<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 15, 1996
FILE NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE
ACCOUNT 02
(EXACT NAME OF REGISTRANT)
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
900 Cottage Grove Road, Hartford, Connecticut 06152
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
Depositor's Telephone Number, including Area Code
(860) 726-6000
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Robert A. Picarello, Esquire COPY TO:
Connecticut General Life Insurance George N. Gingold,
Company Esquire
900 Cottage Grove Road 197 King Philip Drive
Hartford, Connecticut 06152 West Hartford, CT
(NAME AND ADDRESS OF AGENT FOR 06117-1409
SERVICE)
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Approximate date of proposed public offering: Continuous
INDEFINITE NUMBER OF UNITS OF INTEREST IN VARIABLE LIFE INSURANCE CONTRACTS
(TITLE AND AMOUNT OF SECURITIES BEING REGISTERED)
An indefinite amount of the securities being offered by the Registration
Statement has been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The initial registration fee of $500 was paid with the
declaration.
The registrant amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
It is proposed that this filing will become effective:
_________ immediately upon filing pursuant to paragraph (b) of Rule 485
_________ on _______, pursuant to paragraph (b) of Rule 485
_________ 60 days after filing pursuant to paragraph (a) of Rule 485
_________ on _______, pursuant to paragraph (a) of Rule 485
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CROSS REFERENCE SHEET
(RECONCILIATION AND TIE)
REQUIRED BY INSTRUCTION 4 TO FORM S-6
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ITEM OF FORM N-8B-2 LOCATION IN PROSPECTUS
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1 Cover Page Highlights
2 Cover Page
3 *
4 Distribution of Policies
5 The Company
6(a) The Variable Account
6(b) *
9 Legal Proceedings
10(a)-(c) Short-Term Right to Cancel the Policy; Surrenders;
Accumulation Value; Reports to Policy Owners
10(d) Right to Exchange for a Fixed Benefit Policy; Policy
Loans; Surrenders; Allocation of Net Premium Payments
10(e) Lapse and Reinstatement
10(f) Voting Rights
10(g)-(h) Substitution of Securities
10(i) Premium Payments; Transfers; Death Benefit; Policy
Values; Settlement Options
11 The Funds
12 The Funds
13 Charges; Fees
14 Issuance
15 Premium Payments; Transfers
16 The Variable Account
17 Surrenders
18 The Variable Account
19 Reports to Policy Owners
20 *
21 Policy Loans
22 *
23 The Company
24 Incontestability; Suicide; Misstatement of Age or Sex
25 The Company
26 Fund Participation Agreements
27 The Variable Account
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ITEM OF FORM N-8B-2 LOCATION IN PROSPECTUS
- ------------------- -------------------------------------------------------
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28 Directors and Officers of the Company
29 The Company
30 *
31 *
32 *
33 *
34 *
35 *
37 *
38 Distribution of Policies
39 Distribution of Policies
40 *
41(a) Distribution of Policies
42 *
43 *
44 The Funds; Premium Payments
45 *
46 Surrenders
47 The Variable Account; Surrenders, Transfers
48 *
49 *
50 The Variable Account
51 Cover Page; Highlights; Premium Payments; Right to
Exchange for a Fixed Benefit Policy
52 Substitution of Securities
53 Tax Matters
54 *
55 *
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* Not Applicable
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CONNECTICUT GENERAL LIFE INSURANCE COMPANY
[LOGO]
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
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HOME OFFICE LOCATION: MAILING ADDRESS:
900 COTTAGE GROVE ROAD CIGNA INDIVIDUAL INSURANCE
BLOOMFIELD, CONNECTICUT CORPORATE VARIABLE PRODUCTS SERVICE CENTER
ROUTING S-324
HARTFORD, CT 06152-2324
(860)(726-7154)
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THE CORPORATE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
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This prospectus describes a flexible premium variable life insurance
contract ("Policy") offered in an individual form by Connecticut General Life
Insurance Company ("the Company"). This Policy is intended to provide life
insurance benefits. It allows flexible premium payments, a choice of underlying
funding options, and a choice of three death benefit options. Its value will
vary with the investment performance of the underlying funding options selected,
as may the death benefit payable by the Company upon the death of the Insured.
Policy values may be used to continue the Policy in force, may be borrowed
within certain limits, and may be fully or partially surrendered. Annuity
settlement options equivalent to the Death Benefit are available for payment to
the Beneficiary upon the death of the Insured.
The Company offers sixteen funding vehicles under a Policy through the
Separate Account, each a diversified open-end management investment company
(commonly called a mutual fund) with a different investment objective: Alger
American Fund -- Small Cap Portfolio, MidCap Growth Portfolio and Growth
Portfolio; CIGNA Variable Products Group -- Money Market Fund; Fidelity Variable
Insurance Products Fund -- Equity-Income Portfolio and High Income Portfolio;
Fidelity Variable Insurance Products Fund II -- Index 500 Portfolio and
Investment Grade Bond Portfolio; Janus Aspen Fund -- Short-Term Bond Portfolio
and Worldwide Growth Portfolio; MFS-Registered Trademark- Variable Insurance
Trust-Registered Trademark- -- MFS Emerging Growth Series and MFS Total Return
Series; Templeton Variable Insurance Products Series Fund -- Templeton
International Fund; OCC Accumulation Trust -- OCC Equity Portfolio, OCC Managed
Portfolio and OCC Small Cap Portfolio.
The fixed interest option offered under the Policy is the Fixed Account.
Amounts held in the Fixed Account are guaranteed and will earn interest at a
rate equal to the lesser of 4% per year or the prevailing 30 day Treasury Bill
Rate as of the last day of the preceding calendar month. Unless specifically
mentioned, this prospectus only describes the variable investment options.
It may not be advantageous to replace existing insurance or supplement an
existing flexible premium variable life insurance policy with this Policy. This
entire Prospectus, and those of the Funds, should be read carefully to
understand the Policy being offered.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE MUTUAL FUNDS AVAILABLE AS FUNDING OPTIONS FOR THE POLICIES OFFERED BY THIS
PROSPECTUS. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED: JULY , 1996
<PAGE>
TABLE OF CONTENTS
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PAGE
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Definitions..................................... 3
Highlights...................................... 5
Initial Choices............................... 5
Charges and Fees.............................. 5
The Company..................................... 6
The Variable Account............................ 7
The Funds....................................... 7
General....................................... 12
Substitution of Securities.................... 12
Voting Rights................................. 12
Fund Participation Agreements................. 12
Death Benefit................................... 13
Death Benefit Options....................... 13
Changes in Death Benefit Option............. 13
Payment of Death Benefit.................... 14
Changes in Specified Amount................. 15
Premium Payments; Transfers..................... 15
Premium Payments............................ 15
Allocation of Net Premium Payments.......... 16
Transfers................................... 16
Charges; Fees................................... 17
Premium Load................................ 17
Policy Issue Fee............................ 17
Monthly Deductions.......................... 17
Administrative Fee.......................... 18
Transaction Fee for Excess Transfers........ 18
Mortality and Expense Risk Charge........... 18
Surrenders During First Two Policy Years --
Refund of Portion of Premium Load.......... 18
The Fixed Account............................... 19
Policy Values................................... 19
Accumulation Value.......................... 19
Variable Accumulation Unit Value............ 20
Surrender Value............................. 20
Surrenders...................................... 20
Partial Surrenders.......................... 20
Full Surrenders............................. 20
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Deferral of Payment and Transfers........... 21
Lapse and Reinstatement......................... 21
Lapse of a Policy........................... 21
Reinstatement of a Lapsed Policy............ 21
Policy Loans.................................... 21
Settlement Options.............................. 22
Additional Insurance Benefit.................... 23
Other Policy Provisions......................... 23
Issuance.................................... 23
Short-Term Right to Cancel the Policy....... 23
Policy Owner................................ 23
Beneficiary................................. 23
Right to Exchange for a Fixed Benefit
Policy..................................... 24
Incontestability............................ 24
Misstatement of Age......................... 24
Suicide..................................... 24
Nonparticipating Policies................... 25
Tax Matters..................................... 25
Policy Proceeds............................. 25
Taxation of the Company..................... 26
Section 848 Charges......................... 26
Other Matters................................... 27
Directors and Officers of the Company....... 27
Distribution of Policies.................... 27
Changes of Investment Policy................ 28
Other Contracts Issued by the Company....... 28
State Regulation............................ 28
Reports to Policy Owners.................... 28
Advertising................................. 29
Legal Proceedings........................... 29
Experts..................................... 29
Registration Statement...................... 29
Financial Statements........................ 29
Appendix 1...................................... 30
Illustration of Accumulation Values,
Surrender Values, and Death Benefits....... 30
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2
<PAGE>
DEFINITIONS
ACCUMULATION VALUE: The sum of the Fixed Account Value, Variable Account Value
and the Loan Account Value.
ACCUMULATION UNIT: A unit of measure used to calculate the value of a Variable
Account Sub-Account.
ADDITIONAL PREMIUMS: Any premium paid in addition to Planned Premiums.
CASE: A group of Policies covering individuals with common employment or other
relationship, independent of the Policies.
CERTIFICATE: The document which evidences the coverage of an Insured in a Case.
CODE: The Internal Revenue Code of 1986, as amended.
CORRIDOR DEATH BENEFIT: The Death Benefit calculated as a percentage of the
Accumulation Value rather than by reference to the Specified Amount to satisfy
the Internal Revenue Service definition of "life insurance." (See "Payment of
Death Benefit").
COST OF INSURANCE: The portion of the Monthly Deduction designed to compensate
the Company for the anticipated cost of paying Death Benefits in excess of the
Accumulation Value, not including riders, supplemental benefits or monthly
expense charges.
DEATH BENEFIT: The amount payable to the beneficiary upon the death of the
Insured in accordance with the Death Benefit Option elected, before deduction of
the amount necessary to repay any loans in full and overdue deductions.
DEATH BENEFIT OPTION: Any of three methods for determining the Death Benefit.
FIXED ACCOUNT: The account under which principal is guaranteed and interest is
credited at a rate equal to the lesser of 4% per year or the prevailing 30 day
Treasury Bill Rate as of the last day of the preceding calendar month. Fixed
Account assets are general assets of the Company held in the Company's General
Account.
FIXED ACCOUNT VALUE: The portion of the Accumulation Value, other than the Loan
Account Value, held in the Company's General Account.
FUND(S): One or more of Alger American Fund -- Small Cap Portfolio, MidCap
Growth Portfolio and Growth Portfolio; CIGNA Variable Products Group -- Money
Market Fund; Fidelity Variable Insurance Products Fund -- Equity-Income
Portfolio and High Income Portfolio; Fidelity Variable Insurance Products Fund
II -- Index 500 Portfolio and Investment Grade Bond Portfolio; Janus Aspen Fund
- -- Short-Term Bond Portfolio and Worldwide Growth Portfolio;
MFS-Registered Trademark- Variable Insurance Trust-Registered Trademark- -- MFS
Emerging Growth Series and MFS Total Return Series; Templeton Variable Insurance
Products Series Fund -- Templeton International Fund; OCC Accumulation Trust --
OCC Equity Portfolio, OCC Managed Portfolio and OCC Small Cap Portfolio. Each of
them is an open-end management investment company (mutual fund) whose shares are
available to fund the benefits provided by the Policy.
GENERAL ACCOUNT: The Company's general asset account, in which assets
attributable to the non-variable portion of Policies are held.
GRACE PERIOD: The 61-day period following a Monthly Anniversary Day on which the
Policy's Surrender Value is insufficient to cover the current Monthly Deduction.
The Company will send notice at least 31 days before the end of the Grace Period
that the Policy will lapse without value unless a sufficient payment (described
in the notification letter) is received by the Company.
GUIDELINE ANNUAL PREMIUM: The level amount of premium payment, calculated in
accordance with Rule 6e-3(T) under the Investment Company Act of 1940, required
to mature the Policy under guaranteed mortality and expense charges and an
annual interest rate of 5%.
INITIAL SPECIFIED AMOUNT: The amount (at least $50,000), originally chosen by
the Policy Owner, initially equal to the Death Benefit including any Additional
Insurance Benefit. The Initial Specified Amount may be increased or decreased as
described in this Prospectus.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: The age of the Insured, to the nearest birthday, on the Issue Date.
ISSUE DATE: The date on which the Policy becomes effective, as shown in the
Policy Specifications.
LOAN ACCOUNT VALUE: An amount equal to the sum of all unpaid Policy loans and
loan interest.
3
<PAGE>
MONTHLY ANNIVERSARY DAY: The day of the month as shown in the Policy
Specifications, or the next Valuation Day if that day is not a Valuation Day or
is nonexistent for that month, when the Company makes the Monthly Deduction.
MONTHLY DEDUCTION: The monthly deduction made from the Net Accumulation Value;
this deduction includes the cost of insurance, an administrative expense charge,
and charges for supplemental riders or benefits, if applicable.
NET ACCUMULATION VALUE: The Accumulation Value less the Loan Account Value.
NET AMOUNT AT RISK: The Death Benefit before subtraction of outstanding loans,
if any, minus the Accumulation Value.
NET PREMIUM PAYMENT: The portion of a Premium Payment, after deduction of the
Premium Load, available for allocation to the Fixed Account and the Variable
Account Sub-Accounts.
OWNER. The Owner on the Date of Issue will be the person designated in the
Policy Specifications as having all ownership rights under the Policy. If no
person is designated as Owner, the Insured will be the Owner.
PLANNED PREMIUM: The amount of premium the Policy Owner chooses to pay the
Company on a scheduled basis.
POLICY: The life insurance contract described in this Prospectus, i.e., either
an individual Policy or a Certificate evidencing an Insured's coverage in a Case
under which flexible premium payments are permitted and the death benefit and
contract values may vary with the investment performance of the funding
option(s) selected.
POLICY YEAR: Each twelve-month period, beginning on the Issue Date, during which
the Policy is in effect.
PREMIUM LOAD: An amount equal to 6.5% of each Premium Payment, plus 40% of the
Premium Payment(s) in the first Policy Year up to one Guideline Annual Premium.
In the event that the Specified Amount under a Policy is increased, an amount
equal to 25% of the increase in the Guideline Annual Premium will be deducted
from Premium Payments received during the 12 months following the increase.
PREMIUM PAYMENT: A premium payment made under the Policy.
