As filed with the Securities and Exchange Commission on_____________, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-6
Registration Statement
Under
THE SECURITIES ACT OF 1933
________________________
SEPARATE ACCOUNT VL
(Exact name of trust)
FIRST VARIABLE LIFE INSURANCE COMPANY
(Name of depositor)
10 POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(Complete address of depositor's principal executive offices)
_______________________
ARNOLD R. BERGMAN, Copy To:
Vice President - Legal & Administration DIANE E. AMBLER, ESQ.
First Variable Life Insurance Company Mayer, Brown & Platt
10 Post Office Square 2000 Pennsylvania Avenue, N.W.
Boston, Massachusetts 02109 Washington, D.C. 20006
(Name and Address of Agent for Service) (202) 778-0641
Title and amount of securities being registered: interests under single
premium variable life insurance policies.
Approximate date of proposed public offering: as soon as practicable after
the effective date of this Registration Statement.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(B) under the
Investment Company Act of 1940 with respect to the policy described in the
Prospectus.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant hereby declares that an indefinite amount of securities is being
registered under the Securities Act of 1933 by means of this Registration
Statement. A filing fee of $500 is enclosed.
Registrant hereby 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.
CROSS-REFERENCE TABLE
Form N-8B-2 Item Caption in Prospectus
1, 2 Cover, The Company, The
Separate Account
3 Inapplicable
4 Distribution and Other
Agreements
5, 6 The Separate Account
7 Inapplicable
8 Financial Statements
9 Legal Proceedings
10(a), (b), (c), (d), (e) Highlights, Surrenders and
Partial Withdrawals, Withdrawal
Charges, Transfers Among
Contract Options, Lapse and
Reinstatement, Determination of
Account Value, Other Provisions
of the Contract, The Contract,
Contract Options
10(f) Voting Rights, Other Provisions
of the Contract
10(g), (h) Changes in Contract Options
10(i) Mixed and Shared Funding,
Contract Values and Benefits,
Other Provisions of the
Contracts
11, 12 Variable Investors Series
Trust, Federated Insurance
Series
13 Highlights, Charges and
Expenses, Elimination and
Reduction of Charges and
Expenses
14, 15 Application and Issuance of a
Contract, Free Look Right,
Delayed Investment Start Date
16 Premiums, Allocation of
Premiums, Determination of
Account Value
17 Surrenders and Partial
Withdrawals, Payment of
Proceeds
18 Taxation of the Company and the
Separate Account, Determination
of Account Value, The Separate
Account, Contract Options, The
Contract, Charges and Expenses
19 Reports and Records,
Advertising Practices, Other
Provisions of the Contract
20 See 10(g) & 10(h)
21 Preferred and Non-Preferred
Loans, The Contract
22, 23, 24 Inapplicable
25 The Company
26 Inapplicable
27 The Company
28 Management of the Company
29 The Company
30, 31, 32, 33, 34 Inapplicable
35 State Regulation
36 Inapplicable
37 Inapplicable
38, 39, 40, 41(a) Distribution and Other
Agreements, The Company
41(b), 41(c), 42, 43 Inapplicable
44 Determination of Account Value
45 Inapplicable
46 Surrenders and Partial
Withdrawals
47, 48, 49, 50 Inapplicable
51 Contract Values and Benefits
52 Changes in Contract Options
53(a) Federal Tax Status
53(b), 54, 55 Inapplicable
56, 57, 58 Inapplicable
59 Financial Statements
<PAGE>
Prospectus Dated:
CAPITAL ONE PAY VUL
A MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE CONTRACTS
Funded in
SEPARATE ACCOUNT VL
by
FIRST VARIABLE LIFE INSURANCE COMPANY
Marketing and Executive Office: Variable Service Center:
10 Post Office Square P.O.Box 1317
Boston, MA 02109 Des Moines, IA 50305-1317
(800) 845-0089
This prospectus describes the Capital One Pay VUL contract (the
"Contract"), a modified single premium variable life insurance contract
offered by First Variable Life Insurance Company ("the Company"). The
Contracts provide for life insurance coverage and for the accumulation of
an Account Value. The Contract requires the Owner to make an initial
premium payment of at least $10,000 and, subject to certain restrictions,
permits additional premium payments.
After a Contract is approved for issue by the Company, the premium for a
Contract may be allocated to the Company's segregated investment account
called Separate Account VL (the "Separate Account") or to the Company's
Fixed Account, which guarantees a minimum fixed rate of interest. The
Separate Account invests in selected portfolios of two mutual funds:
Variable Investors Series Trust ("VIST") and Federated Insurance Series
("FIS"). The portfolios currently available under a Contract are: VIST
High Income Bond, VIST Multiple Strategies, VIST Common Stock, VIST U.S.
Government Bond, VIST Tilt Utility, VIST World Equity, VIST Growth &
Income, VIST Small Cap and FIS Prime Money Fund (the "Portfolios"). (See
"Contract Options".) The Company reserves the right, under certain
circumstances, to delay the investment of the initial premium payment in
VIST Portfolios, but does not currently do so. (See "Allocation of
Premiums".)
There is no guaranteed minimum Account Value for a Contract which is funded
through the Separate Account. The Death Benefit may, and the Account Value
will, vary up or down to reflect the investment experience of the
Portfolios to which premiums have been allocated. The Death Benefit,
however, will never be less than the Face Amount of the Contract. The
Owner bears the investment risk for all amounts allocated to the
Portfolios.
An investment in a Contract is not a deposit or obligation of, or
guaranteed or endorsed by, any bank, nor is a Contract federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or
any other agency. An investment in the Contract is subject to risk that
may cause the value of the Owner's investment to fluctuate, and when the
Contract is surrendered, the value may be higher or lower than the premium
payment.
Each Contract is a "modified endowment contract" for federal income tax
purposes, except in certain cases. A loan, distribution or other amount
received under a modified endowment contract during the life of the Insured
will be taxed in a manner similar to an annuity. Death benefits under a
modified endowment contract, however, are generally not subject to federal
income tax, except in certain cases. (See "Federal Tax Status".)
It may not be advantageous to replace existing insurance with the Contracts
described in this prospectus.
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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE VARIABLE
INVESTORS SERIES TRUST AND FEDERATED INSURANCE SERIES. ALL PROSPECTUSES
SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS
DEFINITIONS...........................................
HIGHLIGHTS...
THE COMPANY
THE SEPARATE ACCOUNT
CONTRACT OPTIONS
Variable Investors Series Trust
Federated Insurance Series
Fixed Account Option
Transfers Among Contract Options
General Requirements
Systematic Transfers - Dollar Cost Averaging
Restrictions on Transfers
Automatic Transfers of Small Accounts
Changes in Contract Options
Mixed and Shared Funding
CHARGES AND EXPENSES
Monthly Deductions
Administrative Charge
Maintenance Fee
Distribution Charge
Premium Tax Charge
Federal Tax Charge
Cost of Insurance
Daily Deductions
Mortality and Expense Risk Charge
Transfer Fee
Withdrawal Charges
Sales Charge
Unreimbursed Premium Tax
Other Charges and Expenses
Fund Expenses
Income Taxes
Special Service Fees
Elimination and Reduction of Charges and Expenses
THE CONTRACT
Application and Issuance of a Contract
Free Look Right
Premiums
Allocation of Premiums
Delayed Investment Start Date
CONTRACT VALUES AND BENEFITS
Death Benefit
Additional Benefits By Rider
Acceleration of Death Benefit Rider
Determination of Account Value
Preferred and Non-Preferred Loans
Surrenders and Partial Withdrawals
Maturity Proceeds
Lapse and Reinstatement
Payment of Proceeds
Tax Withholding
Optional Annuity Payment Options
Right to Exchange for a Fixed Benefit Contract
OTHER PROVISIONS OF THE CONTRACT
Suicide Exclusion
Representations and Contestability
Misstatement of Age or Sex
Owner and Beneficiary
Assignments
Reports and Records
Voting Rights
Projections of Contract Values and Benefits
Suspension of Payments and Transfers
Nonparticipation in the Company Dividends
DISTRIBUTION AND OTHER AGREEMENTS
SAFEKEEPING OF ASSETS
MANAGEMENT OF THE COMPANY
FEDERAL TAX STATUS
Taxation of the Company and the Separate Account
Life Insurance and Modified Endowment Contract Definitions
Income Tax Treatment of Contract Benefits
Diversification Requirements
ADVERTISING PRACTICES..................................................
LEGAL MATTERS
State Regulation
Legal Proceedings
EXPERTS...............................................
REGISTRATION STATEMENT
APPENDICES
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES, CASH
SURRENDER VALUES AND ACCUMULATED VALUE OF THE PREMIUM
APPENDIX B: FINANCIAL STATEMENTS
<PAGE>
DEFINITIONS
Account - The Fixed Account and/or one or more of the Sub-Accounts of the
Separate Account.
Account Value - The sum of the amounts attributable to a Contract that are:
(a) in the Separate Account; (b) in the Fixed Account; and, if there is an
outstanding Contract loan, (c) in the Loan Account.
Accumulation Unit - A unit of measure used to calculate the Account Value
of a Sub-Account of the Separate Account.
Accumulation Unit Value or AUV - The value of an Accumulation Unit on a
Business Day.
Age - The attained age of the Insured on the date for which age is being
determined.
Beneficiary - The person(s) or entity who will receive the Death Benefit.
Business Day - Each day the New York Stock Exchange is open for trading,
which is Monday through Friday, except for the following holidays: New
Year's Day, President's Day, Good Friday, Memorial Day, July Fourth, Labor
Day, Thanksgiving Day, Christmas Day.
Cash Surrender Value - The amount available upon surrender of the Contract,
which is equal to the Contract's Account Value reduced by any outstanding
Contract loan and accrued interest; and reduced by any applicable
Withdrawal Charges.
Code - The Internal Revenue Code of 1986, as amended.
Company - First Variable Life Insurance Company.
Contract Anniversary - An anniversary of the Contract Date.
Contract Date - The date the provisions of the Contract take effect, as
shown on the Owner's Contract data page. Contract Months and Contract Years
are measured from this date.
Contract Option - The Fixed Account or any of the Sub-Accounts of the
Separate Account which can be selected by the owner of a Contract.
Contract Year - Each 12-month period beginning on the Contract Date.
Death Benefit - The Death Benefit is the amount of insurance provided under
a Contract on the life of an Insured.
Death Benefit Proceeds - The amount payable on the death of the Insured.
This amount is the Death Benefit less Indebtedness.
Distributor - First Variable Capital Services, Inc., 10 Post Office Square,
Boston, MA 02109.
Fixed Account - The Fixed Account is the non-loaned portion of the
Contract's Account Value that is part of the Company's general account.
The Fixed Account provides guarantees of principal and interest and is not
part of the Separate Account.
Funds - Variable Investment Series Trust and Federated Insurance Series,
each of which is an open-end management investment company in which the
Separate Account invests.
Guideline Premium - A hypothetical amount used to determine the Death
Benefit under a Contract. The Guideline Premium for the Contract under the
guideline premium test is the maximum amount permitted to be paid for
insurance coverage with respect to the single guideline premium selected by
the Owner multiplied by the applicable death benefit percentage under the
guideline premium test in section 7702 of the Code.
Indebtedness - All amounts owed to the Company by an Owner for loans on the
Contract plus interest due or accrued on the loans.
Insured - The person on whose life the Contract is issued.
Loan Account - An account which is established in the Company's general
account for any amounts requested for loans. Account Value equal to the
amounts loaned are transferred to the Loan Account from the Fixed Account
and the Separate Account when the loans are made by the Company. Amounts
in the Loan Account are credited with interest.
Maturity Date - The Contract Anniversary on or following the Insured's
100th birthday.
Net Investment Experience - For any period, the Net Investment Experience
of a Sub-Account of the Separate Account is the investment experience of
the underlying Portfolio for the same period, reduced by the amount of
charges against the Sub-Account for that period.
Owner - The person entitled to all the ownership rights under a Contract.
The initial owner is stated on the application for a Contract, and may be
later changed as the Contract provides.
Portfolio - A Fund's separate and distinct class of shares that is
available as an underlying investment under a Contract.
Separate Account - A separate investment account of the Company,
designated as Separate Account VL.
Sub-Account - A segment of the Separate Account which invests in a
specified Portfolio of the Funds.
Valuation Period - The period of time between the close of one Business
Day and the close of business for the next succeeding Business Day.
Variable Service Center - The Company's administrative service center for
the Contracts is located at 1206 Mulberry Street, Des Moines, IA 50309.
HIGHLIGHTS
This prospectus describes Contracts issued by the Company that provide
modified single premium life insurance. Death Benefits and Account Value
under these Contracts are "variable" and will reflect the Net Investment
Experience of the Contract Option and Portfolios chosen by the Owner. If
the Fixed Account is available in the Owner's state, it may be used to fund
all or part of a Contract's Account Value. The Fixed Account, which is part
of the Company's general account, provides guarantees of principal and
interest. For a description of the Fixed Account, see "Fixed Account
Option" which appears later in this prospectus.
The following is a brief listing of the basic features of the Contract.
These and other features of the Contract are explained in detail throughout
the prospectus. The Owner should be sure to read the prospectus and the
prospectuses of the Funds for more complete information.
The Contract requires payment of a single premium on or before the Contract
Date. Additional amounts may be paid thereafter, subject to certain
restrictions, as long as the Contract meets the definition of a life
insurance contract under the Code.
The Contracts are designed to be "modified endowment contracts" under
section 7702A of the Code. Under current federal income tax law, pre-death
distributions under the Contracts, including loans and assignments, will be
included in income on an income first basis, and a 10% penalty tax will be
imposed on income distributed before the Owner attains age 59-1/2. (See
"Federal Tax Status".)
Death Benefit Proceeds paid to the beneficiary under the Contract are
generally not subject to federal income tax. Under current law,
undistributed increases in Account Value are not taxable to the Owner. (See
"Federal Tax Status".)
Generally, a Contract may be issued to cover an Insured from the age of one
to 80 and, if the Company consents, to an Insured from the age of 81 to 85.
All persons must meet the Company's underwriting and other criteria for
issuance. The Contracts are not available to employee benefit plans
qualified under Section 401 of the Code, except with the Company's consent.
In many respects the Contracts are similar to traditional fixed-benefit
whole life insurance. Like fixed-benefit whole life insurance, the
Contracts provide for a Death Benefit, an Account Value, and loan
privileges. However, the Contracts differ from fixed-benefit whole life
insurance in that the Death Benefit and Account Value may increase or
decrease to reflect the investment performance of the Contract Options to
which the Account Value is allocated.
Owners have the right to return the Contract according to the terms of its
"free-look" right. The Company reserves the right to delay the initial
investment of the premium payment in the selected Contract Options in
certain instances, but it does not currently do so. (See "Delayed
Investment Start Date".)
Within 24 months after the Contract Date, the Owner has a right to transfer
all of the Account Value in the Sub-Accounts to the Fixed Account. (See
"Right to Exchange for a Fixed Benefit Contract".)
The Contracts provide for a Death Benefit determined by treating the
initial premium as equal to 100% of the "guideline single premium" on the
Contract Date. After the Contract Date, the Death Benefit is determined
monthly based upon the Account Value at that time multiplied by a specified
percentage. Upon the death of the Insured, the Company will pay the Death
Benefit Proceeds to the beneficiary. (See "Death Benefit Proceeds".)
After the free look period, the Account Value may be transferred among the
Sub-Accounts. The Company currently allows 12 transfers per Contract Year
without the imposition of a Transfer Fee, with certain exceptions.
Transfers and allocations involving the Fixed Account are subject to
certain limits. (See "Transfers Among Contract Options" and "Fixed Account
Option".)
Under certain circumstances, a $10 Transfer Fee may be assessed when an
Owner transfers Account Value from one Sub-Account to another Sub-Account
or to or from the Fixed Account. (See "Charges and Deductions".)
A loan privilege is available under the Contract. Surrenders and partial
withdrawal features are also available and may be subject to withdrawal
charges, discussed below. (See "Preferred and Non-Preferred Loans" and
"Surrenders and Partial Withdrawal".)
The Account Value of the Contract will vary daily based on, among other
things, the Net Investment Experience of the Sub-Accounts to which amounts
have been allocated and the amount of interest credited to any of the
Contract's Account Value in the Fixed Account. (See "Account Value",
"Charges and Expenses", "Premiums", "Preferred and Non-Preferred Loans",
"Surrenders and Partial Withdrawal" and "Fixed Account Option".)
The portion of the Account Value invested in the Sub-Accounts is not
guaranteed and Owners bear the investment risk on this portion of the
Account Value. (See "Account Value".)
A Sales Charge of up to 7.5% of premium(s) and an Unreimbursed Premium Tax
Charge of up to 2.25% of premium(s) may be deducted for a surrender or
withdrawal of all or a portion of the Account Value. These Withdrawal
Charges will also apply if the Account Value is applied to an optional
annuity payment option within five years of the Contract Date. (See "Payment
Options" ___ .) No Withdrawal Charges will be taken on a partial
withdrawal in any Contract Year unless the amount withdrawn exceeds the
annual Free Withdrawal Amount. The annual Free Withdrawal Amount is equal
to 15% of the premium payment(s). The Withdrawal Charges decrease each
Contract Year to 0 at the end of Contract Year 9. (See "Withdrawal Charges"
___ .)
The following monthly charges are deducted from the Contract's Account
Value:
.40% on an annual basis for administrative expenses (See
"Administrative Charge.");
a $2.50 Maintenance Fee during the Accumulation Period from Contracts
with an Account Value of less than $100,000 (See "Maintenance Fee.");
.40% on an annual basis for the first 10 Contract Years and then .55%
on an annual basis for the Cost of Insurance (See "Cost of
Insurance."); and;
for the first ten Contract Years:
.20% on an annual basis for distribution expenses (See
"Distribution Charge.");
.25% on an annual basis for premium tax expenses (See "Premium
Tax Charge."); and
.20% on an annual basis for federal tax expense (See "Federal
Tax Charge.").
A daily charge is deducted from the Separate Account assets equal to:
.90% on an annual basis for the mortality and expense risk charge
(See "Mortality and Expense Risk Charge.").
There are deductions from and expenses paid out of the assets of the Funds
that are described in the accompanying prospectuses for the Funds.
THE COMPANY
First Variable Life Insurance Company ("the Company") is a stock life
insurance company which was organized under the laws of the State of
Arkansas in 1968. The Company is principally engaged in the annuity
business. The Company is licensed in 49 states, the District of Columbia
and the U.S. Virgin Islands. The Company is a wholly-owned subsidiary of
Irish Life of North America, Inc., ("ILoNA") which in turn is beneficially
owned by Irish Life plc ("Irish Life"). ILoNA also owns Interstate
Assurance Company ("Interstate") of Des Moines, Iowa. Irish Life was
formed in 1939 through a consolidation of a number of Irish and British
Life offices transacting business in Ireland. In terms of assets, Irish
Life controls over 50% of the Irish domestic life insurance market. As
Ireland's leading institutional investor, it owns in excess of 10% of the
leading Irish publicly traded stocks. Irish Life, through its international
subsidiaries, conducts business in Ireland, the United Kingdom, the United
States, and France. As of the end of 1995, the Irish Life consolidated
group had in excess of $11 billion in assets. ILoNA is a Delaware
corporation, incorporated as Carrig International, Inc. in 1986, which is
the holding company of Interstate and the Company.
The Company has an A- (Excellent) rating from A.M. Best, an independent
firm that analyzes insurance carriers. This rating is assigned to
companies that have a strong ability to meet obligations to policy holders
over a long period of time. The Company also has an AA- rating from
Standard and Poor's and an AA rating from Duff & Phelps Credit Rating Co.
on claims paying ability. The financial strength of the Company may be
relevant with respect of the Company's ability to satisfy its Fixed Account
obligations under the Contracts.
THE SEPARATE ACCOUNT
The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Arkansas insurance law on March 6,
1987. This account has been designated Separate Account VL (the "Separate
Account"). The Company has registered the Separate Account with the
Securities and Exchange Commission ("SEC") as a unit investment trust
pursuant to the provisions of the Investment Company Act of 1940. Such
registration does not involve supervision by the SEC of the management of
the Separate Account or the Company.
The assets of the Separate Account are the property of the Company.
However, the assets of the Separate Account, equal to the reserves and
other contract liabilities with respect to the Separate Account, are not
chargeable with liabilities arising out of any other business the Company
may conduct. Income, gains and losses, whether or not realized, are, in
accordance with the Contracts, credited to or charged against the Separate
Account without regard to other income, gains or losses of the Company.
The Company's obligations arising under the Contracts are general
obligations.
The Separate Account meets the definition of a "separate account" under the
federal securities laws.
The Separate Account is divided into Sub-Accounts, with the assets of each
Sub-Account invested in one Portfolio of a selected Fund. Owners bear the
complete investment risk for premium payments and Account Value allocated
or transferred to a Sub-Account. Account Values fluctuate in accordance
with the investment performance of the Sub-Account(s) and reflect the
imposition of the fees and charges assessed under a Contract.
