<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1999
REGISTRATION NO. 333-5529
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-4
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 4 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940 [ ]
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 4
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AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVA
(EXACT NAME OF REGISTRANT)
---------------------
AMERITAS LIFE INSURANCE CORP.
DEPOSITOR
5900 "O" STREET
LINCOLN, NEBRASKA 68510
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DONALD R. STADING
SENIOR VICE PRESIDENT, SECRETARY
AND CORPORATE GENERAL COUNSEL
AMERITAS LIFE INSURANCE CORP.
5900 "O" STREET
LINCOLN, NEBRASKA 68510
Approximate Date of Proposed Public Offering: As soon as practicable after
effective date.
It is proposed that this filing will become effective:
[ ] immediate upon filing pursuant to paragraph b
[X] on May 1, 1999 pursuant to paragraph a of Rule 485
[ ] on pursuant to paragraph b of Rule 485
If appropriate, check the following box:
[ ]this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED: SECURITIES OF UNIT INVESTMENT TRUST
Omit from the facing sheet reference to the other Act if the Registration
Statement or amendment is filed under only one of the Acts. Include the
"Approximate Date of Proposed Public Offering" and "Title of Securities Being
Registered" only where securities are being registered under the Securities Act
of 1933.
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NLVA
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
PART A
FORM N-4 ITEM HEADING IN PROSPECTUS
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Item 1. Cover Page................................ Cover Page
Item 2. Definitions............................... Definitions
Item 3. Synopsis or Highlights.................... Fee Table; Highlights
Item 4. Condensed Financial Information........... Condensed Financial Information; Performance
Data
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies
a) Depositor.............................. Ameritas Life Insurance Corp.
b) Registrant............................. The Separate Account
c) Portfolio Company...................... The Funds
d) Prospectus............................. The Funds
e) Voting................................. Voting Rights
f) Administrator.......................... N/A
Item 6. Deductions and Expenses
a) Deductions............................. Fee Table; Highlights; Charges and Deductions
b) Sales load............................. N/A
c) Special purchase plans................. N/A
d) Commissions............................ Distribution of the Policies
e) Portfolio company deductions and
expenses............................... The Funds; Fund Management Fees Expenses
f) Registrant's Operating Expenses........ N/A
Item 7. General Description of Variable Annuity
Contracts
a) Rights................................. Highlights; Policy Features, Annuity Period;
General Provisions; Voting Rights
b) Provisions and limitations............. Highlights; Allocation of Premium; Transfers
Among the Portfolios and the Fixed Account;
Systematic Programs
c) Changes in contracts or operations..... Addition, Deletion, or Substitution of
Investments; Policy Features; Voting Rights
d) Contractowner inquiries................ Cover Page
Item 8. Annuity Period
a) Level of benefits...................... Highlights; Allocation of Premium; Annuity
Income Options
b) Annuity commencement date.............. Annuity Date
c) Annuity payments....................... Highlights; Annuity Income Options
d) Assumed investment return.............. Annuity Income Options
e) Minimums............................... Annuity Income Options
f) Rights to change options or transfer
investment base........................ Annuity Income Options
Item 9. Death Benefit
a) Death benefit calculation.............. Highlights; Death of Annuitant; Death of
Owner; Annuity Income Options
b) Forms of benefits...................... Highlights; Death of Annuitant; Death of
Owner; Annuity Income Options
</TABLE>
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<TABLE>
<CAPTION>
PART A
FORM N-4 ITEM HEADING IN PROSPECTUS
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Item 10. Purchases and Contract Values
a) Procedures for purchases............... Cover Page; Highlights; Policy Purchase and
Premium Payment; Accumulation Value
b) Accumulation unit value................ Accumulation Value
c) Calculation of accumulation unit
value.................................. Accumulation Value; Policy Purchase and
Premium Payment
d) Principal underwriter.................. Distribution of the Policies
Item 11. Redemptions
a) Redemption procedures.................. Highlights; Withdrawals and Surrenders
b) Texas Optional Retirement Program...... N/A
c) Delay.................................. Withdrawals and Surrenders; Deferment of
Payment
d) Lapse.................................. N/A
e) Revocation rights...................... Highlights; Free Look Privilege
Item 12. Taxes
a) Tax consequences....................... Tax Charges; Federal Tax Matters
b) Qualified plans........................ Federal Tax Matters
c) Impact of taxes........................ Tax Charges
Item 13. Legal Proceedings......................... Legal Proceedings
Item 14. Table of Contents of Statement of Table of Contents of Statement of Additional
Additional Information.................... Information
PART B
FORM N-4 ITEM HEADING IN STATEMENT OF ADDITIONAL INFORMATION
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Item 15. Cover page................................ Cover page
Item 16. Table of Contents......................... Table of Contents
Item 17. General Information and History........... General Information and History
Item 18. Services
a) Fees, expenses and costs paid by other
than depositor or registrant........... N/A
b) Management-related services............ N/A
c) Custodian and independent public
accountant............................. Safekeeping of Separate Account Assets;
Experts
d) Other custodianship.................... N/A
e) Administrative servicing agent......... N/A
f) Depositor as principal underwriter..... N/A
Item 19. Purchase of Securities Being Offered
a) Manner of Offering..................... N/A
b) Sales load............................. N/A
Item 20. Underwriters
a) Depositor or affiliate as principal
underwriter............................ Distribution of the Policy
b) Continuous offering.................... Distribution of the Policy
c) Underwriting commissions............... Distribution of the Policy
d) Payments of underwriter................ N/A
Item 21. Calculation of Performance Data........... Calculation of Performance Data
Item 22. Annuity Payments.......................... N/A
Item 23. Financial Statements
a) Registrant............................. Financial Statements
b) Depositor.............................. Financial Statements
</TABLE>
<PAGE> 4
PROSPECTUS
[LOGO]
AMERITAS NO LOAD 5900 "O" Street
VARIABLE ANNUITY: A FLEXIBLE P.O. Box 81889/Lincoln, NE 68501
PREMIUM VARIABLE ANNUITY
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This Prospectus describes a no sales load/no surrender charge flexible premium
variable annuity policy contract ("Policy") offered by Ameritas Life Insurance
Corp. ("Ameritas"). The Policy is a deferred annuity; it provides a vehicle for
investing on a tax-deferred basis for retirement savings or other long-term
purposes.
You may purchase a Policy for $2,000 or more. Minimum additional subsequent
premiums may be $250 or more; smaller amounts may be accepted by automatic bank
draft or at the discretion of Ameritas.
You may direct that premiums accumulate on a variable basis in one or more of
the ten Subaccounts of the Ameritas Life Insurance Corp. Separate Account LLVA
("Separate Account LLVA") or on a fixed basis in the Fixed Account, or on a
combination variable and fixed basis. Separate Account LLVA uses its assets to
purchase shares in one or more of the following mutual fund portfolios:
BERGER INSTITUTIONAL PRODUCTS TRUST ("BERGER IPT")
100 Fund
Small Company Growth
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST ("NEUBERGER & BERMAN AMT")
Liquid Asset
Limited Maturity Bond
Growth
Partners
Balanced
STRONG VARIABLE INSURANCE FUNDS, INC. ("STRONG VIF"*)
International Stock Fund II
Growth Fund II
STRONG OPPORTUNITY FUND II, INC.*
* Strong VIF and Strong Opportunity Fund II, Inc. are referred to collectively
as "Strong Funds(R)"
RYDEX VARIABLE TRUST ("RYDEX")
Nova Fund
Ursa Fund
OTC Fund
Precious Metals Fund
U.S. Government Bond Fund
Juno Fund
You bear all the investment risk for monies placed in Separate Account LLVA
before the Annuity Date. Results for the Portfolios are not guaranteed.
This prospectus contains information you should know before investing. A
Statement of Additional Information, which has the same date as this prospectus,
has been filed with the Securities and Exchange Commission; it is incorporated
herein by reference and is available free by writing Ameritas at the address
above or by calling Us at 1-800-255-9678. (Use this address and phone number for
any inquiry you have about the Policy.) The table of contents of the Statement
of Additional Information appears at the end of this prospectus.
Prospectuses for the mutual fund Portfolios identified above accompany this
prospectus.
Read the prospectuses carefully and keep them for future reference.
These securities are not deposits with, or obligations of, or guaranteed or
endorsed by, any financial institution; nor are they insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
These securities involve investment risk, including the possible loss of
principal.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
MAY 1, 1999
NLVA 1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DEFINITIONS................................................. 3
HIGHLIGHTS.................................................. 5
FEE TABLE................................................... 6
CONDENSED FINANCIAL INFORMATION............................. 9
PERFORMANCE DATA............................................ 10
YEAR 2000................................................... 10
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS................ 11
Ameritas Life Insurance Corp.............................. 11
The Separate Account...................................... 11
The Funds................................................. 12
Addition, Deletion or Substitution of Investments......... 13
THE FIXED ACCOUNT........................................... 14
POLICY FEATURES............................................. 14
Control of the Policy..................................... 14
Policy Purchase and Premium Payment....................... 14
Allocation of Premium..................................... 15
Accumulation Value........................................ 15
Transfers Among the Portfolios and the Fixed Account...... 16
Systematic Programs....................................... 16
Withdrawals and Surrenders................................ 17
Free Look Privilege....................................... 17
CHARGES AND DEDUCTIONS...................................... 17
Administrative Charges.................................... 18
Mortality and Expense Risk Charge......................... 18
Tax Charges............................................... 18
Fund Investment Advisory Fees and Expenses................ 19
ANNUITY PERIOD.............................................. 19
Annuity Date.............................................. 19
Annuity Income Options.................................... 19
FEDERAL TAX MATTERS......................................... 20
Taxation of Annuities in General.......................... 20
Nonqualified Policies..................................... 20
Qualified Policies........................................ 21
GENERAL PROVISIONS.......................................... 22
Annuitant's Beneficiary................................... 22
Death of Annuitant........................................ 23
Death of Owner............................................ 23
Deferment of Payment...................................... 23
Contestability............................................ 24
Misstatement of Age or Sex................................ 24
Reports and Records....................................... 24
DISTRIBUTION OF THE POLICIES................................ 24
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 25
THIRD PARTY SERVICES........................................ 25
VOTING RIGHTS............................................... 25
LEGAL PROCEEDINGS........................................... 25
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 26
</TABLE>
The Policy, certain provisions, and certain Portfolios are not available in all
states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
MAY MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON.
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2 NLVA
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DEFINITIONS
ACCUMULATION UNIT. A unit used to measure the value of the Policy prior to the
Annuity Date. Analogous, though not identical, to a share owned in a mutual fund
account.
ACCUMULATION UNIT PRICE. The value of each Accumulation Unit is calculated each
Valuation Period. Analogous, though not identical, to the share price (net asset
value) of a mutual fund.
ACCUMULATION VALUE. The value of all amounts accumulated under the Policy prior
to the Annuity Date. On the Issue Date, the Accumulation Value is equal to the
initial premium, less any premium tax, plus any interest credited based on the
Liquid Asset Portfolio value as of the Policy Date.
AMERITAS. ("We, Us, Our") Ameritas Life Insurance Corp., a stock life insurance
company domiciled in Nebraska since 1887.
ANNUITANT. The person upon whose life expectancy the Policy is written. The
Annuitant may also be the Owner of the Policy.
ANNUITANT'S BENEFICIARY. The person who will receive any benefits paid upon the
Annuitant's death.
ANNUITY DATE. The date on which Annuity Payments begin.
ANNUITY INCOME OPTION. A method of receiving Annuity Payments.
ANNUITY PAYMENT. One of a series of payments paid to the Annuitant under an
Annuity Income Option.
EFFECTIVE DATE. The Valuation Date on which premiums are applied to purchase a
Policy.
FIXED ACCOUNT. A part of Ameritas' general account to which all or a portion of
premiums may be allocated for accumulation at fixed rates of interest.
FUNDS. Berger IPT, Neuberger & Berman AMT, Strong Funds(R), and Rydex are the
Funds available for investment as of the date of this prospectus. The Funds have
one or more Portfolios; each Portfolio corresponds to one of the Subaccounts of
Separate Account LLVA.
ISSUE DATE. The date all financial, contractual and administrative requirements
have been met to issue the Policy. The free look period begins on this date.
NET PREMIUM. The Premium Payment less the premium tax (if imposed by the state
in which the Policy is delivered).
NONQUALIFIED POLICIES. Policies that do not qualify for special federal income
tax treatment.
OWNER. ("you, your") The person or entity in whose name the Policy is issued, as
stated in the application, or as subsequently changed. The Owner has the
privileges stated in the Policy, including the right to make allocations or
change beneficiaries. If a Policy has been absolutely assigned, the assignee is
the Owner. A collateral assignee is not the Owner.
OWNER'S DESIGNATED BENEFICIARY. The person designated by the Owner to whom
Policy ownership passes upon the Owner's death.
POLICY. The no sales load/no surrender charge variable annuity contract offered
by Ameritas and described in this prospectus.
POLICY DATE. The date used to determine Policy anniversary dates and Policy
Years. This date is determined on the Issue Date. It is the date within two days
after Ameritas received the application and initial premium. If the Policy Date
would fall on the 29th, 30th or 31st of a month, the Policy Date will be set at
the 28th day of that month.
POLICY YEAR -- The period from one Policy anniversary date until the next Policy
anniversary date.
PORTFOLIO -- One of the separate investment Portfolios of the Funds in which
Separate Account LLVA invests. Each Portfolio is a Subaccount of Separate
Account LLVA. In Separate Account LLVA, Berger IPT offers two Portfolios: Berger
IPT-100 Fund and Berger IPT-Small Company Growth Fund; Neuberger & Berman AMT
offers five Portfolios: Liquid Asset, Limited Maturity Bond, Growth, Partners,
and Balanced;
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NLVA 3
<PAGE> 7
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Strong VIF offers two Portfolios: Strong International Stock Fund II, and Strong
Growth Fund II; Strong Opportunity Fund II, Inc. is also offered. Rydex offers
six Portfolios: Nova Fund, Ursa Fund, OTC Fund, Precious Metals Fund, U.S.
Government Bond Fund, and Juno Fund. In this prospectus, Portfolio will also be
used to refer to the Subaccount that invests in the corresponding Portfolio.
PREMIUM PAYMENT -- An amount paid to purchase a Policy or to increase the
investment in the Policy.
QUALIFIED POLICIES -- Policies owned inside certain qualified plans as defined
under applicable tax laws, such as IRAs and Pension Trusts.
SATISFACTORY PROOF OF DEATH -- All of the following must be submitted: (1) A
certified copy of the death certificate; (2) A Claimant Statement; (3) The
Policy; and (4) Any other information that Ameritas may require to establish the
validity of the claim.
SEPARATE ACCOUNT LLVA -- Ameritas Life Insurance Corp. Separate Account LLVA, an
account established by Ameritas to receive and invest premiums paid under the
Policy. Assets in Separate Account LLVA are segregated from the general assets
of Ameritas.
SUBACCOUNT -- A subdivision of Separate Account LLVA which invests in shares of
a specified Portfolio of the Funds.
VALUATION DATE -- Any day on which the New York Stock Exchange (NYSE) is open
for trading.
VALUATION PERIOD -- The period between two successive Valuation Dates,
commencing at the close of trading on the NYSE on one Valuation Date and ending
at the close of trading on the next Valuation Date.
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4 NLVA
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HIGHLIGHTS
For an explanation of capitalized terms, refer to the "Definitions", section.
Unless stated otherwise, the captions in this highlights section correspond to
later sections in the prospectus which are only summarized here. Read the whole
prospectus.
THE POLICY
The purpose of the Policy is to allow you, the Owner, to accumulate funds on a
tax-deferred basis by investing in one or more investment Portfolios of the
Funds for retirement or other purposes. The tax-deferral feature is most
attractive to investors who have exhausted other avenues for tax-deferred
investing.
PURCHASING A POLICY
You may purchase a Policy with a complete application and a minimum initial
premium of $2,000 or more. Later premiums must be at least $250. Smaller
premiums may be accepted on automatic bank draft or at the discretion of
Ameritas. (See the section on Policy Purchase and Premium Payment.)
INVESTMENT CHOICES
In Separate Account LLVA, 16 Portfolios are offered. The assets of each
Portfolio are held separately from the other Portfolios; each has distinct
investment objectives and policies which are described in the accompanying
prospectuses for the Funds. The investment performance of the Portfolios is not
guaranteed. (See the section on The Funds.)
Premiums allocated to the Fixed Account are placed in the general account of
Ameritas and receive a guaranteed interest rate. (See the section on The Fixed
Account.)
ALLOCATION OF PREMIUM
Your Accumulation Value is initially allocated to the Liquid Asset Portfolio. At
the end of the free look period, the Accumulation Value is allocated among the
Portfolios or Fixed Account according to your instructions on the application.
Allocations may be changed at any time with no charge.
We will only allow allocations to Rydex according to administrative rules We
have set.
Where allowed, if the Owner has allocated 100% to the Fixed Account, the
Accumulation Value of the Policy is allocated to the Fixed Account on the
Effective Date, and no further allocation will occur.
CHARGES AND DEDUCTIONS
There are no sales loads or surrender charges. The costs in the Policy include
Our mortality and expense risk ("M&E") charges; an annual policy fee to cover
the cost for Us to administer the Policy; and investment advisory and other fees
imposed by the Funds. State premium taxes, if any, are deducted upon receipt of
premium, upon annuitization, or upon withdrawal, according to the laws of the
state of jurisdiction. A $10 transfer fee may be charged for each transfer over
the 15 free transfers allowed each Policy Year.
TRANSFERS AMONG PORTFOLIOS
You may transfer funds among the Portfolios up to 15 times per year free of
charge. Additional transfers may be subject to a transfer charge (maximum $10
per additional transfer). Minimum transfer amount is $250, or if less, the
entire value of the Portfolio from which the transfer is made. The minimum
amount which can remain in a Portfolio as a result of a transfer is $100.
Certain restrictions apply to transfers from the Fixed Account. We will only
allow transfers with regard to Rydex according to administrative rules We have
set. Systematic programs, which provide for the automatic transfer of funds,
such as Portfolio Rebalancing, Dollar Cost Averaging, and Earnings Sweep may be
offered. (See the section on Transfers Among Portfolios and the Fixed Account.)
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NLVA 5
<PAGE> 9
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WITHDRAWALS
You may withdraw all or part of the Accumulation Value before the earlier of the
Annuity Date or the Annuitant's death. Withdrawals must be at least $250.
Systematic withdrawals may be scheduled at 12 per year. Withdrawals made prior
to age 59 1/2 may be subject to a 10% federal tax penalty. There is no
withdrawal charge imposed by us. (See the section on Withdrawals and
Surrenders.)
ANNUITY INCOME OPTIONS
Beginning on the Annuity Date, the Policy provides for lump sum payment, or for
periodic annuity payments to be paid to the Annuitant, based on the Accumulation
Value on that date. You may select from a number of Annuity Income Options. You
also have some flexibility in choosing an Annuity Date.
DEATH BENEFIT
If the Annuitant dies before the Annuity Date, the death benefit becomes payable
to the Annuitant's Beneficiary upon Satisfactory Proof of Death. Ameritas
guarantees that the death benefit payable upon death of the Annuitant prior to
the Annuity Date will be the greater of the Accumulation Value or the premium
payments made less withdrawals. The death benefit may be paid in a lump sum or
under an Annuity Income Option. (See the section on Death of Annuitant.)
If the Owner dies prior to the Annuity Date, the Owner's entire interest in the
Policy must generally be distributed to the Owner's Designated Beneficiary
within five years after the date of death. Under special rules, if the Owner's
interest is payable to the surviving spouse of the Owner, the Policy may be
continued with the surviving spouse treated as the Owner. (See the section on
Death of Owner.)
FREE LOOK PERIOD
You may cancel the Policy within 10 days after you receive it (except in some
states which may require a longer period). To cancel, you must return the
Policy. When the Policy is received by Ameritas, you will be reimbursed all
premiums paid or the premiums adjusted by investment gains or losses, whichever
is more. (See the section on Free Look Privilege.)
FEE TABLE
The following illustrates the expenses you will bear as Owner, excluding
possible state premium taxes. For a complete discussion of expenses, see
"Charges and Deductions" and the Funds' prospectuses.
<TABLE>
<S> <C>
OWNER TRANSACTION EXPENSES
Sales Load Imposed........................................ None
Surrender Charge.......................................... None
Withdrawal Charge......................................... None
Transfer Fee (after 15 free transfers per Policy year).... $10
ANNUAL POLICY FEE (maximum of $40, currently $25)........... $25
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE
ACCOUNT VALUE)
Mortality and Expense Risk Fees (M&E)..................... 0.75% current
0.95% guaranteed
</TABLE>
FUND MANAGEMENT FEES
Fee information about the Funds was provided to Ameritas by the Funds. Ameritas
has not independently verified such information.
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6 NLVA
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BERGER IPT ANNUAL EXPENSES(1)
<TABLE>
<CAPTION>
TOTAL
INVESTMENT ADVISORY OTHER (REFLECTING
PORTFOLIO & MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS)
- --------- ------------------- -------- ----- ---------------
<S> <C> <C> <C> <C>
100 Fund .75%(1) 2.13% 2.88% 1.00%
Small Company Growth .90%(2) 1.29% 2.19% 1.15%
</TABLE>
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(1) 12/31/98 fiscal year end. Expenses reflect fee waiver and expense
reimbursement.
NEUBERGER & BERMAN AMT ANNUAL EXPENSES(2)
<TABLE>
<CAPTION>
TOTAL
INVESTMENT ADVISORY OTHER (REFLECTING
PORTFOLIO & MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS)
- --------- ------------------- -------- ----- ---------------
<S> <C> <C> <C> <C>
Liquid Asset(3) .65% .49% 1.14% 1.00%
Limited Maturity .65% .11% .76% .76%
Growth .83% .09% .92% .92%
Partners .78% .06% .84% .84%
Balanced .85% .18% 1.03% 1.03%
</TABLE>
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(2) 12/31/98 fiscal year end.
(3) Expenses reflect expense reimbursement.
STRONG FUNDS ANNUAL EXPENSES(4)
<TABLE>
<CAPTION>
INVESTMENT ADVISORY OTHER
PORTFOLIO & MANAGEMENT EXPENSES TOTAL
- --------- ------------------- -------- -----
<S> <C> <C> <C>
Growth Fund II 1.00% .20% 1.20%
International Stock Fund II 1.00% .62% 1.62%
Opportunity Fund II 1.00% .16% 1.16%
</TABLE>
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(4) 12/31/98 fiscal year end.
RYDEX ANNUAL EXPENSES(5)
<TABLE>
<CAPTION>
TOTAL
INVESTMENT ADVISORY OTHER (REFLECTING
PORTFOLIO & MANAGEMENT EXPENSES REIMBURSEMENTS)
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<S> <C> <C> <C>
Nova Fund 2.20%
Ursa Fund 2.30%
OTC Fund 2.20%
Precious Metals Fund 2.20%
U.S. Government Bond Fund 1.80%
Juno Fund 2.30%
</TABLE>
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(5) 12/31/98 fiscal year end.
Berger Associates provides investment advisory services to the Berger IPT Funds
available in Separate Account LLVA. Berger Associates has agreed to waive its
advisory fee and reimburse the Funds for additional expenses to the extent that
normal operating expenses in any fiscal year, including the management fee but
excluding brokerage commissions, interest, taxes and extraordinary expenses, of
Berger IPT-100 Fund exceed 1.00%, and the normal operating expenses in any
fiscal year of the Berger IPT-Small Company Growth Fund exceed 1.15%, of the
respective Fund's average daily net assets.
Neuberger & Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investable
assets in a corresponding series ("Series") of Advisers Managers Trust. The
figures reported under "Investment Management and Administration Fees" include
the aggregate
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NLVA 7
<PAGE> 11
of the administration fees paid by the Portfolio and the management fees paid by
its corresponding Series. Similarly, "Other Expenses' includes all other
expenses of the Portfolio and its corresponding Series.
Neuberger & Berman Management Inc. ("NBMI") provides investment management
services to each Series that include, among other things, making and
implementing investment decisions and providing facilities and personnel
necessary to operate the Series. NBMI provides administrative services to each
Portfolio that include furnishing similar facilities and personnel to the
Portfolio. With the Portfolio's consent, NBMI is authorized to subcontract some
of its responsibilities under its administration agreement with the Portfolio to
third parties.
Each Portfolio bears all expenses of its operations other than those borne by
NBMI as administrator of the Portfolio and as distributor of its shares. Each
Series bears all expenses of its operations other than those borne by NBMI as
investment manager of the Series. These expenses include, but are not limited
to, for the Portfolios and the Series, legal and accounting fees and
compensation for trustees who are not affiliated with NBMI; for the Portfolios,
transfer agent fees and the cost of printing and sending reports and proxy
materials to shareholders; and for the Series, custodial fees for securities.
Any expenses which are not directly attributable to a specific Series are
allocated on the basis of the net assets of the respective Series.
NBMI has voluntarily undertaken to limit the above listed Portfolio's expenses
by reimbursing each Portfolio for its operating expenses and its pro rata share
of its corresponding Series' operating expenses, excluding the compensation of
NBMI (with respect to all Portfolios but the Liquid Asset Portfolio), taxes,
interest, extraordinary expenses, brokerage commissions and transaction costs,
that exceed, in the aggregate, 1% per annum of the Portfolio's average daily net
asset value. This undertaking is subject to termination on 60 days' prior
written notice to the Portfolio.
The effect of any expense limitation by NBMI is to reduce operating expenses of
a Portfolio and its corresponding Series and thereby increase total return.
Strong Capital Management, Inc. is the investment advisor for the Strong
Funds(R). From time to time, Strong Capital Management, Inc., may voluntarily
waive all or a portion of its management fee and/or absorb certain expenses for
the Fund without further notification of the commencement or termination of any
such waiver or absorption. Any such waiver or absorption will have the effect of
lowering the overall expense ratio of the Fund and increasing the Fund's return
to investors at the time such amounts were waived and/or absorbed.
EXAMPLE: The following example illustrates expenses you would incur at the end
of a one, three, five or ten-year period on a hypothetical $1,000 allocation to
each Portfolio assuming a 5% annual return. The example reflects expenses of
Separate Account LLVA and the Portfolio, but does not reflect premium taxes
which may apply. The information presented applies whether or not the Policy is
(1) surrendered; (2) annuitized; or (3) not surrendered or annuitized.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
BERGER IPT
100 Fund $18 $57 $ 97 $211
Small Company Growth $20 $61 $105 $226
NEUBERGER & BERMAN AMT
Liquid Asset $18 $57 $ 97 $211
Limited Maturity $16 $50 $ 86 $186
Growth $17 $54 $ 92 $200
Partners $17 $52 $ 90 $196
Balanced $19 $58 $ 99 $215
STRONG FUNDS(R)
Growth Fund II $20 $63 $108 $232
International Stock Fund II $23 $72 $123 $263
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Opportunity II $20 $61 $105 $226
</TABLE>
8 NLVA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 12
- --------------------------------------------------------------------------------
Rydex
Nova Fund
Ursa Fund
OTC Fund
Precious Metals Fund
U.S. Government Bond Fund
Juno Fund
The examples assume an average $30,000 annuity investment. These examples should
not be considered a representation of past or future expenses, performance or
return. Actual expenses and/or returns may be greater or less than those shown.
CONDENSED FINANCIAL INFORMATION
The financial statements for Ameritas and Separate Account LLVA (as well as
auditors' reports thereon) are in the Statement of Additional Information.
ACCUMULATION UNIT VALUES
Following are the accumulation unit values for the Subaccounts as of January 22,
1997, when contracts offered by this prospectus were first sold, December 31,
1998 and 1997. The number of outstanding accumulation units in each Subaccount
as of December 31, 1998 and 1997 is also shown.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AS OF AS OF UNITS AS OF
FUND JANUARY 22, 1997 DECEMBER 31 DECEMBER 31 YEAR
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BERGER IPT
- ----------------------------------------------------------------------------------------------------------
100 Fund -- 13.558 14,689 1998
10.97 11.748 12,757 1997
- ----------------------------------------------------------------------------------------------------------
Small Company Growth -- 12.111 7,506 1998
10.38 11.979 5,387 1997
- ----------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN AMT
- ----------------------------------------------------------------------------------------------------------
Liquid Asset -- 1.078 465,363 1998
1.00 1.037 289,768 1997
- ----------------------------------------------------------------------------------------------------------
Limited Maturity -- 15.437 76,589 1998
14.08 14.899 33,642 1997
- ----------------------------------------------------------------------------------------------------------
Growth -- 34.807 4,829 1998
27.51 30.355 2,405 1997
- ----------------------------------------------------------------------------------------------------------
Partners -- 21.182 52,142 1998
17.31 20.480 28,567 1997
- ----------------------------------------------------------------------------------------------------------
Balanced -- 21.036 15,849 1998
16.57 18.892 11,464 1997
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NLVA 9
<PAGE> 13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AS OF AS OF UNITS AS OF
FUND JANUARY 22, 1997 DECEMBER 31 DECEMBER 31 YEAR
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STRONG FUNDS(R)
- ----------------------------------------------------------------------------------------------------------
Growth Fund II -- 16.461 13,361 1998
10.69 12.888 1,460 1997
- ----------------------------------------------------------------------------------------------------------
International Stock Fund II -- 9.117 13,841 1998
11.52 9.646 6,593 1997
- ----------------------------------------------------------------------------------------------------------
Opportunity Fund II -- 27.024 20,379 1998
19.62 23.979 1,876 1997
- ----------------------------------------------------------------------------------------------------------
Opportunity Fund II -- 27.024 20,379 1998
19.62 23.979 1,876 1997
- ----------------------------------------------------------------------------------------------------------
RYDEX
- ----------------------------------------------------------------------------------------------------------
Nova Fund(1) -- -- -- 1998
- ----------------------------------------------------------------------------------------------------------
Ursa Fund(1) -- -- -- 1998
- ----------------------------------------------------------------------------------------------------------
OTC Fund(1) -- -- -- 1998
- ----------------------------------------------------------------------------------------------------------
Precious Metals Fund(1) -- -- -- 1998
- ----------------------------------------------------------------------------------------------------------
U. S. Government Bond Fund(1) -- -- -- 1998
- ----------------------------------------------------------------------------------------------------------
Juno Fund(1) -- -- -- 1998
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
(1) No Activity prior to 12/31/98
PERFORMANCE DATA
Separate Account LLVA may advertise certain information regarding the
performance of the Subaccounts. Performance data may be advertised as average
annual total return and/or cumulative total return. The Liquid Asset
Subaccount may advertise yield and/or effective yield. The yield figures are
based on historical earnings and are not intended to indicate future
performance. Other Subaccounts may advertise current yield. Details on how
performance measures are calculated for the Subaccounts are found in the
Statement of Additional Information. Performance advertising will reflect the
mortality and expense risk charge and the annual policy fee.
YEAR 2000
Like other insurance companies and their separate accounts, Ameritas and the
Separate Account could be adversely affected if the computer systems they rely
upon do not properly process date-related information and data involving the
years 2000 and after. This issue arose because both mainframe and PC-based
computer hardware and software have traditionally used two digits to identify
the year. For example, the year 1998 is input, stored and calculated as "98."
Similarly, the year 2000 would be input, stored and calculated as "00." If
computers assume this means 1900, it could cause errors in calculations,
comparisons, and other computing functions.
Like all insurance companies, Ameritas makes extensive use of dates and date
calculations. We began a corporate-wide Year 2000 (Y2K) project in mid-1996. Our
goal is to ensure that Our computer systems continue to operate smoothly with no
service disruptions before, during or after the year 2000.
As of December 31, 1998, all of Our computer application and operating systems
had been updated for the year 2000. Continuous testing and monitoring throughout
1999 will help Ameritas continue to meet Our contractual and service obligations
to Our customers. In addition to Our internal efforts, Ameritas is working
- --------------------------------------------------------------------------------
10 NLVA
<PAGE> 14
- --------------------------------------------------------------------------------
closely with vendors and other business partners to confirm that they too are
addressing Y2K issues on a timely basis. We believe that We are
Y2K -- compliant; however, in the event We or Our service providers, vendors,
financial institutions or others with which We conduct business, fail to be
Y2K -- compliant, there would be a materially adverse effect on Us.
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS
AMERITAS LIFE INSURANCE CORP.
Ameritas Life Insurance Corp. ("Ameritas") is a stock life insurance company
domiciled in Nebraska since 1887. Ameritas and its subsidiaries are currently
licensed to sell life insurance and annuities in 50 states and the District of
Columbia. The Home Office of Ameritas is at 5900 "O" Street, P.O. Box 81889,
Lincoln, Nebraska 68501.
Effective January 1, 1998, Ameritas converted from a mutual insurance company
structure to a mutual insurance holding company structure pursuant to the
Nebraska Mutual Insurance Holding Company Act. The conversion was approved by
the Nebraska State Department of Insurance and the policyowners of the mutual
company.
Ameritas and subsidiaries had total assets at December 31, 1998 of over $4.1
billion. Ameritas enjoys a long standing A+ (Superior) rating for financial
strength and operating performance from A.M. Best, an independent firm that
analyzes insurance carriers This is the second highest of Best's 15 categories.