RIGHT-TO-EXAMINE PERIOD: The period of time following the issuance of the Policy
during which the Owner may return the Policy and receive a refund of premiums
paid, the latest of (a) 10 days after the Policy and notice of withdrawal right
is received by the owner, unless otherwise stipulated by state law requirements,
or (b) 45 days after the application for the Policy is signed by the Owner.
SETTLEMENT OPTION(S): Several ways in which the Beneficiary may receive a Death
Benefit, or in which the Owner may choose to receive payments upon surrender of
the Policy, through the attachment of a rider.
SUB-ACCOUNT: That portion of the Variable Account which is invested in shares of
a specific Fund.
SURRENDER VALUE: The amount an Owner can receive in cash by surrendering the
Policy. This equals the Net Accumulation Value plus any Premium Load credits if
a surrender occurs within 24 months of issue. All of the Surrender Value may be
applied to one or more of the Settlement Options.
VALUATION DAY: Every day on which Accumulation Units are valued; any day on
which the New York Stock Exchange is open, except any day on which trading on
the Exchange is restricted, or on which an emergency exists, as determined by
the Securities and Exchange Commission, so that valuation or disposal of
securities is not practicable.
VALUATION PERIOD: The period of time beginning on the day following a Valuation
Day and ending on the next Valuation Day. A Valuation Period may be more than
one day in length.
VARIABLE ACCOUNT: CG Corporate Insurance Variable Life Separate Account 02.
Consists of all Sub-Accounts invested in shares of the Funds. Variable Account
assets are kept separate from the general assets of the Company and are not
chargeable with the general liabilities of the Company.
VARIABLE ACCOUNT VALUE: The portion of the Accumulation Value attributable to
the Variable Account.
CORPORATE VARIABLE PRODUCTS SERVICE CENTER: The office of the Company to which
Premium Payments should be sent, notices given and any customer service requests
made. Mailing address: CIGNA Individual Insurance, Corporate Variable Products
Service Center, Routing S-324, Hartford, CT 06152-2324.
4
<PAGE>
HIGHLIGHTS
The Policy is a flexible premium variable life insurance
policy. Its values may be accumulated on a fixed or variable
basis or a combination of fixed and variable bases. The
Policy's provisions may vary in some states.
INITIAL CHOICES
TO BE MADE
When purchasing a Policy, the Owner makes three important
choices:
1) Selecting one of the three Death Benefit Options;
2) Selecting the amount of Premium Payments to make; and
3) Selecting how Net Premium Payments will be allocated
among the available funding options.
LEVEL OR VARYING
DEATH BENEFIT
At the time of purchase, the Policy Owner (also called the
"Owner" in this Prospectus) must choose among the three
Death Benefit Options. The amount payable under any option
will be determined as of the date of the Insured's death.
Under the level Death Benefit Option, the Death Benefit will
be the greater of the Specified Amount, or the Corridor
Death Benefit. Under the "return of premium" Death Benefit
Option, the Death Benefit payable will be the greater of the
Specified Amount plus total Premium Payments made, or the
Corridor Death Benefit. Under the varying Death Benefit
Option, the Death Benefit will be the greater of the
Specified Amount plus the Accumulation Value, or the
Corridor Death Benefit (See "Death Benefit").
AMOUNT OF
PREMIUM PAYMENT
At the time of purchase, the Policy Owner must also choose
the amount of premium to be paid. The Owner may vary Premium
Payments to some extent and still keep the Policy in force.
If the Policy lapses it may be reinstated (See "Lapse and
Reinstatement"). Premium Payments are refundable during the
Right-to-Examine Period.
SELECTION OF
FUNDING
VEHICLE(S)
The Policy Owner must choose how to allocate Net Premium
Payments. Net Premium Payments allocated to the Variable
Account may be allocated to one or more Sub-Accounts of the
Variable Account, each of which invests in shares of a
particular Fund. The Initial Premium Payment will not be
allocated to the Variable Account until three days following
the expiration of the Right-to-Examine Period (see
"Short-Term Right to Cancel the Policy"). The Fixed Account
may also be elected as an allocation option. Allocations to
any Sub-Account or to the Fixed Account must be in whole
percentages with a minimum of 10% each. The variable portion
of a Policy is supported by the Fund(s) selected as funding
vehicle(s). The portion of the Variable Account Value
attributable to a particular Fund through the Sub-Account of
the Variable Account is not guaranteed and will vary with
the investment performance of that Fund.
CHARGES
AND FEES
There is a 6.5% premium load on all Premium Payments, and an
additional 40% premium load on Premium Payments of up to One
Guideline Annual Premium in the first Policy Year. In the
event that the specified amount under a policy is increased,
an additional premium load of 25% of the increase in the
Guideline Annual Premium will be deducted from premiums
received during the 12 months following the increase.
Monthly deductions are made for the Cost of Insurance and
any Additional Insurance Benefits.
A policy issue charge of $250 and monthly deductions of $8
per month are also made for administrative expenses.
Daily charges from Variable Account Value are made for the
mortality and expense risk, currently at the annual rate of
.85% during the first ten Policy Years, .35% during the
eleventh through fifteenth Policy Years, and .05%
thereafter.
5
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Daily charges from Variable Account Value are made for
administrative expenses, currently at the annual rate of
.10%.
Investment results for each Sub-Account are affected by each
Fund's daily charge for investment advisory fees; these
charges vary by Fund and are shown at pp. 10-11 of this
Prospectus.
A transaction fee of $25 is imposed for partial surrenders
and for certain transfers in excess of four per Policy Year.
Interest is charged on Policy loans. The net interest spread
(the amount by which interest charged exceeds interest
credited) is currently .95% per year in the first ten Policy
Years, .45% in Policy Years eleven through fifteen and .15%
per year thereafter.
REDUCTION OF
CHARGES
This Policy is available for purchase by corporations and
other groups or sponsoring organizations on a Case basis.
The Company reserves the right to reduce premium loads or
any other charges on certain Cases where it is expected that
the amount or nature of such Cases will result in savings of
sales, underwriting, administrative or other costs.
Eligibility for these reductions and the amount of
reductions will be determined by a number of factors,
including the number of lives to be insured, the total
premiums expected to be paid, total assets under management
for the Policyowner, the nature of the relationship among
the insured individuals, the purpose for which the Policies
are being purchased, expected persistency of the individual
Policies, and any other circumstances which the Company
believes to be relevant to the expected reduction of its
expenses. Some of these reductions may be guaranteed and
others may be subject to withdrawal or modification by the
Company on a uniform Case basis. Reductions in charges will
not be unfairly discriminatory to any Policy Owners.
THE COMPANY
The Company is a stock life insurance company incorporated
in Connecticut in 1865. Its Home Office mailing address is
Hartford, Connecticut 06152, Telephone (860) 726-6000. It
has obtained authorization to do business in fifty states,
the District of Columbia and Puerto Rico. The Company issues
group and individual life and health insurance policies and
annuities. The Company has various wholly-owned subsidiaries
which are generally engaged in the insurance business. The
Company is a wholly-owned subsidiary of Connecticut General
Corporation, Bloomfield, Connecticut. Connecticut General
Corporation is wholly-owned by CIGNA Holdings Inc.,
Philadelphia, Pennsylvania which is in turn wholly-owned by
CIGNA Corporation, Philadelphia, Pennsylvania. Connecticut
General Corporation is the holding company of various
insurance companies, one of which is Connecticut General
Life Insurance Company.
The Company markets the Policies through independent
insurance brokers and general agents who are registered
representatives of broker-dealers which are members of the
National Association of Securities Dealers, Inc.
The Company, in common with other insurance companies, is
subject to regulation and supervision by the regulatory
authorities of the states in which it is licensed to do
business. A license from the state insurance department is a
prerequisite to the transaction of insurance business in
that state. In general, all states have statutory
administrative powers. Such regulation relates, among other
things, to licensing of insurers and their agents, the
approval of policy forms, the methods of computing reserves,
the form and content of statutory financial statements, the
amount of policyholders' and stockholders' dividends, and
the type of distribution of investments permitted. A blanket
bond for $10 million covers all of the officers and
employees of the Company.
6
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THE VARIABLE
ACCOUNT
CG Corporate Insurance Variable Life Insurance Separate
Account 02 was established pursuant to a February 23, 1996
resolution of the Board of Directors of the Company. Under
Connecticut insurance law, the income, gains or losses of
the Variable Account are credited without regard to the
other income, gains or losses of the Company. The Company
serves as the custodian of the assets of the Variable
Account. These assets are held for the Policies. Although
the assets maintained in the Variable Account will not be
charged with any liabilities arising out of any other
business conducted by the Company, all obligations arising
under the Policies are general corporate liabilities of the
Company. Any and all distributions made by the Funds with
respect to shares held by the Variable Account will be
reinvested in additional shares at net asset value.
Deductions and surrenders from the Variable Account will, in
effect, be made by surrendering shares of the Funds at net
asset value. On each Valuation Day of each Fund, the
Variable Account purchases or redeems Fund shares based on a
netting of all transactions for that day. Shares of the
Funds held in the Variable Account are held by the Company
through an open account system, which makes unnecessary the
issuance and delivery of stock certificates.
The Variable Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment
trust under the Investment Company Act of 1940. Such
registration does not involve supervision of the Variable
Account or the Company's management or investment practices
or policies by the Commission. The Company does not
guarantee the Variable Account's investment performance.
The Company has four other separate accounts registered as
unit investment trusts with the Commission, two for the
purpose of funding the Company's variable annuity contracts,
and two for the purpose of funding other variable life
insurance policies of the Company.
THE FUNDS
Each of the sixteen Sub-Accounts of the Variable Account is
invested solely in the shares of one of the sixteen Funds
available as funding vehicles under the Policies. Each of
the Funds is a series of one of eight entities, all
Massachusetts or Delaware business trusts. Each such entity
is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940.
These entities are collectively referred to herein as the
"Series Funds."
The eight Series Funds and their Investment advisers and
distributors are:
Alger American Fund ("Alger Trust") managed by Fred
Alger Management, Inc., 75 Maiden Lane, New York, NY
10038; and distributed by Fred Alger & Company,
Incorporated, 30 Montgomery Street, Jersey City, NJ
07302;
CIGNA Variable Partners Group ("CIGNA Funds"), managed
by CIGNA Investments, Inc. and distributed by CIGNA
Financial Advisors, Inc., 900 Cottage Grove Road,
Hartford, CT 06152.
Variable Insurance Products Fund I ("Fidelity Trust I"),
and Variable Insurance Products Fund II ("Fidelity Trust
II"), managed by Fidelity Management & Research Company
and distributed by Fidelity Distributors Corporation, 82
Devonshire Street, Boston, MA 02103;
Janus Aspen Series ("Janus Series"), managed by Janus
Capital Corporation, 100 Fillmore Street, Suite 500,
Denver, CO 80206-4923.
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MFS-Registered Trademark- Variable Insurance
Trust-Registered Trademark- ("MFS Trust"), managed by
Massachusetts Financial Services Company and distributed
by MFS Investor Services, Inc., 500 Boylston Street,
Boston, MA 02116;
OCC Accumulation Trust, managed by OpCap Advisors and
distributed by OCC Distributors, One World Financial
Center, New York, NY 10281.
Templeton Variable Products Series Fund ("Templeton
Fund"), managed by Templeton Investment Counsel, Inc.,
500 E. Broward Blvd., Broward Financial Centre, Fort
Lauderdale, FL 33394-3091; and distributed by Franklin
Templeton Distributors, Inc., P.O. Box 33030, St.
Petersburg, FL 33733-8030;
Three Funds of ALGER AMERICAN Fund are available under the
Policies:
Alger American Small Cap Portfolio;
Alger American MidCap Growth Portfolio;
Alger American Growth Portfolio.
One Fund of the CIGNA VARIABLE PRODUCTS GROUP is available
under the Policies:
CIGNA Variable Products Money Market Fund
Two Funds of FIDELITY Trust I are available under the
Policies:
Equity-Income Portfolio ("Fidelity Equity-Income
Portfolio").
High Income Portfolio ("Fidelity High Income Portfolio")
Two Funds of FIDELITY Trust II is available under the
Policies.
Index 500 Portfolio ("Fidelity Index 500 Portfolio");
Investment Grade Bond Portfolio ("Fidelity Investment
Grade Bond Portfolio")
Two Funds of JANUS ASPEN Series are available under the
Policies:
Short-Term Bond Portfolio;
Worldwide Growth Portfolio.
Two Funds of MFS Trust are available under the Policies:
MFS Emerging Growth Series;
MFS Total Return Series.
Three Funds of OCC ACCUMULATION Trust are available under
the Policies:
OCC Equity Portfolio;
OCC Managed Portfolio;
OCC Small Cap Portfolio.
One Fund of the TEMPLETON VARIABLE PRODUCTS SERIES is
available under the Policies:
Templeton International Fund
The investment advisory fees charged the Funds by their
advisers are shown on pages 10 and 11 of this Prospectus.
There follows a brief description of the investment
objective and program of each Fund. There can be no
assurance that any of the stated investment objectives will
be achieved.
ALGER AMERICAN SMALL CAP PORTFOLIO: Seeks long-term capital
appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with
total market capitalization of less than $1 billion.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO: Seeks long-term
capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of
companies with total market capitalization between $750
million and $3.5 billion.
8
<PAGE>
ALGER AMERICAN GROWTH PORTFOLIO: Seeks long-term capital
appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with
total market capitalization of $1 billion or greater.
CIGNA VARIABLE PRODUCTS MONEY MARKET FUND: Seeks to provide
as high a level of current income as is consistent with the
preservation of capital and liquidity and the maintenance of
a stable $1.00 per share net asset value by investing in
short-term money market instruments.
FIDELITY HIGH INCOME PORTFOLIO: Seeks high current income by
investing primarily in all types of income-producing debt
securities, preferred stocks, and convertible securities.
FIDELITY EQUITY-INCOME PORTFOLIO: Seeks reasonable income by
investing primarily in income-producing equity securities,
with some potential for capital appreciation, seeking to
exceed the composite yield on the securities comprising the
Standard and Poor's 500 Composite Stock Price Index.
FIDELITY INVESTMENT GRADE BOND PORTFOLIO: Seeks high current
income by investing primarily in fixed-income securities
such as bonds, notes and debentures.
