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Registration No. 333-
_______________________________________________________________________________
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
Registration Statement
Under
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 and Administration DIANE E. AMBLER, ESQ.
First Variable Life Insurance Company Mayer, Brown & Platt
10 Post Office Square 2000 Pennsylvania Avenue, N.W.
Boston, MA 02109 Washington, D.C. 20006
(Name and Address of Agent for Service) (202) 778-0641
Title and Amount of Securities being Registered:
Interests under flexible premium variable life insurance policies.
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration
Statement.
The Registrant has previously registered an indefinite number or amount of its
shares pursuant to Rule 24f-2 under the Investment Company Act of 1940 on
June 3, 1996; accordingly, no fee is payable herewith. A Rule 24f-2 Notice
for Registrant's fiscal year ended December 31, 1995 was not filed because
Registrant had not commenced operations on December 31, 1995.
The 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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
_______________________________________________________________________________
_______________________________________________________________________________
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CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NO. IN
FORM N-8 B-2 LOCATION
- ------------ --------
<S> <C>
1, 2 Caption in Prospectus 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 Policy
Options, Lapse and Reinstatement, Determination of
Account Value, Other Provisions of the Policy, The
Policy, Policy Options
10 (f) Voting Rights, Other Provisions of the Policy
10 (g), (h) Changes to Policy Options
10 (i) Mixed and Shared Funding, Policy Bebefits and
Values, Other Provisions of the Policy
11, 12 Variable Investors Series Trust, Federated
Insurance Series
13 Highlights, Charges and Deductions, Elimination
and Reduction of Charges and Expenses
14, 15 Application and Issuance of a Policy, 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, Policy Options, The Policy, Charges and
Deductions
19 Reports and Records, Advertising Practices, Other
Provisions of the Policy
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20 See 10 (g) & 10 (h)
21 Preferred and Non-Preferred Loans, The Policy
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 Policy Benefits and Values
52 Changes to Policy Options
53 (a) Federal Tax Status
53 (b), 54, 55 Inapplicable
56, 57, 58 Inapplicable
59 Financial Statements
</TABLE>
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Prospectus Dated:
CAPITAL FLEX PAY LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
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 Capital Flex Pay Life (the "Policy"), a flexible
premium variable life insurance policy issued by First Variable Life
Insurance Company ("the Company"). The Policy provides for life insurance
coverage and for the accumulation of an Account Value. An Owner may adjust
the amount and frequency of premium payments and the level of life insurance
provided under the Policy, subject to certain restrictions.
A Death Benefit is payable under the Policy upon the Insured's death. The
Owner may choose either a Death Benefit generally equal to the Face Amount
(Death Benefit Option 1), or a Death Benefit generally equal to the Face
Amount plus the Account Value (Death Benefit Option 2). The Death Benefit
will never be less than the current Face Amount of a Policy, less any due and
unpaid charges, any loans and any interest due or accrued on the loans, as
long as the Policy stays in force.
After a Policy is approved for issue by the Company, the Net Premium 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 Policy 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 "Policy 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 Policy 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 Net Premiums have been allocated. The Owner bears the investment
risk for all amounts allocated to the Portfolios. The Policy continues in
effect while the Cash Surrender Value is sufficient to cover the current
charges and deductions under the Policy. The Company guarantees to keep the
Policy in force during the first five Policy Years so long as the required
Minimum Monthly Premium amounts are paid. (See "Premiums.")
It may not be advantageous to replace existing insurance with the Policy
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.
1
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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.
TABLE OF CONTENTS
PAGE
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DEFINITIONS
HIGHLIGHTS
THE COMPANY
THE SEPARATE ACCOUNT
POLICY OPTIONS
Variable Investors Series Trust
Federated Insurance Series
Fixed Account Option
Transfers Among Policy Options
General Requirements
Systematic Transfers - Dollar Cost Averaging
Asset Rebalancing Program
Restrictions on Transfers
Automatic Transfer of Small Accounts
Changes in Policy Options
Mixed and Shared Funding
CHARGES AND DEDUCTIONS
Premium Load
Monthly Deductions
Administrative Charge
Cost of Insurance
Other Insurance Charges
Daily Deductions
Mortality and Expense Risk Charge
Transfer Fee
Withdrawal Charge
Step Down Percentage
Maximum Withdrawal Charge
Application of the Withdrawal Charge
Free Withdrawal Amount
Persistency Refund Bonus
Other Charges and Deductions
Fund Expenses
Income Taxes
Special Service Fees
Elimination, Reduction, or Refund of Charges and
Deductions
Group and Sponsored Arrangements
THE POLICY
Application and Issuance of a Policy
Free Look Right
Premiums
Planned Premiums
Monthly Minimum Premium
Additional Premiums
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Premium Limitations
Allocation of Premiums
Delayed Investment Start Date
POLICY BENEFITS AND VALUES
Death Benefit
Death Benefit Options
Change in Death Benefit Options and Face Amount
Adjustments to the Death Benefit Proceeds
Optional Insurance Benefit Riders
Acceleration of Death Benefit Rider
Determination of Account Value
Account Value and Cash Surrender Value
Net Investment Experience
Preferred and Non-Preferred Loan Amounts
Surrenders and Partial Withdrawals
Surrenders
Partial Withdrawals
Maturity Proceeds
Lapse and Reinstatement
Payment of Proceeds
Tax Withholding
Payout Options
Annuitization Bonus
Payout Options
Right to Exchange for a Fixed Benefit Policy
OTHER PROVISIONS OF THE POLICY
Suicide Exclusion
Representations and Contestability
Misstatement of Age or Sex
Owner and Beneficiary
Assignments
Reports and Records
Voting Rights
Suspension of Payments and Transfers
Nonparticipation in Company Dividends
DISTRIBUTION AND OTHER AGREEMENTS
SAFEKEEPING OF ASSETS
MANAGEMENT OF THE COMPANY
FEDERAL TAX STATUS
General
Taxation of the Company and the Separate Account
Life Insurance and Modified Endowment Contract Definitions
Life Insurance
Accelerated Benefits Rider
Modified Endowment Contract
Income Tax Treatment of Policy 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
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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 Policy that are: (a) in
the Separate Account; (b) in the Fixed Account; and, if there is an outstanding
Policy 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 Policy, which
is equal to the Account Value reduced by any outstanding Policy 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.
DEATH BENEFIT - The Death Benefit is the amount of insurance provided under a
Policy 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 and less any unpaid monthly
deductions and charges.
DISTRIBUTOR - First Variable Capital Services, Inc., 10 Post Office Square,
Boston, MA 02109.
FACE AMOUNT - A dollar amount used to determine the Death Benefit under a
Policy. It is shown on the Owner's Policy data page.
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 and is not part of the Separate Account.
FUNDS - Variable Investors Series Trust and Federated Insurance Series, each of
which is an open-end management investment company in which the Separate Account
invests.
INDEBTEDNESS - All amounts owed to the Company by an Owner for loans on the
Policy plus interest due or accrued on the loans.
INSURED - The person on whose life the Policy is issued.
LOAN ACCOUNT - An account which is established in the Company's general account
for any amounts requested for loans plus interest due or accrued on the loans.
4
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MATURITY DATE - The Policy Anniversary on or following the Insured's 100th
birthday.
NET AMOUNT AT RISK - The amount of insurance coverage determined under this
Policy for each Policy Month. On the first Business Day of each Policy 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.
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.
NET PREMIUM - The amounts paid for a Policy, less the applicable Premium Load.
OWNER - The person entitled to all the ownership rights under a Policy. The
initial owner is stated on the application for a Policy, and may be later
changed as the Policy provides.
POLICY ANNIVERSARY - An anniversary of the Policy Date.
POLICY DATE - The date the provisions of the Policy take effect, as shown on the
Owner's Policy data page. Policy Months and Policy Years are measured from this
date.
POLICY OPTION - The Fixed Account or any of the Sub-Accounts of the Separate
Account which can be selected by the Owner of a Policy.
POLICY QUARTER - One quarter of a Policy Year. The first Policy Quarter begins
on the Policy Date and ends on the last Business Day of the third Policy Month.
POLICY YEAR - Each 12-month period beginning on the Policy Date.
PORTFOLIO - A Fund's separate and distinct class of shares that is available as
an underlying investment under a Policy.
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
Policies is located at 1206 Mulberry Street, Des Moines, IA 50309.
HIGHLIGHTS
The following is a brief listing of the basic features of the Policy. These and
other features of the Policy 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.
This prospectus describes a Policy issued by the Company that provides
flexible premium life insurance. Death Benefits and Account Value under
these Policies are "variable" and will reflect the Net Investment Experience
of the Policy Option(s) and Portfolios chosen by the Owner. 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.
5
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Generally, a Policy may be issued on a proposed Insured up to Age 80 and, if the
Company consents, on a proposed Insured who is between the Ages of 81 to 85. An
applicant must select a Face Amount (minimum $50,000) and a Death Benefit Option
on the life of the proposed Insured. All persons proposed for insurance must
meet the Company's underwriting and other criteria for issuance. The Policy is
not available to employee benefit plans qualified under Section 401 of the Code,
except with the Company's consent.
In many respects the Policy is similar to traditional fixed-benefit whole life
insurance. Like fixed-benefit whole life insurance, the Policy provides for a
Death Benefit, an Account Value, and loan privileges. However, the Policy
differs 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 Policy Options to which the Account Value is allocated. The portion of the
Account Value invested in the Sub-Accounts is not guaranteed and an Owner bears
the investment risk on this portion of the Account Value. (See "Determination of
Account Value." )
The Policy requires payment of an initial premium on or before the Policy Date
equal to at least 2 Monthly Minimum Premiums. Additional amounts may be paid
thereafter, subject to certain restrictions, as long as the Policy meets the
definition of a life insurance contract under the Code. Payment of the Monthly
Minimum Premium amounts specified in the Policy guarantees that the Policy will
remain in force for 5 years. Planned and unplanned additional premiums may be
paid, subject to certain limitations. A Premium Load, as discussed below, is
deducted from each premium payment before allocation of the Net Premium to the
Sub-Accounts and/or Fixed Account selected by the Owner.
Payment of large amounts of premium relative to the Death Benefit during the
first seven Policy Years may cause a Policy to be classified as a "modified
endowment contract" under section 7702A of the Code. Under current federal
income tax law, pre-death distributions under modified endowment contracts,
including loans, assignments, partial withdrawals and surrenders, 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.")
Owners have the right to return the Policy 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 Policy Options in certain
instances, but it does not currently do so. (See "Delayed Investment Start
Date.")
The Account Value may be transferred among the Sub-Accounts. (See "Transfers
Among Policy Options.") Within 24 months after the Policy 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 Policy.") Under certain
circumstances, a Transfer Fee may be assessed when an Owner transfers Account
Values from one Sub-Account to another Sub-Account or to or from the Fixed
Account. (See "Transfer Fee.") Other restrictions apply to transfers and
allocations involving the Fixed Account. (See "Fixed Account Option" and
"Transfers Among Policy Options.")
The Account Value of the Policy 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 Account Value in the
Fixed Account. (See "Determination of Account Value" and "Fixed Account
Option.")
A loan privilege is available under the Policy after the first Policy Year. The
Policy may be surrendered at any time, and cash surrender value may be taken as
a partial withdrawal after the first Policy Year, subject to a Withdrawal
Charge. (See "Preferred and Non-Preferred Loan Amounts" and "Surrenders and
Partial Withdrawals.") No Withdrawal Charge will be taken on a partial
withdrawal in any Policy Year unless the amount withdrawn exceeds the annual
Free Withdrawal Amount. The annual Free Withdrawal Amount is equal to 15% of
the premiums paid as of the date of a partial withdrawal, less any amounts
attributable to any withdrawals previously taken during the Policy Year. (See
"Withdrawal Charge.")
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Once a Policy is continuously in force for 10 Policy Years, the Company will
begin crediting a Presistency Refund Bonus to Account Value. The Persistency
Refund Bonus will be credited each Policy Month while the Insured is living,
beginning in the 11th Policy Year. The Persistency Refund Bonus is guaranteed
by the Company to be in amounts equivalent to an annual rate of 0.50% of the
non-loaned Account Value. The Company may credit additional Persistency Refund
Bonus amounts at its discretion. On the date of this Prospectus, the Company
expects that the Persistency Refund Bonus will be credited each Policy Month
beginning in the 11th Policy Year in an amount equivalent to an annual rate of
0.65% of Account Value, but this is not guaranteed. (See "Persistency Refund
Bonus.")
Upon the death of the Insured, the Company will pay the Death Benefit Proceeds
to the Beneficiary. (See "Death Benefit.") Death Benefit Proceeds paid to the
Beneficiary under the Policy 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.") Payments may be made in a lump sum or in
the form of an annuity payout. (See "Payout Options.")