Ameritas has been rated A- (Excellent) by Weiss Research, Inc., for fiscal
strength. This is the third highest of Weiss' 16 categories. Ameritas also has
an AA (Very Strong) rating from Standard & Poor's for insurer financial
strength. This is the third highest of Standard & Poor's 21 ratings.
Ameritas Investment Corp., the principal underwriter of the Policies, may
publish in advertisements and reports to Policyowners, the ratings and other
information assigned to Ameritas by one or more independent rating services. The
purpose of the ratings is to reflect the financial strength of Ameritas. The
ratings do not relate to the performance of Separate Account LLVA. Published
material may also include charts and other information concerning dollar cost
averaging, portfolio rebalancing, earnings sweep, tax-deference,
diversification, asset allocation, long-term market trends, index performance,
and other investment programs and methods. Ameritas may also advertise the no
load nature of this Policy.
THE SEPARATE ACCOUNT
Ameritas Life Insurance Corp. Separate Account LLVA ("Separate Account LLVA")
was established under Nebraska law on October 26, 1995 to receive and invest
premiums paid under the Policy. Assets of Separate
Account LLVA are held separately from all other assets of Ameritas and are not
chargeable with liabilities from any other business Ameritas may conduct.
Income, gains, or losses of Separate Account LLVA are credited without regard to
other income, gains, or losses of Ameritas.
Separate Account LLVA purchases and redeems shares from the Portfolios at the
net asset value. Shares are redeemed for Ameritas to pay withdrawals and
surrenders, collect charges, and transfer assets from one Portfolio to another,
or to the Fixed Account, as requested by the Owner. Any dividend or capital gain
distribution is automatically reinvested in the corresponding Subaccount.
All obligations arising under the Policies are liabilities of Ameritas. Ameritas
will always keep assets in Separate Account LLVA of a total market value at
least equal to the reserve and other contract liabilities of Separate Account
LLVA. To the extent that assets in Separate Account LLVA exceed Ameritas'
liabilities in Separate Account LLVA, Ameritas may withdraw excess assets to
cover general account obligations.
Separate Account LLVA is a unit investment trust registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940
Act"). This does not signify that the SEC supervises the management, investment
practices or policies of Separate Account LLVA.
- --------------------------------------------------------------------------------
NLVA 11
<PAGE> 15
- --------------------------------------------------------------------------------
THE FUNDS
The Funds currently available are: Berger IPT, Neuberger & Berman AMT, and
Strong Funds(R), Each Fund is registered with the SEC under the 1940 Act as an
open-ended diversified management investment company or a series thereof. There
are currently 16 Subaccounts within Separate Account LLVA, each investing only
in a corresponding Portfolio of the Funds.
The assets of each Portfolio of the Funds are held separate from the assets of
the other Portfolios. Thus, each Portfolio operates as a separate investment,
and the income or losses of one Portfolio generally do not affect the investment
of any other Portfolio.
Rydex involves strategic or tactical asset allocation, and may involve
aggressive investing strategies. For that reason, We have established
administrative rules under which We will allow allocations and/or transfers to
be made to Rydex. (See Rydex Administrative Rules, below.)
There is no assurance that any Portfolio will achieve stated objectives. More
detailed information, including a description of investment risks, investment
advisory services, total expenses and charges is in the prospectuses of the
Funds, which accompany this Prospectus. These prospectuses should be read in
conjunction with this Prospectus and retained. All underlying Fund information,
including Fund prospectuses, has been provided to Ameritas by the Funds.
Ameritas has not independently verified this information.
The investments in the Portfolios may be managed by Portfolio managers which
manage one or more other mutual funds that have similar names, investment
objectives, and investment styles as the Portfolios. You should be aware that
the Portfolios are likely to differ from the other mutual funds in size, cash
flow pattern, and tax matters. Thus, the holdings and performance of the
Portfolios can be expected to vary from those of the other mutual funds.
You should periodically reconsider your allocation among the Portfolios in light
of current market conditions and the investment risks attendant to investing in
the Portfolios.
The Funds may be made available for variable annuity or variable life insurance
contracts of various insurance companies. Though unlikely, there is a
possibility that a material conflict could arise between the interests of
Separate Account LLVA and one or more of the separate accounts of another
participating insurance company. In the event of a material conflict, the
affected insurance companies agree to take any necessary steps, including
removing separate accounts from the Funds, to resolve the matter. See the
prospectuses of the Funds for more information.
RYDEX ADMINISTRATIVE RULES
You may access the Rydex Subaccounts through your Policy only if you are
currently a Rydex investor, or, in the alternative, you are not a current Rydex
investor but you meet all of the following criteria:
1. You have designated to Us in writing that you have an agreement retaining a
financial advisor to provide strategic or tactical asset allocation services
relating to your Policy;
2. You agree that you are solely responsible for selecting, supervising, and
paying any compensation for services to your financial advisor. We do not
have any responsibility for your financial advisor or the recommendations or
advice provided;
3. You have executed a power of attorney authorizing your financial advisor to
give allocation and transfer directions to Us and/or Our designee;
4. Unless you have specified otherwise in the power of attorney you provided Us,
you may make withdrawals from or surrender your Policy at any time, and may
give Us your directions to allocate and/or transfer among all Investment
Options other than Rydex. Only your financial advisor may give Us directions
to allocate to or transfer Accumulation Value to or from Rydex Subaccounts;
- --------------------------------------------------------------------------------
12 NLVA
<PAGE> 16
- --------------------------------------------------------------------------------
5. You agree to provide Us with:
A. Written notification of any change in financial advisor; and
B. A power of attorney authorizing your new financial advisor to give
allocation and transfer directions to Us;
6. If We receive notification that your financial advisor is either no longer
authorized by you or no longer able to give allocation and transfer
directions to Us, We will send you a ten (10) day advance notification that
all Accumulation Value allocated to Rydex under your Policy ("Rydex
Accumulation Value") will be transferred to the Liquid Asset Subaccount of
Neuberger & Berman AMT. You must send Us, before the ten (10) day period
passes, written notification of the name of your new financial advisor, and a
power of attorney from you authorizing the new financial advisor to give Us
instructions relating to Rydex allocations. In the alternative, you may send
Us written notification, on a form supplied by Us, of your election to remain
allocated to Rydex without the services of a financial advisor. If you do not
send Us the notification and power of attorney, if applicable, We will
transfer the Rydex Accumulation Value on the 10th day. Until you provide Us
with the notification and power of attorney, if applicable, your investment
options will not include Rydex;
7. You agree that the transaction cutoff time for receipt by Us of purchase
payments for allocation and transfer and/or withdrawal instructions relating
to Rydex is 1:30 p.m. Central time; and
8. If you are currently a Rydex investor, and wish to access Rydex on that
basis, you agree to provide Us with proof of that status.
The eligible Portfolios of the Funds, along with their investment advisers, are
listed in the following table:
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISERS OR MANAGERS ELIGIBLE PORTFOLIOS
<S> <C> <C>
Berger IPT Berger Associates, Inc. 100 Fund
Small Company Growth Fund
Neuberger & Berman Neuberger & Berman Liquid Asset
AMT Management Incorporated Limited Maturity Bond
Growth
Partners
Balanced
Strong VIF Strong Capital Growth Fund II
Management, Inc International Stock Fund
II
Strong Opportunity Strong Capital Opportunity Fund II
Fund II, Inc. Management, Inc.
Rydex PADCO Advisors II, Inc. Nova Fund
Ursa Fund
OTC Fund
Precious Metals Fund
U.S. Government Bond Fund
Juno Fund
</TABLE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
Ameritas reserves the right, subject to applicable law, to add, delete, combine,
or substitute investments in Separate Account LLVA if, in our judgment,
marketing needs, tax considerations, or investment conditions warrant. This may
happen due to a change in law or a change in a Portfolio's objectives or
restrictions, or for some other reason. Ameritas may operate Separate Account
LLVA as a management company under the 1940 Act, it may be deregistered under
that Act if registration is no longer required, or it may be combined with other
Ameritas separate accounts. Ameritas may also transfer the assets of Separate
Account LLVA to another separate account. If necessary, We will notify the SEC
and/or state insurance authorities and will obtain any required approvals before
making these changes.
- --------------------------------------------------------------------------------
NLVA 13
<PAGE> 17
If any changes are made, Ameritas may, by appropriate endorsement, change the
Policy to reflect the changes. In addition, Ameritas may, when permitted by law,
restrict or eliminate any voting rights of Owners or other persons who have
voting rights as to Separate Account LLVA. AVLIC will determine the basis for
making any new Subaccounts available to existing Owners.
You will be notified of any material change in the investment policy of any
Portfolio in which you have an interest.
THE FIXED ACCOUNT
You may allocate all or a portion of your Premium Payments and make transfers to
the Fixed Account. Amounts in the Fixed Account earn a fixed rate of interest
guaranteed by Ameritas never to be less than 3.0%. Ameritas may, at its
discretion, set a higher interest rate.
Each month Ameritas will establish the declared rate for the Policies with a
Policy Date or Policy anniversary date in that month. Interest will be credited
on the amounts transferred or allocated to the Fixed Account at the declared
rate effective for the month of issue. The declared interest rate is guaranteed
for the remainder of the Policy Year. During later Policy Years, all amounts in
the Fixed Account will earn interest at the declared rate in effect in the month
of the last Policy anniversary. Declared interest rates may increase or decrease
from previous periods.
Amounts allocated to the Fixed Account or transferred from Separate Account LLVA
to the Fixed Account are placed in the general account of Ameritas, which
supports insurance and annuity obligations. The general account includes all of
Ameritas' assets, except those assets segregated in the separate accounts.
Ameritas has the sole discretion to invest the assets of the general account,
subject to applicable law. Ameritas bears an investment risk for all amounts
allocated or transferred to the Fixed Account and interest credited thereto,
less any deduction for charges and expenses, whereas the Owner bears the
investment risk that the declared interest rate described above may fall to a
lower rate after the expiration of a declared rate period.
Because of exemptive and exclusionary provisions, interests in the general
account have not been registered under the Securities Act of 1933 nor is the
general account registered as an investment company under the Investment Company
Act of 1940. Accordingly neither the general account nor any interest therein is
generally subject to the provisions of the 1933 or 1940 Act. We understand that
the SEC has not reviewed the disclosures in this Prospectus relating to the
Fixed Account portion of the contract; however, disclosures regarding the Fixed
Account portion of the contract may be subject to generally applicable
provisions of the federal securities laws regarding the accuracy and
completeness of statements made.
POLICY FEATURES
The Policy is a variable annuity contract issued by Ameritas. The rights and
benefits of the Policy are described below and in the Policy. The Policy
controls the rights and benefits you have. Ameritas reserves the right to make
any modification to conform the Policy to, or to give you the benefit of, any
changes in the law. If necessary, We will provide notice of such modifications
to, and receive approval from, the SEC and/or state insurance authorities. You
will be notified of any material modifications to the Policy.
CONTROL OF THE POLICY
The Owner is the person or entity named as such in the application or subsequent
written changes shown in Our records. While living, the Owner has the sole right
to receive all benefits and exercise all rights granted by the Policy or
Ameritas. The Owner may name both primary and contingent beneficiaries. Subject
to the rights of any irrevocable beneficiary and any assignee of record, all
rights, options, and privileges belong to the Owner, if living; otherwise to the
Owner's Designated Beneficiary, if living; otherwise to the estate of the last
Owner to die.
POLICY PURCHASE AND PREMIUM PAYMENT
Individuals wishing to purchase a Policy should send a complete application and
an initial premium to Ameritas' Home Office (5900 "O" Street, P.O. Box 81889,
Lincoln, NE 68501). Your initial premium must
14 NLVA
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<PAGE> 18
- --------------------------------------------------------------------------------
be at least $2,000. The named Annuitant must be 85 years of age or less.
Acceptance is subject to Ameritas' underwriting rules, and Ameritas reserves the
right to reject any application.
If the application and initial Premium Payment can be accepted in the form
received, the initial premium will be applied to purchase the Policy within two
business days from the date the premium was received. The date the initial
premium is applied to purchase the Policy is the Effective Date.
If an incomplete application is received, We will request the necessary
information to complete the application. If after five business days from
receipt of the initial premium, the application remains incomplete, We will
return the initial premium unless We obtain your permission to retain the
premium pending completion of the application. Once the application is complete
and We have received the initial premium, the premium will be applied within two
business days.
Additional Premium Payments may be made at any time prior to the Annuity Date,
as long as the Annuitant is living. Additional payments must be made for at
least $250, however, smaller amounts may be accepted if made by automatic bank
draft or at Ameritas' discretion. Any additional premium is credited to the
Accumulation Value as of the end of the Valuation Period during which it is
received.
Total premiums may not exceed $1,000,000 for either a single Policy or for
multiple Ameritas annuity Policies having the same Annuitant without prior
approval from Ameritas.
ALLOCATION OF PREMIUM
You may allocate Net Premium to one or more of the Portfolios and to the Fixed
Account. Allocated portions must be a whole number percentage. The allocations
must total 100%.
On the Issue Date, the Policy's Accumulation Value will be based on the Liquid
Asset Portfolio value as if the Policy had been issued and the initial Net
Premium invested within two Valuation Dates of Our receipt of the application
and initial premium ("the two day date"). On the Effective Date, the
Accumulation Value is allocated to the Liquid Asset Portfolio, unless, where
available, the Owner has allocated 100% to the Fixed Account. Thirteen days
after the Issue Date, the Accumulation Value of the Policy will be allocated
among the Portfolios, or to the Fixed Account as selected by the Owner in the
application.
Where allowed, if the Owner has allocated 100% to the Fixed Account, the
Accumulation Value of the Policy is allocated to the Fixed Account on the
Effective Date. In this instance, no further allocation will occur.
The Owner bears the entire investment risk for the portion of the Accumulation
Value allocated to the Portfolios. This will affect the Policy's Accumulation
Value, which on the Annuity Date affects the level of annuity payments payable.
You should periodically review your allocation in light of market conditions and
your financial objectives.
ACCUMULATION VALUE
On the Effective Date, the Accumulation Value of the Policy is equal to the
initial premium received, less any applicable premium taxes, plus any interest
credited based on the Liquid Asset Portfolio value as of the Policy Date.
Thereafter, the Accumulation Value is determined on each Valuation Date by
multiplying the number of Accumulation Units of each Subaccount by the current
Accumulation Unit Price for that Subaccount and by adding each together with the
amount in the Fixed Account. The number of Accumulation Units credited to the
Policy is decreased by any annual Policy fee, any withdrawals, and, upon
annuitization, any applicable premium taxes.
When a portion of the Accumulation Value is allocated to a Portfolio, a certain
number of Accumulation Units are credited to your Policy. The number of
Accumulation Units is determined by dividing the dollar amount allocated to the
Portfolio by the Accumulation Unit Price for that Portfolio as of the end of the
Valuation Period in which the allocation is made.
- --------------------------------------------------------------------------------
NLVA 15
<PAGE> 19
The Accumulation Units of each Portfolio are valued separately. The Accumulation
Unit Price may vary each Valuation Period according to the net investment
performance of the Portfolio, the daily charges under the Policy, and, any
applicable tax charges.
Therefore, the Accumulation Value of your Policy will vary from Valuation Period
to Valuation Period, reflecting the investment experience of the selected
Portfolios of the Funds, the interest earned in the Fixed Account, additional
Premium Payments, withdrawals and the deduction of any charges.
VALUATION DATE AND VALUATION PERIOD
A Valuation Date is each day on which the New York Stock Exchange ("NYSE") is
open for trading. The net asset value for each Fund Portfolio is determined as
of the close of regular trading on the NYSE. The net investment return for each
Subaccount and all transactions and calculations with respect to the Policies as
of any Valuation Date are determined as of that time. The transaction cut-off
time for receipt by Us of Premium Payments and all transactions with respect to
Rydex is 1:30 p.m. Central time. A Valuation Period is the period between two
successive Valuation Dates, commencing at the close of the NYSE on each
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date.
Transfers Among Portfolios and the Fixed Account
You may make transfers among the Portfolios and/or the Fixed Account 15 times
each Policy Year without charge. A transfer charge of $10 may be imposed for
each additional transfer. This charge will be deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which you are invested.
Each transfer must be at least $250, or the balance of the Portfolio, if less.
You may make unlimited transfers from the Portfolios to the Fixed Account.
During the 30 day period following the Policy anniversary date, you may also
transfer from the Fixed Account to the various Portfolios amounts up to the
greater of: 25% of the Accumulation Value of the Fixed Account; the amount of
any transfer from the Fixed Account during the prior thirteen months; or $1,000.
This provision is not available while dollar cost averaging from the Fixed
Account. The minimum amount that may remain in a Portfolio or the Fixed Account
after a transfer is $100. We will only allow transfers with regard to Rydex
according to administrative rules We have set.
You may initiate transactions by telephone. Ameritas will employ reasonable
procedures to confirm that telephone instructions are genuine. Our procedures
for transactions initiated by telephone include, but are not limited to,
requiring the Owner to provide the Policy number at the time of giving transfer
instructions; tape recording of all telephone transfer instructions; and the
provision, by Ameritas, of written confirmation of telephone transactions.
Ameritas will effect transfers and determine all values in connection with
transfers at the end of the Valuation Period during which the transfer request
is received at the Home Office.
Transfers may be subject to additional limitations by the Funds.
SYSTEMATIC PROGRAMS
Ameritas may offer systematic programs as discussed below. Transfers of
Accumulation Value made within programs will be counted in determining whether
the transfer fee applies. Lower minimum amounts may be allowed to transfer as
part of a systematic program. All other normal transfer restrictions, as
described above, may apply. There is no separate charge for participation in
these programs at this time.
PORTFOLIO REBALANCING. Portfolio rebalancing is a method to maintain your
original allocation proportions among Portfolios. Under this program, the Owner
can instruct Ameritas to reallocate Accumulation Value among the Portfolios, on
a systematic basis, in accordance with allocation instructions specified by the
Owner. The Fixed Account can not be used in this program.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, the Owner can
instruct Ameritas to automatically transfer, on a systematic basis, a
predetermined amount or percentage specified by the Owner from the Fixed Account
or the Liquid Asset Subaccount to any other Subaccount(s). Dollar cost averaging
is permitted from the Fixed Account, if no more than 1/36th of the value of the
Fixed Account at the time dollar cost averaging is established is transferred
each month.
EARNINGS SWEEP. Permits systematic redistribution of earnings among Portfolios.
16 NLVA
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<PAGE> 20
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The Owner can request participation in the available systematic programs when
purchasing the Policy or at a later date. The Owner can change the allocation
percentage or discontinue any program by sending written notice or calling the
Home Office. Other scheduled programs may be made available. Ameritas reserves
the right to modify, suspend or terminate such programs at any time.
Participation in any systematic program will automatically terminate upon death
of the Annuitant. Use of Systematic Programs may not be advantageous, and does
not guarantee success.
WITHDRAWALS AND SURRENDERS
Any time prior to the Annuity Date and while the Annuitant is still living, you
may make withdrawals or surrender the Policy to receive part or all of the
Accumulation Value. No withdrawal or surrender may be made after the Annuity
Date except as permitted under a particular Annuity Income Option.
The amount available for withdrawal is the Accumulation Value at the end of the
Valuation Period during which the written request for withdrawal is received,
less any applicable premium taxes and in the case of a surrender, also less the
annual policy fee that would be due on the last Valuation Date of the Policy
Year.
In the absence of specific direction from the Owner, amounts will be withdrawn
from the Subaccounts and the Fixed Account on a pro rata basis. The minimum
withdrawal amount is $250. Any withdrawal request that would reduce the
Accumulation Value to less than $1,000 will be considered a request for Policy
surrender.
Since the Owner assumes the investment risk with respect to amounts allocated to
Separate Account LLVA, the total amount paid upon withdrawal under the Policy
(taking into account any prior withdrawals) may be more or less than the total
Premium Payments made. The surrender value may be paid in a lump sum to the
Owner, or, if elected, all or any part may be paid out under an Annuity Income
Option. (See the section on "Annuity Income Options".)
Your proceeds will be paid within seven days of receipt of written request for
withdrawal or surrender, on a form approved by Ameritas, subject to postponement
in certain circumstances. (See the section on "Deferment of Payment".) Payments
under the Policy of any amounts derived from a premium paid by check may be
delayed until the check has cleared the payor's bank.
If, at the time you make a withdrawal request, you have not provided Ameritas
with a written election not to have federal income taxes withheld, We must by
law withhold such taxes from the taxable portion of the withdrawal and remit
that amount to the federal government. Moreover, the Internal Revenue Code
provides that a 10% penalty tax may be imposed on certain early withdrawals.
(See the section on "Federal Tax Matters.")
SYSTEMATIC WITHDRAWALS. A systematic withdrawal option is available. Automatic
withdrawals may be taken on a monthly, quarterly, semi-annual or annual mode.
FREE LOOK PRIVILEGE
You have a period of time to examine a Policy and return it for a refund. You
may cancel the Policy within 10 days after receipt of the Policy, unless state
law requires a longer period of time. The refund is equal to the greater of the
premiums paid or the premiums adjusted by investment gains or losses. To cancel
the Policy, the Owner should return it to the selling agent, or to Ameritas at
the Home Office. A refund, if the premium was paid by check, may be delayed
until the check has cleared the Owner's bank.
CHARGES AND DEDUCTIONS
There is no sales load, no withdrawal charge, and no surrender charge.
Charges will be deducted periodically from the Accumulation Value of the Policy
to compensate Ameritas for, among other things: (1) issuing and administering
the Policy; and (2) assuming certain risks in connection with the Policy. The
nature and amount of these charges are described more fully below.
No deductions are made from the Premium Payments before they are allocated to
Separate Account LLVA or the Fixed Account, unless taxes are imposed by state
law upon the receipt of a Premium Payment. In that case Ameritas will deduct the
premium tax due when the premiums are received.
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ADMINISTRATIVE CHARGES
ANNUAL POLICY FEE. An annual policy fee of up to $40.00 (currently $25.00) is
deducted from the Accumulation Value on the last Valuation Date of each Policy
Year or upon a surrender. This charge reimburses Ameritas for the administrative
costs of maintaining the Policy on Ameritas' system and the cost of reporting to
Owners.
Ameritas does not expect to make a profit on the charges for the annual Policy
fee.
TRANSFER CHARGE. Transfer charges may be levied. (See the section on "Transfers
Among Portfolios and the Fixed Account.")
MORTALITY AND EXPENSE RISK CHARGE
Ameritas imposes a charge as compensation for bearing certain mortality and
expense ("M&E") risks under the Policies. The charge is assessed daily and is
equal to an annual rate of .75% of the value of the average daily net assets of
Separate Account LLVA. This charge is subtracted when determining the daily
Accumulation Unit Value. Ameritas guarantees that this charge will never exceed
.95%. If this charge is insufficient to cover assumed risks, the loss will fall
on Ameritas. Conversely, if the charge proves more than sufficient, any excess
will be added to Ameritas' surplus. No M&E charge is imposed on the Fixed
Account.
The mortality risk borne by Ameritas, assuming the selection of one of the forms
of life annuities, is to make monthly Annuity Payments (determined in accordance
with the annuity tables and other provisions contained in the Policies)
regardless of how long all Annuitants may live. This undertaking assures that
neither an Annuitant's own longevity, nor an improvement in life expectancy
greater than expected, will have any adverse affect on the monthly annuity
payments the Annuitant will receive. It therefore relieves the Annuitant from
the risk of outliving the funds accumulated for retirement.
In addition, Ameritas bears a mortality risk under the Policies in two important
aspects. First, regardless of the Annuity Income Option selected, it guarantees
the purchase rates for the Annuity Income Options available under the Policy.
Second, Ameritas guarantees that the death benefit payable upon death of the
Annuitant prior to the Annuity Date will be the greater of the Accumulation
Value or the Premium Payments made, less withdrawals.
The expense risk undertaken by Ameritas, with respect to Separate Account LLVA,
is that the deductions for administrative costs under the Policies may be
insufficient to cover the actual future costs incurred by Ameritas for providing
administration services.
If the annual policy fee is insufficient to cover the administration expenses,
the deficiency will be met from Ameritas' general account funds, including the
amount derived from the charge levied for mortality and expense risks.
TAX CHARGES
The Owner will pay premium taxes that currently range from 0% to 3.5% of the
premium paid, where such taxes are imposed by the state law of the Owner's
residence. States impose premium taxes either upon receipt, by the company, of a
premium payment, or upon annuitization or withdrawals. Ameritas will charge and
deduct premium taxes as required by state law and in accordance with any
applicable company election. Applicable premium tax rates are subject to change.
The Owner will be notified of any applicable premium taxes. You are responsible
for informing Ameritas in writing of changes of residence.
Under present laws, Ameritas will incur state or local taxes (in addition to the
premium taxes described above) in several states. At present, these taxes are
not significant; thus, Ameritas does not currently make a charge for these other
taxes. If they increase, however, Ameritas may charge for such taxes. Such
charges would be deducted from the Accumulation Value.
Ameritas does not expect to incur any federal income tax liability attributable
to investment income or capital gains retained as part of the reserves under the
Policies. Based upon these expectations, no charge is being made currently to
Separate Account LLVA for corporate federal income taxes which may be
attributable to Separate Account LLVA. Ameritas will periodically review the
question of a charge to Separate Account
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LLVA for corporate federal income taxes related to Separate Account LLVA. Such a
charge may be made in future years for any federal income taxes incurred by
Ameritas. This might become necessary if the tax treatment of Ameritas is
ultimately determined to be other than what we currently believe it to be, if
there are changes made in the federal income tax treatment of annuities at the
corporate level, or if there is a change in Ameritas' tax status. In the event
that Ameritas should incur federal income taxes attributable to investment
income or capital gains retained as part of the reserves under the Policy, the
Accumulation Unit Price would be correspondingly adjusted. (See the section on
Federal Tax Matters.)
FUND INVESTMENT ADVISORY FEES AND EXPENSES
The value of the assets in Separate Account LLVA will reflect investment
advisory fees and other expenses incurred by the Funds. Fund expenses are found
in the Funds' prospectuses, and Statements of Additional Information, and the
Fee Table of this prospectus.
ANNUITY PERIOD
ANNUITY DATE
The Annuity Date is the date that Annuity Payments are scheduled to begin,
unless the Policy has been surrendered or the Annuitant is deceased and an
amount has been paid as proceeds prior to that date. The Annuity Date will be
the later of the fifth Policy anniversary date or the Policy anniversary which
is nearest the Annuitant's 85th birthday.
However, the Owner may specify an Annuity Date at the time of purchase which may
be extended up to the Policy anniversary nearest the Annuitant's 95th birthday.
The 29th, 30th, or 31st day of any month may not be selected as the Annuity
Date.
An Annuity Date may only be changed by written request during the Annuitant's
lifetime. Written request to change the Annuity Date must be received at the
Ameritas Home Office at least 30 days before the currently scheduled Annuity
Date. The Annuity Date and Annuity Income Options available for Qualified
contracts may also be controlled by endorsements, the plan, or applicable law.
ANNUITY INCOME OPTIONS
If the Annuitant is living on the Annuity Date and the Policy is in force,
Annuity Payments will be made to the Annuitant according to the terms of the
Policy and the Annuity Income Option selected.
The amounts of any Annuity Payments payable will be based on the Accumulation
Value as of the Annuity Date less any premium taxes, if applicable. Thereafter,
the monthly Annuity Payment will not change, except in the event the Interest
Payment Option is elected, in which case the payment will vary based on the rate
of interest determined by Ameritas. All or part of the Accumulation Value may be
placed under one or more Annuity Income Options. If Annuity Payments are to be
paid under more than one option, Ameritas must be told what part of the
Accumulation Value is to be paid under each option.
The Annuity Income Options are shown below. Election of an Annuity Income Option
must be made by written request to Ameritas at least thirty (30) days in advance
of the Annuity Date. If no election is made, payments will be made as a Life
Annuity as shown below. Subject to Ameritas' approval, the Owner (or after the
Annuitant's death, the Annuitant's Beneficiary) may select any other Annuity
Income Option Ameritas then offers. Annuity Income Options are not available to:
(1) an assignee; or (2) any other than a natural person except with Ameritas'
consent.
If an Annuity Income Option selected does not generate monthly payments of at
least $100, Ameritas reserves the right to pay the Accumulation Value as a lump
sum payment or to change the frequency. If an Annuity Income Option is chosen
which depends on the continuation of life of the Annuitant, proof of birth date
may be required before Annuity Payments begin. For Annuity Income Options
involving life income, the actual age of the Annuitant or joint Annuitant will
affect the amount of each payment. Since payments to older Annuitants are
expected to be fewer in number, the amount of each Annuity Payment may be
greater. For
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Annuity Income Options that do not involve life income, the length of the
payment period may affect the amount of each payment: the shorter the period,
the greater the amount of each Annuity Payment.
The following Annuity Income Options are currently available:
INTEREST PAYMENT. Ameritas will hold any amount applied under this option and
pay or credit interest on the unpaid balance each month at a rate determined by
Ameritas.
DESIGNATED AMOUNT ANNUITY. Monthly Annuity Payments will be for a fixed amount.
Payments continue until the amount Ameritas holds runs out.
DESIGNATED PERIOD ANNUITY. Monthly Annuity Payments are paid for a period
certain, as the Owner elects, up to 20 years.
LIFE ANNUITY. Monthly Annuity Payments are paid for the life of an Annuitant,
ceasing with the last Annuity Payment due prior to his or her death. Variations
provide for guaranteed payments for a period of time.
JOINT AND LAST SURVIVOR ANNUITY. Monthly Annuity Payments are paid based on the
lives of the two Annuitants and thereafter on the life of the survivor, ceasing
with the last Annuity Payment due prior to the survivor's death.
The rate of interest payable under the Interest Payment, Designated Amount
Annuity or Designated Period Annuity options will be guaranteed to be no less
than 3% compounded yearly. Payments under the Life Annuity and Joint and Last
Survivor Annuity options will be based on the 1983 Table "a" Individual Annuity
Table, projected for seventeen years, at 3 1/2% interest. Ameritas may, at any
time of election of an Annuity Income Option, offer more favorable rates in lieu
of the guaranteed rates specified in the Annuity Tables. These rates may be
based on Annuity Tables which distinguish between males and females.
Under current administrative practice, Ameritas allows the beneficiary to
transfer amounts applied under the Interest Payment, Designated Amount Annuity,
and Designated Period Annuity options to either the Life Annuity or Joint and
Last Survivor Annuity option after the Annuity Date. However, there is no
guarantee that Ameritas will continue this practice which can be changed at any
time at Ameritas' discretion.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion is general in nature and is not intended as tax advice.
It is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under a contract. If you are concerned about any of the tax implications
discussed, you should consult a competent tax adviser before purchasing a
Policy. This discussion is based upon Ameritas' understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws, other than premium
taxes. (See the section on Tax Charges.)
TAXATION OF ANNUITIES IN GENERAL
NONQUALIFIED POLICIES. The following discussion assumes that the Policy will
qualify as an annuity policy for federal income tax purposes. The Statement of
Additional Information discusses such qualifications.
Section 72 of the Internal Revenue Code (the Code) governs taxation of
annuities. In general, the owner is not taxed on increases in the value of a
policy until some form of distribution is made under the policy. The exception
to this rule is the treatment afforded to owners that are not natural persons.
Generally, an owner that is not a natural person must include in income any
increase in excess of the owner's cash value over the owner's "investment in the
policy" during the taxable year, even if no distribution occurs. There are,
however, exceptions to this rule which you may wish to discuss with your tax
counsel. The following discussion applies to Policies owned by natural persons.
The taxable portion of a distribution (in the form of an annuity or lump sum
payment) is taxed as ordinary income, subject to any income averaging rules
applicable to taxpayers generally. For this purpose, the
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assignment, pledge, or agreement to assign or pledge any portion of the
accumulation value generally will be treated as a distribution. A transfer of
ownership of the policy without full and adequate consideration will also be
treated as a distribution under the Internal Revenue Code, unless the transfer
falls within an exception for transfers between spouses. Generally, in the case
of a withdrawal under a nonqualified policy, amounts received which are
allocable to "investment in the policy" made after August 13, 1982 are first
treated as taxable income to the extent that the accumulation value immediately
before the withdrawal exceeds the "investment in the policy" at that time. Any
additional amount is not taxable. If a withdrawal is allocable to "investment in
the policy" made prior to August 14, 1982, it is taxed under the "cost recovery
rule" so that withdrawals are treated as a recovery of "investment in the
policy" until such investment has been fully recovered. Thereafter, withdrawals
are fully taxable as ordinary income. Where a policy contains "investment in the
policy" both before and after the above referenced dates, special ordering rules
apply.
Although the tax consequences may vary depending on the annuity income option
elected under the policy, in general, only the portion of an annuity payment
that represents the amount of the Payment which exceeds the payment's
proportionate share of "investment in the policy" will be taxed. For fixed
annuity payments, in general, there is no tax on the amount of each payment
which represents the same ratio that the "investment in the policy" bears to the
total expected value of the annuity payment for the term of the payment;
however, the remainder of each annuity payment is taxable. Any distribution
received subsequent to the investment in the policy being recovered will be
fully taxable.
