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As filed with the Securities and Exchange Commission on
February 29, 2000
Registration No. 333-5529
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No.____
Post Effective Amendment No. 6 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Pre-Effective Amendment No.____
Post Effective Amendment No. 6 [X]
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:
[ ] immediately upon filing pursuant to paragraph b
[X] on May 1, 2000 pursuant to paragraph a of Rule 485
[ ] on pursuant to paragraph b of Rule 485
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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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OVERTURE ANNUITY
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
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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; Fund Expense Summary; Example
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 Expense
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
Changes in contracts or operations......Addition, Deletion, or Substitution of Investment;
The Policy; Voting Rights
d) Contractowners 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.....................Highlight; Annuity Income Options
d) Assumed investment return............N/A
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
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
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FORM N-4 ITEM HEADING IN PROSPECTUS
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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 of 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 for Statement of
Additional Information..................Statement of Additional Information
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<TABLE>
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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
account.................................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
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PROSPECTUS
AMERITAS LIFE INSURANCE CORP. 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 31 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:
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CALVERT VARIABLE SERIES, INC. DEUTSCHE ASSET MANAGEMENT VIT FUNDS BERGER INSTITUTIONAL PRODUCTS TRUST
AMERITAS PORTFOLIOS ("DEUTSCHE VIT") ("BERGER IPT")
("AMERITAS PORTFOLIOS") Small Cap Index Fund Growth Fund
Ameritas Index 500 EAFE(R) Equity Index Fund Small Company Growth
Ameritas Growth
Ameritas MidCap Growth
Ameritas Small Capitalization
Ameritas Growth With Income
STRONG VARIABLE INSURANCE FUNDS, INC. CALVERT VARIABLE SERIES, INC. NEUBERGER BERMAN ADVISERS
("STRONG VIF"*) ("CVS SOCIAL PORTFOLIOS") MANAGEMENT TRUST
International Stock Fund II Social Small Cap Growth ("NEUBERGER BERMAN AMT")
Mid Cap Growth Fund II Social Mid Cap Growth Liquid Asset
Social International Equity Limited Maturity Bond
Social Balanced Growth
Partners
Balanced
STRONG OPPORTUNITY FUND II, INC.* RYDEX VARIABLE TRUST VARIABLE INSURANCE PRODUCTS FUND ("VIP")
*Strong VIF and Strong Opportunity Fund ("RYDEX") VARIABLE INSURANCE PRODUCTS FUND II ("VIP
II, Inc, are referred to collectively Nova Fund II")
as "Strong Funds(R)" Ursa Fund (COLLECTIVELY "FIDELITY PORTFOLIOS")
OTC Fund VIP High Income: Service Class
Precious Metals Fund VIP II Contrafund: Service Class
U.S. Government Bond Fund VIP II Investment Grade Bond: Initial Class
Juno Fund VIP II Mid Cap: Service Class
</TABLE>
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, 2000
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TABLE OF CONTENTS
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PAGE
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DEFINITIONS................................................. 3
HIGHLIGHTS.................................................. 5
FEE TABLE................................................... 6
CONDENSED FINANCIAL INFORMATION............................. 10
PERFORMANCE DATA............................................ 12
YEAR 2000................................................... 12
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS................ 12
Ameritas Life Insurance Corp......................... 12
The Separate Account................................. 13
The Funds............................................ 13
Addition, Deletion or Substitution of Investments.... 15
THE FIXED ACCOUNT........................................... 15
POLICY FEATURES............................................. 15
Control of the Policy................................ 16
Policy Purchase and Premium Payment.................. 16
Allocation of Premium................................ 16
Accumulation Value................................... 17
Transfers Among the Portfolios and the Fixed
Account.............................................. 17
Systematic Programs.................................. 18
Withdrawals and Surrenders........................... 18
Free Look Privilege.................................. 19
CHARGES AND DEDUCTIONS...................................... 19
Administrative Charges............................... 19
Mortality and Expense Risk Charge.................... 19
Tax Charges.......................................... 20
Fund Investment Advisory Fees and Expenses........... 20
ANNUITY PERIOD.............................................. 20
Annuity Date......................................... 20
Annuity Income Options............................... 21
FEDERAL TAX MATTERS......................................... 22
Taxation of Annuities in General..................... 22
Nonqualified Policies................................ 22
Qualified Policies................................... 23
GENERAL PROVISIONS.......................................... 24
Annuitant's Beneficiary.............................. 24
Death of Annuitant................................... 25
Death of Owner....................................... 25
Deferment of Payment................................. 25
Contestability....................................... 26
Misstatement of Age or Sex........................... 26
Reports and Records.................................. 26
DISTRIBUTION OF THE POLICIES................................ 26
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 26
THIRD PARTY SERVICES........................................ 27
VOTING RIGHTS............................................... 27
LEGAL PROCEEDINGS........................................... 27
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 28
</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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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. If
there are Joint Annuitants, the Policy is based on the life expectancies of the
Joint Annuitants. The Annuitants may also be the Owner(s) of the Policy.
ANNUITANT'S BENEFICIARY - The person who will receive any benefits paid upon the
death of the Annuitant, or if there are Joint Annuitants, upon the death of the
second to die of the Annuitants.
ANNUITY DATE - The date on which Annuity Payments are scheduled to begin.
ANNUITY INCOME OPTION - One of several ways in which Annuity Payments may be
made.
ANNUITY PAYMENT - One of a series of payments paid to the Annuitant(s) 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 - Ameritas Portfolios, Deutsche VIT, CVS Social Portfolios, Fidelity
Portfolios, Berger IPT, Neuberger Berman AMT, Strong Funds, 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.
JOINT ANNUITANTS - Two Annuitants named by the Owner in the Policy application.
(The option to name Joint Annuitants may not be available in all states.) On the
Annuity Date, Annuity Payments may be made to the named Annuitants while they
are both living, then to the surviving Annuitant. Joint Annuitants are not
permitted on Qualified Policies prior to the income phase.
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, while an Annuitant is living 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 the Owner designates to own the
Policy upon the Owner's death where the Owner and Annuitant are not the same.
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
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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, Ameritas Portfolios offers five
Portfolios: Ameritas Index 500, Ameritas Growth, Ameritas MidCap Growth,
Ameritas Small Capitalization, and Ameritas Growth With Income; Deutsche VIT
offers two Portfolios: Small Cap Index Fund and EAFE Equity Index Fund; CVS
Social Portfolios offers four Portfolios: Social Small Cap Growth, Social Mid
Cap Growth, Social International Equity, and Social Balanced: Fidelity
Portfolios offer four Portfolios: VIP High Income: Service Class; VIP II
Contrafund: Service Class, VIP II Investment Grad Bond: Initial Class, and VIP
II Mid Cap: Service Class; Berger IPT offers two Portfolios: Berger IPT Growth
Fund and Berger IPT-Small Company Growth Fund; Neuberger Berman AMT offers five
Portfolios: Liquid Asset, Limited Maturity Bond, Growth, Partners, and Balanced;
Strong VIF offers two Portfolios: Strong International Stock Fund II, and Strong
Mid Cap 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, Tax Sheltered Annuities ("TSAs") 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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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, 31 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.
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. 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.)
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.)
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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.
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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
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FUND MANAGEMENT FEES
Fee information about the Funds was provided to Ameritas by the Funds. Ameritas
has not independently verified such information. The amount of expenses borne by
each Portfolio for the fiscal year ended December 31, 1999, was as follows:
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TOTAL
(Reflecting
INVESTMENT WAIVERS AND/OR WAIVERS AND/OR
ADVISORY & 12B-1 OTHER REIMBURSEMENTS, REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSE EXPENSES TOTAL IF ANY IF ANY)
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AMERITAS PORTFOLIOS(1)
Ameritas Index 500 0.29% -- 0.11% 0.40% 0.10% 0.30%
Ameritas Growth 0.80% -- 0.10% 0.90% 0.09% 0.81%
Ameritas MidCap Growth 0.85% -- 0.12% 0.97% 0.11% 0.86%
Ameritas Small
Capitalization 0.90% -- 0.10% 1.00% 0.08% 0.92%
Ameritas Growth With Income 0.80% -- 0.46% 1.26% 0.36% 0.90%
CVS SOCIAL PORTFOLIOS
Social Small Cap Growth 1.00% -- 0.58%(2) 1.58% -- 1.58%
Social Mid Cap Growth 0.90% -- 0.21%(2) 1.11% -- 1.11%
Social International Equity 1.10% -- 0.50%(2) 1.60%(3) -- 1.60%
Social Balanced 0.70% -- 0.19%(2) 0.89% -- 0.89%
DEUTSCHE VIT(4)
Small Cap Index Fund 0.35% -- 0.83% 1.18% 0.73% 0.45%
EAFE Equity Index Fund 0.45% -- 0.69% 1.15% 0.50% 0.65%
FIDELITY PORTFOLIOS(5)
VIP High Income: Service
Class 0.58% 0.10% 0.11% 0.79% -- 0.79%
VIP II Contrafund: Service
Class 0.58% 0.10% 0.10% 0.78% 0.03% 0.75%(6)
VIP II Investment Grade
Bond: Initial Class 0.43% -- 0.11% 0.54% -- 0.54%
VIP II Mid Cap: Service
Class 0.57% 0.10% 2.74% 3.41% -- 3.41%
BERGER IPT
Growth Fund 0.75% -- 1.44% 2.19% 1.19% 1.00%(7)
Small Company Growth 0.90% -- 0.63% 1.53% 0.38% 1.15%(7)
Neuberger Berman AMT(8)
Liquid Asset 0.65% -- 0.44% 1.09% 0.08%(9) 1.01%
Limited Maturity Bond 0.65% -- 0.11% 0.76% -- 0.76%
Growth 0.84% -- 0.08% 0.92% -- 0.92%
Partners 0.80% -- 0.07% 0.87% -- 0.87%
Balanced 0.85% -- 0.17% 1.02% -- 1.02%
STRONG FUNDS(10)
Mid Cap Growth Fund II 1.00% -- 0.15% 1.15% -- 1.15%
International Stock Fund II 1.00% -- 0.16% 1.16% -- 1.16%
Opportunity Fund II 1.00% -- 0.14% 1.14% -- 1.14%
RYDEX(11)
Nova Fund 0.74% -- 0.80% 1.55% -- 1.55%
Ursa Fund 0.90% -- 0.83% 1.73% -- 1.73%
OTC Fund 0.75% -- 0.80% 1.96% -- 1.96%
Precious Metals Fund 0.75% -- 1.42% 2.17% -- 2.17%
U.S. Government Bond Fund 0.50% -- 1.02% 1.52% -- 1.52%
Juno Fund 0.90% -- 1.36% 1.36% -- 1.36%
</TABLE>
- ---------------
(1) Ameritas Investment Corp. ("AIC"), a subsidiary of Ameritas, is investment
advisor to the Ameritas Portfolios. The Portfolio's aggregate expenses are
limited for a period of one year following November 1, 1999. Following this
one year period, expenses of the Ameritas Portfolios will not be permitted
to exceed an expense ratio which is .10% greater than the prior expense
ratio of the corresponding replaced fund, unless an amendment to the
investment advisory contract is approved
NLVA
7
<PAGE> 11
modifying or eliminating the expense guarantee. Total expenses have been
restated to reflect the above.
(2) Calvert Asset Management Company, Inc., an affiliate of Ameritas, is
investment advisor of the CVS Social Portfolios. "Other Expenses" reflect
an indirect fee. Net fund operating expenses after reductions for fees paid
indirectly would be as follows:
<TABLE>
<S> <C>
CVS Social Small Cap Growth 1.15%
CVS Social Mid Cap Growth 1.02%
CVS Social International Equity 1.50%
CVS Social Balanced 0.86%
</TABLE>
(3) Total expenses have been restated to reflect expenses expected to be
incurred in 2000.
(4) Bankers Trust Company is the investment advisor to Deutsche VIT. For its
services, the investment advisor receives a fee that is a percentage of
each fund's average daily net assets. The investment advisor has entered
into agreements to waive and/or reimburse operating expenses, including its
fees, that exceed certain percentages of the funds' aggregate average daily
net assets.
(5) Fidelity Management & Research Company is manager of VIP and VIP II
(Fidelity Portfolios).
(6) A portion of the brokerage commissions VIP II Contrafund: Service Class
pays was used to reduce fund expenses. In addition, through arrangements
with the fund's custodian, credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. Including
these reductions, the total operating expenses presented in the table would
have been 0.78%.
(7) Expenses reflect fee waiver and reimbursement. Berger LLC 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-Growth 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.