CONTRACT OPTIONS
Owners of a Contract may allocate premium payments and Account Value to one
or more Sub-Accounts of the Separate Account and to the Fixed Account.
Each Sub-Account invests exclusively in a Portfolio of a selected Fund. A
brief summary of the Funds and the investment objectives of the currently
available Portfolios is set forth below. More comprehensive information,
including a discussion of potential risks, is found in the current
prospectuses for the Funds, which are included with this prospectus. The
prospectuses for the Funds may describe other portfolios that are not
available under a Contract. THERE IS NO ASSURANCE THAT THE AVAILABLE
PORTFOLIOS WILL ACHIEVE THEIR STATED OBJECTIVES. Investors should read
this prospectus and the prospectuses for the Funds carefully before
investing.
Variable Investors Series Trust
Variable Investors Series Trust ("VIST") is an open-end management
investment company that was formed as a series trust to provide funding
options for variable life insurance and variable annuity contracts.
Effective April 1, 1994, VIST retained First Variable Advisory Services
Corp. ("FVAS") to manage its assets. FVAS is a wholly-owned subsidiary of
the Company and retains the services of sub-advisers under agreements to
manage the assets of the VIST Portfolios. The sub-advisers for the VIST
Portfolios currently available under a Contract are: Value Line, Inc. with
respect to VIST Common Stock and VIST Multiple Strategies Portfolios;
Warburg, Pincus Counsellors, Inc. with respect to VIST Growth & Income
Portfolio; Federated Investment Counseling with respect to VIST High Income
Bond Portfolio; Pilgrim Baxter & Associates, Ltd. with respect to VIST
Small Cap Portfolio; State Street Bank and Trust Company with respect to
VIST Tilt Utility Portfolio; Strong Capital Management, Inc. with respect
to VIST U.S. Government Bond Portfolio; and Keystone Investment Management
Company with respect to VIST World Equity Portfolio.
Each Portfolio has a distinct investment objective and policy. The
investment objectives of the Portfolios available under a Contract are:
VIST Common Stock. The investment objective of this Portfolio is capital
growth, which it seeks to achieve through a policy of investing primarily
in a diversified portfolio of common stocks and securities convertible into
or exchangeable for common stock. The secondary objective is current
income, when consistent with its primary objective.
VIST Growth & Income. The investment objective of this Portfolio is to
provide current income and growth of capital. The Portfolio seeks to
achieve its objectives by investing in equity securities, fixed income
securities and money market instruments. The portion of the Portfolio
invested at any given time in each of these asset classes will vary
depending on market conditions, and there may be extended periods when the
Portfolio is primarily invested in one of them. In addition, the amount of
income derived from the Portfolio will fluctuate depending on the
composition of the Portfolio's holdings and will tend to be lower when a
higher portion of the Portfolio is invested in equity securities. The
Portfolio may also purchase without limitation dollar-denominated American
Depository Receipts ("ADRs"). ADRs are issued by domestic banks and
evidence ownership of underlying foreign securities.
VIST High Income Bond. The investment objective of this Portfolio is to
obtain as high a level of current income as is believed to be consistent
with prudent investment management. As a secondary objective, the
Portfolio seeks capital appreciation when consistent with its primary
objective. The Portfolio seeks to achieve its investment objectives by
investing primarily in fixed income securities rated lower than A. Many of
the high yield securities in which the Portfolio may invest are commonly
referred to as "junk bonds." For special risks involved with investing in
such securities (including among others, risk of default and illiquidity)
see "Investment Objectives and Policies of the Portfolios -- High Income
Bond Portfolio" in the VIST prospectus.
VIST Multiple Strategies. The investment objective of this Portfolio is to
seek as high a level of total return over an extended period of time as is
considered consistent with prudent investment risk by investing in equity
securities, bonds, and money market instruments in varying proportions.
VIST Small Cap. The investment objective of this Portfolio is to seek
capital appreciation. The Portfolio will invest, under normal conditions,
at least 65% of its total assets in securities of companies with small
capitalization (market capitalization or annual revenues under $1 billion
at the time of purchase).
VIST Tilt Utility. The investment objective of this Portfolio is to seek
capital appreciation and current income by investing in a diversified
portfolio of common stock and income securities issued by companies engaged
in the utilities industry ("Utility Securities"). Under normal market
conditions, at least 80% of the Portfolio's assets will be invested in
Utility Securities. The Portfolio is intended to achieve investment
returns that are higher than the Standard & Poor's Utilities Index with
equivalent risk, diversification and price volatility.
VIST U.S. Government Bond. The investment objective of this Portfolio is
to seek current income and preservation of capital through investment
primarily in securities issued or guaranteed as to principal and interest
by the U.S. Government or by its agencies, authorities, or
instrumentalities.
VIST World Equity. The investment objective of this Portfolio is to
maximize long-term total return by investing primarily in common stocks,
and securities convertible into common stocks, traded in securities markets
located in countries around the world, including the United States. See
"Foreign Investments" under "Policies and Techniques Applicable to all
Portfolios" in the VIST prospectus for a discussion of the risks involved
in investing in foreign securities.
Federated Insurance Series
Federated Insurance Series ("FIS") is an open-end investment management
company that was formed as a series trust to provide funding options for
variable life insurance and variable annuity contracts. Pursuant to an
investment advisory contract, investment decisions for FIS are
made by Federated Advisers, an affiliate of Federated Investment
Counseling. Federated Securities Corp. is the principal distributor for
shares of FIS Prime Money Fund Portfolio.
FIS Prime Money Fund II. The investment objective of the Portfolio is to
provide current income consistent with stability of principal and
liquidity. The Portfolio pursues its investment objective by investing
exclusively in money market instruments maturing in 397 days or less. An
investment in the FIS Prime Money Fund II Portfolio is neither insured nor
guaranteed by the U.S. Government.
Fixed Account Option
This Prospectus is generally intended to describe the Contract and Separate
Account. Because of certain exemptive and exclusionary provisions,
interests in the Fixed Account are not registered under the Securities Act
of 1933 and the Fixed Account is not registered as an investment company
under the Investment Company Act of 1940. Accordingly, neither the Fixed
Account nor any interests therein are generally subject to the provisions
of these Acts, and the Company has been advised that the staff of the SEC
has not reviewed the disclosures in the Prospectus relating to the Fixed
Account.
The Company guarantees that it will credit interest to Account Values in
the Fixed Account at a minimum rate of 3% per year. Additional amounts of
"current" interest may be credited by the Company in its sole discretion.
Additional premium payments allocated to the Fixed Account may receive a
different current interest rate than the current interest rate credited to
amounts transferred from the Separate Account. Account Values existing in
the Fixed Account may receive a different current interest rate than the
current interest rate(s) credited on additional premium payment allocations
and Separate Account transfers. The Company determines current interest
rates in advance, and credits interest daily to Fixed Account value.
Transfers Among Contract Options
An Owner may transfer Account Value among Contract Options up to 12 times
each Contract Year without a Transfer Fee, prior to the election of an
optional annuity payment option. After that, a Transfer Fee of $10 is
deducted for each transfer. Systematic transfers of Account Value approved
by the Company are not taken into account in determining any Transfer Fee.
(See "Systematic Transfers" below and "Charges and Deductions -- Transfer
Fee".)
Prior to the Maturity Date, Account Value to be transferred from the Fixed
Account to other Contract Options in any Contract Year may only be
requested within 30 days of the Contract Anniversary and may not exceed:
for transfers during the first Contract Year, 25% of the Fixed Account
Value on the Contract Date; or for transfers after the first Contract Year,
the greater of 25% of the Fixed Account Value on the immediately preceding
Contract Anniversary or 100% of the Fixed Account Value transferred to
other Contract Options during the immediately preceding Contract Year.
Under an optional annuity payment option, the Owner may make a transfer
from one or more Sub-Accounts to other Sub-Accounts or to the Fixed Account
only once each Contract Year and no transfers will be permitted from the
Fixed Account to the Separate Account. Amounts transferred from a
Sub-Account to the Fixed Account are subject to certain procedures set out
in the Contract.
General Requirements. All transfers are subject to the following:
If applicable, the Transfer Fee will be deducted from Account Value remaining
in the Sub-Account or Fixed Account from which the transfer is made.
However, if the entire interest in a Sub-Account or the Fixed
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred.
The minimum amount which may be transferred is the lesser of (a) $1,000; or
(b) the Owner's entire interest in the applicable Sub-Account or Fixed
Account.
Any transfer instruction must clearly specify the amount which is to be
transferred and the Contract Options which are to be affected.
The Company reserves the right at any time and without prior notice to any
party to modify, suspend or terminate the transfer privileges including,
but not limited to, the description in "Suspension of Payments and
Transfers".
All Sub-Account transfer requests made at the same time will be treated as
a single request. The transfer will be effective as of the date when the
Company receives the transfer request at its Variable Service Center.
The Owner may request a Sub-Account transfer, or reallocation of future
premium by written request (which may be telecopied) to the Variable
Service Center. To request a transfer or reallocation by telephone, the
Owner should contact the registered representative or contact the Variable
Service Center at 1-800-845-0589. Requests for transfers or reallocations
by telephone will be automatically permitted. The Company will use
reasonable procedures such as requiring certain identifying information
from the caller, tape recording the telephone instructions, and providing
written confirmation of the transaction, in order to confirm that
instructions communicated by telephone are genuine. Any telephone
instructions reasonably believed by the Company to be genuine will be the
Owner's responsibility, including losses arising from any errors in the
communication of instructions. As a result of this, the Owner will bear
the risk of loss. If the Company does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, the
Company may be liable for any losses due to dishonored or fraudulent
instructions.
Systematic Transfers - Dollar Cost Averaging. The Company permits
systematic transfers, such as dollar cost averaging, that an Owner may
elect by written request. Through systematic transfers, designated amounts
are transferred each month or quarter from a selected Contract Option to
other pre-selected Contract Options. The dollar cost averaging program
permits transfers from the Prime Money Fund Sub-Account or the Fixed
Account to other Sub-Account(s) on a regular scheduled basis. Through use
of systematic transfers, instead of transfers of the total Account Value at
one particular time, an Owner may be less susceptible to the impact of
market fluctuations. Systematic transfers prevent investing too much when
the price of shares is high and too little when the price of shares is low.
However, since systematic transfers, such as dollar cost averaging involve
continuous investment regardless of fluctuating price levels, the purchaser
should consider his ability to continue purchases through periods of low
price levels. The minimum amount which may be transferred at any time is
$250. The Company may require a minimum amount of Account Value before
permitting systematic transfers. The amount required for dollar cost
averaging from the Prime Money Fund Sub-Account or from the Fixed Account
is $6,000.
All systematic transfers are made on the same day of each month or quarter
(or the next Business Day if the same day of the month or quarter is not a
Business Day.) If the Owner is participating in the dollar cost averaging
program, the transfers are not taken into account in determining any
Transfer Fee.
Restrictions on Transfers. Programmed or other frequent requests to
transfer among Contract Options by, or on behalf of, an Owner may have a
detrimental effect on the Fund share values held in the Separate Account.
The Company may therefore limit the number of permitted transfers in any
Contract Year, or refuse to honor any transfer request for an Owner or a
group of Owners if it is informed that the purchase or redemption of
shares of one or more of the Portfolios is to be restricted because of
excessive trading, or if a specific transfer or group of transfers is
deemed to have a detrimental effect on AUV or Portfolio share prices.
The Company may also at any time suspend or cancel its acceptance of third
party authorizations on behalf of an Owner; or restrict the Contract
Options that will be available for such transfers. Notice will be
provided to the third party in advance of the restrictions. The
restrictions will not be imposed, however, if the Company is given
satisfactory evidence that: (a) the third party has been appointed by the
Owner to act on the Owner's behalf for all financial affairs; or (b) the
third party has been appointed by a court of competent jurisdiction to act
on the Owner's behalf.
Automatic Transfers of Small Accounts. The Company reserves the right,
subject to any applicable law, to transfer Contract Value from any Contract
Option if less than $250, to the Contract Option with the highest Contract
Value. (See "The Contract--Minimum Value Contract Requirements".)
Changes in Contract Options
New Sub-Accounts may be established and additional portfolios or mutual
funds may be made available by the Company when, in its sole discretion, it
determines that conditions so warrant. Any new Sub-Accounts may be made
available to existing Owners on a basis to be determined by the Company.
Each additional Sub-Account will purchase shares in another portfolio of a
Fund, or in another mutual fund or investment vehicle.
The Company does not guarantee that continued purchase of Portfolio shares
will remain appropriate in view of the purposes of the Separate Account.
If shares of a Portfolio are no longer available for investment by the
Separate Account or if, in the judgment of the Company, further investment
in the shares should become inappropriate in view of the purpose of the
Contracts, the Company may substitute shares of another portfolio, or
mutual fund for shares already purchased or to be purchased in the future.
The Company also may, in its discretion, remove Portfolios for transfers or
new investments. No substitution of securities may take place without
prior approval of the SEC and under the requirements it may impose.
Mixed and Shared Funding
Shares of VIST and FIS Prime Money Fund II are sold to the Company for
allocation to the Separate Account in connection with the Contracts, and
for allocation to other separate accounts funding variable annuity
contracts and other variable life insurance contracts issued, or to be
issued, by the Company. Shares of VIST and FIS Prime Money Fund II may also
be sold to other insurance companies, either affiliated or unaffiliated
with the Company, for the same purpose. It is conceivable that, in the
future, it may be disadvantageous for variable life insurance separate
accounts and variable annuity separate accounts to invest in one or more of
the VIST Portfolios or FIS Prime Money Fund II simultaneously if the interests
of variable life insurance and variable annuity contract owners differ.
The boards of trustees of VIST and FIS Prime Money Fund II and the
participating insurance companies intend to monitor events to identify any
material irreconcilable conflicts which may arise and to determine what
action, if any, should be taken in response.
CHARGES AND EXPENSES
Various charges and deductions are made from the Account Value and the
Separate Account. These are:
Monthly Deductions
On the first day of each Contract month, the Company will deduct an amount
to cover charges and expenses incurred in connection with the Contract.
Generally, this monthly deduction will be made by subtracting values from
the Fixed Account and/or canceling Accumulation Units from each applicable
Sub-Account in the ratio that the value of each Contract Option bears to
the total Account Value for a Contract. The amount of the monthly
deduction will vary from month to month. If the Account Value is not
sufficient to cover the monthly deduction which is due, the Contract may
lapse. (See "Lapse and Reinstatement".) The monthly deductions are
comprised of the following charges:
Administrative Charge
The Company makes a monthly deduction for an Administrative
Charge. This charge is equal to an annual rate of 0.40% multiplied
by the account value. This charge, together with the Maintenance Fee
(see below), reimburses the Company for its expenses for items such
as the cost of processing Contract transactions, issuing Owner
statements and reports, and record keeping, as well as legal,
actuarial, systems, mailing and other overhead costs connected with
the Company's variable life insurance operations. The Administrative
Charge has been designed to cover actual costs and is not intended to
produce a profit.
Maintenance Fee
The Company will make a deduction of $2.50 from any Contract with
less than $100,000 in Account Value to cover charges and expenses
incurred in connection with the Contract.
The Administrative Charge and Maintenance Fee are to reimburse the
Company for expenses related to issuance and maintenance of the
Contracts. The Company does not intend to profit from these charges.
Distribution Charge
During the first 10 Contract Years, the Company makes a monthly
deduction to compensate for a portion of the sales expenses which are
incurred by the Company with respect to the Contracts. This charge
is equal to an annual rate of 0.20% multiplied by the Account Value.
The Company will monitor distribution charges, federal tax charges
and the sales charge portion of the Withdrawal Charges deducted under
a Contract to ensure that the sum of these charges will never exceed
9% of the premium payments made under the Contract.
Premium Tax Charge
During the first 10 Contract Years, the Company makes a monthly
deduction to offset the average premium tax the Company is expected
to pay to various states and local jurisdictions but will not
necessarily equal the premium taxes paid by the Company with respect
to a particular Contract. This charge is equal to an annual rate of
0.25% multiplied by the Account Value. The Company expects to pay an
average premium tax of approximately $2,500 on $100,000 of premiums
for all states, although such tax rates can generally range from 0%
to 4%. The Company does not intend to profit from these charges.
Federal Tax Charge
During the first 10 Contract Years, the Company makes a monthly
deduction to compensate the Company for the increase in federal tax
liability from the application of Section 848 of the Code. This
charge is equal to an annual rate of 0.20% multiplied by the Account
Value as of each Monthly Anniversary. The Company currently treats
this federal tax charge as if it were a sales load for purposes of
determining compliance with maximum sales loads permitted under SEC
rules.
Cost of Insurance
The Company will make a monthly deduction for the cost of providing
life insurance coverage for the Insured. This charge is guaranteed
not to exceed the maximum cost of insurance charge determined on the
basis of the mortality table guaranteed in the Contract, calculated,
for standard issues, using the 1980 Commissioner's Standard Ordinary
Mortality tables, Age Last Birthday ("1980 CSO"). The maximum cost
of insurance charge for substandard issues are based on multiples or
additives to the guaranteed standard rates established by the 1980
CSO. These mortality tables are sex distinct.
Currently, a cost of insurance charge equal to an annual rate of
0.40% of Account Value will be deducted monthly. For Contract Years
11 and later, this monthly charge is anticipated to be increased to
an annual rate of 0.55% of Account Value.
Daily Deductions
Each Business Day, the Company will deduct charges which are equal to a
percentage of the daily net assets in each Sub-Account of the Separate
Account for this class of Contract. The daily charges are comprised of the
following charges:
Mortality and Expense Risk Charge
The Company makes a daily deduction for the Mortality and Expense
Risk Charge, which is equal to 0.90%, on an annual basis, of the
daily net assets in each Sub-Account. The mortality risk assumed
under the Contract is that the Insured may live for shorter periods
of time than the Company estimated when it guaranteed the maximum
level of insurance charges in the Contract. The expense risk assumed
is that the actual expenses incurred in issuing and administrating
the Contracts may be greater than the Company estimated when it
guaranteed the maximum level of insurance charges in the Contract.
In addition, the Company assumes risks associated with the
nonrecovery of Contract issue, underwriting and other administrative
expenses due to Contracts which lapse or are surrendered during the
early Contract Years.
If any amount collected by the Company from the mortality and expense
risk charge is not needed to cover Death Benefits and expenses, it
will be contributed to the Company's general account. Conversely, if
the amount collected is insufficient, the Company will make up the
deficiency.
Transfer Fee
If more than 12 transfers have been made in a Contract Year, the Company
will deduct a Transfer Fee of $10 per transfer. Systematic transfers of
Account Value approved by the Company are not taken into account in
determining any Transfer Fee. (See "Systematic Transfers - Dollar Cost
Averaging".) The charge is taken pro rata from the Account Value in
each Contract Option prior to a transfer and, with respect to Sub-Accounts,
will result in the cancellation of Accumulation Units credited to the
Contract.
Withdrawal Charges
Withdrawal Charges may be assessed if a Contract is surrendered, or if a
withdrawal of Account Value is made during the first nine Contract Years.
The Withdrawal Charges consist of two separate charges: a sales charge and
an unreimbursed premium tax charge.
Withdrawals of Account Value reduce the Death Benefit proportionately.
(See "Withdrawals".)
The Withdrawal Charges are calculated by separately multiplying the
applicable percentage shown in the tables below for the sales charge and
the unreimbursed premium tax charge by the premium deemed surrendered,
withdrawn or applied to an optional annuity payment option and totaling the
results. The Withdrawal Charges will vary depending on the number of
Contract Years that have elapsed since the Contract Date. Premium payments
are deemed withdrawn in the order in which they are received by the
Company. The amount deducted from the Account Value will be determined by
subtracting values from the Fixed Account and/or canceling Accumulation
Units from each applicable Sub-Account in the ratio that the value of each
Sub-Account bears to the total Account Value, unless another method is
requested and the Company approves the request.
Application of the Withdrawal Charges. No Withdrawal Charges will be
assessed upon any withdrawal during Contract Years 2 through 9 unless the
amount withdrawn exceeds the Free Withdrawal Amount for that year. The
annual Free Withdrawal Amount is an amount equal to 15% of the premium paid
and not previously withdrawn or loaned during that Contract Year. These 15%
withdrawals do not reduce premium payments for purposes of computing the
Withdrawal Charges. The Withdrawal Charges will apply to the amount
withdrawn or surrendered in any Contract Year that exceeds 15% of premium
payments. The unused portion of the Free Withdrawal Amount for one
Contract Year will not be carried over to the next Contract Year. The Free
Withdrawal Amount is not available on withdrawal requests that fail to meet
the minimum remaining Account Value requirements for a partial withdrawal.
(See "Partial Withdrawals".)
Waiver of Withdrawal Charges. The Company will waive the Withdrawal
Charges:
after the first Contract Year and subject to state availability, if
the Insured or the Insured's spouse is confined in an approved
nursing home for six months;
if any Death Benefits are paid; or
if the Account Value is applied after five Contract Years
to an optional annuity payment option. (See "Optional
Annuity Payment Options".)