In the case of a distribution from a nonqualified policy a federal penalty tax
may be imposed equal to 10% of the amount treated as taxable income. In general,
however, there is no penalty tax on distributions: (1) made on or after the date
on which the owner is actual age 59 1/2, (2) made on or after the death of the
owner, (3) attributable to the taxpayer's becoming disabled within the meaning
of Internal Revenue Code Section 72 (m)(7), (4) received in substantially equal
payments (not less frequently than annually) made for the life or life
expectancy of the taxpayer or the joint lives (or joint life expectancies) of
the taxpayer and his or her designated beneficiary, subject to Internal Revenue
Service requirements, including special "recapture" rules, or (5) which are
allocable to "investment in the policy" made prior to August 14, 1982.
QUALIFIED POLICIES. Qualified policies are used by individuals in connection
with retirement plans which are intended to qualify as plans that receive
special income tax treatment under Sections 401, 403(a), 408 or 457 of the
Internal Revenue Code (the "Code"). The ultimate effect of federal income taxes
on the contributions, on the accumulation value, on annuity payments and on the
economic benefit to the owner, the annuitant or the beneficiary depends on the
type of retirement plan, on the tax and employment status of the individual
concerned and on Ameritas' tax status. In addition, certain requirements must be
satisfied in purchasing a Qualified Policy in connection with a tax qualified
plan in order to receive favorable tax treatment. With respect to qualified
policies an endorsement of the policy and/or limitations or penalties imposed by
the Code may impose limits on premiums, withdrawals, distributions or benefits,
or on other provisions of the policies. Therefore, purchasers of qualified
policies should seek competent legal and tax advice regarding the suitability of
the Policy for their situation, the applicable requirements and the tax
treatment of the rights and benefits of a Policy. Section 403(b)(11) of the Code
requires that no distribution attributable to salary deferred contributions may
be made from a plan under Section 403(b) except after age 59 1/2, separation
from service, death or disability, or in the case of hardship, except in a tax
free exchange to another qualified contract. The following discussion assumes
that qualified policies are purchased in connection with retirement plans that
qualify for the special federal income tax treatment described above.
The rules governing the tax treatment of distributions under qualified plans
vary according to the type of plan and the terms and conditions of the plan
itself. Generally, in the case of a distribution to a participant or beneficiary
under a policy purchased in connection with these plans, only the portion of the
payment in excess of the "investment in the policy" allocated to that payment is
subject to tax. The "investment in the policy" equals the portion of plan
contributions invested in the policy that was not excluded from the
participant's gross income (reduced by any amounts previously received under the
policy which were excluded from gross income), and may be zero. In general, for
allowed withdrawals prior to the annuity starting date from qualified policies
other than Roth IRAs, a ratable portion of the amount received is taxable, based
on the ratio of the "investment in the policy" to the total Policy value. The
amount excluded from a taxpayer's income will be limited to an aggregate cap
equal to the "investment in the policy." The taxable portion of annuity payments
with annuity starting dates on or before November 18, 1996 is generally
determined under rules similar to
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those applicable to annuity distributions from nonqualified policies. However,
for annuity payments with annuity starting dates after November 18, 1996,
annuitants must use a simplified method for determining the tax-free portion of
annuity payments by dividing "investments in the policy" by the number of
annuity payments set by tables in the Internal Revenue Code based on the age of
the primary annuitant. This method does not apply if the annuitant is over age
75 and there are 5 or more years of guaranteed payments. Also, for annuity
payments based on the lives of more than one individual and that have annuity
starting dates after December 31, 1997, annuitants must use the simplified
method based on the combined ages of both individuals when calculating the
excludable portion of annuities based on the separate tables set forth in the
Code for that purpose. In the case of an annuity that does not depend in whole
or in part on the life expectancy of one or more individuals, the expected
number of payments is the number of monthly annuity payments under the policy.
Special favorable tax treatment may be available for certain distributions
(including lump sum distributions from plans other than IRAs made in tax years
beginning before January 1, 2000). Adverse tax consequences may result from
excess contributions, distributions made prior to age 59 1/2 (subject to certain
exceptions), distributions that do not conform to specified commencement and
minimum distribution rules, and in certain other circumstances.
Roth IRA contributions are not deductible and may be limited or unavailable
depending on your adjusted gross income. Withdrawals of earnings from Roth IRAs
may be tax free if certain requirements are met. If withdrawals do not meet
those requirements, they will be considered to be made first from contributions
then from "conversion" amounts (on a first-in, first-out basis) and then from
earnings. The earnings will be subject to income tax and an additional 10%
penalty tax may apply to distributions made prior to age 59 1/2. Conversions
from existing IRAs to Roth IRAs are permitted if certain requirements are met,
however, converted amounts not previously taxed will be subject to income tax in
the year of conversion (for 1998 only, taxpayers can elect to include the full
taxable conversion amount in income for 1998 or to have the tax spread over 4
years on a pro rata basis, beginning in 1998). Conversion amounts will not
generally be subject to the 10% penalty tax that applies to premature
distributions, unless a distribution of the conversion amount from the Roth IRA
occurs within the 5 taxable year period beginning with the year of conversion.
Also, income inclusion may be accelerated if a distribution is made of 1998
conversion amounts which are subject to the 4 year spread rule.
Distributions from qualified plans are subject to specific tax withholding
rules. "Eligible rollover distributions" from a qualified plan (other than IRAs
of any type and Section 457 plans) are subject to income tax withholding at a
rate of 20% unless the Owner elects to have the distribution paid directly by
Ameritas to an eligible retirement plan (another plan of the same type or a
rollover IRA) in a direct rollover. If the distribution is not an "eligible
rollover distribution," it is generally subject to the same withholding rules as
distributions from nonqualified policies. However, Section 457 nonqualified
deferred compensation plan distributions are generally subject to withholding as
wages and are not eligible for rollover to an IRA.
GENERAL PROVISIONS
ANNUITANT'S BENEFICIARY
The Annuitant's Beneficiary(ies) receives the death benefit proceeds upon death
of the Annuitant. The Owner may name both primary and contingent Annuitant's
Beneficiaries. The Annuitant's Beneficiary(ies) is named in the application or
as later changed and recorded in Ameritas' records.
Multiple beneficiaries may be named; however, unless otherwise indicated,
payments are made equally to those primary beneficiaries who are alive upon the
death of the Annuitant. Contingent beneficiaries are only eligible if no primary
beneficiary is alive at the time proceeds are payable. If none survive, the
final beneficiary will be the Owner or the Owner's estate.
The Owner may change the Annuitant's Beneficiary by written request on a Change
of Beneficiary form at any time during the Annuitant's lifetime unless otherwise
provided in the previous designation of Beneficiary. Ameritas, at its option,
may require that the Policy be returned to the Home Office for endorsement of
any change, or that other forms be completed. The change will take effect as of
the date the change is recorded at the Home Office. Ameritas will not be liable
for any payment made or action taken before the change is recorded. No limit is
placed on the number of changes that may be made.
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DEATH OF ANNUITANT
If the Annuitant dies prior to the Annuity Date, an amount will be paid as
proceeds to the Annuitant's Beneficiary. The death benefit is payable upon
receipt of Satisfactory Proof of Death of the Annuitant as well as proof that
the Annuitant died prior to the Annuity Date. Ameritas guarantees the Death
Benefit will equal the greater of the Accumulation Value or total premiums paid
less withdrawals, on the date Satisfactory Proof of Death is received by
Ameritas at its Home Office. The death benefit is payable as a lump sum or under
one of the Annuity Income Options.
The Owner may elect an Annuity Income Option for the Annuitant's Beneficiary, or
if no such election was made by the Owner and a cash benefit has not been paid,
the Annuitant's Beneficiary may make this election after the Annuitant's Death.
Since Satisfactory Proof of Death includes a "Claimant's Statement", which
specifies how the beneficiary wishes to receive the benefit (unless the Owner
previously selected an Annuity Income Option), the amount of the death benefit
will continue to reflect the investment performance of Separate Account LLVA
until that information is supplied to Ameritas. The death benefit will be paid
to the Annuitant's Beneficiary within seven days of when it become payable, or
as soon thereafter as Ameritas has sufficient information about the Annuitant's
Beneficiary to make the payment. In order to take advantage of the favorable tax
treatment accorded to receiving the death benefit as an annuity, the Annuitant's
Beneficiary must elect to receive the benefits under an Annuity Income Option
within 60 days "after the day on which such lump sum became payable," as defined
in the Internal Revenue Code.
DEATH OF OWNER
If the Owner dies on or after the Annuity Date, annuity benefits continue to be
paid to the Annuitant under the Annuity Income Option in effect on the Owner's
date of death.
If the Owner dies before the Annuity Date and before the entire interest in the
Policy is distributed, the Accumulation Value of the Policy must be distributed
to the Owner's Designated Beneficiary so that the Policy qualifies as an annuity
under the Internal Revenue Code. The entire interest must be distributed within
five years of the Owner's death. However, a distribution period exceeding five
years will be allowed if the Owner's Designated Beneficiary purchases an
immediate annuity under which payments will begin within one year of the Owner's
death and will be paid out over the lifetime of the Owner's Designated
Beneficiary or over a period not extending beyond his or her life expectancy.
If the Owner's interest is payable to (or for the benefit of) the surviving
spouse of the Owner, the Policy may be continued with the surviving spouse
treated as the Owner for purposes of applying the rules described above.
Finally, in situations where the Owner is not an individual, these distribution
rules are applicable upon the death or change of the Annuitant.
DEFERMENT OF PAYMENT
Payment of any withdrawal, surrender or lump sum death benefit due from Separate
Account LLVA will occur within seven days from the date the amount becomes
payable, except that Ameritas may be permitted to defer such payment if:
a) the New York Stock Exchange is closed other than customary weekends or
holidays or trading on the New York Stock Exchange is otherwise restricted;
or
b) the SEC permits the delay for the protection of Owners; or
c) an emergency exists as determined by the SEC.
In addition, surrenders or withdrawals from the Fixed Account may be deferred by
Ameritas for up to 6 months from the date of written request.
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CONTESTABILITY
Ameritas cannot contest the validity of this Policy after the Policy Date,
subject to the "Misstatement of Age or Sex" provision.
MISSTATEMENT OF AGE OR SEX
Ameritas may require proof of age and sex before making Annuity Payments. If the
age or sex of the Annuitant has been misstated, we will adjust the benefits and
amounts payable under this Policy.
If Ameritas made any overpayments, interest at the rate of 6% per year
compounded yearly will be charged against future payments. If we made
underpayments, the balance due plus interest at the rate of 6% per year
compounded yearly will be paid in a lump sum.
REPORTS AND RECORDS
Ameritas will maintain all records relating to Separate Account LLVA and will
mail the Owner, at the last known address of record, within 30 days after each
Policy anniversary, an annual report which shows the current Accumulation Value
as allocated among the Subaccounts or the Fixed Account, and charges made during
the Policy Year. Quarterly reports are also currently provided but except for
the annual report, Ameritas reserves the right to charge a report fee for each
requested report. The Owner will also be sent confirmations of transactions,
such as Premium Payments, transfers and withdrawals under the Policy. Quarterly
statements are also mailed detailing Policy activity during the calendar
quarter. Instead of receiving an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program, or payment made by automatic bank draft or salary reduction
arrangement), the Owner may receive confirmation of such transactions in their
quarterly statements. The Owner should review the information in these
statements carefully. All errors or corrections must be reported to Ameritas
immediately to assure proper crediting to the Policy. Ameritas will assume all
transactions are accurately reported on quarterly statements unless Ameritas is
otherwise notified within 30 days after receipt of the statement. A periodic
report for the Fund and a list of the securities held in each Portfolio of the
Fund and any other information required by the 1940 Act will also be provided.
DISTRIBUTION OF THE POLICIES
AMERITAS INVESTMENT CORP. ("AIC"), located at 5900 "O" Street, Lincoln, Nebraska
68510, will act as the principal underwriter of the Policies, pursuant to an
Underwriting Agreement it has with Ameritas. AIC is a wholly owned subsidiary of
AMAL Corporation, and an affiliate of Ameritas. AIC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. There is no premium load to
cover sales and distribution expenses. All compensation or expense reimbursement
received by AIC for serving as the principal underwriter of the Policies will be
paid by Ameritas from its other assets or surplus in its general account, which
may include profits derived from amounts derived from mortality and expense risk
charges and other charges made under the Policies. Policies can be purchased
directly from Ameritas through its direct consumer services, with salaried
employees who are registered representatives of AIC and who will not receive
compensation related to the purchase. The Policies are also sold by individuals
who are registered representatives of AIC, or other registered broker-dealers.
In these situations, AIC or the other broker-dealers may receive compensation.
AIC will be paid by Ameritas at a rate of .05% of all premium received. Other
broker-dealers will receive from Ameritas up to .5% of premium, and an asset
based administrative compensation of .10% (annualized), which fee shall be paid
by Ameritas.
The gross variable annuity compensation received by AIC on Ameritas' variable
annuity policies was $10,129 for 1998, $4,677 for 1997, and $0 for 1996.
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SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
Ameritas holds the assets of Separate Account LLVA. The assets are held separate
and apart from general account assets. Ameritas maintains records of all
purchases and redemptions of the Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
Ameritas is aware that certain third parties are offering money management
services in connection with the contracts. Ameritas does not engage any such
third parties to offer such services of any type. In certain cases, Ameritas has
agreed to honor transfer instructions from such services where it has received
powers of attorney, in a form acceptable to it, from the contract Owners
participating in the service. Firms or persons offering such services do so
independently from any agency relationship they may have with Ameritas for the
sale of contracts. Ameritas takes no responsibility for the investment
allocations and transfers transacted on a contract Owner's behalf by such third
parties or any investment allocation recommendations made by such parties.
Contract Owners should be aware that fees paid for such services are separate
and in addition to fees paid under the contracts.
VOTING RIGHTS
To the extent required by law, Ameritas will vote the Portfolio shares held in
Separate Account LLVA at shareholder meetings of the Funds in accordance with
instructions received from persons having voting interests in the corresponding
Subaccount. The 1940 Act currently requires shareholder voting on matters such
as the election of the Board of Trustees of the Funds, the approval of the
investment advisory contract, changes in the fundamental investment policies of
the Funds, and approval of the independent accountants. If, however, the 1940
Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, and, as a result, Ameritas determines that
it is allowed to vote the Portfolio shares in its own right, Ameritas may elect
to do so.
Prior to the Annuity Date, the Owner holds a voting interest in each Subaccount
to which the Accumulation Value is allocated. The number of votes available to
an Owner will be calculated separately for each Subaccount of Separate Account
LLVA. The number of votes available to an Owner will be determined by dividing
the Accumulation Value attributable to a Subaccount by the net asset value per
share of the applicable Portfolio. In determining the number of votes,
fractional shares will be recognized.
The number of votes will be determined as of the record date established by the
Portfolio. Voting instructions will be solicited by written communication prior
to the shareholder meeting in accordance with procedures established by the
Funds.
Shares of Funds as to which no timely instructions are received, or shares held
by Ameritas as to which Owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Policies participating in that Subaccount.
Each person having a voting interest in a Subaccount will receive proxy
material, reports and other materials relating to the appropriate Portfolio.
On and after the Annuity Date, there are no voting rights because amounts are no
longer held in Separate Account LLVA.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account LLVA is a party or to
which the assets of Separate Account LLVA are subject. Ameritas is not involved
in any litigation that is of material importance in relation to its ability to
meet its obligations under the Policies, or that relates to Separate Account
LLVA. AIC is not involved in any litigation that is of material importance in
relation to its ability to perform under its underwriting agreement.
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NLVA 25
<PAGE> 29
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STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available that contains more details
concerning the subjects discussed in this Prospectus. This can be obtained by
writing to the address on the front page or by calling 1-800-255-9678.
The following is a Table of Contents for that Statement:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY............................. 2
THE POLICY.................................................. 2
GENERAL MATTERS............................................. 6
FEDERAL TAX MATTERS......................................... 7
DISTRIBUTION OF THE POLICY.................................. 9
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS...................... 9
STATE REGULATION............................................ 9
LEGAL MATTERS............................................... 9
OTHER INFORMATION........................................... 9
FINANCIAL STATEMENTS........................................ 10
</TABLE>
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26 NLVA
<PAGE> 30
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APPENDIX A
QUALIFIED DISCLOSURES
* Information Statement For:
408(b) IRA Plans
408(k) SEP IRA Plans
408(p) SIMPLE IRA Plans
408A Roth IRA Plans
* Information Statement For:
401(a) Pension/Profit Sharing Plans
[LOGO]
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<PAGE> 31
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If this annuity is being purchased as a qualified plan as defined under
specified sections of the Internal Revenue Code, as purchaser (owner) or
fiduciary of an Employee Benefit Plan purchasing the annuity, you should
carefully review the Information Statement for your specific plan.
Depending on the type of plan, we are required to provide this disclosure to you
to meet the requirements of the Internal Revenue Service (IRS) and/or the
Employee Retirement Income Security Act of 1974 (ERISA).
Acknowledgment of your receipt of the required disclosure is included within the
application language above your signature.
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<PAGE> 32
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Information Statement
408(b) Individual Retirement Annuity (IRA) Plans
408(k) Simplified Employee Pension (SEP IRA) Plans
408(p) Savings Incentive Match (SIMPLE IRA) Plans
408A Roth IRA.......................................... QD-1
Information Statement
401(a) Pension/Profit Sharing Plans.................... QD-16
</TABLE>
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INFORMATION STATEMENT
408(B) INDIVIDUAL RETIREMENT ANNUITY (IRA) PLANS
408(K) SIMPLIFIED EMPLOYEE PENSION (SEP IRA)
[AMERITAS LOGO] PLANS
408(P) SAVINGS INCENTIVE MATCH (SIMPLE IRA) PLANS
408A ROTH IRA
For purchasers of a 408(b) Individual Retirement Annuity (IRA) Plan, 408(k)
Simplified Employee Pension (SEP IRA) Plan, 408(p) Savings Incentive Match
(SIMPLE IRA) Plan or 408A Roth IRA, please review the following:
PART 1. PROCEDURE FOR REVOKING THE IRA PLAN:
After you establish an IRA Plan with Ameritas Life Insurance Corp. (Ameritas),
you are able to revoke your IRA within a limited time and receive a full refund
of the initial premium paid, if any. The period for revocation will not be less
than the legal minimum of seven (7) days following the date your IRA is
established with Ameritas.
To revoke your IRA, you should send a signed and dated written notice to:
Ameritas Life Insurance Corp., Policyholder Service Department, P.O. Box 81889,
Lincoln, NE 68501.
If your IRA contract was delivered to you, the contract should accompany your
notice of revocation. Your notice of revocation will be considered mailed on the
date of the postmark (or certification or registration, if applicable), if sent
by United States mail, properly addressed and by first class postage prepaid.
To obtain further information about the revocation procedure, contact your
Ameritas Representative or call 1-800-745-6665.
PART II. PROVISIONS OF THE IRA LAW:
Ameritas' NO LOAD VARIABLE ANNUITY (Form 4080), can be used for a Regular IRA, a
Rollover IRA, a Spousal IRA Arrangement, a Simplified Employee Pension Plan (SEP
IRA), or a salary reduction Simplified Employee Pension Plan (SARSEP) or a
SIMPLE IRA. A separate policy must be purchased for each individual under each
plan. In addition, Ameritas' NO LOAD VARIABLE ANNUITY is also available for use
as a ROTH IRA. State income tax treatment of IRAs varies, so this disclosure
only discusses the federal tax treatment of IRAs. Please discuss state income
tax treatment of an IRA with your tax advisor.
While provisions of the IRA law are similar for all such plans, the major
differences are set forth under the appropriate topics below.
A. ELIGIBILITY:
REGULAR IRA PLAN: Any individual under age 70 1/2 and earning income from
personal services, is eligible to establish an IRA Plan, although
deductibility of the contributions is determined by adjusted gross income
("AGI") and whether the individual(or the individual's spouse) is an "active
participant" in an employer sponsored retirement plan.
ROLLOVER IRA: This is an IRA plan purchased with your distributions from
another IRA (including a SEP IRA, SARSEP or SIMPLE IRA), a Section 401(a)
Qualified Retirement Plan, or a Section 403(b) Tax Sheltered Annuity (TSA).
Amounts transferred as Rollover Contributions are not taxable in the year of
distribution (provided the rules for Rollover treatment are satisfied) and
may or may not be subject to withholding. Rollover Contributions are not
deductible.
SPOUSAL IRA ARRANGEMENT: A Spousal IRA, consisting of a separate contract for
each spouse, may be set up provided a joint return is filed, the "nonworking
spouse" has less taxable compensation, if any, for the tax year than the
working spouse, and is under age 70 1/2 at the end of the tax year.
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IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99 QD- 1
<PAGE> 34
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Divorced spouses can continue a spousal IRA or start a Regular IRA based on
the standard IRA eligibility rules. All taxable alimony received by the
divorced spouse under a decree of divorce or separate maintenance is treated
as compensation for purposes of the IRA deduction limit.
ROTH IRAS: A Roth IRA must be designated as such when it is established.
Eligibility to contribute to a Roth IRA (Regular, Spousal or Conversion) is
subject to income and other limits. Unlike Regular IRAs, if eligible, you may
contribute to a Roth IRA even AFTER AGE 70 1/2.
1. A REGULAR ROTH IRA is a Roth IRA established to receive annual
contributions and/or qualified rollover contributions from other Roth IRAs
or from other IRAs if permitted by the policy and endorsement.
2. A CONVERSION ROTH IRA IS a Roth IRA established to receive rollovers or
conversions from non-Roth IRAs and is limited to such contributions.
Roth IRAs are available beginning in 1998. Unlike Regular IRAs,
contributions to a Roth IRA are not deductible for tax purposes. However,
any gain accumulated in a Roth IRA may be nontaxable, depending upon how
and when withdrawals are made.
3. SPOUSAL ROTH IRA ARRANGEMENT: Beginning in 1998, a Spousal Roth IRA may be
set up for a "non-working" spouse who has less taxable compensation, if
any, for the tax year than the "working" spouse, regardless of age,
provided the spouses file a joint tax return and subject to the adjusted
gross income ("AGI") limits described in PART II, MAXIMUM CONTRIBUTIONS --
SPOUSAL ROTH IRA ARRANGEMENT. Divorced spouses can continue a Spousal Roth
IRA or start a Regular Roth IRA based on standard Roth IRA eligibility
rules. Taxable alimony received by the divorced spouse under a decree of
divorce or separate maintenance is treated as compensation for purposes of
Roth IRA eligibility limits.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP IRA): An employee is eligible to
participate in a SEP IRA Plan based on eligibility requirements set forth
in form 5305-SEP or other plan document provided by the employer.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN (SARSEP): An employee is
eligible to participate in a SARSEP plan based on eligibility requirements
set forth in form 5305A-SEP or the plan document provided by the employer.
New SARSEP plans may not be established after December 31, 1996. SARSEPs
established prior to January 1, 1997, may continue to receive
contributions after 1996, and new employees hired after 1996 are also
permitted to participate in such plans.
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE
IRA): An employee is eligible to participate in a SIMPLE IRA Plan based on
eligibility requirements set forth in Form 5304-SIMPLE or other plan
document provided by the employer. A SIMPLE IRA must be established as
such, thus some policies may not be available for use with a SIMPLE IRA
Plan.
B. NONTRANSFERABILITY: You may not transfer, assign or sell your IRA Plan
(including a SIMPLE IRA, SEP IRA, SARSEP or Roth IRA) to anyone (except in
the case of transfer incident to divorce).
C. NONFORFEITABILITY: The value of your IRA Plan (all types included) belongs to
you at all times, without risk of forfeiture.
D. PREMIUM: The annual premium (if applicable) of your IRA Plan or Roth IRA may
not exceed the lesser of $2,000, or 100% of compensation for the year (or for
Spousal IRAs, or Spousal Roth IRAs, the combined compensation of the spouses
reduced by any Roth IRA or deductible IRA contribution made by the "working"
spouse). Any premium in excess of or in addition to $2,000 will be permitted
only as a "Rollover Contribution" (or "Conversion" contribution to a Roth
IRA). Your contribution must be made in cash. For IRAs established under SEP
Plans (SEP IRAs), premiums are limited to the lesser of $30,000 or 15% of the
first $150,000 of compensation (adjusted for cost of living increases). In
addition, if the IRA is under a SARSEP Plan established prior to January 1,
1997, annual premiums made by salary reduction are limited to $7,000
(adjusted for cost of living increases). Premiums under a SIMPLE IRA are
limited to permissible levels of annual employee elective contributions (up
to $6,000 adjusted for cost of living increases) plus the applicable
percentage of employer matching contributions (up to 3% of
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QD- 2 IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99
<PAGE> 35
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compensation but not in excess of $6,000, as adjusted) or of employer
non-elective contributions (2% of compensation (subject to the cap under Code
Section 401(a)(17) as indexed) for each eligible employee).
E. MAXIMUM CONTRIBUTIONS:
REGULAR IRA PLAN: In any year that your annuity is maintained under the rules
for a Regular IRA Plan, your maximum contribution is limited to 100% of your
compensation or $2,000, whichever is less. Further, this is the maximum
amount you may contribute to all IRAs in a year (including Roth IRAs, but not
to Education IRAs or employer contributions or salary deferrals to SEP or
SIMPLE IRAs). The amount of permissible contributions to your Regular IRA may
or may not be deductible. Whether IRA contributions (other than Rollovers)
are deductible depends on whether you (or your spouse, if married) are an
active participant in an employer-sponsored retirement plan and whether your
adjusted gross income ("AGI") is above the "phase-out level." Beginning for
tax years after 1997, you will only be deemed to be an active participant and
your deductions for contributions subject to phase-out because of your
spouse's participation in an employer- sponsored retirement plan, if your
combined adjusted gross income exceeds $150,000. SEE PART III. C., DEDUCTIBLE
IRA CONTRIBUTIONS.
ROLLOVER IRA: A Plan to Plan Rollover is a method for accomplishing continued
tax deferral on otherwise taxable distributions from certain plans. Rollover
contributions are not subject to the contribution limits on Regular IRA
contributions, but also are not tax deductible.
There are two ways to make a rollover to an IRA:
(1) PARTICIPANT ROLLOVERS are available to participants, surviving spouses or
former spouses who receive eligible rollover distributions from 401(a)
Qualified Retirement Plans, TSAs or IRAs (including SEPs, SARSEPs, and
SIMPLE IRAs). Participant Rollovers are accomplished by contributing part
or all of the eligible amounts (which includes amounts withheld for
federal income tax purposes) to your new IRA within 60 days following
receipt of the distribution. IRA to IRA Rollovers are limited to one per
distributing plan per 12 month period, while direct IRA to IRA transfers
(where you do not directly receive a distribution) are not subject to
this limitation. Distributions from a SIMPLE IRA may not be rolled over
or transferred to an IRA (which isn't a SIMPLE IRA) during the 2 year
period following the date you first participate in any SIMPLE Plan
maintained by your employer.
(2) DIRECT ROLLOVERS are available to participants, surviving spouses and
former spouses who receive eligible rollover distributions from 401(a)
Qualified Retirement Plans or TSAs. Direct Rollovers are made by
instructing the plan trustee, custodian or issuer to pay the eligible
portion of your distribution directly to the trustee, custodian or issuer
of the receiving IRA. Direct Rollover amounts are not subject to
mandatory federal income tax withholding.
FOR RULES APPLICABLE TO ROLLOVERS OR TRANSFERS TO ROTH IRAS, SEE THE
PARAGRAPHS ON REGULAR AND CONVERSION ROTH IRAS, BELOW.
Certain distributions are not considered to be eligible for Rollover and
include: (1) distributions which are part of a series of substantially equal
periodic payments (made at least annually) for 10 years or more; (2)
distributions attributable to after-tax employee contributions to a 401(a)
Qualified Retirement Plan or TSA; (3) required minimum distributions made
during or after the year you reach age 70 1/2 or, if later and applicable,
the year in which you retire; and (4) amounts in excess of the cash (except
for certain loan offset amounts) or in excess of the proceeds from the sale
of property distributed. Also, under the Internal Revenue Service
Restructuring and Reform Act of 1998 (IRSRRA'98), hardship distributions made
from 401(k) or 403(b) plans on or after January 1, 1999, are no longer
considered eligible rollover distributions. However, the Internal Revenue
Service has announced transition relief from this rule for 1999. Under this
relief, if a distribution made during 1999 would have been considered an
eligible rollover distribution immediately before that Code definition was
amended by IRSRRA '98, the distribution may be rolled over to an eligible
retirement plan. In other words, hardship distributions from a 401(k) or
403(b) plan may still be eligible for rollover in 1999.
At the time of a Rollover, you must irrevocably designate in writing that the
transfer is to be treated as a Rollover Contribution. Eligible amounts which
are not rolled over are normally taxed as ordinary income
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IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99 QD- 3
<PAGE> 36
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in the year of distribution. If a Rollover Contribution is made to an IRA
from a Qualified Retirement Plan, you may later be able to roll the value of
the IRA into a new employer's plan PROVIDED YOU MAKE NO CONTRIBUTIONS TO THE
IRA OTHER THAN FROM THE FIRST EMPLOYER'S PLAN. THIS IS KNOWN AS "CONDUIT
IRA," AND YOU SHOULD DESIGNATE YOUR ANNUITY AS SUCH WHEN YOU COMPLETE YOUR
APPLICATION.
SPOUSAL IRA ARRANGEMENT: In any year that your annuity is maintained under
the rules for a Spousal IRA, the maximum combined contribution to the Spousal
IRA and the "working" spouse's IRA for tax years after 1996, is the lesser of
100% of the combined compensation of both spouses which is includable in
gross income (reduced by the amount of any contributions to a Roth IRA or the
amount allowed as a deduction to the "working" spouse for contribution to his
or her own IRA) or $4,000. No more than $2,000 may be contributed to either
spouse's IRA. Whether the contribution is deductible or non-deductible
depends on whether either spouse is an "active participant" in an
employer-sponsored retirement plan for the year, and whether the adjusted
gross income of the couple is above the applicable phase-out level. (SEE PART
III. C., DEDUCTIBLE IRA CONTRIBUTIONS).
The contribution limit for divorced spouses is the lesser of $2,000 or the
total of the taxpayer's taxable compensation and alimony received for the
year. (Married individuals who live apart for the entire year and who file
separate tax returns are treated as if they are single when determining the
maximum deductible contribution limits).
REGULAR ROTH IRA: The maximum total annual contribution an individual can
make to all IRAs (including Roth IRAs, but not Education, SARSEP or SIMPLE
IRAs) is the lesser of $2,000 or 100% of compensation. (This limit does not
apply to rollover contributions). If an individual contributes to both a
Regular IRA and Roth IRA for the same tax year, contributions are treated as
first made to the Regular IRA. For Regular Roth IRAs (which are available
beginning in the 1998 tax year) this $2,000 limitation is phased out for
adjusted gross incomes between $150,000 and $160,000 for joint filers;
between $95,000 and $110,000 for single taxpayers; and between $0 and $10,000
for married individuals who file separate tax returns. AGI for this purpose
includes any deductible contribution to a Regular IRA, (i.e., the deduction
is disregarded) but does not include any amount included in income as a
result of a rollover or conversion from a non-Roth IRA to a Roth IRA.
Rollovers and transfers may also be made from one Roth IRA to another. Such
rollovers or transfers are generally subject to the same timing and frequency
rules as apply to Participant Rollovers and transfers from one Regular or
Rollover IRA to another. (SEE PART II, MAXIMUM CONTRIBUTIONS: ROLLOVER IRA,
ABOVE).
CONVERSION ROTH IRA: Beginning in the 1998 tax year, rollovers or conversions
may be made from non-Roth IRAs to a Conversion Roth IRA. To be eligible to make
such a conversion or rollover from a non-Roth IRA, the taxpayer's adjusted gross
income ("AGI") for the taxable year cannot exceed $100,000 (joint or individual)
and he or she must not be married filing a separate tax return (unless the
taxpayer lives apart from his of her spouse at all times during the year). A
rollover from a non- Roth IRA to a Conversion Roth IRA does not count toward the
limit of one rollover per IRA in any 12-month period under the normal IRA
rollover rules. Also, eligible rollover distributions received by you or your
spouse from a qualified plan other than an IRA, may not be directly rolled over
to a Roth IRA. However, you may be able to roll such a distribution over to a
non-Roth IRA, then convert that IRA to a Conversion Roth IRA. Also if you are
eligible to make a conversion, you may transfer amounts from most non-Roth IRAs
(other than Education IRAs). Conversion of an individual's SIMPLE IRA is only
permitted after expiration of the 2-year period which begins on the date the
individual first participated in any SIMPLE IRA Plan of the employer. Once an
amount in a SIMPLE IRA or SEP has been converted to a Roth IRA, it is treated as
a Roth IRA contribution for all purposes. Future contributions under the SEP or
SIMPLE Plan may not be made to the Roth IRA. AGI for the purpose of determining
eligibility to convert to a Roth IRA does not include any amount included in
income as a result of a rollover or conversion from a non-Roth IRA to a Roth
IRA, but does include the amount of any deductible contribution made to a
Regular IRA for the tax year. In addition, for tax years beginning before
January 1, 2005, required minimum distributions from an IRA are included in AGI
for purposes of determining eligibility for conversion to a Roth IRA. However,
for tax years beginning after December 31, 2004, required minimum distributions
from an IRA will not be included in AGI (solely for purposes of determining the
$100,000 AGI limit on conversions).