FIDELITY INDEX 500 PORTFOLIO: Seeks to match the total
return of the Standard and Poor's 500 Composite Stock Price
Index while keeping expenses low. The fund will normally
have 80% of its assets invested in the equity securities of
companies that compose the S&P 500.
JANUS ASPEN SERIES SHORT TERM BOND PORTFOLIO: Seeks a high
level of current income while minimizing interest rate risk
by investing in shorter term fixed-income securities.
JANUS ASPEN SERIES WORLDWIDE GROWTH PORTFOLIO: Seeks
long-term growth of capital by investing primarily in common
stocks of foreign and domestic issuers.
MFS EMERGING GROWTH PORTFOLIO: Seeks to provide long-term
growth of capital by investing in common stocks of small and
medium-sized companies which have the potential for growth.
MFS TOTAL RETURN PORTFOLIO: Seeks primarily to provide above
average income (compared to a portfolio entirely invested in
equity securities) consistent with the prudent employment of
capital and secondarily to provide a reasonable opportunity
for growth of capital and income.
OCC ACCUMULATION TRUST SMALL CAP PORTFOLIO: Seeks capital
appreciation through investments in a diversified portfolio
of equity securities of companies with market capitalization
of under $1 billion.
OCC ACCUMULATION TRUST MANAGED PORTFOLIO: Seeks growth of
capital over time through investment in a portfolio of
common stocks, bonds and cash equivalents, the percentage of
which will vary based on management's assessment of relative
investment values.
OCC ACCUMULATION TRUST EQUITY PORTFOLIO: Seeks long-term
capital appreciation through investment in a diversified
portfolio of equity securities on the basis of a value
oriented approach to investing.
TEMPLETON INTERNATIONAL FUND: Seeks long-term capital growth
through a flexible policy of investing in stocks and debt
obligations of companies and governments outside the United
States.
9
<PAGE>
EXPENSE DATA
The purpose of the following Table is to help Purchasers and prospective
purchasers understand the costs and expenses that are borne, directly and
indirectly, by Purchasers assuming that all Net Premium Payments are allocated
to the Variable Account. The table reflects expenses of the Variable Account as
well as of the Individual Funds underlying the Variable Sub-Accounts. The
Mortality and Expense Risk Charge shown is the currently charged rate during the
first ten Policy Years. It currently declines to .35% per year in the eleventh
Policy Year and to .05% in the sixteenth Policy Year. The Mortality and Expense
Risk Charge is guaranteed not to exceed .90% per year. The Administrative
Expense Charge shown is the currently charged rate. It is guaranteed not to
exceed .30% per year.
FEE TABLE
<TABLE>
<CAPTION>
FIDELITY VARIABLE INSURANCE
ALGER AMERICAN FUNDS PRODUCTS FUNDS
---------------------------------------- ---------------------------------------------------
MIDCAP HIGH EQUITY INVESTMENT
SMALL CAP GROWTH GROWTH INCOME INCOME INDEX 500 GRADE BOND
FUND FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- -------- --------- -------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT
ANNUAL EXPENSES
Mortality and
Expense Risk
Charge............. 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%
Administrative
Expense Charge..... 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
--- --- --- --- --- --- ---
TOTAL SEPARATE
ACCOUNT ANNUAL
EXPENSES........... 0.95% 0.95% 0.95% 0.95% 0.95% 0.95% 0.95%
FUND PORTFOLIO
ANNUAL OPERATING
EXPENSES
Management Fees..... 0.85% 0.80% 0.75% 0.60% 0.51% 0.00% 0.45%
Other Expenses...... 0.07% 0.10% 0.10% 0.11% 0.10% 0.28% 0.14%
--- --- --- --- --- --- ---
TOTAL FUND PORTFOLIO
ANNUAL OPERATING
EXPENSES........... 0.92%(1) 0.90%(1) 0.85%(1) 0.71%(2b) 0.61% 0.28%(2a) 0.59%
<FN>
- ------------------------------
(1) Alger management has agreed to reimburse the Portfolios to the extent that
the annual operating expenses (excluding interest, taxes, fees for
brokerage services and extraordinary expenses) of the Alger American Small
Capitalization Portfolio exceed 1.50%; the Alger American Growth Portfolio
exceed 1.50%; and the Alger American MidCap Growth Portfolio exceed 1.50%
of the average net assets of the applicable Portfolio for any fiscal year.
In addition, from time to time, Alger Management, in its sole discretion
and as it deems appropriate, may assume certain expenses of one or more of
the Portfolios while retaining the ability to be reimbursed by the
applicable Portfolio for such amounts prior to the end of the fiscal year.
This will have the effect of lowering the applicable Portfolio's overall
expense ratio and of increasing yield to investors, or the converse, at the
time such amounts are assumed or reimbursed, as the case may be.
(2a) The Fund's expenses were voluntarily reduced by the Fund's Investment
advisor. Absent reimbursement, management fee, other expenses, and total
expenses would have been 0.28%, 0.19% and 0.47%, respectively.
(2b) A portion of the brokerage commissions that Equity-Income Portfolio paid
were used to reduce the fund's expenses. Without this reduction, total
expenses would still have been 0.71%.
</TABLE>
10
<PAGE>
The table does not reflect the monthly deductions for the cost of insurance and
any riders, nor does it reflect the administrative expense monthly deduction of
$8 or the $250 Policy Issue Fee. The information set forth should be considered
together with the information provided in this Prospectus under the heading
"Charges and Fees", and in each Fund's Prospectus. All expenses are expressed as
a percentage of average account value.
<TABLE>
<CAPTION>
MFS-REGISTERED TRADEMARK- TEMPLETON CIGNA
VARIABLE INSURANCE VARIABLE VARIABLE
TRUST-REGISTERED TRADEMARK- JANUS ASPEN SERIES PRODUCTS PRODUCTS
- --------------------------- OCC ACCUMULATION TRUST --------------------- ------------- ---------
EMERGING TOTAL --------------------------------------- WORLDWIDE SHORT TEMPLETON MONEY
GROWTH RETURN SMALL CAP MANAGED EQUITY GROWTH TERM BOND INTERNATIONAL MARKET
SERIES SERIES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND
- ----------- ---------- ----------- ----------- ----------- --------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%
0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
--- --- --- --- --- --- --- --- ---
0.95% 0.95% 0.95% 0.95% 0.95% 0.95% 0.95% 0.95% 0.95%
0.75% 0.75% 0.80% 0.80% 0.80% 0.68% 0.00% 0.49% 0.35%
0.25%(3b) 0.25%(3b) 0.20% 0.14% 0.20% 0.22% 0.70% 0.22% 0.15%(6b)
--- --- --- --- --- --- --- --- ---
1.00%(3a) 1.00%(3a) 1.00%(4) 0.94%(4) 1.00%(4) 0.90%(5) 0.70%(5) 0.71% 0.50%(6a)
</TABLE>
<TABLE>
<S> <C>
- ------------------------------
(3a) The Advisor has agreed to bear, subject to reimbursement, expenses for each
of the Emerging Growth Series and Total Return Series such that each
Series' aggregate operating expenses shall not exceed, on an annualized
basis, 1.00% of the average daily net assets of the Series from November 2,
1994 through December 31, 1996, 1.25% of the average daily net assets of
the Series from January 1, 1997 through December 31, 1998, and 1.50 % of
the average daily net assets of the Series from January 1, 1999 through
December 21, 2004; provided however that this obligation may be terminated
or revised at any time. See "Information Concerning the Shares of Each
Series-Expenses" below. Absent this expense arrangement, "Other Expenses"
for the Emerging Growth Series and Total Return Series would be 2.16% and
2.02%, respectively, and "Total Operating Expenses" would be 2.91% and
2.77%, respectively, for these Series.
(3b) Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Series' expenses). Any such fee reductions are not
reflected under "Other Expenses."
(4) The annual expenses of the OCC Accumulation Trust Equity, Managed and Small
Cap Portfolios as of December 31, 1995 have been restated to reflect new
management fee and expense limitation arrangements in effect as of May 1,
1996. Effective May 1, 1996, the expenses of the Portfolios of the OCC
Accumulation Trust are contractually limited by OpCap Advisors so that
their respective annualized operating expenses do not exceed 1.25% of their
respective average daily net assets. Furthermore, through April 30, 1997,
the annualized operating expenses of the OCC Accumulation Trust Equity,
Managed, and Small Cap Portfolios will be voluntarily limited by OpCap
Advisors so that annualized operating expenses of these Portfolios do not
exceed 1.00% of their respective average daily net assets. Without such
voluntary expense limitations, and taking into account the revised
contractual provisions effective May 1, 1996 concerning management fees and
expense limitations, the Management Fees, Other Expenses and Total
Portfolio Annual Expenses incurred for the fiscal year ended December 31,
1995 would have been: .80%, .45% and 1.25%, respectively, for the Equity
Portfolio; .80%, .14% and .94%, respectively, for the Managed Portfolio;
and .80%, .39% and 1.19%, respectively, for the Small Cap Portfolio.
(5) The fees and expenses are based on expenses before expense offset
arrangements for the fiscal year ended December 31, 1995. The information
for the Portfolios is net of fee waivers or reductions from Janus Capital.
Fee reductions for the Worldwide Growth Portfolio reduces the management
fee to the level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the management fee and then against
other expenses. Without such waivers or reductions, the Management Fee,
Other Expenses, and Total Portfolio Operating Expenses would have been
0.87%, 0.22% and 1.09%, respectively, for the Worldwide Growth Portfolio
and 0.65%, 0.72% and 1.37%, respectively, for the Short-Term Bond
Portfolio.
(6a) CIGNA Investments, Inc., the fund's advisor, has voluntarily agreed to
reimburse such portion of its management fee as is necessary to cause the
Total Fund Operating Expenses during each calendar year not to exceed 0.50%
of the average daily net asset value of the fund. If this reimbursement is
not sufficient to cause the Total Fund Operating Expenses of the fund not
to exceed the applicable percentage of average daily net asset value, CIGNA
Investments, Inc. has agreed to pay such other expenses of the fund as is
necessary to keep Total Fund Operating Expenses from exceeding the
applicable percentage. These arrangements will continue in effect until the
end of the fiscal year ending December 31, 1996, and afterwards to the
extent described in the fund's prospectus. To the extent management fees
are reimbursed by CIGNA Investments, Inc., or expenses of the fund paid by
CIGNA Investments, Inc., the total return to shareholders will increase.
Total return to shareholders will decrease to the extent management fees
are no longer reimbursed or expenses of the fund are no longer paid.
(6b) Other Operating Expenses are based on estimated amounts for the current
fiscal year. Other Operating Expenses include all expenses not specifically
assumed by CIGNA Investments, Inc.
</TABLE>
11
<PAGE>
GENERAL
There is no assurance that the investment objective of any
of the Funds will be met. A Policy Owner bears the complete
investment risk for Accumulation Values allocated to a
Sub-Account. Each of the Sub-Accounts involves inherent
investment risk, and such risk varies significantly among
the Sub-Accounts. Policy Owners should read each Fund's
prospectus carefully and understand the Funds' relative
degrees of risk before making or changing investment
choices. Additional Funds may, from time to time, be made
available as investments to underlie the Policies. However,
the right to make such selections will be limited by the
terms and conditions imposed on such transactions by the
Company (See "Premium Payments").
SUBSTITUTION OF SECURITIES
If the shares of any Fund should no longer be available for
investment by the Variable Account or if, in the judgment of
the Company, further investment in such shares should become
inappropriate in view of the investment objectives of the
Policies, the Company may substitute shares of another Fund.
No substitution of securities in any Sub-Account may take
place without prior approval of the Commission and under
such requirements as it may impose.
VOTING RIGHTS
In accordance with its view of present applicable law, the
Company will vote the shares of each Fund held in the
Variable Account at special meetings of the shareholders of
the particular Series Fund in accordance with written
instructions received from persons having the voting
interest in the Variable Account. The Company will vote
shares for which it has not received instructions, as well
as shares attributable to it, in the same proportion as it
votes shares for which it has received instructions. The
Series Funds do not hold regular meetings of shareholders.
The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the appropriate
Series Fund not more than sixty (60) days prior to the
meeting of the particular Series Fund. Voting instructions
will be solicited by written communication at least fourteen
(14) days prior to the meeting.
The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of the Company and
other life insurance companies. The Series Funds do not
foresee any disadvantage to Policy Owners arising out of the
fact that shares may be made available to separate accounts
which are used in connection with both variable annuity and
variable life insurance products. Nevertheless, the Series
Funds' Boards intend to monitor events in order to identify
any material irreconcilable conflicts which may possibly
arise and to determine what action, if any, should be taken
in response thereto. If such a conflict were to occur, one
of the separate accounts might withdraw its investment in a
Fund. This might force a Fund to sell portfolio securities
at disadvantageous prices.
FUND PARTICIPATION AGREEMENTS
The Company has entered into agreements with the various
Series Funds and their advisers or distributors under which
the Company makes the Funds available under the Policies and
performing certain administrative services. In some cases,
the advisers or distributors may compensate the Company
therefor.
12
<PAGE>
DEATH BENEFIT
DEATH BENEFIT OPTIONS
Three different Death Benefit Options are available. The
amount payable under each option will be determined as of
the date of the Insured's death. Option B will be in effect
unless Option A or Option C has been elected in the
application for the Policy or unless a change has been
allowed.
Under OPTION A the Death Benefit will be the greater of the
Specified Amount (a minimum of $50,000 as of the date of
this Prospectus) plus the Accumulation Value, or the
Corridor Death Benefit. Option A provides a varying Death
Benefit which increases or decreases over time, depending on
the amount of premium paid and the investment performance of
the underlying funding options chosen.
Under OPTION B the Death Benefit will be the greater of the
Specified Amount or Corridor Death Benefit. Option B
provides a level Death Benefit until the Corridor Death
Benefit exceeds the Specified Amount.
Under OPTION C, the Death Benefit will be the greater of the
Specified Amount plus Premium Payments made, or the Corridor
Death Benefit. Option C provides a Death Benefit which
increases is based on Premium Payments.
Under each of Option A, Option B, and Option C the proceeds
payable upon death will be the Death Benefit, reduced by
partial surrenders and by the amount necessary to repay any
loans in full.