To qualify for a waiver of the Withdrawal Charges based upon confinement in
a qualified nursing home, the Insured or the Insured's spouse must never
have been confined in a qualifying nursing home on or before the date the
application for the Contract was signed. The Company may require evidence
satisfactory to it for any of these conditions. Owners should review their
Contract carefully for a complete description of these waivers.
Sales Charge
The sales charge reimburses the Company for expenses incurred in
connection with the promotion, sale and distribution of the
Contracts.
The sales charges and distribution charges under the Contracts in any
year are not necessarily related to the Company's actual sales
expenses for that year. The Company expects that total revenues from
the sales charges and distribution charges will fall short of its
total distribution expenses, and the excess will be recovered from
the Company's surplus and other revenues, including any potential
profit realized which may arise from the mortality and expense risk
charge.
The sales charge percentages against premiums are:
Contract Years Since
Premium Payment 1 2 3 4 5 6 7 8 9 10+
Sales Charge 7.5% 7.5% 7.25% 6.5% 5.75% 5% 4.25% 3.5% 2.75% 0%
Unreimbursed Premium Tax Charge
The unreimbursed premium tax charge is to recover a portion of the premium
tax the Company has paid to any state or other government entity.
The unreimbursed premium tax percentages against premiums are:
Contract Years Since
Premium Payment 1 2 3 4 5 6 7 8 9 10+
Premium Tax
Recovery 2.25% 2% 1.75% 1.5% 1.25% 1% 0.75% 0.5% 0.25% 0%
Other Charges and Expenses
Fund Expenses. There are other deductions from, and expenses paid out of,
the assets of the Portfolios of the Funds, which are described in the
accompanying prospectuses for the Funds.
Income Taxes. While the Company is not currently reducing Account Value
for federal income taxes of the Separate Account, the Company reserves the
right to do so if it determines, in its sole discretion, that it will incur
a tax as a result of the operation of the Separate Account. The Company
will make deductions for any income taxes incurred by it as a result of the
operation of the Separate Account whether or not there was a Company
reserve for taxes and whether or not it was sufficient.
The Company will make deductions for any withholding taxes required by
applicable law when amounts are distributed from a Contract. (See "Tax
Withholding".)
Special Service Fees. The Company may charge Owners for special services,
such as additional reports, and dollar cost averaging. As of the date of
this prospectus, it does not charge for these special services.
Elimination or Reduction of Charges and Expenses. The charges and expenses
on a Contract may be reduced or eliminated, in whole or in part, when sales
of Contracts are made to individuals or to a group of individuals in a
manner that results in savings of sales or administration expenses. Any
reduction will be determined by the Company after examination of relevant
factors such as:
the size and type of group to which sales are to be made, because
expenses for a larger group are generally less than for a smaller
group since large numbers of Contracts may be implemented and
administered;
the total amount of premium payments to be received, because expenses
are likely to be less on larger premium payments than on smaller ones;
any prior or existing relationship with the Company, because of the
likelihood of implementing the Contract with fewer contacts; and
other circumstances, of which the Company is not presently aware, which
could result in reduced expenses.
Charges may also be eliminated when a Contract is issued to an officer,
director, employee or agent of the Company or any of its affiliates. In no
event will reductions or elimination of the charges be permitted where
reductions or elimination will be unfairly discriminatory to any person.
Group and Sponsored Arrangements. Group arrangements include those in
which a trustee, employer, an association or similar entity purchases
individual Contracts covering a group of individuals on a group basis. An
example of such an arrangement is a non-tax qualified deferred compensation
plan. Sponsored arrangements include those in which an employer, an
association or similar entity permits the Company to offer Contracts to its
employees or members on an individual basis.
The United States Supreme Court has held that certain insurance contracts
providing values and benefits that vary with the sex of the insured may not
be used to fund certain employee benefit programs. Therefore, the Company
may offer Contracts for use in connection with certain employee benefit
programs where the cost of insurance does not vary with the sex of the
insured. The Company recommends that any employer proposing to offer the
Contracts to employees under a group or sponsored arrangement consult its
attorney before doing so.
THE CONTRACT
Application and Issuance of a Contract
An application must be submitted to the Company at its Variable Service
Center by anyone wishing to purchase a Contract. If a premium payment is
made with the application, the Contract Date will be the later of the date
the Company approves the application or the date of receipt of the premium
payment. Only one premium payment may be made before the Contract is
issued. Applicants between the ages of 0 and 80 are eligible for
simplified underwriting without a medical examination under the Company's
current underwriting rules, which are subject to change. The Company will
review an application under its underwriting rules, and may request
additional information or reject an application.
If a premium payment is made with the application, the insured will be
covered under a temporary insurance agreement for a limited period, prior
to the Contract Date, that is described in the temporary insurance
agreement form. Coverage under the temporary insurance agreement will
begin on the date when the Company receives the premium for the Contract.
The maximum amount of coverage provided is the lesser of the amount of
insurance applied for or $100,000 for standard risks ($50,000 for
substandard risks and for persons who are determined to be uninsurable).
If a Contract is issued, monthly Contract charges will begin as of the
Contract Date, even if the Contract's issuance was delayed due to
underwriting requirements. If the Company declines an application, it will
refund the premium payment made.
If the premium is paid upon delivery of the Contract, the Contract will
have a Contract Date which is generally five days after issue. Monthly
Contract charges will begin on the Contract Date. Insurance coverage under
the Contract will begin upon receipt of the premium.
Under limited circumstances, the Company may backdate a Contract, upon
request, by assigning a Contract Date earlier than the date the application
is signed. Backdating may be desirable, for example, so that the Cost of
Insurance rate for the initial Death Benefit amount is lower, based on the
Insured's insurance age.
Free Look Right. An Owner has the right to review a Contract during an
initial inspection period specified in the Contract and, if dissatisfied,
to return it to the Company or to the agent through whom it was purchased.
When the Contract is returned to the Company during the permitted period,
it will be voided as if it had never been in force. The Company will
ordinarily refund the Account Value (which may be greater or less than the
premium payments received) on a Contract returned during the permitted
period, unless a different amount is required by state law. The "free look"
period is at least 10 days, and may be greater depending on state
requirements.
Premiums
The Contracts are designed for a large single premium to be paid by the
Owner on or before the Contract Date. Generally, the minimum initial
premium the Company requires for a Contract is $10,000. The initial
premium is used to determine the initial Death Benefit under the Contract
(See "Death Benefits".)
The Contract is primarily intended to be a single premium Contract with a
limited ability to make additional premium payments. Additional premium
payments under the Contract are permitted under the following
circumstances:
(a.) an additional premium payment is required to keep the Contract
in force (See "Lapse and Reinstatement."); or
(b.) an additional premium is paid equal to the lesser of (i) $5,000;
or (ii) 5% of the initial premium, a percentage of the initial
premium.
Payment of additional premiums may increase the Death Benefit.
However, the Company reserves the right to require satisfactory
evidence of insurability before accepting an additional premium payment
in excess of the lesser of (a) $5,000 or (b) 5% of the initial premium.
The Company may require that any Contract loans be repaid prior to
accepting any additional premium payments.
The Company will not accept any additional premium payment which would
result in the total premiums paid exceeding the premium limitation
prescribed by Internal Revenue Service to qualify the Contract as a life
insurance contract.
Allocation of Premiums
Premium payments are allocated to the appropriate Sub-Account(s) within the
Separate Account that invest in the selected Portfolio(s), or to the Fixed
Account, in accordance with an Owner's instructions. For each Sub-Account,
premium payments are converted to Accumulation Units. The number of
Accumulation Units credited to a Contract is determined by dividing the
amount allocated to the Sub-Account by the value of the applicable
Accumulation Unit as of the Valuation Period during which the premium
payment is allocated to the Sub-Account. Premium payments allocated to the
Fixed Account are credited in dollars.
Premium payments are generally allocated to the Sub-Accounts or the Fixed
Account as of the later of the Contract Date or the date the premium is
received.
Delayed Investment Start Date. The Company reserves the right to allocate
premium payments to the Prime Money Fund Sub-Account for a period of up to
five days beyond the "free look" inspection period before they will be
invested (together with any investment gain) in any other Contract Options
designated by the Owner. If the Company elects to delay such initial
investment in the Contract Options, the delay would apply where a Contract
is issued: (a) in a state which requires that the premium payment less
Withdrawals be refunded upon exercise of (i) a "free look" right or (ii) an
inspection right following a "replacement" of an existing life insurance or
annuity contract; or (b) as an initial investment of an Individual
Retirement Account.
CONTRACT VALUES AND BENEFITS
Death Benefit
When an application for a Contract is approved, the Company determines the
Face Amount of insurance and then issues a Contract. The Death Benefit on
the Contract Date is the Face Amount, and any additional benefit riders
elected. The Death Benefit will never be less than the Face Amount. The
Death Benefit may be adjusted as a result of additional premium payments,
an increase or decrease in Account Value, or in the event of Withdrawals.
Upon receipt of proof of death of the Insured, the Company will pay the
Death Benefit Proceeds to the Beneficiary. The Owner or the Beneficiary may
elect that the Death Benefit Proceeds be paid in a single sum, in the form
of a fixed annuity, or that they be retained by the Company in its general
account. Amounts retained by the Company will be credited with interest at
an annual rate of not less than 3%. The amount of the Death Benefit is
determined on the date the Company receives proof of the Insured's death
and will be the greater of (a) the Face Amount or (b) the Account Value
times the death benefit factor from the following table:
Applicable Percentage of Account Value Factors
Attained Percentage of Attained Percentage of Attained Percentage of
Age Account Value Age Account Value Age Account Value
___ _____________ ___ _____________ ___ _____________
35 250 57 142 79 106
36 250 58 138 80 105
37 250 59 134 81 105
38 250 60 130 82 105
39 250 61 128 83 105
40 250 62 126 84 105
41 243 63 124 85 105
42 236 64 122 86 105
43 229 65 120 87 105
44 222 66 119 88 105
45 215 67 118 89 105
46 209 68 117 90 105
47 203 69 116 91 104
48 197 70 115 92 103
49 191 71 113 93 103
50 185 72 111 94 103
51 178 73 109 95 102
52 171 74 109 96 102
53 164 75 108 97 101
54 157 76 107 98 101
55 150 77 107 99 101
56 146 78 106
Face Amount and Guidleine Single Premium - The Face Amount on the Contract
Date is determined by treating the initial premium as a "guideline single
premium." The "guideline single premium" is an amount necessary to keep the
Contract in force until the Maturity Date, using guaranteed mortality and
expense charges, and the calculations required by the Code for a life insurance
contract under the guideline premium test. The "guideline single premium" will
vary by attained age, sex and underwriting risk class. This will generally
result in the same initial premium providing a Face Amount that is higher for
non-smokers than smokers, and a higher Face Amount for females than for males.
Face Amount and Additional Premium Payments - Additional premium payments
may result in an increase in the Face Amount of insurance coverage. If
necessary, the Company will increase the Face Amount by an amount sufficient
to permit the contract to remain within the definition of a "life insurance
contract" under section 7702 of the Code.
Adjustments to the Death Benefit Proceeds. The Death Benefit Proceeds
actually paid to the beneficiary are equal to the Death Benefit reduced by
any outstanding loan and accrued loan interest. The Death Benefit Proceeds
will be increased by any other rider benefits payable.
Additional Benefits by Rider
The Company may in the future permit Owners to purchase additional benefits
provided by rider to the Contract, subject to the Company's underwriting
and issuance standards. These additional benefits may increase the
monthly cost of insurance charge.
Acceleration of Death Benefit Rider
The Company intends to offer in the future a rider benefit that will allow
the Owner to receive an accelerated payment of a portion of the Death Benefit,
discounted to reflect its current value. This advance payment of the Death
Benefit will be available if the Insured is diagnosed as terminally ill with a
life expectancy of 12 months or less.
Tax Treatment. Under proposed regulations, a "qualified accelerated death
benefit" payable on account of a terminal illness would be treated as a
death benefit. However, until final regulations are issued, the tax
treatment of benefits received under an accelerated benefits rider is
presently unclear. Moreover, the treatment may be different depending on
whether the benefit is paid for nominal illness or in the event of some
other health condition.
Determination of Account Value
Account Value and Cash Surrender Value. The Account Value under a
Contract includes its value in the Separate Account, in the Fixed Account
and, if there is any Indebtedness, in the Loan Account. The Account Value
reflects premiums, the Net Investment Experience of the Contract's
Sub-Accounts, interest credited on its Account Value in the Fixed Account
and on amounts held in the Loan Account, amounts deducted for Contract
charges or any Withdrawal Charges that apply to an Owner request to reduce
the Face Amount and amounts withdrawn or surrendered.
The Contract's Cash Surrender Value is the amount the Owner will receive
upon surrender of the Contract. The Cash Surrender Value is the Account
Value reduced by any outstanding Contract loan (and accrued interest) and
by any applicable Withdrawal Charges. (See "Preferred and Non-Preferred
Loans" and "Withdrawal Charges".)
The Contract's Cash Surrender Value in the Separate Account may increase or
decrease daily depending on the Net Investment Experience of the Contract's
Sub-Accounts. Unfavorable investment experience can reduce the Cash
Surrender Value to zero. Because there is no guaranteed minimum Account
Value in the Separate Account, the Owner bears the entire investment risk
with respect to the Account Value allocated to the Separate Account.
Net Investment Experience. The Net Investment Experience of the Contract's
Sub-Accounts will affect the Contract's Account Value and, in some
circumstances, the Death Benefit. The Net Investment Experience of the
Sub-Accounts is determined as of the close of regular trading on the New
York Stock Exchange on each day when the Exchange is open for trading.
A Sub-Account's Net Investment Experience for any period reflects the
investment experience of the underlying Portfolio shares for the same
period, reduced by the charges against the Sub-Account for that period.
(Currently the Sub-Accounts are charged only for the Company's mortality
and expense risk and administrative expenses, but in the future the Company
may impose a charge against the Sub-Accounts for taxes if appropriate. See
"Charges and Expenses" and "Taxation of the Company and the Separate
Account.")
The investment experience of Portfolio shares for any period is the
increase or decrease in their net asset value for the period invested
reduced by the amount of any dividends or capital gains distributions on
the shares during the period. Dividends and capital gains distributions on
Portfolio shares are reinvested in additional shares of the Fund and affect
subsequent investment experience.
Owners who allocate Account Value to the Fixed Account will not share in
the actual investment experience of the Fixed Account. Instead, the
Company guarantees that Account Values in the Fixed Account will earn
interest at an effective annual rate of at least 3.0%. The Company may
from time to time credit interest at a higher rate than 3.0%, but it is
under no obligation to do so. The Company declares the current interest
rate for the Fixed Account periodically. Account Values that are in the
Fixed Account will earn interest daily.
Preferred and Non-Preferred Loans
The Owner may borrow all or part of the Contract's "loan value" at any time
after the free look period. The Company will usually make the loan within
seven days of the date when a loan request in writing is received at the
Variable Service Center.
The maximum amount available for a loan is equal to 90% of the Account Value
less the sum of Withdrawal Charges and Indebtedness. A loan reduces the
Contract's Account Value in the Sub-Accounts and the Fixed Account by the
amount of the loan. The amount taken from the Contract's Sub-Accounts as a
result of a loan does not participate in the investment experience of the
Sub-Accounts. Therefore, the Death Benefit and Account
Value of the Contract can be permanently affected by a loan, even if it is
repaid. In addition, any proceeds payable under a Contract are reduced by the
amount of any outstanding loan plus accrued interest.
A loan repayment increases the Account Value in the Sub-Accounts and the Fixed
Account by the amount of the repayment. Unless the Owner requests otherwise,
loans and loan repayments are attributed to the Sub-Accounts and the Fixed
Account in proportion to the Account Value in each.
If a loan plus accrued interest exceeds the Contract's Account Value less
the Withdrawal Charges on the next loan interest due date (or, if greater,
on the date the calculation is made), the Company will notify the Owner
that the Contract is going to terminate. The Contract will terminate without
value 61 days after the notice is mailed unless the excess amount is paid to
the Company within that time.
The interest rate charged on loans is 5% per year and is due on each Contract
Anniversary. If not paid, the interest accrued on the loan is added to the
loan. An amount equal to the unpaid interest is deducted from the Contract's
Account Value in the Sub-Accounts and the Fixed Account and transferred to the
Loan Account.
Preferred Loan Amounts. A preferred loan amount is determined on the Contract
Date and on the first Business Day of each Contract month. It is equal to
the excess of Account Value over the total premiums paid and not deemed
withdrawn.
Surrenders and Partial Withdrawals
Surrenders. The Owner may surrender a Contract for its Cash Surrender
Value at any time while the Insured is living by a signed written request
conforming to the Company's administrative procedures. The Cash Surrender
Value of the surrendered Contract will be determined as of the Business Day
when a surrender request is received at the Company's Variable Service
Center. The Cash Surrender Value equals the Account Value reduced by any
Contract loans and accrued interest and by any applicable Withdrawal
Charges. (See "Withdrawal Charges".) The Owner may elect in writing to
have all or part of the Cash Surrender Value applied to an optional annuity
payment option. (See "Optional Annuity Payment Options".)
Partial Withdrawal. The Owner may make a partial withdrawal under the
Contract to receive a portion of its Cash Surrender Value. A partial
withdrawal will cause a proportionate reduction in the Contract's Account
Value and Death Benefit. No partial withdrawal may reduce the Death
Benefit below that required to qualify the Contract as life insurance or
below the Contract's Face Amount, except with The Company's consent.
Any Withdrawal Charges that apply to a partial withdrawal will be deducted
pro rata from the Contract's Account Value in the Sub-Accounts and the
Fixed Account. The Surrender Charge applied will reduce any remaining
Withdrawal Charges under the Owner's Contract.
Maturity Proceeds
If the Insured is living on the "Maturity Date" (the anniversary of the
Contract Date on which the Insured is age 100), on surrender of the
Contract to the Company, the Company will pay the Owner the Cash Surrender
Value. In such case, the Contract will terminate and the Company will have
no further obligations under the Contract.
Lapse and Reinstatement
If the Cash Surrender Value in the Contract is insufficient to pay the
monthly deductions, loan interest, or other charges which become due but
are unpaid, a grace period of 61 days will be allowed for payment of
sufficient premium to continue the Contract in force. The Company will
notify the Owner of the amount required to continue the Contract in force.
If the required premium amount is not received within 61 days of the
notice, the Contract will terminate without value. If the Insured dies
during the grace period, the Company will pay the Death Benefit Proceeds.
If the grace period ends and the Owner has neither paid the required
premium nor surrendered the Contract for its Cash Surrender Value, the
Owner may reinstate the Contract by (a) submitting a written request at any
time with two years after the end of the grace period and prior to the
Maturity Date; (b) providing evidence of insurability satisfactory to the
Company; (c) paying a sufficient premium to cover all charges that were due
and unpaid during the grace period; (d) paying an additional premium at
least three times the guaranteed monthly cost of insurance charge under the
Contract and all other applicable charges; and (e) repaying any
indebtedness against the Contract that existed at the end of the grace
period.
Payment of Proceeds
The Company ordinarily will pay any Cash Surrender Value, Contract loan
value or Death Benefit Proceeds from the Sub-Accounts within seven days
after receipt by the Variable Service Center of a request, or proof of
death of the Insured in a form satisfactory to the Company. However, the
Company may delay payment or transfers from the Sub-Accounts. (See
"Suspension of Payments and Transfers.") The Company may also delay
payment if it considers it necessary to contest the Contract. The Company
will pay interest on the Death Benefit Proceeds from the date they become
payable to the date they are paid in one sum or, if an optional annuity
payment option was selected, to the effective date of the option. (See
"Optional Annuity Payment Options".)
Tax Withholding
All distributions or portions thereof which are includable in the gross
income of the Owner are subject to federal income tax withholding. The
Company will withhold federal taxes at the rate of 10% from each
distribution. However, the Owner may elect not to have taxes withheld or
to have taxes withheld at a different rate.
Optional Annuity Payment Options
If no election has been previously made by the Owner, the Beneficiary may
elect that Death Benefit Proceeds be paid as a single sum, as a fixed
annuity or retained by the Company in its general account (see Death
Benefits). The Contract's Death Benefit Proceeds and Cash Surrender Value
can be paid in one sum, or the Owner or payee can choose to receive all or
part of the proceeds as fixed annuity payments (payments which are guaranteed
as to dollar amount by the Company). Other payment options may also be made
available, subject to applicable regulatory requirements. The guaranteed
mortality assumptions used in determining payment levels will not vary based
on sex.
Annuitization Bonus. Subject to state availability, the Company intends to
increase the amount applied to optional annuity payment options A, B, C, D
and, for specified periods greater than five years, E, by an "Annuitization
Bonus". The Annuitization Bonus Value will be calculated by the Company as
of the immediately preceding Business Day. The increase will be allocated
pro rata to the Contract Options which the Owner has elected and will be
deemed "income" on the Contract for federal income tax purposes. (See
"Income Tax Treatment of Contract Benefits.")