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QD- 4 IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99
<PAGE> 37
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SPOUSAL ROTH IRA ARRANGEMENT: Beginning in the 1998 tax year, if the
"non-working" spouse's compensation is less than $2,000, the spouses file a
joint tax return, and their combined AGI (unreduced by any deductible IRA
contribution made for the year, but not including any amounts includable in
income as a result of a conversion to a Roth IRA) is $150,000 or below, a
contribution of up to $2,000 may be made to a separate Spousal Roth IRA in the
name of the "non-working" spouse. The $2,000 limit is phased out proportionately
between $150,000 and $160,000 of AGI (modified as described above). Spouses are
not required to make equal contributions to both Roth IRAs; however no more than
$2,000 may be contributed to the "working" or "non-working" spouse's Roth IRA
for any year, and the total amount contributed annually to all IRAs (including
both Roth and Regular IRAs, but not Education IRAs) for both spouses cannot
exceed $4,000. If the combined compensation of both spouses (reduced by any
deductible IRA or non-deductible Roth contributions made for the "working'
spouse) is less than $4,000, the total contribution for all IRAs is limited to
the total amount of the spouses' combined compensation. These limits do not
apply to rollover contributions.
For divorced spouses, the contribution limit to a Roth IRA is the lesser of
$2,000 or the total of the taxpayer's compensation and alimony received for the
year, subject to the applicable phase-out limits for eligibility to make
contributions to a Roth IRA. (Married individuals who live apart for the entire
year and who file separate tax returns are treated as if they are single when
determining the maximum contribution they are eligible to make in a Roth IRA).
SEP IRA PLAN: In any year that your annuity is maintained under the rules for a
SEP Plan, the employer's maximum contribution is the lesser of $30,000 or 15% of
your first $150,000 of compensation (adjusted for cost-of-living increases) or
as changed under Section 415 of the Code. You may also be able to make
contributions to your SEP IRA the same as you do to a Regular IRA; however, you
will be considered an "active participant" for purposes of determining your
deduction limit. In addition to the above limits, if your annuity is maintained
under the rules for a SARSEP, the maximum amount of employee pre-tax
contributions which can be made is $7,000 (adjusted for cost of living
increases). After December 31, 1996, new SARSEP plans may not be established.
Employees may, however, continue to make salary reductions to a SARSEP plan
established prior to January 1, 1997. In addition, employees hired after
December 31, 1996 may participate in SARSEP plans established by their employers
prior to 1997.
SIMPLE IRA: Contributions to a SIMPLE IRA may not exceed the permissible amounts
of employee elective contributions and required employer matching contributions
or non-elective contributions. Annual employee elective contributions must be
expressed as a percentage of compensation and may not exceed $6,000 (adjusted
for cost of living increases). If an employer elects a matching contribution
formula, it is generally required to match employee contributions dollar for
dollar up to 3% of the employee's compensation for the year (but not in excess
of $6,000 as adjusted for cost-of-living adjustments). An employer may elect a
lower percentage match (but not below 1%) for a year, provided certain notice
requirements are satisfied and the employer's election will not result in the
matching percentage being lower than 3% in more than 2 of the 5 years in the
5-year period ending with that calendar year. Alternatively, an employer may
elect to make non-elective contributions of 2% of compensation for all employees
eligible to participate in the plan who have at least $5,000 in compensation for
the year. The employer must notify employees of this election within specified
timeframes in advance of the plan year or election period. "Compensation" for
purposes of the 2% non-elective contribution option may not exceed the limit on
compensation under Code Section 401(a)(17) ($150,000, adjusted for cost of
living increases).
F. DISTRIBUTIONS:
1. NON-ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS:
Payments to you from your IRA Plan (other than a Roth IRA) must begin no
later than the April 1 following the close of the calendar year in which
you attain age 70 1/2, the Required Beginning Date (RBD). If you have not
already withdrawn your entire balance by this date, you may elect to
receive the entire value of your IRA Plan on or before the RBD in one lump
sum; or arrange for an income to be paid over your lifetime, your expected
lifetime, or over the lifetimes or expected lifetimes of you and your
designated beneficiary. UNDER A ROTH IRA, YOU ARE NOT REQUIRED TO TAKE
DISTRIBUTIONS WHILE YOU ARE LIVING, EVEN AFTER YOU REACH AGE 70 1/2.
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IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99 QD- 5
<PAGE> 38
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RATE OF DISTRIBUTION: If you arrange for the value of your IRA Plan (other
than a Roth IRA) to be paid to you as retirement income rather than as one
lump sum, then you must abide by IRS rules governing how quickly the value
of your IRA plan must be paid out to you. Generally, it is acceptable to
have an insurance company annuity pay income to you for as long as you
live, or for as long as you and your beneficiary live.
Once you reach your RBD, you must withdraw at least a minimum amount each
year or be subject to a 50% non-deductible excise tax on the difference
between the minimum required distribution and the amount distributed. To
determine the required minimum distribution for your first "required
distribution year" (assuming an annuity payout has not been elected)
divide your entire interest (subject to certain adjustments) in your IRA
(generally as of December 31 of the calendar year immediately preceding
your age 70 1/2 year) by your life expectancy or the joint life
expectancies of you and your designated beneficiary. For subsequent
required distribution calendar years, the applicable life expectancy(ies)
will be applied to your IRA account balance as of December 31 of the
calendar year immediately preceding the distribution calendar year
(subject to adjustments). Your single or joint life expectancy is
determined by using IRS life expectancy tables. See IRS Publications 575
and 590.
Your life expectancy (and that of your spousal beneficiary, if applicable)
will be recalculated annually, unless you irrevocably elect otherwise by
the time distributions are required to begin. With the recalculation
method, if a person whose life expectancy is being recalculated dies, his
or her life expectancy will be zero in all subsequent years. The life
expectancy of a non-spouse beneficiary cannot be recalculated. Where life
expectancy is not recalculated, it is reduced by one year for each year
after your 70 1/2 year to determine the applicable remaining life
expectancy. Also, if your benefit is payable in the form of a joint and
survivor annuity, a larger minimum distribution amount may be required
under IRS regulations, unless your spouse is the designated beneficiary.
NON ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS AFTER DEATH. If you die
after the RBD, amounts undistributed at your death must be distributed at
least as rapidly as under the method being used to determine distributions
at the time of your death. If you die before the RBD, your entire interest
must generally be distributed by the end of the calendar year which
contains the fifth anniversary of your death (the "five year payout
rule"). However, if a beneficiary is designated, the beneficiary may elect
to receive distributions over his or her life expectancy if the
beneficiary so elects by December 31 of the year following the year of
your death. If the beneficiary fails to make an election, the entire
benefit will be paid to the beneficiary under the "five year payout rule".
Also, if the designated beneficiary is your spouse, the life annuity
distribution must begin by the later of December 31 of the calendar year
following the calendar year of your death or December 31 of the year in
which you would have attained age 70 1/2. If your designated beneficiary
is not your spouse, life annuity distributions must begin by December 31
of the year following your death. A surviving spouse may in the
alternative elect to treat the policy as his or her own IRA. This election
may be expressly made or will be deemed made if the spouse makes a regular
IRA contribution to the policy, makes a rollover to or from the IRA, or
fails to elect minimum distributions as described above.
2. ROTH IRA DISTRIBUTION REQUIREMENTS:
ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS WHILE YOU ARE LIVING. As long
as you are alive, you are not required to take distributions from a Roth
IRA, even after you reach age 70 1/2.
ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS AFTER YOUR DEATH. Minimum
distribution requirements apply to Roth IRAs only after you die. If you
die after you have reached your Annuity Date, and have begun to receive
distributions under an annuity option (not including an interest only
option), the remaining portion of your policy interests will continue to
be distributed to your designated beneficiary according to the terms of
the elected options, (provided that method satisfies the requirements of
Code Section 408(b)(3), as modified by Code Section 408A(c)(5)).
If you die before you have elected an annuity option or before
distribution of your entire interest in the policy has been made or begun,
your entire interest in your Roth IRA generally must be distributed by the
end of the calendar year which contains the fifth anniversary of your
death (the "five year payout rule"). However, if there is a designated
beneficiary, he or she may elect to receive distributions over a
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period not longer than his or her life expectancy provided the election is
made and distributions commence by December 31 of the year following the
year of your death. If the beneficiary does not make this election, the
entire benefit will be paid to him or her under the "five year payout
rule". If your designated beneficiary is your surviving spouse, he or she
may elect to delay distributions until the later of the end of the
calendar year following the year in which you died or the end of the year
in which you would have reach age 70 1/2. If your sole designated
beneficiary is your surviving spouse, he or she may elect to treat the
policy as his or her own Roth IRA by making an express election to do so,
by making a regular Roth IRA contribution or rollover contribution (as
applicable or as permissible) to the policy, or by failing to elect
minimum distributions under the "five year payout rule" or the life
annuity options discussed above.
Life expectancies will be determined by using IRS life expectancy tables.
A surviving spouse's life expectancy will be recalculated annually, unless
he or she irrevocably elects otherwise. Non-spousal beneficiary life
expectancies will be determined using the beneficiary's attained age in
the calendar year distributions are required to begin and reducing life
expectancy by one for each year thereafter.
3. TAKING REQUIRED MINIMUM DISTRIBUTIONS FROM ONE IRA:
AGGREGATING MINIMUM DISTRIBUTIONS: If you are required to take minimum
distributions from more than one IRA (either as owner of one or more
Regular IRAs and/or as a beneficiary of one or more decedent's Roth IRAs
or Regular IRAs), you may not have to take a minimum distribution from
each IRA. (Regular and Roth IRAs are treated as different types of IRAs,
so minimum distributions from a Roth IRA will not satisfy the minimum
distributions required from a Regular IRA). Instead, you may be able to
calculate the minimum distribution amount required for each IRA
(considered to be of the same type) separately, add the relevant amounts
and take the total required amount from one IRA or Roth IRA (as
applicable). However, an individual required to receive minimum
distributions as a beneficiary under a Roth IRA can only satisfy the
minimum distributions for one Roth IRA by receiving distributions from
another Roth IRA if the Roth IRAs were inherited from the same decedent.
Because of these requirements, Ameritas cannot monitor the required
distribution amounts from Ameritas IRAs. Please check with your tax
advisor to verify that you are receiving the proper amount from all of
your IRAs.
PART III. RESTRICTIONS AND TAX CONSIDERATIONS:
A. TIMING OF CONTRIBUTIONS: Once you establish an IRA, (including a Regular
Roth or Spousal Roth IRA) contributions must be made by the due date, not
including extensions, for filing your tax return. (Participant Rollovers
must be made within 60 days of your receipt of the distribution.) A
CONTRIBUTION MADE BETWEEN JANUARY 1 AND THE FILING DUE DATE FOR YOUR RETURN,
MUST BE SUBMITTED WITH WRITTEN DIRECTION THAT IT IS BEING MADE FOR THE PRIOR
TAX YEAR OR IT WILL BE TREATED AS MADE FOR THE CURRENT TAX YEAR. SEP IRA
contributions must be made by the due date of the Employer's tax return
(including extensions). SIMPLE IRA contributions, if permitted, must be made
by the tax return due date for the employer (including extensions) for the
year for which the contribution is made. Note, an employer is required to
make SIMPLE plan contributions attributable to employee elective
contributions as soon as it is administratively feasible to segregate these
contributions from the employer's general assets, but in no event later than
the 30th day of the month following the month in which the amounts would
have otherwise been payable to the employee in cash.
B. TIMING OF ROTH IRA CONVERSIONS: Conversions from a non-Roth IRA to a Roth
IRA for a TAX YEAR, MUST BE INITIATED SO THAT THE DISTRIBUTION OR TRANSFER
FROM THE NON-ROTH IRA IS MADE BY DECEMBER 31 OF THAT YEAR. YOU DO NOT HAVE
UNTIL THE DUE DATE OF YOUR TAX RETURN FOR A YEAR TO CONVERT A REGULAR IRA TO
A CONVERSION ROTH IRA FOR THAT TAX YEAR. For example, if you wish to convert
a Regular IRA to a Conversion Roth IRA in 1998, the conversion and transfer
must be made by December 31, 1998, even though your tax return for 1998 may
not be due until April 15, 1999.
C. DEDUCTIBLE IRA CONTRIBUTIONS: The amount of permissible contributions to
your Regular IRA may or may not be deductible. If you or your spouse are not
active participants in an employer sponsored retirement plan, any
permissible contribution you make to your IRA will be deductible. If you or
your
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spouse are an active participant in an employer-sponsored retirement plan,
the size of your deduction if any, will depend on your combined adjusted
gross income (AGI).
If you are not an active participant in an employer sponsored plan, but your
spouse is an active participant, you may take a full deduction for your IRA
contribution (other than to a Roth IRA) if your AGI is below $150,000; if
you are not an active participant but your spouse is, the maximum deductible
contribution for you is phased out at AGIs between $150,000 and $160,000.
If you are an active participant in an employer sponsored requirement plan
you may make deductible contributions if your AGI is below a threshold level
of income. For single taxpayers and married taxpayers (who are filing
jointly and are both active participants) the available deduction is reduced
proportionately over a phaseout range. If you are married and an active
participant in an employer retirement plan, but file a separate tax return
from your spouse, your deduction is phased out between $0 and $10,000 of
AGI.
If your AGI is not above the maximum applicable phase out level, a minimum
contribution of $200 is permitted regardless of whether the phase out rules
provide for a lesser amount.
Active participants with income above the phaseout range are not entitled to
an IRA deduction. Due to changes made by the Taxpayer Relief Act of 1997,
the phaseout limits are scheduled to increase as follows:
<TABLE>
<CAPTION>
YEAR MARRIED FILING JOINTLY SINGLE/HEAD OF HOUSEHOLD
---- AGI ---------------------- AGI ------------------------
<S> <C> <C>
1998............................$50,000-$ 60,000............................$30,000-$40,000
1999............................$51,000-$ 61,000............................$31,000-$41,000
2000............................$52,000-$ 62,000............................$32,000-$42,000
2001............................$53,000-$ 63,000............................$33,000-$43,000
2002............................$54,000-$ 64,000............................$34,000-$44,000
2003............................$60,000-$ 70,000............................$40,000-$50,000
2004............................$65,000-$ 75,000............................$45,000-$55,000
2005............................$70,000-$ 80,000............................$50,000-$60,000
2006............................$75,000-$ 85,000............................$50,000-$60,000
2007 and thereafter.............$80,000-$100,000............................$50,000-$60,000
</TABLE>
You can elect to treat deductible contributions as non-deductible. SEP IRA,
SARSEP, SIMPLE IRA and Roth IRA contributions are not deductible by you.
Remember, except for rollovers, conversions or transfers, the maximum amount
you may contribute to all IRAs (including Roth and Regular IRAs, but not
Education IRAs) for a calendar year is $2,000 or 100% of compensation,
whichever is less.
D. NON-DEDUCTIBLE REGULAR IRA CONTRIBUTIONS: It is possible for you to make
non-deductible contributions to your Regular IRA (not including SIMPLE IRAs)
even if you are not eligible to make deductible contributions to a Regular
IRA or non-deductible contributions to a Roth IRA for the year. The amount
of non-deductible contributions you can make depends on the amount of
deductible contributions you make. The sum of your non-deductible and
deductible contributions for a year may not exceed the lesser of (1) $2,000
($4,000 combined when a Spousal IRA is also involved), or (2) 100% of your
compensation (or, if a Spousal IRA is involved, 100% of you and your
spouse's combined compensation, reduced by the amount of any deductible IRA
contribution and non-deductible Roth IRA contribution made by the "working"
spouse). For plan years beginning on or after January 1, 1998, the sum of
your annual non-deductible (including Roth IRA) and deductible
contributions, other than when combined with a Spousal IRA or Spousal Roth
IRA, may not exceed $2,000. IF YOU WISH TO MAKE A NON-DEDUCTIBLE
CONTRIBUTION, YOU MUST REPORT THIS ON YOUR TAX RETURN BY FILING FORM 8606
(NON-DEDUCTIBLE IRA). REMEMBER, YOU ARE REQUIRED TO KEEP TRACK OF YOUR
NON-DEDUCTIBLE CONTRIBUTIONS AS AVLIC DOES NOT KEEP A RECORD OF THESE FOR
YOU. THIS INFORMATION WILL BE NECESSARY TO DOCUMENT THAT THE CONTRIBUTIONS
WERE MADE ON A NON-DEDUCTIBLE BASIS AND THEREFORE, ARE NOT TAXABLE UPON
DISTRIBUTION.
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E. EFFECTS OF CONVERSION OF REGULAR IRA TO ROTH IRA: If you convert all or part
of a non-Roth IRA to a Roth IRA, the amount converted from the non-Roth IRA
will be taxable as if it had been distributed to you in the year of
distribution or transfer from the non-Roth IRA. If you made non-deductible
contributions to any Regular IRA, part of the amount taken out of a Regular
IRA for conversion will be taxable and part will be non-taxable. (Use IRS
Form 8606 to determine how much of the withdrawal from your Regular IRA is
taxable and how much is non-taxable). The taxable portion of the amount
converted is includable in your income for the year of conversion. However,
if the conversion takes place in 1998, or if the conversion amount is
distributed in 1998 and contributed to a Roth IRA within 60 days of your
receipt of the distribution, one quarter of the taxable amount will be
includable in your income in 1998 and in each of the next three tax years.
However, an individual who makes a conversion prior to January 1, 1999, can
elect to include the full taxable conversion amount in income for 1998. This
election is made on IRS Form 8606 by the individual and cannot be made or
changed after the due date (including extensions) for filing the 1998
Federal income tax return. If a taxpayer dies before the end of the 4-year
spread, the taxable portion of the conversion amount which has not been
included in income will generally be taxable in the year of the taxpayer's
death. However, if the sole beneficiary of the Roth IRA is the surviving
spouse, he or she can elect to continue the 4-year spread. In addition, if
the 4-year spread rule is utilized for 1998 conversions, any distributions
of amounts subject to the 4-year spread occurring before 2001, will require
acceleration of income inclusion as explained in the section which follows
on TAXABILITY OF ROTH IRA DISTRIBUTIONS. (SEE PART III. J.)
Amounts properly converted from a non-Roth IRA to a Roth IRA are generally
not subject to the 10% early withdrawal penalty. However, if you make a
conversion to a Roth IRA, but keep part of the money for any reason, that
amount will be taxable in the year distributed from the non-Roth IRA and the
taxable portion may be subject to the 10% early withdrawal penalty. In
addition, under 1998 technical corrections, if an amount allocable to a
conversion contribution is distributed from the Roth IRA during the 5-year
period (beginning with the first day of the individual's taxable year in
which the conversion contribution was made), it will be subject to a
10-percent premature distribution penalty tax (but only to the extent the
conversion amount distributed was includable in gross income as a result of
the conversion).
You should consult with your tax advisor to ensure that you receive the tax
benefits you desire before you contribute to a Roth IRA, convert to a Roth
IRA or take distributions from a Roth IRA. IT WILL ALSO BE IMPORTANT FOR YOU
TO KEEP TRACK OF AND REPORT ANY REGULAR OR CONVERSION CONTRIBUTIONS YOU MAKE
TO YOUR ROTH IRAS AS REQUIRED BY THE IRS. CONVERSION CONTRIBUTIONS MUST BE
REPORTED ON IRS FORM 8606.
F. RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS: IRA owners are
permitted, beginning in 1998, to treat a contribution made to one type of
IRA as made to a different type of IRA for a taxable year in a process known
as "recharacterization". A recharacterization is accomplished by an
individual who has made a contribution to an IRA of one type for a taxable
year, electing to treat the contribution as having been made to a second IRA
of a different type for the taxable year. To accomplish the
recharacterization, a trustee-to-trustee transfer from the first IRA to the
second IRA must be made on or before the due date (including extensions) for
filing the individual's Federal income tax return for the taxable year for
which the contribution was made to the first IRA. Any net income
attributable to the recharacterized contribution must also be transferred to
the second IRA. Once the transfer is made, the election is irrevocable. The
effect of recharacterizing a contribution is that it is treated as having
been originally contributed to the second IRA on the same date and (in the
case of a regular contribution) for the same taxable year that the
contribution was made to the first IRA. If you elect to recharacterize a
contribution, you must report the recharacterization and treat the
contribution as having been made to the second IRA, instead of the first, on
your Federal income tax return.
Examples of where a recharacterization election might be useful or desired
include: where an individual discovers he was ineligible to convert a
regular IRA to a Roth IRA because his adjusted gross income exceeded
$100,000; amounts were erroneously rolled over from a traditional IRA to a
SIMPLE IRA; or an individual decides after he has made a contribution to a
regular IRA for a tax year that he is eligible for and prefers to contribute
to a Roth IRA, or vice versa. Recharacterizations are not permitted where a
deduction has been taken for the contribution to the first IRA; the
contribution to the first IRA was the
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result of a tax-free transfer or; the original contribution was an employer
contribution to a SIMPLE or SEP IRA.
RECONVERSION RULES:
Also, the IRS has issued guidance that indicates amounts recharacterized
from a conversion Roth IRA to a Regular IRA, may be "reconverted" to a Roth
IRA one time in 1998 after November 1, 1998; and one time in 1999. For
purposes of the rule applicable in 1998 and 1999, the IRA owner is not
treated as having previously converted an amount if the conversion failed
because he or she was ineligible to convert because of his or her AGI or tax
filing status. Also, under the 1998-1999 rule, any reconversion that
violates the "one reconversion" rule, is treated as an "excess reconversion"
rather than a "failed conversion". In other words, with an "excess
reconversion" the Roth IRA owner is still treated as having made a
conversion to a Roth IRA, but the "excess reconversion' and the last
preceding recharacterization are disregarded in determining the owner's
taxable conversion amount (which is based on the last reconversion that was
not an "excess reconversion").
For taxable years after 1999, if you convert a non-Roth IRA to a Roth IRA
and then recharacterize it back to a non-Roth IRA, you are not permitted by
IRS rules to reconvert the amount from the non-Roth IRA back to a Roth IRA
before the beginning of the taxable year following the taxable year in which
the amount was converted to a Roth IRA or, if later, the end of the 30-day
period beginning on the day on which you recharacterized the Roth IRA to a
non-Roth IRA. This rule will apply even if you were not eligible to make the
original conversion because of your AGI or tax filing status. If you attempt
a reconversion prior to the time permitted, it will be treated as a "failed
conversion". The remedy for a failed conversion is recharacterization to a
non-Roth IRA. If the failed conversion is not corrected, it will be treated
as a regular contribution to a Roth IRA and thus, may be an excess
contribution subject to a 6% excise tax for each tax year it remains in the
Roth IRA to the extent it exceeds the maximum regular Roth IRA contribution
permitted for the tax year. (SEE PART III. G., EXCESS CONTRIBUTIONS, BELOW).
Also, the failed conversion will be subject to the 10% premature
distribution penalty tax, unless corrected or an exception to that tax
applies. CONSULT WITH YOUR TAX ADVISOR BEFORE ATTEMPTING A "RECONVERSION".
G. EXCESS CONTRIBUTIONS: There is a 6% IRS penalty tax on IRA contributions
made in excess of permissible contribution limits. However, excess
contributions made in one year may be applied against the contribution
limits in a later year if the contributions in the later year are less than
the limit. This penalty tax can be avoided if the excess amount, together
with any earnings on it, is returned to you before the due date of your tax
return for the year for which the excess amount was contributed. Any
earnings so distributed will be taxable in the year for which the
contribution was made and may be subject to the 10% premature distribution
penalty tax (see Part III, Premature IRA Distributions). The 6% excess
contribution penalty tax will apply to each year the excess amount remains
in the IRA Plan, until it is removed either by having it returned to you or
by making a reduced contribution in a subsequent year. To the extent an
excess contribution is absorbed in a subsequent year by contributing less
than the maximum deduction allowable for that year, the amount absorbed will
be deductible in the year applied (provided you are eligible to take a
deduction). If a taxpayer transfers amounts contributed for a tax year to a
Regular IRA (and any earnings allocated to such amounts) to a Roth IRA by
the due date for filing the return for such tax year (including extensions),
the amounts are not included in the taxpayer's gross income to the extent
that no deduction was allowed for the contribution (SEE PART III. F.
RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS ABOVE).
EXCESS CONTRIBUTIONS TO A CONVERSION ROTH IRA: If you are ineligible and
convert a Regular IRA to a Conversion Roth IRA, all or a part of the amount
you convert may be an excess contribution. (Examples may include conversions
made when your Roth AGI exceeds $100,000 or because you fail to timely make
the rollover contribution from the Regular IRA to the Conversion Roth IRA).
In tax years after 1999, you may also have an excess contribution if your
conversion is a "failed conversion" that is not timely corrected. You will
have an excess contribution if the ineligible amounts you convert and the
contributions you make to all your IRAs for the tax year exceed your IRA
contribution limits for the year. To avoid the 6% excise tax on excess
contributions, you must withdraw the excess contributions plus earnings
before the due date of your tax return (plus extensions) or recharacterize
the contribution, if permitted (SEE PART III. F. RECHARACTERIZATION OF IRA
AND ROTH IRA CONTRIBUTIONS ABOVE).
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H. LOANS AND PROHIBITED TRANSACTIONS: You may not borrow from your IRA Plan
(including Roth IRAs) or pledge it as security for a loan. A loan would
disqualify your entire IRA Plan, and its full value(or taxable portions of
your Roth IRA or non-deductible Regular IRA) would be includable in your
taxable income in the year of violation. This amount would also be subject
to the 10% penalty tax on premature distributions. Your IRA Plan will
similarly be disqualified if you or your beneficiary engage in any
transaction prohibited by Section 4975 of the Internal Revenue Code. A
pledge of your IRA as security for a loan will cause a constructive
distribution of the portion pledged and also be subject to the 10% penalty
tax.
I. TAXABILITY OF REGULAR IRA DISTRIBUTIONS: Any cash distribution from your
IRA Plan, other than a Roth IRA, is normally taxable as ordinary income.
All IRAs of an individual are treated as one contract. All distributions
during a taxable year are treated as one distribution; and the value of the
contract, income on the contract, and investment in the contract is
computed as of the close of the calendar year with or within which the
taxable year ends. If an individual withdraws an amount from an IRA during
a taxable year and the individual has previously made both deductible and
non-deductible IRA contributions, the amount excludable from income for the
taxable year is the portion of the amount withdrawn which bears the same
ratio to the amount withdrawn for the taxable year as the individual's
aggregate non- deductible IRA contributions bear to the balance of all IRAs
of the individual.
J. TAXABILITY OF ROTH IRA DISTRIBUTIONS: "Qualified distributions" from a Roth
IRA are not included in the taxpayer's gross income and are not subject to
the additional ten percent (10%) early withdrawal penalty tax. To be a
"qualified distribution," the distribution must satisfy a five-year holding
period and meet one of the following four requirements: (1) be made on or
after the date on which the individual attains age 59 1/2; (2) be made to a
beneficiary or the individual's estate on or after the individual's death;
(3) be attributable to the individual being disabled; or (4) be a
distribution to pay for a "qualified" first-time home purchase (up to a
lifetime limit of $10,000). The five-year holding period for escaping
inclusion in income begins with the first day of the tax year in which any
contribution (including a conversion from a Regular IRA) is made to a Roth
IRA of the taxpayer. If the Roth IRA owner dies, this 5-taxable-year period
is not redetermined for the Roth IRA while it is held in the name of a
beneficiary or a surviving spouse who treats the decedent's Roth IRA as his
or her own. However, a surviving spouse who treats the Roth IRA as his or
her own, must receive any distributions as coming from the surviving
spouse's own Roth IRA, thus it cannot be treated as being received by a
beneficiary on or after the owner's death for purposes of determining
whether the distribution is a "qualified distribution".
If a distribution from a Roth IRA is not a "qualified distribution" and it
includes amounts allocable to earnings, the earnings distributed are
includable in taxable income and may be subject to the 10% premature
distribution penalty if the taxpayer is under age 59 1/2. Also, the 10%
premature distribution penalty tax may apply to conversion amounts
distributed even though they are not includable in income, if the
distribution is made within the 5-taxable-year period beginning on the
first day of the individual's taxable year in which the conversion
contribution was made. Only the portion of the conversion includable in
income as a result of the conversion would be subject to the penalty tax
under this rule. The 5-taxable-year period for this purpose is determined
separately for each conversion contribution and may not be the same as the
5-taxable-year period used to determine whether a distribution from a Roth
IRA is a "qualified distribution" or not. FOR THIS REASON IT IS IMPORTANT
THAT YOU KEEP TRACK OF WHEN YOUR CONVERSION CONTRIBUTIONS ARE MADE TO YOUR
ROTH IRA. (SEE PART III. L., PREMATURE IRA DISTRIBUTIONS).
Unlike Regular IRAs, distributions from Roth IRAs come first from regular
contributions, then converted amounts on a first-in first-out basis, and
last from earnings. Any distributions made before 2001 which are
attributable to 1998 conversion contributions for which the 4-year
income-tax spread is being utilized, will result in an acceleration of
taxable income in the year of distribution up to the amount of the
distribution allocable to the 1998 conversion. This amount is in addition
to the amount otherwise includable in gross income for that taxable year as
a result of the conversion, but not in excess of the amount required to be
included over the 4-year period. This tax treatment would likewise apply in
the case of distributions made by a surviving spouse who elects to continue
the 4-year spread on death of the original owner of the Roth IRA.
Generally, all Roth IRAs (both Regular Roth IRAs and Conversion Roth IRAs)
must be treated as one for purposes of determining the taxation of
distributions. However, if a Roth IRA is held by an individual as
beneficiary of a deceased Roth IRA owner, the 5-taxable-year
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period used to determine whether distributions are qualified or not is
determined independently of the 5-year-taxable period for the beneficiary's
own Roth IRAs. However, if a surviving spouse elects to treat the Roth IRA
as his or her own, the 5-year-taxable period for all of the surviving
spouse's Roth IRAs is the earlier of the end of either the 5-taxable-year
period for the decedent or that applicable to the surviving spouse's own
Roth IRAs.
THE RULES FOR TAXING NON-QUALIFIED DISTRIBUTIONS AND PREMATURE
DISTRIBUTIONS OF CONVERSION AMOUNTS FROM A ROTH IRA ARE COMPLEX. TO ENSURE
THAT YOU RECEIVE THE TAX RESULT YOU DESIRE, YOU SHOULD CONSULT WITH YOUR
TAX ADVISOR BEFORE TAKING A DISTRIBUTION FROM A ROTH IRA.
K. LUMP SUM DISTRIBUTION: If you decide to receive the entire value of your IRA
Plan in one lump sum, the full amount is taxable when received (except as to
non-deductible contributions to a Regular IRA or to a Roth IRA, or
"qualified distributions" from a Roth IRA), and is not eligible for the
special tax rules under Code Section 402 on lump sum distributions which may
be available for other types of Qualified Retirement Plans.
L. PREMATURE IRA DISTRIBUTIONS: There is a 10% penalty tax on taxable amounts
distributed from your IRA (including the taxable portion of any
non-qualified distributions from a Roth IRA, and if you receive a
distribution of conversion amounts within the five-year period beginning
with the year in which the conversion occurred, any amounts distributed that
were taxable as a conversion in the year of conversion) prior to the
attainment of age 59 1/2, except for: (1) distributions made to a
beneficiary on or after the owner's death; (2) distributions attributable to
the owner's being disabled as defined in Code Section 72(m)(7); (3)
distributions that are part of a series of substantially equal periodic
payments (made at least annually) for the life of the annuitant or the joint
lives of the annuitant and his or her beneficiary; (4) distributions made on
or after January 1, 1997 for medical expenses which exceed 7.5% of the
annuitant's adjusted gross income; (5) distributions made on or after
January 1, 1997, to purchase health insurance for the individual and/or his
or her spouse and dependents if he or she: (a) has received unemployment
compensation for 12 consecutive weeks or more; (b) the distributions are
made during the tax year that the unemployment compensation is paid or the
following tax year; and (c) the individual has not been re-employed for 60
days or more; (6) distributions made on or after January 1, 1998 for certain
qualified higher education expenses of the taxpayer, the taxpayer's spouse,
or any child or grandchild of the taxpayer or the taxpayer's spouse; or (7)
qualified first-time home buyer distributions made on or after January 1,
1998 (up to a lifetime maximum of $10,000) used within 120 days of
withdrawal to buy, build or rebuild a first home that is the principal
residence of the individual, his or her spouse, or any child, grandchild, or
ancestor of the individual or spouse. Generally, the part of a distribution
attributable to non-deductible contributions is not includable in income and
is not subject to the 10% penalty. (SEE ROTH IRA EXCEPTIONS BELOW). Also,
beginning January 1, 2000, distributions to satisfy a levy issued by the IRS
will also be exempt from the 10% penalty tax.