(8) Neuberger Berman Management Inc. ("NBMI") provides investment management
services to each Neuberger Berman AMT 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.
(9) NBMI has undertaken through May 1, 2001 to reimburse certain operating
expenses, including 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% of the average daily net asset value.
(10) Strong Capital Management, Inc. is the investment advisor for the Strong
Funds. 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.
(11) PADCO Advisors II, Inc., investment advisor of the Rydex Variable Trust,
and PADCO Service Company, Inc., servicer to the Rydex Variable Trust, may
from time to time volunteer to waive fees and/or reimburse expenses. For
the period ending December 31, 1999, there were no waivers or
reimbursements.
NLVA
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<PAGE> 12
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>
AMERITAS PORTFOLIOS
Ameritas Index 500 $11 $35 $ 61 $134
Ameritas Growth $16 $51 $ 88 $190
Ameritas MidCap Growth $17 $52 $ 90 $196
Ameritas Small Capitalization $18 $54 $ 93 $202
Ameritas Growth With Income $17 $54 $ 92 $200
CVS SOCIAL PORTFOLIOS
Social Small Cap Growth $24 $74 $127 $270
Social Mid Cap Growth $19 $60 $103 $222
Social International $24 $75 $128 $272
Social Balanced $17 $53 $ 92 $199
DEUTSCHE VIT
Small Cap Index Fund $13 $40 $ 69 $151
EAFE Equity Index Fund $15 $46 $ 79 $173
FIDELITY PORTFOLIOS
VIP High Income: Service Class $16 $50 $ 87 $188
VIP II Contrafund: Service Class $16 $49 $ 84 $184
VIP II Investment Grade Bond: Initial Class $14 $43 $ 74 $161
VIP II Mid Cap: Service Class $19 $59 $101 $218
BERGER IPT
Growth Fund $18 $57 $ 97 $211
Small Company Growth $20 $61 $105 $226
NEUBERGER BERMAN AMT
Liquid Asset $18 $57 $ 98 $212
Limited Maturity $16 $49 $ 85 $185
Growth $18 $54 $ 93 $202
Partners $17 $53 $ 91 $197
Balanced $19 $57 $ 98 $213
STRONG FUNDS
Mid Cap Growth Fund II $20 $61 $105 $226
International Stock Fund II $20 $62 $106 $227
Opportunity II $20 $61 $105 $225
RYDEX
Nova Fund $24 $73 $125 $267
Ursa Fund $26 $79 $134 $285
OTC Fund $24 $73 $125 $267
Precious Metals Fund $30 $92 $156 $328
U.S. Government Bond Fund $24 $72 $124 $264
Juno Fund $31 $95 $161 $337
</TABLE>
The example assumes an average $30,000 annuity investment. This example 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.
Please refer to the Funds' prospectuses for more information.
NLVA
9
<PAGE> 13
CONDENSED FINANCIAL INFORMATION
The financial statements for Ameritas and the subaccounts of 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,
1999, 1998, and 1997. The number of outstanding accumulation units in each
Subaccount as of December 31, 1999, 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>
AMERITAS PORTFOLIOS
- -----------------------------------------------------------------------------------------------------------------
Ameritas Index 500(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Ameritas Growth(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Ameritas MidCap Growth(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Ameritas Small
Capitalization(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Ameritas Growth With
Income(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
DEUTSCHE VIT
- -----------------------------------------------------------------------------------------------------------------
Small Cap Index Fund(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
EAFE Equity Index Fund(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
BERGER IPT
- -----------------------------------------------------------------------------------------------------------------
Growth Fund 23.018 5,265 1999
13.558 14,689 1998
10.97 11.748 12,757 1997
- -----------------------------------------------------------------------------------------------------------------
Small Company Growth Fund 20.070 20,004 1999
12.111 7,506 1998
10.38 11.979 5,387 1997
- -----------------------------------------------------------------------------------------------------------------
CVS SOCIAL PORTFOLIOS
- -----------------------------------------------------------------------------------------------------------------
Social Small Cap Growth(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Social Mid Cap Growth(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Social International(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
Social Balanced(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
FIDELITY PORTFOLIOS
- -----------------------------------------------------------------------------------------------------------------
VIP High Income: Service
Class(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
VIP II Contrafund: Service
Class(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
VIP II Investment Grade
Bond: Initial Class(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
VIP II Mid Cap: Service
Class(1) -- -- 1999
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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10
<PAGE> 14
<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>
NEUBERGER BERMAN AMT
- -----------------------------------------------------------------------------------------------------------------
Liquid Asset 1.116 1,921,666 1999
1.078 465,363 1998
1.00 1.037 289,768 1997
- -----------------------------------------------------------------------------------------------------------------
Limited Maturity Bond 15.549 22,169 1999
15.437 76,589 1998
14.08 14.899 33,642 1997
- -----------------------------------------------------------------------------------------------------------------
Growth 51.964 4,428 1999
34.807 4,829 1998
27.51 30.355 2,405 1997
- -----------------------------------------------------------------------------------------------------------------
Partners 22.574 40,952 1999
21.182 52,142 1998
17.31 20.480 28,567 1997
- -----------------------------------------------------------------------------------------------------------------
Balanced 27.889 6,962 1999
21.036 15,849 1998
16.57 18.892 11,464 1997
- -----------------------------------------------------------------------------------------------------------------
STRONG FUNDS
- -----------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund II 31.028 24,538 1999
16.461 13,361 1998
10.69 12.888 1,460 1997
- -----------------------------------------------------------------------------------------------------------------
International Stock Fund II 16.942 19,299 1999
9.117 13,841 1998
11.52 9.646 6,593 1997
- -----------------------------------------------------------------------------------------------------------------
Opportunity Fund II 36.187 19,783 1999
27.024 20,379 1998
19.62 23.979 1,876 1997
- -----------------------------------------------------------------------------------------------------------------
RYDEX
- -----------------------------------------------------------------------------------------------------------------
Nova Fund(2) 18.547 25,185 1999
-- -- 1998
- -----------------------------------------------------------------------------------------------------------------
Ursa Fund(2) 5.347 1,087 1999
-- -- 1998
- -----------------------------------------------------------------------------------------------------------------
OTC Fund(2) 39.299 49,403 1999
-- -- 1998
- -----------------------------------------------------------------------------------------------------------------
Precious Metals Fund(2) 5.425 7,344 1999
-- -- 1998
- -----------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund(2) 0 1999
-- -- 1998
- -----------------------------------------------------------------------------------------------------------------
Juno Fund(2) 0 1999
-- -- 1998
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No activity prior to 12/31/99
(2) No activity prior to 12/31/98
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11
<PAGE> 15
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, the annual Policy fee and Fund expense charges.
YEAR 2000
Like other insurance companies and their separate accounts, Ameritas and
Separate Account LLVA 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 April 15, 2000, Ameritas has experienced no known Y2K problems. All of our
computer application and operating systems had been updated for the year 2000 by
December 31, 1998. Continuous testing and monitoring throughout 1999 helped
Ameritas continue to meet our contractual and service obligations to our
customers. In addition to our internal efforts, Ameritas is working 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. Certain vendors and/or business partners, due
to their exposure to foreign markets, may face additional Y2K issues. Please see
the Funds' prospectuses for information on the Funds' preparedness for Y2K.
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. Ameritas's telephone number is 800-255-9678 and its
website address is www.ameritas.com. All inquires should include the Policy
number and the Owner's name.
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.
Effective January 1, 1999, Ameritas Mutual Holding Company and Acacia Mutual
Holding Corporation merged to form Ameritas Acacia Mutual Holding Company.
Ameritas is wholly owned by Ameritas Holding Company, which is wholly owned by
Ameritas Acacia Mutual Holding Company. There are no other owners of 5% or more
of the outstanding voting securities of Ameritas.
Ameritas and subsidiaries had total assets at December 31, 1999 of over $4.8
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
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12
<PAGE> 16
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 Policy Owners, 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.
THE FUNDS
The Funds currently available are: Ameritas Portfolios, Deutsche VIT, CVS Social
Portfolios, Fidelity Portfolios, Berger IPT, Neuberger Berman AMT, Strong Funds,
and Rydex. 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 31 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.
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.
NLVA
13
<PAGE> 17
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.
The eligible Portfolios of the Funds, along with their investment advisers, are
listed in the following table:
<TABLE>
<CAPTION>
INVESTMENT ADVISERS
FUND OR MANAGERS ELIGIBLE PORTFOLIOS FUND TYPE
- ---- ------------------- ------------------- ---------
<S> <C> <C> <C>
Ameritas Portfolios Ameritas Investment Corp(1) Ameritas Index 500 Growth and Income
Ameritas Growth Growth
Ameritas MidCap Growth Growth
Ameritas Small
Capitalization Aggressive Growth
Ameritas Growth With Income Growth and Income
Deutsche VIT Bankers Trust Company Small Cap Index Growth
EAFE Equity Index Fund Growth
Berger IPT Berger LLC Growth Fund Growth
Small Company Growth Fund Aggressive Growth
CVS Social Calvert Asset Management Social Small Cap Growth Growth
Portfolios(2) Company, Inc.(3) Social Mid Cap Growth Growth
Social International Equity International
Social Balanced Balanced
Fidelity Portfolios Fidelity Management & VIP High Income:
Research Company Service Class Fixed Income
VIP II Contrafund: Service
Class Growth
VIP II Investment Grade
Bond: Initial Class Fixed Income
VIP II Mid Cap: Service
Class Growth
Neuberger Berman Neuberger Berman Liquid Asset Money Market
AMT Management Inc. Limited Maturity Bond Fixed Income
Growth Growth
Partners Growth
Balanced Balanced
Strong VIF Strong Capital Mid Cap Growth Fund II Growth
Management, Inc International Stock Fund II International
Strong Opportunity Strong Capital Opportunity Fund II Growth
Fund II, Inc. Management, Inc.
Rydex PADCO Advisors II, Inc. Nova Fund Aggressive Growth
Ursa Fund Specialty
OTC Fund Growth
Precious Metals Fund Specialty
U.S. Government Bond Fund Fixed Income
Juno Fund Specialty
</TABLE>
(1) Ameritas Investment Corp. ("AIC"), a registered investment adviser under the
Investment Advisers Act of 1940, is an affiliate of Ameritas. AIC contracts
with the following subadvisers which provide investment subadvisory services
to the indicated Portfolios:
<TABLE>
<CAPTION>
PORTFOLIO SUBADVISER
--------- ----------
<S> <C>
Ameritas Index 500 State Street Global Advisors
Ameritas Growth Fred Alger Management, Inc.
Ameritas Small Capitalization Fred Alger Management, Inc.
Ameritas MidCap Growth Fred Alger Management, Inc.
Massachusetts Financial Services
Ameritas Growth With Income Company
</TABLE>
NLVA
14
<PAGE> 18
(2) The CVS Social Portfolios invest with the philosophy that long-term rewards
to investors will come from those organizations whose products, services,
and methods enhance the human condition and the traditional American values
of individual initiative, equality of opportunity and cooperative effort.
Investments are selected on the basis of their ability to contribute to the
dual objectives of financial soundness and social criteria.
(3) Certain administrative services are provided by other Calvert entities,
which are also affiliates of Ameritas.
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.
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. Ameritas 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
NLVA
15
<PAGE> 19
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 an Annuitant is living, the Owner
generally 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, while the Annuitant is living. If the Owner and Annuitant are not the
same individual and the Owner dies, the Owner's Designated Beneficiary becomes
the new Owner, or the Owner's estate if there is no surviving Owner's Designated
Beneficiary on death of the Owner. If the Owner/Annuitant are the same, and the
Owner/Annuitant dies before the Annuity Date, the Owner's Designated Beneficiary
will have no rights in the Policy unless the Owner's Designated Beneficiary is
also the Annuitant's Designated Beneficiary. On the Annuity Date, Annuity Income
Option payments are payable to the Annuitant(s). Once a fixed Annuity Income
Option is selected, the Policy will end and Ameritas will issue a supplemental
Policy to the Annuitant(s) to describe the terms of the option selected. The
supplemental Policy will also name who will receive payments and when payments
will be made.
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 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.
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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.
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. Rydex requests received after the cutoff time
will be executed on the following business day. 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. 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. Rydex requests received after the cutoff time will be executed on the
following business day.
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
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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. We will count your
transfers in these programs when 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, you can
instruct Ameritas to reallocate Accumulation Value among the Portfolios, on a
systematic basis, in accordance with allocation instructions you specify. The
Fixed Account can not be used in this program.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
Ameritas to automatically transfer, on a systematic basis, a predetermined
amount or percentage you specify 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.