CHANGES IN DEATH BENEFIT OPTION
A Death Benefit Option change will be allowed upon the
Owner's written request to the Corporate Variable Products
Service Center in form satisfactory to the Company, subject
to the following conditions:
- The change will take effect on the Monthly Anniversary Day
following the date of receipt of the request.
- No change in the Death Benefit Option may reduce the
Specified Amount below $50,000.
- For changes from Option B to Option A, the new Specified
Amount will equal the Death Benefit less the Accumulation
Value at the time of the change.
- For changes from Option B to Option C, the new Specified
Amount will equal the Death Benefit less premiums paid at
the time of the change.
- For changes from Option A to Option B, the new Specified
Amount will equal the Death Benefit at the time of the
change.
- For changes from Option A to Option C, the new Specified
Amount will equal the Death Benefit less premiums paid at
the time of the change.
- For changes from Option C to Option A, the new Specified
Amount will equal the Death Benefit less the Accumulation
Value at the time of the change.
- For changes from Option C to Option B, the new Specified
Amount will equal the Death Benefit at the time of the
change.
13
<PAGE>
PAYMENT OF DEATH BENEFIT
The Death Benefit under the Policy will be paid in a lump
sum within seven days after receipt at the Corporate
Variable Products Service Center of due proof of the
Insured's death (a certified copy of the death certificate),
unless the Owner or the Beneficiary has elected that it be
paid under one or more of the Settlement Options (See
"Settlement Options"). Payment of the Death Benefit may be
delayed if the Policy is being contested.
While the Insured is living, the Owner may elect a
Settlement Option for the Beneficiary and deem it
irrevocable, and may revoke or change a prior election. The
Beneficiary may make or change an election within 90 days of
the death of the Insured, unless the Owner has made an
irrevocable election.
All or a part of the Death Benefit may be applied under one
or more of the Settlement Options, or such other options as
the Company may make available in the future.
If the Policy is assigned as collateral security, the
Company will pay any amount due the assignee in one lump
sum. Any excess Death Benefit due will be paid as elected.
A Policy must satisfy either of two testing methods to
qualify as a life insurance contract for tax purposes under
Section 7702 of the Internal Revenue Code of 1986, as
amended. At the time of purchase, the Owner must choose a
Policy which uses either the Guideline Premium test or the
Cash Value Accumulation test. Both methods require a life
insurance Policy to meet minimum ratios of life insurance
coverage to Accumulation Value ("Applicable Percentages").
The Applicable Percentages for the Guideline Premium test
are 250% through Attained Age 40, decreasing over time to
150% at Attained Age 55, 120% at Attained Age 65 and 101% at
Attained Age 94 and above. The Guideline Premium test also
restricts the maximum premiums that may be paid into a life
insurance policy for a specified Death Benefit. The Cash
Value Accumulation test does not limit premiums which may be
paid but has higher required Applicable Percentages.
Applicable Percentages under the Cash Value Accumulation
Test for Non-Smokers decrease over time from 727% at
Attained Age 20, to 378% at Attained Age 40, and to 101% at
Attained Age 100.
See also Tax Matters.
14
<PAGE>
CHANGES IN SPECIFIED AMOUNT
Changes in the Specified Amount of a Policy can be made by
submitting a written request to the Corporate Variable
Products Service Center in form satisfactory to the Company.
Changes in the Specified Amount are subject to the following
conditions:
- Satisfactory evidence of insurability and a supplemental
application may be required for an increase in the
Specified Amount.
- An increase in the Specified Amount will result in an
additional Premium Load of 25% of the increase in the
Guideline Annual Premium.
- No decrease may reduce the Specified Amount to less than
$50,000.
- No decrease may reduce the Specified Amount below the
minimum required to maintain the Policy's status under the
Code as a life insurance policy.
PREMIUM
PAYMENTS;
TRANSFERS
PREMIUM PAYMENTS
The Policies provide for flexible premium payments. Premium
Payments are payable in the frequency and in the amount
selected by the Policy Owner. The initial Premium Payment is
due on the Issue Date and is payable in advance. The minimum
payment is the amount necessary to maintain a positive
Surrender Value. The Company reserves the right to decline
any application or Premium Payment.
After the initial Premium Payment, all Premium Payments must
be sent directly to the Corporate Variable Products Service
Center and will be deemed received when actually received
there.
The Policy Owner may elect to increase, decrease or change
the frequency of Premium Payments.
PLANNED PREMIUMS are Premium Payments scheduled when a
Policy is applied for.
ADDITIONAL PREMIUMS are any Premium Payments made ($500
minimum) in addition to Planned Premiums.
PREMIUM INCREASES. At any time, the Owner may increase
Planned Premiums, or pay Additional Premiums, but:
- Evidence of insurability may be required if the Additional
Premium or the new Planned Premium during the current
Policy Year would increase the difference between the
Death Benefit and the Accumulation Value. If satisfactory
evidence of insurability is requested and not provided,
the increase in premium will be refunded without interest
and without participation of such amounts in any
underlying funding options.
- In no event may the total of all Premium Payments exceed
the then-current maximum premium limitations established
by federal law for a Policy to qualify as life insurance.
If, at any time, a Premium Payment would result in total
Premium Payments exceeding such maximum premium
limitation, the Company will only accept that portion of
the Premium Payment which will make total premiums equal
the maximum. Any part of the Premium Payment in excess of
that amount will be returned or applied as otherwise
agreed and no further Premium Payments will be accepted
until allowed by the then-current maximum premium
limitations prescribed by law.
15
<PAGE>
- If there is any Policy indebtedness, any additional Net
Premium Payments will be used first as a loan repayment
with any excess applied as an additional Net Premium
Payment.
ALLOCATION OF NET PREMIUM PAYMENTS
At the time of purchase of the Policy, the Owner must decide
how to allocate Net Premium Payments among the Sub-Accounts
and the Fixed Account. Allocation to any one Variable
Account Sub-Account or to the Fixed Account cannot be less
than 10% of the Net Premium Payment, and must be in whole
percentages. For each Variable Account Sub-Account, the Net
Premium Payments are converted into Accumulation Units. The
number of Accumulation Units credited to the Policy is
determined by dividing the Net Premium Payment allocated to
the Sub-Account by the value of the Accumulation Unit for
the Sub-Account.
During the Right-to-Examine Period, the Net Premium Payment
will be allocated to the CIGNA Variable Products Group Money
Market Fund of the Variable Account, and earnings credited
from the Issue Date if the Premium Payment was received on
or before the Issue Date. The Company will allocate the
initial Net Premium Payment directly to the Sub-Account(s)
selected by the Owner within three days after expiration of
the Right-to-Examine Period.
Unless the Company is directed otherwise by the Policy
Owner, subsequent Net Premium Payments will be allocated on
the same basis as the most recent previous Net Premium
Payment. Such allocation will occur as of the next Valuation
Period after each payment is received.
The allocation for future Premium Payments may be changed at
any time free of charge. Any new allocation will apply to
Premium Payments made more than one week after the Company
receives the notice of the new allocation. Any new
allocation must allocate a minimum of 10% to any single
funding vehicle and must be expressed in whole percents.
TRANSFERS
Values may, at any time, be transferred ($500 minimum) from
one Sub-Account to another. Within the 30 days prior to each
Policy Anniversary, the Owner may also transfer a portion of
one or more Sub-Accounts to the Fixed Account. Transfers
from the Fixed Account are allowed in the 30-day period
following a Policy Anniversary and will be effective as of
the next Valuation Day after a request is received in good
order at the Corporate Variable Products Service Center. The
cumulative amount of transfers from the Fixed Account within
any such 30-day period cannot exceed 20% of the Fixed
Account Value on the most recent Policy Anniversary. If the
Fixed Account Value as of any Policy Anniversary is less
than $5,000, however, this condition will not apply. The
Company may further limit transfers from the Fixed Account
at any time.
Subject to the above restrictions, up to four transfers may
be made in any Policy Year without charge, and any value
remaining in the Fixed Account or a Sub-Account after a
transfer must be at least $500. Transfers must be made in
writing unless other arrangements have been previously
approved by the Company.
Any transfer among the Funds or to the Fixed Account will
result in the crediting and cancellation of Accumulation
Units based on the Accumulation Unit values next determined
after a written request is received at the Corporate
Variable Products Service Center. Transfer requests must be
received by the Corporate Variable Products Center by 4:00
Eastern Time in order to be effective that day. Any transfer
made which causes the remaining value of Accumulation Units
for a Sub-Account to be less than $500 will
16
<PAGE>
result in those remaining Accumulation Units being cancelled
and their aggregate value reallocated proportionately among
the other funding options chosen. The Policy Owner should
carefully consider current market conditions and each Fund's
investment policies and related risks before allocating
money to the Sub-Accounts. See pages 8-11 of this
Prospectus.
The Company, at its sole discretion, may waive minimum
balance requirements on the Sub-Accounts.
CHARGES;
FEES
PREMIUM LOAD
A deduction of 6.5% of every Premium Payment will be made to
cover the premium load. An additional 40% on Premium
Payments up to one Guideline Annual Premium will be deducted
in the first Policy Year. In the event that the Specified
Amount under a Policy is increased, an additional Premium
Load of 25% of the increase in the Guideline Annual Premium
will be deducted from all premiums received during the 12
months following the increase. This load represents state
taxes and federal income tax liabilities and a portion of
the sales expenses incurred by the Company. The 2.25%
portion of this deduction for premium taxes may be higher or
lower than the actual tax imposed by the applicable
jurisdiction; it is in the mid-range of state premium taxes,
which range from 1.75% to 5.0%. The Company estimates 1.25%
of each Premium Payment will be used to meet federal income
tax liabilities attributable to the treatment of deferred
acquisition costs. The remaining 3.0% of the deduction (plus
40% up to one Guideline Annual Premium during the first
Policy Year) is for sales load. There is no deferred sales
charge. The sales load will not exceed maximum sales charges
permitted under the 1940 Act.
POLICY ISSUE FEE
A policy issue fee of $250 is deducted from the Accumulation
Value for a portion of the Company's administrative
expenses.
MONTHLY DEDUCTIONS
A Monthly Deduction of $8 is made from the Net Accumulation
Value for administrative expenses. This charge is for items
such as premium billing and collection, policy value
calculation, confirmations and periodic reports and will not
exceed the Company's costs.
A Monthly Deduction is also made from the Net Accumulation
Value for the Cost of Insurance and any charges for
supplemental riders. The Cost of Insurance depends on the
attained age, years since issue, risk class and gender
classification (in accordance with state law) of the Insured
and the current Net Amount at Risk.
The Cost of Insurance is determined by subtracting the
Accumulation Value at the previous Monthly Anniversary Day
from the Death Benefit at the previous Monthly Anniversary
Day, and multiplying the result (the Net Amount at Risk) by
the applicable Cost of Insurance Rate as determined by the
Company. The Guaranteed Maximum Cost of Insurance Rates, per
$1,000 of Net Amount at Risk, for standard risks are based
on the 1980 Commissioners Standard Ordinary Mortality
Table-B, Age Nearest Birthday (1980 CSO).
17
<PAGE>
These Monthly Deductions are deducted proportionately from
the value of each funding option. This is accomplished for
the Sub-Accounts by canceling Accumulation Units and
withdrawing the value of the canceled Accumulation Units
from each funding option in the same proportion as their
respective values have to the Net Accumulation Value. The
Monthly Deductions are made on the Monthly Anniversary Day.
ADMINISTRATIVE FEE
For administrative costs a daily deduction, currently
equivalent to .10% per year, is made from amounts held in
the Variable Account. This deduction is guaranteed not to
exceed .30% per year.
TRANSACTION FEE FOR EXCESS TRANSFERS
There will be a $25 transaction fee for each transfer
between funding options in excess of four during any Policy
Year.
MORTALITY AND EXPENSE RISK CHARGE
For mortality and expense risks, a daily deduction,
currently equivalent to .85% per year during the first ten
Policy Years, .35% per year during the eleventh through
fifteenth Policy Years and .05% thereafter, is made from
amounts held in the Variable Account. This deduction is
guaranteed not to exceed .90% per year.
SURRENDERS DURING FIRST TWO POLICY YEARS -- REFUND OF
PORTION OF PREMIUM LOAD
If the Policy is surrendered during the first 12 months
after issue a credit will be paid equal to 60% of all
Premium Loads previously deducted. If the Policy is
surrendered during the months 13 through 24, the credit will
equal 30% of all Premium Loads previously deducted.
In the event a Policy is surrendered during the first two
Policy Years, the Aggregate Premium Load retained by the
Company for sales and promotional expense will not exceed
30% of the sum of Premium Payments in the first two Policy
Years up to one Guideline Annual Premium, plus 10% of
Premium Payments in the first two Policy Years between one
and two times one Guideline Annual Premium plus 9% of
Premium Payments in the first two Policy Years in excess of
two times one Guideline Annual Premium. Any surrenders may
result in tax implications. See "Tax Matters".
Based on its actuarial determination, the Company is not
certain whether the Premium Load, the policy issue fee and
the monthly administrative expense deduction will cover all
sales and administrative expenses which the Company will
incur in connection with the Policy. Any shortfall,
including but not limited to payment of sales and
distribution expenses, would be available for recovery from
the General Account of the Company, which supports insurance
and annuity obligations.
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<PAGE>
THE FIXED
ACCOUNT
The Fixed Account is funded by the assets of the Company's
General Account. Amounts held in the Fixed Account are
guaranteed and will be credited with interest at rates equal
to the lesser of 4% per year or the prevailing 30 day
Treasury Bill Rate as of the last day of the preceding
calendar month.
THE FIXED ACCOUNT IS MADE UP OF THE GENERAL ASSETS OF THE
COMPANY OTHER THAN THOSE ALLOCATED TO ANY SEPARATE ACCOUNT.
THE FIXED ACCOUNT IS PART OF THE COMPANY'S GENERAL ACCOUNT.
BECAUSE OF APPLICABLE EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE FIXED ACCOUNT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), AND
NEITHER THE FIXED ACCOUNT NOR THE COMPANY'S GENERAL ACCOUNT
HAS BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940
(THE "1940 ACT"). THEREFORE, NEITHER THE FIXED ACCOUNT NOR
ANY INTEREST THEREIN IS GENERALLY SUBJECT TO REGULATION
UNDER THE PROVISIONS OF THE 1933 ACT OR THE 1940 ACT.