The Policy is subject to the following charges and deductions:
The Premium Load, composed of a premium charge of 6.5% on paid premiums. (See
"Premium Load.")
Monthly Deductions, composed of a monthly administrative charge of $6 each
Policy Month; a cost of insurance charge, and charges for any optional insurance
benefit riders. (See "Monthly Deductions.")
Daily deductions for the mortality and expense risks assumed by the Company,
which are equal to 0.90%, on an annual basis, of the daily net assets in each
Sub-Account. (See "Daily Deductions.")
A transfer fee of $10 on certain transfers of Account Value between and among
Policy Options. (See "Transfer Fee.")
A Withdrawal Charge on surrenders and certain withdrawals of Account Value
during the first 12 Policy Years. The Withdrawal Charge declines by stated
percentages at the end of each Policy Year during this period. The maximum
Withdrawal Charge is equivalent to 12 Monthly Minimum Premiums times 125%., but
will not be greater than $56.50 per $1,000 of Face Amount. The maximum
Withdrawal Charge may be less depending on the Age of the Insured on the Policy
Date. (See "Withdrawal 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.
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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 Policies.
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 Policy
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 Policies,
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 Policies 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
charges and deductions assessed under a Policy.
POLICY OPTIONS
Owners of a Policy 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
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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 Policy.
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 policies. 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 Policy 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 Policy 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 objectives of this Portfolio are 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.
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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
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 policies. Pursuant to an investment advisory
policy, 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 Policy 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 4% per year. Additional amounts of "current"
interest may be credited by the Company in its sole discretion. The Company
determines current interest rates in advance, and credits interest daily to
Fixed Account value.
TRANSFERS AMONG POLICY OPTIONS
GENERAL REQUIREMENTS. An Owner may transfer Account Value among Policy Options
by written request or telephone authorization. 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. A written request to transfer
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Account Value, or to reallocate future premium payments should be sent or
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 1-800-845-0689.
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.
Any transfer instruction must clearly specify the amount which is to be
transferred and the Policy Options which are to be affected. 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.
Account Value to be transferred from the Fixed Account to other Policy Options
in any Policy Year may not exceed:
- - for transfers during the first Policy Year, 25% of the Fixed Account Value
on the Policy Date; and
- - for transfers after the first Policy Year, the greater of 25% of the Fixed
Account Value on the immediately preceding Policy Anniversary or 100% of
the Fixed Account Value transferred to other Policy Options during the
immediately preceding Policy Year.
Any applicable Transfer Fee will be taken pro-rata from Account Value in each
Policy Option prior to a transfer. If the entire interest in a Sub-Account or
the Fixed Account is being transferred, the pro-rata portion of the Transfer Fee
will be deducted from the amount which is transferred. (See "Charges and
Deductions.")
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."
SYSTEMATIC TRANSFERS - DOLLAR COST AVERAGING. The Company permits systematic
transfers, such as dollar cost averaging, that an Owner may elect by written
request to the Company at its Variable Service Center. Through systematic
transfers, designated amounts are transferred each month or quarter from a
selected Policy Option to other pre-selected Policy Options. The dollar cost
averaging program permits transfers from the Prime Money Fund II 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
requires at least $6,000 of Account Value to be in the FIS Prime Money Fund II
Sub-Account or the Fixed Account, as applicable, before a "dollar cost
averaging" program may begin. Transfers from the Fixed Account are also subject
to the restrictions described above in GENERAL REQUIREMENTS. Systematic
transfers under the dollar cost averaging program are not taken into account for
purposes of determining any applicable transfer fee. The Company does not
currently charge for enrolling in the dollar cost averaging program, but
reserves the right to do so. (See "Special Service Fees.")
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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.)
ASSET REBALANCING PROGRAM. The Company administers an asset rebalancing program
that an Owner may elect by written request to the Company at its Variable
Service Center. The asset rebalancing program enables the Owner to indicate to
the Company the percentage levels of Account Value he or she would like to
maintain in particular Sub-Accounts. On the last Business Day of each Policy
Quarter, the Account Value will be automatically rebalanced to maintain the
indicated percentages by transfers among the Separate Account Policy Options.
All Account Value allocated to the Separate Account Policy Options must be
included in the asset rebalancing program. Other investment programs, such as
systematic transfers and systematic withdrawals, or other transfers or
withdrawals may not work in concert with the asset rebalancing program.
Therefore, Owners should monitor their use of these programs and other transfers
or withdrawals while the asset rebalancing program is being used. Asset
rebalancing involving transfers from the Fixed Account are subject to the
restrictions described above in GENERAL REQUIREMENTS. All transfers under the
asset rebalancing program will be taken into account for purposes of determining
any applicable transfer fee. (See "Transfer Fees.") The Company does not
currently charge for enrolling in the asset rebalancing program, but reserves
the right to do so. (See "Special Service Fees.")
RESTRICTIONS ON TRANSFERS. Programmed or other frequent requests to transfer
among Policy 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 Policy 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 Policy 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 Account Value from any Policy Option if less
than $250, to the Policy Option with the highest Account Value.
CHANGES IN POLICY 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 invest in another portfolio of a Fund, or in another mutual
fund or in other investments.
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 Policies, 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, to the extent
required, and under the requirements it may impose.
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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 Policies, and for
allocation to other separate accounts funding variable annuity policies and
other variable life insurance Policies 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
policy 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 DEDUCTIONS
PREMIUM LOAD
The Premium Load is equivalent to 6.5% of each premium paid. It is deducted
from each premium payment under a Policy. After deduction, the Net Premium is
allocated to the Policy Options selected by an Owner.
The Premium Load, together with the Withdrawal Charge, is intended to cover the
Company's sales and distribution costs, as well the average premium tax the
Company is expected to pay to various states and local jurisdictions. Amounts
realized on the Premium Load and the Withdrawal Charge are not necessarily
related to the Company's actual sales expenses for that year.
MONTHLY DEDUCTIONS
Various Monthly Deductions are made from the Account Value and the Separate
Account. On the first day of each Policy Month, the Company will deduct an
amount to cover charges and deductions incurred in connection with the Policy.
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 Policy Option bears to the total
Account Value for a Policy. The amount of the monthly deduction will vary from
month to month. The Policy may lapse if the Cash Surrender Value is not
sufficient to cover the monthly deduction which is due. (See "Lapse and
Reinstatement.")
The Monthly Deductions are comprised of the following charges:
ADMINISTRATIVE CHARGE. A monthly administrative charge of $6 is deducted each
Policy Month. This charge, together with the Withdrawal Charge, is intended to
reimburse the Company for its administrative expenses such as the cost of
processing Policy applications and 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.
COST OF INSURANCE. The Company will make a monthly deduction for the cost of
providing life insurance coverage for the Insured based on the Net Amount at
Risk. This charge is guaranteed not to exceed the maximum cost of insurance
charge determined on the basis of the mortality table guaranteed in the Policy,
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. In addition, separate mortality tables will be used for non-
smokers and smokers.
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OTHER INSURANCE CHARGES. The Company will make a monthly deduction for the cost
of optional insurance benefit riders added to the Policy. See "Optional
Insurance Benefit Riders."
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 Policy. 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 Policy is that the Insured may live for shorter periods of time than the
Company estimated when it guaranteed the maximum charges in the Policy. The
expense risk assumed is that the actual expenses incurred in issuing and
administrating the Policies may be greater than the Company estimated when it
guaranteed the maximum level of insurance charges in the Policy. In addition,
the Company assumes risks associated with the nonrecovery of Policy issue,
underwriting and other administrative expenses due to Policies which lapse or
are surrendered during the early Policy 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
An Owner may transfer all or part of the Account Value among Policy Options
without the imposition of any fee or charge if there have been no more than 12
transfers made in any Policy Year. If more than 12 transfers have been made in
a Policy Year, the Company will deduct a transfer fee of $10 per transfer.
Transfers under a systematic transfer program, such as the dollar cost averaging
program providing for the automatic transfer of funds from the Prime Money Fund
II Sub-Account or Fixed Account, are not taken into account in determining any
transfer fee. (See "Systematic Transfers - Dollar Cost Averaging.") The charge
is taken pro-rata from Account Value in each Policy Option prior to a transfer
and with respect to Sub-Accounts, will result in the cancellation of
Accumulation Units credited to a Policy. If the entire interest in a
Sub-Account or the Fixed Account is being transferred, the pro-rata portion of
the Transfer Fee will be deducted from the amount which is transferred.
WITHDRAWAL CHARGE
A Withdrawal Charge may be assessed if a Policy is surrendered during the first
12 Policy Years or if a permitted partial withdrawal of Cash Surrender Value is
made during Policy Years 2 through 12. (See "Surrenders and Partial
Withdrawals.") The initial Withdrawal Charge is equal to 12 Monthly Minimum
Premiums times 125%. (See "Premiums - MONTHLY MINIMUM PREMIUM.") The dollar
amount of the initial Withdrawal Charge on the Policy Date is stated in the
Policy and is based on the Insured's Age and sex, the Face Amount, and the
premium class.
STEP DOWN PERCENTAGE. For each policy year, the initial Withdrawal Charge is
multiplied by the Step-Down Percentage shown below to obtain the Withdrawal
Charge for investments made at any time during that Policy Year:
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POLICY YEAR STEP-DOWN % POLICY YEAR STEP DOWN %
----------- ----------- ----------- -----------
1 100% 8 64%
2 92% 9 56%
3 88% 10 48%
4 84% 11 32%
5 80% 12 16%
6 76% 13+ 0%
7 72%
MAXIMUM WITHDRAWAL CHARGE. The maximum withdrawal charge in any Policy Year is
limited to $56.50 per $1,000 of Face Amount.
APPLICATION OF THE WITHDRAWAL CHARGE. Generally, the Withdrawal Charge is
applied by subtracting values from the Fixed Account and/or canceling
Accumulation Units from each affected Sub-Account in the ratio that the value of
each Policy Option bears to the total Account Value for a Policy. If there is
insufficient value in a Sub-Account or in the Fixed Account to cover the
Withdrawal Charge, the Company may deduct it from other Policy Options. Other
methods may be requested subject to Company approval. Withdrawals of Account
Value reduce the Death Benefit dollar for dollar by the amount of the withdrawal
and applicable withdrawal charge. (See "Surrenders and Partial Withdrawals.")
FREE WITHDRAWAL AMOUNT. No Withdrawal Charge will be assessed upon a partial
withdrawal of Cash Surrender Value 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 during that Policy
Year. These 15% withdrawals do not reduce the Withdrawal Charge. The
Withdrawal Charge will continue to apply to any amount withdrawn or surrendered
in any Policy Year that exceeds 15% of premium payments. The unused portion of
the Free Withdrawal Amount for one Policy Year will not be carried over to the
next Policy 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 "Surrenders and Partial Withdrawals.")
PERSISTENCY REFUND BONUS
After a Policy has been continuously in force for 10 Policy Years, the Company
will begin crediting monthly Persistency Refund Bonus amounts to Account Value
in the Separate Account and in the Fixed Account. Account Value in the Loan
Account is not credited with a Persistency Refund Bonus (See "Preferred and Non-
Preferred Loan Amounts.") The Persistency Refund Bonus is determined each Policy
Month while the Insured is living, beginning in the 11th Policy Year. The
Company calculates the amount of a Persistency Refund Bonus for a Policy Month
by multiplying (a) times (b), where:
(a) is the Account Value on the first Business Day of the Policy Month held in
the Separate Account and in the Fixed Account; and
(b) is a factor guaranteed to be not less than the equivalent of an annual rate
of 0.50% (0.0415% monthly).
The Company may credit additional Persistency Refund Bonus amounts in its
discretion. On the date of this prospectus, the Company expects that the
Persistency Refund Bonus will be credited each Policy Month beginning in the
11th Policy Year in an amount equivalent to an annual rate of 0.65% (0.0540%
monthly) of Account Value then held in the Separate Account and in the Fixed
Account, but this is not guaranteed. Any Persistency Refund Bonus will be added
to each Policy Option in the same proportion as the Account Value in that Policy
Option bears to the entire Account Value as of the beginning of the Policy
Month.
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OTHER CHARGES AND DEDUCTIONS
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 Policy. (See "Tax
Withholding.")
SPECIAL SERVICE FEES. The Company may charge Owners for special services, such
as additional reports, dollar cost averaging, and asset rebalancing. As of the
date of this prospectus, it does not charge for these special services.