You can request participation in the available systematic programs when
purchasing the Policy or at a later date. You 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 (if Joint Annuitants, upon the death of the second to die). 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 an 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, or as
permitted with respect to certain Qualified Policies.
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
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"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.
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.
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In addition, Ameritas bears a mortality risk under the Policies in two important
aspects. First, regardless of the Annuity Income Option selected, Ameritas
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 (if Joint Annuitants, the death of the second to die) 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 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 (if Joint
Annuitants, if both are deceased) and an amount has been paid as proceeds prior
to that date. The Annuity Date will normally be the later of the fifth Policy
anniversary date or the Policy anniversary which is nearest the Annuitant's 85th
birthday (if Joint Annuitants, the younger 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
(if Joint Annuitants, the younger Annuitant's 95th birthday). The 29th, 30th, or
31st day of any month may not be selected as the Annuity Date. Some
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states may require an earlier Annuity Date. Further, an earlier Annuity Date may
be required by the Internal Revenue Code for Qualified Policies.
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 limits on partial or systematic withdrawals and Annuity
Income Options available for Qualified Policies 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 you choose the
Interest Payment Option, 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. You must choose an Annuity Income
Option by written request to Ameritas at least thirty (30) days in advance of
the Annuity Date. If you do not, payments will be made as a Life Annuity, or if
there are Joint Annuitants, as a Joint and Last Survivor Annuity, as shown
below. Subject to Ameritas' approval, the Owner (or after the death(s) of the
Annuitant(s), 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 you choose an Annuity Income Option
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 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
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Annuity Table, projected for seventeen years, at 32 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. The rules applicable to Qualified Policies may
permit systematic or partial withdrawals to continue after the Annuity Date (as
defined for those Policies) with a later election of a permissible Annuity
Income Option.
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 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.
Tax treatment of amounts received as an annuity under the Policy, is different
from taxation of distributions or withdrawals that are not in annuity form.
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
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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.
Distributions from non-qualified annuity policies are generally subject to
federal income tax. Ameritas will withhold taxes as required by the Code from
the distributions unless the taxpayer requests otherwise. Withholding cannot be
waived if the distribution is subject to mandatory back-up withholding (if no
mandatory taxpayer identification number is given or if Ameritas is notified
that mandatory back-up holding is required). Mandatory back-up withholding rates
are 31% of income that is distributed. Distributions to non-resident aliens may
be subject to mandatory withholding at 30% of the income distributed.
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 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
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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 (if Joint Annuitants, the death of the second to die). 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.
NLVA
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<PAGE> 28
DEATH OF ANNUITANT
If the last surviving 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. Generally, 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 generally may be continued with the surviving
spouse treated as the Owner for purposes of applying the rules described above.
This exception will not apply if the Owner is also the Annuitant and someone
other than the surviving spouse is named as the Annuitant's Beneficiary.
Finally, in situations where the Owner is not an individual, these distribution
rules are applicable upon the death or change of the Annuitant(s).
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.
NLVA
25
<PAGE> 29
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 $14,034 for 1999, $10,129 for 1998, and $4,677 for 1997.
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.
NLVA
26
<PAGE> 30
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.
NLVA
27
<PAGE> 31
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>
<S> <C>
GENERAL INFORMATION AND HISTORY............................. 2
THE POLICY.................................................. 2
GENERAL MATTERS............................................. 7
FEDERAL TAX MATTERS......................................... 8
DISTRIBUTION OF THE POLICY.................................. 9
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS...................... 10
STATE REGULATION............................................ 10
LEGAL MATTERS............................................... 10
EXPERTS..................................................... 10
OTHER INFORMATION........................................... 10
FINANCIAL STATEMENTS........................................ 10
</TABLE>
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<PAGE> 32
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
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.
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-11
</TABLE>
AMERITAS LIFE INSURANCE CORP. LOGO
<PAGE> 33
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
[AMERITAS LIFE INSURANCE CORP. LOGO]
- --------------------------------------------------------------------------------
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), a SIMPLE
IRA or a Roth IRA. A separate policy must be purchased for each individual under
each plan. 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.
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.
QD- 1
IRS/SEP/SIMPLE/ROTH
NO LOAD VARIABLE ANNUITY 2/2000
<PAGE> 34
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 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
Education IRAs or employer contributions or salary deferrals made 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 except as otherwise permitted by the Internal Revenue Service. The
Service announced transition relief from this rule for 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 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
QD- 2
IRS/SEP/SIMPLE/ROTH
NO LOAD VARIABLE ANNUITY 2/2000
<PAGE> 35
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).
Also, beginning in the 1998 tax year, rollovers or conversions may be made from
non-Roth IRAs to a Roth IRA. These contributions can be commingled with regular
Roth contributions if your policy permits. 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 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 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).
ROTH CONVERSION IRA: A Roth Conversion IRA is a Roth IRA that only accepts IRA
conversion contributions made during the same tax year. YOU SHOULD NOT DESIGNATE
YOUR POLICY AS A ROTH CONVERSION IRA IF YOU WISH TO MAKE BOTH REGULAR ROTH AND
CONVERSION CONTRIBUTIONS TO THE POLICY.
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, SARSEP, or SIMPLE 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
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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.
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)).
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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 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 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.
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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> <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 AMERITAS 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.
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,
RECHARACTERIZATIONS OF CONVERSIONS AND DISTRIBUTIONS FROM A ROTH IRA 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. However, in Announcement 99-104, the IRS has indicated
that a calendar year taxpayer that has timely filed his 1998 federal income
tax return, can elect to recharacterize a 1998 IRA contribution, including a
Roth IRA conversion, provided appropriate corrective action is taken by
December 31, 1999. For the 1999 tax year, the deadline is
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currently October 16, 2000 (See Form 8606 instructions). Appropriate
corrective action may include notifying the trustee or issuer; having the
trustee or issuer actually making the transfer or account redesignation; and
filing an amended 1998 or 1999, as appropriate, federal income tax return to
reflect the recharacterization. For 1998, the corrected return must be filed
by April 15, 2000. 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 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).
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.
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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
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.
QD- 8
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<PAGE> 41
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%.
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. Additional information is
also available in IRS Publication 590.
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 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.
QD- 9
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<PAGE> 42
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 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.
PARTIAL AND FULL 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. If an annuity
option is elected, no partial or full withdrawals may be made after the annuity
date except as permitted under the particular annuity option. Systematic or
partial withdrawals may be continued after the annuity date, for Qualified
Policies, with Ameritas' consent. 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).
QD- 10
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<PAGE> 43
EMPLOYEE BENEFIT PLAN
INFORMATION STATEMENT
401(A) PENSION/PROFIT SHARING PLANS
AMERITAS LIFE INSURANCE CORP. LOGO
- --------------------------------------------------------------------------------
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.
PARTIAL AND FULL 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 or as may be permitted under the plan and the Internal
Revenue Code and applicable regulations. 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- 11
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<PAGE> 44
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, 2000, 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, 2000
<PAGE> 45
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
GENERAL INFORMATION AND HISTORY................................................2
THE POLICY.....................................................................2
Accumulation Value...........................................................2
Value of Accumulation Units..................................................2
Calculation of Performance Data .............................................2
Total Return ................................................................3
Performance .................................................................4
Yields ......................................................................6
GENERAL MATTERS................................................................7
The Policy...................................................................7
Non-Participating............................................................7
Assignment...................................................................7
Annuity Data.................................................................7
Ownership....................................................................7
Joint Annuitants.............................................................8
IRS Required Distributions...................................................8
FEDERAL TAX MATTERS............................................................8
Taxation of Ameritas.........................................................8
Tax Status of the Policies...................................................8
Qualified Policies...........................................................9
DISTRIBUTION OF THE POLICY.....................................................9
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS........................................10
STATE REGULATION..............................................................10
LEGAL MATTERS.................................................................10
EXPERTS.......................................................................10
OTHER INFORMATION.............................................................10
FINANCIAL STATEMENTS..........................................................10
</TABLE>
<PAGE> 46
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, 31 Subaccounts of the Separate Account are available under the
contracts. Each Subaccount invests in a corresponding investment portfolio of
Calvert Variable Series, Inc. ("Ameritas Portfolios"), Deutsche Asset
Management VIT Funds ("Deutsche VIT"), Calvert Variable Series, Inc. ("CVS
Social Portfolios"), Variable Insurance Products Fund ("VIP"), Variable
Insurance Products Fund II ("VIP II") (collectively "Fidelity Portfolios"),
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.
CALCULATION OF PERFORMANCE DATA
As disclosed in the prospectus, premium payments will be allocated to Separate
Account LLVA which has 31 Subaccounts, with the assets of each invested in
corresponding portfolios of Ameritas Portfolios, Deutsche VIT, CVS Social
Portfolios, Fidelity Portfolios, Berger IPT, Neuberger Berman AMT, Strong Funds
or Rydex ("the Funds"), or to the Fixed Account. From time to time Ameritas will
advertise the performance data of the portfolios of the Funds.
NLVA
SAI 2
<PAGE> 47
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 Services 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 surrendercharge, the average annual total return would be
the same for the relevant time periods if the contract is continued.
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,
1999. Standardized performance is not available for Rydex, because Rydex has not
previously been available through Separate Account LLVA.
NLVA
SAI 3
<PAGE> 48
AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING ON 12/31/99
<TABLE>
<CAPTION>
SINCE OFFERED
SUBACCOUNT IN THE
INCEPTION DATE ONE YEAR FIVE YEAR SEPARATE ACCOUNT
-------------- -------- --------- ----------------
<S> <C> <C> <C> <C>
AMERITAS PORTFOLIOS
Ameritas Growth 05/01/00 NA NA NA
Ameritas Small Capitalization 05/01/00 NA NA NA
Ameritas MidCap Growth 05/01/00 NA NA NA
Ameritas Growth With Income 05/01/00 NA NA NA
Ameritas Index 500 05/01/00 NA NA NA
BERGER IPT
Growth 01/22/97 45.53% NA 20.48%
Small Company Growth 01/22/97 87.56% NA 28.49%
CVS SOCIAL PORTFOLIOS
Social Small Cap Growth 05/01/00 NA NA NA
Social Mid Cap Growth 05/01/00 NA NA NA
Social International Equity 05/01/00 NA NA NA
Social Balanced 05/01/00 NA NA NA
DEUTSCHE VIT
Small Cap Index 05/01/00 NA NA NA
EAFE Equity Index 05/01/00 NA NA NA
FIDELITY PORTFOLIOS
VIP High Income: Service Class 05/01/00 NA NA NA
VIPII Contrafund: Service Class 05/01/00 NA NA NA
VIPII Mid Cap: Service Class 05/01/00 NA NA NA
VIPII Investment Grade Bond: Initial
Class 05/01/00 NA NA NA
NEUBERGER BERMAN AMT
Limited Maturity Bond 01/22/97 -1.78% NA 1.73%
Growth 01/22/97 46.79% NA 25.43%
Partners 01/22/97 4.07% NA 9.49%
Balanced 01/22/97 30.08% NA 17.24%
RYDEX
Nova 05/01/99 NA NA 0.57%
Ursa 05/01/99 NA NA -0.60%
OTC 05/01/99 NA NA 7.13%
Precious Metals 05/01/99 NA NA -2.21%
U.S. Government Bond 05/01/99 NA NA -1.90%
Juno 05/01/99 NA NA 1.33%
STRONG FUNDS(R)
Mid Cap Growth Fund II 01/22/97 86.00% NA 40.82%
International Stock Fund II 01/22/97 83.33% NA 11.33%
Opportunity Fund II 01/22/97 31.41% NA 21.02%
</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.
NLVA
SAI 4
<PAGE> 49
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,
1999.
