<PAGE>
As filed with the Securities and Exchange Commission on December 6, 1996.
Registration No. 333 - 7509
811 - 7689
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -------------------------------------------------------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1
---
Post-Effective Amendment No.
----
and
REGISTRATION STATEMENT UNDER THE [X]
INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
---
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
-----------------------------------------------
(Exact Name of Registrant)
PFL LIFE INSURANCE COMPANY
--------------------------
(Name of Depositor)
4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code
(319) 297-8468
Frank A. Camp, Esquire
PFL Life Insurance Company
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
(Name and Address of Agent for Service)
Copy to:
Frederick R. Bellamy, Esquire
Sutherland, Asbill and Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
<PAGE>
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
declares that an indefinite number of Securities is being registered under the
Securities Act of 1933. The Securities Act registration filing fee of $500 has
been paid.
------------------------
Approximate date of proposed public offering:
As soon as practicable after effectiveness of the Registration Statement, as
the Commission, acting pursuant to said Section 8(a), shall determine.
------------------------
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus) and
Part B (Statement of Additional Information)
of Registration Statement of Information Required by Form N-4
-------------------------------------------------------------
PART A
------
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
- ---------------- ------------------
<S> <C>
1. Cover Page................................ Cover Page
2. Definitions............................... Definitions
3. Synopsis.................................. Summary; Historical Performance Data
4. Condensed Financial Information........... Condensed Financial Information;
Financial Statements
5. General Description of Registrant,
Depositor and Portfolio Companies
(a) Depositor............................ PFL Life Insurance Company
(b) Registrant........................... The Retirement Builder Accounts
(c) Portfolio Company.................... The Mutual Fund Account
(d) Fund Prospectus...................... Underlying Funds
(e) Voting Rights........................ Underlying Funds
6. Deductions and Expenses
(a) General.............................. Charges and Deductions
(b) Sales Load %......................... Surrender Charge
(c) Special Purchase Plan................ N/A
(d) Commissions.......................... Distributor of the Policies
(e) Expenses - Registrant................ N/A
(f) Fund Expenses........................ Other Expenses including Investment
Advisory Fees
(g) Organizational Expenses.............. N/A
7. Policies
(a) Persons with Rights.................. The Policy; Election of Payment Option;
Annuity Payments; Annuity Commencement
Date; Voting Rights
(b) (i) Allocation of Premium
Payments....................... Allocation of Premium Payments
(ii) Transfers...................... Transfers
(iii) Exchanges...................... N/A
(c) Changes.............................. The Policy; Annuity Payment Options;
Premium Payments; Possible changes in
taxation; Addition, Deletion, or
Substitution of Investments
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(d) Inquiries............................ Summary
8. Annuity Period............................ Annuity Payment Options;
...................................... Annuity Commencement Date
9. Death Benefit............................. Death Benefit
10. Purchases and Contract Value
(a) Purchases............................ Policy Application and Issuance of
..................................... Policies; Premium Payments
(b) Valuation............................ Policy Value; The Mutual Fund
..................................... Policy Value
(c) Daily Calculation.................... The Mutual Fund Policy Value
(d) Underwriter.......................... Distributor of the Policies
11. Redemptions
(a) By Owners............................ Surrenders
By Annuitant......................... N/A
(b) Texas ORP............................ Restrictions Under the Texas Optional
..................................... Retirement Program
(c) Check Delay.......................... Payment Not Honored by Bank
(d) Lapse................................ N/A
(e) Free Look............................ Summary
12. Taxes..................................... Certain Federal Income Tax Consequences
13. Legal Proceedings......................... Legal Proceedings
14. Table of Contents for the
Statement of Additional Information....... Statement of Additional Information
<CAPTION>
PART B
------
Item of Form N-4 Statement of Additional
- ---------------- Information Caption
-------------------
<S> <C>
15. Cover Page................................ Cover Page
16. Table of Contents......................... Table of Contents
17. General Information and History........... (Prospectus) PFL Life Insurance Company
18. Services
(a) Fees and Expenses of Registrant...... N/A
(b) Management Policies.................. N/A
(c) Custodian............................ Custody of Assets
</TABLE>
<PAGE>
<TABLE>
Independent
Auditors............................. Independent Auditors
(d) Assets of Registrant................. Custody of Assets
(e) Affiliated Person.................... N/A
(f) Principal Underwriter................ Distribution of the Policies
19. Purchase of Securities Being Offered...... Distribution of the Policies
Offering Sales Load....................... N/A
20. Underwriters.............................. Distribution of the Policies;
(Prospectus) Distributor of the
Policies
21. Calculation of Performance Data........... Historical Performance Data
22. Annuity Payments.......................... (Prospectus) Annuity Payment Options
23. Financial Statements...................... Financial Statements
<CAPTION>
PART C -- OTHER INFORMATION
---------------------------
Item of Form N-4 Part C Caption
- ---------------- --------------
<S> <C>
24. Financial Statements
and Exhibits
(a) Financial Statements................. Financial Statements
(b) Exhibits............................. Exhibits
25. Directors and Officers of
the Depositor............................. Directors and Officers of the Depositor
26. Persons Controlled By or
Under Common Control with the
Depositor or Registrant................... Persons Controlled By or Under Common Control
with the Depositor or Registrant
27. Number of Contractowners.................. Number of Contractowners
28. Indemnification........................... Indemnification
29. Principal Underwriters.................... Principal Underwriters
30. Location of Accounts and Records.......... Location of Accounts and Records
31. Management Services....................... Management Services
32. Undertakings.............................. Undertakings
Signature Page............................ Signature Page
</TABLE>
<PAGE>
Prospectus
- ----------
THE RETIREMENT INCOME BUILDER VARIABLE ANNUITY
Issued Through
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
by
PFL LIFE INSURANCE COMPANY
This Prospectus describes the Retirement Income Builder Variable Annuity (the
"Policy"), a Flexible Premium Variable Annuity offered by PFL Life Insurance
Company ("PFL") to individuals who wish to accumulate capital on a tax-deferred
basis for retirement or other long-term purposes. The Policy provides for
monthly annuity payments on a variable or fixed basis, commencing at a future
date selected by the Owner of the Policy (the "Annuity Commencement Date"). The
Policy may be purchased with a minimum initial Premium Payment of $2,000. There
is no minimum initial Premium Payment required if the Policy is purchased and
used in connection with a tax deferred 403(b) Annuity. An Owner may make
subsequent additional Premium Payments of at least $50 at any time before the
Annuity Commencement Date. The maximum total Premium Payments allowed without
prior approval of PFL is $1,000,000.
The Owner may allocate Premium Payments to one or more Subaccounts of the PFL
Retirement Builder Variable Annuity Account (the "Mutual Fund Account"), to one
or more options under a Fixed Account in which PFL guarantees a minimum fixed
return (the "Fixed Account"), or to a combination of these. The Mutual Fund
Account is a separate investment account of PFL that currently has ten different
Subaccounts (the "Subaccounts"). Assets of each Subaccount are currently
invested only in shares of a corresponding Portfolio of a mutual fund: the
portfolios of the Variable Insurance Products Fund and the Variable Insurance
Products Fund II (together, the "Underlying Funds"), managed by Fidelity
Management & Research Company ("FMR"), an affiliate of Fidelity Investments.
The Underlying Funds currently consist of ten Portfolios: Money Market, High
Income, Equity-Income, Growth, Overseas, Investment Grade Bond, Asset Manager,
Index 500, Asset Manager: Growth, and Contrafund. The Underlying Funds are
described in separate prospectuses that accompany this Prospectus. The Policy
Value will vary in accordance with the investment performance of the Subaccounts
selected by the Owner. Therefore, the Owner bears the entire investment risk
for all amounts allocated to the Mutual Fund Account, including possible loss of
principal amount invested. Amounts allocated to the Fixed Account are guaranteed
by PFL and will earn a specified rate of interest declared periodically which
will never be less than an effective annual interest rate of 3%.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus must be accompanied or preceded by a current prospectus for the
Variable Insurance Products Fund and the Variable Insurance Products Fund II.
Certain portfolios may not be available in all states.
AN INVESTMENT IN THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION, AND IS NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
The date of this Prospectus is December 6, 1996.
<PAGE>
Prior to the Annuity Commencement Date, the Owner can transfer certain amounts
among the Guaranteed Period Options of the Fixed Account or between the Fixed
Account or Subaccounts of the Mutual Fund Account (some prohibitions and
restrictions apply). The Owner can also elect to surrender all or any portion
of the Cash Value in exchange for a payment from PFL; however, any surrender may
be taxable, and subject to a Surrender Charge or a penalty tax or both. Full
surrenders or partial surrenders (withdrawals) from the Fixed Account may be
subject to delay and adjustment related to changes in interest rates declared by
PFL (an Excess Interest Adjustment). The operation of the Excess Interest
Adjustment may result in upward or downward adjustments in the amount to be
received on full surrender, or in the Policy Value upon partial withdrawal.
This Prospectus sets forth the information that a prospective investor should
consider before investing in a Policy. A Statement of Additional Information
about the Policy and the Mutual Fund Account which has the same date as this
Prospectus has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information is
dated December 6, 1996, and a copy is available at no cost upon request by
writing PFL at the Administrative and Service Office or by calling 1-800-525-
6205. The table of contents of the Statement of Additional Information is
included at the end of the Prospectus. This Prospectus and the Statement of
Additional Information generally describe only the Policy and the Mutual Fund
Account, except when the Fixed Account is specifically mentioned.