ELIMINATION, REDUCTION OR REFUND OF CHARGES AND DEDUCTIONS. The charges and
deductions on a Policy may be eliminated, reduced or refunded, in whole or in
part, when sales of Policies are made to individuals or to a group of
individuals in a manner that results in savings of sales or administration
expenses. Any such adjustment to charges and deductions 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 Policies may be implemented and administered;
- - the total amount of premium payments to be received, because certain
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 Policy with fewer contacts;
- - other circumstances, of which the Company is not presently aware, which
could result in reduced expenses; and
- - after a Contract is issued, in the event anticipated expenses for later
Policy Years are anticipated to be less than initially projected.
Charges and deductions may also be eliminated, reduced or refunded when a Policy
is issued to an officer, director, employee or agent of the Company or any of
its affiliates. No adjustment in charges and deductions is guaranteed by the
Company, and any adjustment may vary by group. In no event will adjustments to
charges and deductions be permitted if the adjustment would 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
Policies 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 Policies 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 Policies 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 Policies to
employees under a group or sponsored arrangement consult its attorney before
doing so.
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THE POLICY
APPLICATION AND ISSUANCE OF A POLICY
An application must be submitted to the Company at its Variable Service Center
by anyone wishing to purchase a Policy. The applicant selects:
- - A Face Amount (minimum $50,000) and a Death Benefit Option on the life of a
proposed Insured (see "Death Benefit");
- - The amount of planned premium that is intended to be paid (see "Premiums");
and
- - The way that Net Premiums will be allocated to the Sub-Account(s) and/or
the Fixed Account (see "Allocation of Premiums").
The Company generally will not issue Policies to insure persons older than Age
80. If a premium payment is made with the application, the Policy Date will be
the later of the date the Company approves the application or the date of
receipt of the premium payment. The Company will review an application under its
underwriting rules, and may request additional information or reject an
application.
If a Policy is issued, Monthly Deductions will begin as of the Policy Date, even
if the Policy'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 Policy, the Policy will have a
Policy Date which is generally five days after issue. Monthly Deductions will
begin on the Policy Date.
Under limited circumstances, the Company may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
Backdating may be desirable, for example, so that the cost of insurance rate is
lower, based on a lower Age of the Insured.
FREE LOOK RIGHT. An Owner has the right to review a Policy during an initial
inspection period specified in the Policy and, if dissatisfied, to return it to
the Company or to the agent through whom it was purchased. When the Policy 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,
Premium Load, and any Monthly Deductions (which may be greater or less than the
premium payments received) on a Policy returned during the permitted period,
unless a different amount is required by state law. The "free look" period is
typically 10 days, and may be greater depending on state requirements.
PREMIUMS
The Policy is designed for the flexible payment of premiums. The amount of
premiums paid and the time between payments may vary, as long as the Account
Value is greater than the next Monthly Deductions. The minimum amount required
on the Policy Date, as shown in the Policy, will be at least equal to 2 times
the Monthly Minimum Premium. The Owner may also select to pay: planned premiums;
Monthly Minimum Premiums; and/or additional premiums, subject to the limitations
described below.
PLANNED PREMIUMS. The Owner may elect, within limits specified by the Company,
to pay premium on a pre-determined schedule. The Company will provide periodic
reminder notices. Failure to make a payment will not necessarily result in
lapse of a Policy, provided the Account Value is sufficient to cover the Monthly
Deductions. Although planned premium payments will not necessarily assure that
a Policy will remain in force (see "Lapse and Reinstatement"), the amounts paid
will generally provide greater benefits than if a lower amount of premium is
paid. Making planned premiums can also help assure that coverage remains in
force if they are greater than or equal to the Monthly Minimum Premium.
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The Owner may arrange to pay planned premiums by pre-authorized automatic
deductions from accounts maintained at other financial institutions, and may
request to change the amount of planned premiums by submitting a written request
to the Variable Service Center.
MONTHLY MINIMUM PREMIUM. Payment of Monthly Minimum Premiums guarantees that
the Policy will remain in force during the first five Policy Years; provided
that on the first Business Day of each Policy Month (a) is greater than (b),
where:
(a) is the sum of all premiums paid to date minus any Indebtedness, minus any
partial withdrawals and any Withdrawal Charges deducted; and
(b) is the Monthly Minimum Premium stated in the Policy times the number of
elapsed Policy Months, plus the Monthly Minimum Premium for the current
Policy Month.
If (a) is equal to or less than (b), and there is no Cash Surrender Value, a 61
day grace period is allowed for payment of sufficient premium. (See "Lapse and
Reinstatement - First Five Policy Years.")
An increase in Face Amount during the first five Policy Years will result in an
increase in the Monthly Minimum Premium. (See "Death Benefit.") After the
first five Policy Years, a Policy will not lapse as long as the Cash Surrender
Value is sufficient to cover the next Monthly Deductions and accrued interest on
Policy loans.
The Monthly Minimum Premium is based on the Insured's Age and sex, the Face
Amount and the Premium Class. Increases or decreases in the Death Benefit,
partial withdrawals of Account Value, changes in Death Benefit Options and the
addition or deletion of Optional Insurance Benefit Riders may affect the amount
of the Minimum Monthly Premium.
ADDITIONAL PREMIUMS. The Owner may pay additional premiums during the lifetime
of the Insured at any time, subject to the premium limitations described below.
PREMIUM LIMITATIONS
The Company reserves the right to require satisfactory evidence of insurability
before accepting any premium payment that would increase the Net Amount of Risk
under a Policy. The Company may require that any Indebtedness be repaid prior to
accepting any premium payments.
The maximum amount of Premium Payment in any Policy Year is limited to 3 times
the "guideline level premium" for a Policy, unless necessary to keep the Policy
in force. The "guideline level premium" is defined under section 7702 of the
Internal Revenue Code and determined by the Company. The "guideline level
premium" on the Policy Date is shown in the Policy. The Company will not accept
any additional premium payment which would result in the total premiums paid
exceeding the premium limitation prescribed by section 7702 of the Internal
Revenue Code to qualify the Policy as a life insurance contract. (See "Federal
Tax Status.")
Payment of premium in excess of specified amounts may cause a Policy to be
classified as a "modified endowment contract" for federal income tax purposes.
(See "Federal Tax Status.")
ALLOCATION OF PREMIUMS
Net 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, Net
Premium payments are converted to Accumulation Units. The number of
Accumulation Units credited to a Policy is determined by dividing the amount
allocated to the Sub-Account by the value of the applicable Accumulation Unit
next determined after receipt of a premium payment.
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Calculations of Accumulation Unit Value for each Sub-Account are made as of
the end of each Business Day. Initial Net Premium payments are converted into
Accumulation Units when a Policy is issued. Net Premium payments allocated to
the Fixed Account are credited in dollars.
Net Premium payments are generally allocated to the Sub-Accounts or the Fixed
Account as of the later of the Policy Date or the date the premium is received.
DELAYED INVESTMENT START DATE. Net Premium payments are allocated to the Sub-
Accounts or to the Fixed Account as selected by the Owner. On the date of this
prospectus, the Company does not delay investment start dates and will allocate
Net Premium payments to the selected Policy Options upon issuance of a Policy.
The Company reserves the right, however, to allocate Net Premium payments to the
Prime Money Fund II Sub-Account for an investment delay period before they will
be invested (together with any investment gain) in any other Policy Option(s)
designated by the Owner. If the Company elects to delay such initial
investments in the Policy Options, the delay would apply where a Policy is
issued subject to a requirement that Net Premium payments be refunded upon the
exercise of a "free look" right. Allocation to the Policy Option(s) designated
by the Owner would be made at the end of the "free look" period. The
investment delay period would be measured from the date a Policy is issued from
the Variable Service Center and would include up to 5 extra days in addition to
the applicable "free look" inspection period to provide time for mail or other
delivery of the Policy to the Owner.
Should the Company elect to delay investment start dates, it will so advise
prospective investors in a Policy.
POLICY BENEFITS AND VALUES
DEATH BENEFIT
As long as the Policy remains in force, a Death Benefit is payable upon the
death of the Insured. Upon receipt of proof of death of the Insured and any
applicable election for payment of the Death Benefit, the Company will pay the
Death Benefit Proceeds to the Beneficiary. While the Insured is living, the
Owner may elect for the Death Benefit Proceeds to be paid in a single sum or
under a Payout Option. If no election is in effect at the death of the Insured,
the Beneficiary may make the election during a 60 day period following the
Insured's death. The amount of the Death Benefit is determined on the date the
Company receives proof of the Insured's death.
The Death Benefit is based on: the Death Benefit Option in effect on the date
of the Insured's death; any increases or decreases to the Face Amount; and the
amounts, if any, payable under any Optional Insurance Benefit rider.
DEATH BENEFIT OPTION 1. Under this option, the Death Benefit is the greater
of: (a) the Face Amount or (b) the Account Value times the applicable percentage
of Death Benefit factors from the table below.
DEATH BENEFIT OPTION 2. Under this option, the Death Benefit is the greater
of: (a) the Face Amount plus the Account Value or (b) the Account Value times
the applicable percentage of Death Benefit factors from the table below.
19
<PAGE>
APPLICABLE PERCENTAGE OF DEATH BENEFIT FACTORS.
<TABLE>
<CAPTION>
Percentage Percentage Percentage
Attained of Account Attained of Account Attained of Account
Age Value Age Value Age Value
<S> <C> <C> <C> <C> <C>
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
</TABLE>
CHANGE IN DEATH BENEFIT OPTIONS AND FACE AMOUNT. The Owner may make written
request to the Variable Service Center during the Insured's lifetime to change
the Death Benefit Option. A change from Death Benefit Option 2 to Death Benefit
Option 1 will cause the Face Amount to be increased by the amount of the Account
Value. A change from Death Benefit Option 1 to Death Benefit Option 2 will
cause the Face Amount to decrease by the amount of the Account Value, and is not
permitted during the first 5 Policy Years if the decrease would result in a Face
Amount that is 75% or less of the Face Amount on the Policy Date.
After the first Policy Year, the Owner may request to increase or decrease the
Face Amount by making written request to the Variable Service Center during the
Insured's lifetime.
For a change that would increase the Face Amount, the Company may require
evidence of insurability. The Company may restrict any requested increases in
Face Amount to minimums and maximums that vary with the Insured's Age and
premium risk class. An increase in Face Amount during the first 5 Policy Years
will increase the Monthly Minimum Premium. (See "Premiums.") The increase in
Monthly Minimum Premium begins when the increase in Face Amount begins, and
applies for the remainder of the first 5 Policy Years. The increase in Monthly
Minimum Premium is based on the Insured's attained age, sex, additional Face
Amount and premium risk class. The Withdrawal Charge is not increased as a
result of an increase in Face Amount.
20
<PAGE>
No decrease in the Face Amount will be permitted during the first 5 Policy Years
if the reduction would result in a Face Amount that is 75% or less of the Face
Amount on the Policy Date. Any reduction will be in the following order:
(a) against the most recent increase in insurance;
(b) against the next most recent increases;
(c) against the initial Face Amount.
The Company may deny any request to change the Face Amount if:
(a) the Death Benefit would be reduced below that required to qualify the
Policy as life insurance; or
(b) the Death Benefit would be reduced below $50,000, except with the
Company's consent; or
(c) the remaining Cash Surrender Value would be less than the greater of
(i) $500 or (ii) an amount equal to 3 times the current Monthly
Deductions.
A change in Death Benefit Option or Face Amount will take effect on the first
Business Day of the Policy Month coinciding with or next following the date the
Company approves the request.
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 Indebtedness and unpaid monthly charges.
OPTIONAL INSURANCE BENEFIT RIDERS
The Company may in the future permit Owners to purchase additional benefits
provided by rider to the Policy, 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 Policy
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 Sub-Accounts, interest credited on its
Account Value in the Fixed Account and on amounts held in the Loan Account,
amounts deducted for charges and deductions due under the Policy or any
Withdrawal Charges that apply to an Owner request to reduce the Face Amount and
amounts withdrawn or surrendered.
21
<PAGE>
The Cash Surrender Value is the amount the Owner will receive upon surrender of
the Policy. The Cash Surrender Value is the Account Value reduced by any
outstanding Policy loan (and accrued interest) and by any applicable Withdrawal
Charges. (See "Preferred and Non-Preferred Loan Amounts" and "Withdrawal
Charge.")
The Cash Surrender Value in the Separate Account may increase or decrease daily
depending on the Net Investment Experience of the 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 Sub-Accounts
will affect the 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, but in the future
the Company may impose a charge against the Sub-Accounts for taxes if
appropriate. See "Charges and Deductions" 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 4.0%. The Company may from time to time
credit interest at a higher rate than 4.0%, 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 LOAN AMOUNTS
The Owner may borrow all or part of the Policy's "loan value" at any time after
the first Policy Year. 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 Account
Value in the Sub-Accounts and the Fixed Account by the amount of the loan.
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 at a minimum
guaranteed rate of 4% annually.