The "Annuitization Bonus" for a Contract will be determined by the Company
at the time of issuance of a Contract, but may be modified, reduced or
eliminated for Contracts subsequently issued. On the date of this
prospectus, the Annuitization Bonus is 3% of the amount applied to annuity
payment options A, B, C, D and, for specified periods greater than five
years, E.
The following annuity payment options are available:
Option A. Life Annuity. An annuity payable monthly during the lifetime of
the payee. Annuity payments cease at the death of the payee.
Option B. Life Annuity with Period Certain of 60, 120, 180 or 240 Months.
An annuity payable monthly during the lifetime of the payee for 60, 120,
180 or 240 months certain as selected.
Option C. Joint and Survivor Annuity. An annuity payable monthly during the
joint lifetime of the payee and a designated second person. At the death of
either payee, annuity payments will continue to be made to the survivor
payee. The survivor's annuity payments will equal 100%, 75%, 66-2/3% or 50%
of the amount payable during the joint lifetime, as chosen.
Option D. Joint and Contingent Annuity. An annuity payable monthly during
the lifetime of the payee and continuing during the lifetime of a
designated second person after the payee's death. The second person's
annuity payments will equal 100%, 75%, 66 2/3% or 50% of the amount
payable, as chosen.
Option E. Fixed Payments for a Period Certain. Annuity payable monthly for
a fixed amount for any specific period (at least 5 years but not exceeding
30 years), as chosen.
Option F. Death Benefit Proceeds Remaining with the Company. Proceeds from
the Death Benefit left with the Company. The Death Benefit Proceeds will
remain in the Contract Options to which they were allocated at the time of
death unless the beneficiary elects to reallocate them. Full and partial
withdrawals may be made at any time.
Annuity Options A, B, C & D are available for fixed annuity payments,
variable annuity payments or some combination of both. Annuity Option E is
available for fixed annuity payments only.
If the payee dies during a period certain (Annuity Options B or E), the
remaining annuity payments will be made to the beneficiary. The beneficiary
may elect to receive the commuted value of the remaining annuity payments
in a single sum instead. If no beneficiary is designated, the commuted
value of the remaining annuity payments will be made to the payee's estate
in a single sum. The Company will determine the commuted value by
discounting the remaining annuity payments at its then current interest
rate used for commutation.
Right to Exchange for a Fixed Benefit Contract
During the first 24 months after the Contract Date, if the Contract has not
lapsed, there is an unconditional right to transfer all of the Account
Value in the Sub-Accounts to the Fixed Account.
OTHER PROVISIONS OF THE CONTRACT
Suicide Exclusion
If the Insured commits suicide within two years from the Contract's date of
issue (or less if required by state law), the Death Benefit will be limited
to the premiums paid, reduced by any outstanding loan and accrued loan
interest.
Representations and Contestability
Generally, the Company can challenge the validity of the Owner's Contract
or any rider to the Owner's Contract during the Insured's lifetime for two
years from the date of issue, based on misrepresentations made in the
application. The Company can challenge the portion of the Death Benefit
resulting from payment of an underwritten additional premium payment for
two years, during the Insured's lifetime, from the date the additional
premium payment was received. However, the two year time limit on the
Company's right to challenge all or part of the Contract does not apply in
the event that the Insured dies within the two year period.
Misstatement of Age or Sex
If the Insured's age or sex is misstated in the application, the Contract's
Account Value and Death Benefit will be what the premiums paid and
unscheduled premium payments made would have purchased, based on the
Insured's correct age or, if the Contract is sex-based, on the Insured's
correct sex.
Owner and Beneficiary
The Owner is named in the application but may be changed from time to time.
At the death of the Owner, his or her estate will become the Owner unless a
successor Owner has been named. The Owner's rights as such terminate when
the Insured dies.
The beneficiary is also named in the application. The beneficiary of the
Contract may be changed at any time before the death of the Insured. The
beneficiary has no rights under the Contract until the death of the Insured
and must survive the Insured in order to receive the Death Benefit
Proceeds. If no named beneficiary survives the Insured, the proceeds will
be paid to the Owner.
A change of Owner or beneficiary must be in written form satisfactory to
the Company and must be dated and signed by the Owner making the change.
The change will be subject to all payments made and actions taken by the
Company under the Contract before the signed change form is received by the
Company at its Variable Service Center.
Assignments
The Owner may assign (transfer) the Owner's rights in the Contract to
someone else. An absolute assignment of the Contract is a change of Owner
and beneficiary to the assignee. A collateral assignment of the Contract
does not change the Owner or beneficiary, but their rights will be subject
to the terms of the assignment. The assignments must be in writing, signed
by the Owner and recorded by the Company at its Variable Service Center.
The Company is not responsible for any assignment not submitted for
recording, nor is the Company responsible for the sufficiency or validity
of any assignment.
The assignment will be subject to any Indebtedness under a contract before
and after the assignment was recorded.
Reports and Records
The Company will mail to the Owner, at the last known address of record, an
annual statement showing current Account Values, transactions since the
last statement, Contract loan information and any other information
required by federal or state laws or regulations.
The Owner will also be sent annual and semi-annual reports containing the
financial statements of the Separate Account and the Fund or Portfolio.
In addition, Owners will receive statements of significant transactions,
such as changes in the Death Benefit, transfers among Contract Options,
premium payments, Contract loans, increases in Contract loan principal,
Contract loan repayments, unpaid Contract loan interest added to principal,
reinstatement and termination.
Voting Rights
In accordance with its view of present applicable law, the Company will
vote the shares of the Portfolios held by the Separate Account Sub-Accounts
at regular or special meetings of the shareholders in accordance with
instructions received from Owners having the voting interest in the
affected Portfolio(s). The number of votes that an Owner has the right to
instruct for a particular Sub-Account is determined by dividing the Account
Value in the Sub-Account by the net asset value per share of the
corresponding Portfolio. 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. A
Fund may not be required to hold routine annual meetings of its
shareholders.
The number of shares which an Owner has a right to vote will be determined
as of a date to be chosen by the Company not more than 60 days prior to a
shareholder meeting of Fund. Each Owner having a voting interest will
receive proxy material, annual reports and any other materials relating to
the appropriate Portfolio.
If required by state insurance authorities, the Company may disregard
voting instructions if they would require that shares be voted to cause a
change in the Portfolios of a Sub-Account; or a change in the investment
policy of the Portfolios; or to approve or disapprove an investment
advisory or underwriting contract for a Portfolio. In addition, the
Company may disregard voting instructions in favor of changes, initiated by
an Owner or the Fund's Board of Trustees, in any investment policy,
investment adviser or principal underwriter of the Portfolio if the
Company: (a) reasonably disapproves of the changes and (b) in the case of
a change in investment policy or investment adviser, the Company makes a
good faith determination that the proposed change is contrary to state law
or is prohibited by state regulatory authorities or that the change would
be inconsistent with a Sub-Account's investment objectives or would result
in the purchase of securities which vary from the general quality and
nature of investments and investment techniques utilized by other separate
accounts of the Company. If the Company does disregard voting
instructions, a summary of that action and the reasons for it will be
included in the next semiannual report to Owners.
Suspension of Payments and Transfers
The Company reserves the right to suspend or postpone payments for
surrenders, withdrawals and Contract loans or transfers from the
Sub-Accounts for any period when:
. the New York Stock Exchange is closed for trading;
. trading on the New York Stock Exchange is restricted by the SEC;
. an emergency exists as a result of which disposal of securities
held in the applicable Sub-Accounts is not reasonably
practicable or it is not reasonably practicable to determine the
value of the applicable Sub-Account's net assets; or
. during any other period when the SEC, by order, permits such
suspension.
The Company also reserves the right to defer payment for a surrender,
withdrawal and Contract loan or transfer from the Fixed Account for the
period permitted by law but not for more than six months after written
election is received by the Company. The Company will pay interest in
accordance with state insurance law requirements on payments that are
delayed.
Nonparticipation in Company Dividends
The Contracts are nonparticipating. This means that they do not participate
in any dividend distribution of the Company's surplus.
DISTRIBUTION AND OTHER AGREEMENTS
First Variable Capital Services, Inc. ("FVCS"), 10 Post Office Square, MA
02109, acts as distributor of the Contracts. FVCS, a wholly owned
subsidiary of the Company, is registered with the SEC under the Securities
Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. The Contract is offered on a continuous basis.
The Company and FVCS have agreements with various broker/dealers under
which the Contracts will be sold by registered representatives of
broker/dealers. The registered representatives are required to be
authorized under applicable state regulations to sell variable life
insurance contracts. The commissions payable to a broker/dealer for sales
of the Contract pursuant to the sales agreement is not expected to exceed
8.50% of the first year premium payment. Broker/dealers may receive
expense allowances, wholesaler fees, bonuses and training fees.
Under a Services Agreement between the Company and FVCS, the Company
performs underwriting, issuance and other administrative services for the
Contracts.
SAFEKEEPING OF ASSETS
The Company serves as the custodian of the assets of the Variable Account.
MANAGEMENT OF THE COMPANY
The directors and executive officers of the Company and their principal
business experience during the past five years, are:
Name and Address Position with the Company Principal Occupation
During Past 5 Years
Ronald M. Butkiewicz Director and Chairman President and Chief
2211 York Rd., Suite 202 Executive Officer, Irish
Oakbrook, IL 60521 Life of North America,
Inc; prior to 1993,
President, Interstate
Assurance Company
Michael J. Corey Director Managing Director
401 East Host Drive Insurance Practice Group
Lake Geneva, WI 53147 Ward Howell Intl., Inc.;
President, CSG
International Inc.
Norman A. Fair Director Vice President, Treasurer
2211 York Rd., Suite 202 & Asst. Sec., Irish Life
Oakbrook, IL 60521 of North America, Inc.;
prior to 1994, Senior
Vice President and Chief
Financial Officer,
Interstate Assurance
Company
Michael R. Ferrari Director President, Drake
Drake University University
Des Moines, IA 50311
Peter D. Fullam Director Executive Director and
Irish Life Centre Chief Financial Office,
Lower Abbey St. Managing Director, Irish
Dublin, Ireland Life plc
T. David Kingston Director Managing Director, Irish
Irish Life Centre Life plc
Lower Abbey st.
Dublin, Ireland
Stephan M. Largent Director and President President, prior to April,
10 Post Office Square 1995, President, ING
Boston, MA 02109 America Equities, Inc.
Jeff S. Liebmann Director Partner, Dewey Ballantine
1301 Avenue of
the Americas
New York, NY 10019
Kenneth R. Meuyer Director Managing Director, Lincoln
200 S. Wacker Dr. Capital Management Co.
Chicago, IL 60606
Thomas K. Neavins Director Vice President, and
2211 York Rd., Suite 202 Corporate Secretary,
Oakbrook, IL 60521 Irish Life of North
America, Inc.
Phillip R. O'Connor Director (non-voting) Principal of Coopers &
Suite 1247 Lybrand LLP/Palmer
111 W. Washington St. Bellevue Corp.
Chicago, IL 60602
Mark E. Reynolds Vice President and Vice President and
10 Post Office Square Treasurer Treasurer; prior to 1993,
Boston, MA 02109 Vice President, Treasurer
and Controller, First
Internaitonal Life
Insurance Company
Arnold R. Bergman Vice President-Legal & Vice President-Legal &
10 Post Office Square Administration and Administration and
Boston, MA 02109 Secretary Secretary; prior to
February 1995, Counsel,
Aetna Life Insurance and
Annuity Company; prior to
1992, Vice President,
General Counsel and
Secretary, First
International Life
Insurance Company
Martin Sheerin Vice President and Chief Vice President and Chief
10 Post Office Square Actuary Actuary; prior to October,
Boston, MA 02109 1994, Vice President,
Irish Life of North
America, Inc.
Thomas Simpson Vice President and Chief Vice President; prior to
10 Post Office Square Marketing Officer February, 1996, Vice
Boston, MA 02109 President, Alexander
Hamilton Life Insurance
Company; prior to November,
1994, National Sales
Manager, Bankers National
Life Insurance Company
<PAGE>
FEDERAL TAX STATUS
General
BECAUSE OF THE COMPLEXITY OF THE LAWS AND BECAUSE TAX RESULTS WILL VARY
ACCORDING TO THE STATUS OF THE OWNER, LEGAL AND TAX ADVICE MAY BE NEEDED BY
A PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
CONTRACT.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Contracts cannot be made
in this prospectus and that special tax rules may be applicable with
respect to purchases not discussed herein. In addition, no attempt is made
to consider any applicable state or other tax laws. This discussion of
federal tax status is based upon the Company's understanding of current
federal income tax laws as they are currently interpreted.
Taxation of the Company and the Separate Account
Under current federal income tax law, no tax is imposed on the Company as a
result of the operations of the Separate Account and the Fixed Account.
Thus, no charge is currently imposed for Company federal income taxes. The
Company reserves the right to charge the Separate Account or Fixed Account
for Company federal income taxes, if there are changes in federal tax law.
Under current laws the Company may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes are not
significant and, accordingly, the Company is not currently imposing a
charge for them. If they increase, however, a charge for such taxes
attributable to the Separate Account and/or Fixed Account may be imposed.
Life Insurance and Modified Endowment Contract Definitions
Life Insurance. Section 7702 of the Code provides that if certain tests
are met, a Contract will be treated as life insurance for federal tax
purposes. The Company will monitor compliance with these tests. As a
result, the Company believes Owners will not be taxed on increases in
Account Value under the Contracts until they are distributed. Furthermore,
the Company believes the Death Benefits received under the Contracts are
excludable from the gross income of the beneficiary pursuant to the
provisions of Section 101(a) of the Code.
Accelerated Benefits Rider. The Company believes that payments received
under an accelerated benefits rider will be treated as distributions from
an insurance contract under current law and, in addition, under regulations
proposed December 15, 1992, as distributions or death benefits, depending
on the circumstances. (See "Acceleration of Death Benefit Rider" for more
information regarding the rider.) If such payments are distributions,
their tax treatment would depend on whether or not the Contract is a
modified endowment contract.
Modified Endowment Contract. Section 7702A of the Code contains provisions
affecting the tax treatment of any loan, assignment or other pre-death
distribution from a life insurance contract which is also a "modified
endowment contract". The Company has designed the Contracts to meet the
definition of a modified endowment contract.
A modified endowment contract is a life insurance contract where premiums
paid under the Contract at any time during the first seven contract years
exceeds the sum of the net level premiums that would have been paid on or
before such time if the Contract provided for paid up future benefits after
the payment of seven level annual premiums ("7-pay test"). (The amount of
premiums payable under the 7-pay test are calculated based upon certain
assumptions regarding the Contract's earnings and the use of a reasonable
mortality charge. Riders to the Contract are considered part of the
Contract for purposes of applying the 7-pay test.)
Any Contract received in exchange for a modified endowment contract will
also be a modified endowment contract. However, an exchange under Section
1035 of the Code of a life insurance contract entered into before June 21,
1988 will not cause the new Contract to be treated as a modified endowment
contract if no additional premiums are paid and there is no increase as a
result of the exchange.
Income Tax Treatment of Contract Benefits
If the Contract falls within the definition of a modified endowment
contract, the following rules will apply to distributions under such
Contract:
(a) Distributions will be included in gross income to the extent the
Account Value of the Contract exceeds the investment in the Contract (i.e.
will be treated as income first). Any additional amounts received other
than Contract loans will be treated as a return of capital to the Owner and
will reduce the Owner's investment in the Contract.
(b) Loans are considered distributions. An investment in the Contract
will be increased by the amount of any prior loan that was included in the
Owner's gross income.
(c) A Contract assignment is treated as a distribution. For example, a
collateral assignment is a distribution which will subject any gain that
accrues in the Contract to taxation.
(d) For purposes of determining the amount of the distribution which is
included in gross income, all modified endowment contracts issued by the
Company and its affiliates to the same Owner during any 12-month period
must be treated as one modified endowment contract.
(e) Payments under the accelerated benefits rider may be treated as
distributions that are subject to taxation under these rules.
Any taxable distribution will be subject to an additional tax equal to 10%
of the taxable amount of the distribution unless the distribution is:
(a) made on or after the date when the Owner attains age 59 1/2;
(b) is attributable to the Owner becoming disabled; or
(c) is part of a series of substantially equal periodic payments made no
less frequently than annually for the life (or life expectancy) or for the
joint lives (or life expectancies) of the Owner or the beneficiary.
Diversification Requirements
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable life insurance contracts. The Code provides
that a variable life insurance contract will not be treated as a life
insurance contract under Section 7702 for any period (and any subsequent
period) for which the investments are not, in accordance with regulations
prescribed by the United States Treasury Department ("Treasury
Department"), adequately diversified. Failure to comply with the
diversification requirements may result in the Contract not qualifying as
life insurance. If the Contract does not qualify as life insurance, Owners
may be subject to immediate taxation on the increases in Account Value of
their Contracts plus the cost of insurance protection for the year.
The Company intends that all Portfolios of the Funds underlying the
Contracts will be managed by the Fund or its investment adviser to comply
with the diversification requirements set forth in Section 817(h) of the
Code and Treas. Reg. 1.817-5 promulgated thereunder.
The Treasury Department has indicated that the diversification regulations
do not provide guidance regarding the circumstances in which Owners may
direct their investments to Sub-Accounts of the Separate Account without
being considered the owners of the assets of the Separate Account. At this
time it cannot be determined whether additional guidance will be provided
and what standards may be contained in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situation addressed in published
rulings issued by the Internal Revenue Service ("IRS") in which it was held
that the policy owner was not the owner of the assets of the separate
account. It is unknown whether these differences, such as the Owner's
ability to transfer among investment choices or the number and type of
investment choices available, would cause the Owner to be considered the
owner of the assets of the Separate Account. To the extent the Owner is
treated as owner of the assets of the Separate Account attributable to the
Owner's Contract, the Owner would be liable for federal income tax on the
earnings allocable to the Contract prior to receipt of payments under the
Contract.
In the event any forthcoming guidance or ruling by the IRS is considered to
set forth a new position, such guidance or ruling will generally be applied
only prospectively. However, if such ruling or guidance was not considered
to set forth a new position, it may be applied retroactively, resulting in
the Owner being retroactively determined to be the owner of the assets of
the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
ADVERTISING PRACTICES
The Company may from time to time receive endorsements of the Contracts
from professional organizations. The Company may use such endorsements in
advertisements or sales material for the Contracts. The Company may also
pay the professional organization making the endorsement for the use of its
customer or mailing lists in order to distribute promotional materials
regarding the Contracts. An endorsement of the Contracts by a third party
is not necessarily indicative of the future performance or results which
may be obtained by persons who purchase the Contracts.
From time to time, articles discussing the Separate Account's investment
experience, performance rankings and other characteristics may appear in
national publications. Some or all of these publishers or ranking services
(including, but not limited to, Lipper Analytical Services Inc. and
Morningstar, Inc.) may publish their own rankings or performance reviews of
variable contract separate accounts, including the Separate Account.
References to, reprints or portions of reprints of such articles or
rankings may be used by the Company as sales literature or advertising
material and may include rankings that indicate the names of other variable
contract separate accounts and their investment experience.
Articles and releases, developed by the Company, the Funds and other
parties, about the Separate Account or the Funds regarding individual
Portfolio, Fund and Fund Group asset levels and sales volumes, statistics
and analyses of industry sales volume and asset levels, and other
characteristics may appear in various publications. References to or
reprints of such articles may be used in promotional literature for the
Contracts or the Separate Account. Such literature may refer to personnel
of the adviser, or personnel of the sub-advisers, who have investment
management responsibility, and their investment style. The reference may
allude to or include excerpts from articles appearing in the media.
The advertising and sales literature for the Contracts and the Separate
Account may refer to historical, current and prospective economic trends.
In addition sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and
prospective Owners. These materials may include, but are not limited to,
discussions of college planning, retirement planning, reasons for investing
and historical examples of the investment performance of various classes of
securities, securities markets and indices.
LEGAL MATTERS
State Regulation
The Company is subject to the laws of the State of Arkansas governing
insurance companies and to the regulations of the Arkansas 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 full examination of its operations is conducted periodically by
the National Association of Insurance Commissioners. Such regulation does
not, however, involve any supervision of management or investment practices
or policies. In addition, the Company is subject to regulation under the
insurance laws of other jurisdictions in which it may operate.
Legal Proceedings
There are no material pending legal proceedings to which the Separate
Account, First Variable Capital Services, Inc. or First Variable Life
Insurance Company is a party.
EXPERTS
The audited financial statements of First Variable Life Insurance Company
included in this prospectus and Registration Statement have been audited by
Ernst & Young, LLP, independent public auditors, as indicated in their
report herein, and are included herein in reliance upon their authority as
experts in accounting and auditing.
The interim financial statements of First Variable Life Insurance Company
as of ________, 1996 and for the ___ month period then ended and the
interim financial statements of the Separate Account as of _______, and the
___ month period then ended have not been audited.
The hypothetical Contract illustrations included in this prospectus and
Registration Statement have been approved by Martin Sheerin, Chief Actuary
of the Company, and are included in reliance upon his opinion as to their
reasonableness.