Any telephone requests and inquiries
may be made to 1-800-525-6205.
Any Written Notices or Written Requests
must be sent to the following address:
PFL Life Insurance Company
Administrative and Service Office:
Financial Markets Division-Variable Annuity Dept.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Please Read This Prospectus Carefully And Retain it For Future Reference.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESPERSON OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
DEFINITIONS.............................................................. 5
SUMMARY.................................................................. 9
CONDENSED FINANCIAL INFORMATION..........................................
FINANCIAL STATEMENTS..................................................... 21
HISTORICAL PERFORMANCE DATA.............................................. 21
Standardized Performance Data......................................... 21
Other Subaccounts..................................................... 22
Non-Standardized Performance Data..................................... 24
PUBLISHED RATINGS........................................................ 25
PFL LIFE INSURANCE COMPANY............................................... 25
THE RETIREMENT BUILDER ACCOUNTS.......................................... 26
The Mutual Fund Account............................................... 26
The Fixed Account..................................................... 31
Guaranteed Periods................................................. 31
Dollar Cost Averaging Fixed Account Option......................... 32
Transfers............................................................. 33
Reinstatements........................................................ 33
Telephone Transactions................................................ 34
Dollar Cost Averaging................................................. 34
Asset Rebalancing..................................................... 35
THE POLICY............................................................... 35
Policy Application and Issuance of Policies........................... 36
Premium Payments...................................................... 36
Initial Premium Payment............................................ 36
Subsequent Additional Premium Payments............................. 36
Maximum Total Premium Payments..................................... 37
Allocation of Premium Payments..................................... 37
Payment Not Honored by Bank........................................ 37
Policy Value.......................................................... 38
The Mutual Fund Policy Value....................................... 38
Adjusted Policy Value................................................. 38
Non-participating Policy.............................................. 39
DISTRIBUTIONS UNDER THE POLICY........................................... 39
Surrenders............................................................ 39
Nursing Care and Terminal Condition Withdrawal Option................. 41
Unemployment Waiver................................................... 41
Excess Interest Adjustments (EIA)..................................... 42
Systematic Payout Option.............................................. 43
Annuity Payments...................................................... 43
Annuity Commencement Date.......................................... 43
Election of Payment Option............................................ 44
Premium Tax........................................................... 44
Supplementary Contract................................................ 44
Annuity Payment Options............................................... 45
Death Benefit......................................................... 48
Death of Annuitant Prior to Annuity Commencement Date............. 48
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Death On or After Annuity Commencement Date........................ 50
Beneficiary........................................................ 50
Death of Owner........................................................ 50
Restrictions Under the Texas Optional Retirement Program.............. 51
Restrictions Under Section 403(b) Plans............................... 51
Restrictions Under Qualified Policies................................. 51
CHARGES AND DEDUCTIONS................................................... 51
Surrender Charge...................................................... 52
Mortality and Expense Risk Fee........................................ 53
Administrative Charges................................................ 54
Premium Taxes......................................................... 54
Federal, State and Local Taxes........................................ 54
Transfer Fee.......................................................... 55
Other Expenses Including Investment Advisory Fees..................... 55
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................. 55
Tax Status of Policy.................................................. 56
Taxation of Annuities................................................. 56
DISTRIBUTOR OF THE POLICIES.............................................. 62
VOTING RIGHTS............................................................ 62
LEGAL PROCEEDINGS........................................................ 64
STATEMENT OF ADDITIONAL INFORMATION...................................... 64
Appendix A............................................................ 66
</TABLE>
4
<PAGE>
DEFINITIONS
Accumulation Unit--An accounting unit of measure used in calculating the
Policy Value in the Mutual Fund Account before the Annuity Commencement Date.
Adjusted Policy Value--An amount equal to the Policy Value increased or
decreased by any Excess Interest Adjustments.
Administrative and Service Office--Financial Markets Division Variable Annuity
Department, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001.
Annuitant--The person entitled to receive Annuity Payments after the Annuity
Commencement Date and during whose life any Annuity Payments involving life
contingencies will continue.
Annuity Commencement Date--The date upon which Annuity Payments are to
commence. The Annuity Commencement Date may not be later than the last day of
the policy month starting after the Annuitant attains age 85, except as
expressly allowed by PFL, but in no event later than the last day of the Policy
month following the month in which the Annuitant attains age 95. The Annuity
Commencement Date may be required to be earlier for Qualified Policies.
Annuity Payment Option or Payment Option--A method of receiving a stream of
Annuity Payments selected by the Owner.
Annuity Unit--An accounting unit of measure used in the calculation of the
amount of the second and each subsequent Variable Annuity Payment.
Beneficiary--The person who has the right to the death benefit set forth
in the Policy.
Business Day--A day when the New York Stock Exchange is open for
business.
Cash Value--The Adjusted Policy Value, less the Surrender Charge, if any.
Code--The Internal Revenue Code of 1986, as amended.
Cumulative Free Percentage--The percentage (as applied to the Policy Value)
which is available to the Owner free of any Surrender Charge.
5
<PAGE>
Current Interest Rate--The interest rate or rates currently guaranteed to be
credited on amounts allocated to one or more options in the Fixed Account. This
interest rate will always be equal to or greater than 3%.
Dollar Cost Averaging--The process by which the Owner may elect to liquidate a
specified Dollar Cost Averaging Fixed Account Option in order to purchase Mutual
Fund Account Accumulation Units on a systematic basis.
Due Proof of Death--A certified copy of a death certificate, a certified copy
of a decree of a court of competent jurisdiction as to the finding of death, a
written statement by the attending physician, or any other proof satisfactory to
PFL, will constitute Due Proof of Death.
Excess Interest Adjustment-- A positive or negative adjustment to amounts
withdrawn upon partial or full surrenders by the Owner from the Fixed Account
Guaranteed Period Options, or to amounts applied to Annuity Payment Options. The
adjustment reflects changes in the interest rates declared by PFL since the date
any payment was received by or an amount was transferred to the Guaranteed
Period Option. The Excess Interest Adjustment (EIA) can either decrease or
increase the amount to be received by the Owner upon full surrender or
commencement of Annuity Payments, depending upon whether there has been an
increase or decrease in interest rates, respectively.
Excess Partial Surrender--The portion of a partial withdrawal (surrender) that
can be subject to a Surrender Charge.
Fixed Account--A group of Investment Options under the Policy, other than the
Mutual Fund Account, that are part of the general assets of PFL that are not in
separate accounts.
Fixed Annuity Payments--Payments made pursuant to an Annuity Payment Option
which do not fluctuate in amount.
FMR--Fidelity Management & Research Company, the investment advisor to the
Underlying Funds.
Guaranteed Period Options--The various guaranteed interest rate periods of the
Fixed Account which may be offered by PFL and into which Premium Payments may be
paid or amounts transferred.
Investment Options--Any of the Guaranteed Period Options of the Fixed Account,
the Dollar Cost Averaging Fixed Account Option, and any of the Subaccounts of
the Mutual Fund Account.
Mutual Fund Account--The PFL Retirement Builder Variable Annuity Account, a
separate account established and registered as a unit investment trust under the
Investment Company Act of 1940 to which Premium Payments under the Policies may
be allocated.
Nonqualified Policy--A Policy other than a Qualified Policy.
6
<PAGE>
Owner or Owners--The person who may exercise all rights and privileges under
the Policy. The Owner during the lifetime of the Annuitant and prior to the
Annuity Commencement Date is the person designated as the Owner or a Successor
Owner in the application.
Policy Anniversary--Each anniversary of the Policy Date.
Policy Date--The Policy Date as shown on the Policy Data Page attached to the
Policy.
Policy Value--On or before the Annuity Commencement Date, the Policy Value is
equal to the Owner's:
(1) Premium Payments; minus
(2) Partial Withdrawals (including any applicable Excess Interest
Adjustments and/or Surrender Charges on such withdrawals); plus
(3) interest credited in the Fixed Account; plus
(4) accumulated gains or losses in the Mutual Fund Account; minus
(5) Service Charges, premium taxes and transfer fees, if any.
Policy Year--A Policy Year begins on the Policy Date and on each Policy
Anniversary.
Premium Payment--An amount paid to PFL by the Owner or on the Owner's behalf
as consideration for the benefits provided by the Policy.
Qualified Policy--A Policy issued in connection with retirement plans that
qualify for special Federal income tax treatment under the Code.
Service Charge--There is an annual Service Charge on each Policy Anniversary
(and a charge at the time of surrender during any Policy Year) for Policy
maintenance and related administrative expenses. This annual charge is the
lesser of 2% of the Policy Value or $30.
Subaccount--A subdivision within the Mutual Fund Account, the assets of which
are invested in a specified Portfolio of the Underlying Funds.
Successor Owner--A person appointed by the Owner to succeed to ownership of
the Policy in the event of the death of the Owner who is not the Annuitant
before the Annuity Commencement Date.
Surrender Charge--The applicable contingent deferred sales charge, assessed on
certain full surrenders or partial withdrawals of Premium Payments to cover
expenses relating to the sale of the Policies.