The interest rate charged on Indebtedness in excess of a "preferred loan amount"
is 6% per year. The interest rate charged on Indebtedness that is less than or
equal to a "preferred loan amount" is equivalent to a rate of 4% per year. If
not paid, the interest accrued on the loan is added to the loan each Policy
Anniversary. An amount equal to the unpaid interest is deducted from the
Account Value in the Sub-Accounts and the Fixed Account and transferred to the
Loan Account.
22
<PAGE>
PREFERRED LOAN AMOUNTS. A "preferred loan amount" is determined on the Policy
Date and on the first Business Day of each Policy Month. It is equal to the
excess of Account Value over the total amount of Premiums Paid.
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 on the first Business Day of a Policy Month
exceeds the Account Value less the Withdrawal Charges, a repayment will be
required to reduce the total Indebtedness to an amount equal to the sum of (a)
plus (b), where:
(1) is the Account Value less any Withdrawal Charges; and
(2) is an amount sufficient to continue the Policy in force for 3 months.
The Company will send a notice to the Owner or assignee, if any, and allow a
period of 61 days from the first Business Day of the Policy Month for the
repayment. The Policy will terminate without value unless a sufficient
repayment is made during that period.
The amount taken from the 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 Policy can be permanently affected by a
loan, even if it is repaid. In addition, any proceeds payable under a Policy
are reduced by the amount of any outstanding loan plus accrued interest.
SURRENDERS AND PARTIAL WITHDRAWALS
SURRENDERS. The Owner may surrender a Policy 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 Policy 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 Policy 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 "Payout Options.") The
Company's liability for the Death Benefit ends when a Policy is surrendered.
PARTIAL WITHDRAWAL. After the first Policy Year, the Owner may make a partial
withdrawal under the Policy (minimum $500) to receive a portion of its Cash
Surrender Value. A partial withdrawal will reduce the Account Value and Death
Benefit by the amount withdrawn and any applicable Withdrawal Charge. A partial
withdrawal may not be made, unless the Company expressly consents, if:
- the Death Benefit would be reduced below that required to qualify the
Policy as life insurance; or
- the Death Benefit would be reduced below $50,000, except with the
Company's consent; or
- the remaining Cash Surrender Value would be less than the greater of
(a) $500 or (b) 3 times the most recent Monthly Deduction.
Any Withdrawal Charge that applies to a partial withdrawal will be deducted pro
rata from the Account Value in the Sub-Accounts and the Fixed Account. A
permitted partial withdrawal will result in the cancellation of Accumulation
Units from each applicable Sub-Account Policy Option or a reduction in Fixed
Account Value in the ratio that the Account Value in the Policy 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.
23
<PAGE>
MATURITY PROCEEDS
If the Insured is living on the "Maturity Date" (the anniversary of the Policy
Date on which the Insured is Age 100), on surrender of the Policy to the
Company, the Company will pay the Owner the Cash Surrender Value. In such case,
the Policy will terminate and the Company will have no further obligations under
the Policy.
LAPSE AND REINSTATEMENT
FIRST FIVE POLICY YEARS. The Policy will not lapse during the first five Policy
Years, provided that on the first Business Day of each Policy Month (a) is
greater than (b), where:
(a) Is the sum of all premiums paid to date minus any Indebtedness, minus any
partial withdrawals and any Withdrawal Charges deducted; and
(b) Is the Monthly Minimum Premium stated in the Policy times the number of
elapsed Policy Months, plus the Monthly Minimum Premium for the current
Policy Month.
If (a) is equal to or less than (b), and there is no Cash Surrender Value, a
grace period of 61 days from the first Business Day of the Policy Month will be
allowed for the payment of sufficient premium to satisfy the minimum premium
requirement. The Policy will not lapse as long as there is a positive Cash
Surrender Value.
POLICY YEARS SIX AND AFTER. If the Cash Surrender Value on the first Business
Day of a Policy Month is not sufficient to cover the current charges,
deductions, and accrued interest on Policy loans, a grace period of 61 days from
the first Business Day of the Policy Month will be allowed to for the payment of
sufficient premium to satisfy the minimum premium requirement.
ALL POLICY YEARS. The Company will send a grace period notice to the Owner's
last known address. The notice will show the minimum premium requirement. This
is the amount necessary to cover current charges and deductions due under the
Policy plus an amount equal to three times the current monthly deduction. If
sufficient premium is not paid by the end of the grace period, the Policy will
lapse without value. If the Insured dies during the grace period, the Company
will pay the Death Benefit Proceeds.
REINSTATEMENT. If the grace period ends and the Owner has neither paid the
required premium nor surrendered the Policy for its Cash Surrender Value, the
Owner may reinstate the Policy by:
(a) submitting a written request at any time within 3 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 and deductions that were
due and unpaid during the grace period;
(d) paying sufficient premium to keep the Policy in force for 3 Policy Months
from the date of reinstatement; and
(e) repaying any Indebtedness against the Policy that existed at the end of the
grace period.
PAYMENT OF PROCEEDS
The Company ordinarily will pay any Cash Surrender Value, Policy 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
Policy. 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
"Payout Options.")
24
<PAGE>
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.
PAYOUT 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 Fixed Account. The 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 payout 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 will be calculated by the Company as of the immediately
preceding Business Day. The increase will be allocated pro rata to the Policy
Options which the Owner has elected and will be deemed "income" on the Policy
for federal income tax purposes. (See "Income Tax Treatment of Policy
Benefits.")
The "Annuitization Bonus" for a Policy will be determined by the Company at the
time of issuance of a Policy, but may be modified, reduced or eliminated for
Policies 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.
PAYOUT OPTIONS. The following payout 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.
25
<PAGE>
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 general account and be credited with interest by the Company at a rate of
not less than 4%. Full and partial withdrawals may be made at any time with no
Withdrawal Charge.
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 POLICY
During the first 24 months after the Policy Date, if the Policy 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 POLICY
SUICIDE EXCLUSION
If the Insured commits suicide within two years from the Policy Date (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 Policy or any rider to
the Policy on the Policy Date during the Insured's lifetime for two years from
the Policy Date, based on misrepresentations made in the application. The
Company can challenge an increase in Death Benefit requiring evidence of
insurability for two years, during the Insured's lifetime, from the date of the
increase. For any increase in Face Amount requiring evidence of insurability,
the Company will not contest payment of the Death Benefit Proceeds based on such
an increase after it has been in force during the Insured's lifetime for two
years from its effective date. However, the two year time limit on the
Company's right to challenge all or part of the Policy 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 Account Value,
Cash Surrender Value and Death Benefit will be what the premiums paid would have
purchased, based on the Insured's correct Age and 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
Policy may be changed at any time before the death of the Insured. The
Beneficiary has no rights under the Policy 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.
26
<PAGE>
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 Policy 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 Policy to someone
else. An absolute assignment of the Policy is a change of Owner and Beneficiary
to the assignee. A collateral assignment of the Policy 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 Policy 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, Policy 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 Policy Options, premium payments,
Policy loans, increases in Policy loan principal, Policy loan repayments, unpaid
Policy 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. On the date of this prospectus, the Funds are not
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 a 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
Policy 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
27
<PAGE>
(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 Policy 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 Policy 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 Policies 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 Policies. 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
Policy is offered on a continuous basis.
The Company and FVCS have agreements with various broker/dealers under which the
Policies 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 policies. The commissions payable to
a broker/dealer for sales of a Policy may vary with the sales agreement, but are
not expected to exceed 100% of a company established target first year premium
payment and 5% of additional payments. 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 Policies.
SAFEKEEPING OF ASSETS
The Company serves as the custodian of the assets of the Variable Account.
28
<PAGE>
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 Principal Occupation
Company During Past 5 Years
Ronald M. Butkiewicz Chairman and President and Chief
2211 York Road, Suite 202 Director Executive Officer,
Oakbrook, IL 60521 Irish Life of North
America, Inc.;
Chairman and Chief
Executive Officer,
Interstate Assurance
Company
Michael J. Corey Director Managing Director,
401 East Host Drive Insurance Practice
Lake Geneva, WI 53147 Group, Ward Howell
Intl., Inc.;
President, GSG
International Inc.
Norman A. Fair Director Vice President,
2211 York Road, Suite 202 Treasurer, & Asst.
Oakbrook, IL 60521 Sec., Irish Life of
North America, Inc.;
prior to 1994, Senior
Vice President and
Chief Financial
Officer, Interstate
Assurance Company
Michael R. Ferrari Director President, Drake
25th & University Avenue University
Des Moines, IA 50311
Stephen Shone Director Chief Financial
Lower Abbey Street Officer, Irish Life
Dublin 1, Ireland plc
T. David Kingston Director Managing Director,
Lower Abbey Street Irish Life plc
Dublin 1, Ireland
Stephan M. Largent President and Prior to April 1995,
10 Post Office Square Director President, ING America
Boston, MA 02109 Equities, Inc.
Jeff S. Liebmann Director Partner, Dewey
1301 Avenue of the Americas Ballantine
New York, NY 10019
Kenneth R. Meyer Director Managing Director,
200 South Wacker Drive, Lincoln Capital
Suite 2100 Management Co.
Chicago, IL 60606
Thomas K. Neavins Director Vice President and
2211 York Road, Suite 202 Corporate Secretary,
Oakbrook, IL 60521 Irish Life of North
America, Inc.
Phillip R. O'Connor Director (non- Principal of Coopers &
111 West Washington, Suite 1247 voting) Lybrand LLP/Palmer
Chicago, IL 60602 Bellevue Corp.
29
<PAGE>
Anthony J. Koenig, Jr. Vice President and Vice President and
10 Post Office Square Treasurer Treasurer; prior to
Boston, MA 02109 June, 1996, Assistant
Controller; prior to
1993, Audit Manager,
Ernst & Young LLP;
prior to 1992,
Assistant Controller,
First Inter. Life Ins.
Co.
Arnold R. Bergman Vice President- Vice President-Legal
10 Post Office Square Legal & & Administration and
Boston, MA 02109 Administration and Secretary; prior to
Secretary February 1995,
Counsel, Aetna Life
Insurance and Annuity
Company; prior to
1992, Vice President,
General Counsel and
Secretary, First Int.
Life Ins. Co.
Martin Sheerin Vice President and Vice President and
10 Post Office Square Chief Actuary Chief Actuary; prior
Boston, MA 02109 to October, 1994, Vice
President, Irish Life
of North America, Inc.
Thomas Simpson Vice President and Vice President; prior
10 Post Office Square Chief Marketing to February, 1996,
Boston, MA 02109 Officer Vice President,
Hamilton Life Ins.
Co.; prior to
November, 1994,
National Sales
Manager, Bankers Nat.
Life Ins. Co.
30
<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 POLICY.
It should be understood that any detailed description of the federal income tax
consequences regarding the purchase of these Policies 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 Policy 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
Policies until they are distributed. Furthermore, the Company believes the
Death Benefits received under the Policies are excludable from the gross income
of the Beneficiary pursuant to the provisions of Section 101 of the Code.
ACCELERATED BENEFITS RIDER. The Company believes that payments received under
an accelerated benefits rider will be treated as distributions from a life
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 Policy 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 policy which is also a "modified endowment
contract."
A modified endowment contract is a life insurance policy where premiums paid
under the policy at any time during the first seven policy years exceeds the sum
of the net level premiums that would have been paid on or before such time if
the policy 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 policy's
earnings and the use of a reasonable mortality charge. Riders to the policy are
considered part of the policy for purposes of applying the 7-pay test.)
31
<PAGE>
Any Policy 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 policy entered into before June 21, 1988 will not cause
the new policy 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 POLICY BENEFITS
If the Policy falls within the definition of a modified endowment contract, the
following rules will apply to distributions under such Policy:
(a) Distributions will be included in gross income to the extent the Account
Value of the Policy exceeds the investment in the Policy (i.e. will be
treated as income first). Any additional amounts received other than
Policy loans will be treated as a return of capital to the Owner and will
reduce the Owner's investment in the Policy.
(b) Loans are considered distributions. An investment in the Policy will be
increased by the amount of any prior loan that was included in the Owner's
gross income.
(c) A Policy assignment is treated as a distribution. For example, a
collateral assignment is a distribution which will subject any gain that
accrues in the Policy to taxation.
(d) For purposes of determining the amount of the distribution which is
included in gross income, all modified endowment Policies 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 policies. The Code provides that a
variable life insurance policy 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 Policy
not qualifying as life insurance. If the Policy does not qualify as life
insurance, Owners may be subject to immediate taxation on the increases in
Account Value of their Policies plus the cost of insurance protection for the
year.
The Company intends that all Portfolios of the Funds underlying the Policies
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.