Legal matters in connection with the Contracts have been reviewed by the
Company's Legal Department. Mayer, Brown & Platt, of Washington, DC, has
provided advice on certain matters relating to the federal securities and
tax laws.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. This prospectus
omits certain information contained in the Registration Statement. Copies
of such additional information may be obtained from the SEC upon payment of
the prescribed fee.
APPENDIX: A
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES,
CASH SURRENDER VALUES AND ACCUMULATED VALUE OF THE PREMIUM
The tables in Appendix A illustrate the way the Contracts operate. They
show how the Death Benefit, Cash Surrender Value and Account Value change
over an extended period of time assuming hypothetical gross rates of return
(i.e. investment income and capital gains, realized or unrealized) for the
Separate Account equal to constant after-tax annual rates of 0%, 6% and
12%. The tables are based on an initial premium of $10,000 to provide
insurance coverage on males aged 40 and 50. The males aged 40 and 50 are
assumed to be in the nonsmoker standard risk classification. Values are
first given based on current mortality rates and other Contract charges and
then based on guaranteed mortality rates and other Contract charges. Death
Benefits, Cash Surrender Values and Account Values for a Contract would be
different from the amounts shown if the actual gross rates of return do not
average 0%, 6% or l2%, but are either above or below that average for the
period. They would also be different depending on the allocation of Account
Value among the Separate Account's Sub-Accounts if the aggregate gross rate
of return for all Sub-Accounts averaged 0%, 6% or 12%, but varied above or
below that average for individual Sub-Accounts. They would also be
different if any Contract loan were made during the period of time
illustrated, if the Insured were female or in the smoker standard risk
classification, or if the Contracts were issued at a unisex rate.
The Death Benefits, Cash Surrender Values and Account Values shown in the
tables reflect the fact that the Company makes: (a) a monthly deduction
from the Account Value on the first day of each Contract month for (i) a
Maintenance Fee of $2.50, (ii) a Distribution Charge equivalent to an
annual rate of 0.20% of the Account Value for the first ten Contract Years,
(iii) a Premium Tax Charge equivalent to an annual rate of 0.25% of the
Account Value for the first ten Contract Years, (iv) a federal tax charge
equivalent to an annual rate of 0.20% of the Account Value for the first
ten Contract Years and (v) a Cost of Insurance charge equivalent to an
annual rate of 0.40% of the Account Value for the first ten Contract Years
and to an annual rate of 0.55% of the Account Value thereafter and (b) a
daily charge assessed against the Separate Account for (i) a Mortality and
Expense Risk Charge equivalent to an annual rate of 0.90% of the average
daily net assets of the Separate Account and (ii) an Administrative Charge
equivalent to an annual rate of 0.40% of the average daily net assets of
the Separate Account. The Cash Surrender Values shown in the tables
reflect the fact that Withdrawal Charges (consisting of a Sales Charge and
an Unreimbursed Premium Tax Charge) are deducted from the Account Value
upon surrender. (See "Charges and Expenses".) The Death Benefits, Cash
Surrender Values and Account Values shown in the tables also reflect a
simple average of the investment advisory fees and operating expenses
incurred by the Fund or Portfolio, at an annual rate of .__% of the average
daily net assets of the Fund or Portfolio. This average reflects a
voluntary cap on the investment advisory fees. If the investment adviser
discontinues these caps, the values illustrated on the following pages
could be less. (See "Fund Expenses".)
Taking account of the charges for mortality and expense risks and
administrative expense in the Separate Account and the average investment
advisory fee and operating expenses of the Fund or Portfolio, the gross
annual rates of return of 0%, 6% and 12% correspond to net investment
experience at constant annual rates of ____%, ____% and ___%, respectively.
The hypothetical rates of return shown in the tables do not reflect any tax
charges attributable to the Separate Account since no such charges are
currently made. If any such charges are imposed in the future, the gross
annual rate of return would have to exceed the rates shown by an amount
sufficient to cover the tax charges, in order to produce the Death
Benefits, Cash Surrender Values and Account Values illustrated. (See
"Taxation of the Company and the Separate Account".)
The second column of each table shows the amount which would accumulate if
the initial premium was invested to earn interest, after taxes of 5% per
year, compounded annually.
<PAGE>
<TABLE>
<CAPTION>
$10,000 INITIAL PREMIUM
$_______ SPECIFIED AMOUNT
MALE NONSMOKER: AGE 40
CURRENT RATES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN
_________________ _________________ _________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREMIUM
PAID PLUS
END OF INTEREST
POLICY AT 5% CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR Per Year VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
_____ ________ _____ _____ _______ _____ _____ _______ _____ _____ _______
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATIVE
OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY
BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING ECONOMIC
CONDITIONS, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND
ACCOUNT VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATION CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
$10,000 INITIAL PREMIUM
$_______ SPECIFIED AMOUNT
MALE NONSMOKER: AGE 40
GUARANTEED RATES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN
_________________ _________________ _________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREMIUM
PAID PLUS
END OF INTEREST
POLICY AT 5% CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR Per Year VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
_____ _______ _____ _____ _______ _____ _____ _______ _____ _____ _______
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND WHOULD NOT BE DEEMED A
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY AN OWNER,
PREVAILING ECONOMIS CONDITIONS, PREVAILING RATES AND RATES OF INFLATION.
THE DEATH BENEFIT AND ACCOUNT VLAUE WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS
BUT ALSO FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATION CAN BE MADE THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.
<TABLE>
<CAPTION>
$10,000 INITIAL PREMIUM
$_______ SPECIFIED AMOUNT
MALE NONSMOKER: AGE 50
CURRENT RATES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN
_________________ _________________ _________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREMIUM
PAID PLUS
END OF INTEREST
POLICY AT 5% CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR Per Year VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
_____ ________ _____ _____ _______ _____ _____ _______ _____ _____ _______
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING
ECONOMIC CONDITIONS, PREVAILING RATES AND RATES OF INFLATION. THE DEATH
BENEFIT AND ACCOUNT VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATION CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
$10,000 INITIAL PREMIUM
$_______ SPECIFIED AMOUNT
MALE NONSMOKER: AGE 50
GUARANTEED RATES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN
_________________ _________________ _________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREMIUM
PAID PLUS
END OF INTEREST
POLICY AT 5% CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR Per Year VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
_____ ________ _____ _____ _______ _____ _____ _______ _____ _____ _______
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING
ECONOMIC CONDITIONS, PREVAILING RATES AND RATES OF INFLATION. THE DEATH
BENEFIT AND ACCOUNT VALUE WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATION CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
APPENDIX B: FINANCIAL STATEMENTS
SEPARATE ACCOUNT VL
FIRST VARIABLE LIFE INSURANCE COMPANY
REPORT OF- INDEPENDENT ACCOUNTANT
[To be inserted.]
<PAGE>
PART II
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.
UNDERTAKING REGARDING INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities
Act of 1933 ("Act") may be permitted to directors and officers and
controlling persons of the Registrant, the Registrant, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross-Reference Sheet.
The prospectus consisting of ____________ pages.
The undertaking to file reports.
The undertaking regarding indemnification.
The signatures.
Written consents of the following persons:
Arnold R. Bergman (See Exhibit 3(a))
Mayer, Brown & Platt (See Exhibit 3(b))
Martin Sheerin (See Exhibits 6(a) and 6(b))
Ernst & Young, LLP (See Exhibit 7)
The following exhibits:
1.A. (1) Resolution of the Board of Directors of the Company authorizing
the establishment of the Separate Account.
(2) Not Applicable.
(3) (a) Underwriting Agreement.*/<F2>
(b) Form of Sales Agreement.*/<F2>
(c) Commission Schedule for Contracts. */<F2>
(4) Not Applicable.
(5) Specimen Variable Life Insurance Contract.
(6) Articles of Incorporation and By-Laws of First Variable
Life Insurance Company. 1/<F3>
(7) Not Applicable.
(8) Form of Participation Agreement.*/<F2>
(9) Not Applicable.
(10) Specimen Single Premium Variable Life Insurance Application.
<PAGE>
2. Included as exhibit I.A(5) above.
3. (a) Opinion and consent of ___________________ as to
securities being registered.*/<F2>
(b) Consent of Mayer, Brown & Platt.*/<F2>
4. Not Applicable.
5. Not Applicable.
6. (a) Opinion and Consent of Actuary.*/<F2>
(b) Opinion and Consent of Actuary regarding DAC tax charge.*/<F2>
7. Consent of Independent Accountants.*/<F2>
8. Notice of Withdrawal Right for Contracts.*/<F2>
9. Representations, Description and Undertaking pursuant to
Rule 6e-3(T)(b)(13)(iii)(F) under the Investment Company Act of
1940.
10. Powers of Attorney.
_________________
*/<F2> To be filed by amendment.</F2>
1/<F3> Incorporated herein by reference to Post-Effective Amendment
No. 21 to the Form N-4 Registration Statement of First Variable
Life Insurance Company and First Variable Annuity Fund E, filed
with the Securities and Exchange Commission on April 29, 1996
(File No. 33-86738).</F3>
<PAGE>
Exhibit Index
Exhibit Number Description Sequentially
Numbered
Page. */<F4>
1.A. (1) Resolution of the Board of Directors
of the Company authorizing
establishment of the Separate Account
(5) Specimen Variable Life Insurance Contract
(10) Specimen Single Premium Variable
Life Insurance Application
9. Representations, Description and Under-
taking pursuant to Rule 6e-3(T)(b)(13)(iii)(F)
under the Investment Company Act of 1940
10. Powers of Attorney
__________________
*/<F4> Appear in manually signed original only. </F4>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
First Variable Life Insurance Company has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, on the 28th day of May, 1996.
First Variable Life Insurance Company
By: /s/ Stephan M. Largent
-----------------------
Stephan M. Largent
President
ATTEST:
/s/ Arnold R. Bergman
- ------------------------
Arnold R. Bergman
Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, Separate Account VL of First Variable Life Insurance
Company, has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, on the 28th
day of May, 1996.
Separate Account VL of First Variable
Life Insurance Company
(Registrant)
By: First Variable Life Insurance Company
(Depositor)
By: /s/ Stephan M. Largent
-----------------------
Stephan M. Largent
President
ATTEST:
/s/ Arnold R. Bergman
- ------------------------
Arnold R. Bergman
Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities with First Variable Life Insurance Company, on the date indicated.
PRINCIPAL EXECUTIVE OFFICER
s/ Stephan M. Largent
- ----------------------
Stephan M. Largent
President
PRINCIPAL FINANCIAL OFFICER
Mark E. Reynolds
- ----------------
Mark E. Reynolds
Vice President and Treasurer
DIRECTORS
s/ Arnold R. Bergman *
- --------------------------------------
Ronald M. Butkiewicz
Stephan M. Largent
- -------------------
Stephan M. Largent
s/ Arnold R. Bergman *
- --------------------------------------
Michael J. Corey
s/ Arnold R. Bergman *
- -------------------------------------
Peter Fullam
s/ Arnold R. Bergman *
- -------------------------------------
T. David Kingston
s/ Arnold R. Bergman *
- -------------------------------------
Norman A. Fair
s/ Arnold R. Bergman *
- -------------------------------------
Thomas K. Neavins
* By: /s/ Arnold R. Bergman
-------------------------
Arnold R. Bergman
Attorney-in-Fact
May 28, 1996
First Variable Life Insurance Company
Certificate of Secretary
I, Arnold R. Bergman, Secretary of First Variable Life
Insurance Company, (the "Company"), do hereby certify, in the
name and on behalf of the Company that:
1. As the Secretary of the Company, I am authorized to execute
this Certificate in the name and on behalf of the Company;
1. Attached hereto as Annex A is a true and complete copy of
resolutions adopted by the Board of Directors of the Company
at a special meeting held on March 6, 1987 authorizing the
establishment of a segregated asset account of the Company,
designated "Separate Account VL," for the purpose of funding
variable life insurance policies;
1. The resolutions contained on Annex A have not been amended,
modified or rescinded and remain in full force and effect on
the date of this Certificate.
IN WITNESS WHEREOF, I have signed my name and affixed the Seal of
the Company effective this 14 day of May, 1996.
s/ Arnold R. Bergman
------------------------
[SEAL] Arnold R. Bergman
Secretary
<PAGE>
Annex A
to
First Variable Life Insurance
Certificate of Secretary
Dated: May 14, 1996
-------------
"RESOLVED, that this Company, pursuant to Ark.
Stat. Ann. Section 66-3337, establish a separate account
designated "Separate Account VL" for the following
use and purposes and subject to such conditions as
hereinafter set forth; and
"FURTHER RESOLVED, that Separate Account VL shall
constitute a funding medium to support reserves
under such variable life insurance policies
("Policies") issued by the Company as the Chairman
of the Board or President may designate for such
purposes; and
"FURTHER RESOLVED, that the income, gains and
losses, whether or not realized, from assets
allocated to Separate Account VL shall, in
accordance with the Policies, be credited to or
charged against such account without regard to the
other income, gains, or losses of the Company; and
"FURTHER RESOLVED, that the fundamental investment
policy of Separate Account VL shall be to invest or
reinvest the assets of Separate Accounts VL in
securities issued by the investment companies,
including unit investment trusts, registered under
the Investment Company Act of 1940 as may be
specified in the Policies; . . ."
FIRST VARIABLE LIFE
INSURANCE COMPANY
Little Rock, Arkansas
FIRST VARIABLE LIFE INSURANCE COMPANY (the "Company") will pay the Death
Benefit Proceeds to the Beneficiary upon receipt at our Variable Service
Center of due proof of the Insured's death while this Contract was in
force.
This Contract is issued in return for the Application and payment of the
initial Premium Payment. A copy of the Application is attached and made a
part of the Contract.
TEN DAY FREE LOOK--Within ten (10) days of the date of receipt of this
Contract, it may be returned by delivering or mailing it to the Company at
its Variable Service Center or to the agent through whom it was purchased.
When this Contract is received by the Company, it will be voided as if it
had never been in force. Any premium paid will be refunded within seven
(7) days of receipt of a notice of cancellation and return of this
Contract.
Signed for the Company
/s/ Arnold R. Bergman /s/ Stephan M. Largent
Secretary President
This is a legal contract -- read it carefully.
THE ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT PROVIDED BY THIS
CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE VARIABLE PROVISIONS OF THIS CONTRACT BEGIN ON PAGE 6.
INDIVIDUAL MODIFIED SINGLE PREMIUM VARIABLE
LIFE INSURANCE POLICY - NON-PARTICIPATING
<PAGE>
TABLE OF CONTENTS
Begins on Page
CONTRACT DATA PAGES CD - 1
Section 1. Definitions 1
Section 2. Premium Payment 3
Section 3. Death Benefits 5
Section 4. Contract Options 6
Section 5. Transfers 7
Section 6. Account Value 8
Section 7. Charges and Deductions 9
Section 8. Withdrawals 12
Section 9. Loans 13
Section 10. Ownership, Assignment and Beneficiary Provisions 14
Section 11. General Provisions 15
Section 12. Optional Annuity Payment 18
ANNUITY OPTION TABLES 20
<PAGE>
CONTRACT DATA PAGES
CAPITAL ONE PAY VUL
INSURED: [JOHN DOE] AGE and SEX: [35 MALE]
OWNER: [JOHN DOE] RATE CLASS: [NON-SMOKER]
CONTRACT NUMBER: [SPVL12345] CONTRACT DATE: [May 15, 1996]
MATURITY DATE: [May 15, 2059] INSURANCE CLASS: [STANDARD]
FACE AMOUNT: [$XX,XXX]
BENEFICIARY: [MARY DOE]
PREMIUM:
Initial: [$10,000]
Additional: [One additional premium may be made each Contract
Year after the first Contract Year until the end of
the Contract Year in which the Insured attains age
70. Each additional premium must be at least $1,000.
GUARANTEED AMOUNT: The Guaranteed Amount of Premium is the Lesser of
(a) $5,000; or (b) 5% of Initial Premium.
CONTRACT OPTIONS:
Separate Account: [Separate Account VL]
[VIST Common Stock Portfolio] [VIST Tilt Utility Portfolio]
[VIST Growth and Income Portfolio] [VIST U.S. Government Bond Portfolio]
[VIST High Income Bond Portfolio] [VIST World Equity Portfolio]
[VIST Multiple Strategies Portfolio] [Federated Primary Money Fund II
Portfolio]
[VIST Small Cap Portfolio]
Fixed Account: [Guaranteed Interest Rate: [3.0%]
Delayed Investment Start Date: [Not Applicable]
Delayed Investment Start Sub-Account:[Not Applicable]
CHARGES AND DEDUCTIONS:
Monthly Administrative Charge: [Equal to an annual rate of .40% of Account
Value]
Monthly Maintenance Fee: [$2.50 each month, if the Account Value is
less than $100,000]
Monthly Distribution Charge: [For the first ten Contract Years, equal to
an annual rate of .20% of Account Value]
Monthly Premium Tax Charge: [For the first ten Contract Years, equal to
an annual rate of .25% of Account Value]
Monthly Federal Tax Charge: [For the first ten Contract Years, equal to
an annual rate of .20% of Account Value]
Monthly Cost of Insurance Charge: [Maximum rate based on TABLE OF GUARANTEED
RATES for attained age and Net Amount at
Risk.]
Daily Mortality and Expense Risk Charge: [Daily charge on net assets in each
Sub-Account equal to an annual rate
of .90%]
<PAGE>
See TRANSFERS and WITHDRAWALS
CONTRACT DATA PAGES
(cont.)
CAPITAL ONE PAY VUL
Separate Account Management Fee: [NONE]
Riders:
Annuitization Bonus [3% of Account Value applied]
TRANSFERS:
Free Transfers: [12 per Contract Year prior to the Annuity Date; 1 per
Contract Year during the Annuity Period]
Transfer Fee: [$10.00]
Minimum Account Value to be Transferred: [$1,000 or the Account Value in
the selected Contract Option, if less]
Restrictions on Transfers from the Fixed Account: [Prior to the Maturity
Date, Account Value to be transferred from the Fixed Account in any
Contract Year may not exceed the greater of:
(1) 25% of Fixed Account Value on the Contract Date for transfers during
the first Contract Year, or,
(2) for transfers after the first Contract Year, the greater of (a) 25% of
Fixed Account Value on the immediately preceding Contract Anniversary; or
(b) 100% of the Fixed Account Value transferred to other Contract Options
during the immediately preceding Contract Year.
No transfers of Account Value are permitted from the Fixed Account to other
Contract Options during the Annuity Period.]
Minimum Account Value to Remain in Contract Option After Transfer: [None]
VARIABLE SERVICE CENTER: [The Variable Service Center on the Contract Date
is located at P.O. Box 1317, Des Moines, IA 50305-13179]
WITHDRAWALS:
Withdrawal Charge Percentages [ ( as percentage of Premium Payment)]:
[Sales Charge]
[Contract 1 2 3 4 5 6 7 8 9 10+]
Year
[Sales Charge
Percentage] 7.50% 7.50% 7.25% 6.50% 5.75% 5.00% 4.25% 3.50% 2.75% 0.0%]
[Unreimbursed Premium Tax Charge]
[Contract 1 2 3 4 5 6 7 8 9 10+]
[Premium Tax
Recovery
Percentage] 2.25% 2.00% 1.75% 1.50% 1.25% 1.00% 0.75% 0.50% 0.25% 0.0%]
Minimum Partial Withdrawal: [$1,000 ]
Free Withdrawal Amount on Partial Withdrawals: [15% of Premium Payments]
Withdrawal Value Required to Remain in Contract After Partial
Withdrawal: [$1,000]
Waiver of Withdrawal Charge: [As specified in Nursing Home Endorsement]
LOANS:
Minimum Preferred Loan: [$1,000]
Minimum Non-Preferred Loan: [$1,000]
Loan Interest Rate: [ 5%]
Preferred Loan Credited Interest Rate: [ 5%]
<PAGE>
CONTRACT DATA PAGES
(cont.)
CAPITAL ONE PAY VUL
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
(As a percent of Account Value)
MINIMUM MINIMUM MINIMUM
DEATH DEATH DEATH
ATTAINED BENEFIT ATTAINED BENEFIT ATTAINED BENEFIT
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
35 250 57 142 79 106
36 250 58 138 80 105
37 250 59 134 81 105
38 250 60 130 82 105
39 250 61 128 83 105
40 250 62 126 84 105
41 243 63 124 85 105
42 236 64 122 86 105
43 229 65 120 87 105
44 222 66 119 88 105
45 215 67 118 89 105
46 209 68 117 90 105
47 203 69 116 91 104
48 197 70 115 92 103
49 191 71 113 93 103
50 185 72 111 94 103
51 178 73 109 95 102
52 171 74 109 96 102
53 164 75 108 97 101
54 157 76 107 98 101
55 150 77 107 99 101
56 146 78 106
THE MINIMUM BENEFIT PERCENTAGES ARE DETERMINED TO COMPLY WITH SECTION
7702 OF THE INTERNAL REVENUE CODE.
CONTRACT DATA PAGES (cont.)