Underlying Funds--The portfolios of the Variable Insurance Products Fund and
the Variable Insurance Products Fund II, managed by Fidelity Management &
Research Company, an affiliate of Fidelity Investments.
Valuation Period--The period of time from one determination of Accumulation
Unit and Annuity Unit values to the next subsequent determination of values.
Such determinations shall be made on each Business Day.
7
<PAGE>
Variable Annuity Payments--Payments made pursuant to an Annuity Payment Option
which fluctuate as to dollar amount or payment term in relation to the
investment performance of the specified Subaccounts within the Mutual Fund
Account.
Written Notice or Written Request--Written notice, signed by the Owner, that
gives PFL the information it requires and is received at the Administrative and
Service Office. For some transactions, PFL may accept an electronic notice such
as telephone instructions. Such electronic notice must meet the requirements PFL
establishes for such notices.
8
<PAGE>
THE RETIREMENT INCOME BUILDER
VARIABLE ANNUITY
SUMMARY
The following summary is intended to provide a brief overview of the Policy.
More detailed information can be found in the sections of this Prospectus that
follow, all of which should be read in their entirety.
The Policy
The Retirement Income Builder Variable Annuity is a tax-deferred flexible
premium variable annuity policy which can be purchased on a non-tax
qualified basis or with the proceeds from certain plans qualifying for
favorable federal income tax treatment. The Policy provides the Owner with
the ability to accumulate funds on a tax-deferred basis and to receive
periodic annuity payments on a variable basis, a fixed basis, or a
combination of both. The Owner allocates the Premium Payments among the
various options available under the Mutual Fund Account and the Fixed
Account. The Policy is intended for long-term purposes, such as retirement,
and for persons who have maximized their use of other retirement savings
methods, such as 401(k) plans and individual retirement accounts
(IRAs).
The Accounts
The Mutual Fund Account. The Mutual Fund Account is a separate account of
PFL, which currently is divided into ten Subaccounts that invest exclusively
in shares of the ten portfolios of the Variable Insurance Products Fund and
the Variable Insurance Products Fund II (collectively, the "Underlying
Funds"). Fidelity Management & Research Company ("FMR") provides investment
advice and administrative services to the Underlying Funds. The Variable
Insurance Products Fund currently offers five Portfolios: Money Market
Portfolio; High Income Portfolio; Equity-Income Portfolio; Growth Portfolio;
and Overseas Portfolio. The Variable Insurance Products Fund II currently
offers five portfolios: Investment Grade Bond Portfolio; Asset Manager
Portfolio; Index 500 Portfolio; Asset Manager: Growth Portfolio; and
Contrafund Portfolio. Each of the ten Subaccounts of the Mutual Fund Account
invests solely in a corresponding Portfolio of the Underlying Funds.
Because the Policy Value may depend on the investment experience of the
selected Subaccounts, the Owner bears the entire investment risk with
respect to Premium Payments allocated to, and amounts transferred to, the
Mutual Fund Account. (See "THE RETIREMENT BUILDER ACCOUNTS--The Mutual Fund
Account" p. 26.)
The Fixed Account. PFL guarantees return of principal and a minimum
annual return of 3% on: Premium Payments and transfers to, less partial
withdrawals or transfers from the Fixed Account. PFL will always offer a
Current Interest Rate which will be guaranteed for at least one year from
the date of the Premium Payment or transfer. PFL may, in its sole
discretion, declare a higher Current Interest Rate from time-to-time. PFL
may offer optional guaranteed interest rate periods into which Premium
Payments may be made or amounts transferred. PFL may also offer a Dollar
Cost Averaging
9
<PAGE>
Fixed Account Option which will have a one-year interest rate guarantee and
which will require automatic periodic transfers to the Mutual Fund Account.
(See "THE RETIREMENT BUILDER ACCOUNTS--The Fixed Account" p. 31.)
Premium Payments
A Nonqualified or Qualified Policy may be purchased with an initial
Premium Payment of at least $2,000, but there is no minimum initial Premium
Payment required for a Policy purchased and used in connection with a tax
deferred 403(b) Annuity. An Owner may make subsequent additional Premium
Payments of at least $50 each at any time before the Annuity Commencement
Date. The maximum total Premium Payments allowed without prior approval of
PFL is $1,000,000. At the time of each Premium Payment no charges or fees
are deducted, so the entire Premium Payment is invested immediately, subject
to the restrictions below regarding the "Right to Cancel" period. (See
"CHARGES AND DEDUCTIONS--Surrender Charge," p. 52 and CHARGES AND
DEDUCTIONS--Premium Taxes," p. 54.)
The Owner must allocate the initial Premium Payment among the Investment
Options (that is, among the options available under the Fixed Account and/or
the Subaccounts of the Mutual Fund Account) according to allocation
percentages in the Policy application or transmittal form. Any allocation
must be in whole percents, and the total allocation must equal 100%.
However, any amounts allocated to Subaccounts of the Mutual Fund Account
will be allocated entirely to the Money Market Subaccount of the Mutual Fund
Account for the first 14 days after the date the Policy is issued or a
longer period if the laws of the state where issued require more than a 10
day "right-to-cancel" period-(See "Right to Cancel Period," below.) At the
end of this period, the amount in the Money Market Subaccount will then be
allocated to the Subaccount(s) of the Mutual Fund Account in accordance with
the allocation percentages specified by the Owner. Allocations specified by
the Owner will be used for Subsequent Additional Premium Payments unless the
Owner requests a change in allocation. Allocations for additional Premium
Payments may be changed by sending Written Notice to PFL's Administrative
and Service Office. (See "THE POLICY--Premium Payments," p. 36.)
Introductory Premium Credit
For Initial Premium Payments that are received on or before February
28, 1997, PFL will credit an additional amount equal to 3% of such Premium
Payments to the Policy Value effective as of the Policy Date provided,
however, that the Policy is not canceled pursuant to the "Right to Cancel"
described below. The 3% credit will be entitled to the same treatment as any
other Premium Payment for all purposes under the Policy. This offer may not
be available in all states.
Right to Cancel Period
When the Owner receives the Policy, it should be reviewed carefully to
make sure it is what the Owner intended to purchase. The Owner may,
10
<PAGE>
until the end of the period of time specified in the Policy (the Right to
Cancel period), examine the Policy and return it for a refund. The
applicable period will depend on the state in which the Policy is issued. In
many states the period is (10) days after the Policy is delivered to the
Owner. Some states may allow for a longer period to return the Policy. The
amount of the refund will be the greater of the Premium Payments made under
the Policy or the Policy Value. PFL will pay the refund within (7) days
after it receives written notice of cancellation and the returned Policy.
The Policy will then be deemed void.
Transfers Before the Annuity Commencement Date
An Owner can transfer values from one Subaccount to another within the
Mutual Fund Account or from the Mutual Fund Account to the Guaranteed Period
Options of the Fixed Account, or from the Guaranteed Period Options of the
Fixed Account to the Mutual Fund Account within limits established by PFL.
Transfers of funds from any of the Guaranteed Period Options of the Fixed
Account to any of the Subaccounts of the Mutual Fund Account are allowed
only at the end of the applicable Guaranteed Periods, and will not be
subject to an Excess Interest Adjustment at that time. PFL may, at its
discretion, offer the Owner the option to transfer any or all of the
interest credited in any of the Guaranteed Period Options to any
Subaccount(s) of the Mutual Fund Account prior to the end of a specified
Guaranteed Period. (See "THE RETIREMENT BUILDER ACCOUNTS--Transfers.") Any
transfers of interest which may be permitted from a Guaranteed Period Option
prior to the end of a Guaranteed Period will not be subject to any Excess
Interest Adjustment. (See "DISTRIBUTIONS UNDER THE POLICY--Excess Interest
Adjustments," p. 42.) Transfers from the Dollar Cost Averaging Fixed
Account Option (See "THE RETIREMENT BUILDER ACCOUNTS--Dollar Cost Averaging
Fixed Account Option," p. 32), except through a Dollar Cost Averaging
program, are not allowed. Transfers currently may be made either by
telephone (subject to the provisions described under "THE RETIREMENT BUILDER
ACCOUNTS--Telephone Transactions," p. 34.) or by sending Written Notice to
PFL's Administrative and Service Office.
PFL reserves the right to impose a $10 fee for each transfer in excess of
12 transfers per Policy Year. At the present time, PFL does not charge for
transfers. (See "THE RETIREMENT BUILDER ACCOUNTS--Transfers," p. 33.)
Surrenders
The Owner may elect to surrender all or withdraw a portion of the Cash
Value ($500 minimum) in exchange for a payment from PFL at any time prior to
the earlier of the Annuitant's death or the Annuity Commencement Date. The
Cash Value equals the Policy Value increased or decreased by any Excess
Interest Adjustments, less any applicable Surrender Charge (described
below). A surrender request must be made by Written Request, and a request
for a partial withdrawal must specify the Subaccounts or Guaranteed Period
Options from which the withdrawal is requested. There is currently no limit
on the frequency or timing of Policy withdrawals. (See "DISTRIBUTIONS UNDER
THE POLICY--Surrenders," p. 39), although for Qualified Policies the
retirement plan or applicable law may restrict and/or penalize
11
<PAGE>
withdrawals. In addition to the Surrender Charge, Service Charge, any
applicable Excess Interest Adjustment, and any applicable premium taxes,
surrenders and partial withdrawals may be subject to income taxes and a 10%
Federal penalty tax.