32
<PAGE>
The amount of Owner control which may be exercised under the Policy 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 Policy, the Owner would be liable for federal income
tax on the earnings allocable to the Policy prior to receipt of payments under
the Policy.
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 Policy in an attempt to maintain favorable tax treatment.
ADVERTISING PRACTICES
The Company may from time to time receive endorsements of the Policies from
professional organizations. The Company may use such endorsements in
advertisements or sales material for the Policies. 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
Policies. An endorsement of the Policies by a third party is not necessarily
indicative of the future performance or results which may be obtained by persons
who purchase the Policies.
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 policy 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 or Fund
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 Policies 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 Policies 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.
33
<PAGE>
LEGAL MATTERS
STATE REGULATION
The Company is subject to the laws of the State of Arkansas governing insurance
companies and to regulation by 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 Policy 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,
the Distributor or the Company 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.
Legal matters in connection with the Policies 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.
34
<PAGE>
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 Policies 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 45 and 55; payment of annual premium of $1,300 for Age
45 and $2,200 for Age 55; and a Face Amount of $100,000. The males aged 45
and 55 are assumed to be in the nonsmoker standard risk classification. The
tables are first given based on current (i.e., non-guaranteed) cost of
insurance rates, other charges and deductions due under the Policy, and the
expected (i.e., non-guaranteed) Persistency Refund Bonus beginning in the
11th Policy Year. The tables are next based on guaranteed cost of insurance
rates, other charges and deductions due under the Policy, and the guaranteed
Persistency Refund Bonus beginning in the 11th Policy Year. Death Benefits,
Cash Surrender Values and Account Values for a Policy 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 Policy loan
were made during the period of time illustrated, if the Insured were female
or in the smoker standard risk classification, or if the Policies 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: (a) deducts a Premium Load of 6.5%
from each premium paid; (b) deducts a monthly deduction from the Account
Value on the first day of each Policy Month for (i) an administrative charge
of $6 per Policy Month , (ii) a cost of insurance charge determined on the
basis of the mortality table specified in the Policy; (c) deducts a daily
charge assessed against the Separate Account for 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 (d) credits a monthly Persistency Bonus Refund
beginning in the 11th Policy Year at a guaranteed rate equivalent to an
annual rate of 0.50%. The current tables reflect the crediting of a monthly
Persistency Refund beginning in the 11th Policy Year at a rate equivalent to
an an annual rate of 0.65% . The tables also assume the election of Death
Benefit Option 1 throughout the period, and the election of no Optional
Insurance Benefits for which a separate monthly deduction might otherwise
apply. The Cash Surrender Values shown in the tables reflect the fact that
Withdrawal Charges are deducted from the Account Value upon surrender. (See
"Charges and Deductions.") 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 1.12% 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 -2.02%, 3.98% and 9.98%, 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.")
35
<PAGE>
The second column of each table shows the amount which would accumulate if the
premium was invested to earn interest, after taxes of 5% per year, compounded
annually.
$1,300 ANNUAL PREMIUM
$_______ FACE AMOUNT - DEATH BENEFIT OPTION 1
NONSMOKER: MALE AGE 45
CURRENT COST OF INSURANCE RATE
<TABLE>
<CAPTION>
HYPOTHETICAL GROSS INVESTMENT RETURN
0% 6% 12%
-- -- ---
End of PREMIUMS Cash Cash Cash
Policy WITH 5% Acct. Surr. Death Acct. Surr. Death Acct. Surr. Death
Year INTEREST Value Value Benefit Value Value Benefit Value Value Benefit
- ------ -------- ------ ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[TO BE
INSERTED]
</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 POLICY 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.
36
<PAGE>
$1,300 ANNUAL PREMIUM
$_______ FACE AMOUNT - DEATH BENEFIT OPTION 1
NONSMOKER: MALE AGE 45
GUARANTEED COST OF INSURANCE RATE
<TABLE>
<CAPTION>
HYPOTHETICAL GROSS INVESTMENT RETURN
0% 6% 12%
-- -- ---
End of PREMIUMS Cash Cash Cash
Policy WITH 5% Acct. Surr. Death Acct. Surr. Death Acct. Surr. Death
Year INTEREST Value Value Benefit Value Value Benefit Value Value Benefit
- ------ -------- ------ ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[TO BE
INSERTED]
</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 POLICY 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.
37
<PAGE>
$2,200 ANNUAL PREMIUM
$_______ FACE AMOUNT - DEATH BENEFIT OPTION 1
NONSMOKER: MALE AGE 55
CURRENT COST OF INSURANCE RATE
<TABLE>
<CAPTION>
HYPOTHETICAL GROSS INVESTMENT RETURN
0% 6% 12%
-- -- ---
End of PREMIUMS Cash Cash Cash
Policy WITH 5% Acct. Surr. Death Acct. Surr. Death Acct. Surr. Death
Year INTEREST Value Value Benefit Value Value Benefit Value Value Benefit
- ------ -------- ------ ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[TO BE
INSERTED]
</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 POLICY 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.
38
<PAGE>
$2,200 ANNUAL PREMIUM
$_______ FACE AMOUNT - DEATH BENEFIT OPTION 1
NONSMOKER: MALE AGE 55
GUARANTEED COST OF INSURANCE RATE
<TABLE>
<CAPTION>
HYPOTHETICAL GROSS INVESTMENT RETURN
0% 6% 12%
-- -- ---
End of PREMIUMS Cash Cash Cash
Policy WITH 5% Acct. Surr. Death Acct. Surr. Death Acct. Surr. Death
Year INTEREST Value Value Benefit Value Value Benefit Value Value Benefit
- ------ -------- ------ ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[TO BE
INSERTED]
</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 POLICY 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.
39
<PAGE>
APPENDIX B: FINANCIAL STATEMENTS
SEPARATE ACCOUNT VL
FIRST VARIABLE LIFE INSURANCE COMPANY
REPORT OF INDEPENDENT ACCOUNTANT
[To be inserted.]
40
<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 and 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 of 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.
UNDERTAKING PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
In accordance with section 26(e) of the Investment Company Act of 1940, First
Variable Life Insurance Company represents that the fees and charges deducted
under the Contracts described in this Registration Statement on Form S-6, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by First Variable Life Insurance
Company.
<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 undertaking pursuant to section 26(e) under the Investment Company Act of
1940.
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 Exhibit 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.**
(b) Form of Sales Agreement.***
(c) Commission Schedule for Policies.**
(4) Not Applicable.
(5) Specimen Variable Life Insurance Policy.
(6) Articles of Incorporation and By-Laws of First Variable Life Insurance
Company.#
(7) Not Applicable.
(8) Form of Participation Agreement.***
(9) Not Applicable.
(10) Specimen Flexible Premium Variable Life Insurance Application.**
<PAGE>
2. Included as Exhibit 1.A (5) above.
3. (a) Opinion and consent of Arnold R. Bergman, Vice President, Legal
and Administration, as to securities being registered.**
(b) Consent of Mayer, Brown & Platt.**
4. Not Applicable.
5. Not Applicable.
6. (a) Opinion and consent of Actuary.**
(b) Opinion and consent of Actuary regarding DAC tax charge.**
7. Consent of Independent Auditors.**
8. Powers of Attorney.
* Incorporated herein by reference to the Form S-6 Registration Statement of
First Variable Life Insurance Company and Separate Account VL, filed
electronically with the Securities and Exchange Commission on June 3, 1996
(File No. 333-05053).
** To be filed by amendment
*** Incorporated herein by reference to Post-Effective Amendment No. 22 to the
Form N-4 Registration Statement of First Variable Life Insurance Company
and First Variable Annuity Fund E, filed electronically with the Securities
and Exchange Commission on September 18, 1996 (File Nos. 333-12197,
811-04092)
# 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 electronically with the Securities
and Exchange Commission on April 29, 1996 (File Nos. 33-86738, 811-04092).
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Sequentially
Numbered
Page*
1.A (5) Specimen Variable Life Insurance Policy
8. Powers of Attorney
*Appear in manually signed original only
SIGNATURES
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 3rd day of January, 1997.
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
/s/Anthony J. Koenig, Jr.
- -------------------------
Anthony J. Koenig, Jr.
Vice President and Treasurer
DIRECTORS
/s/Ronald M. Butkiewicz*
- -------------------------
Ronald M. Butkiewicz
/s/Stephan M. Largent
- -------------------------
Stephan M. Largent
/s/Michael J. Corey*
- -------------------------
Michael J. Corey
/s/Michael R. Ferrari*
- -------------------------
Michael R. Ferrari
/s/T. David Kingston*
- -------------------------
T. David Kingston
/s/Jeff S. Liebmann*
- -------------------------
Jeff S. Liebmann
<PAGE>
- -------------------------
Kenneth R. Meyer
/s/Phillip R. O'Connor*
- -------------------------
Phillip R. O'Connor
/s/Norman A. Fair*
- -------------------------
Norman A. Fair
/s/Thomas K. Neavins*
- -------------------------
Thomas K. Neavins
- -------------------------
Stephen Shone
* By: /s/Arnold R. Bergman
-------------------------
Arnold R. Bergman
Attorney-in-Fact
January 3, 1997
<PAGE>
EXHIBIT 1.A (5)
SPECIMEN VARIABLE LIFE INSURANCE POLICY
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[Logo]
A STOCK 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 Policy was in force.
On the Maturity Date, the Company will pay the Owner the Cash Surrender Value
if the Insured is living and the Policy is in force.
This Policy 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 Policy.
TEN DAY FREE LOOK--Within ten (10) days of the date of receipt of this
Policy, 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 Policy is received by the Company, it will be voided as if it had never
been in force. The Company will refund the Account Value, and any deductions
for Monthly Charges and Premium Load, computed at the end of the Valuation
Period during which this Policy is received by the Company at its Variable
Service Center.
Signed for the Company
/s/ Steve Largent /s/ Arnold R. Bergman
President Secretary
THIS IS A LEGAL CONTRACT -- READ IT CAREFULLY.
THE ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT PROVIDED BY THIS
POLICY, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE VARIABLE PROVISIONS OF THIS POLICY BEGIN ON PAGE 6.
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY - NON-PARTICIPATING
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TABLE OF CONTENTS
Begins on
Page
POLICY DATA PAGES CD - 1
SECTION 1. DEFINITIONS 1
SECTION 2. PREMIUM PAYMENTS 3
SECTION 3. DEATH BENEFITS 6
SECTION 4. POLICY OPTIONS 8
SECTION 5. TRANSFERS 9
SECTION 6. ACCOUNT VALUE 10
SECTION 7. CHARGES AND DEDUCTIONS 11
SECTION 8. SURRENDERS AND PARTIAL WITHDRAWALS 13
SECTION 9. LOANS 15
SECTION 10. OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS 16
SECTION 11. GENERAL PROVISIONS 17
SECTION 12. PAYOUT OPTIONS 19
ANNUITY TABLES 21
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POLICY DATA PAGES
CAPITAL FLEX PAY VUL
INSURED: [JOHN DOE] AGE AND SEX: [45 MALE]
OWNER: [JOHN DOE] RATE CLASS: [NON-SMOKER]
POLICY NUMBER: [SPVL12345] POLICY DATE: [May 15, 1996]
MATURITY DATE: [May 15, 2059] INSURANCE CLASS: [STANDARD]
FACE AMOUNT: [$100,000]
BENEFICIARY: [MARY DOE]
PREMIUM:
MINIMUM INITIAL PREMIUM: [2 Monthly Minimum Premiums]
MONTHLY MINIMUM [$_______] MONTHLY MINIMUM
PREMIUM: GUARANTEE PERIOD: First 5 Policy Years
INITIAL GUIDELINE
LEVEL PREMIUM: [$ ______ ]
PLANNED PREMIUM: [$_______] FREQUENCY: [annually]
POLICY 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
[VIST Small Cap Portfolio] Portfolio]
FIXED ACCOUNT: [Guaranteed Interest Rate: 4.0%]
DELAYED INVESTMENT START DATE: [Not Applicable]
DELAYED INVESTMENT START SUB-ACCOUNT: [Not Applicable]
CHARGES AND DEDUCTIONS:
PREMIUM LOAD: [Equal to 6.5% of each Premium Payment]
MONTHLY ADMINISTRATIVE CHARGE: [$6 each Policy Month]
MONTHLY MAINTENANCE FEE: [NONE]
MONTHLY DISTRIBUTION CHARGE: [NONE]
MONTHLY FEDERAL TAX CHARGE: [NONE]
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%]
See TRANSFERS and WITHDRAWALS
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POLICY DATA PAGES
(CONT.)