CAPITAL ONE PAY VUL
TABLE OF GUARANTEED RATES - MALE
Guaranteed Maximum Monthly Cost of Insurance Rates
per $1,000 of Net Amount at Risk *<F6>
ATTAINED NON- ATTAINED NON-
AGE SMOKER AGE SMOKER
20 0.14002 60 1.10873
21 0.13835 61 1.22400
22 0.13585 62 1.35684
23 0.13252 63 1.50727
24 0.12918 64 1.67447
25 0.12502 65 1.85761
26 0.12252 66 2.05588
27 0.12085 67 2.26847
28 0.12001 68 2.49957
29 0.12001 69 2.75591
30 0.12085 70 3.04592
31 0.12335 71 3.37720
32 0.12668 72 3.75992
33 0.13168 73 4.19334
34 0.13752 74 4.67004
35 0.14419 75 5.18003
36 0.15169 76 5.71919
37 0.16169 77 6.28340
38 0.17253 78 6.87612
39 0.18420 79 7.51607
40 0.19837 80 8.22375
41 0.21338 81 9.01810
42 0.22922 82 9.91569
43 0.24673 83 10.91280
44 0.26590 84 11.99040
45 0.28758 85 13.12418
46 0.31093 86 14.29994
47 0.33595 87 15.49991
48 0.36347 88 16.71910
49 0.39349 89 17.97489
50 0.42768 90 19.28574
51 0.46688 91 20.68243
52 0.51193 92 22.21791
53 0.56365 93 24.04369
54 0.62122 94 26.50346
55 0.68547 95 30.20740
56 0.75557 96 36.35803
57 0.82985 97 47.21180
58 0.91250 98 66.20701
59 1.00518 99 83.3333
*<F6> For cost of insurance rates which are not standard class, the schedule
may show:
a) rating factors to be applied to this table, and/or
b) additional monthly charges.</F6>
SECTION 1 DEFINITIONS
- ---------------------------------------------------------------------------
ACCOUNT The Fixed Account and/or one or more of the Sub-Accounts of
the Separate Account.
ACCOUNT VALUE The sum of the Owner's interest (i) in the Sub-Account of
the Separate Account; (ii) in the Fixed Account; and, if
there is an outstanding Contract loan, (iii) the Loan
Account.
ACCUMULATION A unit of measurement used to calculate the Account Value
of a Sub-Account of the Separate Account.
ACCUMULATION The value of an Accumulation Unit on a Business Day.
UNIT VALUE
AGE The attained age of the Insured on the date for which age
is being determined.
ANNUITY The series of payment made to the payee selected by the
PAYMENTS Owner under the Optional Annuity Payment Option.
ANNUITY PERIOD The period after election of an Optional Annuity Payment
during which Annuity Payments are made.
BENEFICIARY The person, persons or entity who will receive the Death
Benefit. The Beneficiary is stated in the application for
this Contract, unless changed in accordance with the Contract
provisions.
BUSINESS DAY Each day the New York Stock Exchange is open for trading,
which is Monday through Friday, except for normal business
holidays.
COMPANY First Variable Life Insurance Company.
CASH The amount available upon surrender of the Contract which
SURRENDER is equal to the Account Value less all Indebtedness; and
VALUE reduced by any applicable Withdrawal Charges due upon
surrender.
CONTRACT An anniversary of the Contract Date.
ANNIVERSARY
CONTRACT DATE The date on which the Contract became effective. The
Contract Date is shown on the Contract Data Pages. Contract
Months and Contract Years are measured from this date.
CONTRACT The Fixed Account or any of the Sub-Accounts of the
OPTION Separate Account which can be selected under the Contract.
CONTRACT YEAR One year from the Contract Date and from each Contract
Anniversary.
DEATH BENEFIT The amount of insurance provided under a Contract on the
life of the Insured.
DEATH BENEFIT The amount payable on the death of the Insured. This
PROCEEDS amount is the Death Benefit less Indebtedness.
FIXED ACCOUNT The Fixed Account is the non-loaned portion of the Account
Value that is part of the Company's general account. The
Fixed Account provides guarantees of principal and
interest.
INDEBTEDNESS All amounts owed to the Company by the Owner. This
includes all outstanding loans on this Contract, including
any interest due or accrued.
INSURED The person whose life is insured under this Contract as
shown on the Contract Data Pages.
LOAN ACCOUNT An account established in the Company's general account for
any amounts requested for loans. Account Value equal to
the amounts loaned are transferred from the Fixed Account
and the Separate Account when the loans are made. Interest
is credited to the Loan Account.
MATURITY DATE The Contract Anniversary on or following the Insured 100th
birthday. The date on which the Contract will mature is
shown on the Contract Data Pages.
NET AMOUNT The amount of insurance coverage determined under this
AT RISK Contract for each Contract month. On the first Business Day
of each Contract month, it is the excess of: (a) the Death
Benefit as of that day, over (b) the Account Value on that
day after deduction of all monthly and other
charges then due.
OWNER The person, persons or entity entitled to all ownership
rights under the Contract. The Owner is stated on the
application for this Contract, unless changed in accordance
with Contract provisions.
PORTFOLIO The separate and distinct class of shares that is available
as an underlying investment of a Sub-Account. On the
Contract Date, each Sub-Account invests exclusively in a
Portfolio stated on the Contract Data Pagess.
PREMIUM An amount paid to the Company to provide benefits under
PAYMENT this Contract.
SEPARATE A separate investment account of the Company, designated on
ACCOUNT the Contract Data Pages.
SUB-ACCOUNT A segment of the Separate Account.
VALUATION The period of time between the close of one Business Day
PERIOD and the close of business for the next succeeding Business
Day.
VARIABLE The Company's administrative service center for this
SERVICE contract. The mailing address for the Variable Service Center
CENTER on the Contract Date is shown on the Contract Data Pages.
Other terms are defined in the Contract.
Section 2 PREMIUM PAYMENTS
- ---------------------------------------------------------------------------
GENERAL The initial Premium Payment is due on or before the
Contract Date. The Owner may make additional Premium
Payments: (a) one additional premium payment may be
made each Contract Year after the first Contract Year
until the end of the Contract Year in which the Insured
reaches age 70. Each additional premium payment must be
at least $1,000 and may not exceed the lesser of $5,000 or
5% of the initial premium, (b) if an additional Premium
Payment is required to keep the Contract in force, provided
that the Contract continues to meet the definition of a life
insurance contract under section 7702 of the Internal Revenue
Code; or (c) for the Additional Premium Payment amounts shown
on the Contract Data Pages.
Any additional Premium Payment may result in an increase in
the Death Benefit. The Company reserves the right to
require satisfactory evidence of insurability before
accepting any additional Premium Payment in excess of the
Guaranteed Amount of Premium shown on the Contract Date
Pages. The Company may require that any Indebtedness be
repaid prior to accepting any additional Premium Payment.
The Company reserves the right to reject any Premium Payment.
CONVERSION TO Each Premium Payment is allocated to the Fixed Account
ACCUMULATION and/or one or more Sub-Accounts of the Separate Account. A
UNITS Premium Payment allocated to a Sub-Account of the Separate
Account is converted into Accumulation Units. The number of
Accumulation Units in a Sub-Account credited to this
Contract is determined by dividing the Premium Payment
allocated to that Sub-Account by the dollar value of the
Accumulation Unit Value for that Sub-Account as of the end
of the Valuation Period during which that Premium Payment
is received by the Company at its Variable Service Center.
Except as described in the Delayed Investment Start Date
paragraph, the initial Premium Payment is allocated in
accordance with the selection made by the Owner in the
application. Unless otherwise changed by the Owner, any
additional Premium Payment is allocated in the same manner
as the initial Premium Payment. Allocation of Premium
Payments is subject to the terms and conditions imposed by
the Company.
DELAYED If a Delayed Investment Start Date is shown on the Contract
INVESTMENT Data Pages, the initial Premium Payment for this Contract
START DATE will be allocated to the Delayed Investment Start
Sub-Account shown on the Contract Data Pages in lieu of
allocation to any other Sub-Account Contract Option. Account
Value will be transferred from the Delayed Investment Start
Sub-Account on the Business Day immediately following the
Delayed Investment Start Date to any other Sub-Account
Contract Option in accordance with the initial instructions
of the Owner.
The allocation of a Premium Payment to the Fixed Account is
not affected by a Delayed Investment Start Date. Any
Premium Payment received after a Delayed Investment Start
Date will be allocated to any Contract Option then
available under this Contract in accordance with the
Owner's direction.
GRACE PERIOD If the Cash Surrender Value on the first Business Day of
any month less any Indebtedness is not sufficient to pay
the Monthly Deduction, loan interest then due and unpaid,
and/or any other Contract charges then due, a 61 day Grace
Period will be provided. During the Grace Period, a Premium
Payment sufficient to cover the past due and current
Monthly Deductions must be made. If a Premium Payment is
not made within the Grace Period, the Contract will
terminate without value. Written notice will be sent to the
Owner and any assignee of record at the last known address
at least 30 days prior to the termination of coverage. If
the Insured dies during the Grace Period, the Death Benefit
will be reduced by the past due Monthly Deductions.
REINSTATEMENT If the Grace Period ends and the Owner has neither paid the
required Premium Payment nor surrendered the Contract for
its Cash Surrender Value, the Owner may reinstate the
Contract by (i) submitting a written request at any time
within two years after the end of the Grace Period and
prior to the Maturity Date; (ii) providing evidence of
insurability satisfactory to the Company; (iii) paying a
sufficient Premium Payment to cover all charges that were
due and unpaid during the Grace Period; (iv) paying an
additional Premium Payment at least 3 times the Monthly
Deductions: and (v) repaying any Indebtedness that existed
at the end of the Grace Period.
Section 3 DEATH BENEFITS
- ---------------------------------------------------------------------------
DEATH OF Upon the death of the Insured prior to the Annuity Period,
INSURED the Owner will be entitled to the Death Benefit. The Death
Benefit Proceeds are equal to the Death Benefit reduced by
any outstanding loan and accrued loan interest.
The Death Benefit on the Contract Date is the Face Amount
shown on the Contract Data Pages. It is determined by
treating the initial Premium Payment as a "guideline single
premium." The "guideline single premium" is an amount
necessary to keep this Contract in force until the Maturity
Date using guaranteed mortality and expense charges, and
the calculations required by the Internal Revenue Code for
a life insurance contract under the guideline premium test.
Additional Premium Payments may result in an increase in
the Death Benefit. The Death Benefit may also be adjusted
as a result of an increase or decrease in Account Value, or
in the event of a Withdrawal. If investment performance is
favorable, the Death Benefit will be increased to equal the
applicable percentage of Account Value shown on the
Contract Data Pages.
Upon the death of the payee during the Annuity Period, the
Death Benefit, if any, will be as specified in the Annuity
Option elected.
PAYMENT OF The Death Benefit Proceeds will be determined by the
DEATH BENEFIT Company as of the date of the Insured's death. The Death
Benefit Proceeds will be paid as of the Valuation Period next
following the date of receipt by the Company of both due
proof of death and, if no election of payment method was
previously made by the Owner, an election for the payment
method. Upon of the death of an Insured, a Beneficiary may
elect to have the Death Benefit Proceeds paid as a single
lump sum payment; or under an Optional Annuity Payment
Option. The Beneficiary may also elect that Death Benefit
Proceeds be retained by the Company in its general account.
The Company will credit interest on retained Death Benefit
Proceeds at an annual rate of not less than 3%.
If a single sum payment is requested, the amount will be
paid within seven (7) days of receipt of proof of death and
the election, unless the Suspension or Deferral of Payments
provision is in effect.
Payment to the Beneficiary, other than in a single sum, may
only be elected during the sixty-day period beginning with
the date of receipt of proof of death. All Death Benefits
will be paid in accordance with applicable law or
regulations governing death benefit payments.
The Company will require due proof of death before payment
of a Death Benefit. For these purposes, "due proof of
death" means:
1. a certified death certificate;
2. a certified decree of a court of competent jurisdiction
as to the finding of death; or
3. any other proof satisfactory to the Company.
BENEFICIARY Unless the Owner provides otherwise, the Death Benefit
OTHER THAN A will be paid in equal shares to the survivor(s) as follows:
SINGLE PERSON 1. to the primary Beneficiary(ies) who survive the death of
the Insured or Annuity payee, as applicable; or if there
are none,
2. to the contingent Beneficiary(ies) who survive the death
of the Insured or Annuity payee, as applicable; or if
there are none,
3. to the estate of the Owner.
Section 4 CONTRACT OPTIONS
- ---------------------------------------------------------------------------
THE SEPARATE The Separate Account is a separate investment account of
ACCOUNT AND the Company. It is shown on the Contract Data Pages. The
THE Company has allocated a part of its assets for this and
SUB-ACCOUNTS certain other contracts to the Separate Account. The assets
of the Separate Account are the property of the Company. The
Company guarantees that the portion of the Separate Account
assets equal to the Company's reserves and other contract
liabilities with respect to the Separate Account shall not be
chargeable with the liabilities arising out of any other
business the Company may conduct.
Assets of the Separate Account are valued at their fair
market value in accordance with procedures of the Company.
The Separate Account is segmented into Sub-Accounts. Each
Sub-Account available under this Contract on the Contract
Date invests its assets exclusively in shares of one of the
Portfolios shown on the Contract Data Pages.
SUB-ACCOUNT The Owner may allocate a Premium Payment to one or more of
INVESTMENT the Sub-Accounts that correspond to the Portfolios shown on
OPTIONS the Contract Data Page. The Company may, from time to time,
invest Separate Account assets in additional mutual funds,
portfolios of mutual funds, or other investment vehicles.
The Owner may be permitted to transfer Account Value or
allocate a Premium Payment to these additional Separate
Account investments. However, the right to make any transfer
will be limited by the terms and conditions imposed by the
Company.
If the shares of any Portfolio, or of any other Separate
Account investment, become unavailable for investment by
the Separate Account, or if the Company's Board of
Directors deems further investment in these shares
inappropriate, the Company may limit further purchase of
these shares and may substitute shares of another Portfolio
or other investment vehicle for shares already purchased
under this Contract.
FIXED ACCOUNT The Owner may allocate a Premium Payment to the Fixed
Account.
OPTION Interest will be credited to amounts allocated to the Fixed
Account as described in the "Account Value - Fixed Account
Value" provision of this Contract.
Section 5 TRANSFERS
- ---------------------------------------------------------------------------
TRANSFERS The Owner may transfer Account Value among Contract Options
AMONG without the imposition of any fee or charge if there have
CONTRACT been no more than the number of free transfers shown on the
OPTIONS Contract Data Pages for the Contract Year. No transfers are
permitted, however, until the end of a Delayed Investment
Start Date, if any, shown on the Contract Data Pages.
The amount of Account Value which may be transferred from
the Fixed Account to other Contract Options will be subject,
without limitation, to the specific restrictions, if any,
shown on the Contract Data Page.
All amounts and Accumulation Unit Values will be determined
as of the end of the Valuation Period preceding the
effective date of a transfer.
GENERAL If more than the permitted number of free transfers have
REQUIREMENTS been made in the Contract Year, the Company will deduct the
FOR TRANSFERS Transfer Fee shown on the Contract Data Pages for each
subsequent transfer. The Transfer Fee will be deducted from
the Owner's interest in the Contract Option from which the
transfer is made. However, if the Owner's entire interest in
a Contract Option is being transferred, the Transfer Fee will
be deducted from the amount which is transferred.
The minimum amount of Account Value which can be
transferred is shown on the Contract Data Pages. The
minimum amount of Account Value, if any, which must remain
in a Contract Option after a transfer from it is shown on
the Contract Data Pages.
Any transfer instruction must be in form satisfactory to
the Company, and received by the Company at its Variable
Service Center. Without limitation, any such instruction
must clearly specify the amount which is to be transferred
and the Contract Options which are to be affected. The
Company will not be liable for transfers made in accordance
with instructions by, or on behalf of, the Owner.
The Company reserves the right, at any time and without
prior notice to any party, to terminate, suspend or modify
the transfer privileges described above.
Section 6 ACCOUNT VALUE
- ---------------------------------------------------------------------------
GENERAL The Account Value on any Business Day is the sum of the
Owner's interest (i) in the Sub-Accounts of the Separate
Account; (ii) in the Fixed Account and, if there is an
outstanding Contract loan, (iii) in the Loan Account. The
value of the Owner's interest in a Sub-Account is
determined by multiplying the number of Accumulation Units
attributable to that Sub-Account by the Accumulation Unit
Value for that Sub-Account.
ACCUMULATION The number of Accumulation Units in a Sub-Account credited
UNIT VALUE to this Contract is determined by dividing the amount to be
allocated to that Sub-Account by the Accumulation Unit
Value for that Sub-Account as of the end of the Valuation
Period preceding the effective date of the allocation. An
amount to be allocated may be derived from a Premium
Payment or a transfer of Account Value into a Sub-Account.
The Accumulation Unit Value for each Sub-Account was
arbitrarily set initially at $10. Subsequent Accumulation
Unit Values are determined by subtracting (2) from (1) and
dividing the result by (3) where:
1. is the net result of:
a. the assets of the Sub-Account attributable to
Accumulation Units; plus or minus
b. the cumulative charge or credit for taxes reserved
which is determined by the Company to have resulted
from the operation or maintenance of that
Sub-Account.
2. is the cumulative unpaid charge for the Mortality and
Expense Risk Charge and for the Administrative Charge,
which are shown on the Contract Data Pages; and
3. is the number of Accumulation Units outstanding at the
end of the Valuation Period.
The Accumulation Unit Value may increase or decrease from
Valuation Period to Valuation Period.
FIXED ACCOUNT The Company guarantees that it will credit interest to the
VALUE Account Value in the Fixed Account at a rate not less than
the minimum guaranteed interest rate shown on the Contract
Data Pages. Additional amounts of interest may be credited
by the Company from time to time in its sole discretion. The
current interest rate credited on the Contract Date, which
includes the minimum guaranteed interest rate, is shown on
the Contract Data Pages. It is guaranteed for the first
Contract Year by the Company, unless a greater period is
shown on the Contract Data Pages.
Additional Premium Payments allocated to the Fixed Account
may be credited with interest at a different rate than the
interest rate credited to Account Values transferred from
the Separate Account to the Fixed Account. Account Value
existing in the Fixed Account may be credited with interest
at a different rate than the interest rate(s) applied to
new Premium Payment allocations and Separate Account
transfers. The Company determines interest rates in
advance, and credits interest daily to Fixed Account Value
in dollars.
MINIMUM VALUE The Company reserves the right to transfer Account Value
REQUIRED IN ANY from any Contract Option if on any Business Day the Account
CONTRACT Value in the Contract Option is less than $250. In such event,
OPTION the Account Value will be transferred to the Contract Option
with the highest Account Value.
Section 7 CHARGES AND DEDUCTIONS
- ------------------------------------------------------------------------------
Various charges and deductions are made from the Account Value and the
Separate Account. These are:
MONTHLY On the first Business Day of each Contract month, the
DEDUCTIONS Company will deduct an amount to cover charges and expenses
incurred in connection with the Contract. Generally, this
monthly deduction will be deducted by subtracting values from
the Fixed Account and/or canceling Accumulation Units from
each applicable Sub-Accounts in the ratio that the value of
each Contract Option bears to the Account Value The amount
of the monthly deduction will vary from month to month. If
the Account Value is not sufficient to cover the monthly
deduction which is due, the Contract may lapse. (See
"Grace Period.") The monthly deductions are comprised of
the following charges:
Administrative Charge: The Company deducts an
Administrative Charge for the amount, and during the
period, shown on the Contract Data Pages. The
Administrative Charge and the Maintenance Fee compensates
the Company for the costs associated with the
administration of this Contract and the Separate Account.
Maintenance Fee: The Company deducts a Maintenance Fee
from the Account Value for the amount, and during the
period, shown on the Contract Data Pages.
The Maintenance Fee will be deducted from the Account Value
each month while this Contract is in force. During the
Annuity Period, the Maintenance Charge, if any, will be
collected on a monthly basis and will result in a reduction
of each Annuity Payment.
Distribution Charge: The Company deducts a Distribution
Charge each month from the Account Value during the period
and at the annual rate shown the Contract Data Pages.
The Distribution Charge for any month is equal to (a) the
Distribution Charge annual rate divided by 12; multiplied
by (b) the Account Value on the Valuation Period prior to
the first Business Day of the month.
The Distribution Charge compensates the Company for a
portion of the sales expense with respect to the Contract.
In no event will the sum of the Distribution Charge, the
Federal Tax Charge and the Sales Charge Percentage of the
Withdrawal Charge, as may be shown on the Contract Data Pages,
exceed 9% of the aggregate premiums received by the
Company for this Contract.
Premium Tax Charge: The Company deducts a Premium Tax
Charge each month from the Account Value during the period
and at the annual rate shown on the Contract Data Pages.
The Premium Tax Charge for any month is equal to (a) the
Premium Tax Charge annual rate divided by 12; multiplied by
(b) the Account Value on the Valuation Period prior to the
first Business Day of the month.
The Premium Tax Charge is to offset the average premium tax
the Company is expected to pay to various states and local
jurisdictions but will not necessarily equal the amount
paid by the Company with respect to this Contract.