Nursing Care and Terminal Condition Withdrawal Option
In some states, if the Owner or Owner's spouse (Annuitant or Annuitant's
spouse if the Owner is not a natural person): (1) has been confined in a
hospital or nursing facility for 30 consecutive days or (2) has been
diagnosed after the Policy Date as having a terminal condition as defined in
the Policy or endorsement, and the individual was not so confined or
diagnosed as of the Policy Date, then the Surrender Charge, Excess Interest
Adjustment, and partial withdrawals adjustment as described in the
Guaranteed Minimum Death Benefit calculation, (See "DISTRIBUTIONS UNDER THE
POLICY--Death Benefit," p. 48.) are not imposed on surrenders or partial
withdrawals. (Since this benefit may not be available in all states, --
see the Policy or endorsement for details.) (See DISTRIBUTIONS UNDER THE
POLICY--Nursing Care and Terminal Condition Withdrawal Option," p. 41.)
Unemployment Waiver
The Owner may withdraw all or a portion of the Policy Value free of
Surrender Charges and free of Excess Interest Adjustments if the Owner or
Owner's spouse (Annuitant or Annuitant's spouse, if the Owner is not a
natural person) becomes unemployed. In order to qualify, the affected
individual 1) must have been employed full time for at least two years prior
to becoming unemployed, 2) must have been employed full time on the Policy
Date, 3) must have been unemployed for at least 60 consecutive days at the
time of withdrawal, and 4) must have a minimum Cash Value at the time of
withdrawal of $5,000. Proof of unemployment will consist of providing PFL
with a determination letter from the applicable State's Department of Labor
which verifies that the individual qualifies for and is receiving
unemployment benefits at the time of withdrawal. The determination letter
must be received by PFL no later than fifteen (15) days after the date of
the withdrawal request. This benefit may not be available in all states,
see the Policy or endorsement for details.
12
<PAGE>
Charges and Deductions
Surrender Charge. In order to permit investment of the entire Premium
Payment, PFL does not deduct sales or other charges at the time of
investment. However, a Surrender Charge, which is a contingent deferred
sales charge, of up to 6% of the Premium Payment is imposed on certain full
surrenders or partial withdrawals of Premium Payments in order to cover
expenses relating to the distribution of the Policies. The applicable
Surrender Charge is based on the period of time elapsed since payment of the
Premium Payment(s) being withdrawn. There will be no Surrender Charge
imposed five or more years after a Premium Payment was paid. In any event,
Surrender Charges will be waived after the tenth Policy Year. For purposes
of determining the applicable Surrender Charge, Premium Payments are
considered to be withdrawn on a "first-in, first-out" basis. (See "CHARGES
AND DEDUCTIONS--Surrender Charge," p. 52.)
In each Policy Year the Owner may request partial withdrawals ($500
minimum) of up to 10% of the Policy Value free of Surrender Charges. The
amount that may be taken free of Surrender Charges each Policy Year is
cumulative. This is referred to as the "Cumulative Free Percentage." That
is, Cumulative Free Percentages which are not taken are carried forward and
are available to be taken in the following Policy Year free of Surrender
Charges. Cumulative Free Percentage withdrawals previously taken reduce the
Cumulative Free Percentage that is available. (See "DISTRIBUTIONS UNDER THE
POLICY--Surrenders," p. 39.) Amounts withdrawn in excess of the available
Cumulative Free Percentage will be subject to a Surrender Charge (up to 6%).
Excess Interest Adjustment. Full surrenders, partial withdrawals from the
Guaranteed Period Options of the Fixed Account prior to the end of the
Guaranteed Period, and amounts applied to a Payment Option (prior to the end
of the Guaranteed Period) and which are in excess of the cumulative interest
credited at the time of, but prior to, the withdrawal, are subject to an
Excess Interest Adjustment. Depending upon market rates of interest, the
effect of an Excess Interest Adjustment could eliminate all interest in
excess of the minimum guaranteed effective annual interest rate of 3%, or it
could result in the crediting of additional interest. See "DISTRIBUTIONS
UNDER THE POLICY--Excess Interest Adjustments," p. 42.
Account Charges. PFL deducts a daily charge equal to a percentage of the
net assets in the Mutual Fund Account for the mortality and expense risks
assumed by PFL. For Guaranteed Minimum Death Benefit Option "A" Return of
Premium Death Benefit, the effective annual rate of this charge is 1.10% of
the value of the Mutual Fund Account's net assets. For Guaranteed Minimum
Death Benefit Options "B" (5% Annually Compounding Death Benefit) and "C"
(Annual Step-Up Death Benefit), the effective annual rate of this charge is
1.25% of the value of the Mutual Fund Account's net assets. (See
13
<PAGE>
"CHARGES AND DEDUCTIONS--Mortality and Expense Risk Fee," p. 53 and
"DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p. 48.)
PFL also deducts a daily Administrative Charge from the net assets of
the Mutual Fund Account to partially cover expenses incurred by PFL in
connection with the administration of the Account and the Policies. The
effective annual rate of this charge is .15% of the value of the Mutual Fund
Account's net assets. (See "CHARGES AND DEDUCTIONS--Administrative
Charges," p. 54.)
PFL guarantees that the account charges for mortality and expense risks
and administrative expenses will not exceed a total of 1.25% for the Return
of Premium Death Benefit, and 1.40% for the 5% Annually Compounding Death
Benefit and the Annual Step Up Benefit Death Benefit.
Service Charge. There is also an annual Service Charge on each Policy
Anniversary (and a charge at the time of surrender during any Policy Year)
for Policy maintenance and related administrative expenses. This annual
charge is the lesser of 2% of the Policy Value or $30 and is deducted from
each Subaccount and/or Guaranteed Period Option of the Fixed Account in
proportion to each Subaccount's/Guaranteed Period Option's percentage of the
Policy Value in the Subaccount/Guaranteed Period Option just prior to such
charge. This charge is waived if either the Policy Value or the sum of all
Premium Payments less the sum of all partial withdrawals equals or exceeds
$50,000 on a Policy Anniversary (or date of surrender). PFL GUARANTEES THAT
THIS CHARGE WILL NOT BE INCREASED IN THE FUTURE. (See "CHARGES AND
DEDUCTIONS--Administrative Charges," p. 54.)
Taxes. PFL may incur premium taxes relating to the Policies. When
permitted by state law, PFL will not deduct any premium taxes related to
particular Policy from the Policy Value until withdrawal of Policy Value,
payment of the death benefit or until the Annuity Commencement Date.
Premium taxes currently range from 0% to 3.50% of Premium Payments.
(See "CHARGES AND DEDUCTIONS--Premium Taxes," p. 54.)
No charges are currently made against any of the Accounts for federal,
state, or local income taxes. Should PFL determine that any such taxes be
imposed with respect to any of the Accounts, PFL may deduct such taxes from
amounts held in the relevant Account. (See "CHARGES AND DEDUCTIONS--Federal,
State and Local Taxes," p. 54.)
Charges Against the Underlying Funds. The value of the net assets of the
Subaccounts of the Mutual Fund Account will reflect the investment advisory
fees and other expenses incurred by the Underlying Funds.
Expense Data. The charges and deductions are summarized in the following
tables. This tabular information regarding expenses assumes that the entire
Policy Value is in the Mutual Fund Account.
14
<PAGE>
<TABLE>
<CAPTION>
Investment
Money High Equity- Grade Asset
Market Income Income Growth Overseas Bond Manager Contrafund
------- ------ ------- ------- --------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Owner Transaction
Expenses (1)............
Sales Load on Purchase
Payments............ 0 0 0 0 0 0 0 0
Maximum Surrender
Charge
as a % of Premium
Payment
Surrendered) (2) 6% 6% 6% 6% 6% 6% 6% 6%
Surrender Fees.......... 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Service Charge $30 Per Policy
-----------------------------------------------------------------------------------------
Transfer Fee First 12 Transfers Per Year: NO FEE
More than 12 in One Year: Currently no fee
Mutual Fund Account Annual
Expenses
(as a percentage of account
value)
Mortality and Expense
Risk Fees (3).......... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
----- ----- ----- ----- ----- ----- ----- -----
Administrative Charge.. 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
Total Mutual Fund
Account
Annual Expenses.... 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
Underlying Funds Annual
Expenses (4)
(as a percentage of
average net assets,
after waivers and
reimbursements
Management Fees......... 0.24% 0.60% 0.51% 0.61% 0.76% 0.45% 0.56% 0.61%
Other Expenses.......... 0.09% 0.11% 0.10% 0.09% 0.15% 0.14% 0.08% 0.11%
Total Underlying Funds
Annual Expenses.... 0.33% 0.71% 0.61% 0.70% 0.91% 0.59% 0.64% 0.72%
(5)
<CAPTION>
Asset
Manager: Index
Growth 500
------ -----
<S> <C> <C>
Policy Owner Transaction
Expenses (1)............