CAPITAL FLEX PAY VUL
SEPARATE ACCOUNT MANAGEMENT FEE: [NONE]
RIDERS:
Annuitization Bonus [3% of Account Value applied]
TRANSFERS:
FREE TRANSFERS: [12 per Policy Year]
TRANSFER FEE: [$10.00]
MINIMUM ACCOUNT VALUE TO BE TRANSFERRED: [$1,000 or the Account Value in the
selected Policy Option, if less]
RESTRICTIONS ON TRANSFERS FROM THE FIXED ACCOUNT: [Prior to the Maturity Date,
Account Value to be transferred from the Fixed Account in any Policy Year may
not exceed the greater of:
(1) 25% of Fixed Account Value on the Policy Date for transfers during the first
Policy Year, or,
(2) for transfers after the first Policy Year, the greater of (a) 25% of Fixed
Account Value on the immediately preceding Policy Anniversary; or (b) 100% of
the Fixed Account Value transferred to other Policy Options during the
immediately preceding Policy Year.
No transfers of Account Value are permitted from the Fixed Account to other
Policy Options after payments begin under an Annuity Payout Option.]
MINIMUM ACCOUNT VALUE TO REMAIN IN POLICY OPTION AFTER TRANSFER: [None]
VARIABLE SERVICE CENTER: [The Variable Service Center on the Policy Date is
located at P.O. Box 1317, Des Moines, IA 50305-1317]
WITHDRAWALS:
WITHDRAWAL CHARGE AMOUNT: [$_____, equal to 125% of 12 Monthly Minimum
Premiums.]
WITHDRAWAL CHARGE PERCENTAGES:
Policy Year 1 2 3 4 5 6 7 8 9 10 11 12 13+
Percentage 100 92 88 84 80 76 72 64 56 48 32 16 0
[The Withdrawal Charge is the Withdrawal Charge Amount multiplied by the
applicable Withdrawal Charge Percentage. The initial Withdrawal Charge on the
Policy Date is the Withdrawal Charge amount shown.]
MINIMUM PARTIAL WITHDRAWAL: [$500 ]
FREE WITHDRAWAL AMOUNT ON PARTIAL WITHDRAWALS: [equal to 15% of the premiums
paid as of the date of a partial withdrawal, less any amounts attributable to
any withdrawals previously taken during the Policy Year
RESTRICTIONS ON PARTIAL WITHDRAWALS: [A partial withdrawal may not be made if:
1. the Death Benefit would be reduced below that required to qualify the
Policy as a life insurance contract; or
2. the Death Benefit would be reduced below $50,000; or
3. the remaining Cash Surrender Value would be less than the greater of (a)
$500 or (b) 3 times the most recent Monthly Deduction.]
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POLICY DATA PAGES
(CONT.)
CAPITAL FLEX PAY VUL
WAIVER OF WITHDRAWAL CHARGE: [ Not Applicable ]
LOANS:
MINIMUM PREFERRED LOAN: [$500]
MINIMUM NON-PREFERRED LOAN: [$500]
LOAN INTEREST RATE: Preferred Loan Amount: [Equal to an annual rate of 4.0%]
Non-Preferred Loan [Equal to an annual rate of 6.0%]
Amounts:
LOAN ACCOUNT CREDITED INTEREST RATE: [4% per annum]
PERSISTENCY BONUS REFUND
PERSISTENCY PERIOD: [10 Policy Years from the Policy Date]
REFUND GUARANTEE RATE: [0.0415% monthly (equivalent to 0.050% per annum)]
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POLICY DATA PAGES
(CONT.)
CAPITAL FLEX 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.
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POLICY DATA PAGES (CONT.)
CAPITAL FLEX PAY VUL
TABLE OF GUARANTEED RATES - MALE
Guaranteed Maximum Monthly Cost of Insurance Rates
per $1,000 of Net Amount at Risk*
ATTAINED NON- ATTAINED NON- ATTAINED NON-
AGE SMOKER AGE SMOKER AGE SMOKER
0 0.22 34 0.14 68 2.50
1 0.09 35 0.14 69 2.76
2 0.08 36 0.15 70 3.05
3 0.08 37 0.16 71 3.38
4 0.08 38 0.17 72 3.76
5 0.07 39 0.18 73 4.19
6 0.07 40 0.20 74 4.67
7 0.07 41 0.21 75 5.18
8 0.06 42 0.23 76 5.72
9 0.06 43 0.25 77 6.28
10 0.06 44 0.27 78 6.88
11 0.07 45 0.29 79 7.52
12 0.08 46 0.31 80 8.22
13 0.09 47 0.34 81 9.02
14 0.10 48 0.36 82 9.92
15 0.11 49 0.39 83 10.91
16 0.12 50 0.43 84 11.99
17 0.13 51 0.47 85 13.12
18 0.14 52 0.51 86 14.30
19 0.14 53 0.56 87 15.50
20 0.14 54 0.62 88 16.72
21 0.14 55 0.69 89 17.97
22 0.14 56 0.76 90 19.29
23 0.13 57 0.83 91 20.68
24 0.13 58 0.91 92 22.22
25 0.13 59 1.01 93 24.04
26 0.12 60 1.11 94 26.50
27 0.12 61 1.22 95 30.21
28 0.12 62 1.36 96 36.36
29 0.12 63 1.51 97 47.21
30 0.12 64 1.67 98 66.21
31 0.12 65 1.86 99 90.91
32 0.13 66 2.06
33 0.13 67 2.27
* 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.
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SECTION 1 DEFINITIONS
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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 Policy
loan, (iii) in the Loan Account.
ACCUMULATION UNIT A unit of measurement used to calculate the
Account Value of a Sub-Account of the Separate
Account.
ACCUMULATION UNIT VALUE 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.
ANNUITY PAYMENTS A series of payments made to the payee selected
under a Payout Option.
ANNUITY PERIOD The period after election of a Payout Option
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 Policy, unless changed in
accordance with the Policy 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 SURRENDER VALUE The amount available upon surrender of the Policy
which is equal to the Account Value less all
Indebtedness; and reduced by any applicable
Withdrawal Charges due upon surrender.
DEATH BENEFIT The amount of insurance provided under a Policy on
the life of the Insured.
DEATH BENEFIT PROCEEDS The amount payable on the death of the Insured.
This amount is the Death Benefit less Indebtedness
and less any due and unpaid Monthly Deduction.
FACE AMOUNT A dollar amount used to determine the Death
Benefit under a Policy. It is shown on the Policy
Data Pages
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
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outstanding loans on this Policy, including any
interest due or accrued.
INSURED The person whose life is insured under this Policy
as shown on the Policy Data Pages.
LOAN ACCOUNT An account established in the Company's general
account for any amounts requested for loans.
MATURITY DATE The Policy Anniversary on or following the Insured
100th birthday. The date on which the Policy will
mature is shown on the Policy Data Pages.
MONTHLY DEDUCTION The amount deducted from Account Value on the
first Business Day of each Policy Month to cover
charges and expenses incurred in connection with
the Policy.
NET AMOUNT AT RISK The amount of insurance coverage determined under
this Policy for each Policy Month. On the first
Business Day of each Policy 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.
NET PREMIUM The amounts paid for a Policy, less the applicable
Premium Load, if any, shown on the Policy Data
Pages.
OWNER The person, persons or entity entitled to all
ownership rights under the Policy. The Owner is
stated on the application for this Policy, unless
changed in accordance with Policy provisions.
POLICY ANNIVERSARY An anniversary of the Policy Date.
POLICY DATE The date on which the Policy became effective. The
Policy Date is shown on the Policy Data Pages.
Policy Months and Policy Years are measured from
this date.
POLICY OPTION The Fixed Account or any of the Sub-Accounts of
the Separate Account which can be selected under
the Policy.
POLICY YEAR One year from the Policy Date and from each Policy
Anniversary.
PORTFOLIO The separate and distinct class of shares that is
available as an underlying investment of a Sub-
Account. On the Policy Date, each Sub-Account
invests exclusively in a Portfolio stated on the
Policy Data Pages.
PREMIUM PAYMENT An amount paid to the Company to provide benefits
under this Policy.
SEPARATE ACCOUNT A separate investment account of the Company,
designated on the Policy Data Pages.
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SUB-ACCOUNT A segment of the Separate Account.
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
this Policy. The mailing address for the Variable
Service Center on the Policy Date is shown on the
Policy Data Pages.
Other terms are defined in the Policy.
Section 2 PREMIUM PAYMENTS
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GENERAL The minimum initial Premium Payment shown on the
Policy Data Pages is due on or before the Policy
Date. The Owner may make additional Premium
Payments during the lifetime of the Insured at any
time, subject to the Premium Limitations.
PLANNED PREMIUMS The Owner may elect, within limits specified by
the Company, to pay premium on a pre-determined
schedule. The Planned Premiums on the Policy
Date, if any, are shown on the Policy Data Pages.
MONTHLY MINIMUM PREMIUM The Monthly Minimum Premium on the Policy Date is
shown on the Policy Data Pages. Payment of a
sufficient amount of Monthly Minimum Premiums
guarantees that the Policy will remain in force
during the Monthly Minimum Guarantee Period shown
on the Policy Data Pages, as long as there are no
withdrawals or Policy loans taken during that
time. Payment of Monthly Minimum Premiums is
sufficient if, at any time during the Monthly
Minimum Guarantee Period, (a) is equal to or
greater than (b) where:
(a) is the sum of Premium Payments, minus any
Indebtedness, minus any partial withdrawals and
any Withdrawal Charges deducted; and
(b) is the Monthly Minimum Premium multiplied by
the number of elapsed Policy Months, plus the
Monthly Minimum Premium for the current Policy
Month.
If an insufficient amount of the Monthly Minimum
Premium is paid, or if there are partial
withdrawals or Policy loans taken during the first
five Policy Years, the Policy will lapse if the
Cash Surrender Value is less than the next Monthly
Deductions and accrued interest on any Policy
loan. The Monthly Minimum Premium amount will be
increased if the Face Amount is increased during
the Monthly Minimum Guarantee Period shown on the
Policy Data Pages.
PREMIUM LIMITATIONS The Company reserves the right to require
satisfactory evidence of insurability before
accepting any additional Premium Payment that
would increase the then current Net Amount at
Risk. The Company may require that any
Indebtedness be repaid prior to accepting any
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additional premium.
The maximum amount of Premium Payment in any
Policy Year is limited to 3 times the guideline
level premium for a Policy, unless necessary to
keep the Policy in force. The guideline level
premium is defined under section 7702 of the
Internal Revenue Code and determined by the
Company. The guideline level premium on the Policy
Date is shown on the Policy Data Pages. The
Company will not accept any additional Premium
Payment which would result in the total Premium
Payments exceeding the premium limitation of a
life insurance contractunder section 7702 of the
Internal Revenue Code.
ALLOCATION OF PREMIUM Each Premium Payment is allocated to the Fixed
Account and/or one or more Sub-Accounts of the
Separate Account after deduction of the Premium
Load, if any, shown on the Policy Data Pages. The
portion of a Net Premium 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 Policy is
determined by dividing (a) by (b), where:
(a) is the amount of Premium Payment to be
allocated to that Sub-Account; and
(b) is the dollar value of the Accumulation Unit
Value for that Sub-Account.
It is calculated by the Company as of the end of
the Valuation Period during which a Premium
Payment is received by the Company at its Variable
Service Center.
Except as described in the Delayed Investment
Start Date paragraph, the initial Net Premium 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 INVESTMENT START DATE If a Delayed Investment Start Date is shown on the
Policy Data Pages, the Premium Payment for this
Policy, less the Premium Load, will be allocated
to the Delayed Investment Start Sub-Account shown
on the Policy Data Pages in lieu of allocation to
any other Sub-Account Policy 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 Policy 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 Policy Option then available under this Policy
in accordance with the Owner's direction.
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GRACE PERIOD MINIMUM MONTHLY GUARANTEE PERIOD. During the
Minimum Monthly Guarantee Period shown on the
Policy Data Pages, the Policy will not lapse
provided that on the first Business Day of each
Policy Month during the period (a) is greater than
(b), where:
(a) is the sum of all premiums paid to date,
minus any Indebtedness, minus any partial
withdrawals and any Withdrawal Charges
deducted; and
(b) is the Monthly Minimum Premium times the
number of elapsed Policy Months, plus the
Monthly Minimum Premium for the current
Policy Month.
If (a) is equal to or less than (b), and the Cash
Surrender Value is zero, a grace period of 61 days
from the first Business Day of the Policy Month
will be allowed for the payment of sufficient
premium to satisfy the Grace Period minimum
premium requirement. The Policy will not lapse as
long as there is a positive Cash Surrender Value.