ACCORDINGLY, THE COMPANY HAS BEEN ADVISED THAT THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE
DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.
POLICY VALUES
ACCUMULATION VALUE
Once a Policy has been issued, each Net Premium Payment
allocated to a Sub-Account of the Variable Account is
credited in the form of Accumulation Units, representing the
Fund in which assets of that Sub-Account are invested. Each
Net Premium Payment will be credited to the Policy as of the
end of the Valuation Period in which it is received at the
Corporate Variable Products Service Center (or portion
thereof allocated to a particular Sub-Account). The number
of Accumulation Units credited is determined by dividing the
Net Premium Payment by the value of an Accumulation Unit
next computed after receipt. Since each Sub-Account has a
unique Accumulation Unit value, a Policy Owner who has
elected a combination of funding options will have
Accumulation Units credited from more than one source.
The Accumulation Value of a Policy is determined by: (a)
multiplying the total number of Accumulation Units credited
to the Policy for each applicable Sub-Account by its
appropriate current Accumulation Unit value; (b) if a
combination of Sub-Accounts is elected, totaling the
resulting values; and (c) adding any values attributable to
the General Account (i.e., the Fixed Account Value and the
Loan Account Value).
The number of Accumulation Units credited to a Policy will
not be changed by any subsequent change in the value of an
Accumulation Unit. Such value may vary from Valuation Period
to Valuation Period to reflect the investment experience of
the Fund used in a particular Sub-Account.
The Fixed Account Value reflects amounts allocated to the
General Account through payment of premiums or transfers
from the Variable Account. The Fixed Account Value is
guaranteed; however, there is no assurance that the Variable
Account Value of the Policy will equal or exceed the Net
Premium Payments allocated to the Variable Account.
Each Policy Owner will be advised at least annually as to
the number of Accumulation Units which remain credited to
the Policy, the current Accumulation Unit values, the
Variable Account Value, the Fixed Account Value and the Loan
Account Value.
Accumulation Value will be affected by Monthly Deductions.
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<PAGE>
VARIABLE ACCUMULATION UNIT VALUE
The value of a Variable Accumulation Unit for any Valuation
Period is determined by multiplying the value of that
Variable Accumulation Unit for the immediately preceding
Valuation Period by the Net Investment Factor for the
current period for the appropriate Sub-Account. The Net
Investment Factor is determined separately for each
Sub-Account by dividing (a) by (b) and subtracting (c) from
the results where (a) equals the net asset value per share
of the Fund held in the Sub-Account at the end of a
Valuation Period plus the per share amount of any
distribution declared by the Fund if the "ex-dividend" date
is during the Valuation Period plus or minus taxes or
provisions for taxes, if any, attributable to the operation
of the Sub-Account during the Valuation Period; (b) equals
the net asset value per share of the Fund held in the
Sub-Account at the beginning of that Valuation Period, and
(c) is the daily charge for mortality and expense risk plus
the daily fee for administration multiplied by the number of
days in the Valuation Period.
SURRENDER VALUE
The Surrender Value of a Policy is the amount the Owner can
receive in cash by surrendering the Policy. All or part of
the Surrender Value may be applied to one or more of the
Settlement Options available through a rider attached to the
Policy.
SURRENDERS
PARTIAL SURRENDERS
A partial surrender may be made at any time by written
request to the Corporate Variable Products Service Center
during the lifetime of the Insured and while the Policy is
in force. A $25 transaction fee is charged.
The amount of a partial surrender may not exceed 90% of the
Net Accumulation Value at the end of the Valuation Period in
which the election becomes or would become effective, and
may not be less than $500.
For Option B and C Policies (See "Death Benefit"): A partial
surrender will reduce the Accumulation Value, Death Benefit,
and Specified Amount. The Specified Amount and Accumulation
Value will be reduced by equal amounts and will reduce any
past increases in the reverse order in which they occurred.
For an Option A Policy (See "Death Benefit"): A partial
surrender will reduce the Accumulation Value and the Death
Benefit, but it will not reduce the Specified Amount.
The Specified Amount remaining in force after a partial
surrender may not be less than $50,000. Any request for a
partial surrender that would reduce the Specified Amount
below this amount will not be granted. In addition, if,
following the partial surrender and the corresponding
decrease in the Specified Amount, the Policy would not
comply with the maximum premium limitations required by
federal tax law, the decrease may be limited to the extent
necessary to meet the federal tax law requirements.
If, at the time of a partial surrender, the Net Accumulation
Value is attributable to more than one funding option, the
$25 transaction charge and the amount paid upon the
surrender will be taken proportionately from the values in
each funding option, unless the Policy Owner and the Company
agree otherwise.
FULL SURRENDERS
A full surrender may be made at any time. The Company will
pay the Surrender Value next computed after receiving the
Owner's written request at the Corporate Variable
20
<PAGE>
Products Service Center in a form satisfactory to the
Company. Payment of any amount from the Variable Account on
a full surrender will usually be made within seven calendar
days thereafter.
DEFERRAL OF PAYMENT AND TRANSFERS
Payment of the surrendered amount from the Variable Account
may be postponed when the New York Stock Exchange is closed
and for such other periods as the Commission may require.
Payment or transfer from the Fixed Account may be deferred
up to six months at the Company's option. If the Company
exercises its right to defer such payments or transfers
interest will be added as required by law.
LAPSE AND
REINSTATEMENT
LAPSE OF A POLICY
If there have been any loans or partial surrenders, and
depending on the investment performance of the funding
options, the Accumulation Value may be insufficient to keep
this Policy in force, and payment of an additional premium
may be necessary. The Policy may lapse unless there is
sufficient Surrender Value to cover the Monthly Deduction.
A lapse occurs if a Monthly Deduction is greater than the
Surrender Value and no payment to cover the Monthly
Deduction is made within the Grace Period. The Company will
send the Owner a lapse notice at least 31 days before the
Grace Period expires.
REINSTATEMENT OF A LAPSED POLICY
The Owner can apply for reinstatement at any time during the
Insured's lifetime. To reinstate a Policy, the Company will
require satisfactory evidence of insurability and an amount
sufficient to pay for the current Monthly Deduction plus two
additional Monthly Deductions.
If the Policy is reinstated within five years of the Issue
Date, all values including the Loan Account Value will be
reinstated to the point they were on the date of lapse.
If the Policy is reinstated after five years following the
Issue Date, it will be reinstated on the Monthly Anniversary
Day following the Company approval. The Accumulation Value
at reinstatement will be the Net Premium Payment then made
less the Monthly Deduction due that day.
POLICY LOANS
A Policy loan requires that a loan agreement be executed and
that the Policy be assigned to the Company. The loan may be
for any amount up to 90% of the then current Net
Accumulation Value. The amount of a loan, together with
subsequent accrued but not paid interest on the loan,
becomes part of the Loan Account Value. If Policy values are
held in more than one funding option, withdrawals from each
funding option will be made in proportion to the assets in
each funding option at the time of the loan for transfer to
the Loan Account, unless the Company is instructed otherwise
in writing at the Corporate Variable Products Service
Center.
21
<PAGE>
Interest on loans will accrue at an annual rate of 5%, and
net loan interest (interest charged less interest credited
as described below) is payable once a year in arrears on
each anniversary of the loan, or earlier upon full surrender
or other payment of proceeds of a Policy. Any interest not
paid when due becomes part of the loan and the net interest
will be withdrawn proportionately from the values in each
funding option.
The Company will credit interest on the Loan Account Value.
During the first ten Policy Years, the Company's current
practice is that interest will be credited at an annual rate
equal to the interest rate charged on the loan minus .95%
(guaranteed not to exceed 1.2%). Beginning with the eleventh
Policy Year, the Company's current practice is that interest
will be credited at an annual rate equal to the interest
rate charged on the loan, less .45% annually (guaranteed not
to exceed 1.2%), and beginning with the sixteenth policy
year, .15% annually (guaranteed not to exceed 1.2%). In no
case will the annual credited interest rate be less than
3.8%.
Repayments on the loan will be allocated among the funding
options according to current Net Premium Payment
allocations. However, the Company maintains the right to
require that amounts loaned from the Fixed Account be
allocated to the Fixed Account upon repayment. The Loan
Account Value will be reduced by the amount of any loan
repayment.
A Policy loan, whether or not repaid, will affect the
proceeds payable upon the Insured's death and the
Accumulation Value because the investment results of the
Variable Account or the Fixed Account will apply only to the
non-loaned portion of the Accumulation Value. The longer a
loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the Variable Account
or the Fixed Account while the loan is outstanding, the
effect could be favorable or unfavorable.
SETTLEMENT OPTIONS
Proceeds in the form of Settlement Options are payable by
the Company at the Beneficiary's election upon the Insured's
death, or while the Insured is alive upon election by the
Owner of one of the Settlement Options available through the
addition of a rider.
A written request may be made to elect, change, or revoke a
Settlement Option before payments begin under any Settlement
Option. This request must be in form satisfactory to the
Company, and will take effect upon its receipt at the
Corporate Variable Products Service Center. Payments after
the first payment will be made on the first day of each
month.
FIRST OPTION -- Payments for a stated number of years.
SECOND OPTION -- Payments for the lifetime of the payee,
guaranteed for a specified number of months;
THIRD OPTION -- Payment of interest annually on the sum left
with the Company at a rate of at least 3% per year, and upon
the payee's death the amount on deposit will be paid.
FOURTH OPTION -- Installments of specified amounts payable
until the proceeds with any interest thereon are exhausted.
ADDITIONAL OPTIONS -- Policy proceeds may also be settled
under any other method of settlement offered by the Company
at the time the request is made.
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<PAGE>
ADDITIONAL INSURANCE BENEFIT
The Policy can be issued with an Additional Insurance
Benefit as a portion of the total Death Benefit. The benefit
provides annually renewable term life insurance on the life
of the Insured.
The cost of the benefit is added to the Monthly Deduction,
and is dependent on the attained age, years since issue,
risk class and gender classification. The Company may adjust
the monthly benefit rate from time to time, but the rate
will never exceed the guaranteed cost of insurance rate for
the benefit for that Policy Year.
The benefit provides a vehicle for a Policy Owner to
increase the insurance protection under the Policy.
OTHER POLICY PROVISIONS
ISSUANCE
A Policy may only be issued upon receipt of satisfactory
evidence of insurability, and generally only where the
Insured is below the age of 75.
SHORT-TERM RIGHT TO CANCEL THE POLICY
A Policy may be returned for cancellation and a full refund
of premium within 10 days after the Policy and notice of
withdrawal right are received, unless otherwise stipulated
by state law requirements, or within 45 days after the
application for the Policy is signed, whichever occurs
later. The Initial Premium Payment made when the Policy is
issued will be held in the CIGNA Variable Products Group
Money Market Fund of the Variable Account and not allocated
to any other Variable Sub-Accounts even if the Policy Owner
may have so directed until three business days following the
expiration of the Right-to-Examine Period. If the Policy is
returned for cancellation in a timely fashion, the refund of
premiums paid, without interest, will usually occur within
seven days of notice of cancellation, although a refund of
premiums paid by check may be delayed until the check
clears.
POLICY OWNER
While the Insured is living, all rights in this Policy are
vested in the Policy Owner named in the application or as
subsequently changed, subject to assignment, if any.
The Policy Owner may name a new Policy Owner while the
Insured is living. Any such change in ownership must be in a
written form satisfactory to the Company and recorded at the
Corporate Variable Products Service Center. Once recorded,
the change will be effective as of the date signed; however,
the change will not affect any payment made or action taken
by the Company before it was recorded. The Company may
require that the Policy be submitted for endorsement before
making a change.
If the Policy Owner is other than the Insured and dies
before the Insured, the Policy Owner's rights in this Policy
belong to the Policy Owner's estate.
BENEFICIARY
The Beneficiary(ies) shall be as named in the application or
as subsequently changed, subject to assignment, if any.
The Policy Owner may name a new Beneficiary while the
Insured is living. Any change must be in a written form
satisfactory to the Company and recorded at the Corporate
23
<PAGE>
Variable Products Service Center. Once recorded, the change
will be effective as of the date signed; however, the change
will not affect any payment made or action taken by the
Company before it was recorded.
If any Beneficiary predeceases the Insured, that
Beneficiary's interest passes to any surviving
Beneficiary(ies), unless otherwise provided. Multiple
Beneficiaries will be paid in equal shares, unless otherwise
provided. If no named Beneficiary survives the Insured, the
death proceeds shall be paid to the Policy Owner or the
Policy Owner's executor(s), administrator(s) or assigns.
RIGHT TO EXCHANGE FOR A FIXED BENEFIT POLICY
The Policy Owner may, within the first two Policy Years,
exchange the Policy for a flexible premium adjustable life
insurance policy then being offered by the Company's
Corporate Insurance Department. The benefits for the new
policy will not vary with the investment experience of a
separate account. The exchange must be elected within 24
months from the Issue Date. No evidence of insurability will
be required.
The Policy Owner, the Insured and the Beneficiary under the
new policy will be the same as those under the exchanged
Policy on the effective date of the exchange. The new policy
will have a Death Benefit on the exchange date not more than
the Death Benefit of the original Policy immediately prior
to the exchange date. The new policy will have the same
Issue Date and Issue Age as the original Policy. The initial
Specified Amount and any increases in Specified Amount will
have the same rate class as those of the original Policy.
Any indebtedness may be transferred to the new policy.
INCONTESTABILITY
The Company will not contest payment of the death proceeds
based on the Initial Specified Amount after the Policy has
been in force during the Insured's lifetime for two years
from the Issue Date. For any increase in Specified Amount
requiring evidence of insurability, the Company will not
contest payment of the death proceeds based on such an
increase after it has been in force during the Insured's
lifetime for two years from its effective date.
MISSTATEMENT OF AGE
The Company will adjust the Death Benefit and Accumulation
Value. The adjustment process will recalculate all such
benefits and values to the amount that would have been
calculated using the rates that were in effect at the time
of each monthly anniversary. The proceeds will begin with
the recalculation based on the rates in effect on the Issue
Date. Each succeeding recalculation will be based on the
rates in effect on the corresponding monthly anniversary.
SUICIDE
If the Insured dies by suicide, while sane or insane, within
two years from the Issue Date, the Company will pay no more
than the sum of the premiums paid, less any indebtedness. If
the Insured dies by suicide, while sane or insane, within
two years from the date an application is accepted for an
increase in the Specified Amount, the Company will pay no
more than a refund of the monthly charges for the cost of
such additional benefit.