Sales Load on Purchase
Payments............ 0 0
Maximum Surrender
Charge
as a % of Premium
Payment
Surrendered) (2) 6% 6%
Surrender Fees.......... 0 0
--------------------------
Service Charge
--------------------------
Transfer Fee
Mutual Fund Account Annual
Expenses
(as a percentage of account
value)
Mortality and Expense
Risk Fees (3).......... 1.25% 1.25%
----- -----
Administrative Charge... 0.15% 0.15%
Total Mutual Fund
Account
Annual Expenses.... 1.40% 1.40%
Underlying Funds Annual
Expenses (4)
(as a percentage of
average net
assets, after
waivers and
reimburseemnts)
Management Fees......... 0.671% 0.00%
Other Expenses.......... 0.29% 0.28%
Total Underlying Funds
Annual Expenses.... 0.90% 0.28%(6)
(5.6)
</TABLE>
(1) The Surrender Charge and Transfer Fee, if any is imposed, apply to each
Policy, regardless of how Policy Value is allocated among the Mutual Fund
Account and the Fixed Account. The Service Charge applies to both the Fixed
Account and the Mutual Fund Account, and is assessed on a prorata basis
relative to each Account's Policy Value as a percentage of the Policy's
total Policy Value. Mutual Fund Account Annual Expenses do not apply to the
Fixed Account (See "CHARGES AND DEDUCTIONS--Other Expenses Including
Investment Advisory Fees," p. 55.)
(2) The Surrender Charge is decreased based on the number of years since the
Premium Payment was made, from 6% in the year in which the Premium Payment
was made to 0% in the sixth year after the Premium Payment was made.
(3) These Mortality and Expense Risk Fees are those for the 5% Annually
Compounding Death Benefit and the Annual Step Up Death Benefit. The
corresponding Fees for the Return of Premium Death Benefit is 1.10% for
each Subaccount. (See "DISTRIBUTIONS UNDER THE POLICY--Death Benefit,"
p. 48.)
(4) The fee table information relating to the Underlying Funds was provided to
PFL by the Underlying Funds, and PFL has not independently verified such
information.
(5) A portion of the brokerage commissions the fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have been
as follows: for High Income: 0.71% [brokerage commissions were paid, but
such payment did not affect the ratio for this Portfolio]; for Asset
Manager: 0.81%; for Asset Manager: Growth: 1.13%; and for Contrafund:
0.73%.
15
<PAGE>
(6) The fund's expenses were voluntarily reduced by the fund's investment
adviser. Absent reimbursement, management fee, other expenses, and total
expenses would have been (Index 500 Portfolio) 0.28%, 0.19% and 0.47%,
respectively; and (Asset Manager: Growth) 0.71%, 0.42% and 1.13%,
respectively.
16
<PAGE>
Examples
II. An Owner would pay the following expenses on a $1,000 investment,
assuming Death Benefit Option A (Return of Premium Death Benefit)
a hypothetical 5% annual return on assets and assuming the entire Policy Value
is in the applicable Subaccount:
1. If the Policy is surrendered at the end of the applicable time
period:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Money Market Subaccount $71 $92
High Income Subaccount $74 $104
Equity-Income Subaccount $73 $101
Growth Subaccount $74 $104
Overseas Subaccount $76 $110
Investment Grade Bond
Subaccount $73 $100
Asset Manager Subaccount $74 $102
Asset Manager: Growth $76 $110
Subaccount
Contrafund Subaccount $74 $104
Index 500 Subaccount $70 $90
</TABLE>
2. If the Policy is annuitized at the end of the applicable time
period:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Money Market Subaccount $17 $52
High Income Subaccount $21 $64
Equity-Income Subaccount $20 $60
Growth Subaccount $20 $63
Overseas Subaccount $23 $70
Investment Grade Bond
Subaccount $19 $60
Asset Manager Subaccount $20 $61
Asset Manager: Growth
Subaccount $22 $69
Contrafund Subaccount $21 $64
Index 500 Subaccount $16 $50
</TABLE>
3. If the Policy is not surrendered or annuitized:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Money Market Subaccount $17 $52
High Income Subaccount $21 $64
Equity-Income Subaccount $20 $60
Growth Subaccount $20 $63
Overseas Subaccount $23 $70
Investment Grade Bond
Subaccount $19 $60
Asset Manager Subaccount $20 $61
Asset Manager: Growth
Subaccount $22 $69
Contrafund Subaccount $21 $64
Index 500 Subaccount $16 $50
</TABLE>
17
<PAGE>
II. An Owner would pay the following expenses on a $1,000 investment,
assuming Death Benefit Option B, (5% Annually Compounding Death Benefit) or
Death Benefit Option C, (Annual Step-Up Death Benefit) a hypothetical 5% annual
return on assets and assuming the entire Policy Value is in the applicable
Subaccount:
1. If the Policy is surrendered at the end of the applicable time
period:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Money Market Subaccount $72 $97
High Income Subaccount $76 $108
Equity-Income Subaccount $75 $105
Growth Subaccount $76 $108
Overseas Subaccount $78 $115
Investment Grade Bond
Subaccount $75 $105
Asset Manager Subaccount $75 $106
Asset Manager: Growth
Subaccount $78 $114
Contrafund Subaccount $76 $109
Index 500 Subaccount $72 $95
</TABLE>
2. If the Policy is annuitized at the end of the applicable time
period:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Money Market Subaccount $18 $57
High Income Subaccount $22 $68
Equity-Income Subaccount $21 $65
Growth Subaccount $22 $68
Overseas Subaccount $24 $74
Investment Grade Bond $21 $64
Subaccount
Asset Manager Subaccount $21 $66
Asset Manager: Growth
Subaccount $24 $74
Contrafund Subaccount $22 $68
Index 500 Subaccount $18 $55
</TABLE>
3. If the Policy is not surrendered or annuitized:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Money Market Subaccount $18 $57
High Income Subaccount $22 $68
Equity-Income Subaccount $21 $65
Growth Subaccount $22 $68
Overseas Subaccount $24 $74
Investment Grade Bond
Subaccount $21 $64
Asset Manager Subaccount $21 $66
Asset Manager: Growth
Subaccount $24 $74
Contrafund Subaccount $22 $68
Index 500 Subaccount $18 $55
</TABLE>
The above tables are intended to assist the Owner in understanding the
costs and expenses of the Mutual Fund Account and the Underlying Funds
18
<PAGE>
that the Owner will bear, directly or indirectly. These include the 1995
expenses of the Underlying Funds. See "CHARGES AND DEDUCTIONS," p. 51, and the
Underlying Funds' prospectuses. In addition to the expenses listed above,
premium taxes, currently ranging from 0% to 3.50% of Premium Payments may be
applicable.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED RATE. THE FIGURES AND DATA FOR UNDERLYING FUND ANNUAL EXPENSES
HAVE BEEN PROVIDED BY FMR FOR 1995 AND PFL HAS NOT INDEPENDENTLY VERIFIED THEIR
ACCURACY.
In these examples, the $30 Service Charge is reflected as a charge of
.064% based on an anticipated average Policy Value of $46,590.
Death Benefit
In the event that the Annuitant who is not the Owner dies prior to the
Annuity Commencement Date, the Owner will become the Annuitant unless the Owner
specifically requests on the application or in a Written Request that the death
benefit be paid upon the Annuitant's death and PFL agrees to such an election.
If the Annuitant is also the Owner, upon receipt of proof that the Annuitant has
died before the Annuity Commencement Date, the Death Benefit is calculated and
is payable to the Beneficiary when we receive an election of the method of
settlement and return of the Policy.
The amount of the Death Benefit will depend on the state where the Policy
is purchased and may depend on the death benefit option elected by the Owner.
However, the Death Benefit will always be at least equal to the greater of the
Policy Value or the Cash Value on the date due proof of death and election of
the method of settlement are received by PFL.
The Owner has the "one-time" option of choosing a "Return of Premium
Death Benefit," (Death Benefit Option "A"), a "5% Annually Compounding Death
Benefit," (Death Benefit Option "B"), or an "Annual Step-Up Death Benefit,"
(Death Benefit Option "C"). The Return of Premium Death Benefit is the return of
all Premium Payments less any Partial Withdrawals, as of the date of death. The
5% Annually Compounding Death Benefit is the total Premium Payments less any
Partial Withdrawals, accumulated at 5% until the earlier of the date of death or
the Owner's 81st birthday. The Annual Step-Up Death Benefit is the largest
Policy Value on the issue date or on any Policy Anniversary prior to the earlier
of the date of death or prior to the Owner's 81st birthday, plus any premiums
paid, less any premium withdrawals taken, subsequent to the date of the largest
anniversary Policy
19
<PAGE>
Value. If no election is made by the Policyholder, the Return
of Premium Death Benefit will be used upon death of the Annuitant.
The Death Benefit provisions may vary depending on the state where the
Policy is issued. The Death Benefit may be paid as either a lump sum cash
benefit or as an annuity as permitted by federal or state law. (See
"DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p. 48.)
The Death Benefit is not paid on the death of an Owner if the Owner is
not the Annuitant. If an Owner who is not the Annuitant dies before the Annuity
Commencement date, the amount payable under the Policy upon surrender will be
the Policy Value increased or decreased by an Excess Interest Adjustment.
Variations in Policy Provisions
Certain provisions of the Policies may vary from the descriptions in
this Prospectus in order to comply with different state laws. See the Policy
itself for variations. Any such state variations will be included in the Policy
itself or in riders or endorsements attached to the Policy.