HISTORICAL AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING ON 12/31/99
<TABLE>
<CAPTION>
TEN YEARS OR
PORTFOLIOS INCEPTION ONE YEAR FIVE YEAR LIFE OF FUND
- ---------- --------- -------- --------- ------------
<S> <C> <C> <C> <C>
AMERITAS PORTFOLIOS
Ameritas Growth 10/29/99 NA NA NA
Ameritas Small Capitalization 10/29/99 NA NA NA
Ameritas MidCap Growth 10/29/99 NA NA NA
Ameritas Growth With Income 10/29/99 NA NA NA
Ameritas Index 500 10/29/99 NA NA NA
BERGER IPT
Growth 05/01/96 47.95% NA 20.65%
Small Company Growth 05/01/96 89.97% NA 25.26%
CVS SOCIAL PORTFOLIOS
Social Small Cap Growth 03/15/95 NA NA NA
Social Mid Cap Growth 07/16/91 NA NA NA
Social International Equity 06/30/92 NA NA NA
Social Balanced 09/02/86 NA NA NA
DEUTSCHE VIT
Small Cap Index 08/25/97 NA NA NA
EAFE Equity Index 08/22/97 NA NA NA
FIDELITY PORTFOLIOS
VIP High Income: Service Class 09/19/85 NA NA NA
VIPII Contrafund: Service Class 01/03/95 NA NA NA
VIPII Mid Cap: Service Class 12/28/98 NA NA NA
VIPII Investment Grade Bond:
Initial Class 12/05/88 NA NA NA
NEUBERGER BERMAN AMT
Limited Maturity Bond 09/10/84 0.64% 4.66% 4.98%*
Growth 09/10/84 49.21% 25.37% 14.69%*
Partners 03/22/94 6.48% 20.07% 16.39%
Balanced 02/28/89 32.49% 17.86% 11.75%*
RYDEX
Nova 05/07/97 17.86% NA 28.59%
Ursa 06/10/97 -14.00% NA -19.46%
OTC 05/07/97 102.39% NA 69.77%
Precious Metals 05/29/97 -23.98% NA -2.31%
U.S. Government Bond 08/18/97 19.17% NA 4.87%
Juno 03/03/98 -5.23% NA -22.60%
STRONG FUNDS(R)
Mid Cap Growth Fund II 12/31/96 88.41% NA 45.75%
International Stock Fund II 10/20/95 85.75% NA 13.07%
Opportunity Fund II 05/08/92 33.83% 22.38% 19.99%
</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.
NLVA
SAI 5
<PAGE> 50
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, 1999.
HISTORICAL CUMULATIVE TOTAL RETURN FOR PERIOD ENDING ON 12/31/99
<TABLE>
<CAPTION>
TEN YEARS OR
PORTFOLIOS INCEPTION ONE YEAR FIVE YEAR LIFE OF FUND
- ---------- --------- -------- --------- ------------
<S> <C> <C> <C> <C>
AMERITAS PORTFOLIOS
Ameritas Growth 10/29/99 NA NA NA
Ameritas Small Capitalization 10/29/99 NA NA NA
Ameritas MidCap Growth 10/29/99 NA NA NA
Ameritas Growth With Income 10/29/99 NA NA NA
Ameritas Index 500 10/29/99 NA NA NA
BERGER IPT
Growth 05/01/96 47.95% NA 99.45%
Small Company Growth 05/01/96 89.97% NA 128.88%
CVS SOCIAL PORTFOLIOS
Social Small Cap Growth 03/15/95 NA NA NA
Social Mid Cap Growth 07/16/91 NA NA NA
Social International Equity 06/30/92 NA NA NA
Social Balanced 09/02/86 NA NA NA
DEUTSCHE VIT
Small Cap Index 08/25/97 NA NA NA
EAFE Equity Index 08/22/97 NA NA NA
FIDELITY PORTFOLIOS
VIP High Income: Service Class 09/19/85 NA NA NA
VIPII Contrafund: Service Class 01/03/95 NA NA NA
VIPII Mid Cap: Service Class 12/28/98 NA NA NA
VIPII Investment Grade Bond: Initial
Class 12/05/88 NA NA NA
NEUBERGER BERMAN AMT
Limited Maturity Bond 09/10/84 0.64% 26.04% 63.58%*
Growth 09/10/84 49.21% 210.47% 295.88%*
Partners 03/22/94 6.48% 150.14% 142.99%
Balanced 02/28/89 32.49% 128.07% 205.39%*
RYDEX
Nova 05/07/97 17.86% NA 95.72%
Ursa 06/10/97 -14.00% NA -42.69%
OTC 05/07/97 102.39% NA 310.56%
Precious Metals 05/29/97 -23.98% NA -5.35%
U.S. Government Bond 08/18/97 19.17% NA 9.20%
Juno 03/03/98 -5.23% NA -48.25%
STRONG FUNDS(R)
Mid Cap Growth Fund II 12/31/96 88.41% NA 210.06%
International Stock Fund II 10/20/95 85.75% NA 69.08%
Opportunity Fund II 05/08/92 33.83% 175.19% 305.66%
</TABLE>
*10 Year Figure
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
NLVA
SAI 6
<PAGE> 51
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, 1999 for the
Liquid Asset Portfolio was 4.53% and the net effective yield for the 7-day
period ended December 31, 1999 for the Liquid Asset Portfolio was 4.63%.
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 ) / cd) + 1)6 - 1]
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.
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 an annuitant's lifetime, all
rights and privileges under this Policy may generally be exercised solely by the
owner. While an annuitant is living, the owner generally 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, while the annuitant is living.
NLVA
SAI 7
<PAGE> 52
If the owner and annuitant are not the same individual and the owner
dies, the owner's designated beneficiary becomes the new owner, or the owner's
estate if there is no surviving owner's designated beneficiary on death of the
owner. If the owner/annuitant are the same, and the owner/annuitant dies before
the annuity date, the owner's designated beneficiary will have no rights in the
Policy unless the owner's designated beneficiary is also the annuitant's
designated beneficiary. On the annuity date, annuity income option payments are
payable to the annuitant(s). Once a fixed annuity income option is selected, the
Policy will end and Ameritas will issue a supplemental Policy to the
annuitant(s) to describe the terms of the option selected. The supplemental
Policy will also name who will receive payments and when payments will be made.
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. Assignment of the Policy may be a taxable event. 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.
JOINT ANNUITANTS
The owner may name joint annuitants on the Policy application. The joint
annuitants must meet Ameritas' underwriting requirements. An annuitant may not
be replaced. The annuity date shall be determined based on the date of birth of
the younger joint annuitant.
IRS REQUIRED DISTRIBUTIONS
If the owner dies before the entire interest in the Policy is distributed, the
value of the Policy must be distributed 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 last surviving annuitant will be treated as death of
the owner.
If the death of the owner 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, and the owner and the annuitant are
not the same person, 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.
Ameritas reserves the right to require proof of the Owner's 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, even if the
original owner was actually the same person as the annuitant.
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 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 currently to the owner. 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 directly 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.
NLVA
SAI 8
<PAGE> 53
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 701/2. 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 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.
Generally, where the Policy is purchased by a qualified plan, the tax-deferral
feature is provided through the qualified plan and the tax-deferral feature of
the Policy is not necessary and does not provide any additional tax deferred
treatment of earnings.
The Policy does provide features unavailable in other products, such as lifetime
income payments, family protection through the death benefit, and certain
guarantees of fees and expenses. Fees imposed by the Policy may be higher than
alternative investments, such as mutual funds, as a result of offering these
features.
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.
NLVA
SAI 9
<PAGE> 54
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 $14,034 for 1999, $10,129 for 1998,
and $4,677 for 1997.
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.
EXPERTS
The consolidated financial statements of Ameritas as of December 31, 1999 and
1998, and for each of the three years in the period ended December 31, 1999, and
the financial statements of the subaccounts of Separate Account LLVA as of
December 31, 1999, and for each of the two years in the period then ended,
included in this Statement of Additional Information have been audited by
Deloitte & Touche LLP, 1040 NBC Center, Lincoln, Nebraska 68508, independent
auditors, as stated in their reports appearing herein, and are included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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
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.
NLVA
SAI 10
<PAGE> 55
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Life Insurance Corp.
Lincoln, Nebraska
We have audited the accompanying statement of net assets of each of the
subaccounts of Ameritas Life Insurance Corp. Separate Account LLVA, (comprising,
respectively, the Balanced Portfolio, Growth Portfolio, Partners Portfolio,
Limited Maturity Bond Portfolio, and Liquid Assets Portfolio of the Neuberger &
Berman Advisers Management Trust; the International Stock Fund II Portfolio, and
Growth Fund II Portfolio of the Strong Variable Insurance Funds, Inc.; the
Opportunity Fund II, Inc. Portfolio of the Strong Opportunity Fund II, Inc.; the
100 Fund Portfolio, and Small Company Growth Portfolio of the Berger
Institutional Products Trust; and the Nova Portfolio (commenced November 1,
1999), OTC Portfolio (commenced July 25, 1999), Precious Metals Portfolio
(commenced August 13, 1999), Ursa Portfolio (commenced November 1, 1999), and
U.S. Government Bond Portfolio (commenced July 20, 1999) of the Rydex Variable
Trust) as of December 31, 1999, and the related statements of operations and
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1999. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of each of the subaccounts constituting
Ameritas Life Insurance Corp. Separate Account LLVA as of December 31, 1999, and
the results of its operations and changes in net assets for each of the two
years in the period then ended, in conformity with generally accepted accounting
principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 2000
F-I- 1
<PAGE> 56
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
Balanced Portfolio -- 9,294.566 shares at $20.89 per
share (cost $198,972)................................. $ 194,163
Growth Portfolio -- 6,082.216 shares at $37.27 per
share (cost $149,906)................................. 226,684
Partners Portfolio -- 47,085.126 shares at $19.64 per
share (cost $828,026)................................. 924,752
Limited Maturity Bond Portfolio -- 26,151.811 shares at
$13.24 per share (cost $402,519)...................... 346,250
Liquid Assets Portfolio -- 2,148,442.540 shares at
$1.00 per share (cost $2,148,442)..................... 2,148,442
STRONG VARIABLE INSURANCE FUNDS, INC.:
International Stock Fund II Portfolio -- 19,808.985
shares at $16.37 per share (cost $202,428)............ 324,273
Growth Fund II Portfolio -- 25,081.593 shares at $30.37
per share (cost $373,513)............................. 761,728
STRONG OPPORTUNITY FUND II, INC.:
Opportunity Fund II, Inc. Portfolio -- 27,553.944
shares at $25.99 per share (cost $536,638)............ 716,127
BERGER INSTITUTIONAL PRODUCTS TRUST:
100 Fund Portfolio -- 20,888.554 shares at $19.22 per
share (cost $279,751)................................. 401,478
Small Company Growth Portfolio -- 5,154.773 shares at
$23.51 per share (cost $42,671)....................... 121,189
RYDEX VARIABLE TRUST:
Nova Portfolio -- 25,153.351 shares at $18.57 per share
(cost $414,742)....................................... 467,098
OTC Portfolio -- 50,402.216 shares at $38.52 per share
(cost $1,388,682)..................................... 1,941,493
Precious Metals Portfolio -- 7,336.787 shares at $5.43
per share (cost $22,258).............................. 39,839
Ursa Portfolio -- 1,086.098 shares at $5.35 per share
(cost $4,440)......................................... 5,811
U.S. Governments Bond Portfolio -- 0 shares at $10.17
per share (cost $0)................................... --
----------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS.............. $8,619,327
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 2
<PAGE> 57
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I- 3
<PAGE> 58
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
-------------------------------------------------
BALANCED GROWTH PARTNERS
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received................... $ 120,208 $ 5,296 $ -- $ 13,593
Mortality and expense risk charge................. 36,383 1,758 1,223 7,592
---------- -------- ------- --------
NET INVESTMENT INCOME (LOSS)........................ 83,825 3,538 (1,223) 6,001
========== ======== ======= ========
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions................... 109,590 7,846 8,335 23,641
Net change in unrealized appreciation
(depreciation)................................. 1,545,596 32,450 69,918 50,876
---------- -------- ------- --------
NET GAIN (LOSS) ON INVESTMENTS...................... 1,655,186 40,296 78,253 74,517
---------- -------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $1,739,011 $ 43,834 $77,030 $ 80,518
========== ======== ======= ========
1998
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 distributions................... 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
========== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 4
<PAGE> 59
<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE STRONG OPP. BERGER INSTITUTIONAL
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC. FUND II, INC. PRODUCTS TRUST
- ------------------------- ------------------------- ------------- ---------------------
LIMITED INTERNATIONAL SMALL
MATURITY STOCK GROWTH OPPORTUNITY COMPANY
BOND LIQUID ASSETS FUND II FUND II FUND II, INC. 100 FUND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------- ------------- ------------- --------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 66,658 $33,383 $ 497 $ -- $ -- $ 63 $ --
4,403 5,836 1,412 3,708 4,758 2,083 621
- -------- ------- -------- -------- -------- -------- -------
62,255 27,547 (915) (3,708) (4,758) (2,020) (621)
======== ======= ======== ======== ======== ======== =======
-- -- -- 590 66,251 -- --
(55,575) -- 147,900 356,797 133,584 125,813 65,784
- -------- ------- -------- -------- -------- -------- -------
(55,575) -- 147,900 357,387 199,835 125,813 65,784
- -------- ------- -------- -------- -------- -------- -------
$ 6,680 $27,547 $146,985 $353,679 $195,077 $123,793 $65,163
======== ======= ======== ======== ======== ======== =======
$ 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
======== ======= ======== ======== ======== ======== =======
</TABLE>
F-I- 5
<PAGE> 60
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF OPERATIONS
FOR THE YEARS ENDING DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
RYDEX VARIABLE TRUST
------------------------------------------
PRECIOUS
NOVA OTC METALS
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
------------ ------------ ------------
<S> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.......................... $ -- $ -- $ 3
Mortality and expense risk charge........................ 619 2,138 107
------- -------- -------
NET INVESTMENT INCOME (LOSS)............................... (619) (2,138) (104)
------- -------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... -- 1,440 1,487
Net change in unrealized appreciation (depreciation)..... 52,356 552,812 17,581
------- -------- -------
NET GAIN (LOSS) ON INVESTMENTS............................. 52,356 554,252 19,068
------- -------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $51,737 $552,114 $18,964
======= ======== =======
1998
INVESTMENT INCOME:
Dividend distributions received.......................... $ -- $ -- $ --
Mortality and expense risk charge........................ -- -- --
------- -------- -------
NET INVESTMENT INCOME (LOSS)............................... -- -- --
------- -------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... -- -- --
Net change in unrealized appreciation (depreciation)..... -- -- --
------- -------- -------
NET GAIN (LOSS) ON INVESTMENTS............................. -- -- --
------- -------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $ -- $ -- $ --
======= ======== =======
</TABLE>
- ---------------
(1) Commenced business 11/01/99
(2) Commenced business 07/25/99
(3) Commenced business 08/13/99
(4) Commenced business 11/01/99
(5) Commenced business 07/20/99
The accompanying notes are an integral part of these financial statements.