24
<PAGE>
NONPARTICIPATING POLICIES
These are nonparticipating Policies on which no dividends
are payable. These Policies do not share in the profits or
surplus earnings of the Company.
TAX MATTERS
The following discussion is general and is not intended as
tax advice. Counsel and other competent advisers should be
consulted for more complete information. This discussion is
based on the Company's understanding of Federal income tax
laws as they are currently interpreted by the Internal
Revenue Service. No representation is made as to the
likelihood of continuation of these current laws and
interpretations.
POLICY PROCEEDS
Section 7702 of the Code provides a definition of a life
insurance policy for federal tax purposes. This definition
can be satisfied by complying with either the cash value
test or the guideline premium test set forth in Section
7702. The Company will monitor compliance with these tests.
The Policy should thus receive the same federal income tax
treatment as fixed benefit life insurance. As a result, the
death proceeds payable under a Policy are excludable from
gross income of the Beneficiary under Section 101 of the
Code. However, if a Policy were determined not to be a life
insurance contract for purposes of Section 7702, such Policy
would not afford the tax advantage normally provided by a
life insurance policy.
A life insurance policy may be treated as a modified
endowment contract depending upon the amount of premiums
paid in relation to the death benefit provided under the
Policy. The premium limitation rules for determining whether
a Policy is a modified endowment contract are extremely
complex. In general, however, Section 7702A of the Code
defines modified endowment contracts as those policies
issued or materially changed on or after June 21, 1988 on
which the total premiums paid during the first seven years
exceed the amount that would have been paid if the policy
provided for paid up benefits after seven level annual
premiums. The Code provides for taxation of surrenders,
partial surrenders, loans, collateral assignments and other
pre-death distributions from modified endowment contracts to
the extent the cash value of the policy exceeds, at the time
of distribution, the premiums paid into the policy. A 10%
tax penalty generally applies to the taxable portion of such
distributions unless the Policy Owner is over age 59 1/2 or
disabled.
It may not be advantageous to replace existing insurance
with Policies described in this Prospectus. It may also be
disadvantageous to purchase a Policy to obtain additional
insurance protection if the purchaser already owns another
variable life insurance policy.
The Policies offered by this Prospectus may or may not be
issued as modified endowment contracts. If a Policy is not a
modified endowment contract, a cash distribution during the
first 15 years after a policy is issued which causes a
reduction in death benefits may still become fully or
partially taxable to the Owner pursuant to Section
7702(f)(7) of the Code. The Policy Owner should carefully
consider this potential effect and seek further information
before initiating any changes in the terms of the Policy.
Under certain conditions, a Policy may become a modified
endowment contract as a result of a material change or a
reduction in benefits as defined by Section 7702A(c) of the
Code.
In addition to meeting the tests required under Section 7702
and Section 7702A, Section 817(h) of the Code requires that
the investments of separate accounts such as the Variable
Account be adequately diversified. Treasury regulation
1.817-5 issued by the Secretary of the Treasury set the
standards for measuring the adequacy of this
25
<PAGE>
diversification. Generally, no more than 55 percent of the
value of the total assets may be represented by any one (1)
investment; no more than 70 percent of such value may be
represented by any two (2) investments; no more than 80
percent of such value may be represented by any three (3)
investments; and no more than 90 percent of such value may
be represented by any four (4) investments. U.S. Treasury
Securities are not subject to the diversification test and
to the extent that assets include such securities, somewhat
less stringent requirements may apply. A variable life
insurance policy that is not adequately diversified under
these regulations would not be treated as life insurance
under Section 7702 of the Code. The Company believes the
Variable Account investments meet the applicable
diversification standards.
Should the Secretary of the Treasury issue additional rules
or regulations limiting the number of funds, transfers
between funds, exchanges of funds or changes in investment
objectives of funds such that the Policy would no longer
qualify as life insurance under Section 7702 of the Code,
the Company will take whatever steps are available to remain
in compliance.
A total surrender or termination of the Policy by lapse, a
change in the Specified Amount, payment of Additional
Premiums, a Policy Loan, a change in Death Benefit Option,
the exchange of a Policy for a fixed-benefit policy, or the
assignment of a Policy may have adverse tax consequences. If
the amount received by the Policy Owner upon surrender or
termination plus total Policy indebtedness exceeds the
premiums paid into the Policy, the excess will generally be
treated as taxable income, regardless of whether or not the
Policy is a modified endowment contract.
Federal estate and state and local estate, inheritance and
other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each Policy Owner or
Beneficiary.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the
Code. Since the Variable Account is not a separate entity
from the Company and its operations form a part of the
Company, it will not be taxed separately as a "regulated
investment company" under Sub-chapter M of the Code.
Investment income and realized capital gains on the assets
of the Variable Account are reinvested and taken into
account in determining the value of Accumulation Units.
The Company does not initially expect to incur any Federal
income tax liability that would be chargeable directly to
the Variable Account. Based upon these expectations, no
charge is currently being made against the Variable Account
for federal income taxes. If, however, the Company
determines that on a separate company basis such taxes may
be incurred, it reserves the right to assess a charge for
such taxes against the Variable Account.
The Company may also incur state and local taxes in addition
to premium taxes in several states. At present, these taxes
are not significant. If they increase, however, additional
charges for such taxes may be made.
SECTION 848 CHARGES
The premium load is assessed to cover state taxes, federal
income tax liabilities and a portion of the sales expenses
incurred by the Company. The portion of the premium load
other than for sales expenses is made up of 2.25% for state
taxes and 1.25% for the additional federal income tax burden
under Section 848 of the Code relating to the
26
<PAGE>
tax treatment of deferred acquisition costs. The 1.25%
charge for federal income tax liabilities is reasonable in
relation to the Company's increased taxes under this Section
of the Code.
OTHER MATTERS
DIRECTORS AND OFFICERS OF THE COMPANY
The following persons are Directors and officers of the
Company. The address of each is 900 Cottage Grove Road,
Hartford, CT 06152 and each has been employed by the Company
or its affiliates for more than five years except Mr. Jones,
Mr. Alexander and Dr. Schaffer. Prior to February 1994, Mr.
Jones was Executive Vice President, Chief Administrative
Officer, Chief Operating Officer and Director, NAC Re
Corporation and NAC Reinsurance Corporation (Chief Operating
Officer of NAC Re Corporation beginning June 1993). Prior to
December 1994, Mr. Alexander was Director, Human Development
E.I. Dupont De Nemours, Inc. Prior to May 1993, Dr. Schaffer
was Vice President, Professional Affairs, Aetna Health
Plans, Aetna Life & Casualty.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND ADDRESS WITH THE COMPANY
- ------------------------------ -----------------------------------
<S> <C>
Thomas C. Jones President
(Principal Executive Officer)
James T. Kohan Vice President and Actuary
(Principal Financial Officer)
Robert Moose Vice President
(Principal Accounting Officer)
David C. Kopp Corporate Secretary
Andrew G. Helming Secretary
Stephen C. Stachelek Vice President and Treasurer
Harold W. Albert Director
Martin A. Brennan Director and Senior Vice President
Robert W. Burgess Director
John G. Day Director and Chief Counsel
S. Tyrone Alexander Director and Senior Vice President
Joseph M. Fitzgerald Director and Senior Vice President
Arthur C. Reeds, III Director and Senior Vice President
Patricia L. Rowland Director and Senior Vice President
W. Allen Schaffer, M.D. Director and Senior Vice President
John Wilkinson Director, Senior Vice President and
Chief Financial Officer
</TABLE>
DISTRIBUTION OF POLICIES
The Policies will be sold by licensed insurance agents in
those states where the Policies may lawfully be sold. Such
agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers,
Inc. (NASD). The Policies will be distributed by the
Company's principal underwriter, CIGNA Financial Advisors,
Inc. ("CFA"), whose address is the same as the Company's.
CFA is a Connecticut corporation organized in 1967, and is
the principal underwriter for the Company's other registered
separate accounts and for a registered separate account of
CIGNA Life Insurance Company, a wholly-owned subsidiary of
the Company.
Gross first year commissions paid by the Company, on the
sale of the Policies will not exceed 47% of one Guideline
Annual Premium, plus 4.3% of any Premium Payment in
27
<PAGE>
excess of the Guideline Annual Premium. Gross renewal
commissions paid by the Company will not exceed 4.3% of
Premium Payments, plus 25% of any increase in Guideline
Annual Premium.
CHANGES OF INVESTMENT POLICY
The Company may materially change the investment policy of
the Variable Account. The Company must inform the Policy
Owners and obtain all necessary regulatory approvals. Any
change must be submitted to the various state insurance
departments which shall disapprove it if deemed detrimental
to the interests of the Policy Owners or if it renders the
Company's operations hazardous to the public. If a Policy
Owner objects, the Policy may be converted to a
substantially comparable fixed benefit life insurance policy
offered by the Company on the life of the Insured. The
Policy Owner has the later of 60 days (6 months in
Pennsylvania) from the date of the investment policy change
or 60 days (6 months in Pennsylvania) from being informed of
such change to make this conversion. The Company will not
require evidence of insurability for this conversion.
The new policy will not be affected by the investment
experience of any separate account. The new policy will be
for an amount of insurance not exceeding the Death Benefit
of the Policy converted on the date of such conversion.
OTHER CONTRACTS ISSUED BY THE COMPANY
The Company does presently and will, from time to time,
offer other variable annuity contracts and variable life
insurance policies with benefits which vary in accordance
with the investment experience of a separate account of the
Company.
STATE REGULATION
The Company is subject to the laws of Connecticut governing
insurance companies and to regulation by the Connecticut
Insurance Department. An annual statement in a prescribed
form is filed with the Insurance Department each year
covering the operation of the Company for the preceding year
and its financial condition as of the end of such year.
Regulation by the Insurance Department includes periodic
examination to determine the Company's contract liabilities
and reserves so that the Insurance Department may certify
the items are correct. The Company's books and accounts are
subject to review by the Insurance Department at all times
and a full examination of its operations is conducted
periodically by the Connecticut Department of Insurance.
Such regulation does not, however, involve any supervision
of management or investment practices or policies.
REPORTS TO POLICY OWNERS
The Company maintains Policy records and will mail to each
Policy Owner, at the last known address of record, an annual
statement showing the amount of the current death benefit,
the Accumulation Value, and Surrender Value, premiums paid
and monthly charges deducted since the last report, the
amounts invested in the Fixed Account and in the Variable
Account and in each Sub-Account of the Variable Account, and
any Loan Account Value.
Policy Owners will also be sent annual reports containing
financial statements for the Variable Account and annual and
semi-annual reports of the Funds as required by the 1940
Act.
In addition, Policy Owners will receive statements of
significant transactions, such as changes in Specified
Amount, changes in Death Benefit Option, changes in future
premium allocation, transfers among Sub-Accounts, Premium
Payments, loans, loan repayments, reinstatement and
termination.
28
<PAGE>
ADVERTISING
The Company is also ranked and rated by independent
financial rating services, including Moody's, Standard &
Poor's, Duff & Phelps and A.M. Best Company. The purpose of
these ratings is to reflect the financial strength or
claims-paying ability of the Company. The ratings are not
intended to reflect the investment experience or financial
strength of the Variable Account. The Company may advertise
these ratings from time to time. In addition, the Company
may include in certain advertisements, endorsements in the
form of a list of organizations, individuals or other
parties which recommend the Company or the Policies.
Furthermore, the Company may occasionally include in
advertisements comparisons of currently taxable and tax
deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles
and general economic conditions.
LEGAL PROCEEDINGS
There are no material legal or administrative proceedings
pending or known to be contemplated, other than ordinary
routine litigation incidental to the business, to which the
Company and the Variable Account are parties or to which any
of their property is subject. The principal underwriter,
CFA, is not engaged in any material litigation of any
nature.
EXPERTS
Actuarial opinions regarding Deferred Acquisition Cost Tax
(DAC Tax) and Mortality and Expense Charges included in this
Prospectus have been rendered by Timothy J. Luedtke, FSA,
900 Cottage Grove Road, Hartford, CT 06152, as stated in the
opinion filed as an Exhibit to the Registration Statement
given on the authority of Mr. Luedtke as an expert in
actuarial matters.
Legal matters in connection with the Policies described
herein are being passed upon by Robert A. Picarello, Esq.,
Chief Counsel, CIGNA Individual Insurance, 900 Cottage Grove
Road, Hartford, CT 06152, in the opinion filed as an Exhibit
to the Registration Statement given on his authority as an
expert in these matters.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities
and Exchange Commission under the Securities Act of 1933, as
amended, with respect to the Policies offered hereby. This
Prospectus does not contain all the information set forth in
the Registration Statement and amendments thereto and
exhibits filed as a part thereof, to all of which reference
is hereby made for further information concerning the
Variable Account, the Company, and the Policies offered
hereby. Statements contained in this Prospectus as to the
content of Policies and other legal instruments are
summaries. For a complete statement of the terms thereof,
reference is made to such instruments as filed.
FINANCIAL STATEMENTS
Consolidated balance sheets of the Company and its
subsidiaries as of December 31, 1995 and 1994 and related
consolidated statements of income and retained earnings and
cash flows for the years ended December 31, 1995, 1994 and
1993 will be filed by pre-effective amendment.
29
<PAGE>
APPENDIX 1
ILLUSTRATIONS OF ACCUMULATION VALUES, SURRENDER VALUES,
AND DEATH BENEFITS
The illustrations in this Prospectus have been prepared to
help show how values under the Policies change with
investment performance. The illustrations illustrate how
Accumulation Values, Surrender Values and Death Benefits
under a Policy would vary over time if the hypothetical
gross investment rates of return were a uniform annual
effective rate of either 0%, 6% or 12%. If the hypothetical
gross investment rate of return averages 0%, 6%, or 12% over
a period of years, but fluctuates above or below those
averages for individual years, the Accumulation Values,
Surrender Values and Death Benefits may be different. The
illustrations also assume there are no Policy loans, no
additional Premium Payments are made other than shown, no
Accumulation Values are allocated to the Fixed Account, and
there are no changes in the Specified Amount or Death
Benefit Option.