Federal Income Tax Consequences of Investment in the Policy
With respect to Owners who are natural persons, there should be no
federal income tax on increases in the Policy Value until a distribution under
the Policy occurs (e.g., a surrender or Annuity Payment) or is deemed to occur
(e.g., a pledge or assignment of a Policy). Generally, a portion of any
distribution or deemed distribution will be taxable as ordinary income. The
taxable portion of certain distributions will be subject to withholding unless
the recipient elects otherwise. In addition, a penalty tax may apply to certain
distributions or deemed distributions under the Policy. (See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES," p. 55.)
Note: The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this Prospectus and in the Statement of
Additional Information and in the prospectuses for the Underlying Funds and in
the Policy, all of which should be referred to for more detailed information.
This Prospectus generally describes only the Policy and the Mutual Fund Account.
Separate prospectuses describe the Underlying Funds. (There is no prospectus for
the Fixed Account since interests in the Fixed Account are deemed not to be
securities. See "THE RETIREMENT BUILDER ACCOUNTS--The Fixed Account, " p. 31.)
Requests for Information
Any telephone requests and inquiries
may be made to 1-800-525-6205.
Any Written Notices or Written Requests
must be sent to the following address:
PFL Life Insurance Company
Administrative and Service Office:
20
<PAGE>
Financial Markets Division-Variable Annuity Dept.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
FINANCIAL STATEMENTS
The financial statements of PFL and the independent auditors' report thereon are
contained in the Statement of Additional Information which is available free
upon request to PFL's Administrative and Service Office.
HISTORICAL PERFORMANCE DATA
Standardized Performance Data
From time to time, PFL may advertise historical yields and total
returns for the Subaccounts of the Mutual Fund Account. These figures will be
calculated according to standardized methods prescribed by the Securities and
Exchange Commission ("SEC"). They will be based on historical earnings and are
not intended to indicate future performance.
The yield of a Subaccount of the Mutual Fund Account (other than the
Money Market Subaccount) for a Policy refers to the annualized income generated
by an investment under a Policy in the Subaccount over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that 30-day period is generated each 30-day period over a 12-
month period and is shown as a percentage of the investment.
The total return of a Subaccount of the Mutual Fund Account refers to
return quotations assuming an investment under a Policy has been held in the
Subaccount for various periods of time including, but not limited to, a period
measured from the date the Subaccount commenced operations. When a Subaccount
has been in operation for 1, 5, and 10 years, respectively, the total return for
these periods will be provided. The total return quotations for a Subaccount
will represent the average annual compounded rates of return that equate an
initial investment of $1,000 in the Subaccount to the redemption value of that
investment as of the last day of each of the periods for which total return
quotations are provided.
The yield and total return calculations for a Subaccount do not reflect
the effect of any premium taxes that may be applicable to a particular Policy.
The yield calculations also do not reflect the effect of any Surrender Charge
that may be applicable to a particular Policy. To the extent that any or all of
a premium tax and/or Surrender Charge is applicable to a particular Policy, the
yield and/or total return of that Policy will be reduced. For additional
information regarding yields and total returns calculated using the standard
formats briefly summarized above, please refer to the Statement of Additional
Information, a copy of which may be obtained from PFL's Administrative and
Service Office upon request.
21
<PAGE>
Subaccounts
The following performance data is for hypothetical subaccounts which
would be subject to the same fees, charges and deductions as the Subaccounts of
the Mutual Fund Account, but which are shown as if the hypothetical subaccounts
actually commenced operations on the same date as the underlying Portfolio.
Accordingly, the following hypothetical performance data is for periods before
the Subaccounts actually commenced operations, and is based on the performance
of the Underlying Funds adjusted to reflect the Mutual Fund Account charges.
The following information is also based on the method of calculation
described in the Statement of Additional Information. The average annual total
returns for periods ended December 31, 1995, were as follows:
Return of Premium Death Benefit (Total Mutual Fund Account Annual Expenses:
1.25%)
<TABLE>
<CAPTION>
Inception
---------
1 Year 3 Year 5 Year Life Date
------------- ------------- ------------- --------- ----
<S> <C> <C> <C> <C> <C>
Money Market * 2.85% 3.01 3.31% 4.72%* 03/31/82
High Income 17.88% 11.23% 17.40% 10.02%** 09/11/85
Equity-Income 32.11% 18.03% 19.74% 11.86% 10/08/86
Growth 32.70% 15.82% 19.20% 13.34% 10/08/86
Overseas 5.66% 13.46% 6.73% 5.90% 01/27/87
Investment Grade Bond 12.89% 6.09% 7.83% 7.55% 06/05/89
Asset Manager 12.92% 8.29% 11.29% 10.77% 05/29/90
Asset Manager: Growth N/A N/A N/A 16.66% 01/03/95
Contrafund N/A N/A N/A 33.40% 01/03/95
Index 500 31.85% 13.15% N/A 13.41% 08/27/92
</TABLE>
5% Annually Compounding Death Benefit or Annual Step-Up Death Benefit (Total
Mutual Fund Account Annual Expenses: 1.40%)
<TABLE>
<CAPTION>
Inception
---------
1 Year 3 Year 5 Year Life Date
------------- ------------- ------------- --------- ----
<S> <C> <C> <C> <C> <C>
Money Market * 2.63% 2.84% 3.15% 4.56%** 03/31/82
High Income 17.67% 11.06% 17.23% 9.86%** 09/11/85
Equity-Income 31.88% 17.85% 19.57% 11.69% 10/08/86
Growth 32.47% 15.65% 19.03% 13.17% 10/08/86
Overseas 5.45% 13.28% 6.57% 5.74% 01/27/87
Investment Grade Bond 12.68% 5.93% 7.67% 7.39% 06/05/89
Asset Manager 12.72% 8.13% 11.13% 10.60% 05/29/90
Asset Manager: Growth N/A N/A N/A 16.47% 01/03/95
Contrafund N/A N/A N/A 33.20% 01/03/95
Index 500 31.63% 12.98% N/A 13.24% 08/27/92
</TABLE>
22
<PAGE>
This performance data is hypothetical for the Retirement Income Builder Variable
Annuity. For purposes of this calculation, the deductions for the Mortality and
Expense Risk Fee and Administrative Charge are made on a monthly basis, rather
than a daily basis. Accumulation Unit values and yields will fluctuate and
there is no guarantee the Owner will receive back the Owner's original
principal. Average Annual Total Returns and Yield include all insurance
contract charges.
* The underlying Money Market Portfolio seeks to maintain a stable $1.00
share price, however, there is no assurance that it will be able to do so.
An investment in the Portfolio is not insured by the U.S. government.
** Figure for 10 years.
23
<PAGE>
Non-Standardized Performance Data
PFL may from time to time also advertise or disclose average annual total
return or other performance data in non-standard formats for a Subaccount of the
Mutual Fund Account. The non-standard performance data may assume that no
Surrender Charge is applicable, and may also make other assumptions such as
the amount invested in a Subaccount, differences in time periods to be shown, or
the effect of partial withdrawals or annuity payments .
The following hypothetical non-standardized average annual total return
figures are based on the assumption that the Policy is not surrendered, and
therefore the following figures assume that the Surrender Charge is not imposed.
Average Annual Total Returns
(Assuming No Surrender Charge)
Return of Premium Death Benefit (Total Mutual Fund Account Annual Expenses:
1.25%)
<TABLE>
<CAPTION>
Inception
---------
1 Year 3 Year 5 Year Life Date
------- ------- ------- --------- ----
<S> <C> <C> <C> <C> <C>
Money Market * 4.51% 3.10% 3.31% 4.72%** 03/31/82
High Income 19.04% 11.23% 17.40% 10.02%** 09/11/85
Equity-Income 33.35% 18.03% 19.74% 11.86% 10/08/86
Growth 33.62% 15.82% 19.20% 13.34% 10/08/86
Overseas 8.25% 13.76% 6.73% 5.90% 01/27/87
Investment Grade Bond 15.81% 6.41% 7.83% 7.55% 06/05/89
Asset Manager 15.44% 8.53% 11.29% 10.77% 05/29/90
Asset Manager: Growth N/A N/A N/A 22.01% 01/03/95
Contrafund N/A N/A N/A 38.63% 01/03/95
Index 500 35.52% 13.53% N/A 13.75% 08/27/92
</TABLE>
5% Annually Compounding Death Benefit or Annual Step-Up Death Benefit (Total
Mutual Fund Account Annual Expenses: 1.40%)
<TABLE>
<CAPTION>
Inception
---------
1 Year 3 Year 5 Year Life Date
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Money Market * 4.35% 2.94% 3.15% 4.56%** 03/31/82
High Income 18.87% 11.06% 17.23% 9.86%** 09/11/85
Equity-Income 33.16% 17.85% 19.57% 11.69% 10/08/86
Growth 33.43% 15.65% 19.03% 13.17% 10/08/86
Overseas 8.09% 13.59% 6.57% 5.74% 01/27/87
Investment Grade Bond 15.63% 6.25% 7.67% 7.39% 06/05/89
Asset Manager 15.27% 8.37% 11.13% 10.60% 05/29/90
Asset Manager: Growth N/A N/A N/A 21.83% 01/03/95
Contrafund N/A N/A N/A 38.43% 01/03/95
Index 500 35.32% 13.36% N/A 13.58% 08/27/92
</TABLE>
This performance data is hypothetical for the Retirement Income Builder Variable
Annuity. For purposes of this calculation, the deductions for the Mortality and
Expense Risk Fee and Administrative Charge are made on a monthly basis, rather
24
<PAGE>
than a daily basis. Accumulation Unit values and yields will fluctuate and
there is no guarantee the Owner will receive back the Owner's original
principal. Average Annual Total Returns and Yield include all insurance
contract charges.