Distributions from a SIMPLE Plan during the two-year period beginning on the
date the employee first participated in the employer's SIMPLE Plan will be
subject to a 25% (rather than 10%) premature distribution penalty tax.
Distributions from a Roth IRA made before the expiration of the applicable 5
year holding period (SEE TAXABILITY OF ROTH IRA DISTRIBUTIONS) are not
treated as qualified distributions and are subject to the 10% penalty tax to
the extent they are includable in taxable income. In addition, any
conversion amounts distributed within the five-year period beginning with
the year in which the conversion occurred, are subject to the 10% penalty
tax even if the distribution is not currently taxable as income, unless one
of the above mentioned exceptions to the penalty tax applies. The penalty
tax will only apply to the amount of the conversion that was includable in
income as a result of the conversion.
M. MINIMUM REQUIRED DISTRIBUTIONS: SEE PART II. F.1. AND F.2., NON-ROTH IRA
MINIMUM DISTRIBUTION REQUIREMENTS AND ROTH IRA MINIMUM DISTRIBUTION
REQUIREMENTS. If a minimum distribution is not made from your IRA (including
a Roth IRA) for a tax year in which it is required, the excess, in any
taxable year, of the amount that should have been distributed over the
amount that was actually distributed is subject to an excise tax of 50%.
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N. GIFT AND ESTATE TAX CONSEQUENCES: The designation of a beneficiary to
receive funds from a Regular or a Roth IRA is not considered a transfer
subject to federal gift taxes. However, funds remaining in your IRA (Regular
or Roth) at the time of your death are includable in your federal gross
estate for tax purposes. In addition, if the owner of an IRA or Roth IRA
transfers his or her IRA or Roth IRA to another individual by gift, the gift
will be considered an assignment and cause the assets of the IRA or Roth IRA
to be deemed distributed to the owner, and will no longer be treated as held
in the IRA. The IRS has indicated that for gifts of a Roth IRA made prior to
October 1, 1998, if the entire interest in the Roth IRA is reconveyed to the
original Roth IRA owner prior to January 1, 1999, the IRS will disregard the
gift and reconveyance for most tax purposes.
O. MAXIMUM DISTRIBUTIONS: The Taxpayer Relief Act of 1997 repealed both the 15%
excess accumulation estate tax and excess distribution excise tax which
previously applied to excess retirement plan accumulations at death and
excess lifetime retirement plan distributions. These rules are repealed for
plan distributions made and decedents who die after December 31, 1996.
P. TAX FILING-REGULAR IRAS: You are not required to file a special IRA tax form
for any taxable year (1) for which no penalty tax is imposed with respect to
the IRA Plan, and (2) in which the only activities engaged in, with respect
to the IRA Plan, are making deductible contributions and receiving
permissible distributions. Information regarding such contributions or
distributions will be included on your regular Form 1040. In some years, you
may be required to file Form 5329 and/or Form 8606 in connection with your
Regular IRA. Form 5329 is filed as an attachment to Form 1040 or 1040A for
any tax year that special penalty taxes apply to your IRA. If you make
non-deductible contributions to a regular IRA, you must designate those
contributions as non-deductible on Form 8606 and attach it to your Form 1040
or 1040A. There is a $100 penalty each time you overstate the amount of your
non-deductible contributions unless you can prove the overstatement was due
to reasonable cause. Additional information is required on Form 8606 in
years you receive a distribution from a Regular IRA. There is a $50 penalty
for each failure to file a required Form 8606 unless you can prove the
failure was due to reasonable cause. For further information, consult the
instructions for Form 5329 (Additional Taxes Attributable to Qualified
Retirement Plans (including IRAs), Annuities, and Modified Endowment
Contracts), Form 8606 and IRS Publication 590.
Q. TAX FILING-ROTH IRA: It is your responsibility to keep records of your
regular and conversion contributions to a Roth IRA and to file any income
tax forms the Internal Revenue Service may require of you as a Roth IRA
owner. You will need this information to calculate your taxable income if
any, when distributions from the Roth IRA begin. For example, conversion
contributions must be reported to the Service on Form 8606. Form 5329 is
required to be filed to the Service by you to report and remit any penalty
or excise taxes. Consult the instructions to your tax return or your tax
advisor for additional reporting requirements that may apply.
R. TAX ADVICE: Ameritas is providing this general information as required by
regulations issued under the Internal Revenue Code and assumes no
responsibility for its application to your particular tax situation. Please
consult with your personal tax advisor regarding specific questions you may
have.
With respect to ROTH IRAS, you should be aware that Congress has recently
enacted legislation that substantially revises the rules relating to
distributions from and conversions to Roth IRAs which applies retroactive to
January 1, 1998. Because of this, and because guidance regarding these
changes has just recently been finalized by the Internal Revenue Service,
you should consult with a tax advisor prior to establishing, making
contributions to, or taking distributions from a Roth IRA, to ensure that
you receive the tax result you anticipate.
S. ADDITIONAL INFORMATION: You may obtain more information about IRA Plans from
any district office of the IRS and IRS Publication 590.
PART IV. STATUS OF AMERITAS IRA PLAN:
INTERNAL REVENUE SERVICE APPROVAL LETTER: Ameritas has received approval from
the Internal Revenue Service as to the form of No Load Variable Annuity (Form
4080), for use in funding Regular IRA plans. The Policy has also been approved
as to form for use in funding a SIMPLE IRA. It has not, however, been submitted
to
- --------------------------------------------------------------------------------
IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99 QD- 13
<PAGE> 46
- --------------------------------------------------------------------------------
the IRS for approval of its use as a Roth IRA, but it is expected that it will
be in due course. You may be required to accept a revised Roth IRA endorsement
if the IRS requires changes to your issued Roth IRA during the IRS approval
process. Such approval, when received, is a determination only as to the form of
the Annuity Contract, and does not represent a determination of the merits of
the annuity.
PART V. FINANCIAL DISCLOSURE:
The following is a general description and required financial disclosure
information for the variable annuity product, No Load Variable Annuity (Form
4080) offered by Ameritas, hereafter referred to as the policy.
In order for you to achieve your retirement objectives, you should be prepared
to make your IRA Plan a long term savings program. An IRA is not suited to
short-term savings, nor was it intended to be by Congress, as indicated by the
general rule that penalties apply to withdrawals before age 59 1/2, subject to
certain exceptions. SEE PART III; PREMATURE IRA DISTRIBUTIONS. However, you
should be aware of the values in your IRA Plan during the early years as well as
at retirement.
Prior to the annuity date, the policy allows you to accumulate funds based on
the investment experience of the assets underlying the policy in the Separate
Account or the Fixed Account. Currently, the assets which underlie the Separate
Account are invested exclusively in shares of mutual funds, the "Funds", managed
or administered by fund managers. Each of the Subaccounts of the Separate
Account invest solely in the corresponding portfolio of the Funds. The assets of
each portfolio are held separately from the other portfolios and each has
distinct investment objectives which are described in the accompanying
prospectus for the Funds which you would have received when making an
application for your annuity. The accumulation value of your IRA Plan allocated
to the Separate Account will vary in accordance with the investment performance
of the Subaccounts you selected. Therefore, for assets in the Separate Account,
you bear the entire investment risk prior to the annuity date.
Premium payments and subsequent allocations to the Fixed Account are placed in
the general account of Ameritas which supports insurance and annuity
obligations. Policyowners are paid interest on the amounts placed in the Fixed
Account at guaranteed rates (3.0%) or at higher rates declared by Ameritas.
ACCUMULATION VALUE: On the effective date, the accumulation value of the policy
is equal to the premium received, reduced by any applicable premium taxes.
Thereafter, the accumulation value of the policy is determined as of the close
of trading on the New York Stock Exchange on each valuation date by multiplying
the number of accumulation units for each Subaccount credited to the policy by
the current value of an accumulation unit for each Subaccount, and by adding the
amount deposited in the Fixed Account, plus interest. The current value of an
accumulation unit reflects the increase or decrease in value due to investment
results of the Subaccount and certain charges, as described below. The number of
accumulation units credited to the policy is decreased by any annual policy fee,
any withdrawals and, upon annuitization, any applicable premium taxes and
charges.
A valuation period is the period between successive valuation dates. It begins
at the close of trading on the New York Stock Exchange on each valuation date
and ends at the close of trading on the next succeeding valuation date. A
valuation date is each day that the New York Stock Exchange is open for
business.
The accumulation value is expected to change from valuation period to valuation
period, reflecting the net investment experience of the selected portfolios of
the Funds, interest earned in the Fixed Account, additional premium payments,
withdrawals, as well as the deduction of any applicable charges under the
policy. GROWTH IN THE ACCUMULATION VALUE BASED ON INVESTMENTS IN THE ACCOUNT IS
NEITHER GUARANTEED NOR PROJECTED.
VALUE OF ACCUMULATION UNITS: The accumulation units of each Subaccount are
valued separately. The value of an accumulation unit may change each valuation
period according to the net investment performance of the shares purchased by
each Subaccount and the daily charge under the policy for mortality and expense
risks, and if applicable, any federal and state income tax charges.
CASH SURRENDER VALUE: The amount available for withdrawal, which is the
accumulation value less any applicable premium taxes, and, in the case of a full
withdrawal, the annual policy fee.
ANNUAL POLICY FEE: An annual policy fee of $25, is deducted from the
accumulation value on the last valuation date of each policy year and on a full
withdrawal if between policy anniversaries. This charge
- --------------------------------------------------------------------------------
QD- 14 IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99
<PAGE> 47
- --------------------------------------------------------------------------------
reimburses Ameritas for the administrative costs of maintaining the policy on
Ameritas' system. This charge may be increased to a maximum of $40.
MORTALITY AND EXPENSE RISK CHARGE: Ameritas imposes a charge to compensate it
for bearing certain mortality and expense risks under the policies. For assuming
these risks, Ameritas makes a daily charge equal to an annual rate of 0.75%
(current; 0.95% guaranteed) of the value of the average daily net assets of the
Account. This charge is subtracted when determining the daily accumulation unit
value. If this charge is insufficient to cover assumed risks, the loss will fall
on Ameritas. Conversely, if the charge proves more than sufficient, any excess
will be added to Ameritas' surplus. No mortality and expense risk charge is
imposed on the Fixed Account.
TAXES: Ameritas will charge and deduct premium taxes as required by state law
and in accordance with any applicable company election. Applicable premium tax
rates depend upon such factors as the policyowner's current state of residency,
and the insurance laws and the status of Ameritas in states where premium taxes
are incurred. Currently, premium taxes range from 0% to 3.5% of the premium
paid. Applicable premium tax rates are subject to change by legislation,
administrative interpretations, or judicial acts. The owner will be notified of
any applicable premium taxes.
WITHDRAWALS: The owner may make a withdrawal of the policy to receive part or
all of the accumulation value (less any applicable charges), at any time before
the annuity date and while the annuitant is living, by sending a written request
to Ameritas. Withdrawals may be either systematic or elective. Systematic
withdrawals provide for an automatic withdrawal, whereas, each elective
withdrawal must be elected by the owner. Systematic withdrawals are available on
a monthly, quarterly, semi-annual or annual mode. This withdrawal right may be
restricted by Section 403(b)(11) of the Internal Revenue Code if the annuity is
used in connection with a Section 403(b) retirement plan. No withdrawals may be
made after the annuity date except as permitted under the particular annuity
option. The amount available for a withdrawal is the accumulation value at the
end of the valuation period during which the written request for withdrawal is
received, less any applicable premium taxes, and in the case of a full
withdrawal, less the annual policy fee that would be due on the last valuation
date of the policy year. The accumulation value may be paid in a lump sum to the
owner, or, if elected, all or any part may be paid out under an annuity income
option.
SALES COMMISSIONS: No deductions are made from the premium payments for sales
charges. Compensation to the sales force is a maximum .5% based on premiums paid
for broker/dealers other than AIC, and an asset-based administrative
compensation of .10% (annualized).
- --------------------------------------------------------------------------------
IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99 QD- 15
<PAGE> 48
- --------------------------------------------------------------------------------
EMPLOYEE BENEFIT PLAN
AMERITAS [LOGO] INFORMATION STATEMENT
401(A) PENSION/PROFIT SHARING PLANS
For purchasers of a 401(a) Pension/Profit Sharing Plan, the purpose of this
statement is to inform you as an independent Fiduciary of the Employee Benefit
Plan, of the Sales Representative's relationship to and compensation from
Ameritas Life Insurance Corp. (Ameritas), as well as to describe certain fees
and charges under the No Load Variable Annuity Policy being purchased from the
Sales Representative.
The Sales Representative is appointed with Ameritas as its Sales Representative
and is a Securities Registered Representative. In this position, the Sales
Representative is employed to procure and submit to Ameritas applications for
contracts, including applications for No Load Variable Annuity.
COMMISSIONS, FEES AND CHARGES
The following commissions, fees and charges apply to No Load Variable Annuity
(policy):
SALES COMMISSION: No deductions are made from the premium payments for sales
charges. Compensation to the Sales Representative's Broker/Dealer is a maximum
of up to .5% based on premiums paid for broker/dealers other than AIC, and an
asset-based administrative compensation of .10 (annualized).
ANNUAL POLICY FEE: An annual policy fee of $25 is deducted from the accumulation
value in the policy on the last valuation date of each policy year or on a full
withdrawal if between policy anniversaries. This charge reimburses Ameritas for
the administrative costs of maintaining the policy on Ameritas system. This
charge may be increased to a maximum of $40.
MORTALITY AND EXPENSE RISK CHARGE: Ameritas imposes a charge to compensate it
for bearing certain mortality and expense risks under the policies. Ameritas
makes a daily charge equal to an annual rate of 0.75% (current; 0.95%
guaranteed) of the value of the average daily net assets of the Account under
the policies. This charge is subtracted when determining the daily accumulation
unit value. If this charge is insufficient to cover assumed risks, the loss will
fall on Ameritas. Conversely, if the charge proves more than sufficient, any
excess will be added to Ameritas' surplus. No mortality and expense risk charge
is imposed on the Fixed Account.
WITHDRAWALS: The policyowner may make a withdrawal of the policy to receive part
or all of the accumulation value (less any applicable charges), at any time
before the annuity date and while the annuitant is living by sending a written
request to Ameritas. Withdrawals may be either systematic or elective.
Systematic withdrawals provide for an automatic withdrawal, whereas, each
elective withdrawal must be elected by the owner. Systematic withdrawals are
available on a monthly, quarterly, semi-annual or annual mode. No withdrawals
may be made after the annuity date except as permitted under the particular
annuity option. The amount available for withdrawal is the accumulation value at
the end of the valuation period during which the written request for withdrawal
is received, less any applicable premium taxes, and in the case of a full
withdrawal, the annual policy fee that would be due on the last valuation date
of the policy year. The accumulation value may be paid in a lump sum to the
owner, or if elected, all or any part may be paid out under an annuity income
option.
TAXES: Ameritas will deduct premium taxes upon receipt of a premium payment or
upon annuitization depending upon the requirements of the law of the state of
the policyowner's residence. Currently, premium taxes range from 0% to 3.5% of
the premium paid, but are subject to change by legislation, administrative
interpretations, or judicial act.
FUND INVESTMENT ADVISORY FEES AND EXPENSES: At the direction of the policyowner,
the Separate Account LLVA purchases shares of Funds which are available for
investment under this policy. The net assets of the Separate Account LLVA will
reflect the value of the Fund shares and therefore, investment advisory fees and
other expenses of the Funds. A complete description of these fees and expenses
is contained in the Funds' Prospectuses.
- --------------------------------------------------------------------------------
QD- 16 IRS/SEP SIMPLE/ROTH NO LOAD VARIABLE ANNUITY 2/99
<PAGE> 49
- --------------------------------------------------------------------------------
PART B REGISTRATION NO. 333-5529
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF ADDITIONAL INFORMATION
FOR
FLEXIBLE PREMIUM VARIABLE ANNUITY POLICY
OFFERED BY
AMERITAS LIFE INSURANCE CORP.
(A NEBRASKA STOCK COMPANY)
5900 "O" STREET
LINCOLN, NEBRASKA 68510
------------------------
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the Flexible Premium Variable Annuity Policy ("Policy")
offered by Ameritas Life Insurance Corp. ("Ameritas"). You may obtain a copy of
the Prospectus dated May 1, 1999, by writing Ameritas Life Insurance Corp., 5900
"O" Street, Lincoln, Nebraska 68510, or calling, 1-800-255-9678. Terms used in
the current Prospectus for the Policy are incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.
DATED: MAY 1, 1999
- --------------------------------------------------------------------------------
<PAGE> 50
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY............................. 2
THE POLICY.................................................. 2
Accumulation Value........................................ 2
Value of Accumulation Units............................... 2
Calculation of Performance Data........................... 3
Total Return.............................................. 3
Yields.................................................... 6
GENERAL MATTERS............................................. 6
The Policy................................................ 6
Non-Participating......................................... 6
Assignment................................................ 7
Annuity Data.............................................. 7
Ownership................................................. 7
IRS Required Distributions................................ 7
FEDERAL TAX MATTERS......................................... 7
Taxation of Ameritas...................................... 7
Tax Status of the Policies................................ 8
Qualified Policies........................................ 8
DISTRIBUTION OF THE POLICY.................................. 9
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS...................... 9
STATE REGULATION............................................ 9
LEGAL MATTERS............................................... 9
OTHER INFORMATION........................................... 9
FINANCIAL STATEMENTS........................................ 10
</TABLE>
- --------------------------------------------------------------------------------
NLVA 1
<PAGE> 51
GENERAL INFORMATION AND HISTORY:
In order to supplement the description in the Prospectus, the following provides
additional information concerning the company and its history.
Ameritas Life Insurance Corp. Separate Account LLVA ("the Separate Account") is
a separate investment account of Ameritas Life Insurance Corp. established under
Nebraska Law on October 26, 1995. Ameritas Life Insurance Corp. ("Ameritas") is
a stock life insurance company domiciled in Nebraska since 1887. The Home Office
of Ameritas is at 5900 "O" Street, Lincoln, Nebraska 68501.
Effective January 1, 1998, Ameritas converted from a mutual insurance company
structure to a mutual insurance holding company structure pursuant to the
Nebraska Mutual Insurance Holding Company Act. The conversion was approved by
the Nebraska State Department of Insurance and the policyowners of the mutual
company.
Currently, 16 Subaccounts of the Separate Account are available under the
contracts. Each Subaccount invests in a corresponding investment portfolio of,
Berger Institutional Products Trust ("Berger IPT"), the Neuberger & Berman
Advisers Management Trust ("Neuberger & Berman AMT"), Strong Variable Insurance
Funds, Inc., Strong Opportunity Fund II, Inc., (collectively "Strong Funds(R)")
or Rydex Variable Trust ("Rydex").
THE POLICY
In order to supplement the description in the Prospectus, the following provides
additional information about the Policy which may be of interest to the owners.
ACCUMULATION VALUE
The Accumulation Value of a Policy on each valuation date is equal to:
(1) the aggregate of the values attributable to the Policy in each Subaccount on
the valuation date, determined for each Subaccount by multiplying the
Subaccount's accumulation unit price by the number of the Subaccount
accumulation units allocated to the Policy and/or the net allocation plus
interest in the Fixed Account; plus;
(2) the amount deposited in the Fixed Account, plus interest; less
(3) any withdrawal made on the valuation date; less
(4) any annual policy fee deducted on that valuation date. In computing the
accumulation value, the number of Subaccount accumulation units allocated to
the Policy is determined after any transfer among the Subaccounts.
VALUE OF ACCUMULATION UNITS
The value of each Subaccount's accumulation units reflects the investment
performance of that Subaccount. The accumulation unit price of each Subaccount
shall be calculated by:
(1) multiplying the per share net asset value of the corresponding Fund
portfolio on the valuation date by the number of shares held by the
Subaccount, before the purchase or redemption of any shares on that date;
minus
(2) a daily charge, currently 0.002049% (equivalent to an annual rate of .75%),
not to exceed 0.002595% (equivalent to an annual rate of .95% of the average
daily net assets), for mortality and expense risks; minus
(3) any applicable charge for federal and state income taxes, if any; and
(4) dividing the result by the total number of accumulation units held in the
Subaccount on the valuation date, before the purchase or redemption of any
units on that date.
2 NLVA
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<PAGE> 52
- --------------------------------------------------------------------------------
CALCULATION OF PERFORMANCE DATA
As disclosed in the prospectus, premium payments will be allocated to the
Separate Account LLVA which has ten Subaccounts, with the assets of each
invested in corresponding portfolios of Berger IPT, Neuberger & Berman AMT, or
Strong ("the Funds"), or to the Fixed Account. From time to time Ameritas will
advertise the performance data of the portfolios of the Funds.
Performance information for any subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Stock Index ("S & P 500"), Dow
Jones Industrial Average ("DJIA"), Donahue Money Market Institutional Averages;
(2) other variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services or the Variable Annuity Research and Data
Service, widely used independent research firms which rank mutual funds and
other investment companies by overall performance, investment objectives, and
assets; and (3) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in a contract. Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect deductions for
annuity charges and investment management costs.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising may also contain other information including (i) the ranking of any
subaccount derived from rankings of variable annuity separate accounts or other
investment products tracked by Lipper Analytical Series or by rating services,
companies, publications or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (ii) the
effect of tax deferred compounding on a subaccount's investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.
Standardized average annual total returns will be provided for the period since
the subaccounts have been offered in the Separate Account. The tables below are
established to demonstrate performance results for each underlying portfolio
with charges deducted at the Separate Account level as if the policy had been in
force from the commencement of the portfolio. The performance information is
based on the historical investment experience of the underlying portfolios and
does not indicate or represent future performance.
TOTAL RETURN
Total returns quoted in advertising reflect all aspects of a subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the subaccount's value over the period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the subaccount over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18% which is the steady rate
that would equal 100% grown on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the subaccount's performance is not constant over
time, but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
subaccount.
The subaccounts, other than the Liquid Asset subaccount, will quote average
annual returns for the period since offered in the Separate Account, after
deducting charges at the Separate Account level. The average annual total
returns will be computed by finding the average annual compounded rates of
return over a period of one, five, and ten years (or, if less, up to the life of
the subaccount), that would equate the initial amount invested to the withdrawal
value, in accordance with the following formula: P(1 + T)(n) = ERV where P is a
hypothetical investment payment of $1,000, T is the average annual total return,
n is the number of years, and ERV is the withdrawal value at the end of the
periods shown. This formula is used to obtain standardized average annual total
return. The returns will reflect the mortality and expense risk charge
(guaranteed not to exceed .95% on an annual basis), and the annual policy fee.
Because there is no surrender charge, the average annual total return would be
the same for the relevant time periods if the contract is continued.
- --------------------------------------------------------------------------------
NLVA 3
<PAGE> 53
- --------------------------------------------------------------------------------
The following table shows the average annual total return on a hypothetical
investment in the subaccounts for the last year, five years, and ten years (or,
if less, up to the life of the subaccount) for the period ending December 31,
1998. The subaccounts have been offered since January 22, 1997.
AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING ON 12/31/98
<TABLE>
<CAPTION>
SINCE OFFERED
SUBACCOUNT IN THE
INCEPTION DATE ONE YEAR FIVE YEAR SEPARATE ACCOUNT
-------------- -------- --------- ----------------
BERGER IPT PORTFOLIOS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
100 Fund 1/22/97 12.91% N/A 13.63%
Small Company Growth 1/22/97 -1.40 N/A 9.80
NEUBERGER & BERMAN AMT PORTFOLIOS
- ------------------------------------------------------------------------------------------------------------------
Limited Maturity Bond 1/22/97 1.11% N/A 3.61%
Growth 1/22/97 12.17 N/A 20.48
Partners 1/22/97 0.93 N/A 15.72
Balanced 1/22/97 8.85 N/A 13.97
STRONG FUNDS(R) PORTFOLIOS
- ------------------------------------------------------------------------------------------------------------------
Growth Fund II 1/22/97 25.22% N/A 26.99%
International Stock Fund II 1/22/97 -7.99 N/A -11.08
Opportunity Fund II 1/22/97 10.20 N/A 17.86
RYDEX PORTFOLIOS
- ------------------------------------------------------------------------------------------------------------------
Nova Fund 5/1/99 N/A N/A N/A
Ursa Fund 5/1/99 N/A N/A N/A
OTC Fund 5/1/99 N/A N/A N/A
Precious Metals Fund 5/1/99 N/A N/A N/A
U.S. Government Bond Fund 5/1/99 N/A N/A N/A
Juno Fund 5/1/99 N/A N/A N/A
</TABLE>
PERFORMANCE
Quotations of average annual total return may also be shown for a Subaccount for
periods prior to the date the portfolio was offered through the Separate
Account, based upon the actual historical performance of the mutual fund
portfolio in which the subaccount invests. This information reflects all actual
charges and deductions of the mutual fund Portfolio and all Separate Account
charges and deductions, with respect to the Contracts, that hypothetically would
have been made had the Separate Account, with respect to the Contracts, been
invested in these Portfolios for all the periods indicated. This is calculated
in a manner similar to standardized average annual total return except the total
return is based on an initial investment of $30,000.
The following table shows the historical average annual total return on an
investment in the subaccounts for the last year, five years, and ten years (or,
if less, up to the life of the portfolio) for the period ending December 31,
1998.
HISTORICAL AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING ON 12/31/98
<TABLE>
<CAPTION>
10 YEARS OR
INCEPTION ONE YEAR FIVE YEAR LIFE OF FUND
--------- -------- --------- ------------
BERGER IPT PORTFOLIOS
- -----------------------------------------
<S> <C> <C> <C> <C>
100 Fund 05/01/96 15.32% N/A 11.77%
Small Company Growth 05/01/96 1.02 N/A 7.16
NEUBERGER & BERMAN AMT PORTFOLIOS
- --------------------------------------------------------------------------------------------------------------
Limited Maturity Bond 09/10/84 3.53% 4.32% 5.91%*
Growth 09/10/84 14.58 14.35 12.99*
Partners 03/22/94 3.35 N/A 18.54
Balanced 02/28/89 11.26 10.46 10.43
</TABLE>
- --------------------------------------------------------------------------------
4 NLVA
<PAGE> 54
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
10 YEARS OR
INCEPTION ONE YEAR FIVE YEAR LIFE OF FUND
--------- -------- --------- ------------
STRONG FUNDS(R) PORTFOLIOS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Fund II 12/31/96 27.64% N/A 28.18%
International Stock Fund II 10/20/95 -5.57 N/A -2.94
Opportunity Fund II 05/08/92 12.62 16.07% 18.04
RYDEX PORTFOLIOS
- --------------------------------------------------------------------------------------------------------------
Nova Fund
Ursa Fund
OTC Fund
Precious Metals Fund
U.S. Government Bond Fund
Juno Fund
</TABLE>
- ---------------
* 10 Year Figure
In addition to average annual returns, the Subaccounts, other than the Liquid
Asset subaccount, may quote unaveraged or cumulative total returns reflecting
the simple change in value of an investment over a stated period. The cumulative
total return on an investment in the Subaccounts will be shown for the period of
one, five, and ten years (or, if less, up to the life of the subaccount). The
returns reflect the mortality and expense risk charge (guaranteed not to exceed
.95% on an annual basis), and the policy fee. Because there is no surrender
charge, the cumulative total return would be the same for the relevant time
periods if the contract is continued.
The following table shows the historical cumulative total return on an
investment of $30,000 in the Subaccounts for the last year, five years, and ten
years (or, if less, up to the life of the portfolio) for the period ending
December 31, 1998.
HISTORICAL CUMULATIVE TOTAL RETURN FOR PERIOD ENDING ON 12/31/98
<TABLE>
<CAPTION>
10 YEARS OR
ONE YEAR FIVE YEAR LIFE OF FUND
-------- --------- ------------
BERGER IPT PORTFOLIOS
- -----------------------------------------
<S> <C> <C> <C>
100 Fund 15.32% N/A 34.73%
Small Company Growth 1.02 N/A 20.43
NEUBERGER & BERMAN AMT PORTFOLIOS
- --------------------------------------------------------------------------------------------------------------
Limited Maturity Bond 3.53% 24.01% 78.56%
Growth 14.58 96.12 240.78
Partners 3.35 N/A 128.02
Balanced 11.26 65.02 166.48
STRONG FUNDS(R) PORTFOLIOS
- --------------------------------------------------------------------------------------------------------------
Growth Fund II 27.64% N/A 64.49%
International Stock Fund II -5.57 N/A -9.02
Opportunity Fund II 12.62 111.26 202.93
RYDEX PORTFOLIOS
- --------------------------------------------------------------------------------------------------------------
Nova Fund
Ursa Fund
OTC Fund
Precious Metals Fund
U.S. Government Bond Fund
Juno Fund
</TABLE>
- ---------------
* 10 Year Figure
- --------------------------------------------------------------------------------
NLVA 5
<PAGE> 55
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YIELDS
Some Subaccounts may also advertise yields. Yields quoted in advertising reflect
the change in value of a hypothetical investment in the Subaccount over a stated
period of time, not taking into account capital gains or losses. Yields are
annualized and stated as a percentage.
Current yield for Liquid Asset Subaccount reflects the income generated by a
subaccount over a 7-day period. Current yield is calculated by determining the
net change, exclusive of capital changes, in the value of a hypothetical
subaccount having one Accumulation Unit at the beginning of the period adjusting
for the annual policy fee, and dividing the difference by the value of the
Subaccount at the beginning of the base period to obtain the base period return,
and multiplying the base period return by (365/7). The resulting yield figure is
carried to the nearest hundredth of a percent. Effective yield for the Liquid
Asset subaccount is calculated in a similar manner to current yield except that
investment income is assumed to be reinvested throughout the year at the 7-day
rate. Effective yield is obtained by taking the base period returns as computed
above, and then compounding the base period return by adding 1, raising the sum
to a power equal to (365/7) and subtracting one from the result, according to
the formula:
Effective Yield = [(Base Period Return + 1)(365/7)] - 1.
Since the reinvestment of income is assumed in the calculation of effective
yield, it will generally be higher than current yield.
The net average yield for the 7-day period ended December 31, 1998 for the
Liquid Asset Portfolio was 3.43% and the net effective yield for the 7-day
period ended December 31, 1998 for the Liquid Asset Portfolio was 3.50%.
Current yield for subaccounts other than the Liquid Asset subaccount reflects
the income generated by a subaccount over a 30-day period. Current yield is
calculated by dividing the net investment income per accumulation unit earned
during the period by the maximum offering price per unit on the last day of the
period, according to the formula:
YIELD = 2[( a-b + 1)(6) - 1]
cd
Where a = net investment income earned during the period by the portfolio
company attributable to shares owned by the subaccount, b = expenses accrued for
the period (net of reimbursements), c = the average daily number of accumulation
units outstanding during the period, and d = the maximum offering price per
accumulation unit on the last day of the period. The yield reflects the
mortality and expense risk charge and the annual policy fee.
GENERAL MATTERS
THE POLICY
The Policy, the application, any supplemental applications, and any amendments
or endorsements make up the entire contract. All statements made in the
application, in the absence of fraud, are considered representations and not
warranties. Only statements in the application that is attached to the Policy
and any supplemental applications made a part of the Policy when a change went
into effect can be used to contest a claim or the validity of the Policy. Only
the President, Vice President, Secretary or Assistant Secretary of Ameritas can
modify the Policy. Any changes must be made in writing, and approved by
Ameritas. No agent has the authority to alter or modify any of the terms,
conditions or agreements of the Policy or to waive any of its provisions.
NON-PARTICIPATING
The Policies are non-participating. No dividends are payable and the Policies
will not share in the profits or surplus earnings of Ameritas.
- --------------------------------------------------------------------------------
6 NLVA
<PAGE> 56
- --------------------------------------------------------------------------------
ASSIGNMENT
Any non-qualified policy and any qualified policy, if permitted by the plan or
by law relevant to the plan applicable to the qualified policy, may be assigned
by the owner prior to the annuity date and during the annuitant's lifetime.
Ameritas is not responsible for the validity of any assignment. No assignment
will be recognized until Ameritas receives written notice thereof. The interest
of any beneficiary which the assignor has the right to change shall be
subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum, not withstanding any settlement agreement in effect at
the time the assignment was executed. Ameritas shall not be liable as to any
payment or other settlement made by Ameritas before receipt of written notice.
ANNUITY DATA
Ameritas will not be liable for obligations which depend on receiving
information from a payee until such information is received in a form
satisfactory to Ameritas.
OWNERSHIP
The owner of the Policy on the policy date is the annuitant, unless otherwise
specified in the application. During the annuitant's lifetime, all rights and
privileges under this Policy may be exercised solely by the owner. Ownership
passes to the Owner's Designated Beneficiary upon the death of the owner(s). If
there is no Owner's Designated Beneficiary, or if no Owner's Designated
Beneficiary is living, ownership will pass to the owner's estate. From time to
time Ameritas may require proof that the owner is still living.