AFTER THE MINIMUM MONTHLY GUARANTEE PERIOD. After
the Minimum Monthly Guarantee Period shown on the
Policy Data Pages, the Policy will not lapse
provided that the Cash Surrender Value on the
first Business Day of each Policy Month is
sufficient to cover the current Monthly Deduction
and accrued interest on Policy loans. If the Cash
Surrrender Value is not sufficient, a grace period
of 61 days from the first Business Day of the
Policy Month will be allowed to for the payment of
sufficient premium to satisfy the Grace Period
minimum premium requirement
ALL POLICY YEARS. The Company will send a grace
period notice to the Owner's last known address.
The notice will show the Grace Period minimum
premium requirement. This is the amount necessary
to cover the Monthly Deduction due under the
Policy plus an amount equal to three times the
current monthly deduction. If sufficient premium
is not paid by the end of the grace period, the
Policy will lapse without value. If the Insured
dies during the grace period, the Company will pay
the Death Benefit Proceeds.
REINSTATEMENT If the Grace Period ends and the Owner has neither
paid the required Premium nor surrendered the
Policy for its Cash Surrender Value, the Owner may
reinstate the Policy by:
(a) submitting a written request at any time
within 3 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 sufficient the
keep the Policy in force for 3 Policy Months
from the date of reinstatement; and
(e) repaying any Indebtedness against the Policy
that existed at the end of the Grace Period.
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SECTION 3 DEATH BENEFITS
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GENERAL As long as the Policy remains in force, a Death
Benefit is payable upon the death of the Insured.
Upon receipt of proof of death of the Insured and
receipt of any applicable Payout Option election,
the Company will pay the Death Benefit Proceeds to
the Beneficiary. During the lifetime of the
Insured, the Owner may elect for the Death
Benefit Proceeds to be paid in a single sum or
under a Payout Option by written request to the
Company at its Variable Service Center. If no
Payout Option is in effect upon the death of the
Insured, the Beneficiary may elect a Payout Option
under the Payout Option provisions of this Policy.
The Death Benefit is based on: the Death Benefit
Option in effect on the date of the Insured's
death; any increases or decreases to the Face
Amount; and the amounts, if any, payable under any
Optional Insurance Benefit rider.
DEATH BENEFIT OPTIONS DEATH BENEFIT OPTION 1. Under this option, the
Death Benefit is the greater of: (a) the Face
Amount or (b) the Account Value times the
applicable percentage of Death Benefit factors
shown on the Policy Data Pages.
DEATH BENEFIT OPTION 2. Under this option, the
Death Benefit is the greater of: (a) the Face
Amount plus the Account Value or (b) the Account
Value times the applicable percentage of Death
Benefit factors shown on the Policy Data Pages.
CHANGE IN DEATH BENEFIT The Owner may make written request to the Variable
OPTIONS AND FACE AMOUNT Service Center during the Insured's lifetime to
change the Death Benefit Option. A change from
Death Benefit Option 2 to Death Benefit Option 1
will cause the Face Amount to be increased by the
amount of the Account Value. A change from Death
Benefit Option 1 to Death Benefit Option 2: (a)
will cause the Face Amount to decrease by the
amount of the Account Value; and (b) is not
permitted during the first 5 Policy Years if the
decrease would result in a Face Amount that is 75%
or less of the Face Amount on the Policy Date.
After the first Policy Year, the Owner may request
to increase or decrease the Face Amount by making
written request to the Variable Service Center
during the Insured's lifetime.
A change will take effect on the first Business
Day of the Policy Month coinciding with or next
following the date the Company approves the
request.
For a change that would increase the Face Amount,
the Company may require evidence of insurability.
The Company may restrict any requested increases
in Face Amount to minimums and maximums that vary
with the Insured's Age and premium risk class. If
the Face Amount is increased during the Monthly
Minimum Guarantee Period shown on the Policy Data
Pages, the Monthly Minimum Premium will
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be increased. The increase in Monthly Minimum
Premium will begin on the first Business Day of
the Policy Month on which the increase in Face
Amount is effective. The increase in Monthly
Minimum Premium will remain in effect for for the
remainder of the Monthly Minimum Guarantee Period
shown on the Policy Data Pages. The Company will
calculate the increase in Monthly Minimum Premium
based on the Insured's attained age, sex,
additional Face Amount and premium risk class.
No decrease in the Face Amount will be permitted
during the first 5 Policy Years if the reduction
would result in a Face Amount that is 75% or less
of the Face Amount on the Policy Date. Any
reduction will be in the following order:
(a) against the most recent increase in
insurance;
(b) against the next most recent increases;
(c) against the initial Face Amount.
The Company may deny any request to change the
Face Amount if:
(a) the Death Benefit would be reduced below that
required to qualify the Policy as life
insurance; or
(b) the Death Benefit would be reduced below
$50,000, except with the Company's consent;
or
(c) the remaining Cash Surrender Value would be
less than the greater of (i) $500 or (ii) an
amount equal to cover 3 times the current
Monthly Deductions.
PAYMENT OF DEATH The amount of the Death Benefit is determined on
BENEFIT PROCEEDS the date the Company receives proof of the
Insured's death. The Death Benefit Proceeds
actually paid to the Beneficiary are equal to the
Death Benefit reduced by any Indebtedness. The
Death Benefit Proceeds will be determined by the
Company as of the date of the Insured's 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:
(a) a certified death certificate;
(b) a certified decree of a court of competent
jurisdiction as to the finding of death; or
(c) any other proof satisfactory to the Company.
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BENEFICIARY OTHER THAN Unless the Owner provides otherwise, the Death
A SINGLE PERSON Benefit will be paid in equal shares to the
survivor(s) as follows:
(a) to the primary Beneficiary(ies) who survive
the death of the Insured or Annuity payee, as
applicable; or if there are none,
(b) to the contingent Beneficiary(ies) who
survive the death of the Insured or Annuity
payee, as applicable; or if there are none,to
the estate of the Owner.
(c) to the estate of the Owner.
SECTION 4 POLICY OPTIONS
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THE SEPARATE ACCOUNT AND The Separate Account is a separate investment
THE SUB-ACCOUNTS account of the Company. It is shown on the Policy
Data Pages. The Company has allocated a part of
its assets for this and certain other policies 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 policy 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 Policy on the Policy Date invests its
assets exclusively in shares of one of the
Portfolios shown on the Policy Data Pages.
The investment policy of the Separate Account
shall not be changed without approval of the
Insurance Commissioner of the Company's state of
domicile. On the Policy Date, the Company's
state of domicile is Arkansas. A statement of the
approval process is on file with that state's
Insurance Department.
SUB-ACCOUNT INVESTMENT The Owner may allocate Net Premium to one or more
OPTIONS of the Sub-Accounts that correspond to the
Portfolios shown on the Policy Data Pages. The
Company may, from time to time, invest Separate
Account assets in additional mutual funds,
portfolios of mutual funds, or other investments.
The Owner may be permitted to transfer Account
Value or allocate Net Premium 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 Policy. The Company also
may, in its discretion, remove Portfolios for
transfers or new investments.
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FIXED ACCOUNT OPTION The Owner may allocate a Premium Payment to the
Fixed Account. Interest will be credited to
amounts allocated to the Fixed Account as
described in the Account Value - Fixed Account
Value provision of this Policy.
Section 5 TRANSFERS
- -------------------------------------------------------------------------------
TRANSFERS AMONG The Owner may transfer Account Value among Policy
POLICY OPTIONS Options without the imposition of any fee or
charge if there have been no more than the number
of free transfers shown on the Policy Data Pages
for the Policy Year. No transfers are permitted,
however, until the end of a Delayed Investment
Start Date, if any, shown on the Policy Data
Pages. The amount of Account Value which may be
transferred from the Fixed Account to other Policy
Options will be subject, without limitation, to
the specific restrictions, if any, shown on the
Policy 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 REQUIREMENTS If more than the permitted number of free
FOR TRANSFERS transfers have been made in the Policy Year, the
Company will deduct the Transfer Fee shown on the
Policy Data Pages for each subsequent transfer.
The Transfer Fee will be deducted pro-rata from
Account Value in each Policy Option prior to a
transfer. If the entire interest in a
Sub-Account or the Fixed Account is being
transferred, the pro-rata portion of 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 Policy Data Pages.
The minimum amount of Account Value, if any, which
must remain in a Policy Option after a transfer
from it is shown on the Policy 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 Policy 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.
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<PAGE>
SECTION 6 ACCOUNT VALUE
- -------------------------------------------------------------------------------
GENERAL The Account Value on any Business Day is the sum
of the Owner's interest (a) in the Sub-Accounts of
the Separate Account; (b) in the Fixed Account
and, if there is an outstanding Policy loan, (c)
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 UNIT VALUE The number of Accumulation Units in a Sub-Account
credited to this Policy 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 (b) from (a) and dividing the
result by (c) where:
(a) is the net result of:
(i) the assets of the Sub-Account
attributable to Accumulation Units;
plus or minus
(ii) 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.
(b) is the daily charge for the Mortality and
Expense Risk Charge shown on the Policy Data
Pages; and
(c) 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 VALUE The Company guarantees that it will credit
interest to the Account Value in the Fixed Account
at a rate not less than the minimum guaranteed
interest rate shown on the Policy Data Pages.
Additional amounts of interest may be credited by
the Company from time to time in its sole
discretion. The Company determines interest rates
in advance, and credits interest daily to Fixed
Account Value in dollars.
MINIMUM VALUE REQUIRED The Company reserves the right to transfer Account
IN ANY POLICY OPTION Value from any Policy Option if on any Business
Day the Account Value in the Policy Option is less
than $250. In such event, the Account Value will
be transferred to the Policy Option with the
highest Account Value.
PERSISTENCY REFUND BONUS After a Policy has been continuously in force for
the Persistency Period shown on the Policy Data
Pages, the Company will begin crediting monthly
Persistency Refund Bonus amounts to Account Value
in the
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Separate Account and in the Fixed Account.
Account Value in the Loan Account is not credited
with a Persistency Refund Bonus. The Persistency
Refund Bonus is determined each Policy Month while
the Insured is living, beginning on the first
Business Day of the first Policy Month following
the Persistency Period. The Company calculates
the amount of a Persistency Refund Bonus for each
Policy Month following the Persistency Period by
multiplying (a) times (b), where:
(a) is the Account Value on the first Business
Day of the Policy Month held in the Separate
Account and in the Fixed Account; and
(b) is a factor guaranteed to be not less than
the monthly Refund Guarantee Rate shown on
the Policy Data Pages.
The Company may credit additional Persistency
Refund Bonus amounts from time to time in its
discretion. Any Persistency Refund Bonus will be
added to each Policy Option in the same proportion
as the Account Value in that Policy Option bears
to the entire Account Value as of the beginning of
the Policy Month.
SECTION 7 CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
Various charges and deductions are made from Premium Payments, Account Value and
the Separate Account. These are:
PREMIUM LOAD A Premium Load, as shown on the Policy Data Pages,
is deducted from each Premium Payment.
MONTHLY DEDUCTIONS On the first Business Day of each Policy Month,
the Company will deduct a Monthly Deduction to
cover charges and expenses incurred in connection
with the Policy. Generally, the Monthly Deduction
will be deducted 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 Policy Option bears to the
Account Value. The amount of the Monthly
Deduction will vary from month to month.
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 Policy Data Pages. The
Administrative Charge and the Maintenance Fee
compensates the Company for the costs associated
with the administration of this Policy 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 Policy
Data Pages.
The Maintenance Fee will be deducted from the
Account Value each month while this Policy 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.
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<PAGE>
DISTRIBUTION CHARGE: The Company deducts a
Distribution Charge each month from the Account
Value during the period and at the annual rate
shown on the Policy 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.
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 Policy 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.
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 Policy 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 Net
Amount at Risk 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 DEDUCTIONS Each Business Day, the Company will deduct charges
which are equal to a percentage of the net assets
in each Sub-Account of the Separate Account for
this class of Policy. 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 Policy Data Pages. The Mortality and Expense
Risk Charge compensates the Company for assuming
the mortality and expense risks under this Policy.
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
MANAGEMENT FEE Account for investment management is shown on the
Policy Data Pages.
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
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<PAGE>
not it was sufficient.
TRANSFER FEE The Transfer Fee applicable to a permitted
transfer of Account Value among Policy Options is
shown on the Policy 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 Policy
Option bears to the total Account Value.
Accumulation Unit Value is reduced by the Company
canceling Accumulation Units credited to this
Policy.
WITHDRAWAL CHARGE The Withdrawal Charge shown on the Policy Data
Pages, if any, will be deducted from Account Value
by the Company in the event of a surrender of the
Policy or a partial withdrawal of the Cash
Surrender Value.
SECTION 8 SURRENDERS AND PARTIAL WITHDRAWALS
- -------------------------------------------------------------------------------
SURRENDERS The Owner may surrender this Policy for its Cash
Surrender Value at any time while the Insured is
living by written request to the Company at its
Variable Service Center. The Cash Surrender Value
of the surrendered Policy will be determined as of
the Business Day when a surrender request is
received at the Company's Variable Service Center.