The amounts shown for the Accumulation Value, Surrender
Value and Death Benefit as of each Policy Anniversary
reflect the fact that the net investment return on the
assets held in the Sub-Accounts is lower than the gross
return. This is due to the daily charges made against the
assets of the Sub-Accounts for assuming mortality and
expense risks and for administrative expenses. The
administrative expense charge is currently at an annual
effective rate of 0.10% of the daily net asset value of the
Variable Account and is guaranteed not to exceed 0.30% per
year. The current mortality and expense risk charges are
equivalent to an annual effective rate of 0.85% of the daily
net asset value of the Variable Account. After the Tenth
Policy Year, the mortality and expense risk charge is
reduced to 0.35% on an annual basis of the daily net assets
of the Variable Account. After the Fifteenth Policy Year,
the mortality and expense risk charge is further reduced to
0.05% on an annual basis of the daily net assets of the
Variable Account. The mortality and expense risk charge is
guaranteed not to exceed an annual effective rate of 0.90%.
In addition, the net investment returns also reflect the
deduction of Fund investment advisory fees and other
expenses which will vary depending on which funding vehicle
is chosen but which are assumed for purposes of these
illustrations to be equivalent to an annual effective rate
of 0.85% of the daily net asset value of the Variable
Account.
Assuming current charges for administration and mortality
and expense risks, gross annual rates of 0%, 6%, and 12%
correspond to net experience at constant annual rates of
-1.80%, 4.20% and 10.20% during the first ten policy years,
constant annual rates of -1.30%, 4.70% and 10.70% during the
eleventh through fifteenth policy years and constant annual
rates of -1.00%, 5.00% and 11.00% thereafter. Assuming
guaranteed charges for administration and mortality and
expense risks, gross annual rates of 0%, 6% and 12%
correspond to net experience at constant annual rates of
-2.05%, 3.95% and 9.95% in all policy years.
The illustrations also reflect the fact that the Company
makes monthly charges for providing insurance protection.
Current values reflect current Cost of Insurance charges and
guaranteed values reflect the maximum Cost of Insurance
charges guaranteed in the Policy. The values shown are for
Policies which are issued as standard. Policies issued on a
substandard basis would result in lower Accumulation Values
and Death Benefits than those illustrated.
30
<PAGE>
The illustrations also reflect the fact that the Company
deducts a premium load from each Premium Payment. Current
and guaranteed values reflect a deduction of 6.5% of each
Premium Payment, plus an additional 40% of the first year's
Premium Payments up to one Guideline Annual Premium.
The Surrender Values shown in the illustrations reflect the
fact that the Company will refund a portion of the sales
load for any Policy surrendered during the first two years.
In addition, the illustrations reflect the fact that the
Company deducts an $8 monthly administrative charge at the
beginning of each Policy Month, as well as an initial $250
policy issue charge.
Upon request, the Company will furnish a comparable
illustration based on the proposed insured's age, gender
classification, smoking classification, risk classification
and premium payment requested.
31
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX NON SMOKER ISSUE AGE 45
$4,935 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
GUIDELINE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-1.80% 4.20% 10.20% -1.80% 4.20% 10.20% -1.80% 4.20% 10.20%
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET NET NET NET
PREMIUMS -1.30% 4.70% 10.70% -1.30% 4.70% 10.70% -1.30% 4.70% 10.70%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -1.00% 5.00% 11.00% -1.00% 5.00% 11.00% -1.00% 5.00% 11.00%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,935 500,000 500,000 500,000 1,686 1,808 1,930 3,063 3,185 3,307
2 10,117 500,000 500,000 500,000 5,396 5,875 6,370 6,180 6,660 7,155
3 10,673 500,000 500,000 500,000 8,910 9,981 11,128 8,910 9,981 11,128
4 11,251 500,000 500,000 500,000 12,223 14,119 16,228 12,223 14,119 16,228
5 11,814 500,000 500,000 500,000 15,362 18,315 21,732 15,362 18,315 21,732
6 12,404 500,000 500,000 500,000 18,342 22,586 27,697 18,342 22,586 27,697
7 13,035 500,000 500,000 500,000 21,167 26,935 34,173 21,167 26,935 34,173
8 13,686 500,000 500,000 500,000 23,852 31,380 41,229 23,852 31,380 41,229
9 14,371 500,000 500,000 500,000 26,400 35,928 48,929 26,400 35,928 48,929
10 15,089 500,000 500,000 500,000 28,805 40,577 57,336 28,805 40,577 57,336
15 24,195 500,000 500,000 500,000 38,511 65,807 114,266 38,511 65,807 114,266
20 30,880 500,000 500,000 500,000 39,924 90,705 205,622 39,924 90,705 205,622
25 39,412 500,000 500,000 500,000 26,035 108,632 355,972 26,035 108,632 355,972
30 56,013 0 500,000 656,119 0 112,468 620,332 0 112,468 620,332
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates are assumed. Current mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and administrative
expense charges and (2) assumed Fund total
expenses of 0.85% per year. See "Expense Data"
at pages 10-11 of this Prospectus.
32
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX NONSMOKER ISSUE AGE 45
$4,935 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
GUIDELINE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET NET NET NET
PREMIUMS -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- --------------------------------- --------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,935 500,000 500,000 500,000 639 727 816 2,016 2,104 2,193
2 10,117 500,000 500,000 500,000 3,330 3,678 4,038 4,115 4,462 4,823
3 10,673 500,000 500,000 500,000 5,843 6,620 7,453 5,843 6,620 7,453
4 11,251 500,000 500,000 500,000 8,163 9,534 11,063 8,163 9,534 11,063
5 11,814 500,000 500,000 500,000 10,290 12,416 14,884 10,290 12,416 14,884
6 12,404 500,000 500,000 500,000 12,213 15,253 18,926 12,213 15,253 18,926
7 13,035 500,000 500,000 500,000 13,905 18,008 23,181 13,905 18,008 23,181
8 13,686 500,000 500,000 500,000 15,345 20,657 27,648 15,345 20,657 27,648
9 14,371 500,000 500,000 500,000 16,505 23,162 32,321 16,505 23,162 32,321
10 15,089 500,000 500,000 500,000 17,353 25,482 37,187 17,353 25,482 37,187
15 24,195 500,000 500,000 500,000 16,157 33,103 64,481 16,157 33,103 64,481
20 30,880 500,000 500,000 500,000 2,050 28,544 95,694 2,050 28,544 95,694
25 39,412 0 0 500,000 0 0 125,367 0 0 125,367
30 56,013 0 0 500,000 0 0 141,214 0 0 141,214
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Guaranteed cost of insurance
rates are assumed. Guaranteed mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of guaranteed
administrative expense and mortality and
expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
33
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX NONSMOKER ISSUE AGE 45
$4,935 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
CASH VALUE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-1.80% 4.20% 10.20% -1.80% 4.20% 10.20% -1.80% 4.20% 10.20%
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET
PREMIUMS -1.30% 4.70% 10.70% -1.30% 4.70% 10.70% -1.30% 4.70% 10.70%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -1.00% 5.00% 11.00% -1.00% 5.00% 11.00% -1.00% 5.00% 11.00%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,935 500,000 500,000 500,000 1,686 1,808 1,930 3,063 3,185 3,307
2 10,117 500,000 500,000 500,000 5,396 5,875 6,370 6,180 6,660 7,155
3 10,673 500,000 500,000 500,000 8,910 9,981 11,128 8,910 9,981 11,128
4 11,251 500,000 500,000 500,000 12,223 14,119 16,228 12,223 14,119 18,228
5 11,814 500,000 500,000 500,000 15,362 18,315 21,732 15,362 18,315 21,732
6 12,404 500,000 500,000 500,000 18,342 22,586 27,697 18,342 22,586 27,697
7 13,035 500,000 500,000 500,000 21,167 25,935 34,173 21,167 26,935 34,173
8 13,686 500,000 500,000 500,000 23,852 31,380 41,229 23,852 31,380 41,229
9 14,371 500,000 500,000 500,000 26,400 35,928 48,929 26,400 35,928 48,929
10 15,089 500,000 500,000 500,000 28,805 40,577 57,336 28,805 40,577 57,336
15 24,195 500,000 500,000 500,000 38,511 65,807 114,266 38,511 65,807 114,266
20 30,880 500,000 500,000 500,000 39,924 90,705 205,622 39,924 90,705 205,622
25 39,412 500,000 500,000 567,169 26,035 108,632 355,032 26,035 108,632 355,032
30 56,013 0 500,000 847,694 0 112,468 593,185 0 112,468 593,185
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates are assumed. Current mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of current
administrative expense charges and mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
34
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX NON SMOKER ISSUE AGE 45
$4,935 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
CASH VALUE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET NET NET NET
PREMIUMS -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,935 500,000 500,000 500,000 639 727 816 2,016 2,104 2,193
2 10,117 500,000 500,000 500,000 3,330 3,678 4,038 4,115 4,462 4,823
3 10,673 500,000 500,000 500,000 5,843 6,620 7,453 5,843 6,620 7,453
4 11,251 500,000 500,000 500,000 8,163 9,534 11,063 8,163 9,534 11,063
5 11,814 500,000 500,000 500,000 10,290 12,416 14,884 10,290 12,416 14,884
6 12,404 500,000 500,000 500,000 12,213 15,253 18,926 12,213 15,253 18,926
7 13,035 500,000 500,000 500,000 13,905 18,008 23,181 13,905 18,008 23,181
8 13,686 500,000 500,000 500,000 15,345 20,657 27,648 15,345 20,657 27,648
9 14,371 500,000 500,000 500,000 16,505 23,162 32,321 16,505 23,162 32,321
10 15,089 500,000 500,000 500,000 17,353 25,482 37,187 17,353 25,482 37,187
15 24,195 500,000 500,000 500,000 16,157 33,103 64,481 16,157 33,103 64,481
20 30,880 500,000 500,000 500,000 2,050 28,544 95,694 2,050 28,544 95,694
25 39,412 0 0 500,000 0 0 125,367 0 0 125,367
30 56,013 0 0 500,000 0 0 141,214 0 0 141,214
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Guaranteed cost of insurance
rates are assumed. Guaranteed mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of guaranteed
administrative expense and mortality and
expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
35
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX UNISMOKER ISSUE AGE 45
$5,254 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
GUIDELINE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-1.80% 4.20% 10.20% -1.80% 4.20% 10.20% -1.80% 4.20% 10.20%
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET NET NET NET
PREMIUMS -1.30% 4.70% 10.70% -1.30% 4.70% 10.70% -1.30% 4.70% 10.70%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -1.00% 5.00% 11.00% -1.00% 5.00% 11.00% -1.00% 5.00% 11.00%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,254 500,000 500,000 500,000 1,777 1,907 2,037 3,243 3,373 3,503
2 10,771 500,000 500,000 500,000 5,677 6,185 6,709 6,512 7,020 7,544
3 11,359 500,000 500,000 500,000 9,342 10,474 11,686 9,342 10,474 11,686
4 11,972 500,000 500,000 500,000 12,781 14,780 17,003 12,781 14,780 17,003
5 12,571 500,000 500,000 500,000 16,017 19,123 22,719 16,017 19,123 22,719
6 13,199 500,000 500,000 500,000 19,067 23,522 28,893 19,067 23,522 26,893
7 13,869 500,000 500,000 500,000 21,943 27,988 35,584 21,943 27,988 35,584
8 14,563 500,000 500,000 500,000 24,656 32,534 42,856 24,656 32,534 42,856
9 15,291 500,000 500,000 500,000 27,217 37,174 50,784 27,217 37,174 50,784
10 16,055 500,000 500,000 500,000 29,621 41,906 59,433 29,621 41,906 50,433
15 25,748 500,000 500,000 500,000 38,968 67,294 117,802 38,968 67,294 117,802
20 32,861 500,000 500,000 500,000 39,065 91,518 211,210 39,065 91,518 211,210
25 41,940 500,000 500,000 500,000 22,859 107,777 365,814 22,859 107,777 365,814
30 59,609 0 500,000 677,652 0 109,058 638,736 0 109,058 638,736
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates are assumed. Current mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of current
administrative expense charges and mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
36
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX UNISMOKER ISSUE AGE 45
$5,254 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
GUIDELINE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
-------- -------- --------- -------- -------- --------- -------- -------- ---------
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET NET NET NET
PREMIUMS -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,254 500,000 500,000 500,000 268 349 431 1,734 1,815 1,897
2 10,771 500,000 500,000 500,000 2,674 2,991 3,320 3,509 3,826 4,155
3 11,359 500,000 500,000 500,000 4,860 5,563 6,319 4,860 5,563 6,319
4 11,972 500,000 500,000 500,000 6,826 8,059 9,437 6,826 8,059 9,437
5 12,571 500,000 500,000 500,000 8,549 10,448 12,657 8,549 10,448 12,657
6 13,199 500,000 500,000 500,000 10,019 12,711 15,979 10,019 12,711 15,979
7 13,869 500,000 500,000 500,000 11,207 14,812 19,381 11,207 14,812 19,381
8 14,563 500,000 500,000 500,000 12,090 16,714 22,845 12,090 16,714 22,845
9 15,291 500,000 500,000 500,000 12,628 18,366 26,337 12,628 18,366 26,337
10 16,056 500,000 500,000 500,000 12,789 19,720 29,825 12,789 19,720 29,825
15 25,748 500,000 500,000 500,000 7,196 20,595 46,444 7,196 20,595 46,444
20 32,861 0 500,000 500,000 0 5,195 57,237 0 5,195 57,237
25 41,940 0 0 500,000 0 0 46,542 0 0 46,542
30 59,609 0 0 0 0 0 0 0 0 0
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Guaranteed cost of insurance
rates are assumed. Guaranteed mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return,
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of guaranteed
administrative expense charges and mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
37
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX UNISMOKER ISSUE AGE 45
$5,254 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
CASH VALUE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-1.80% 4.20% 10.20% -1.80% 4.20% 10.20% -1.80% 4.20% 10.20%
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET
PREMIUMS -1.30% 4.70% 10.70% -1.30% 4.70% 10.70% -1.30% 4.70% 10.70%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -1.00% 5.00% 11.00% -1.00% 5.00% 11.00% -1.00% 5.00% 11.00%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,254 500,000 500,000 500,000 1,777 1,907 2,037 3,243 3,373 3,503
2 10,771 500,000 500,000 500,000 5,677 6,185 6,709 6,512 7,020 7,544
3 11,359 500,000 500,000 500,000 9,342 10,474 11,686 9,342 10,474 11,686
4 11,972 500,000 500,000 500,000 12,781 14,780 17,003 12,781 14,780 17,003
5 12,571 500,000 500,000 500,000 16,017 19,123 22,719 16,017 19,123 22,719
6 13,199 500,000 500,000 500,000 19,067 23,522 28,893 19,067 23,522 28,893
7 13,869 500,000 500,000 500,000 21,943 27,988 35,584 21,943 27,988 35,584
8 14,563 500,000 500,000 500,000 24,656 32,534 42,856 24,656 32,534 42,856
9 15,291 500,000 500,000 500,000 27,217 37,174 50,784 27,217 37,174 50,784
10 16,055 500,000 500,000 500,000 29,621 41,906 59,433 29,621 41,906 58,433
15 25,748 500,000 500,000 500,000 38,968 67,294 117,802 38,968 67,294 117,802
20 32,861 500,000 500,000 500,000 39,065 91,518 211,210 39,065 91,518 211,210
25 41,940 500,000 500,000 571,686 22,859 107,777 364,640 22,859 107,777 364,640
30 59,609 0 500,000 864,277 0 109,058 608,995 0 109,058 608,995
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates are assumed. Current mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of current
administrative expense charges and mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
38
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY
UNISEX UNISMOKER ISSUE AGE 45
$5,254 ANNUAL PREMIUM
FACE AMOUNT $500,000
DEATH BENEFIT OPTION B
CASH VALUE TEST
<TABLE>
<CAPTION>
DEATH BENEFIT TOTAL ACCUMULATION VALUE SURRENDER VALUE
ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12%
NET NET NET NET NET NET NET NET NET
-2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
-------- -------- --------- -------- -------- --------- -------- -------- ---------
IN YEARS 1-10 IN YEARS 1-10 IN YEARS 1-10
NET NET NET NET NET NET NET NET NET
PREMIUMS -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
ACCUMULATED IN YEARS 11-15 IN YEARS 11-15 IN YEARS 11-15
END OF AT NET NET NET NET NET NET NET NET NET
POLICY 5% INTEREST -2.05% 3.95% 9.95% -2.05% 3.95% 9.95% -2.05% 3.95% 9.95%
YEAR PER YEAR IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER IN YEARS 16 AND AFTER
- ------ ----------- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,254 500,000 500,000 500,000 268 349 431 1,734 1,815 1,897
2 10,117 500,000 500,000 500,000 2,674 2,991 3,320 3,509 3,826 4,155
3 11,359 500,000 500,000 500,000 4,860 5,563 6,319 4,860 5,563 6,319
4 11,972 500,000 500,000 500,000 6,826 8,059 9,437 6,826 8,059 9,437
5 12,571 500,000 500,000 500,000 8,549 10,448 12,657 8,549 10,448 12,657
6 13,199 500,000 500,000 500,000 10.019 12,711 15,979 10,019 12,711 15,979
7 13,869 500,000 500,000 500,000 11,207 14,812 19,381 11,207 14,812 19,381
8 14,563 500,000 500,000 500,000 12,090 16,714 22,845 12,090 16,714 22,845
9 15,291 500,000 500,000 500,000 12,628 18,366 26,337 12,628 18,366 26,337
10 16,056 500,000 500,000 500,000 12,789 19,720 29,825 12,789 19,720 29,825
15 25,748 500,000 500,000 500,000 7,196 20,595 46,444 7,196 20,595 46,444
20 32,861 0 500,000 500,000 0 5,195 57,237 0 5,195 57,237
25 41,940 0 0 500,000 0 0 46,542 0 0 46,542
30 59,609 0 0 0 0 0 0 0 0 0
</TABLE>
If Premiums are paid more frequently than
annually, the Death Benefits, Accumulation
Values and Surrender Values would be less than
those illustrated.