F-I- 6
<PAGE> 61
<TABLE>
<CAPTION>
RYDEX VARIABLE TRUST
-------------------------------
U.S. GOVERNMENT
URSA BOND
PORTFOLIO(4) PORTFOLIO(5)
------------ ---------------
<S> <C> <C>
$ -- $ 715
8 117
------ -------
(8) 598
------ -------
-- --
1,371 (6,071)
------ -------
1,371 (6,071)
------ -------
$1,363 $(5,473)
====== =======
$ -- $ --
-- --
------ -------
-- --
------ -------
-- --
-- --
------ -------
-- --
------ -------
$ -- $ --
====== =======
</TABLE>
F-I- 7
<PAGE> 62
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
----------------------------------
BALANCED GROWTH PARTNERS
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss).................. $ 83,825 $ 3,538 $ (1,223) $ 6,001
Net realized gain distributions............... 109,590 7,846 8,335 23,641
Net change in unrealized appreciation
(depreciation)............................. 1,545,596 32,450 69,918 50,876
---------- --------- -------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... 1,739,011 43,834 77,030 80,518
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................. 2,403,523 (183,059) (18,448) (260,255)
---------- --------- -------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS......... 4,142,534 (139,225) 58,582 (179,737)
---------- --------- -------- ----------
NET ASSETS AT JANUARY 1, 1999................... 4,476,793 333,388 168,102 1,104,489
---------- --------- -------- ----------
NET ASSETS AT DECEMBER 31, 1999................. $8,619,327 $ 194,163 $226,684 $ 924,752
========== ========= ======== ==========
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss).................. $ 41,549 $ 2,625 $ (680) $ (3,414)
Net realized gain distributions............... 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
========== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 8
<PAGE> 63
<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE STRONG OPP. BERGER INSTITUTIONAL
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC. FUND II, INC. PRODUCTS TRUST
-------------------------- ------------------------- ------------- -------------------------
LIMITED INTERNATIONAL
MATURITY STOCK GROWTH OPPORTUNITY SMALL COMPANY
BOND LIQUID ASSETS FUND II FUND II FUND II, INC. 100 FUND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ------------- ------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 62,255 $ 27,547 $ (915) $ (3,708) $ (4,758) $ (2,020) $ (621)
-- -- -- 590 66,251 -- --
(55,575) -- 147,900 356,797 133,584 125,813 65,784
---------- ---------- -------- -------- -------- -------- --------
6,680 27,547 146,985 353,679 195,077 123,793 65,163
(842,763) 1,619,293 51,106 188,118 (29,658) 78,530 (34,877)
---------- ---------- -------- -------- -------- -------- --------
(836,083) 1,646,840 198,091 541,797 165,419 202,323 30,286
---------- ---------- -------- -------- -------- -------- --------
1,182,333 501,602 126,182 219,931 550,708 199,155 90,903
---------- ---------- -------- -------- -------- -------- --------
$ 346,250 $2,148,442 $324,273 $761,728 $716,127 $401,478 $121,189
========== ========== ======== ======== ======== ======== ========
$ 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
========== ========== ======== ======== ======== ======== ========
</TABLE>
F-I- 9
<PAGE> 64
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDING DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
RYDEX VARIABLE TRUST
------------------------------------------------------------
PRECIOUS
NOVA OTC METALS URSA
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................. $ (619) $ (2,138) $ (104) $ (8)
Net realized gain distributions.............. -- 1,440 1,487 --
Net change in unrealized appreciation
(depreciation)............................ 52,356 552,812 17,581 1,371
-------- ---------- ------- ------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. 51,737 552,114 18,964 1,363
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. 415,361 1,389,379 20,875 4,448
-------- ---------- ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 467,098 1,941,493 39,839 5,811
-------- ---------- ------- ------
NET ASSETS AT JANUARY 1, 1999.................. -- -- -- --
-------- ---------- ------- ------
NET ASSETS AT DECEMBER 31, 1999................ $467,098 $1,941,493 $39,839 $5,811
======== ========== ======= ======
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................. $ -- $ -- $ -- $ --
Net realized gain distributions.............. -- -- -- --
Net change in unrealized appreciation
(depreciation)............................ -- -- -- --
-------- ---------- ------- ------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. -- -- -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. -- -- -- --
-------- ---------- ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ -- -- -- --
-------- ---------- ------- ------
NET ASSETS AT JANUARY 1, 1998.................. -- -- -- --
-------- ---------- ------- ------
NET ASSETS AT DECEMBER 31, 1998................ $ -- $ -- $ -- $ --
======== ========== ======= ======
</TABLE>
- ---------------
(1) Commenced business 11/01/99
(2) Commenced business 07/25/99
(3) Commenced business 08/13/99
(4) Commenced business 11/01/99
(5) Commenced business 07/20/99
The accompanying notes are an integral part of these financial statements.
F-I- 10
<PAGE> 65
<TABLE>
<CAPTION>
RYDEX VARIABLE TRUST
--------------------
U.S. GOVERNMENT
BOND PORTFOLIO(5)
--------------------
<S> <C>
$ 598
--
(6,071)
-------
(5,473)
5,473
-------
--
-------
--
-------
$ --
=======
$ --
--
--
-------
--
--
-------
--
-------
--
-------
$ --
=======
</TABLE>
F-I- 11
<PAGE> 66
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, 1999 there are fifteen 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. Five of the subaccounts invest only in a corresponding
Portfolio of the Rydex Variable Trust which is a diversified open-end management
investment company managed by PADCO Advisors II, Inc. Each Portfolio pays the
manager a monthly fee for managing its investments and business affairs.
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. 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.
F-I- 12
<PAGE> 67
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I- 13
<PAGE> 68
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 PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1, 1999... 20,403.196 6,394.129 58,345.968 85,552.309 501,601.800
Shares acquired................... 11,092.570 7,414.546 18,749.760 37,315.834 8,918,932.430
Shares disposed of................ 22,201.200 7,726.459 30,010.602 96,716.332 7,272,091.690
---------- --------- ---------- ---------- -------------
Shares owned at December 31,
1999............................ 9,294.566 6,082.216 47,085.126 26,151.811 2,148,442.540
========== ========= ========== ========== =============
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
========== ========= ========== ========== =============
</TABLE>
- ---------------
(1) Commenced business 11/01/99
F-I- 14
<PAGE> 69
<TABLE>
<CAPTION>
STRONG VARIABLE STRONG OPP. BERGER INSTITUTIONAL RYDEX
INSURANCE FUNDS, INC. FUND II, INC. PRODUCTS TRUST VARIABLE TRUST
- -------------------------- ------------- ---------------------- --------------
INTERNATIONAL SMALL
STOCK GROWTH OPPORTUNITY COMPANY
FUND II FUND II FUND II, INC. 100 FUND GROWTH NOVA
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(1)
- ------------- ---------- ------------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C>
14,371.502 13,728.553 25,354.875 15,450.336 7,402.572 --
27,156.996 20,587.953 18,843.245 27,535.173 4,621.412 159,527.784
21,719.513 9,234.913 16,644.176 22,096.955 6,869.211 134,374.433
---------- ---------- ---------- ---------- --------- -----------
19,808.985 25,081.593 27,553.944 20,888.554 5,154.773 25,153.351
========== ========== ========== ========== ========= ===========
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 --
========== ========== ========== ========== ========= ===========
</TABLE>
F-I- 15
<PAGE> 70
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
NOTES TO FINANCIAL STATEMENTS
3. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
owned are as follows:
<TABLE>
<CAPTION>
RYDEX VARIABLE TRUST
------------------------------------------------------------
U.S.
PRECIOUS GOVERNMENT
OTC METALS URSA BOND
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares owned at January 1, 1999............... -- -- -- --
Shares acquired............................... 67,757.247 34,040.249 40,249.504 12,021.304
Shares disposed of............................ 17,355.031 26,703.462 39,163.406 12,021.304
---------- ---------- ---------- ----------
Shares owned at December 31, 1999............. 50,402.216 7,336.787 1,086.098 --
========== ========== ========== ==========
Shares owned at January 1, 1998............... -- -- -- --
Shares acquired............................... -- -- -- --
Shares disposed of............................ -- -- -- --
---------- ---------- ---------- ----------
Shares owned at December 31, 1998............. -- -- -- --
========== ========== ========== ==========
</TABLE>
- ---------------
(1) Commenced business 07/25/99
(2) Commenced business 08/13/99
(3) Commenced business 11/01/99
(4) Commenced business 07/20/99
F-I- 16
<PAGE> 71
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Life Insurance Corp.