In order to change the owner of the Policy or assign Policy rights, an
assignment of the Policy must be made in writing and filed with Ameritas at its
Home Office. The change will take effect as of the date the change is recorded
at the Home Office, and Ameritas will not be liable for any payment made or
action taken before the change is recorded. The payment of proceeds is subject
to the rights of any assignee of record. A change in the owner will be valid
only upon absolute and complete assignment of the Policy. A collateral
assignment is not a change of ownership.
IRS REQUIRED DISTRIBUTIONS
If the owner dies before the entire interest in the Policy is distributed, the
value of the Policy must be distributed to the Owner's Designated Beneficiary as
described in this section so that the Policy qualifies as an annuity under the
Code. If the owner is not an individual, death of the annuitant will be treated
as death of the owner.
If the death occurs on or after the annuity date, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
If the death occurs before the annuity date, the entire interest in the Policy
will be distributed within five years after date of death or be used to purchase
an immediate annuity under which payments will begin within one year of the
owner's death and will be made for the life of the owner's designated
beneficiary or for a period not extending beyond the life expectancy of that
beneficiary.
The owner's designated beneficiary is the person to whom ownership of the Policy
passes by reason of death of the owner and must be a natural person. Ameritas
reserves the right to require proof of death.
If the owner's interest is payable to (or for the benefit of) the surviving
spouse of the owner, the surviving spouse will be treated as the original owner
for purposes of applying the above distribution requirements.
FEDERAL TAX MATTERS
TAXATION OF AMERITAS
Ameritas is taxed as a life insurance company under Part I of Subchapter L of
the Code. Since the Separate Account is not an entity separate from Ameritas and
its operations form a part of Ameritas, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Investment income
and
- --------------------------------------------------------------------------------
NLVA 7
<PAGE> 57
- --------------------------------------------------------------------------------
realized net capital gains on the assets of the Separate Account are reinvested
and are taken into account in determining the Policy values. As a result, such
investment income and realized net capital gains are automatically retained as
part of the reserves under the Policy. Under existing federal income tax law,
Ameritas believes that Separate Account investment income and realized net
capital gains should not be taxed to the extent that such income and gains are
retained as part of the reserves under the Policy.
TAX STATUS OF THE POLICIES
Section 817(h) of the Code provides in substance that Section 72 of the Code
will not apply and Ameritas will not be treated as the owner of the assets of
the Separate Account unless the investments made by the Separate Account are
"adequately diversified" in accordance with regulations prescribed by the
Secretary of Treasury (the "Treasury"). If the segregated account is not
"adequately diversified" any increase in the value of a variable annuity
contract will be taxed to the owner currently. The Separate Account, through the
Funds, intends to comply with the diversification requirements prescribed by
Treasury regulations which affect how the Funds' assets may be invested.
Although Ameritas does not control the Funds, it has entered into an agreement
regarding participation in the Funds, which requires the Funds to be operated in
compliance with the requirements prescribed by the Treasury.
QUALIFIED POLICIES
The Policies are designed for use with several types of qualified plans. The
following are brief descriptions of qualified plans with which the policies may
be used:
a. H.R. 10 Plans -- Section 401 of the Code permits self-employed individuals
to establish qualified plans for themselves and their employees. Such plans
commonly are referred to as "H.R. 10" or "Keogh' plans. Taxation of plan
participants depends on the specified plan.
The Code governs such plans with respect to maximum contributions,
distribution dates, non-forfeitability of interests, and tax rates
applicable to distributions. In order to establish such a plan, a plan
document, usually in prototype form preapproved by the Internal Revenue
Service, is adopted and implemented by the employer. When issued in
connection with H.R. 10 plans, a Policy may be subject to special
requirements to conform to the requirements under such plans.
b. Individual Retirement Annuities -- Section 408 of the Code permits certain
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or an "IRA." IRAs are subject to
limitations on eligibility, maximum contributions, and time of
distribution. Distributions from certain other types of qualified plans may
be "rolled over" on a tax-deferred basis into an IRA. Sales of a Policy for
use with an IRA may be subject to special requirements of the Internal
Revenue Service. Purchasers of a Policy for such purposes will be provided
with supplemental information required by the Internal Revenue Service or
other appropriate agency.
c. Roth IRAs -- Section 408A of the Code permits certain individuals to an
individual retirement program known as a "Roth Individual Retirement
Annuity" or a "Roth IRA." Roth IRAs are subject to limits on eligibility
and maximum contributions. Unlike regular IRAs, Roth IRAs are not subject
to minimum distribution requirements at age 70 1/2. In addition, certain
qualified distributions from a Roth IRA may not be subject to federal
income tax on withdrawal. Distributions from other types of qualified plans
may not, as a general rule, be rolled over to a Roth IRA. However, a
regular IRA can be converted to a Roth IRA in certain circumstances. Sales
of a Policy for use as a Roth IRA may be subject to special requirements of
the Internal Revenue Service. Purchasers of a Roth IRA Policy will be
provided with supplemental information required by the Internal Revenue
Service or other appropriate agency.
d. SIMPLE IRAs -- Section 408(p) of the Code permits certain small employers
to establish a "SIMPLE Individual Annuity" or "SIMPLE IRA" plan for the
benefit of its eligible employees. Employers who maintain SIMPLE IRA plans
make a specified amount of either matching or non-elective contributions to
SIMPLE IRAs of eligible employees. Employees may also make salary deferred
contributions to their SIMPLE IRAs. The Code specifies limits on
eligibility, contributions, and the timing of distributions, among other
things. Sales of SIMPLE IRAs may be subject to special requirements of the
Internal
- --------------------------------------------------------------------------------
8 NLVA
<PAGE> 58
- --------------------------------------------------------------------------------
Revenue Service. Purchasers of a SIMPLE IRA Policy will be provided with
supplemental information required by the Internal Revenue Service or other
appropriate agency.
e. Corporation Pension and Profit Sharing Plans -- Sections 401(a) and 403(a)
of the Code permit corporate employers to establish various types of
retirement plans for employees. Such retirement plans may permit the
purchase of Policies in order to provide benefits under the plans.
DISTRIBUTION OF THE POLICY
Ameritas Investment Corp. ("AIC"), the principal underwriter of the Policies, is
registered with the Securities and Exchange Commission under the Securities and
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. AIC is wholly owned by AMAL Corporation.
Ameritas owns a majority interest in AMAL Corporation.
The Policies are offered to the public directly from Ameritas, with salaried
employees who are registered representatives of AIC and who will not receive
compensation related to the purchase. The Policies may also be purchased through
brokers licensed under the federal securities laws and state insurance laws, and
properly licensed banking institutions that have entered into agreements with
AIC. The offering of the Policies is continuous and AIC may discontinue the
offering of this policy in certain states and continue to offer it in other
states.
Gross variable annuity compensation for the Policies and for all other variable
annuity policies issued by Ameritas totaled $10,129 for 1998, $4,677 for 1997,
and $0 for 1996.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
Title to assets of the Separate Account is held by Ameritas. The assets are kept
physically segregated and held separate and apart from Ameritas' general account
assets. Accumulation values deposited or transferred to the Fixed Account are
held in the General Account of Ameritas. Records are maintained of all purchases
and redemptions of eligible portfolio shares held by each of the Subaccounts.
STATE REGULATION
Ameritas is a stock life insurance company organized under the laws of Nebraska,
and is subject to regulation by the Nebraska State Department of Insurance. An
annual statement is filed with the Nebraska Commissioner of Insurance on or
before March 1 of each year covering the operations and reporting on the
financial condition of Ameritas as of December 31 of the preceding calendar
year. Periodically, the Nebraska Commissioner of Insurance examines the
financial condition of Ameritas, including the liabilities and reserves of the
Separate Account.
In addition, Ameritas is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain policy
rights and provisions depends on state approval and/or filing and review
process. Where required by state law or regulation, the Policy will be modified
accordingly.
LEGAL MATTERS
All matters of Nebraska law pertaining to the validity of the Policy and
Ameritas' right to issue such Policies under Nebraska law have been passed upon
by Donald R. Stading, Senior Vice President, Secretary and Corporate General
Counsel of Ameritas.
OTHER INFORMATION
A registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in this Statement of Additional Information or in the
Prospectus. Statements contained in this Statement of Additional Information and
the Prospectus concerning the content of the policies and other legal
- --------------------------------------------------------------------------------
NLVA 9
<PAGE> 59
- --------------------------------------------------------------------------------
instruments are intended to be summaries. For a complete statement of the terms
of these documents, reference should be made to the instruments filed with the
Securities and Exchange Commission.
FINANCIAL STATEMENTS
The financial statements of Ameritas, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
Ameritas to meet its obligations under the Policies. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account.
- --------------------------------------------------------------------------------
10 NLVA
<PAGE> 60
- --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
INVESTMENTS AT NET ASSET VALUE:
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
Balanced Portfolio -- 20,403.196 shares at $16.34
per share (cost $370,646).............................. $ 333,388
Growth Portfolio -- 6,394.129 shares at $26.29
per share (cost $161,243).............................. 168,102
Partners Portfolio -- 58,345.968 shares at $18.93
per share (cost $1,058,638)............................ 1,104,489
Limited Maturity Bond Portfolio -- 85,552.309 shares
at $13.82 per share (cost $1,183,028)................ 1,182,333
Liquid Assets Portfolio -- 501,601.800 shares at
$1.00 per share (cost $501,602)........................ 501,602
STRONG VARIABLE INSURANCE FUNDS, INC.:
International Stock Fund II Portfolio -- 14,371.502
shares at $8.78 per share (cost $152,237)............. 126,182
Growth Fund II Portfolio -- 13,728.553 shares at $16.02
per share (cost $188,514)............................. 219,931
STRONG OPPORTUNITY FUND II, INC.: (STRONG OPP. FUND II)
Opportunity Fund II, Inc. Portfolio -- 25,384.875
shares at $21.72 per share (cost $504,803)............ 550,708
BERGER INSTITUTIONAL PRODUCTS TRUST:
100 Fund Portfolio -- 15,450.338 shares at $12.89
per share (cost $203,241).............................. 199,155
Small Company Growth Portfolio -- 7,402,572 shares
at $12.28 per share (cost $78,170)................... 90,903
----------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS.............. $4,476,793
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
<PAGE> 61
- --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
--------------------------------------------------------
BALANCED GROWTH PARTNERS
TOTAL PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
-------- ------------ ------------ ------------
1998
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend distributions received................ $ 65,389 $ 5,727 $ -- $ 2,423
Mortality and expense risk charge.............. 23,840 3,102 680 5,837
-------- -------- ------- --------
NET INVESTMENT INCOME (LOSS)..................... 41,549 2,625 (680) (3,414)
======== ======== ======= ========
REALIZED AND UNREALIZED GAIN(LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments........ 145,859 40,221 20,701 76,334
Net change in unrealized appreciation
(depreciation).............................. (11,596) (45,597) (1,241) (13,224)
-------- -------- ------- --------
NET GAIN (LOSS) ON INVESTMENTS................... 134,263 (5,376) 19,460 63,110
-------- -------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $175,812 $ (2,751) $18,780 $ 59,696
======== ======== ======= ========
1997
INVESTMENT INCOME:
Dividend distributions received................ $ 16,062 $ 201 $ -- $ --
Mortality and expense risk charge.............. 6,504 437 294 1,972
-------- -------- ------- --------
NET INVESTMENT INCOME (LOSS)..................... 9,558 (236) (294) (1,972)
-------- -------- ------- --------
REALIZED AND UNREALIZED GAIN(LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments........ 8,134 516 -- --
Net change in unrealized appreciation
(depreciation).............................. 86,268 8,338 8,100 59,076
-------- -------- ------- --------
NET GAIN (LOSS) ON INVESTMENTS................... 94,402 8,854 8,100 59,076
-------- -------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $103,960 $ 8,618 $ 7,806 $ 57,104
======== ======== ======= ========
</TABLE>
- ---------------
(1) Commenced business 02/12/97
(2) Commenced business 03/05/97
(3) Commenced business 03/18/97
(4) Commenced business 02/12/97
(5) Commenced business 01/22/97
(6) Commenced business 02/04/97
(7) Commenced business 02/04/97
(8) Commenced business 02/10/97
(9) Commenced business 03/05/97
(10) Commenced business 02/04/97
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
<PAGE> 62
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE STRONG OPP. BERGER INSTITUTIONAL PRODUCTS
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC. FUND II TRUST
- ---------------------------- ---------------------------- ------------ ------------------------------
LIMITED INTERNATIONAL OPPORTUNITY SMALL
MATURITY STOCK GROWTH FUND II, COMPANY
BOND LIQUID ASSETS FUND II FUND II INC. 100 FUND GROWTH
PORTFOLIO(4) PORTFOLIO(5) PORTFOLIO(6) PORTFOLIO(7) PORTFOLIO(8) PORTFOLIO(9) PORTFOLIO(10)
- ------------ ------------- ------------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$32,282 $22,523 $ 918 $ -- $ 1,124 $ 355 $ 37
5,226 3,658 775 707 1,574 1,683 598
------- ------- -------- ------- ------- ------- -------
27,056 18,865 143 (707) (450) (1,328) (561)
======= ======= ======== ======= ======= ======= =======
-- -- -- -- 8,510 93 --
(4,691) -- (13,898) 29,108 43,282 (6,259) 924
------- ------- -------- ------- ------- ------- -------
(4,691) -- (13,898) 29,108 51,792 (6,166) 924
------- ------- -------- ------- ------- ------- -------
$22,365 $18,865 $(13,755) $28,401 $51,342 $(7,494) $ 363
======= ======= ======== ======= ======= ======= =======
$ 220 $11,576 $ 401 $ 233 $ 95 $ 3,336 $ --
487 1,831 259 89 179 682 274
------- ------- -------- ------- ------- ------- -------
(267) 9,745 142 144 (84) 2,654 (274)
------- ------- -------- ------- ------- ------- -------
-- -- 520 502 1,365 5,231 --
3,996 -- (12,157) 2,310 2,623 2,173 11,809
------- ------- -------- ------- ------- ------- -------
3,996 -- (11,637) 2,812 3,988 7,404 11,809
------- ------- -------- ------- ------- ------- -------
$ 3,729 $ 9,745 $(11,495) $ 2,956 $ 3,904 $10,058 $11,535
======= ======= ======== ======= ======= ======= =======
</TABLE>
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<PAGE> 63
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AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
--------------------------------------------
BALANCED GROWTH PARTNERS
TOTAL PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net Investment income (loss)................... $ 41,549 $ 2,625 $ (680) $ (3,414)
Net realized gain (loss) on investments........ 145,859 40,221 20,701 76,334
Net change in unrealized appreciation
(depreciation).............................. (11,596) (45,597) (1,241) (13,224)
---------- -------- -------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ 175,812 (2,751) 18,780 59,696
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 2,282,739 119,564 76,318 459,751
---------- -------- -------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 2,458,551 116,813 95,098 519,447
---------- -------- -------- ----------
NET ASSETS AT JANUARY 1, 1998.................... 2,018,242 216,575 73,004 585,042
---------- -------- -------- ----------
NET ASSETS AT DECEMBER 31, 1998.................. $4,476,793 $333,388 $168,102 $1,104,489
========== ======== ======== ==========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net Investment income (loss)................... $ 9,558 $ (236) $ (294) $ (1,972)
Net realized gain (loss) on investments........ 8,134 516 -- --
Net change in unrealized appreciation
(depreciation).............................. 86,268 8,338 8,100 59,076
---------- -------- -------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ 103,960 8,618 7,806 57,104
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 1,914,282 207,957 65,198 527,938
---------- -------- -------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 2,018,242 216,575 73,004 585,042
---------- -------- -------- ----------
NET ASSETS AT JANUARY 1, 1997.................... -- -- -- --
---------- -------- -------- ----------
NET ASSETS AT DECEMBER 31, 1997.................. $2,018,242 $216,575 $ 73,004 $ 585,042
========== ======== ======== ==========
</TABLE>
- ---------------
(1) Commenced business 02/12/97
(2) Commenced business 03/05/97
(3) Commenced business 03/18/97
(4) Commenced business 02/12/97
(5) Commenced business 01/22/97
(6) Commenced business 02/04/97
(7) Commenced business 02/04/97
(8) Commenced business 02/10/97
(9) Commenced business 03/05/97
(10) Commenced business 02/04/97
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
<PAGE> 64
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE STRONG OPP. BERGER INSTITUTIONAL
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC. FUND II PRODUCTS TRUST
---------------------------- ---------------------------- ------------- ----------------------------
LIMITED LIQUID INTERNATIONAL GROWTH OPPORTUNITY SMALL COMPANY
MATURITY BOND ASSETS STOCK FUND II FUND II FUND II, INC. 100 FUND GROWTH
PORTFOLIO(4) PORTFOLIO(5) PORTFOLIO(6) PORTFOLIO(7) PORTFOLIO(8) PORTFOLIO(9) PORTFOLIO(10)
------------- ------------ ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
$ 27,056 $ 18,865 $ 143 $ (707) $ (450) $ (1,328) $ (561)
-- -- -- -- 8,510 93 --
(4,691) -- (13,898) 29,108 43,282 (6,259) 924
---------- -------- -------- -------- -------- -------- -------
22,365 18,865 (13,755) 28,401 51,342 (7,494) 363
658,736 182,137 76,345 172,715 454,387 56,778 26,008
---------- -------- -------- -------- -------- -------- -------
681,101 201,002 62,590 201,116 505,729 49,284 26,371
---------- -------- -------- -------- -------- -------- -------
501,232 300,600 63,592 18,815 44,979 149,871 64,532
---------- -------- -------- -------- -------- -------- -------
$1,182,333 $501,602 $126,182 $219,931 $550,708 $199,155 $90,903
========== ======== ======== ======== ======== ======== =======
$ (267) $ 9,745 $ 142 $ 144 $ (84) $ 2,654 $ (274)
-- -- 520 502 1,365 5,231 --
3,996 -- (12,157) 2,310 2,623 2,173 11,809
---------- -------- -------- -------- -------- -------- -------
3,729 9,745 (11,495) 2,956 3,904 10,058 11,535
497,503 290,855 75,087 15,859 41,075 139,813 52,997
---------- -------- -------- -------- -------- -------- -------
501,232 300,600 63,592 18,815 44,979 149,871 64,532
---------- -------- -------- -------- -------- -------- -------
-- -- -- -- -- -- --
---------- -------- -------- -------- -------- -------- -------
$ 501,232 $300,600 $ 63,592 $ 18,815 $ 44,979 $149,871 $64,532
========== ======== ======== ======== ======== ======== =======
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 65
- --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Life Insurance Corp. Separate Account LLVA (the Account) was
established under Nebraska law on October 26, 1995. The assets of the Account
are held by Ameritas Life Insurance Corp. (ALIC) and are segregated from all of
ALIC's other assets.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. At December 31, 1998 there are ten
subaccounts within the Account. Five of the subaccounts invest only in a
corresponding Portfolio of the Neuberger & Berman Advisers Management Trust
which is a diversified open-end management investment company managed by
Neuberger & Berman Management Incorporated. Two of the subaccounts invest only
in a corresponding Portfolio of the Berger Institutional Products Trust which is
a diversified open-end management investment company managed by Berger
Associates. Two of the subaccounts invest only in a corresponding Portfolio of
the Strong Variable Insurance Funds, Inc. and one subaccount invests only in a
corresponding Portfolio of Strong Opportunity Fund II, Inc. Both funds are
diversified open-end management investment companies and are managed by Strong
Capital Management, Inc. Each Portfolio pays the manager a monthly fee for
managing its investments and business affairs. The assets of the Account are
carried at the net asset value of the underlying Portfolios of the funds, and
the value of the policyowners' units corresponds to the Account's investment in
the underlying subaccounts.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
The assets of the account are carried at the net asset value of the
underlying Portfolios of the Funds. The value of the policyowners' units
corresponds to the Account's investment in the underlying subaccounts. The
availability of investment portfolio and subaccount options may vary between
products. Share transactions and security transactions are accounted for on a
trade date basis.
FEDERAL AND STATE TAXES
The operations of the Account are included in the federal income tax return
of ALIC, which is taxed as a life insurance company under the Internal Revenue
Code. ALIC has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the policies funded in the Account. Currently, ALIC does not make
a charge for income or other taxes. Charges for state and local taxes, if any,
attributable to the Account may also be made.
2. POLICYOWNER CHARGES
ALIC charges the account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing equity
of policyowners held in each subaccount per each product's current policy
provisions. Additional charges are made at intervals and in amounts per each
product's current policy provisions. These charges are prorated against the
balance in each investment option of the policyowner, including the Fixed
Account option which is not reflected in this separate account.
- --------------------------------------------------------------------------------
<PAGE> 66
- --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
NOTES TO FINANCIAL STATEMENTS
3. SHARES OWNED
The Account invests in shares of mutual funds. Share activity and total shares
owned are as follows:
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
-----------------------------------------------------------------------------
LIMITED
MATURITY
BALANCED GROWTH PARTNERS BOND LIQUID ASSETS
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4) PORTFOLIO(5)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1998........................... 12,167.134 2,390.452 28,400.091 35,498.016 300,600.080
Shares acquired.................. 50,129.086 4,473.475 44,871.307 51,682.206 4,371,682.690
Shares disposed of............... 41,893.024 469.798 14,925.430 1,627.913 4,170,680.970
---------- --------- ---------- ---------- -------------
Shares owned at December 31,
1998........................... 20,403.196 6,394.129 58,345.968 85,552.309 501,601.800
========== ========= ========== ========== =============
Shares owned at January 1,
1997........................... -- -- -- -- --
Shares acquired.................. 12,638.796 2,932.267 30,237.460 37,110.661 4,880,248.700
Shares disposed of............... 471.662 541.815 1,837.369 1,612.645 4,579,648.620
---------- --------- ---------- ---------- -------------
Shares owned at December 31,
1997........................... 12,167.134 2,390.452 28,400.091 35,498.016 300,600.080
========== ========= ========== ========== =============
</TABLE>
- ---------------
(1) Commenced business 02/12/97
(2) Commenced business 03/05/97
(3) Commenced business 03/18/97
(4) Commenced business 02/12/97
(5) Commenced business 01/22/97
(6) Commenced business 02/04/97
(7) Commenced business 02/04/97
(8) Commenced business 02/10/97
(9) Commenced business 03/05/97
(10) Commenced business 02/04/97
- --------------------------------------------------------------------------------
<PAGE> 67
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG VARIABLE STRONG OPP. BERGER INSTITUTIONAL
INSURANCE FUNDS, INC. FUND II PRODUCTS TRUST
- ---------------------------- ------------- ----------------------------
INTERNATIONAL SMALL
STOCK GROWTH OPPORTUNITY COMPANY
FUND II FUND II FUND II, INC. 100 FUND GROWTH
PORTFOLIO(6) PORTFOLIO(7) PORTFOLIO(8) PORTFOLIO(9) PORTFOLIO(10)
- ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
6,823.144 1,511.266 2,072.755 13,489.758 5,350.946
8,593.796 16,051.054 25,586.526 38,729.529 2,807.857
1,045.438 3,833.767 2,304.406 36,768.951 756.231
---------- ---------- ---------- ---------- ----------
14,371.502 13,728.553 25,354.875 15,450.336 7,402.572
========== ========== ========== ========== ==========
-- -- -- -- --
7,748.521 1,520.146 3,281.788 14,664.414 5,888.960
925.377 8.880 1,209.033 1,174.656 538.014
---------- ---------- ---------- ---------- ----------
6,823.144 1,511.266 2,072.755 13,489.758 5,350.946
========== ========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 68
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities held to maturity (fair value
$620,543 -- 1998, $792,856 -- 1997).................... $ 586,419 $ 754,581
Fixed maturity securities available for sale (amortized
cost $466,025 -- 1998, $462,831 -- 1997)............... 484,491 479,990
Equity securities (cost $59,411 -- 1998,
$59,383 -- 1997)....................................... 121,905 108,744
Mortgage loans on real estate............................. 222,151 228,709
Loans on insurance policies............................... 29,047 70,638
Real estate, less accumulated depreciation
($17,431 -- 1998, $18,324 -- 1997)..................... 33,420 43,085
Other investments......................................... 45,104 33,971
Short-term investments.................................... 1,341 655
---------- ----------
Total Investments...................................... 1,523,878 1,720,373
Cash and cash equivalents................................... 79,019 83,139
Accrued investment income................................... 20,104 25,186
Deferred policy acquisition costs........................... 171,201 164,564
Property and equipment, less accumulated depreciation
($31,985 -- 1998, $29,199 -- 1997)........................ 20,946 20,191
Other assets................................................ 21,903 16,668
Closed block assets......................................... 309,326 --
Separate accounts........................................... 1,954,931 1,437,165
---------- ----------
Total................................................ $4,101,308 $3,467,286
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy and contract reserves................................ $ 100,190 $ 364,168
Policy and contract claims.................................. 29,823 27,467
Accumulated contract values................................. 1,019,849 1,039,938
Unearned policy charges..................................... 12,160 13,177
Unearned reinsurance ceded allowance........................ 1,480 1,763
Federal income taxes:
Current................................................... 6,710 339
Deferred.................................................. 50,795 46,236
Dividends payable........................................... -- 10,134
Other liabilities........................................... 45,509 41,467
Closed block liabilities.................................... 334,622 --
Separate accounts........................................... 1,954,931 1,436,677
---------- ----------
Total Liabilities...................................... 3,556,069 2,981,366
---------- ----------
Commitments and contingencies
Minority interest in subsidiary............................. 27,523 24,483
Common stock, par value $0.10 per share; 25,000,000 shares
authorized, issued and outstanding........................ 2,500 --
Additional paid-in capital.................................. 5,000 --
Retained earnings........................................... 459,065 419,797
Accumulated other comprehensive income...................... 51,151 41,640
---------- ----------
Total Stockholder's Equity............................. 517,716 461,437
---------- ----------
Total................................................ $4,101,308 $3,467,286
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 69
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Premiums:
Life insurance......................................... $ 21,159 $ 26,794 $ 26,855
Accident and health insurance.......................... 256,742 181,952 163,557
Contract charges.......................................... 68,145 57,199 49,667
Reinsurance, net.......................................... 19,930 (1,037) (6,205)
Reinsurance ceded allowance............................... 3,667 2,475 1,746
Investment revenues:
Investment income, net.................................... 130,102 137,744 126,862
Realized gains, net....................................... 14,288 10,295 13,103
Other....................................................... 23,011 14,987 8,961
Loss in closed block........................................ (105) -- --
-------- -------- --------
536,939 430,409 384,546
-------- -------- --------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits............................................ 19,879 20,710 18,402
Surrender benefits........................................ 6,730 10,084 10,708
Accident and health benefits.............................. 200,405 130,908 112,005
Interest credited......................................... 68,698 66,788 65,494
Decrease in policy and contract reserves.................. (2,570) (3,307) (5,060)
Other..................................................... 21,920 23,747 23,216
Sales and operating expenses................................ 126,199 90,737 77,086
Amortization of deferred policy acquisition costs........... 18,584 16,441 16,790
-------- -------- --------
459,845 356,108 318,641
-------- -------- --------
Income before federal income taxes and minority interest in
earnings of subsidiary.................................... 77,094 74,301 65,905
Income taxes -- current..................................... 27,229 26,401 29,081
Income taxes -- deferred.................................... 157 39 (1,560)
-------- -------- --------
Total federal income taxes................................ 27,386 26,440 27,521
-------- -------- --------
Income before minority interest in earnings of subsidiary... 49,708 47,861 38,384
Minority interest in earnings of subsidiary................. (2,940) (1,987) (1,259)
-------- -------- --------
Net income.................................................. $ 46,768 $ 45,874 $ 37,125
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 70
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net income.................................................. $46,768 $45,874 $37,125
Other comprehensive income (loss), net of tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during the
period
(net of deferred tax of $6,913 -- 1998,
$11,628 -- 1997,
and $814 -- 1996).................................... 12,646 21,290 1,512
Reclassification adjustment for gains included in net
income
(net of deferred tax of $1,635 -- 1998,
$2,548 -- 1997,
and $4,285 -- 1996).................................. (3,036) (4,733) (7,958)
Minority interest...................................... (99) (158) 27
------- ------- -------
Other comprehensive income (loss)......................... 9,511 16,399 (6,419)
------- ------- -------
Comprehensive income........................................ $56,281 $62,273 $30,706
======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 71
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
------------------- PAID - IN RETAINED COMPREHENSIVE STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS INCOME EQUITY
--------- ------ ---------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996.......... -- $ -- $ -- $336,798 $31,660 $368,458
Net unrealized investment losses,
net............................. -- -- -- -- (6,446) (6,446)
Minority interest in net
unrealized investment losses,
net............................. -- -- -- -- 27 27
Net income........................ -- -- -- 37,125 -- 37,125
--------- ------ ------ -------- ------- --------
BALANCE, December 31, 1996........ -- -- -- 373,923 25,241 399,164
Net unrealized investment gains,
net............................. -- -- -- -- 16,557 16,557
Minority interest in net
unrealized investment gains,
net............................. -- -- -- -- (158) (158)
Net income........................ -- -- -- 45,874 -- 45,874
--------- ------ ------ -------- ------- --------
BALANCE, December 31, 1997........ -- -- -- 419,797 41,640 461,437
Issuance of common stock.......... 25,000,000 2,500 5,000 (7,500) -- --
Net unrealized investment gains,
net............................. -- -- -- -- 9,610 9,610
Minority interest in net
unrealized investment gains,
net............................. -- -- -- -- (99) (99)
Net income........................ -- -- -- 46,768 -- 46,768
--------- ------ ------ -------- ------- --------
BALANCE, December 31, 1998........ 25,000,000 $2,500 $5,000 $459,065 $51,151 $517,716
========= ====== ====== ======== ======= ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 72
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 46,768 $ 45,874 $ 37,125
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization............................. 5,717 5,275 4,231
Amortization of deferred policy acquisition costs......... 19,090 16,441 16,790
Policy acquisition costs deferred......................... (40,349) (36,117) (30,611)
Interest credited to contract values...................... 69,487 66,788 65,494
Amortization of discounts or premiums..................... (4,611) (1,747) (1,513)
Net realized gains on investment transactions............. (14,288) (10,295) (13,103)
Deferred income taxes..................................... 157 39 (1,560)
Minority interest in earnings of subsidiary............... 2,940 1,987 1,259
Change in assets and liabilities:
Accrued investment income.............................. (455) (10) (1,071)
Other assets........................................... (6,544) (3,239) (1,372)
Policy and contract reserves........................... (2,798) (3,446) 2,266
Policy and contract claims............................. 3,992 6,047 2,538
Unearned policy charges................................ (1,017) (315) (2,141)
Unearned reinsurance ceded allowance................... (283) 511 373
Federal income taxes payable -- current................ 5,422 (7,977) 1,300
Dividends payable...................................... 479 (183) (111)
Other liabilities...................................... 6,039 6,509 5,445
Cash from closed block................................. (2,526) -- --
-------- -------- --------
Net cash from operating activities.......................... 87,220 86,142 85,339
-------- -------- --------
INVESTING ACTIVITIES
Purchase of investments:
Fixed maturity securities held to maturity................ (62,244) (39,522) (122,182)
Fixed maturity securities available for sale.............. (137,319) (115,864) (40,572)
Equity securities......................................... (21,944) (29,432) (19,925)
Mortgage loans on real estate............................. (68,518) (56,251) (57,248)
Real estate............................................... (998) (1,676) (642)
Short-term investments.................................... (1,632) (2,124) (5,844)
Other investments......................................... (16,343) (6,026) (23,073)
Proceeds from sale of investments:
Fixed maturity securities available for sale 14,447 16,419 4,774
Equity securities -- unaffiliated......................... 24,681 19,914 18,676
Equity securities -- affiliated........................... -- -- 190
Real estate............................................... 14,117 1,723 951
Other investments......................................... 4,166 649 7,949
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 73
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
INVESTING ACTIVITIES (CONTINUED)
Proceeds from maturities or repayment of investments:
Fixed maturity securities held to maturity................ $ 84,662 $ 68,069 $ 71,317
Fixed maturity securities available for sale.............. 68,338 45,942 36,519
Mortgage loans on real estate............................. 37,810 49,750 34,594
Real estate............................................... -- -- --
Other investments......................................... 5,325 6,278 15,106
Short-term investments.................................... 958 3,050 16,571
Purchase of property and equipment.......................... (4,002) (5,413) (3,711)
Proceeds from sale of property and equipment................ 43 45 78
Net change in loans on insurance policies................... (3,377) (2,622) 1,252
Closed block investing activities........................... 178 -- --
-------- -------- --------
Net cash from investing activities.......................... (61,652) (47,091) (65,220)
-------- -------- --------
FINANCING ACTIVITIES
Contribution for minority interest in subsidiary............ -- 1,530 22,445
Net change in accumulated contract values................... (30,380) (34,584) (47,186)
Closed block financing activities........................... 692 -- --
-------- -------- --------
Net cash from financing activities.......................... (29,688) (33,054) (24,741)
-------- -------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............ (4,120) 5,997 (4,622)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 83,139 77,142 81,764
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 79,019 $ 83,139 $ 77,142
======== ======== ========
Supplemental cash flow information:
Cash paid for income taxes................................ $ 21,936 $ 34,397 $ 27,748
Non-cash financing activities:
Issuance of common stock.................................. $ 7,500 $ -- $ --
Assets transferred to closed block........................ 307,754 -- --
Liabilities transferred to closed block................... 332,223 -- --
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 74
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
On September 13, 1997, the Board of Directors of Ameritas Life Insurance Corp.