Federal Tax Charge: The Company deducts a Federal Tax
Charge each month from the Account Value during the period
and at the annual rate shown on the Contract Data Pages.
The Federal Tax Charge for any month is equal to (a) the
Federal Tax Charge annual rate divided by 12; multiplied by
(b) the Account Value on the Valuation Period prior to the
first Business Day of the month.
The Federal Tax Charge is to compensate the Company for the
increase in the federal tax liability from the application
of Section 848 of the Internal Revenue Code.
Cost of Insurance: The Company deducts a Cost of Insurance
Charge each month from the Account Value during the period
and at the annual rate shown on the Contract Data Pages.
The Cost of Insurance Charge for any month is equal to (a)
the Cost of Insurance Charge annual rate divided by 12;
multiplied by (b) the Account Value on the Valuation Period
prior to the first Business Day of the month.
The maximum cost of insurance charges do not exceed the
cost of insurance rates based on the 1980 Commissioner's
Standard Ordinary Morality Table, Age Last Birthday.
DAILY Each Business Day, the Company will deduct charges which
DEDUCTIONS are equal DEDUCTIONSto a percentage of the net assets in
each Sub-Account of the Separate Account for this class of
Contract. The daily charges are:
Mortality And Expense Risk Charge: The Company deducts on
each Business Day, both prior to and during the Annuity
Period, a Mortality and Expense Risk Charge from the
Separate Account which is equal, on an annual basis, to the
amount shown on the Contract Data Pages. The Mortality and
Expense Risk Charge compensates the Company for assuming
the mortality and expense risks under this Contract. The
Company guarantees that the dollar amount of each Annuity
Payment after the first Annuity Payment will not be
affected by variations in mortality or expense experience.
SEPARATE
ACCOUNT Any fee deducted by the Company from the Separate Account for
MANAGEMENT investment management is shown on the Contract Data Pages.
FEE
INCOME TAXES The Company reserves the right to reduce the Account Value
for federal income taxes of the Separate Account if it
determines, in its sole discretion, that it will incur a
tax as a result of the operation of the Separate Account.
The Company will deduct for any income taxes incurred by it
as a result of the operation of the Separate Account
whether or not there was a Company reserve for taxes and
whether or not it was sufficient.
TRANSFER FEE The Transfer Fee applicable to a permitted transfer of
Account Value among Contract Options is shown on the
Contract Data Pages.The charge is deducted by the Company
reducing Fixed Account Value and/or Accumulation Unit Value
from each applicable Sub-Account in the ratio that the
value that Account Value in each applicable Contract Option
bears to the total Account Value. Accumulation Unit Value
is reduced by the Company canceling Accumulation Units
credited to this Contract.
WITHDRAWAL The Withdrawal Charges, if any, shown on the Contract Data
CHARGES Pages may be deducted in the event of a withdrawal
of all or a portion of the Account Value. It is described
in the Withdrawal provisions of this Contract.
Section 8 WITHDRAWALS
- ------------------------------------------------------------------------------
GENERAL The Owner may, upon written request received by the Company
at its Variable Service Center, make a total withdrawal
(surrender) or partial withdrawal of the Withdrawal Value.
The Withdrawal Value is:
1. the Account Value for the Valuation Period next following
the Valuation Period during which a written request for a
withdrawal is received at the Company; less
2. the Withdrawal Charges, if any.
A withdrawal will result in the cancellation of
Accumulation Units from each applicable Sub-Account
Contract Option or a reduction in Fixed Account Value in
the ratio that the Account Value in the Contract Option
bears to the total Account Value. The Owner may request in
writing in advance if a different method for canceling
Accumulation Units or reducing Fixed Account Value is
desired. The Company reserves the right to approve or
disapprove any such request.
The Company will pay the amount of any withdrawal within
seven (7) days of receipt of a request in good order unless
the Suspension or Deferral of Payments provision is in
effect.
WITHDRAWAL Withdrawal Charges will be imposed by the Company on total
CHARGES and partial withdrawals of Withdrawal Value.
The Withdrawal Charges are determined by the Company
applying the Withdrawal Charge Percentages shown on the
Contract Data Pages to the Premium Payment(s) withdrawn,
surrendered or applied to an Annuity Option. The charge
will vary depending on the elapsed period shown on the
Contract Data Pages for which the Withdrawal Charges
applies. Premium Payments are deemed withdrawn in the
order in which they are received by the Company. The
amount deducted will result in the cancellation of
Accumulation Units from each applicable Sub-Account or a
reduction in Fixed Account Value in the ratio that the
Account Value in each Contract Option bears to the total
Account Value. The Owner may request in writing in advance
if a different method for assessing the Withdrawal Charge
is desired. The Company reserves the right to approve or
disapprove any such request.
PARTIAL Each partial withdrawal must be for an amount which is not
WITHDRAWALS less than the amount shown on the Contract Data Pages.
FREE The Free Withdrawal Amount on Partial Withdrawals applicable
WITHDRAWAL to this Contract, if any, is shown on the Contract Data
AMOUNT Pages. No Withdrawal Charges will be imposed on a partial
withdrawal unless the amount withdrawn during a Contract Year
exceeds the Free Withdrawal Amount on Partial Withdrawals.
Amounts taken as a Free Withdrawal Amount do not reduce
Premium Payments for purposes of computing the Withdrawal
Charges. The Withdrawal Charge will apply to any amount
withdrawn during a Contract Year in excess of the Free
Withdrawal Amount on Partial Withdrawals. The unused portion
of the Free Withdrawal Amount for one Contract Year will not
carry-over to the next Contract Year.
SUSPENSION OR The Company reserves the right to suspend or postpone
DEFERRAL OF payments for a withdrawal or transfer for any period when:
PAYMENTS 1. the New York Stock Exchange is closed;
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of
securities held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to
determine the value of the Separate Account's net
assets; or
4. during any other period when the Securities and
Exchange
Commission, by order, so permits for the protection of
Owners; Exchange Commission will govern as to whether the
conditions described in 2. and 3. exist.
The Company reserves the right to defer payment for a
withdrawal or transfer from the Fixed Account for the
period permitted by law, but not for more than six months
after written election is received by the Company.
Section 9 LOANS
- ------------------------------------------------------------------------------
GENERAL The Owner may borrow money and use the Contract as security
for the Indebtedness at any time after the Free Look
period. The Company will usually make the loan within seven
(7) days of the date a loan request is received at the
Variable Service Center.
The maximum amount available as a loan is equal to 90% of
the Account Value less the sum of Withdrawal Charges and
Indebtedness. The minimum Contract loan amount is shown
on the Contract Data Pages.
A Contract loan reduces the Account Value in the
Sub-Accounts and Fixed Account by the amount of the loan.
The amount taken from the Contract's Sub-Accounts as a
result of a loan does not participate in the investment
experience of the Sub-Accounts. Therefore, the Death
Benefit and Account Value of the Contract can be
permanently affected by a Contract loan, even if it is
repaid. In addition, any proceeds payable under a Contract
are reduced by the amount of any Indebtedness.
A loan repayment increases the Account Value in the
Sub-Accounts and Fixed Account by the amount of the
repayment. Unless the Owner requests otherwise, Contract
loans and loan repayments are attributed to the
Sub-Accounts and the Fixed Account in proportion to the
Account Value in each. The Company reserves the right to
accept or reject any such request.
INTEREST Any Indebtedness under this Contract will be charged
ON THE interest at the annual loan interest rate shown on the
LOAN Contract Data Pages. Interest will be payable in arrears on
each Contract Anniversary. Any interest not paid when due
will be added to the Indebtedness and bear interest in the
same manner. An amount equal to the unpaid interest will be
deducted from the Account Value in the Contract Options and
transferred to the Loan Account.
If a Contract loan plus accrued interest exceeds the
Account Value less the Withdrawal Charges on the next
Contract loan interest due date (or, if greater, on the
date the calculation is made), the Company will notify the
Owner that the Contract is going to terminate. The
Contract will terminate without value 61 days after the
notice is mailed unless the amount due is paid to the
Company within that time.
PREFERRED A preferred loan amount is determined on the Contract Date
LOAN and on the first Business Day of each Contract month. It is
AMOUNT equal to the excess of the Account Value over the Premium
Payments made and not deemed withdrawn.
The amount of the Loan Account that is less than or equal
to the preferred loan amount will be credited with interest
each Business Day at the Preferred Loan Credited Interest
Rate shown on the Contract Data Pages.
NON-PREFERRED The portion of the Loan Account attributable to
LOAN non-preferred loan amounts will be credited with interest
AMOUNTS each Business Day at the Guaranteed Interest Rate for the
Fixed Account shown on the Contract Data Pages.
Section 10 OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
- ------------------------------------------------------------------------------
OWNERSHIP The Owner has all rights under this Contract. The Owner is
the person designated in the Application, unless changed
prior to the commencement of Annuity Payments. Upon the
death of the Owner, his or her estate will become the Owner
unless a successor Owner has been named. The Owner's
rights under the Contract terminate when the insured dies.
ASSIGNMENT The Owner may, at any time during the lifetime of the
Insured, assign his or her rights under this Contract. The
Company will not be bound by any assignment until written
notice is received by the Company at its Variable Service
Center. The Company is not responsible for the validity or
tax consequences of any assignment. The Company will not
be liable as to any payment or other settlement made by the
Company before receipt of the assignment.
BENEFICIARY The Beneficiary on the Contract Date is as named on the
Application.
CHANGE OF A request to change the designated Owner or Beneficiary
DESIGNATIONS must be made in writing and received by the Company at its
Variable Service Center. The change will become effective as
of the date the written request is signed. A new designation
will not apply to any payment made or action taken by the
Company prior to the time it records the change, and the
Company shall be released from any further liability with
respect to any such payment made or action taken.
Owner. The Owner may change the Owner at any time while the
Insured is alive. A change of Owner will automatically
revoke any prior designation of Owner.
Beneficiary: Subject to the rights of any irrevocable
Beneficiary(ies), the Owner may change the primary
Beneficiary(ies) or contingent Beneficiary(ies). A
permitted change of Beneficiary will automatically revoke
any prior designation of Beneficiary.
Section 11 GENERAL PROVISIONS
- ------------------------------------------------------------------------------
THE CONTRACT The entire contract consists of this Contract; the
Application which is attached to this Contract; and any
riders or endorsements attached to this Contract.
This Contract may be changed or altered only by the
President or Vice President and the Secretary of the
Company. A change or alteration must be made in writing.
INCONTESTABILITY The Contract will generally not be contestable after it
has been in force for a period of two years from
the Contract Date. The Company can challenge the portion
of the Death Benefit resulting from payment of an
underwritten additional Premium Payment for two years,
during the Insured's lifetime, from the date the
additional Premium Payment was received. However, the two
year time limit on the Company's right to challenge all or
part of the Contract does not apply in the event that the
Insured dies within the two year period.
SUICIDE Suicide, while sane or insane, within two years from the
Contract Date is a risk not assumed under this Contract.
The Company's liability for such suicide is limited to the
Cash Surrender Value. When the laws of the state in which
this Contract is delivered require less than a two year
period, the period will be as stated in such law.
MATURITY If the Insured is living on the Maturity Date, on
PROCEEDS surrender of the Contract to the Company, the Company will pay
the Owner the Cash Surrender Value. In such case, the Contract
will terminate and the Company will have no further obligations
under the Contract.
MISSTATEMENT If the Age or Sex of the Insured, or the Age or Sex of any
OF AGE OR SEX annuitant under an Optional Annuity Payment, has been misstated,
any Death Benefit or Annuity Payments, as the case may be, will
will be the amounts provided by the correct Age or Sex. If the
misstatement is discovered after the Annuity Date: (a) the
Company will add interest to any overpayments at the rate of
6% per year, compounded annually, and deduct the amount from
remaining Annuity Payments until the total is repaid; and (b)
the Company will add interest to any underpayments at the rate
of 6% per year, compounded annually, and pay the amount in a
single sum with the next Annuity Payment.
MODIFICATION This Contract may be modified in order to maintain
compliance with applicable state and federal law.
NON- This Contract will not share in any distribution of
PARTICIPATING dividends.
PROTECTION OF To the extent permitted by law, Death Benefits and Annuity
PROCEEDS Payments shall be free from legal process and the claim of
any creditor if the person is entitled to them under this
Contract. No payment and no amount under this Contract can
be taken or assigned in advance of its payment date unless
the Company receives the Owner's written consent.
TRANSFER BY The Company reserves the right to transfer its obligations
THE COMPANY hereunder to another qualified life insurance company under
an assumption reinsurance arrangement without the prior
consent of the Owner.
VOTING RIGHTS The Company will vote the shares of the Portfolio held in
the Separate Account at regular or special meetings of the
shareholders in accordance with instructions received from
Owners having the voting interest in the affected
Portfolio(s) held in the Separate Account. The number of
votes that an Owner has the right to instruct for a
particular Sub-Account is determined by dividing the
Account Value in the Sub-Account by the net asset value per
share of the corresponding Portfolio in which the
Sub-Account invests. 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. A Fund may
not be required to hold routine annual meetings of it
shareholders.
The number of shares which a Owner has a right to vote will
be determined as of a date to be chosen by the Company not
more than sixty (60) days prior to a shareholder meeting of
Fund. Each Owner having a voting interest will receive
proxy material, report and other materials relating to the
appropriate Portfolio.
If required by state insurance authorities, the Company may
disregard voting instructions if they would require that
shares be voted to cause a change in the Portfolios or a
Sub-Account Contract Option; or a change in the investment
policy of the Portfolios or a Sub-Account Contract Option;
or to approve or disapprove an investment advisory or
underwriting contract for a Portfolio or a Sub-Account
Contract Option. In addition, the Company may disregard
voting instructions in favor of changes, initiated by a
Owner or the Fund's Board of Trustees, in any investment
policy, investment adviser or principal underwriter of the
Portfolio if the Company: (i) reasonably disapproves of the
changes and (ii) in the case of a change in investment
policy or investment adviser, the Company makes a good
faith determination that the proposed change is contrary to
state law or is prohibited by state regulatory authorities
or that the change would be inconsistent with a
Sub-Account's investment objectives or would result in the
purchase of securities which vary from the general quality
and nature of investments and investment techniques
utilized by other separate accounts of the Company. If the
Company does disregard voting instructions, a summary of
that action and the reasons for it will be included in the
next semiannual report to Owners.
RIGHT TO
EXCHANGE FOR During the first 24 months after the Contract Date, if the
A FIXED BENEFIT Contract has not lapsed, there is an unconditional right to
CONTRACT transfer all of the Account Value in the Sub-Accounts to the
Fixed Account.
REPORTS At least once each calendar year, the Company will furnish
the Owner with a report showing the Account Value and any
other information as may be required by law. Reports will
be sent to the last known address of the Owner.
Section 12 OPTIONAL ANNUITY PAYMENTS
- ------------------------------------------------------------------------------
GENERAL The Contract's Death Benefit Proceeds and Cash Surrender
Value can be paid in one sum, or the Owner or Beneficiary
can choose to put all or part of the proceeds under an
optional annuity payment option. The Owner or Beneficiary
may also elect for the Company to retain Death Benefit
Proceeds as stated in the Death Benefits section. If an
Annuity start date is selected for the payment of Cash
Surrender Value, Withdrawal Charges will be deducted from
the Account Value before the first Annuity Payment is made.
ANNUITY Annuity Payments are paid in monthly installments. The
PAYMENTS Account Value on the Annuity start date, less any applicable
Withdrawal Charges, will be transferred to the Company's
general account and applied to the applicable Annuity Table
in this Contract for the selected Annuity Option. If the
current fixed annuity option rates applicable to this class
of Contracts provide an initial Annuity Payment greater
than that guaranteed under the same Annuity Option under
this Contract, the greater payment will be made.
The Company reserves the right to pay Annuity Payments in
one sum when the remaining payments are less than $2,000,
or other minimum amount established by the Company from
time to time, or when the Annuity Option elected would
result in periodic payments of less than $100.
FIXED ANNUITY The dollar amount of each Annuity Payment determined under
the Annuity Tables in this Contract will not change
regardless of investment, mortality or expense experience.
ANNUITY The following Annuity Options or any other Annuity Option
OPTIONS acceptable to the Company may be selected:
Option A. LIFE ANNUITY: Monthly Annuity Payments during
the life of the payee.
Option B. LIFE ANNUITY WITH PERIODS CERTAIN OF 60, 120, 180
OR 240 MONTHS: Monthly Annuity Payments during the
lifetime of the payee and in any event for sixty (60), one
hundred twenty (120), one hundred eighty (180) or two
hundred forty (240) months certain as selected.
Option C. JOINT AND SURVIVOR ANNUITY: Monthly Annuity
Payments payable during the joint lifetime of the payee and
a designated second person and then during the lifetime of
the survivor at the percentage (100%, 75%, 66 2/3% or 50%)
selected.
Option D. JOINT AND CONTINGENT ANNUITY: Monthly Annuity
Payments during the payee's lifetime and continuing during
the lifetime of a designated second person after the
payee's death at the percentage (either 100%, 75%, 66 2/3%
or 50%) selected.
Option E. FIXED PAYMENTS FOR A PERIOD CERTAIN: Fixed
monthly Annuity Payments for any specified period (at least
five years but not exceeding thirty years), as selected.
If the payee dies during a period certain (Annuity Options
B or E), the remaining Annuity Payments will be made to the
Beneficiary. The Beneficiary may elect to receive the
commuted value of the remaining Annuity Payments in a
single sum instead. The Company will determine the
commuted value by discounting the remaining Annuity
Payments at its then current interest rate used for
commutation.
MORTALITY The mortality table used in determining the Annuity Tables
TABLES contained in this Contract for Options A, B, C, and D is the
1983a Annuity Mortality Table and interest at a rate of 3.0%
per year, compounded annually. A detailed statement of the
method of calculation has been filed with the insurance
department of the state in which the application was
signed. The Company will compute reserves on this Contract
on the Commissioners Annuity Reserve Valuation Method
(CARVM). The reserves and guaranteed values, Withdrawal
Value or Death Benefits will at no time be less than the
minimum required by the laws of the state in which the
application was signed.
The dollar amount of an Annuity Payment for any Age or
combination of Ages not shown in the Tables or for any
other form of Annuity Option agreed to by the Company will
be provided by the Company upon request.
MISSTATEMENT If the Age or Sex of the payee, or the Age or Sex of any
OF AGE OR SEX designated second person, has been misstated, any Annuity
Payments will be the Annuity Payments provided by the correct
Age or Sex. If the misstatement is discovered after the
Annuity Date: (a) the Company will add interest to any
overpayments at the rate of 6% per year, compounded
annually, and deduct the amount from remaining Annuity
Payments until the total is repaid; and (b) the Company
will add interest to any underpayments at the rate of 6%
per year, compounded annually, and pay the amount in a
single sum with next Annuity Payment.
EVIDENCE OF The Company may require satisfactory evidence of the
SURVIVAL continued survival SURVIVALof any person(s) on whose life
Annuity Payments are based.
PROOF OF AGE The Company may require evidence of Age of any payee under
Annuity Options A, B, C, and D and of the designated second
person under Annuity Options C and D.
ANNUITY OPTION TABLES
Options A and B - LIFETIME PAYMENT OPTION
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
Age of 10 Year & Age of 10 Year &
Payee Life Payee Life
50 4.07 70 6.30
51 4.13 71 6.47
52 4.20 72 6.65
53 4.28 73 6.83
54 4.35 74 7.01
55 4.44 75 7.20
56 4.52 76 7.39
57 4.61 77 7.58
58 4.71 78 7.76
59 4.81 79 7.95
60 4.91 80 8.12
61 5.02 81 8.29
62 5.14 82 8.45
63 5.26 83 8.60
64 5.39 84 8.74
65 5.53 85 8.87
66 5.67
67 5.82
68 5.97
69 6.13
Option C - JOINT and SURVIVOR LIFETIME PAYMENT
Payments reduce upon the death of either the Annuitant or the Joint Annuitant:
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
Annuitants' Ages Percentage of Payment to Surviving
Annuitant is:
Primary Joint 50% 66-2/3% 75% 100%
50 50 4.10 3.93 3.85 3.63
50 55 4.29 4.09 4.00 3.74
55 55 4.49 4.28 4.18 3.90
55 60 4.74 4.48 4.37 4.05
60 60 5.01 4.74 4.61 4.27
60 65 5.35 5.02 4.87 4.47
65 65 5.73 5.37 5.20 4.76
65 70 6.20 5.75 5.56 5.04
<PAGE>
Option D - JOINT and CONTINGENT LIFETIME PAYMENT
Payments reduce only upon the death of the Annuitant
(ERISA Joint and Survivor Annuity Option)
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
Annuitants' Ages Percentage of Payment to Surviving
Annuitant is:
Primary Joint 50% 66-2/3% 75% 100%
50 50 3.85 3.78 3.73 3.63
50 55 3.91 3.86 3.83 3.74
55 50 4.08 3.97 3.90 3.74
55 55 4.18 4.08 4.03 3.90
55 60 4.26 4.19 4.15 4.05
60 55 4.48 4.33 4.26 4.05
60 60 4.61 4.49 4.43 4.27
60 65 4.72 4.64 4.59 4.47
65 60 5.02 4.83 4.73 4.47
65 65 5.20 5.05 4.97 4.76
65 70 5.36 5.25 5.19 5.04
70 65 5.76 5.51 5.38 5.04
Monthly payment rates for other age combinations will be furnished on
request. For quarterly payments, multiply the monthly payment rate by
2.99. For semi-annual payments, multiply by 5.96. For annual payment,
multiply by 11.84.