The Owner may request to have all or part of the
Cash Surrender Value applied to a Payout Option.
The Company's liability for the Death Benefit
terminates upon a surrender of the Policy.
PARTIAL WITHDRAWAL After the first Policy Year, the Owner may request
to make a partial withdrawal of the Cash Surrender
Value. The amount requested must be not less than
the Minimum Partial Withdrawal amount shown on the
Policy Data Pages. Any request is subject to the
Restrictions on Partial Withdrawals, if any, shown
on the Policy Data Pages. A permitted partial
withdrawal will cause a reduction in the Account
Value and Death Benefit by the amount of the Cash
Surrender Value withdrawn and any applicable
Withdrawal Charge.
A permitted partial withdrawal will result in the
cancellation of Accumulation Units from each
applicable Sub-Account Policy Option or a
reduction in Fixed Account Value in the ratio that
the Account Value in the Policy 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.
WITHDRAWAL CHARGE The Withdrawal Charge, if any, is shown on the
Policy Data Pages. The charge may vary depending
on the elapsed period during which the Withdrawal
Charge applies.
The Company will apply the Withdrawal Charge to a
surrender or a partial withdrawal by subtracting
values from the Fixed Account and/or canceling
Accumulation Units credited to this Policy. The
subtraction is
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<PAGE>
made from each applicable Sub-Account in the
ratio that the value of each Policy Option
bears to the total Account Value in the Fixed
Account and in the Separate Account at the time
of the withdrawal. If there is insufficient
value in a Sub-Account or in the Fixed Account
to cover the Withdrawal Charge, the Company
may, in its discretion, deduct it from other
Policy Options. 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.
FREE WITHDRAWAL AMOUNT The Free Withdrawal Amount on Partial Withdrawals,
if any, is shown on the Policy Data Pages. No
Withdrawal Charge will be imposed on a partial
withdrawal unless the amount withdrawn during a
Policy Year exceeds the Free Withdrawal Amount on
Partial Withdrawals. Free Withdrawal Amounts do
not reduce the Withdrawal Charge to which this
Policy is subject. The Withdrawal Charge will
apply to any amount withdrawn during a Policy Year
in excess of the Free Withdrawal Amount on Partial
Withdrawals. The unused portion of the Free
Withdrawal Amount for one Policy Year will not
carry-over to the next Policy Year.
SUSPENSION OR DEFERRAL The Company generally will pay amounts from the
OF PAYMENTS Separate Account for a surrender, withdrawal,
Policy loan or transfer within seven (7) days of
receipt of a request in good order. The Company
reserves the right, however, to suspend or
postpone such payments for any period when:
(a) the New York Stock Exchange is closed;
(b) trading on the New York Stock Exchange is
restricted;
(c) 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
(d) during any other period when the Securities
and Exchange Commission, by order, so permits
for the protection of Owners;
provided that applicable rules and regulations of
the Securities and Exchange Commission will govern
as to whether the conditions described in (b) and
(c) exist.
The Company reserves the right to defer payment
for a surrender, withdrawal, Policy 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 right to defer a loan excludes payments of any
premiums to the Company, unless such loan is
prohibited by law.
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<PAGE>
SECTION 9 LOANS
- -------------------------------------------------------------------------------
GENERAL The Owner may borrow money and use the Policy 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
Policy loan amount is shown on the Policy Data
Pages.
A Policy loan reduces the Account Value in the
Sub-Accounts and Fixed Account by the amount of
the loan. Account Value equal to the amounts
loaned are transferred from the Fixed Account and
the Separate Account to the Loan Account when the
loans are made. Interest is credited to the Loan
Account at the minimum guaranteed interest rate
shown on the Policy Data Pages.
The amount taken from the Policy'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 Policy can be permanently affected by a Policy
loan, even if it is repaid. In addition, any
proceeds payable under a Policy 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, Policy 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 ON THE LOAN Any Indebtedness under this Policy will be charged
interest at the annual loan interest rate(s) shown
on the Policy Data Pages. Interest will be
payable in arrears on each Policy 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
Policy Options and transferred to the Loan
Account.
IMMEDIATE LOAN REPAYMENT A loan repayment will be due on the first Business
Day of a Policy Month if (a) exceeds (b), where:
(a) is the amount of Indebtedness; and
(b) the excess of the Policy's Account Value over
any Withdrawal Charge that would be due if
the Policy were surrendered.
A period of 61 days will be allowed from the first
day of such Policy Month for a loan repayment.
The Company will send a notice to the Owner or
assignee, if any. The Policy will terminate
without value 61
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<PAGE>
days after the mailing of the notice unless a
sufficient repayment is made during that
period. A repayment is sufficient if it is
large enough to reduce the total Indebtedness
to an amount equal to the Policy's Account
Value less any Withdrawal Charges plus an
amount sufficient to continue the Policy in
force for 3 months.
The Company will send such notice at the start of
the 61 day loan repayment period to the Owner's
last known address. If the Insured dies during
the loan repayment period, the Death Benefit
Proceeds will be payable as stated in the Death
Benefits section.
PREFERRED LOAN AMOUNT A preferred loan amount is determined on the
Policy Date and on the first Business Day of each
Policy Month. It is equal to the excess of the
Account Value over the Premium Payments made.
The amount of Indebtedness that is less than or
equal to the preferred loan amount will be charged
with interest each Business Day at the Loan
Interest Rate for Preferred Loan Amounts shown on
the Policy Data Pages.
NON-PREFERRED LOAN AMOUNTS The amount of Indebtedness that is in excess of
the preferrred loan amount will be charged with
interest each Business Day at the Loan Interest
Rate for Non-Preferred Loan Amounts shown on the
Policy Data Pages.
SECTION 10 OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
- -------------------------------------------------------------------------------
OWNERSHIP The Owner has all rights under this Policy. The
Owner is the person designated in the Application,
unless changed during the lifetime of the Insured.
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 Policy
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
Policy. 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 Policy Date is as named on
the Application.
CHANGE OF DESIGNATIONS A request to change the designated Owner or
Beneficiary 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.
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<PAGE>
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 POLICY The entire contract consists of this Policy; the
Application which is attached to this Policy; and
any riders or endorsements attached to this
Policy.
This Policy 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 Generally, the Company can challenge the validity
of the Policy or any rider to the Policy on the
Policy Date during the Insured's lifetime for two
years from the Policy Date, based on
misrepresentations made in the application. The
Company can challenge an increase in Death Benefit
requiring evidence of insurability for two years,
during the Insured's lifetime, from the date of
the increase. For any increase in Face Amount
requiring evidence of insurability, the Company
will not contest payment of the Death Benefit
Proceeds based on such an increase after it has
been in force during the Insured's lifetime for
two years from its effective date. However, the
two year time limit on the Company's right to
challenge all or part of the Policy 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 Policy Date is a risk not assumed under
this Policy. The Company's liability for such
suicide is limited to the Cash Surrender Value.
When the laws of the state in which this Policy is
delivered require less than a two year period, the
period will be as stated in such law.
MATURITY PROCEEDS If the Insured is living on the Maturity Date, on
surrender of the Policy to the Company, the
Company will pay the Owner the Cash Surrender
Value. In such case, the Policy will terminate
and the Company will have no further obligations
under the Policy.
MISSTATEMENT OF AGE OR SEX If the Insured's Age or sex is misstated in any
application for benefits under this Policy, the
Account Value, Cash Surrender Value and Death
Benefit will be what the premiums paid would have
purchased, based on the Insured's correct Age and
sex .
MODIFICATION This Policy may be modified in order to maintain
compliance with applicable state and federal law.
17
<PAGE>
CONFORMITY WITH LAWS This policy is subject to the laws of the state
where the policy was delivered. If any part of it
does not follow that law, it will be treated as if
it does.
NON-PARTICIPATING This Policy will not share in any distribution of
dividends.
PROTECTION OF PROCEEDS To the extent permitted by law, Death Benefits and
Annuity Payments shall be free from legal process
and the claim of any creditor if the person is
entitled to them under this Policy. No payment
and no amount under this Policy can be taken or
assigned in advance of its payment date unless the
Company receives the Owner's written consent.
TRANSFERS BY THE COMPANY The Company reserves the right to transfer its
obligations 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 its 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 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.
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<PAGE>
RIGHT TO EXCHANGE FOR A During the first 24 months after the Policy Date,
FIXED BENEFIT POLICY if the Policy has not lapsed, there is an
unconditional right to 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 PAYOUT OPTIONS
- -------------------------------------------------------------------------------
GENERAL The Policy's Death Benefit Proceeds and Cash
Surrender Value can be paid in one sum, or all or
part of the Proceeds may be paid under a Payout
Option. If an Annuity start date is selected for
the payment of Cash Surrender Value, any
Withdrawal Charges and Indebtedness will be
deducted from the Account Value before the first
Annuity Payment is made.
During the Insured's lifetime, the Owner may
elect: (a) for Cash Surrender Value to be paid
under an annuity Payout Option (Options A-E); (b)
for Death Benefit Proceeds to be paid under a
Payout Option; and (c) to change a previously
elected Payout Option for Death Benefit Proceeds.
Any election must be by written request to the
Variable Service Center.
If no election by the Owner is in effect at the
death of the Insured, the Beneficiary may elect
that Death Benefit Proceeds be paid as a single
sum or under a Payout Option. Payment under a
Payout Option may only be elected by a Beneficiary
during the sixty-day period beginning with the
date of receipt of proof of death.
ANNUITY PAYOUT OPTIONS The dollar amount of each payment determined under
the Annuity Payout Options in this Policy (Options
A - E) will not change regardless of investment,
mortality or expense experience.
PAYOUT OPTIONS The following Payout Options or any other Payout
Option 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.
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<PAGE>
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.
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 general account and be credited with
interest by the Company at a rate of not less than
4%. Full and partial withdrawals may be made at
any time with no Withdrawal Charge.
If the payee dies during a period certain (Payout
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 TABLES The mortality table used in determining the
Annuity Tables contained in this Policy for
Options A, B, C, and D is the 1983a Annuity
Mortality Table (40% Male, 60% Female) 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 Policy
on the Commissioners Annuity Reserve Valuation
Method (CARVM). The reserves and guaranteed
values, including any paid up annuity, 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 Payout Option agreed to
by the Company will be provided by the Company
upon request. 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
Payout Option agreed to by the Company will be
provided by the Company upon request.
EVIDENCE OF SURVIVAL The Company may require satisfactory evidence of
the continued survival of any person(s) on whose
life Annuity Payments are based.
PROOF OF AGE The Company may require evidence of Age of any
payee under Payout Options A, B, C, and D and of
the designated second person under Payout Options
C and D.
20
<PAGE>
ANNUITY 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
21
<PAGE>
ANNUITY TABLES (CONTINUED)
OPTION D - JOINT AND CONTINGENT LIFETIME PAYMENT
Payments reduce only upon the death of the Annuitant
(ERISA Joint and Survivor Payout 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.
22
<PAGE>
[Logo]
A STOCK LIFE INSURANCE COMPANY
LITTLE ROCK, ARKANSAS
THE ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT PROVIDED BY THIS
POLICY, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY - NON-PARTICIPATING
23
<PAGE>
[Logo]
LITTLE ROCK, ARKANSAS
ANNUITIZATION BONUS RIDER
This Rider is made part of the Policy to which it is attached, and is effective
upon the Policy Date:
The OPTIONAL ANNUITY PAYMENTS provision of the Policy is amended to include the
following:
ANNUITIZATION BONUS: The Company will increase the amount applied to Optional
Annuity Payment Options A, B, C, D and, for specified periods greater than 5
years, E. The increase will be calculated by the Company with respect to the
amount so applied as of the immediately preceding Business Day, using the
percentage shown on the Policy Data Pages.
Signed for the Company.
/s/ Steve Largent /s/ Arnold R. Bergman
President Secretary
<PAGE>
EXHIBIT 8
POWERS OF ATTORNEY
<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, 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 24th day of April, 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, MICHAEL R. FERRARI, 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 18th day of November, 1996
WITNESS:
/S/ MICHAEL R. FRIEDBERG /S/ MICHAEL R. FERRARI
- ------------------------ ----------------------
Michael R. Ferrari
<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, JEFF S. LIEBMANN, 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/ MICHAEL R. FRIEDBERG /S/ JEFF S. LIEBMANN
- ------------------------ --------------------
Jeff S. Liebmann
<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>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, PHILLIP R. O'CONNOR, 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/ MICHAEL R. FRIEDBERG /S/ PHILIP R. O'CONNOR
- ------------------------ ----------------------
Phillip R. O'Connor