* The underlying Money Market Portfolio seeks to maintain a stable $1.00
share price, however, there is no assurance that it will be able to do
so. An investment in the Portfolio is not insured by the U.S.
government.
** Figure for 10 years.
All non-standard performance data will be advertised only if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information, a copy of which may be obtained free from
PFL's Administrative and Service office upon request.
PUBLISHED RATINGS
PFL may from time to time publish in advertisements, sales literature and
reports to Owners, the ratings and other information assigned to it by one or
more independent rating organizations such as A.M. Best Company, Standard &
Poor's, and Duff & Phelps. The purpose of the ratings is to reflect the
financial strength and/or claims-paying ability of PFL and they should not be
considered as bearing on the investment performance of assets held in the Mutual
Fund Account or of the safety or riskiness of an investment in the Mutual Fund
Account. Each year the A.M. Best Company reviews the financial status of
thousands of insurers, culminating in the assignment of Best's ratings. These
ratings reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, the claims-paying ability of PFL
as measured by Standard & Poor's Insurance Ratings Services or Duff & Phelps may
be referred to in advertisements or sales literature or in reports to Owners.
These ratings are opinions of an operating insurance company's financial
capacity to meet the obligations of its insurance policies in accordance with
their terms. Claims-paying ability ratings do not refer to an insurer's ability
to meet non-policy obligations such as debt or commercial paper obligations.
PFL LIFE INSURANCE COMPANY
PFL Life Insurance Company ("PFL"), 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499-0001, is a stock life insurance company. It was incorporated
under the name NN Investors Life Insurance Company, Inc. under the laws of the
State of Iowa on April 19, 1961. It is principally engaged in the sale of life
insurance and annuity policies, and is licensed in the District of Columbia,
Guam, and in all states except New York. As of December 31, 1995, PFL had
assets of approximately $7.2 billion. PFL is a wholly-owned indirect subsidiary
of AEGON USA, Inc. which conducts substantially all of its operations through
subsidiary companies engaged in the insurance business or in providing non-
insurance financial services. All of the stock of AEGON USA, Inc., is
indirectly owned by AEGON n.v. of the Netherlands, the securities of which are
publicly traded. AEGON n.v., a
25
<PAGE>
holding company, conducts its business through subsidiary companies engaged
primarily in the insurance business.
THE RETIREMENT BUILDER ACCOUNTS
Premium Payments made under a Policy may be allocated to the Mutual
Fund Account, to the Fixed Account, or to a combination of these Accounts.
The Mutual Fund Account
The Mutual Fund Account was established as a separate investment
account of PFL under the laws of the State of Iowa on March 29, 1996. The
Mutual Fund Account receives and currently invests the Premium Payments under
the Policies that are allocated to it for investment only in shares of the
Variable Insurance Products Fund and the Variable Insurance Products Fund II,
managed by Fidelity Management and Research Company ("FMR"), an affiliate of
Fidelity Investments.
The Mutual Fund Account currently is divided into ten Subaccounts.
Additional Subaccounts may be established in the future at the discretion of
PFL. Each Subaccount invests exclusively in shares of one of the Portfolios of
the Underlying Funds. Under Iowa law, the assets of the Mutual Fund Account are
owned by PFL but they are held separately from the other assets of PFL. To the
extent that these assets are attributable to the Cash Value of the Policies,
these assets are not chargeable with liabilities incurred in any other business
operation of PFL. Income, gains, and losses incurred on the assets in the
Subaccounts of the Mutual Fund Account, whether or not realized, are credited to
or charged against that Subaccount without regard to other income, gains or
losses of any other Account or Subaccount of PFL. Therefore, the investment
performance of any Subaccount should be entirely independent of the investment
performance of PFL's general account assets or any other Account or Subaccount
maintained by PFL.
The Mutual Fund Account is registered with the SEC under the Investment
Company Act of 1940 (the "1940 Act") as a unit investment trust and meets the
definition of a separate account under federal securities laws. However, the
SEC does not supervise the management or the investment practices or policies of
the Mutual Fund Account or PFL.
Underlying Funds. The available Subaccounts of the Mutual Fund Account
currently invest exclusively in shares of the Underlying Funds. The Underlying
Funds are diversified, open-end management investment companies organized as
Massachusetts Business Trusts. The Variable Insurance Product Fund was
established on November 13, 1981, and was formerly known as Fidelity Cash
Reserves II. The Variable Insurance Products Fund II was established on March
21, 1988.
Certain information concerning the Underlying Funds is set forth below.
More detailed information may be found in the Underlying Funds' current
prospectuses, which accompany or precede this Prospectus, and the Underlying
Funds' current Statements of Additional Information. The following description
is qualified in its entirety by reference to each
26
<PAGE>
Underlying Fund's prospectus and Statement of Additional Information wherein
more detailed information may be found.
FMR provides investment advice and administrative services to the
Underlying Funds pursuant to an agreement under which each Portfolio pays FMR a
monthly fee. The Variable Insurance Product Fund currently offers five
Portfolios: Money Market; High Income; Equity-Income; Growth; and Overseas. The
Variable Insurance Products Fund II currently offers five Portfolios that are
available under the Policies: Investment Grade Bond; Asset Manager; Index 500,
Asset Manager: Growth; and Contrafund. The ten Portfolios offered by the
Underlying Funds provide a range of investment alternatives that vary according
to the different investment objectives described in the Underlying Funds'
prospectuses and summarized below. The assets of each Portfolio are separate
from the others, and each Portfolio has separate investment objectives and
policies. As a result, each Portfolio operates as a separate investment fund,
and the investment performance of one Portfolio has no effect on the investment
performance of any other Portfolio. Each of the Portfolios may not be available
for investment in every state.
Money Market Portfolio seeks to obtain as high a level of current
income as is consistent with preserving capital and providing liquidity. The
Portfolio will invest only in high-quality short-term U.S. dollar-denominated
money market instruments of domestic and foreign issuers. The Portfolio seeks
to maintain a constant net asset value of $1.00 per share, although no
assurances can be given that such constant net asset value will be maintained.
The Portfolio's shares are neither insured nor guaranteed by the U.S.
Government.
High Income Portfolio seeks to obtain a high level of current income by
investing primarily in high-yielding, lower rated, fixed-income securities. In
choosing these securities, growth of capital also will be considered. The fund
can also invest in common stocks, other equity securities, and debt securities
not currently paying interest but which are expected to do so in the future.
The Portfolio may invest without limitation in lower-quality debt securities,
sometimes called "junk bonds" which carry greater risk than other debt
securities. See the Fund's prospectus for a description of these risks.
Equity-Income Portfolio seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities, the
Portfolio will also consider the potential for capital appreciation. The
Portfolio seeks to achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500 Stocks.
Growth Portfolio seeks to achieve capital appreciation through the
purchase of common stocks, although the Portfolio's investments are not
restricted to any one type of security. Capital appreciation may also be found
in other types of securities, including bonds and preferred stocks.
Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities. The Portfolio seeks to achieve its
27
<PAGE>
investment objective by investing at least 65% of the Portfolio's assets in
securities of companies from at least three different countries outside of North
America. The Overseas Portfolio expects to invest most of its assets in
securities of companies located in developed countries in these general areas:
The Americas (other than the United States), the Far East and Pacific Basin,
Scandinavia and Western Europe. The Overseas Portfolio expects to invest a
majority of its assets in equity securities, but may also invest in debt
securities of any quality. Generally, the investment in securities of foreign
companies will involve greater risks than are present in domestic
investments.
Investment Grade Bond Portfolio seeks as high a level of current income
as is consistent with the preservation of capital by investing primarily in a
broad range of fixed-income securities. FMR normally invests at least 65% of
the Portfolio's total assets in investment-grade, fixed income securities. Its
dollar weighted average maturity will be generally five to ten years.
Asset Manager Portfolio seeks high total return with reduced risk over
the long-term by allocating its assets among the following classes, or types of
investments: domestic and foreign stocks, bonds, and short-term and money market
instruments. The Portfolio's "neutral" mix is expected to be 50% stocks, 40%
bonds and 10% short-term/money market instruments. FMR may change the neutral
mix from time to time within specified ranges as set forth in the Fund's
prospectus.
Index 500 Portfolio seeks to match the total return of the Standard &
Poor's Composite Index of 500 Stocks, while keeping transaction costs and other
expenses low.
Asset Manager: Growth Portfolio seeks to maximize total return by
allocating its assets among the following classes, or types, of investments:
domestic and foreign stocks, bonds, and short-term and money market instruments.
The Portfolio's "neutral" mix is expected to be 70% stocks, 25% bonds and 5%
short-term/money market instruments. FMR may change the neutral mix from time to
time within specified ranges as set forth in the Fund's prospectus.