(Ameritas) adopted the Plan which authorized the reorganization (Reorganization)
of Ameritas into a mutual insurance holding company structure. The Nebraska
Department of Insurance held a public hearing on the Reorganization on October
14, 1997 and approved the Plan on October 24, 1997. The policyowners' of
Ameritas approved the Plan on December 8, 1997 and the Reorganization became
effective on January 1, 1998 (effective date).
Pursuant to the Reorganization, Ameritas (i) formed Ameritas Mutual Insurance
Holding Company (AMHC) as a mutual insurance holding company under the insurance
laws of the State of Nebraska, (ii) formed Ameritas Holding Company (AHC) as an
intermediate stock holding company under the general laws of the State of
Nebraska, and (iii) amended and restated its Charter and Articles of
Incorporation to authorize the issuance of capital stock and the continuance of
its existence as a stock life insurance company under the same name. As of the
effective date of the Reorganization, the membership interests and the
contractual rights of the policyowners of Ameritas were separated -- the
membership interests automatically became, by operation of law, membership
interests in AMHC and the contractual rights remained in Ameritas. Each person
who becomes the owner of a designated policy issued by Ameritas after the
effective date of the Reorganization will become a member of AMHC and have a
membership interest in AMHC so long as such policy remains in force. The
membership interests in AMHC follow, and are not severable, from the policy from
which the membership interest in AMHC is derived.
On the effective date, Ameritas issued 25 million of its authorized shares of
capital stock to AMHC. AMHC then contributed all of these to AHC in exchange for
20 million shares of its common stock. As a result, AHC directly owns Ameritas,
and AMHC indirectly owns Ameritas, through AHC. The reorganization was accounted
for at historical cost in a manner similar to a pooling of interests.
Accordingly, the accompanying financial statements and disclosures reflect the
operations of Ameritas for all periods presented.
Ameritas' insurance operations consist of life and health insurance and annuity
and pension contracts. Ameritas and its subsidiaries operates in all 50 states
and the District of Columbia. Wholly owned insurance subsidiaries include First
Ameritas Life Insurance Corp. Of New York and Pathmark Assurance Company.
Ameritas is also a 66% owner of AMAL Corporation (incorporated March 8, 1996),
which owns 100% of Ameritas Variable Life Insurance Company and Ameritas
Investment Corp. (a broker/dealer). In addition to the subsidiaries noted above,
Ameritas conducts other diversified financial-service-related operations through
the following wholly owned subsidiaries: Veritas Corp (a marketing organization
for low-load insurance products); Ameritas Investment Advisors, Inc. (an advisor
providing investment management services); and Ameritas Managed Dental Plan,
Inc. (A prepaid dental organization).
CLOSED BLOCK
Effective October 1, 1998 (the Effective Date) Ameritas formed a closed block
(the Closed Block) of policies, under an arrangement approved by the Insurance
Department of the State of Nebraska, to provide for dividends on policies that
were in force on the Effective Date and which were within the classes of
individual policies for which Ameritas had a dividend scale in effect on the
Effective Date. The Closed Block was designed to give reasonable assurance to
owners of affected policies that the assets will be available to support such
policies including maintaining dividend scales in effect at the Effective Date,
if the experience underlying such scales continues. The assets, including
revenue thereon, will accrue solely to the benefit of the owners of policies
included in the block until the block is no longer in effect.
The financial results of the Closed Block, while prepared on a GAAP basis,
reflect the provisions of the approved arrangement and not the actual results of
operations and financial position. The arrangement provides for the level of
expenses charged to the Closed Block, actual expenses related to the Closed
Block operations are charged outside of the Closed Block; therefore the
contribution or loss from the Closed Block does not represent the actual
operations of the Closed Block.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 75
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
Summarized financial information of the Closed Block as of December 31, 1998 and
from October 1, 1998 to December 31, 1998, is as follows (in thousands):
<TABLE>
<CAPTION>
CLOSED BLOCK
------------
<S> <C>
ASSETS:
Fixed maturity securities held to maturity (fair value
$156,499).............................................. $148,398
Fixed maturity securities available for sale (amortized
cost $53,679).......................................... 56,384
Mortgage loans on real estate............................. 38,756
Loans on insurance policies............................... 44,968
Cash and cash equivalents................................. 1,656
Accrued investment income................................. 5,537
Deferred policy acquisition costs......................... 12,364
Other assets.............................................. 1,263
--------
Total Closed Block Assets.............................. $309,326
========
LIABILITIES:
Policy and contract reserves.............................. $261,180
Policy and contract claims................................ 1,636
accumulated contract values............................... 59,196
Dividends payable......................................... 10,613
Other liabilities......................................... 1,997
--------
Total Closed Block Liabilities......................... $334,622
========
INCOME, BENEFITS AND EXPENSES:
Premiums.................................................. $ 4,354
Investment income, net.................................... 5,054
Policy benefits........................................... (5,123)
Sales and operating expenses.............................. (812)
amortization of deferred policy acquisition costs......... (506)
Dividends appropriated for policyowners................... (3,072)
--------
Loss in Closed Block................................... $ (105)
========
</TABLE>
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Ameritas Life
Insurance Corp. and its majority-owned subsidiaries (the Company). These
consolidated financial statements exclude the effects of all material
intercompany transactions.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain items on the prior year financial statements have been restated to
conform to current year presentation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 76
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
The principal accounting and reporting practices followed are:
INVESTMENTS
The Company classifies its securities into categories based upon the Company's
intent relative to the eventual disposition of the securities. The first
category, held to maturity securities, includes fixed maturity securities which
the Company has the positive intent and ability to hold to maturity. These
securities are carried at amortized cost. The second category, available for
sale securities, may be sold to address the liquidity and other needs of the
Company. Securities classified as available for sale are carried at fair value
on the balance sheet with unrealized gains and losses excluded from operations
and reported as a separate component of stockholder's equity included in
accumulated other comprehensive income, net of related deferred acquisition
costs and income tax effects. The third category, trading securities, is for
debt and equity securities acquired for the purpose of selling them in the near
term. The Company has not classified any of its securities as trading
securities.
Equity securities (common stock and nonredeemable preferred stock) are valued at
fair value, and are classified as available for sale.
Mortgage loans on real estate are carried at amortized cost less an allowance
for estimated uncollectible amounts. SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan," which was amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan -- Income Recognition and Disclosures,"
requires that an impaired loan be measured at the present value of expected
future cash flows, or alternatively, the observable market price or the fair
value of the collateral. Total impaired loans as of December 31, 1998 and 1997,
and the associated interest income were not material.
Investment real estate owned directly by the Company is carried at cost less
accumulated depreciation and allowances for estimated losses. Real estate
acquired through foreclosure is carried at the lower of cost or fair value minus
estimated costs to sell.
Other investments primarily include investments in venture capital partnerships
and real estate joint ventures accounted for using the equity method, and
securities owned by the broker dealer subsidiary valued at fair value. Changes
in the fair value of the securities owned by the broker dealer are included in
investment income.
Short-term investments are carried at amortized cost, which approximates fair
value.
Realized investment gains and losses on sales of securities are determined on
the specific identification method. Write-offs of investments that decline in
value below cost on other than a temporary basis and the change in the
allowances for mortgage loans and wholly owned real estate are included with
realized gains in the consolidated statements of operations.
The Company records write-offs or allowances for its investments based upon an
evaluation of specific problem investments. The Company reviews, on a continual
basis, all invested assets to identify investments where the Company may have
credit concerns. Investments with credit concerns include those the Company has
identified as experiencing a deterioration in financial condition.
CASH EQUIVALENTS
The Company considers all highly liquid debt securities purchased with a
remaining maturity of less than three months to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation. The
Company provides for depreciation of property and equipment using straight-line
and accelerated methods over the estimated useful lives of the assets.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 77
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contractholders. The assets (principally investments) and
liabilities of each account are clearly identifiable and distinguishable from
other assets and liabilities of the Company. The separate accounts are an
investment alternative for pension, variable life, and variable annuity products
which the Company markets. Amounts are reported at fair value.
PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS
RECOGNITION OF PARTICIPATING AND TERM LIFE, ACCIDENT AND HEALTH AND ANNUITY
PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS
Participating life insurance products include those products with fixed and
guaranteed premiums and benefits on which dividends are paid by the Company.
Premiums on participating and term life products and certain annuities with life
contingencies (immediate annuities) are recognized as premium revenue when due.
Accident and health insurance premiums are recognized as premium revenue over
the time period to which the premiums relate. Benefits and expenses are
associated with earned premiums so as to result in recognition of profits over
the premium-paying period of the contracts. This association is accomplished by
means of the provision for liabilities for future policy benefits and the
amortization of deferred policy acquisition costs.
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
POLICYOWNERS
Universal life-type policies are insurance contracts with terms that are not
fixed and guaranteed. The terms that may be changed could include one or more of
the amounts assessed the policyowner, premiums paid by the policyowner or
interest accrued to policyowners' balances. Amounts received as payments for
such contracts are reflected as deposits in accumulated contract values and are
not reported as premium revenues.
Revenues for universal life-type policies consist of charges assessed against
policy account values for deferred policy loading, mortality risk expense, the
cost of insurance and policy administration. Policy benefits and claims that are
charged to expense include interest credited to contracts and benefit claims
incurred in the period in excess of related policy account balances.
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO POLICYOWNERS
Contracts that do not subject the Company to risks arising from policyowner
mortality or morbidity are referred to as investment contracts. Deposit
administration plans and certain deferred annuities are considered investment
contracts. Amounts received as payments for such contracts are reflected as
deposits in accumulated contract values and are not reported as premium
revenues.
Revenues for investment products consist of investment income and policy
administration charges. Contract benefits that are charged to expense include
benefit claims incurred in the period in excess of related contract balances,
and interest credited to contract balances.
POLICY ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are directly related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable from future premiums. Such costs include
commissions, certain costs of policy issuance and underwriting, and certain
agency expenses.
Costs deferred related to term life insurance are amortized over the
premium-paying period of the related policies, in proportion to the ratio of
annual premium revenues to total anticipated premium revenues. Such anticipated
premium revenues are estimated using the same assumptions used for computing
liabilities for future policy benefits.
Costs deferred related to participating life, universal life-type policies and
investment-type contracts are amortized generally over the lives of the
policies, in relation to the present value of estimated gross profits from
mortality, investment and expense margins. The estimated gross profits are
reviewed periodically based on actual experience and changes in assumptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 78
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
A roll-forward of the amounts reflected in the consolidated balance sheets as
deferred policy acquisition costs is as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Beginning balance........................................... $164,564 $146,405 $130,420
Acquisition costs deferred.................................. 40,324 36,117 30,611
Amortization of deferred policy acquisition costs........... (18,584) (16,441) (16,790)
Amount transferred to closed block.......................... (12,845) -- --
Adjustment for unrealized investment (gain)/loss............ (2,258) (1,517) 2,164
-------- -------- --------
Ending balance.............................................. $171,201 $164,564 $146,405
======== ======== ========
</TABLE>
To the extent that unrealized gains or losses on available for sale securities
would result in an adjustment of deferred policy acquisition costs had those
gains or losses actually been realized, the related unamortized deferred policy
acquisition costs are recorded as an adjustment of the unrealized investment
gains or losses included in stockholder's equity.
FUTURE POLICY AND CONTRACT BENEFITS
Liabilities for future policy benefits for participating and term life contracts
and additional coverages offered under policy riders are calculated using the
net level premium method and assumptions as to investment yields, mortality,
withdrawals and dividends. The assumptions are based on projections of past
experience and include provisions for possible unfavorable deviation. These
assumptions are made at the time the contract is issued. These liabilities are
shown as policy and contract reserves.
Liabilities for future policy and contract benefits on universal life-type and
investment-type contracts are based on the policy account balance, and are shown
as accumulated contract values.
The liabilities for future policy and contract benefits for group long-term
disability reserves are based upon interest rate assumptions and morbidity and
termination rates from published tables, modified for Company experience.
DIVIDENDS TO POLICYOWNERS
A portion of the Company's business has been issued on a participating basis.
The amount of policyowners' dividends to be paid is determined annually by the
Board of Directors.
INCOME TAXES
All companies included in these consolidated financial statements, with the
exception of AMAL and its subsidiaries, files a consolidated life/non-life tax
return. An agreement among the members of the consolidated group provides for
distribution of consolidated tax results as if filed on a separate return basis.
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the cumulative differences in assets and liabilities
determined on a tax return and financial statement basis at the current enacted
tax rates.
Federal income tax returns have been examined by the Internal Revenue Service
(IRS) through 1995. Management is currently appealing certain adjustments
proposed by the IRS for tax years 1988 and 1990 through 1995, and believes
adequate provisions have been made for any additional taxes which may become due
with respect to the adjustments proposed by the IRS.
- --------------------------------------------------------------------------------
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<PAGE> 79
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities held to maturity.................. $ 53,680 $ 59,700 $ 59,366
Fixed maturity securities available for sale................ 33,846 32,605 30,039
Equity securities........................................... 1,783 1,899 1,571
Mortgage loans on real estate............................... 20,312 19,866 19,376
Real estate................................................. 11,871 12,317 9,699
Loans on insurance policies................................. 3,849 4,341 4,265
Other investments........................................... 9,639 15,494 8,572
Short-term investments and cash and cash equivalents........ 8,665 4,266 5,069
-------- -------- --------
Gross investment income................................... 143,645 150,488 137,957
Investment expenses......................................... 13,543 12,744 11,095
-------- -------- --------
Net investment income..................................... $130,102 $137,744 $126,862
======== ======== ========
</TABLE>
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net gains (losses) on disposals, including calls, of
investments
Fixed maturity securities held to maturity................ $ 2,235 $ 1,059 $ 237
Fixed maturity securities available for sale.............. 1,906 494 802
Equity securities......................................... 2,764 6,787 11,439
Mortgage loans on real estate............................. 1,583 959 66
Real estate............................................... 5,877 502 136
Other..................................................... (2) 564 503
-------- -------- --------
14,363 10,365 13,183
-------- -------- --------
Provisions for losses on investments
Mortgage loans on real estate............................. (100) (20) (80)
Real estate............................................... 25 (50) --
-------- -------- --------
Net pretax realized investment gains........................ $ 14,288 $ 10,295 $ 13,103
======== ======== ========
</TABLE>
Proceeds from sales of securities and gross gains and losses realized on those
sales were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 14,447 $ 433 $ 302
Equity securities........................................... 24,681 3,874 1,110
-------- -------- --------
$ 39,128 $ 4,307 $ 1,412
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 16,419 $ 161 $ 8
Equity securities........................................... 19,914 7,725 938
-------- -------- --------
$ 36,333 $ 7,886 $ 946
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 4,774 $ 30 $ 247
Equity securities........................................... 18,676 11,796 357
-------- -------- --------
$ 23,450 $ 11,826 $ 604
======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 80
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS--(CONTINUED)
The amortized cost and fair value of investments in securities by type of
investment were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------
COST GAINS LOSSES FAIR VALUE
---------- -------- ------ ----------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity
U.S. Corporate................................... $ 351,099 $ 20,258 $ 417 $ 370,940
Mortgage-backed.................................. 114,146 6,294 -- 120,440
U.S. Treasury securities and obligations of U.S.
government agencies........................... 57,879 5,870 -- 63,749
Foreign.......................................... 63,295 2,231 112 65,414
---------- -------- ------ ----------
Total fixed maturity securities held to
maturity.................................... 586,419 34,653 529 620,543
---------- -------- ------ ----------
Fixed maturity securities available for sale
U.S. Corporate................................... 305,576 12,361 466 317,471
Mortgage-backed.................................. 80,018 1,295 19 81,294
Asset-backed..................................... 7,998 202 -- 8,200
U.S. Treasury securities and obligations of U.S.
government agencies........................... 58,841 4,425 -- 63,266
Foreign.......................................... 13,592 668 -- 14,260
---------- -------- ------ ----------
Total fixed maturity securities available for
sale........................................ 466,025 18,951 485 484,491
---------- -------- ------ ----------
Equity securities................................ 59,411 63,511 1,017 121,905
Short-term investments........................... 1,341 -- -- 1,341
---------- -------- ------ ----------
Total available for sale securities........... 526,777 82,462 1,502 607,737
---------- -------- ------ ----------
Total....................................... $1,113,196 $117,115 $2,031 $1,228,280
========== ======== ====== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------
COST GAINS LOSSES FAIR VALUE
---------- -------- ------ ----------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity
U.S. Corporate................................... $ 448,344 $ 23,764 $ 423 $ 471,685
Mortgage-backed.................................. 147,741 6,523 14 154,250
U.S. Treasury securities and obligations of U.S.
government agencies........................... 82,107 5,764 -- 87,871
Foreign.......................................... 76,389 2,769 108 79,050
---------- -------- ------ ----------
Total fixed maturity securities held to
maturity.................................... 754,581 38,820 545 792,856
---------- -------- ------ ----------
Fixed maturity securities available for sale
U.S. Corporate................................... 282,265 11,742 280 293,727
Mortgage-backed.................................. 86,370 1,957 165 88,162
Asset-backed..................................... 7,997 169 -- 8,166
U.S. Treasury securities and obligations of U.S.
government agencies........................... 67,342 3,455 242 70,555
Foreign.......................................... 18,857 524 1 19,380
---------- -------- ------ ----------
Total fixed maturity securities available for
sale........................................ 462,831 17,847 688 479,990
---------- -------- ------ ----------
Equity securities................................ 59,383 49,893 532 108,744
Short-term investments........................... 655 -- -- 655
---------- -------- ------ ----------
Total available for sale securities........... 522,869 67,740 1,220 589,389
---------- -------- ------ ----------
Total....................................... $1,277,450 $106,560 $1,765 $1,382,245
========== ======== ====== ==========
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 81
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS--(CONTINUED)
The amortized cost and fair value of fixed maturity securities by contractual
maturity at December 31, 1998 are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
--------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Due in one year or less............................. $ 15,916 $ 16,110 $ 7,600 $ 7,693
Due after one year through five years............... 168,635 175,041 130,762 136,181
Due after five years through ten years.............. 150,487 156,680 243,218 257,923
Due after ten years................................. 42,971 47,167 90,693 98,306
Mortgage-backed and asset-backed securities......... 88,016 89,493 114,146 120,440
-------- -------- -------- --------
Total.......................................... $466,025 $484,491 $586,419 $620,543
======== ======== ======== ========
</TABLE>
3. INCOME TAXES
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
--------------------
1998 1997
-------- --------
<S> <C> <C>
Net unrealized investment gains............................. $ 35,211 $ 29,569
Equity in subsidiaries...................................... 12,058 9,992
Deferred policy acquisition costs........................... 53,003 47,713
Prepaid expenses............................................ 3,903 3,246
Other....................................................... 2,277 2,327
-------- --------
Gross deferred tax liability................................ 106,452 92,847
-------- --------
Future policy and contract benefits......................... 38,333 30,593
Deferred future revenues.................................... 5,845 6,091
Policyowner dividends....................................... 3,715 3,547
Pension and postretirement benefits......................... 2,917 2,715
Other....................................................... 4,847 3,665
-------- --------
Gross deferred tax asset.................................... 55,657 46,611
-------- --------
Net deferred tax liability................................ $ 50,795 $ 46,236
======== ========
</TABLE>
The difference between the U.S. federal income tax rate and the consolidated tax
provision rate is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate.................................. 35.0% 35.0% 35.0%
Equity in subsidiaries...................................... 2.6 2.4 1.2
Surplus tax................................................. -- (2.7) 7.1
Other....................................................... (2.1) 0.9 (1.5)
---- ---- ----
Effective tax rate........................................ 35.5% 35.6% 41.8%
==== ==== ====
</TABLE>
The "surplus tax," IRC Section 809, is an imputation of income to mutual life
insurance companies according to a formula based on a comparison of the returns
of equity of the mutual and stock segments of the life insurance industry. The
Company's provision for its surplus tax is based on the Company's best estimate
of what its final surplus tax will be.
- --------------------------------------------------------------------------------
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<PAGE> 82
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
4. EMPLOYEE AND AGENT BENEFIT PLANS
The Company has a noncontributory defined benefit plan covering substantially
all employees. Plan benefits are based on years of credited service and the
employee's compensation during the last five years of employment. The Company's
funding policy is to make contributions each year at least equal to the minimum
funding requirements for tax-qualified retirement plans. Pension costs include
current service costs, which are accrued and funded on a current year basis, and
past service costs, which are amortized over the average remaining service life
of all employees on the adoption date. The assets of the plan are not
segregated.
The Company also provides certain health care benefits to retired employees.
These benefits are a specified percentage of premium until age 65 and a flat
dollar amount thereafter. Employees become eligible for these benefits upon the
attainment of age 55, 15 years of service and participation in the Company
medical plan for the immediately preceding five years.
The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets over the two-year period ending
December 31, 1998, and a statement of the funded status as of December 31 of
both years:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Reconciliation of benefit obligation
Benefit obligation at beginning of year............... $23,232 $20,261 $ 4,498 $ 4,746
Service cost.......................................... 1,970 1,408 141 158
Interest cost......................................... 1,777 1,496 251 304
Actuarial (gain)/loss................................. 4,488 1,023 (711) (552)
Benefits paid......................................... (721) (956) (155) (158)
------- ------- ------- -------
Benefit obligation at end of year..................... $30,746 $23,232 $ 4,024 $ 4,498
======= ======= ======= =======
Reconciliation of fair value of plan assets
Fair value of plan assets at beginning of year........ $24,271 $20,153 $ 1,767 $ 1,252
Actual return on plan assets.......................... 2,517 3,330 120 90
Employer contributions................................ 2,201 1,744 -- 425
Benefits paid......................................... (721) (956) -- --
------- ------- ------- -------
Fair value of plan assets at end of year.............. $28,268 $24,271 $ 1,887 $ 1,767
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Funded Status
Funded status at end of year.......................... $(2,478) $ 1,039 $(2,137) $(2,731)
Unrecognized net actuarial (gain)/loss................ 3,086 (875) (2,075) (1,498)
Unrecognized prior service cost....................... 1,143 1,236 (15) (18)
------- ------- ------- -------
Prepaid/(accrued) benefit cost........................ $ 1,751 $ 1,400 $(4,227) $(4,247)
======= ======= ======= =======
</TABLE>
Periodic pension expense for the Company included the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost................................................ $ 1,970 $ 1,408 $ 1,223
Interest cost............................................... 1,777 1,496 1,866
Expected return on plan assets.............................. (2,517) (3,329) (2,817)
Amortization of transition (asset) obligation............... 94 94 94
Amortization of net loss.................................... 526 1,742 838
------- ------- -------
Net periodic benefit cost................................... $ 1,850 $ 1,411 $ 1,204
======= ======= =======
</TABLE>
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<PAGE> 83
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
4. EMPLOYEE AND AGENT BENEFIT PLANS -- (CONTINUED)
Periodic postretirement medical expense for the Company included the following
components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Service cost................................................ $ 141 $ 158 $ 177
Interest cost............................................... 251 304 315
Expected return on plan assets.............................. (124) (89) (57)
Amortization of prior service cost.......................... (2) -- --
Amortization of net gain.................................... (130) (77) (35)
----- ----- -----
Net periodic benefit cost................................... $ 136 $ 296 $ 400
===== ===== =====
</TABLE>
The assumptions used in the measurement of the Company's benefit obligation are
shown in the following table:
<TABLE>
<CAPTION>
PENSION
BENEFITS OTHER BENEFITS
------------ --------------
1998 1997 1998 1997
---- ---- ----- -----
<S> <C> <C> <C> <C>
Weighted-average assumptions as of December 31
Discount rate............................................. 6.75 7.25 6.75 7.25
Expected return on plan assets............................ 8.00 8.00 7.50 7.50
Rate of compensation increase............................. 4.50 4.50 -- --
</TABLE>
The assumed health care trend line rate used in measuring the accumulated
postretirement benefit obligation, for pre-65 employees, was 7.5% in 1997
decreasing linearly each successive year until it reaches 5.5% in 1999, after
which it remains constant.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A 1% change in health care trend rates would
have the following effects:
<TABLE>
<CAPTION>
1% INCREASE 1% DECREASE
----------- -----------
<S> <C> <C>
Effect on total of service and interest cost components of
net periodic postretirement health care benefit cost...... $ 17 $ (17)
Effect on the health care component of the accumulated
postretirement benefit obligation......................... $ 117 $(131)
</TABLE>
The Company's employees and agents also participate in defined contribution
plans that cover substantially all full-time employees and agents. Company
contributions were $852 in 1998, $868 in 1997 and $800 in 1996.
5. INSURANCE REGULATORY MATTERS
STATUTORY SURPLUS AND NET INCOME
Net income of Ameritas and its insurance subsidiaries, as determined in
accordance with statutory accounting practices, was $41,019, $47,200, and
$44,100 for 1998, 1997 and 1996, respectively and statutory surplus was
$357,700, $311,300, and $257,300 at December 31, 1998, 1997 and 1996,
respectively. Insurance companies are required to maintain a certain level of
surplus to be in compliance with state laws and regulations. Surplus is
monitored by state regulators to ensure compliance with risk based capital
requirements.
Under statutes of the Insurance Department of Nebraska, the amount of dividends
payable to stockholders are limited.
6. REINSURANCE
In the ordinary course of business, the Company assumes and cedes reinsurance
with other insurers and reinsurers. These arrangements provide greater
diversification of business and limit the maximum net loss potential on large
risks.
- --------------------------------------------------------------------------------
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<PAGE> 84
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
6. REINSURANCE -- (CONTINUED)
The effect of reinsurance on premiums earned is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Assumed..................................................... $ 32,191 $ 9,740 $ 6,344
Ceded....................................................... (12,261) (10,777) (12,549)
-------- -------- --------
$ 19,930 $ (1,037) $ (6,205)
======== ======== ========
</TABLE>
The Company remains contingently liable in the event that a reinsurer is unable
to meet the obligations ceded under the reinsurance agreement.
7. RESERVE FOR UNPAID CLAIMS
The change in the liability for unpaid accident and health claims and claim
adjustment expenses is summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Balance at January 1........................................ $ 22,433 $ 17,957 $ 14,925
Reinsurance reserves (net).................................. (1,748) (89) 121
-------- -------- --------
20,685 17,868 15,046
-------- -------- --------
Incurred related to:
Current year.............................................. 186,940 132,940 117,610
Prior year................................................ (6,678) (4,675) (2,051)
-------- -------- --------
Total incurred......................................... 180,262 128,265 115,559
-------- -------- --------
Paid related to:
Current year.............................................. 161,843 112,255 99,742
Prior year................................................ 14,007 13,193 12,995
-------- -------- --------
Total paid............................................. 175,850 125,448 112,737
-------- -------- --------
25,097 20,685 17,868
Reinsurance reserves (net).................................. 2,561 1,748 89
-------- -------- --------
Balance at December 31...................................... $ 27,658 $ 22,433 $ 17,957
======== ======== ========
</TABLE>
The liability for unpaid accident and health claims and claim adjustment
expenses is included in policy and contract claims on the consolidated balance
sheets.
8. COMMITMENTS AND CONTINGENCIES
INVESTMENTS
Securities commitments of $30,545 and $25,848, and mortgage loan and real estate
commitments of $8,284 and $17,742 were outstanding for investments to be
purchased in subsequent years as of December 31, 1998 and 1997, respectively.
These commitments have been made in the normal course of investment operations
and are not reflected in the accompanying financial statements. The Company's
exposure to credit loss is represented by the contractual notional amount of
those instruments. The Company uses the same credit policies and collateral
requirements in making commitments and conditional obligations as it does for
on-balance sheet instruments.
LINE OF CREDIT
The Company has a $25,000 unsecured line of credit available at December 31,
1998. No balance was outstanding at any time during 1998 or 1997.
- --------------------------------------------------------------------------------
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<PAGE> 85
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
8. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
STATE LIFE AND HEALTH GUARANTY FUNDS
As a condition of doing business, all states and jurisdictions have adopted laws
requiring membership in life and health insurance guaranty funds. Member
companies are subject to assessments each year based on life, health or annuity
premiums collected in the state. In some states these assessments may be applied
against premium taxes. The Company has estimated its costs related to past
insolvencies and has provided a reserve included in other liabilities of $2,650
and $2,325 as of December 31, 1998 and 1997, respectively.
LITIGATION
From time to time, the Company and its subsidiaries is subject to litigation in
the normal course of business. Management does not believe that the Company is
party to any such pending litigation which would have a material adverse effect
on its financial statements or future operations.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures are made regarding fair value information about
certain financial instruments for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates, in many cases, could not be realized on immediate
settlement of the instrument. All nonfinancial instruments are excluded from
disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1998 and 1997. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for each class of financial instrument for which it is
practicable to estimate a value:
FIXED MATURITY SECURITIES -- For publicly traded securities, fair value is
determined using an independent pricing source. For securities without a
readily ascertainable fair value, the value has been determined using an
interest rate spread matrix based upon quality, weighted average maturity
and Treasury yields.
EQUITY SECURITIES -- For publicly traded securities, fair value is
determined using prices from an independent pricing source.
LOANS ON INSURANCE POLICIES -- Fair value for loans on insurance policies
is estimated using a discounted cash flow analysis at interest rates
currently offered for similar loans. Loans on insurance policies with
similar characteristics are aggregated for purposes of the calculations.
MORTGAGE LOANS ON REAL ESTATE -- Mortgage loans in good standing are valued
on the basis of discounted cash flow. The interest rate that is assumed is
based upon the weighted average term of the mortgage and appropriate spread
over Treasuries.
OTHER INVESTMENTS -- Fair value for venture capital partnerships is
estimated based on values as last reported by the partnership and
discounted for their lack of marketability. Real estate partnerships are
carried on the equity method and are excluded from the fair value
disclosure.
SHORT-TERM INVESTMENTS -- The carrying amount approximates fair value
because of the short maturity of these instruments.
CASH AND CASH EQUIVALENTS -- The carrying amounts equal fair value.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 86
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
ACCRUED INVESTMENT INCOME -- Fair value equals book value.
ACCUMULATED CONTRACT VALUES -- Funds on deposit with a fixed maturity are
valued at discounted present value using market interest rates. Funds on
deposit which do not have fixed maturities are carried at the amount
payable on demand at the reporting date, which approximates fair value.
COMMITMENTS -- The estimated fair value of commitments approximates
carrying value because the fees currently charged for these arrangements
and the underlying interest rates approximate market.
Estimated fair values are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------------
1998 1997
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Fixed maturity securities
Held to maturity............................... $586,419 $620,543 $754,581 $792,856
Available for sale............................. 484,491 484,491 479,990 479,990
Equity securities................................. 121,905 121,905 108,744 108,744
Loans on insurance policies....................... 29,047 30,332 70,638 63,356
Mortgage loans on real estate..................... 222,151 238,006 228,709 240,583
Other investments................................. 23,901 28,391 22,717 32,466
Short-term investments............................ 1,341 1,341 655 655
Cash and cash equivalents......................... 79,019 79,019 83,139 83,139
Accrued investment income......................... 20,104 20,104 25,186 25,186
Financial liabilities:
Accumulated contract values excluding amounts held
under insurance contracts...................... 783,275 786,152 764,505 764,998
</TABLE>
10. SUBSEQUENT EVENT
In September, 1998, Ameritas and Acacia Life Insurance Company (Acacia) agreed
in principle that all of Acacia Financial Group, Ltd.'s (the stock holding
company of Acacia) outstanding common stock, would be acquired by Ameritas
Holding Company in a business combination accounted for as a pooling of
interests. This merger became effective January 1, 1999. In addition the members
interest in Acacia Mutual Holding Corporation were merged with those of Ameritas
Mutual Insurance Holding Company. Concurrently, the name was changed to Ameritas
Acacia Mutual Holding Company. Historical financial information presented in
future reports will be restated to included the financial information of the
merged companies.
The following summarized unaudited data gives effect to the acquisition as if
the combination had been consummated. The most current combined financial
information available is as of September 30, 1998.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
Assets...................................................... $6,049,266 $5,740,880
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED
FOR THE NINE MONTH DECEMBER 31
PERIOD ENDED --------------------
SEPTEMBER 30, 1998 1997 1996
------------------ -------- --------
<S> <C> <C> <C>
Income................................................. $619,170 $721,568 $664,578
Net Income............................................. $ 39,363 $ 62,341 $ 44,505
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 87
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial Statements:
The financial statements of Ameritas Life Insurance Corp. Separate Account LLVA
and Ameritas Life Insurance Corp. are filed in Part B.
Ameritas Life Insurance Corp. Separate Account LLVA:
- - Statement of Net Assets as of December 31, 1998.
- - Statements of Operations for the years ended December 31, 1998 and 1997.
- - Statements of Changes in Net Assets for the years ended December 31, 1998 and
1997.