Lincoln, Nebraska
We have audited the accompanying consolidated balance sheets of Ameritas Life
Insurance Corp. (a wholly owned subsidiary of Ameritas Holding Company) and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of operations, comprehensive income, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Ameritas Life Insurance Corp. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 2000
F-II- 1
<PAGE> 72
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities held to maturity (fair value
$582,445 -- 1999, $620,543 -- 1998).................... $ 590,661 $ 586,419
Fixed maturity securities available for sale (amortized
cost $373,762 -- 1999, $466,025 -- 1998)............... 364,388 484,491
Redeemable preferred stock -- affiliate................... 25,000 --
Equity securities (cost $70,421 -- 1999,
$59,411 -- 1998)....................................... 159,819 121,905
Mortgage loans on real estate............................. 245,058 222,151
Loans on insurance policies............................... 37,645 29,047
Real estate, less accumulated depreciation
($13,083 -- 1999, $17,431 -- 1998)..................... 25,319 33,420
Other investments......................................... 47,416 45,104
Short-term investments.................................... 295 1,341
---------- ----------
Total investments................................. 1,495,601 1,523,878
Cash and cash equivalents................................... 47,538 79,019
Accrued investment income................................... 19,025 20,104
Deferred policy acquisition costs........................... 207,117 171,201
Property and equipment, less accumulated depreciation
($31,001 -- 1999, $31,985 -- 1998)........................ 23,829 20,946
Reinsurance receivable -- affiliate......................... 35,921 --
Other assets................................................ 22,339 21,903
Closed block assets......................................... 308,490 309,326
Separate accounts........................................... 2,728,169 1,954,931
---------- ----------
TOTAL............................................. $4,888,029 $4,101,308
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Policy and contract reserves................................ $ 106,097 $ 100,190
Policy and contract claims.................................. 30,091 29,823
Accumulated contract values................................. 965,246 1,019,849
Unearned policy charges..................................... 11,343 12,160
Unearned reinsurance ceded allowance........................ 1,768 1,480
Federal income taxes--
Current................................................... 7,660 6,710
Deferred.................................................. 52,690 50,795
Other liabilities........................................... 45,757 45,509
Closed block liabilities.................................... 334,769 334,622
Separate accounts........................................... 2,728,169 1,954,931
---------- ----------
TOTAL LIABILITIES................................. 4,283,590 3,556,069
---------- ----------
COMMITMENTS AND CONTINGENCIES
Minority interest in subsidiary............................. 29,519 27,523
Common stock, par value $0.10 per share, 25,000,000 shares
authorized, issued and outstanding........................ 2,500 2,500
Additional paid-in capital.................................. 5,000 5,000
Retained earnings........................................... 512,575 459,065
Accumulated other comprehensive income...................... 54,845 51,151
---------- ----------
TOTAL STOCKHOLDER'S EQUITY........................ 574,920 517,716
---------- ----------
TOTAL............................................. $4,888,029 $4,101,308
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 2
<PAGE> 73
[PAGE INTENTIONALLY LEFT BLANK]
F-II- 3
<PAGE> 74
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Premiums:
Life Insurance......................................... $ 15,181 $ 21,159 $ 26,794
Accident and health insurance.......................... 270,263 256,742 181,952
Contract charges.......................................... 77,877 68,145 57,199
Reinsurance, net.......................................... (572) 19,930 (1,037)
Reinsurance, ceded allowance.............................. 3,986 3,667 2,475
Investment revenues:
Investment income, net.................................... 120,265 130,102 137,744
Realized gains, net....................................... 10,913 14,288 10,295
Other....................................................... 30,951 23,011 14,987
Gain/(loss) in closed block................................. 2,751 (105) --
-------- -------- --------
531,615 536,939 430,409
-------- -------- --------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits............................................ 14,642 19,879 20,710
Surrender benefits........................................ 137 6,730 10,084
Accident and health benefits.............................. 190,452 200,405 130,908
Interest credited......................................... 62,939 68,698 66,788
Increase/(decrease) in policy and contract reserves....... 6,290 (2,570) (3,307)
Other..................................................... 12,815 21,920 23,747
Sales and operating expenses................................ 137,830 126,199 90,737
Amortization of deferred policy acquisition costs........... 17,329 18,584 16,441
-------- -------- --------
442,434 459,845 356,108
-------- -------- --------
Income before federal income taxes and minority interest in
earnings of subsidiary.................................... 89,181 77,094 74,301
Income taxes -- current..................................... 32,130 27,229 26,401
Income taxes -- deferred.................................... 923 157 39
-------- -------- --------
Total federal income taxes........................... 33,053 27,386 26,440
-------- -------- --------
Income before minority interest in earnings of subsidiary... 56,128 49,708 47,861
Minority interest in earnings of subsidiary................. (2,618) (2,940) (1,987)
-------- -------- --------
NET INCOME.................................................. $ 53,510 $ 46,768 $ 45,874
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 4
<PAGE> 75
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Net Income.................................................. $53,510 $46,768 $45,874
Other comprehensive income (loss), net of tax:
Unrealized gains on securities:
Unrealized holding gains arising during period (net of
deferred tax of $2,664 -- 1999, $6,913 -- 1998, and
$11,628 -- 1997)..................................... 6,155 12,646 21,290
Reclassification adjustment for gains included in net
income (net of deferred tax of $1,659 -- 1999,
$1,635 -- 1998, and $2,548 -- 1997).................. (3,082) (3,036) (4,733)
Minority interest...................................... 621 (99) (158)
------- ------- -------
Other comprehensive income................................ 3,694 9,511 16,399
------- ------- -------
Comprehensive income........................................ $57,204 $56,279 $62,273
======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 5
<PAGE> 76
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<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, 1997........ -- $ -- $ -- $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 2,500 5,000 (7,500) -- --
Net realized 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 2,500 5,000 459,065 51,151 517,716
------ ------ ------ -------- ------- --------
Net unrealized investment
gains, net................. -- -- -- -- 3,073 3,073
Minority interest in net
unrealized investment
losses, net................ -- -- -- -- 621 621
Net income.................... -- -- -- 53,510 -- 53,510
------ ------ ------ -------- ------- --------
BALANCE, December 31, 1999...... 25,000 $2,500 $5,000 $512,575 $54,845 $574,920
====== ====== ====== ======== ======= ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 6
<PAGE> 77
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-II- 7
<PAGE> 78
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 53,510 $ 46,768 $ 45,874
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization............................. 5,899 5,717 5,275
Amortization of deferred policy acquisition costs......... 18,544 19,090 16,441
Policy acquisition costs deferred......................... (45,600) (40,349) (36,117)
Interest credited to contract values...................... 65,577 69,487 66,788
Amortization of discounts or premiums..................... (3,615) (4,611) (1,747)
Net realized gains on investment transactions............. (11,554) (14,288) (10,295)
Deferred income taxes..................................... 923 157 39
Minority interest in earnings of subsidiary............... 2,618 2,940 1,987
Change in assets and liabilities:
Accrued investment income.............................. 1,057 (455) (10)
Other assets........................................... (2,869) (6,544) (3,239)
Policy and contract reserves........................... 3,187 (2,798) (3,446)
Policy and contract claims............................. 441 3,992 6,047
Unearned policy charges................................ (817) (1,017) (315)
Unearned reinsurance ceded allowance................... 288 (283) 511
Federal income taxes payable -- current................ 950 5,422 (7,977)
Dividends payable...................................... (96) 479 (183)
Other liabilities...................................... 2,080 6,039 6,509
Cash from closed block................................. (4,343) (2,526) --
-------- --------- ---------
Net cash from operating activities........................ 86,180 87,220 86,142
-------- --------- ---------
INVESTING ACTIVITIES
Purchase of investments:
Fixed maturity securities held to maturity................ (57,469) (62,244) (39,522)
Fixed maturity securities available for sale.............. (92,268) (137,319) (115,864)
Equity securities......................................... (34,982) (21,944) (29,432)
Redeemable preferred stock -- affiliate................... (25,000) -- --
Mortgage loans on real estate............................. (80,702) (68,518) (56,251)
Real estate............................................... (1,218) (998) (1,676)
Short-term investments.................................... (390) (1,632) (2,124)
Other investments......................................... (30,695) (16,343) (6,026)
Proceeds from sale of investments:
Fixed maturity securities available for sale.............. 7,762 22,282 16,419
Equity securities......................................... 30,527 24,681 19,914
Real estate............................................... 13,831 14,117 1,723
Other investments......................................... 1,162 4,166 649
Proceeds from maturities or repayment of investments:
Fixed maturity securities held to maturity................ 61,486 84,662 68,069
Fixed maturity securities available for sale.............. 127,068 60,503 45,942
Mortgage loans on real estate............................. 53,826 37,810 49,750
Short-term investments.................................... 1,445 958 6,278
Other investments......................................... 18,487 5,325 3,050
Purchase of property and equipment.......................... (6,753) (4,002) (5,413)
Proceeds from sale of property and equipment................ 27 43 45
Net change in loans on insurance policies................... (6,859) (3,377) (2,622)
Closed block investing activities........................... (2,765) 178 --
-------- --------- ---------
Net cash from investing activities........................ (23,480) (61,652) (47,091)
-------- --------- ---------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 8
<PAGE> 79
AMERITAS LIFE INSURANCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
FINANCING ACTIVITIES:
Contribution for minority interest in subsidiary............ $ -- $ -- $ 1,530
Net change in accumulated contract values................... (96,953) (30,380) (34,584)
Closed block financing activities........................... 2,772 692 --
-------- -------- --------
Net cash from financing activities........................ (94,181) (29,688) (33,054)
-------- -------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............ (31,481) (4,120) 5,997
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 79,019 83,139 77,142
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 47,538 $ 79,019 $ 83,139
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes.................................. $ 30,992 $ 21,936 $ 34,397
NON-CASH ACTIVITIES:
Issuance of common stock.................................. $ -- $ 7,500 $ --
Assets transferred to closed block........................ -- 307,754 --
Liabilities transferred to closed block................... -- 332,223 --
Assets transferred on block co-insurance.................. 57,648 -- --
Accumulated contract values ceded in block co-insurance... 59,561 -- --
Release of deferred policy acquisition costs on block
co-insurance........................................... 1,815 -- --
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-II- 9
<PAGE> 80
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Ameritas Life Insurance Corp. (Ameritas) is a wholly owned subsidiary of
Ameritas Holding Company (AHC) which is a wholly owned subsidiary of Ameritas
Acacia Mutual Holding Corporation (AAMHC).
In 1998, the Board of Directors of Ameritas Mutual Insurance Holding Company
(AMIHC) and Acacia Mutual Holding Corporation (AMHC) approved and adopted a plan
of merger under which the two would merge to form AAMHC. In addition, their two
wholly owned subsidiaries, AHC and Acacia Financial Group, Ltd. (AFG), would
merge to form Ameritas Holding Company. Public information hearings on the
proposed merger were held on November 20, 1998 with the Nebraska Insurance
Director and on December 17, 1998 with the D.C. Insurance Commissioner.
Following the commissioner's approval a special meeting with the eligible
members of AMHC was held on December 22, 1998 and the members of AMIHC on
December 29, 1998. With the members approval, the merger became effective
January 1, 1999. The business combination was accounted for as a pooling of
interests.
On September 13, 1997, the Board of Directors of 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 AMIHC as a mutual insurance
holding company under the insurance laws of the State of Nebraska, (ii) formed
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 AMIHC 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 AMIHC and have a
membership interest in AMIHC so long as such policy remains in force. The
membership interests in AMIHC follow, and are not severable, from the policy
from which the membership interest in AMIHC is derived.
On the effective date, Ameritas issued 25 million of its authorized shares of
capital stock to AMIHC. AMIHC 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 AMIHC 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).
F-II- 10
<PAGE> 81
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
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.
Summarized financial information of the Closed Block as of December 31, 1999 and
1998 and for the year ended December 31, 1999 and for the period from October 1,
1998 to December 31, 1998, is as follows:
<TABLE>
<CAPTION>
CLOSED BLOCK
--------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS:
Fixed maturity securities held to maturity (fair value
$136,940 -- 1999; $156,499 -- 1998).................... $139,517 $148,398
Fixed maturity securities available for sale (amortized
cost $58,087 -- 1999; $53,679 -- 1998)................. 56,443 56,384
Mortgage loans on real estate............................. 42,949 38,756
Loans on insurance policies............................... 43,229 44,968
Cash and cash equivalents................................. 5,992 1,656
Accrued investment income................................. 5,559 5,537
Deferred policy acquisition costs......................... 11,149 12,364
Other assets.............................................. 3,652 1,263
-------- --------
Total Closed Block Assets.............................. $308,490 $309,326
======== ========
LIABILITIES:
Policy and contract reserves.............................. $258,460 $261,180
Policy and contract claims................................ 1,809 1,636
Accumulated contract values............................... 58,878 59,196
Dividends payable......................................... 10,517 10,613
Other liabilities......................................... 5,105 1,997
-------- --------
Total Closed Block Liabilities......................... $334,769 $334,622
======== ========
INCOME, BENEFITS AND EXPENSES:
Premiums.................................................. $ 16,827 $ 4,354
Investment income, net.................................... 20,844 5,054
Policy benefits........................................... (20,261) (5,123)
Sales and operating expenses.............................. (2,835) (812)
Amortization of deferred policy acquisition costs......... (1,215) (506)
Dividends appropriated for policyowners................... (10,609) (3,072)
-------- --------
Gain/(Loss) in Closed Block............................ $ 2,751 $ (105)
======== ========
</TABLE>
F-II- 11
<PAGE> 82
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
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 reclassified to
conform to current year presentation.
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, 1999 and 1998,
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 cost or equity method
(depending upon percentage ownership), and
F-II- 12
<PAGE> 83
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
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.
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.
F-II- 13
<PAGE> 84
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
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.
F-II- 14
<PAGE> 85
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (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>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Beginning balance........................................... $171,201 $164,564 $146,405
Acquisition costs deferred.................................. 45,694 40,324 36,117
Amortization of deferred policy acquisition costs........... (17,329) (18,584) (16,441)
Amount transferred to closed block.......................... -- (12,845) --
Adjustment for unrealized investment (gain)/loss............ 7,551 (2,258) (1,517)
-------- -------- --------
Ending balance.............................................. $207,117 $171,201 $164,564
======== ======== ========
</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, generally,
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. The IRS is currently examining the Company's 1996 through
1998 federal income tax returns. Management is currently appealing certain
adjustments proposed by the IRS for tax years 1988 and 1990
F-II- 15
<PAGE> 86
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
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.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, entitled "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). The statement requires that
all derivatives (including certain derivatives embedded in contracts) be
recorded on the balance sheet and measured at fair value. SFAS No. 133 requires
that changes in the fair value of derivatives be recognized currently in
operations unless specific hedge accounting criteria are met. If such criteria
are met, the derivative's gain or loss will offset related results of the hedged
item in the statement of operations. A company must formally document, designate
and assess the effectiveness of transactions to apply hedge accounting
treatment.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000, with
earlier implementation permitted. The statement must be implemented as of the
beginning of a quarter and retroactive application to financial statements of
prior periods is prohibited. The Company has not determined the financial
statement impact of adopting this statement.
2. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities held to maturity.................. $ 45,001 $ 53,680 $ 59,700
Fixed maturity securities available for sale................ 32,213 33,846 32,605
Equity securities........................................... 1,764 1,783 1,899
Mortgage loans on real estate............................... 19,085 20,312 19,866
Real estate................................................. 9,883 11,871 12,317
Loans on insurance policies................................. 2,254 3,849 4,341
Other investments........................................... 15,943 9,639 15,494
Short-term investments and cash and cash equivalents........ 5,493 8,665 4,266
-------- -------- --------
Gross investment income................................... 131,636 143,645 150,488
Investment expenses......................................... 11,371 13,543 12,744
-------- -------- --------
Net investment income..................................... $120,265 $130,102 $137,744
======== ======== ========
</TABLE>
F-II- 16
<PAGE> 87
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net gains (losses) on disposals, including calls, of
investments
Fixed maturity securities held to maturity................ $ (817) $ 2,235 $ 1,059
Fixed maturity securities available for sale.............. (1,816) 1,906 494
Equity securities......................................... 6,556 2,764 6,787
Mortgage loans on real estate............................. 282 1,583 959
Real estate............................................... 6,548 5,877 502
Other..................................................... 83 (2) 564
-------- -------- --------
10,836 14,363 10,365
-------- -------- --------
Provisions for losses on investments
Mortgage loans on real estate............................. (43) (100) (20)
Real estate............................................... 120 25 (50)
-------- -------- --------
Net pretax realized investment gains........................ $ 10,913 $ 14,288 $ 10,295
======== ======== ========
</TABLE>
Proceeds from sales of securities and gross gains and losses realized on those
sales were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 7,762 $ 6 $ 80
Equity securities........................................... 30,527 8,330 1,774
-------- -------- --------
$ 38,289 $ 8,336 $ 1,854
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------
PROCEEDS GAINS LOSSES
-------- -------- --------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 22,282 $ 242 $ 301
Equity securities........................................... 24,681 3,874 1,110
-------- -------- --------
$ 46,963 $ 4,116 $ 1,411
======== ======== ========
</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>
F-II- 17
<PAGE> 88
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (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, 1999
---------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------
COST GAINS LOSSES FAIR VALUE
--------- ------- ------- ----------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity
U.S. Corporate...................................... $369,467 $ 4,280 $11,368 $362,379
Mortgage-backed..................................... 96,708 1,474 898 97,284
Asset-backed........................................ 5,498 -- 306 5,192
U.S. Treasury securities and obligations of
U.S. government agencies......................... 48,547 1,989 116 50,420
Foreign............................................. 70,441 43 3,314 67,170
-------- ------- ------- --------
Total fixed maturity securities held to
maturity....................................... 590,661 7,786 16,002 582,445
-------- ------- ------- --------
Redeemable preferred stock -- affiliate............... 25,000 -- -- 25,000
-------- ------- ------- --------
Total held to maturity securities................ 615,661 7,786 16,002 607,445
-------- ------- ------- --------
Fixed maturity securities available for sale
U.S. Corporate...................................... 255,640 1,370 10,122 246,888
Mortgage-backed..................................... 70,844 108 1,750 69,202
Asset-backed........................................ 11,999 -- 303 11,696
U.S. Treasury securities and obligations of
U.S. government agencies......................... 23,083 1,830 157 24,756
Foreign............................................. 12,196 87 437 11,846
-------- ------- ------- --------
Total fixed maturity securities available for
sale........................................... 373,762 3,395 12,769 364,388
-------- ------- ------- --------
Equity securities................................... 70,421 91,549 2,151 159,819
Short-term investments.............................. 295 -- -- 295
-------- ------- ------- --------
Total available for sale securities.............. $444,478 $94,944 $14,920 $524,502
======== ======= ======= ========
</TABLE>
F-II- 18
<PAGE> 89
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
<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
======== ======= ======= ========
</TABLE>
The amortized cost and fair value of fixed maturity securities by contractual
maturity at December 31, 1999 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............................. $ 17,363 $ 17,508 $ 11,810 $ 11,788
Due after one year through five years............... 120,461 118,239 163,223 162,980
Due after five years through ten years.............. 112,064 107,804 216,196 210,580
Due after ten years................................. 41,031 39,940 97,227 94,621
Mortgage-backed and asset-backed securities......... 82,843 80,897 102,205 102,476
-------- -------- -------- --------
Total............................................. $373,762 $364,388 $590,661 $582,445
======== ======== ======== ========
</TABLE>
F-II- 19
<PAGE> 90
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
3. INCOME TAXES
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------
1999 1998
-------- --------
<S> <C> <C>
Net unrealized investment gains............................. $ 33,060 $ 35,211
Equity in subsidiaries...................................... 13,414 12,058
Deferred policy acquisition costs........................... 63,753 53,003
Prepaid expenses............................................ 4,048 3,903
Other....................................................... 3,033 2,277
-------- --------
Gross deferred tax liability................................ 117,308 106,452
-------- --------
Future policy and contract benefits......................... 46,650 38,333
Deferred future revenues.................................... 5,697 5,845
Policyowner dividends....................................... 3,681 3,715
Pension and postretirement benefits......................... 3,494 2,917
Other....................................................... 5,096 4,847
-------- --------
Gross deferred tax asset.................................... 64,618 55,657
-------- --------
Net deferred tax liability................................ $ 52,690 $ 50,795
======== ========
</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
--------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate.................................. 35.0% 35.0% 35.0%
Equity in subsidiaries...................................... 2.0 2.6 2.4
Surplus tax................................................. -- -- (2.7)
Other....................................................... 0.1 (2.1) 0.9
---- ---- ----
Effective tax rate........................................ 37.1% 35.5% 35.6%
==== ==== ====
</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 has an approximate $1.5 million capital loss carryforward available as
of December 31, 1999. At December 31, 1999 the Company provided for a valuation
allowance against the net deferred tax asset related to the capital loss
carryforward.
4. RELATED PARTY TRANSACTIONS
In addition to Ameritas, AHC is also a 100% owner of Acacia Life Insurance
Company, an insurance company domiciled in Washington, D.C., which in turn is a
100% owner of Acacia National Life Insurance Company, an insurance company
domiciled in Virginia.
Ameritas and its affiliates provide technical, financial, legal, marketing and
investment advisory support to the Acacia companies under administrative service
agreements which were effective July 1, 1999. The cost of these services for the
year ended December 31, 1999 was $4,372.
On December 20, 1999, Ameritas purchased $25,000 of redeemable preferred stock
from Acacia Life Insurance Company. The stock, which pays dividends in an amount
per annum equal to 8% and is non-voting, provides for redemption in equal
installments beginning in 2005 with final redemption on or by January 1, 2015.
F-II- 20
<PAGE> 91
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
4. RELATED PARTY TRANSACTIONS -- (CONTINUED)
Effective June 30, 1999, Ameritas' 66% indirectly owned subsidiary, Ameritas
Variable Life Insurance Company (AVLIC), agreed to 100% co-insure its equity
index annuity business to their 34% owner in a non-cash transaction. In December
1999 through assumption reinsurance the co-insured block was reduced
approximately 40%. The receivable of $35,921 from this affiliate which supports
the remaining co-insurance obligation is secured by a letter of credit.
During 1999, AVLIC formed a variable insurance trust (VIT). A 66% indirectly
owned subsidiary, Ameritas Investment Corp., serves as the investment advisor
and another affiliate provides administrative services to the VIT. At December
31, 1999 separate account assets under the VIT totaled $1,066,249.
5. 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 ended
December 31, 1999, and a statement of the funded status as of December 31 of
both years:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ----------------
1999 1998 1999 1998
------- ------- ------ ------
<S> <C> <C> <C> <C>
Reconciliation of benefit obligation
Benefit obligation at beginning of year................. $30,746 $23,232 $4,024 $4,498
Service cost............................................ 2,420 1,970 172 141
Interest cost........................................... 2,083 1,777 257 251
Actuarial (gain)/loss................................... (3,314) 4,488 (418) (711)
Benefits paid........................................... (2,637) (721) (232) (155)
------- ------- ------ ------
Benefit obligation at end of year....................... $29,298 $30,746 $3,803 $4,024
------- ------- ------ ------
Reconciliation of fair value of plan assets
Fair value of plan assets at beginning of year.......... $28,268 $24,271 $1,887 $1,767
Actual return on plan assets............................ 3,214 2,517 126 120
Employer contributions.................................. 2,278 2,201 -- --
Benefits paid........................................... (2,637) (721) (291) --
------- ------- ------ ------
Fair value of plan assets at end of year................ $31,123 $28,268 $1,722 $1,887
======= ======= ====== ======
</TABLE>
F-II- 21
<PAGE> 92
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
5. EMPLOYEE AND AGENT BENEFIT PLANS -- (CONTINUED)
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Funded Status
Funded status at end of year.......................... $ 1,825 $(2,478) $(2,081) $(2,137)
Unrecognized net actuarial (gain)/loss................ (1,168) 3,086 (2,373) (2,075)
Unrecognized prior service cost....................... 1,049 1,143 (13) (15)
------- ------- ------- -------
Prepaid/(accrual) benefit cost........................ $ 1,706 $ 1,751 $(4,467) $(4,227)
======= ======= ======= =======
</TABLE>
Periodic pension expense for the Company included the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Service cost................................................ $ 2,420 $ 1,970 $ 1,408
Interest cost............................................... 2,083 1,777 1,496
Expected return on plan assets.............................. (3,214) (2,517) (3,329)
Amortization of transition (asset) obligation............... 94 94 94
Amortization of net loss.................................... 939 526 1,742
------- ------- -------
Net periodic benefit cost................................... $ 2,322 $ 1,850 $ 1,411
======= ======= =======
</TABLE>
Periodic post-retirement medical expense for the Company included the following
components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Service cost................................................ $172 $141 $158
Interest cost............................................... 257 251 304
Expected return on plan assets.............................. (132) (124) (89)
Amortization of prior service cost.......................... (2) (2) --
Amortization of net gain.................................... (114) (130) (77)
---- ---- ----
Net periodic benefit cost................................... $181 $136 $296
==== ==== ====
</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
----------------- ---------------
1999 1998 1999 1998
----- ----- ---- ----
<S> <C> <C> <C> <C>
Weighted-average assumptions as of December 31
Discount rate............................................ 7.50% 6.75% 7.50% 6.75%
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
post-retirement benefit obligation, for pre-65 employees, was 6.5% in 1998
decreasing to 5.5% in 1999, after which it remains constant.
F-II- 22
<PAGE> 93
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
5. EMPLOYEE AND AGENT BENEFIT PLANS -- (CONTINUED)
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...... $ 21 $ (20)
Effect on the health care component of the accumulated
post-retirement benefit obligation........................ $117 $(110)
</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 $959 in 1999, $852 in 1998 and $868 in 1997.
6. 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 $51,200, $41,000, and
$47,200 for 1999, 1998 and 1997, respectively and statutory surplus was
$413,200, $357,700, and $311,300 at December 31, 1999, 1998 and 1997,
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 the State of Nebraska, the amount
of dividends payable to stockholders are limited.
7. 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. The effect of reinsurance on premiums earned is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Assumed..................................................... $ 13,529 $ 32,191 $ 9,740
Ceded....................................................... (14,101) (12,261) (10,777)
-------- -------- --------
$ (572) $ 19,930 $ (1,037)
======== ======== ========
</TABLE>
The Company remains contingently liable in the event that a reinsurer is unable
to meet the obligations ceded under the reinsurance agreement.
F-II- 23
<PAGE> 94
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
8. 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>
YEARS ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Balance at January 1........................................ $ 27,658 $ 22,433 $ 17,957
Reinsurance reserves (net).................................. (2,561) (1,748) (89)
-------- -------- --------
25,097 20,685 17,868
-------- -------- --------
Incurred related to:
Current year.............................................. 196,147 186,940 132,940
Prior year................................................ (8,206) (6,678) (4,675)
-------- -------- --------
Total incurred......................................... 187,941 180,262 128,265
-------- -------- --------
Paid related to:
Current year.............................................. 171,312 161,843 112,255
Prior year................................................ 16,890 14,007 13,193
-------- -------- --------
Total paid........................................ 188,202 175,850 125,448
-------- -------- --------
24,836 25,097 20,685
Reinsurance reserves (net).................................. 2,208 2,561 1,748
-------- -------- --------
Balance at December 31...................................... $ 27,044 $ 27,658 $ 22,433
======== ======== ========
</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.