Option E - FIXED PAYMENTS FOR A PERIOD CERTAIN
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
Years Monthly Payment Years Monthly Payment Years Monthly Payment
1 Not available 11 8.86 21 5.32
2 Not available 12 8.24 22 5.15
3 Not available 13 7.71 23 4.99
4 Not available 14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
For quarterly payments, multiply the monthly payment rate by 2.99. For
semi-annual payments, multiply by 5.96. For annual payment, multiply by
11.84.
<PAGE>
FIRST VARIABLE LIFE INSURANCE COMPANY
Little Rock, Arkansas
THE ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT PROVIDED BY THIS
CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
INDIVIDUAL MODIFIED SINGLE PREMIUM VARIABLE
LIFE INSURANCE POLICY - NON-PARTICIPATING
FIRST VARIABLE LIFE
INSURANCE COMPANY
Little Rock, Arkansas
ANNUITIZATION BONUS RIDER
This Rider is made part of the Contract to which it is attached, and is
effective upon the Contract Date:
The OPTIONAL ANNUITY PAYMENTS provision of the Contract is amended to
include the following:
ANNUITIZATION BONUS: The Company will increase the Account Value applied
to Optional Annuity Payment Options A, B, C, D and, for specified periods
greater than 5 years, E. The increase in Account Value will be calculated
by the Company with respect to Account Value as of the immediately
preceding Business Day, using the percentage shown on the Contract Data
Pages.
Signed for the Company.
s/ Arnold R. Bergman s/Stephan M. Largent
Secretary President
<PAGE>
FIRST VARIABLE LIFE
INSURANCE COMPANY
Little Rock, Arkansas
ENDORSEMENT - NURSING HOME WAIVER
This Endorsement is made part of the Contract to which it is attached, and
is effective upon the Contract Date.
The WITHDRAWALS provisions of the Contract are hereby amended to include
the following:
WAIVER OF WITHDRAWAL CHARGES: After the first Contract Year, the Owner may
apply for a waiver of the Withdrawal Charges due to confinement of the
Insured or the Insured's spouse in a Qualifying Nursing Home.
If approved, the Company will waive any Withdrawal Charges that would
otherwise become due on a partial withdrawal or surrender of the Contract,
subject to the following conditions:
Qualifying Nursing Home Conditions. If application is made for waiver due
to confinement in a Qualifying Nursing Home:
1. The Insured or the Insured's spouse, as the case may be, must be and
have been confined in a Qualifying Nursing Home for the immediately
preceding period of six (6) consecutive months
2. The Insured or the Insured's spouse, as the case may be, must never
have been confined in a Qualifying Nursing Home on or before the date the
application for this Contract was signed.
3. The Insured must not have changed.
4. Confinement must be for reasons that are medically necessary and
prescribed by a licensed physician; and be based on physical limitations
which prohibit daily living in a non-institutional environment.
5. The Company must be presented with written and signed documentation
from the confining facility that it qualifies as a Qualifying Nursing Home
and that the confinement satisfies the criteria stated in 4, above.
To be eligible as a Qualifying Nursing Home, a facility must be either a
Skilled Nursing Facility, an Intermediate Care Facility or a Custodial Care
Facility that is licensed and operated as such in the state in which it is
located. A Skilled Nursing Facility, Intermediate Care Facility or
Custodial Care Facility must provide nursing service 24 hours a day under
the supervision of a licensed physician, registered graduate professional
nurse or licensed practical nurse. A Skilled Nursing Facility or
Intermediate Care Facility must maintain a daily medical record of each
patient. A Custodial Care Facility must accommodate three or more persons
for a charge.
<PAGE>
ENDORSEMENT - NURSING HOME WAIVER (cont.)
The Company will not accept any additional Premium Payments under a
Contract if a waiver of Withdrawal Charges under this Endorsement is in
effect.
Signed for the Company.
Secretary President
FIRST
VARIABLE Simplified Life Insurance Application
LIFE Insurance -------------------------------------
Company
Application for Capital One Pay VUL
Issued and Administered by First Variable Life Insurance Company
A stock company domiciled in Little Rock, Arkansas
INSTRUCTIONS: Please type or print in permanent black ink. This form will
be photocopied. Include date of birth and social security number for all
parties.
1. Proposed Name Male Female Social Security Number
Insured
If no Owner is Permanent Address Height Weight Date of Birth
specified in
Section 2,
the Proposed City, State, Zip Occupation Marital Status
Insured will
be the Owner
- --------------------------------------------------------------------------
2. Owner Name Relationship to Social Security Number
Proposed Insured
Complete only if
different from the
Proposed Insured Permanent Address Date of Birth
City, State, Zip
- --------------------------------------------------------------------------
3. Beneficiary Name (Primary) Social Security Number
Date of Birth Relationship to
Proposed Insured
Name (Contingent) Social Security Number
Date of Birth Relationship to
Proposed Insured
- --------------------------------------------------------------------------
4. Purchase One Pay Purchase Payment
Payment/
Face Amount Accompanying Application: $ Face Amount $
(Make check payable to:
First Variable Life Insurance Company)
1035 Sum $
- --------------------------------------------------------------------------
5. Suitability By signing this application, I acknowledge receipt of
the prospectus and understand that the death benefit
The proposed under the contract may increase or decrease depending
OWNER of the on the investment results of the contract. I under-
contract should stand that hypothetical illustrations are not
carefully read indicative of future results. The contract's cash
the following surrender value may increase or decrease on any day
statement depending on the investment results. No minimum cash
carefully. surrender value is guaranteed. The contract represents
a long-term commitment to meet insurance needs and
financial goals.
Yes No
---- ---
a) Did you receive the prospectus for the contract?
b) Did you receive the prospectus for the contract options?
c) Do you believe that the contract will meet your financial
needs and objectives?
d) Do you understand that the amount and duration of the
death benefit may vary, depending on the performance of
the separate account?
- --------------------------------------------------------------------------
6. Replacement
Will this proposed life insurance policy replace any existing annuity or
life insurance?
No ___ Yes___ (If "yes", state company and contract number in the
Special Requests/Remarks Section. Attach replacement
forms.)
7. Contract Options Simplified Life Insurance
Application Selection
Use whole percentages only.
Total Allocation must equal
100%.
% VIST US. Government Bond Portfolio Fixed Account
% VIST High Income Bond Portfolio % 1-Year Option
% VIST Common Stock Portfolio % Other
% VIST Multiple Strategies Portfolio
% VIST Tilt Utility Portfolio
% VIST World Equity Portfolio
% VIST Growth & Income Portfolio
% VIST Small Cap Portfolio
% Federated-Prime Money Fund II
% Other
- --------------------------------------------------------------------------
8. Telephone
Transfers
By initialing this box [ ], I hereby authorize the Company,
either directly or through its agents, to transfer Contract Values among
the Contract Options available under the Contract upon telephone
instructions from: the Owner; or any other person who purports to give
instructions on his or her behalf This authorization is subject to the
restrictions and limitations contained in the rules and procedures
established by the Company from time to time. (A copy of these rules will
be provided with your Contract.)
The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if it does not, it may be liable for
any losses due to unauthorized or fraudulent transactions.
The Company is authorized, without prior disclosure, to record telephone
conversations containing telephone instructions.
The Owner agrees to examine promptly all confirmation statements reflecting
transfers made in accordance with telephone instructions. Errors shall be
reported to the Company immediately.
- --------------------------------------------------------------------------
9. Simplified Underwriting Information
Prepared Insured is a:
Smoker
Non-Smoker
If you answer "YES" to any part of Question 9, provide details where
indicated.
Yes No
---- ---
1. Within the last 10 years (7 years for residents
of Maryland), have you been diagnosed or treated
by a member of the medical profession for high
blood pressure, lung, kidney, or liver disease,
diabetes, cancer or tumor, colon problems, back
or spinal disorder, nervous disorder, alcohol or
drug dependency, or Acquired Immune Deficiency
Syndrome (AIDS)? (Symptoms of AIDS include fever,
unexplained weight loss, swollen lymph glands,
diarrhea or fatigue.)
2. Within the past 5 years, have you
a. Been hospitalized or treated by a member of
the medical profession?
b. Consulted a physician or had any medication
prescribed?
c. Engaged in or intended to engage in aviation
activities or sports including stock or sports
car, drag strip or motorcycle racing, scuba or
sky diving, or been convicted of a felony?
3. Have you in the past 12 months smoked cigarettes,
cigars, pipes or used chewing tobacco?
4. Have you ever been declined or rated for life
insurance?
Details of "YES" Answers in Question 9
Question Nature of Disorder Duration Attending Physician
Number & Date and Hospital
- --------------------------------------------------------------------------
10. Special If you are unable to issue the above life insurance
Requests/ policy, please consider this an application for the
Remarks Capital variable annuity contract.
You can best reach the Proposed Insured:
Best times: Best days:
Most convenient place to call:
Business Phone ( ) Home Phone ( )
Other: (Indicate Question No.)
Company Use Only:
Riders:
Declarations
I/We have read all questions and answers in this application.
I/We represent to the best of my/our knowledge and belief that all
statements and answers contained in this application, and any supplements
required by the Company, are complete and true. I/We understand that if a
prepayment is made in connection with this application, the insurance will
take effect only when the first premium is paid, provided that at the time
of payment: (a) this application has been approved by the Company at its
Variable Service Center, Des Moines, Iowa, and (b) there has been no change in
insurability as represented in this application since the date of the
application. I/We further understand that agents and registered
representatives do not have the authority to: (a) determine insurability;
(b) change any terms of this application; or (c) make a contract for the
Company.
Authorizations
I/We hereby authorize any licensed physician, hospital, clinic or
other medical or medically related facility, insurance company or
the Medical Information Bureau, that has any records or knowledge of me or
my family or of our health, to give First Variable Life Insurance Company,
or its reinsurers any such information and records pertaining to medical,
psychiatric, drug use or alcohol use history. A copy of this authorization
shall be considered as valid as the original and either shall be valid for
a period of two years.
I/We acknowledge receipt of the Medical Information Bureau Pre-notification
and Investigative Consumer Report Pre-notification. If a premium payment is
being submitted with this application,
I/we acknowledge receipt of the Temporary Life Insurance Agreement and the
Prepayment Receipt. In return, I/we have read and agree to its terms.
Signatures Signed at: (city/state) Date:
Proposed Insured: Owner if other than
Proposed Insured:
Licensed Agent/Registered Representative:
Broker/Dealer (Print name)
Owner's Owner's Social Security Number or Taxpayer
Certification Identification Number:
(in lieu of W-9)
I am / I am not subject to backup withholding under
Section 3406(a)(1)(c) of the Internal Revenue Code.
Under penalties of perjury, I certify that the
information in thissection is true. correct
and complete.
Signature of Owner: Date:
Producer MUST complete Certification on next page.
<PAGE>
FIRST
VARIABLE Simplified Life Insurance Application
LIFE Insurance
Company
PRODUCER'S CERTIFICATION
I CERTIFY:
(1) that I am a Registered Representative of a Company approved NASD
member and duly licensed in the state in which this application
was signed;
(2) that I asked each question contained in this application of the
Proposed Insured and Owner and duly recorded the answers;
(3) to the best of my knowledge that there is nothing adversely
affecting the insurability of any persons proposed for insurance
except as stated in this application;
(4) that I have complied with the state and federal laws on disclosure,
cost comparison and replacement;
(5) that to the best of my knowledge, this application ____ does
___ does not replace existing life insurance;
(6) that I ___ have ___ have not issued a Temporary Life Insurance
Agreement and Prepayment Receipt (8515-TIA) for the payment
of $__________ in connection with this Simplified Life Insurance
Application.
Signature of Producer Date Phone
Name of Broker Dealer
<PAGE>
FIRST
VARIABLE
LIFE INSURANCE
COMPANY
Simplified Life Insurance Application
This Page MUST be detached and given to Proposed Insured
INVESTIGATIVE
CONSUMER REPORT
PRE-NOTIFICATION
Thank you for applying for life insurance with First Variable Life
Insurance Company. As required by the Federal Fair Credit Reporting Act,
we wish to advise that in connection with the insurance applied for, an
investigative consumer report may be requested by the Company with respect
to any person proposed for insurance. The consumer report is customarily
obtained through personal interviews with neighbors, friends, associates,
or the subject of the report. We will furnish the nature of the report to
you if you send us a written request for it. For this information, you may
write our Underwriting Department, Variable Service Center, P. 0. Box 1317,
Des Moines, IA 50305-1317.
MEDICAL INFORMATION
BUREAU PRE- NOTIFICATION
Information regarding your insurability will be treated as confidential.
First Variable Life Insurance Company or its reinsurers may, however, make
a brief report thereon to the Medical Information Bureau, a non-profit
membership organization of life insurance companies which operates an
information exchange on behalf of its members. If you apply to another
Bureau member for life or health insurance coverage, or a claim for
benefits is submitted to such a company, the Bureau, upon request, will
supply such company with the information it may have in its file.
Upon receipt of a request from you, the Bureau will arrange disclosure of
any information it may have in your file. If you question the accuracy of
information in the Bureau's file, you may contact the Bureau and seek a
correction. The address of the Bureau's information office is: Post Office Box
105, Essex Station, Boston, MA 02112 (Telephone (617) 426-3660).
First Variable Life Insurance Company or its reinsurers may also release
information in their files to other life insurance companies to whom you
may apply for life or health insurance, or to whom a claim for benefits may be
submitted.
FIRST
VARIABLE
LIFE Insurance
Company
Temporary Life
Insurance Agreement
and Prepayment Receipt
Completion of Simplified Life This temporary life insurance
Insurance Application and agreement ("Agreement") and
Part 11 Application prepayment receipt is authorized
for use:
(a) if a simplified life insurance application is made to
First Variable Life Insurance Company; and
(b) if any part of Question 9 on the application is answered
"Yes", a Part 11 application to the Company is
completed and submitted to the Company during the lifetime
of the Proposed Insured; and
(c) a prepayment is made. (No payment may be accepted with the
simplified life insurance application if any part of
Question 9 on the simplified application is answered
"Yes".)
Temporary Life Insurance
Temporary life insurance on the life of the Proposed Insured
will become effective on the later of:
(a) the date of this Receipt and Agreement; or
(b) the signature date of the Part 11 application (if Part 11
is required).
This insurance will be subject to the terms of the contract
applied for. The sum of all death benefits under this
Agreement will be the amount applied for, to a maximum of
$50,000.
Increase in Maximum
Amount of Temporary Life
Insurance
If the Company determines that a Proposed Insured is insurable
as a standard risk, the $50,000 maximum will be increased to
$100,000.
This increase in maximum will be retroactive to the effective
date of the temporary life insurance without regard to change
of insurability or death after that date.
If more than one Agreement is in effect on a Proposed Insured,
the temporary life insurance on that Proposed Insured will in
no event exceed the sum of $100,000.
Statements in Application
The temporary life insurance is issued by the Company in
reliance on the statements made in the application for the
insurance. Those statements are representations; they are
not warranties. No statement can be used to contest or
rescind insurance or to defend against a claim unless
contained in the application for the insurance.
Termination of Temporary
Life Insurance
Any contract issued on the basis of the application of a
Proposed Insured will replace the temporary insurance if
(a) the Proposed Insured is living when the contract is
delivered to the Owner; (b) the Owner accepts the contract;
and (c) any balance of premium, if any, then due is paid.
If the contract is not accepted and paid for at the time of
delivery; (a) the temporary insurance will terminate;
(b) the contract will not in force; and (c) the prepayment
will be refunded to the Owner.
The Company can terminate the temporary life insurance before
death of the Proposed Insured by; (a) notice of termination to
the Owner at the address shown the application; and (b) refund
of the prepayment will be refunded to the Owner.
The temporary insurance will expire 60 days after the date of
Part 11 of the application, unless it has already terminated.
Notice of the termination will be sent to the Owner.
If the Proposed Insured dies while the temporary life
insurance is in force, the prepayment will be used as
the premium. Any prepayment in excess of the amount necessary
to fund the temporary life insurance amount will be refunded
to the Owner. Any additional premium due will be deducted
from the death proceeds.
Insurability and Contract
Date
The Company will determine if a Proposed Insured is insurable;
(a) using the regular underwriting rules, limits and standards
of the Company; and (b) as of the effective date of the
temporary insurance, but the Company can require further
medical examinations, tests and reports after the effective
date. Any contract issued on the basis of the application
will be dated as of the effective date of the temporary
insurance.
Conditions
This receipt and agreement are subject to these conditions:
(a) It must be signed by the applicant and countersigned by
a licensed agent of the Company. (b) Any check, draft or money
order for the entire payment must be collectable. (c) No agent
has authority to make any changes in the terms of the printed
text. (d) The liability of the Company for death by suicide
will be limited to refund of the payment.
FIRST
VARIABLE
LIFE Insurance
Company
Prepayment Receipt
Proposed Insured Owner
I have received payment of $__________ from the Owner in
connection with the Application to First Variable Life Insurance
Company dated ________________ for life insurance for a Face Amount
of $_________________
Signature of Licensed Agent/
Registered representative:
Broker/Dealer (print)
The owner(s) has/have read carefully, understands and agrees to all of the
limits, conditions and provisions of this Temporary
Insurance Agreement and Prepayment Receipt.
Signed at (City/State) Date:
Signature Owner
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO FIRST VARIABLE LIFE INSURANCE
COMPANY; DO NOT MAKE CHECKS PAYABLE TO THE AGENT OR LEAVE THE PAYEE BLANK.
REPRESENTATIONS, DESCRIPTIONS AND UNDERTAKINGS PURSUANT TO
RULE 6e-3(T)(b)(13)(iii)(F) UNDER THE
INVESTMENT COMPANY ACT OF 1940
______________________________
Registrant makes the following representations:
(1) Rule 6e-3(T)(b)(13)(iii)(F) is being relied upon;
(2) The level of the mortality and expense risk charge is within the
range of industry practice for comparable flexible premium variable
life insurance policies;
(3) First Variable Life Insurance Company has concluded that there is a
reasonable likelihood that the distribution financing arrangement
of the Separate Account will benefit the Separate Account and the
Owners;
(4) The Separate 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 the Rule 12b-1 to finance
distribution expenses.
The methodology used to support the representation made in paragraph (2)
above was to analyze a sample of flexible premium variable life policies,
all of which are funded by separate accounts that have been registered as
investment companies with the Securities and Exchange Commission and which
contain similar guarantees, and some of which are sold in similar markets.
Registrant undertakes to keep and make available to the Commission on
request the documents used to support the representation in paragraph (2)
above and a memorandum setting for the basis for the representation in
paragraph (4) above.
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Michael J. Corey, a Director of
First Variable Life Insurance Company, a corporation duly organized under
the laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ Michael J. Corey
__________________ ____________________
Michael J. Corey
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Norman A. Fair, Director of First
Variable Life Insurance Company, a corporation duly organized under the
laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Thomas K. Neavins s/ Norman A. Fair
_____________________ __________________
Norman A. Fair
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Mark E. Reynolds, Director of First
Variable Life Insurance Company, a corporation duly organized under the
laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ Mark E. Reynolds
__________________ ____________________
Mark E. Reynolds
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Peter D. Fullam, a Director of
First Variable Life Insurance Company, a corporation duly organized under
the laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ Peter D. Fullam
__________________ ___________________
Peter D. Fullam
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Ronald M. Butkiewicz, a Director of
First Variable Life Insurance Company, a corporation duly organized under
the laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ Ronald M. Butkiewicz
__________________ ________________________
Ronald M. Butkiewicz
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Stephan M. Largent, a Director of
First Variable Life Insurance Company, a corporation duly organized under
the laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ Stephan M. Largent
__________________ ______________________
Stephan M. Largent
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, T. David Kingston, a Director of
First Variable Life Insurance Company, a corporation duly organized under
the laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ T. David Kingston
__________________ _____________________
T. David Kingston
<PAGE>
LIMITED POWER OF ATTORNEY
_________________________
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas K. Neavins, Director of
First Variable Life Insurance Company, a corporation duly organized under
the laws of the State of Arkansas, do hereby appoint, Stephan Largent and
Arnold R. Bergman, or any one of the foregoing individually, as my attorney
and agent, for me, and in my name as a Director of this company on behalf
of the Company or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of variable annuity and variable life insurance contracts
under the Securities Act of 1933, as amended, and the registration of unit
investment trusts under the Investment Company Act of 1940, as amended, and
to do and perform each and every act that said attorney may deem necessary
or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 15th day of May, 1996
WITNESS:
s/ Martin Sheerin s/ Thomas K. Neavins
__________________ ____________________
Thomas K. Neavins
<PAGE>