- - Notes to Financial Statements for the years ended December 31, 1998 and 1997.
Ameritas Life Insurance Corp.:
- - Consolidated Balance Sheets as of December 31, 1998 and 1997.
- - Consolidated Statements of Operations for the years ended December 31, 1998,
1997 and 1996.
- - Consolidated Statements of Comprehensive Income for the years ended December
31, 1998, 1997 and 1996.
- - Consolidated Statements of Stockholder's Equity for the years ended December
31, 1998, 1997 and 1996.
- - Consolidated Statements of Cash Flows for the years ended December 31, 1998,
1997 and 1996.
- - Notes to the Consolidated Financial Statements for the years ended December
31, 1998, 1997 and 1996.
All schedules of Ameritas Life Insurance Corp. for which provision is made in
the applicable accounting regulations of the Securities and Exchange Commission
are not required under the related instructions, are inapplicable or have been
disclosed in the Notes to the Financial Statements and therefore have been
omitted.
There are no financial statements included in Part A.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 88
- --------------------------------------------------------------------------------
b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
(1) Resolution of Board of Directors of Ameritas Life Insurance
Corp. establishing Ameritas Life Insurance Corp. Separate
Account LLVA.*
(2) Not applicable.
(3)(a) Principal Underwriting Agreement.**
(3)(b) Form of Selling Agreement.*
(4) Form of Variable Annuity Contract.****
(5) Form of Application for Variable Annuity Contract.***
(6)(a) Certificate of Incorporation of Ameritas Life Insurance
Corp.*
(6)(b) Bylaws of Ameritas Life Insurance Corp.*
(7) Not applicable.
(8)(a) Participation Agreement.*
(8)(b) Proposed Participation Agreement.*
(8)(c) Proposed Participation Agreement**
(8)(d) Proposed Participation Agreement**
(8)(e) Proposed Participation Agreement (to be filed).
(9) Opinion and consent of Donald R. Stading.
(10)(a) Independent Auditors' Consent (to be filed).
(11) No financial statements are omitted from Item 23.
(12) Not applicable.
(13) Not applicable.
</TABLE>
- ---------------
* Incorporated by reference to the initial registration statement for
Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-5529),
filed on June 7, 1996.
** Incorporated by reference to the Pre-Effective Amendment No. 1 for Ameritas
Life Insurance Corp. Separate Account LLVA (File No. 333-5529), filed on
October 3, 1996.
*** Incorporated by reference to the Pre-Effective Amendment No. 2 for Ameritas
Life Insurance Corp. Separate Account LLVA (File No. 333-5529), filed on
November 20, 1996.
**** Incorporated by reference to the Post-Effective Amendment No. 3 for
Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-5529),
filed on February 27, 1998.
- --------------------------------------------------------------------------------
2 NLVA
<PAGE> 89
- --------------------------------------------------------------------------------
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR
------------------ -----------------------------------
<S> <C>
Lawrence J. Arth*........ Director, Chairman of the Board and Chief Executive Officer
Kenneth C. Louis*........ Director, President and Chief Operating Officer
Donald R. Stading*....... Senior Vice President, Secretary and Corporate General
Counsel
Jon C. Headrick*......... Executive Vice President-Investments and Treasurer
James P. Abel**.......... Director
Duane W. Acklie**........ Director
Haluk Ariturk*........... Executive Vice President -- Ameritas Acacia Shared Services
Center
Robert C. Barth*......... Vice President and Controller
Edward M. Beller*........ Vice President -- Individual Administration and Chief
Underwriter
Eldon Bohmont*........... Vice President -- Individual Client Services
Roxann Brennfoerder*..... Vice President -- Group Administration, Underwriting and
Compliance
Wayne E. Brewster*....... Vice President -- Variable Sales
Jan M. Connolly*......... Senior Vice President -- Operations, Planning and Quality
William W. Cook, Jr.**... Director
Gerald B. Dimon*......... Vice President -- Human Resources
Bert A. Getz**........... Director
William R. Giovanni*..... Senior Vice President, President and Chief Executive
Officer -- Ameritas Investment Corp.
Lori S. Gohde*........... Vice President -- Group Business Development and Planning
B. Douglas Gritton*...... Vice President -- Individual Agency Distribution
Arnold D. Henkel*........ Vice President -- Pensions
Thomas D. Higley*........ Vice President and Financial Operations
Leslie D. Inman*......... Vice President -- Group Marketing and Training
Michael Jaskolka*........ Vice President -- Information Services
Marty L. Johnson*........ Second Vice President -- Individual Underwriting
Kenneth R. Jones*........ Vice President -- Corporate Compliance and Assistant
Secretary
James R. Knapp**......... Director
Norman M. Krivosha*...... Executive Vice President -- Legal and Governmental Affairs
Robert F. Krohn**........ Director
Robert G. Lange*......... Vice President and General Counsel -- Insurance and
Assistant Secretary
William W. Lester*....... Vice President-Securities
Wilfred J. Maddux**...... Director
JoAnn M. Martin*......... Senior Vice President and Chief Financial Officer
David C. Moore*.......... President -- Group Division
William W. Nelson*....... Vice President -- Group Claims and Consultant Review
Dale K. Niebuhr*......... Second Vice President -- Audit Services
Donald W. Parker*........ Second Vice President -- Accounting and Assistant Controller
Gary R. Raymond*......... Vice President -- Group Actuary
Todd W. Reimers*......... Vice President -- Group Field Sales
</TABLE>
- --------------------------------------------------------------------------------
NLVA 3
<PAGE> 90
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR
------------------ -----------------------------------
<S> <C>
Barry C. Ritter*......... Senior Vice President -- Information Services
Mary H. Rutford*......... Second Vice President -- Accounting
Paul C. Schorr, III**.... Director
William C. Smith**....... Director
Neal E. Tyner**.......... Director
Kenneth L. VanCleave*.... Vice President -- Group Managed Care and Partnering
Richard W. Vautravers*... Senior Vice President and Corporate Actuary
Winston J. Wade**........ Director
Jon B. Weinberg*......... Vice President -- Mortgage Loans and Real Estate
Steven L. Welton*........ Vice President-Individual Marketing
Russell J. Wiltgen*...... Vice President -- Individual Product Management
</TABLE>
- ---------------
* Principal business address: Ameritas Life Insurance Corp., 5900 "O" Street,
Lincoln, Nebraska 68510
** Principal address for: James P. Abel, NEBCO, Inc., P.O. Box 80268, Lincoln,
Nebraska 68501; Duane W. Acklie, Crete Carrier Corporation, P.O. Box 81228,
Lincoln, Nebraska 68501; William W. Cook, Jr., The Beatrice National Bank and
Trust Company, P.O. Box 100, Beatrice, Nebraska 68310; Bert A. Getz, Globe
Corporation, Scottsdale Spectrum, 6730 N. Scottsdale Road, Suite 250,
Scottsdale, Arizona 85253; James R. Knapp, The Brookhollow Group, 535 Anton
Boulevard, Suite 100, Costa Mesa, California 92626; Robert F. Krohn, PSI
Group, Inc., 10011 "J" Street, Omaha, Nebraska 68127; Wilfred J. Maddux,
Maddux Cattle Company, P.O. Box 217, Wauneta, Nebraska 69045; Paul C. Schorr,
III, ComCor Holding, Inc., 6940 "O" Street, Suite 336, P.O. Box 57310,
Lincoln, Nebraska 68505, William C. Smith, William C. Smith & Co., Cornhusker
Plaza, Suite 401, 301 So. 13th Street, Lincoln, Nebraska 68508; Neal E.
Tyner, NET Consultants, 6940 "O" Street, Suite 324, Lincoln, Nebraska 68510;
Winston J. Wade, c/o PMI-USW 843-1, P.O. Box 311, Mendham, New Jersey 07945.
- --------------------------------------------------------------------------------
4 NLVA
<PAGE> 91
- --------------------------------------------------------------------------------
ITEM 26
The depositor, Ameritas Life Insurance Corp., is a stock life insurance company
domiciled in Nebraska. The Registrant is a segregated asset account of Ameritas
Life Insurance Corp.
The following chart indicates the persons controlled by or under common control
with Ameritas Life Insurance Corp.:
[LOGO]
(OMITTED CHART SHOWS AMERITAS ORGANIZATION: AMERITAS ACACIA MUTUAL HOLDING
COMPANY IS AT THE UPPERMOST TIER; AMERITAS HOLDING COMPANY IS AT THE SECOND
TIER; THIRD TIER ENTITIES ARE: AMERITAS LIFE INSURANCE CORP. WITH ITS SEPARATE
ACCOUNTS AND ACACIA LIFE INSURANCE COMPANY: THE FOURTH TIER COMPANIES ARE:
AMERITAS INVESTMENT ADVISORS, INC., AMERITAS MANAGED DENTAL PLAN, INC., FIRST
AMERITAS LIFE INSURANCE CORP. OF NEW YORK, PATHMARK ASSURANCE COMPANY, VERITAS
CORP., AND AMAL CORPORATION; FIFTH TIER COMPANIES, WHICH ARE OWNED BY AMAL
CORPORATION, ARE AMERITAS INVESTMENT CORP. AND AMERITAS VARIABLE LIFE INSURANCE
COMPANY WITH ITS SEPARATE ACCOUNTS.)
All entities are Nebraska entities, except First Ameritas Life Insurance Corp.
of New York, which is a New York entity, Ameritas Managed Dental Plan, Inc.,
which is a California entity, and Acacia Life Insurance Company, which is a
District of Columbia entity.
All entities are wholly owned by the person immediately controlling it, except
AMAL Corporation, a holding company, which is jointly owned by Ameritas Life
Insurance Corp., which owns a majority interest in AMAL Corporation, and AmerUs
Life Insurance Company, which owns a minority interest in AMAL Corporation.
AMAL Corporation is a holding company. Veritas is a marketing agency. Pathmark
Assurance Company is an insurance company.
ITEM 27. NUMBER OF CONTRACTOWNERS
As of December 31, 1998, there were 188 contractowners.
ITEM 28. INDEMNIFICATION
Ameritas Life Insurance Corp.'s By-laws provide as follows:
"The Company shall indemnify any person who was, or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director, officer or employee of the
Company or is or was serving at the request of the Company as a director,
officer or employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit or proceeding to the full extent authorized
by the laws of Nebraska."
Section 21-2004 of the Nebraska Business Corporation Act, in general, allows a
corporation to indemnify any director, officer, employee or agent of the
corporation for amounts paid in settlement actually and reasonably incurred by
him or her in connection with an action, suit or proceeding, if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
In a case of a derivative action, no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of
- --------------------------------------------------------------------------------
NLVA 5
<PAGE> 92
his or her duty to the corporation, unless a court in which the action was
brought shall determine that such person is fairly and reasonably entitled to
indemnify for such expenses which the Court shall deem proper.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
a) Ameritas Investment Corp. which will serve as the principal underwriter for
the variable annuity contracts issued through Ameritas Life Insurance Corp.
Separate Account LLVA, also serves as the principal underwriter for variable
life insurance contracts issued through Ameritas Life Insurance Corp.
Separate Account LLVL. Ameritas Investment Corp. also serves as the
principal underwriter for variable life insurance contracts issued through
Ameritas Variable Life Insurance Company Separate Account V, and variable
annuity contracts issued through Ameritas Variable Life Insurance Company
Separate Account VA-2.
b) The following table sets forth certain information regarding the officers
and directors of the principal underwriter, Ameritas Investment Corp.
<TABLE>
<S> <C>
Lawrence J. Arth* Director and Chairman of the Board
Kenneth C. Louis* Director, Senior Vice President
Gary R. McPhail** Director, Senior Vice President
Norman M. Krivosha* Secretary and General Counsel
William R. Giovanni* Director, President and Chief Executive Officer
Michael G. Fraizer** Director
Thomas C. Godlasky** Director
Billie B. Beavers*** Senior Vice President
Thomas C. Bittner* Vice President-Marketing and Administration
Alan R. Eveland* Vice President-Public Finance
James R. Fox*** Senior Vice President
Cynthia Susan Hahn* Vice President-Trading and Institutional Sales
Jon C. Headrick* Treasurer
Michael P. Heaton*** Senior Vice President
William J. Janssen* Vice President -- Retail Sales Manager
Kenneth R. Jones* Vice President-Corporate Compliance and Assistant Secretary
Bruce D. Lefler*** Vice President
Robert W. Morrow* Vice President
John V. Scheer* Vice President Sales Manager -- AIC / Ameritas
Michael E. Shoemaker* Vice President -- Fixed Income Trading & Underwriting
</TABLE>
6 NLVA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 93
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Michael VanHorne*** Senior Vice President
Janell D. Winsor* Vice President-Retail Sales Manager
</TABLE>
- ---------------
* Principal business address: Ameritas Investment Corp., 5900 "O" Street,
Lincoln, Nebraska 68510.
** Principal business address: AmerUs Life Insurance Company, 611 Fifth
Avenue, Des Moines, Iowa 50309.
*** Principal business address: Ameritas Investment Corp., 440 Regency Parkway
Drive, Suite 222, Omaha, Nebraska 68114.
c)
<TABLE>
<CAPTION>
NET UNDERWRITING COMPENSATION
NAME OF PRINCIPAL DISCOUNTS AND ON BROKERAGE
UNDERWRITER(1) COMMISSIONS(2) REDEMPTION(3) COMMISSIONS(4) COMPENSATION(5)
----------------- ---------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Ameritas Investment Corp. $ 7,569 $0 $ 0 $ 2,560
</TABLE>
- ---------------
(2)+(4)+(5) = Gross variable annuity compensation received by AIC.
(2) = Sales compensation received and paid out by AIC as underwriter, AIC
retains 0.
(4) = Sales compensation received by AIC for retail sales.
(5) = Sales compensation received by AIC and retained as underwriting fee.
ITEM 30. LOCATION OF SEPARATE ACCOUNT AND RECORDS
The Books, records and other documents required to be maintained by Section
31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder are maintained at
Ameritas Variable Life Insurance Company, 5900 "O" Street, Lincoln, Nebraska
68510.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the audited
financial statements in the registration statement are never more than 16
months old for so long as payments under the variable annuity contracts may
be accepted.
b) Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post card
or similar written communication affixed to or included in the prospectus
that the applicant can remove and send for a Statement of Additional
Information.
c) Registrant undertakes to deliver any Statement of Additional Information and
any financial statements required to be made available under this form
promptly upon written or oral request.
d) The Registrant is relying upon the Division of Investment Management
(Division) no-action letter of November 28, 1988 concerning annuities sold
in 403(b) plans and represents that the requirements of the no-action letter
have been, are and/or will be complied with.
e) Ameritas Life Insurance Corp. represents that the fees and charges deducted
under the contract, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by the insurance company.
- --------------------------------------------------------------------------------
NLVA 7
<PAGE> 94
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Life Insurance Corp. Separate Account LLVA, certifies that it meets all
the requirements of effectiveness of this Post-Effective Amendment No. 4 to the
Registration Statement pursuant to Rule 485(a) under the Securities Act of 1933
and has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized in the City of Lincoln,
County of Lancaster, State of Nebraska on this 26th day of February, 1999.
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA, Registrant
AMERITAS LIFE INSURANCE CORP., Depositor
<TABLE>
<S> <C>
Attest: /s/ DONALD R. STADING By: /s/ LAWRENCE J. ARTH
------------------------------------- -----------------------------------------
Secretary Chairman of the Board
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Ameritas
Life Insurance Corp. on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LAWRENCE J. ARTH Director, Chairman of the Board and February 26, 1999
- --------------------------------------------- Chief Executive Officer
Lawrence J. Arth
/s/ KENNETH C. LOUIS Director, President and Chief February 26, 1999
- --------------------------------------------- Operating Officer
Kenneth C. Louis
/s/ DONALD R. STADING Senior Vice President, Secretary February 26, 1999
- --------------------------------------------- and Corporate General Counsel
Donald R. Stading
/s/ JON C. HEADRICK Executive Vice February 26, 1999
- --------------------------------------------- President-Investments and Treasurer
Jon C. Headrick
/s/ JOANN M. MARTIN Senior Vice President-Controller February 26, 1999
- --------------------------------------------- and Chief Financial Officer
JoAnn M. Martin
/s/ JAMES P. ABEL Director February 26, 1999
- ---------------------------------------------
James P. Abel
/s/ DUANE W. ACKLIE Director February 26, 1999
- ---------------------------------------------
Duane W. Acklie
/s/ WILLIAM W. COOK, JR. Director February 26, 1999
- ---------------------------------------------
William W. Cook, Jr.
/s/ BERT A. GETZ Director February 26, 1999
- ---------------------------------------------
Bert A. Getz
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 95
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES R. KNAPP Director February 26, 1999
- ---------------------------------------------
James R. Knapp
/s/ ROBERT F. KROHN Director February 26, 1999
- ---------------------------------------------
Robert F. Krohn
/s/ WILFRED J. MADDUX Director February 26, 1999
- ---------------------------------------------
Wilfred J. Maddux
/s/ PAUL C. SCHORR III Director February 26, 1999
- ---------------------------------------------
Paul C. Schorr, III
/s/ WILLIAM C. SMITH Director February 26, 1999
- ---------------------------------------------
William C. Smith
/s/ NEAL E. TYNER Director February 26, 1999
- ---------------------------------------------
Neal E. Tyner
/s/ WINSTON J. WADE Director February 26, 1999
- ---------------------------------------------
Winston J. Wade
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 96
- --------------------------------------------------------------------------------
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1999
REGISTRATION NO. 333-5529
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
EXHIBITS TO
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM N-4
---------------------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 97
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<C> <S> <C>
(6)(b) Bylaws of Ameritas Life Insurance Corp.
(9) Opinion and consent of Donald R. Stading
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT (6)(b)
RESTATED BY-LAWS OF
AMERITAS LIFE INSURANCE CORP.
February 26, 1999
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation in
the State of Nebraska shall be located in the City of Lincoln, County of
Lancaster. The Corporation may have such other offices, either within or without
the State of Nebraska, as the Board of Directors may designate or as the
business of the Corporation may require from time to time.
Section 2. Registered Office. The registered office of the Corporation
may be, but need not be, identical with the principal office in the State of
Nebraska, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II
SHAREHOLDER
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held on such day at such time of day as may be determined by the Board of
Directors, but in no event later than June 30, of each year. If the day fixed
for the annual meeting shall be on a legal holiday in the State of Nebraska,
such meeting shall be held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Chairman of the Board or the President or by the Board of Directors, and
shall be called by the Chairman of the Board, the President or the Secretary at
the request of the holders of not less than one-tenth of all the outstanding
shares of the Corporation entitled to vote at the meeting.
Section 3. Place of Meeting. Written or printed notice stating the
place (either within or without the State of Nebraska), the day and the hour of
the meeting and, in case of a special meeting; the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) nor more than
fifty (50) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman or the Secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the shareholder at its address as it
appears on the stock transfer books of the Corporation, with postage thereon
prepaid.
<PAGE> 2
Section 4. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, those present may adjourn the
meeting from time to time with notice to shareholders. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 5. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by its duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting.
Section 6. Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
Section 7. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Board of Directors of such corporation may prescribe.
Section 8. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. Number, Term. The Board of Directors shall consist of
fifteen (15) members divided into three (3) classes and elected by the
policyholders from their number as in the Articles of Incorporation provided. No
outside director shall serve beyond the last day of the month in which he or she
shall reach his or her 70th birthday. No inside director shall serve after his
or her retirement from active corporate service, provided however, if an inside
director is elected prior to his or her retirement, he or she may continue to
serve as a director until the end of the term for which he or she shall have
been elected. "Inside Director" shall mean a director of Ameritas Acacia Mutual
Holding Company, or any of its subsidiaries or affiliates, who is a full-time
employee of Ameritas Acacia Mutual Holding Company or any of its subsidiaries or
affiliates.
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held at the time the annual meeting of shareholders is held,
or when otherwise determined by the Board of Directors from time to time, at the
place and hour, within or without the State of Nebraska, specified in the Notice
of such meeting. The Board of Directors may provide, by resolution, the time and
place, either within or without the State of Nebraska, for the holding of
additional regular meetings without other notice than such resolution.
<PAGE> 3
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board or the President
or any two Directors. The person or persons authorized to call special meetings
of the Board of Directors may fix any place, either within or without the State
of Nebraska, as the place for holding any special meeting of the Board of
Directors called by them.
Section 5. Notice of Special Meetings. Notice of any special meeting
shall be given at least two (2) days prior thereto by written notice delivered
personally or by overnight courier, or at least ten (10) days prior thereto by
mail, to each Director and to the Secretary at his or her business address. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage thereon prepaid. Appearance of any
Director at a meeting shall constitute a waiver of notice of such meeting to
such Director, except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. A majority of Directors present shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors.
Section 7. Manner of Acting. Members of the Board of Directors or of
any committee appointed by the Board may participate in a meeting by means of
conference telephone or similar communications equipment whereby all members
participating in the meeting are able to hear each other, and participation in
such meeting in such manner shall constitute presence in person at such meeting.
Any two members of the Board of Directors may, upon written request directed to
the Chairman or the Secretary of the Corporation, (i) place any matter on the
agenda for any meeting of the Board of Directors and/or (ii) call for a vote on
any agenda item during any meeting of the Board of Directors. Any action
required or permitted to be taken at a meeting of the Board of Directors may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all the Directors.
Section 8. Vacancies. Any vacancy occurring in the Board of Directors
shall be filled by the Board of Directors. A Director elected to fill a vacancy
shall be elected for the unexpired term of his or her predecessor in office.
Section 9. Compensation. By resolution of the Board of Directors, the
Directors who are not employed by or serving as officers of the Corporation may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor; provided, however, that no such Director
employed by or serving as an officer of the Corporation shall receive any
compensation as a Director.
Section 10. Indemnification. The Corporation shall indemnify any person
who was, or is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that he or she is or was a
director, officer or employee
<PAGE> 4
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonable incurred
in connection with such action, suit or proceeding to the full extent authorized
by the laws of Nebraska.
Section 11. Personal Liability. No person employed by the company as a
director, officer, employee, or agent or serving at the request of the company
as a director, officer, employee, or agent of one of the company's subsidiaries
or affiliates shall be personally liable to the company or any member thereof
for monetary damages of any type which arise as a result of acts or omissions by
the director, officer, employee, or agent which are related to the director,
officer, employee, or agent's responsibilities with the company, which are done
in good faith and which do not involve intentional misconduct or a knowing
violation of the law.
Section 12. Non-exclusive Provision. The foregoing right of indemnity
and reimbursement shall not be deemed exclusive of any other rights to which any
director, officer, employee, or agent may be entitled under any other law,
by-law, agreement, vote of shareholders or otherwise.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a Chairman
of the Board, a Chief Executive Officer, a President, one or more Vice
Presidents (the number thereof to be determined by the Board of Directors), a
Secretary, and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors. Any two or more offices
may be held by the same person, except that the Chairman or President cannot
also hold the office of Secretary, Treasurer or Vice President.
Additionally, the Board of Directors may designate any area of the
Company or line of business as a division of the Company and elect a President
thereof who shall have such duties and responsibilities and shall report to such
person or persons as the Board of Directors shall determine, effective February
1, 1999.
Section 2. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. The term of office for each officer shall be one year, and
each such officer shall hold office only until the expiration of such one-year
period unless otherwise determined by the Board of Directors. Each officer shall
hold office until the earliest of (i) the expiration of his or her term, (ii)
the due election and qualification of his or her successor, (iii) his or her
death, or (iv) his or her resignation or removal in the manner hereinafter
provided.
<PAGE> 5
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. A vacancy in an office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. The Chairman. The Chairman shall preside over all meetings
of the shareholders and of the Board of Directors and shall perform such duties
as may be prescribed and delegated to him or her by the Board of Directors.
Section 6. The Chief Executive Officer. The Chief Executive Officer
shall be the principal executive officer of the Corporation and, subject to the
control of the Board of Directors and its Executive Committee, shall in general
supervise and control all of the business and affairs of the Corporation. He or
she may sign, with the Secretary or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates for shares of the
Corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of the Chairman of the Board and
such other duties as may be prescribed by the Board of Directors from time to
time.
Section 7. The President. The President shall have general control and
management of the business affairs of the Corporation subject to the direction
of the Chairman of the Board and Chief Executive Officer and the Board of
Directors. He or she may delegate such duties and responsibilities and authority
to other officers as he or she may deem proper.
Section 8. The Vice Presidents. In the absence of the President or in
the event of his or her death, inability or refusal to act, the Vice President
(or in the event there be more than one Vice President, the Vice Presidents in
the order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Any Vice President may sign, with
the Secretary or an Assistant Secretary, certificates for shares of the
Corporation; and shall perform such other duties as from time to time may be
assigned to him or her by the Chairman, the President or by the Board of
Directors.
Section 9. The Secretary. The Secretary shall: (a) keep the minutes of
the shareholder's and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these By-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholders; (e) sign, with the Chief Executive
<PAGE> 6
Officer or a Vice President, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him or
her by the Chairman, the President or by the Board of Directors.
Section 10. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the Board of Directors shall
determine. He or she shall: (a) have charge and custody of and be responsible
for all funds and securities of the Corporation; (b) receive and give receipts
for moneys due and payable to the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance with
provisions of Article VI of these By-laws; and (c) in general perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him or her by the Chairman, the President or by the
Board of Directors.
Section 11. Other Officers. The powers, authority, duties and
responsibilities of other executive officers shall be delegated and defined by
the Board of Directors, or if no such delegation and definition be made, then by
the Chief Executive Officer.
Section 12. Salaries. The salaries of the officers, if any, shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he or she is
also a Director of the Corporation.
Section 13. Delegation of Duties. The Board of Directors may at its
discretion designate such administrative officers as it may deem proper and
delegate such duties, responsibilities and authority to them as it may
determine.
Section 14. Appointed Officers. In addition to such authority granted
to the Board of Directors under Article IV, Section 1 and 13, of the By-Laws,
the Chief Executive Officer, may at his or her discretion, and consistent with
the Articles of Incorporation and By-Laws of the Corporation, appoint such
Appointed Officers as he or she shall deem proper and delegate such duties,
responsibilities, and authority to them as determined by said Chief Executive
Officer, and thereafter report such appointments to the Board of Directors.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. At each of its annual meetings, the
Board of Directors shall elect not less than three (3) of its members to serve
with the Chairman of the Board and the President as the Executive Committee for
the ensuing year and until their successors are elected and qualified. Any
vacancy in the Executive Committee occurring during the year may be filled for
the unexpired term by the Board of Directors. Notice of call of meeting may be
written or by telephone and shall be given to each member in sufficient time to
permit convenient travel by
<PAGE> 7
usual means to the meeting. Call and notice of call of meetings may be waived
before or after the meeting and attendance at any meeting shall constitute a
waiver of call and notice of call thereof by the attending member. Three (3)
members of the Executive Committee shall constitute a quorum for the transaction
of business.
Section 2. Duties of Executive Committee. Except as limited by the laws
of the State of Nebraska or by the provisions of the Articles of Incorporation,
the Executive Committee shall possess and exercise all the powers of the Board
of Directors in the interim between meetings of the Board of Directors. The
Executive Committee shall carry into practical effect all orders and directions
of the Board of Directors and shall in such interim decide all questions of
current business policy. The Secretary shall promptly forward a copy of the
minutes of each meeting of the Executive Committee to each director. It may
elect, appoint, employ, remove or authorize the appointment, employment or
removal of such supervisory and administrative officers and employees as it
shall deem necessary for the conduct of the company's business, including one or
more assistant secretaries and one or more assistant treasurers, with full
authority to perform the duties of Secretary and Treasurer, respectfully, and
fix and authorize payment of the compensation of such officers and employees. It
may, at its discretion, adjust the compensation of such officers and employees
so elected, appointed or employed.
Section 3. Finance Committee. At each of its annual meetings, the Board
of Directors shall elect not less than three (3) of its members to serve with
the Chairman of the Board and the President as the Finance Committee for the
ensuing year and until their successors are elected and qualified. Any vacancy
in the Finance Committee occurring during the year may be filled by the Board of
Directors for the unexpired term. Three (3) members of the Finance Committee
shall constitute a quorum for the transaction of business.
Section 4. Audit Committee. At each of its annual meetings, the Board
of Directors shall elect not less than three (3) of its members to serve as an
Audit Committee. The Committee shall be responsible for recommending to the
Board of Directors the selection of independent auditors, reviewing of the scope
and results of such audits, as well as internal audits, and reviewing with
independent auditors and internal auditors the adequacy of the Company's
accounting, financial, and operating controls. Three (3) members of the Audit
Committee shall constitute a quorum for the transaction of business.
Section 5. Nominating Committee. At each of its annual meetings, the
Board of Directors shall elect not less than three (3) of its members to serve
with the Chairman of the Board and President as the Nominating Committee for the
ensuing year and until their successors are elected and qualified. The
Nominating Committee shall be charged with the duty of nominating directors to
be elected or re-elected during the ensuing year. Any vacancy in the Nominating
Committee occurring during the year may be filled by the Board of Directors for
the unexpired term. Three (3) members of the Nominating Committee shall
constitute a quorum for the transaction of business.
Section 6. Standing Committees. The Board of Directors may establish
and discontinue standing committees as it may from time-to-time consider
necessary and proper. Delegating to each of them such responsibilities and
authority as it may deem appropriate and designate a chairman of each committee.
The Chairman of the Board and President shall be an ex-officio member of each
standing committee with full voting
<PAGE> 8
rights, except neither the Chairman of the Board nor the President shall be a
member of either the Audit Committee (or the Organization and Compensation
Committee).
Section 7. Committee Secretary. The chairman of each committee other
than the Executive Committee shall appoint a committee secretary, who shall keep
minutes of the official votes and acts of the committee and such other records
of the committee's deliberations and activities as the chairman shall direct.
The committee secretary shall keep one copy of such minutes and shall file a
copy with the Secretary of the company and send a copy to each member of the
Executive Committee.
Section 8. Vacancies in Committee. Vacancies in any standing committee
other than the Executive and Finance Committees may be filled by action of the
Executive Committee.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contract. The Board of Directors may authorize any
officer(s) or agent(s) to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidence of indebtedness issued in the name
of the Corporation shall be signed by such officer(s) or agent(s) of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chief Executive Officer or a
Vice President and by the Secretary or an Assistant Secretary. All certificates
for shares, including certificates for newly issued shares, shall be
consecutively numbered or otherwise identified. The name and address of the
person
<PAGE> 9
to whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer shall be canceled
and no new certificates shall be issued in respect of such transfer until the
former certificates for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by its legal representative, who shall furnish proper
evidence of authority to transfer, or by its attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be January 1 to December 31.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law.
ARTICLE X
SEAL
The Board of Directors shall provide a corporate seal and shall have
inscribed thereon the name of the Corporation, its state of incorporation and
the words "Corporate Seal."
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
Director of the Corporation under the provisions of these By-laws or under the
provisions of the Articles of Incorporation or under the provisions of the
<PAGE> 10
Nebraska Business Corporation Act, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
These By-laws may be altered, amended or repealed and new by-laws may
be adopted by the Board of Directors at any regular or special meeting of the
Board of Directors; provided, however, that these By-laws shall not be amended
without the unanimous consent of the Directors unless ten (10) days' written
notice of any meeting called for the purpose of amending the By-laws is
delivered to each Director.
CERTIFICATION
I, Donald R. Stading, duly elected and qualified Secretary of Ameritas
Life Insurance Corp., Lincoln, Nebraska, hereby certify that the attached
Restated By-Laws, is a true and exact copy of the By-Laws duly adopted by the
Board of Directors of Ameritas Life Insurance Corp. on February 26, 1999, and
that said By-Laws are in full force and effect.
IN WITNESS WHEREOF, I have affixed my name as Secretary and have caused
the corporate seal of said corporation to be hereunto affixed this
___________________ day of_____________________ , 19_________ .
_____________________________________
Secretary
(SEAL)
<PAGE> 1
EXHIBIT 9
[AMERITAS LIFE INSURANCE LETTERHEAD]
February 26, 1999
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, Nebraska 68501
Gentlemen:
With reference to Post-Effective Amendment No. 4 to the Registration Statement
on Form N-4, filed by Ameritas Life Insurance Corp. and Ameritas Life Insurance
Corp. Separate Account LLVA with the Securities & Exchange Commission covering
flexible premium variable annuity policies, I have examined such documents and
such laws as I considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:
1. Ameritas Life Insurance Corp. is duly organized and validly existing
under the laws of the State of Nebraska and has been duly authorized by
the Insurance Department of the State of Nebraska to issue variable
annuity policies.
2. Ameritas Life Insurance Corp. Separate Account LLVA is a duly
authorized and existing separate account established pursuant to the
provisions of Sections 44-310.06 (subsequently repealed) and/or
44-402.01 of the Statutes of the State of Nebraska.
3. The flexible premium variable annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of Ameritas Life
Insurance Corp.
I hereby consent to the filing of this opinion as an exhibit to said
Post-Effective Amendment No. 4 to the Registration Statement on Form N-4 and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Donald R. Stading
Donald R. Stading
Senior Vice President, Secretary
and Corporate General Counsel