9. COMMITMENTS AND CONTINGENCIES
INVESTMENTS
Securities commitments of $24,802 and $30,545, and mortgage loan and real estate
commitments of $9,897 and $8,284 were outstanding for investments to be
purchased in subsequent years as of December 31, 1999 and 1998, 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,
1999. No balance was outstanding at any time during 1999 or 1998.
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 $3,000
and $2,650 as of December 31, 1999 and 1998, respectively.
F-II- 24
<PAGE> 95
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
9. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
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.
10. 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, 1999 and 1998. 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 cost or 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, REDEEMABLE PREFERRED STOCK-AFFILIATE, AND
REINSURANCE RECEIVABLE-AFFILIATE -- The carrying amounts equal fair value.
ACCRUED INVESTMENT INCOME -- Fair value equals book value.
F-II- 25
<PAGE> 96
AMERITAS LIFE INSURANCE CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
10. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
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
------------------------------------------------
1999 1998
---------------------- ----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Fixed maturity securities
Held to maturity............................... $590,661 $ 582,445 $586,419 $ 620,543
Available for sale............................. 364,388 364,388 484,491 484,491
Redeemable preferred stock -- affiliate........... 25,000 25,000 -- --
Equity securities................................. 159,819 159,819 121,905 121,905
Loans on insurance policies....................... 37,645 36,304 29,047 30,332
Mortgage loans on real estate..................... 245,058 241,952 222,151 238,006
Other investments................................. 32,419 35,398 23,901 28,391
Short-term investments............................ 295 295 1,341 1,341
Cash and cash equivalents......................... 47,538 47,538 79,019 79,019
Accrued investment income......................... 19,025 19,025 20,104 20,104
Reinsurance receivable -- affiliate............... 35,921 35,921 -- --
Financial liabilities:
Accumulated contract values excluding amounts held
under insurance contracts...................... 672,020 669,289 783,275 786,152
</TABLE>
F-II- 26
<PAGE> 97
PART C
------
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
a) Financial Statements:
The financial statements of the subaccounts of Ameritas Life Insurance
Corp. Separate Account LLVA and Ameritas Life Insurance Corp. are filed in
Part B.
Subaccounts of Ameritas Life Insurance Corp. Separate Account LLVA:
- Report of Deloitte & Touche LLP, independent auditors.
- Statement of Net Assets as of December 31, 1999.
- Statements of Operations for the years ended December 31, 1999 and
1998.
- Statements of Changes in Net Assets for the years ended December 31,
1999 and 1998.
- Notes to Financial Statements for the years ended December 31, 1999 and
1998.
Ameritas Life Insurance Corp.:
- Report of Deloitte & Touche LLP, independent auditors.
- Consolidated Balance Sheets as of December 31, 1999 and 1998.
- Consolidated Statements of Operations for the years ended December 31,
1999, 1998 and 1997.
- Consolidated Statements of Comprehensive Income for the years ended
December 31, 1999, 1998 and 1997.
- Consolidated Statements of Stockholder's Equity for the years ended
December 31, 1999, 1998 and 1997.
- Consolidated Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997.
- Notes to Financial Statements for the years ended December 31, 1999,
1998 and 1997.
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> 98
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) Participation Agreement.*
(8) (c) Participation Agreement.**
(8) (d) Participation Agreement.**
(8) (e) Form of Participation Agreement - Rydex Variable Trust.******
(8) (f) Form of Participation Agreement - Calvert Variable Series, Inc.*******
(8) (g) Form of Participation Agreement - Variable Insurance Products Fund.*******
(8) (h) Form of Participation Agreement - Variable Insurance Products Fund II.*******
(9) Opinion and consent of Donald R. Stading.
(10) (a) Consent of Deloitte & Touche LLP.
(11) No financial statement are omitted from Item 23.
(12) Not applicable.
(13) Schedule of Computation of Performance Quotations
</TABLE>
<TABLE>
<S> <C>
* 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 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.
***** Incorporated by reference to Post-Effective Amendment No. 4 for Ameritas Life Insurance Corp. Separate
Account LLVA (File No. 333-5529), filed on February 26, 1999.
****** Incorporated by reference to Post-Effective Amendment No. 6 for Ameritas Life Insurance Corp. Separate
Account LLVL (File No. 33-86500), filed on April 20, 1999.
******* Incorporated by reference to Post-Effective Amendment No. 1 for Ameritas Life Insurance Corp. Separate
Account LLVL (File No. 333-76359), filed February 29, 2000.
</TABLE>
<PAGE> 99
Item 25 Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Position and Offices
Business Address 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
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
Robert W. Clyde** Director
Jan M. Connolly* Senior Vice President - Operations, Planning and Quality
William W. Cook, Jr.** Director
Bert A. Getz** Director
William R. Giovanni* Senior Vice President, President and Chief Executive Officer -
Ameritas Investment Corp.
Kenneth R. Jones Vice President - Corporate Compliance and Assistant Secretary
James R. Knapp** Director
Robert F. Krohn** Director
William W. Lester* Vice President - Securities
Wilfred J. Maddux** Director
JoAnn M. Martin Senior Vice President and Chief Financial Officer
Charles T. Nason** Director
Barry C. Ritter* Senior Vice President - Information Services
Paul C. Schorr, III** Director
William C. Smith** Director
Neal E. Tyner** Director
Richard W. Vautravers* Senior Vice President and Corporate Actuary
Winston J. Wade** Director
</TABLE>
<PAGE> 100
* Principal business address: Ameritas Life Insurance Corp., 5900 "O" Street,
Lincoln, Nebraska 68510.
**Principal business address: James p. Abel, NEBCO, Inc., P.O. Box80268,
Lincoln, Nebraska 68501; Duane W. Acklie, Crete Carrier Corporation, P.O. Box
81228, Lincoln, Nebraska 68501; Robert W. Clyde, Acacia National Life Insurance
Company, 7315 Wisconsin Avenue, Bethesda, Maryland 20814; 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, Wanueta, Nebraska 69045; Charles T.
Nason, Acacia National Life Insurance Company, 7315 Wisconsin Avenue, Bethesda,
Maryland 20814; Paul C. Schorr, II, 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.
<PAGE> 101
Item 26.
The depositor, Ameritas Life Insurance Corp., is a stock life insurance company
domiciled in Nebraska. The Registrant is 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.:
(OMITTED CHART SHOWS AMERITAS ACACIA 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. AND ACACIA
LIFE INSURANCE COMPANY. FOURTH TIER COMPANIES UNDER AMERITAS LIFE INSURANCE
CORP. ARE: AMERITAS INVESTMENT ADVISORS, INC., AMERITAS MANAGED DENTAL PLAN,
INC., FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK, AMAL CORPORATION, VERITAS
CORP., AND PATHMARK ASSURANCE COMPANY. FOURTH TIER COMPANIES UNDER ACACIA LIFE
INSURANCE COMPANY ARE: ACACIA NATIONAL LIFE INSURANCE COMPANY AND ACACIA
FINANCIAL CORP. FIFTH TIER COMPANIES WHICH ARE OWNED BY AMAL CORPORATION ARE
AMERITAS INVESTMENT CORP. AND AMERITAS VARIABLE LIFE INSURANCE COMPANY. FIFTH
TIER COMPANIES OWNED BY ACACIA FINANCIAL CORP. ARE ACACIA FEDERAL SAVINGS BANK,
CALVERT GROUP, LTD. AND ITS INVESTMENT COMPANIES, AND THE ADVISORS GROUP, INC.)
All Ameritas entities are Nebraska entities, except First Ameritas Life
Insurance Corp. of New York, which is a New York entity, and Ameritas Managed
Dental Plan, Inc., which is a California entity. Acacia Life Insurance Company
is regulated by the District of Columbia. Acacia National Life Insurance Company
and Acacia Financial Corp. are Virginia entities. Acacia Federal Savings Bank is
regulated by the U. S. Government. Calvert Group Ltd. and The Advisors Group,
Inc. are Delaware entities.
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 and Acacia Financial Corp. are holding companies. Veritas Corp.
is a marketing agency. Pathmark Assurance Company is an insurance company.
Item 27. Number of Contractowners
As of December 31, 1999 there were 215 contractowners.
Item 28. Indemnification
Ameritas Life Insurance Corp.'s By-laws provide as follows:
"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 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 reasonably incurred
in connection with such action, suit or proceeding to the full extent authorized
by the laws of Nebraska."
<PAGE> 102
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 amount 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 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 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 contract 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, and
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. AIC is
the underwriter for the Ameritas Portfolios and also serves as its
investment advisor.
b) The following table sets forth certain information regarding the
officers and directors of the principal underwriter, Ameritas
Investment Corp.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS AND UNDERWRITER
---------------- ---------------
<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
Donald R. Stading*.........................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
James R. Fox***............................Senior Vice President
</TABLE>
<PAGE> 103
<TABLE>
<S> <C>
Michael P. Heaton***.......................Senior Vice President
Kenneth R. Jones*..........................Vice President - Corporate Compliance and Assistant Secretary
William W. Lester*.........................Treasurer
Michael VanHorne***........................Senior Vice President
</TABLE>
<TABLE>
<S> <C>
* 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.
</TABLE>
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 $10,937 $0 $0 $3,097
Corp. ("AIC")
</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 Life Insurance Corp., 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 statement in the registration statement are never more
than 16 months old for so long as payment under the variable annuity
contracts my 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.
<PAGE> 104
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. 6 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 29th day of February, 2000.
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA, Registrant
AMERITAS LIFE INSURANCE CORP., Depositor
Attest: /s/ Donald R. Stading By: /s/ Lawrence J. Arth
------------------------ -------------------------
Secretary Chairman of the Board
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 February 29, 2000
- ---------------------------------- and Chief Executive Officer
Lawrence J. Arth
/s/ Kenneth C. Louis Director, President and February 29, 2000
- ----------------------------------
Kenneth C. Louis Chief Operating Officer
/s/ Donald R. Stading Senior Vice President, Secretary and February 29, 2000
- ---------------------------------- Corporate General Counsel
Donald R. Stading
/s/ William W. Lester Senior Vice President-Investments February 29, 2000
- ---------------------------------- and Treasurer
William W. Lester
/s/ JoAnn M. Martin Senior Vice President and February 29, 2000
- ---------------------------------- Chief Financial Officer
JoAnn M. Martin
/s/ James P. Abel Director February 29, 2000
- ----------------------------------
James P. Abel
/s/ Duane W. Acklie Director February 29, 2000
- ----------------------------------
Duane W. Acklie
</TABLE>
<PAGE> 105
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert W. Clyde Director February 29, 2000
- ----------------------------------
Robert W. Clyde
/s/ William W. Cook, Jr. Director February 29, 2000
- ----------------------------------
William W. Cook, Jr.
/s/ Bert A. Getz Director February 29, 2000
- ----------------------------------
Bert A. Getz
/s/ James R. Knapp Director February 29, 2000
- ----------------------------------
James R. Knapp
/s/ Robert F. Krohn Director February 29, 2000
- ----------------------------------
Robert F. Krohn
/s/ Wilfred J. Maddux Director February 29, 2000
- ----------------------------------
Wilfred J. Maddux
/s/ Charles T. Nason Director February 29, 2000
- ----------------------------------
Charles T. Nason
/s/ Paul C. Schorr, III Director February 29, 2000
- ----------------------------------
Paul C. Schorr, III
/s/ William C. Smith Director February 29, 2000
- ----------------------------------
William C. Smith
/s/ Neal E. Tyner Director February 29, 2000
- ----------------------------------
Neal E. Tyner
/s/ Winston J. Wade Director February 29, 2000
- ----------------------------------
Winston J. Wade
</TABLE>
<PAGE> 106
EXHIBIT INDEX
-------------
Exhibit
- -------
9 Opinion and Consent of Donald R. Stading
10(a) Consent of Deloitte & Touche LLP
<PAGE> 1
EXHIBIT 9
Opinion and Consent of Donald R. Stading
[AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO]
February 29, 2000
Ameritas Life Insurance Corp.
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentleman:
With reference to Post-Effective Amendment No. 6 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 and Exchange Commission covering
flexible premium 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 Section 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. 6 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
Secretary and General Counsel
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 6 to Registration
Statement No. 333-5529 of Ameritas Life Insurance Corp. Separate Account LLVA of
our reports dated February 5, 2000, on the financial statements of Ameritas Life
Insurance Corp. and the subaccounts of Ameritas Life Insurance Corp. Separate
Account LLVA, appearing in the Statement of Additional Information, which is a
part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Statement of Additional Information.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
February 28, 2000