Assumes no policy loans or partial surrenders
have been made. Guaranteed cost of insurance
rates are assumed. Guaranteed mortality and
expense risk charges, administrative fees and
premium load are assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The "Net" percentages in these illustrations
reflect (1) the deduction of guaranteed
administrative expense charges and mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.85% per year. See "Expense
Data" at pages 10-11 of this Prospectus.
39
<PAGE>
[LOGO]
550253 (3/96)
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
A cross-reference sheet (reconciliation and tie);
The prospectus, consisting of 40 pages;
The undertaking to file reports;
The signatures;
Opinion and written consent of Robert A. Picarello:
Robert A. Picarello
Opinion and Representation and Consents of Timothy J. Luedtke
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02, has duly caused this
Registration Statement on Form S-6 to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the town of Bloomfield and State of Connecticut, on the 14th day of March,
1996.
CG CORPORATE INSURANCE VARIABLE LIFE
SEPARATE ACCOUNT 02
(Name of Registrant)
By: /s/ THOMAS C. JONES
-----------------------------------
Thomas C. Jones,
PRESIDENT
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
(Name of Depositor)
By: /s/ THOMAS C. JONES
-----------------------------------
Thomas C. Jones,
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below on March 14, 1996 by the following
persons in the capacities indicated:
SIGNATURE TITLE DATE
- ----------------------------------- ------------------------- -----------------
THOMAS C. JONES President (Principal
- ----------------------------------- Executive March 14, 1996
Thomas C. Jones Officer)
Vice President and
JAMES T. KOHAN* Actuary
- ----------------------------------- (Principal Financial March 14, 1996
James T. Kohan Officer)
ROBERT MOOSE*
- ----------------------------------- Vice President (Principal March 14, 1996
Robert Moose Accounting Officer)
HAROLD W. ALBERT*
- ----------------------------------- Director March 14, 1996
Harold W. Albert
MARTIN A. BRENNAN*
- ----------------------------------- Director March 14, 1996
Martin A. Brennan
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- ------------------------- -----------------
<C> <S> <C>
ROBERT W. BURGESS*
- ----------------------------------- Director March 14, 1996
Robert W. Burgess
JOHN G. DAY*
- ----------------------------------- Director March 14, 1996
John G. Day
JOSEPH M. FITZGERALD*
- ----------------------------------- Director March 14, 1996
Joseph M. Fitzgerald
ARTHUR C. REEDS, III*
- ----------------------------------- Director March 14, 1996
Arthur C. Reeds, III
PATRICIA L. ROWLAND*
- ----------------------------------- Director March 14, 1996
Patricia L. Rowland
W. ALLEN SCHAFFER, M.D.*
- ----------------------------------- Director March 14, 1996
W. Allen Schaffer, M.D.
*By ROBERT A. PICARELLO
- -----------------------------------
Robert A. Picarello March 14, 1996
ATTORNEY-IN-FACT
(A Majority of the Directors)
</TABLE>
<PAGE>
POWER OF ATTORNEY
We, the undersigned directors and officers of Connecticut General Life
Insurance Company, hereby severally constitute and appoint David C. Kopp and
Robert A. Picarello, and each of them individually, our true and lawful
attorneys-in-fact, with full power to them and each of them to sign for us, in
our names and in the capacities indicated below, any and all Registration
Statements on Form N-4 or Form S-6 which may be filed with the Securities and
Exchange Commission under the Securities Act of 1933, hereby ratifying and
confirming our signatures as they may be signed by either of our
attorneys-in-fact to any such Registration Statement.
WITNESS our hands and common seal on this 31st day of May, 1995.
SIGNATURE TITLE
- ----------------------------------- -------------------------
THOMAS C. JONES
- ----------------------------------- President (Principal
Thomas C. Jones Executive Officer)
JAMES T. KOHAN Vice President and
- ----------------------------------- Actuary (Principal
James T. Kohan Financial Officer)
ROBERT MOOSE
- ----------------------------------- Vice President (Principal
Robert Moose Accounting Officer)
HAROLD W. ALBERT
- ----------------------------------- Director
Harold W. Albert
S. TYRONE ALEXANDER
- ----------------------------------- Director
S. Tyrone Alexander
MARTIN A. BRENNAN
- ----------------------------------- Director
Martin A. Brennan
ROBERT W. BURGESS
- ----------------------------------- Director
Robert W. Burgess
JOHN G. DAY
- ----------------------------------- Director
John G. Day
R. CHRIS DOERR
- ----------------------------------- Director
R. Chris Doerr
LAWRENCE P. ENGLISH
- ----------------------------------- Director
Lawrence P. English
JOSEPH M. FITZGERALD
- ----------------------------------- Director
Joseph M. Fitzgerald
ARTHUR C. REEDS, III
- ----------------------------------- Director
Arthur C. Reeds, III
W. ALLEN SCHAFFER, M.D.
- ----------------------------------- Director
W. Allen Schaffer, M.D.
PATRICIA L. ROWLAND
- ----------------------------------- Director
Patricia L. Rowland
<PAGE>
Robert A. Picarello
Chief Counsel
[LOGO]
March 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Form S-6 Registration Statement - File No. 33-
CG Corporate Insurance Variable Life Separate Account 02 (the "Account")
Dear Sirs:
As Chief Counsel of the Individual Insurance Division of Connecticut General
Life Insurance Company (the "Company"), I am familiar with the actions of the
Board of Directors establishing the Account and its method of operation and
authorizing the filing of a registration statement under the Securities Act of
1933 for the securities to be issued by the Account and under the Investment
Company Act of 1940 for the Account itself.
In the course of preparing this opinion, I have reviewed the Certificate of
Incorporation and the By-Laws of the Company, the Board actions with respect to
the Account, and such other matters as I deemed necessary or appropriate. Based
on such review, I am of the opinion that the variable life insurance contracts
(and interests therein) which are the subject of the registration statement
under the Securities Act of 1933 being filed for the Account will, when issued,
be legally issued and will represent binding obligations of the Company, the
depositor for the Account.
I further consent to the use of this opinion as an Exhibit to said Registration
Statement and to the reference to me under the heading "Experts" in said
Registration Statement.
Very truly yours,
/s/ ROBERT A. PICARELLO
Robert A. Picarello
Chief Counsel
<PAGE>
[LOGO]
INTEROFFICE MEMO
<TABLE>
<S> <C> <C>
Date: March 14, 1996
To: File
From: Timothy J. Luedtke, S251
Telephone: 721-1612
Subject: Flexible Premium Variable Life Insurance Policy
Actuarial Opinion Regarding DAC Tax Charge
</TABLE>
This memo has been prepared for filing as an exhibit with Connecticut General
Life Insurance Company's (the "Company") registration statement on Form S-6 with
the Securities and Exchange Commission for CG Corporate Insurance Variable Life
Separate Account 02 (the "Account"). The filing is made pursuant to Rule 6e-3(T)
under the Investment Company Act of 1940.
In the opinion of the undersigned:
1. The 1.25% of premium charged as part of the premium load(1) for the
additional Federal Income Tax burden under Internal Revenue Code Section 848
(DAC Tax) is reasonable in relation to CGLIC's increased taxes under this
Section. In determining reasonableness, CGLIC has taken into account the
benefit of future deductions and has used a discount rate of 10%
representing our cost of capital.
2. The 10% cost of capital assumption is reasonable and appropriate for use in
calculating the present value of future tax deductions. CGLC seeks an
after-tax rate of return on investment capital well in excess of 10%, and to
the extent that capital must be used to meet increased federal tax burden
under Section 848 resulting from the receipt of premiums, such capital is
not available for investment. Thus, the cost of capital used to satisfy our
tax burden is equal to the after-tax rate of return on capital. To the
extent that the 10% discount rate is lower than CGLIC's actual targeted rate
of return, a margin is provided that the calculation of CGLIC's increased
tax burden attributable to the receipt of premiums will continue to be
reasonable over time, even if the corporate tax rate or targeted rate of
return is lowered.
3. The factors used to determine the cost of capital are appropriate. The
factors considered include the following: actual historical costs CGLIC has
incurred for capital, market interest rates, CGLIC's anticipated long term
growth rate, the risk level for this type of business, and inflation.
I hereby consent to the reference to me under "Experts" in said registration
statement.
/s/ TIMOTHY J. LUEDTKE
Timothy J. Luedtke, FSA, MAAA
Assistant Vice President and Actuary
Connecticut General Life Insurance Company
- ------------------------------
(1) The premium load structure consists of:
1. A First Year premium load which is comprised of: (a) a sales load of 40% on
the amount of premium paid up to the first guideline annual premium and (b) an
additional premium load of 6.5% on total first year premium; and
2. A Renewal Year premium load of 6.5% on total renewal year premium.
<PAGE>
[LOGO]
INTEROFFICE MEMO
<TABLE>
<S> <C> <C>
Date: March 14, 1996
To: File
From: Timothy J. Luedtke, S251
Telephone: 721-1612
Subject: Flexible Premium Variable Life Insurance Policy
Representation Pursuant to Rule 6e-3(T)
</TABLE>
This memo has been prepared for filing as an exhibit with Connecticut General
Life Insurance Company's (the "Company") registration statement on Form S-6 with
the Securities and Exchange Commission for CG Corporate Insurance Variable Life
Separate Account 02 (the "Account"). The filing is made pursuant to Rule 6e-3(T)
under the Investment Company Act of 1940. Registrant elects to be governed by
Rule 6e-3(T)(b)(13)(i)(A).
The Company makes the following representations:
1. Rule 6e-3(T)(b)(13)(iii)(F) has been relied upon.
2. The level of the Mortality and Expense Risk Charge is reasonable in relation
to the risks assumed by the Company under the policies. The methodology used
to support this representation is based on an analysis of the policies,
including the level of other expense charges, uncertainties in terms of
expense and mortality factors, and policy guarantees. The Company undertakes
to keep and make available to the Commission on request the documents used
to support this representation.
3. There is reasonable likelihood that the distribution financing arrangement
of the Account will benefit the Account and Policy Owners, and the Company
will keep and make available to the Commission on request a memorandum
setting forth the basis for this representation.
4. The Account will invest only in management investment companies which have
undertaken to have a board of directors, a majority of whom are not
interested persons of the company, formulate and approve any plan under
12b-1 to finance distribution expenses.
I hereby consent to the reference to me under "Experts" in said registration
statement.
/s/ TIMOTHY J. LUEDTKE
Timothy J. Luedtke, FSA, MAAA
Assistant Vice President and Actuary
Connecticut General Life Insurance Company