Contrafund Portfolio seeks capital appreciation by investing primarily
in equity securities of companies that are considered to be undervalued or out-
of-favor by the Portfolio's adviser.
THERE IS NO ASSURANCE THAT ANY OF THE UNDERLYING FUNDS' PORTFOLIOS WILL ACHIEVE
ITS INVESTMENT OBJECTIVE.
The Underlying Funds' prospectuses should be read carefully before any
decision is made concerning the allocation of Premium Payments to a particular
Subaccount. The Underlying Funds are not limited to selling their shares to the
Mutual Fund Account and are permitted to accept investments from any separate
account of an insurance company. Since the Portfolios of the Underlying Funds
are available to registered separate accounts offering variable annuity products
of the Company, as well as variable annuity and variable life products of other
insurance companies, there is a possibility that
28
<PAGE>
a material conflict may arise between the interests of the Mutual Fund Account
and one or more of the separate accounts of another participating insurance
company. In the event of a material conflict, the affected insurance companies,
including PFL, agree to take any necessary steps, including removing their
separate accounts from the Underlying Funds, to resolve the matter. See the
Underlying Funds' prospectuses for further details.
An investment in the Mutual Fund Account, or in any Portfolio,
including the Money Market Portfolio is not insured or guaranteed by the U.S.
government or any government agency.
Addition, Deletion, or Substitution of Investments. PFL cannot and
does not guarantee that any of the Subaccounts will always be available for
Premium Payments, allocations, or transfers. PFL retains the right, subject to
any applicable law, to make certain changes in the Mutual Fund Account and its
investments. PFL reserves the right to eliminate the shares of any Portfolio
held by a Subaccount and to substitute shares of another Portfolio of the
Underlying Funds, or of another registered open-end management investment
company for the shares of any Portfolio, if the shares of the Portfolio are no
longer available for investment or if, in PFL's judgment, investment in any
Portfolio would be inappropriate in view of the purposes of the Mutual Fund
Account. To the extent required by the 1940 Act, substitutions of shares
attributable to an Owner's interest in a Subaccount will not be made without
prior notice to the Owner and the prior approval of the SEC. Nothing contained
herein shall prevent the Mutual Fund Account from purchasing other securities
for other series or classes of variable annuity policies, or from effecting an
exchange between series or classes of variable annuity policies on the basis of
requests made by Owners.
New Subaccounts may be established when, in the sole discretion of PFL,
marketing, tax, investment or other conditions warrant. Any new Subaccounts may
be made available to existing Owners on a basis to be determined by PFL. Each
additional Subaccount will purchase shares in a mutual fund portfolio or other
investment vehicle. PFL may also eliminate one or more Subaccounts if, in its
sole discretion, marketing, tax, investment or other conditions warrant such
change. In the event any Subaccount is eliminated, PFL will notify Owners and
request a reallocation of the amounts invested in the eliminated Subaccount. If
no such reallocation is provided by the Owner, PFL will reinvest the amounts
invested in the eliminated Subaccount in the Subaccount that invests in the
Money Market Portfolio (or in a similar portfolio of money market instruments)
or in another Subaccount, if appropriate.
In the event of any such substitution or change, PFL may, by
appropriate endorsement, make such changes in the Policies as may be necessary
or appropriate to reflect such substitution or change. Furthermore, if deemed
to be in the best interests of persons having voting rights under the Policies,
the Mutual Fund Account may be (i) operated as a management company under the
1940 Act or any other form permitted by law, (ii) deregistered under the 1940
Act in the event such registration is no longer required or (iii) combined with
one or more other separate accounts. To the extent permitted by applicable law,
PFL also may (1) transfer the assets of the
29
<PAGE>
Mutual Fund Account associated with the Policies to another account or accounts,
(2) restrict or eliminate any voting rights of Owners or other persons who have
voting rights as to the Mutual Fund Account, (3) create new mutual fund
accounts, (4) add new Subaccounts to or remove existing Subaccounts from the
Mutual Fund Account, or combine Subaccounts, or (5) add new underlying funds, or
substitute a new fund for an existing fund.
30
<PAGE>
The Fixed Account
This Prospectus is generally intended to serve as a disclosure document
only for the Policy and the Mutual Fund Account. For complete details regarding
the Fixed Account, see the Policy itself.
Premium Payments allocated and amounts transferred to the Fixed Account
become part of the general account of PFL, which supports insurance and annuity
obligations. Interests in the general account have not been registered under
the Securities Act of 1933 (the "1933 Act"), nor is the general account
registered as an investment company under the 1940 Act. Accordingly, neither the
general account nor any interests therein are generally subject to the
provisions of the 1933 or 1940 Acts. PFL has been advised that while
the staff of the SEC has not reviewed the disclosures in this Prospectus
which relate to the fixed portion, the disclosures may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of the statements made in the prospectus. .
The Fixed Account is made up of all the general assets of PFL, other
than those in the Mutual Fund Account or in any other segregated asset account.
The Policy Owner may allocate Premium Payments to the Fixed Account at the time
of Premium Payment or by subsequent transfers from the Mutual Fund Account.
Rather than the Policy Owner bearing the investment risk, as is the case for
Policy Value allocated to the Mutual Fund Account, PFL bears the full investment
risk for all Policy Value allocated to the Fixed Account. PFL has sole
discretion to invest the assets of its general account, including the Fixed
Account, subject to applicable law.
Premium Payments applied to, and any amounts transferred to, the Fixed
Account will reflect a fixed interest rate. The interest rates PFL sets will be
credited for increments of at least one year measured from each Premium Payment
or transfer date. These rates will never be less than an effective annual
interest rate of 3%.
Guaranteed Periods. PFL may offer optional guaranteed interest rate
periods ("Guaranteed Period Options") into which Premium Payments may be paid or
amounts transferred. For example, PFL may offer Guaranteed Period Options for
1, 3, 5, or 7 years duration from time to time. The Current Interest Rate PFL
sets for funds placed in each Guaranteed Period Option will be guaranteed until
the end of the applicable Guaranteed Period. At the end of the Guaranteed
Period, the Policy Value for the Guaranteed Period Option will be rolled into a
new Guaranteed Period Option(s) or may be transferred to any Subaccount(s)
within the Mutual Fund Account.
The Owner may choose the Guaranteed Period Option(s) in which to place
the Policy Value by giving PFL notice within 30 days before the end of the
expiring Guaranteed Period. In the absence of such election, the new Guaranteed
Period Option will be the same as the expiring Guaranteed Period Option unless
that Guaranteed Period Option is no longer offered, in which case, the next
shorter Guaranteed Period Option offered will be used. PFL reserves the right,
for new Premium Payments, transfers, or rollovers, to offer
31
<PAGE>
or not to offer any Guaranteed Period Option. PFL will, however, always offer at
least a one-year Guaranteed Period Option.
Surrenders or partial withdrawals from a Guaranteed Period Option prior
to the end of the Guaranteed Period and which are in excess of the cumulative
interest credited at the time of, but prior to, the withdrawal are subject to an
Excess Interest Adjustment on the amount withdrawn. See "DISTRIBUTIONS UNDER
THE POLICY--Excess Interest Adjustment," p. 42.) No transfers from any
Guaranteed Period Option to any other Investment Option will be allowed prior to
the end of the Guaranteed Period. (See "Transfers," below.)
PFL guarantees that, at any time prior to the Annuity Commencement
Date, the amount in the Fixed Account allocable to a particular Policy will be
not less than the amount of the Premium Payments or transfers to, less
withdrawals or transfers from, the Fixed Account, plus interest at the effective
annual rate of 3% per year, plus any excess interest credited to amounts in the
Fixed Account, less any applicable Surrender Charge or premium or other taxes
allocable to the Fixed Account. Upon full surrender, the Owner will always
receive at least the Premium Payments applied to, less prior partial withdrawals
and transfers from, the Fixed Account plus interest at the effective annual rate
of 3%.
Current Interest Rates will be determined by PFL in its sole
discretion.
For purposes of crediting interest, the oldest Premium Payment or
transfer into a Guaranteed Period Option within the Fixed Account, plus interest
allocable to that Premium Payment or transfer, is considered to be withdrawn
first; the next oldest Premium Payment or transfer plus interest is considered
to be withdrawn next, and so on (this is a "first-in, first-out" procedure).
The Owner bears the risk that PFL will not credit interest in excess of 3% per
year.
Dollar Cost Averaging Fixed Account Option. PFL may offer a Dollar
Cost Averaging Fixed Account Option separate from the Guaranteed Period
Option(s). This option will have a one-year interest rate guarantee and will
only be available under a Dollar Cost Averaging (DCA) program.
Prior to the Annuity Commencement Date, no transfers, except through a
Dollar Cost Averaging program, will be allowed from the Dollar Cost Averaging
Fixed Account. Dollar Cost Averaging transfers to Subaccounts of the Mutual
Fund Account must begin within 30 days after the Premium Payment or transfer to
the Dollar Cost Averaging Fixed Account. Transfers must be scheduled for at
least six but not more than 24 months, or for at least four, but not more than
eight calendar quarters. No changes to the amount transferred will be allowed,
but changes can be made to the Subaccounts to which these transfers are
allocated. Transfers under a Dollar Cost Averaging program will not be subject
to an Excess Interest Adjustment. (See "THE RETIREMENT BUILDER ACCOUNTS--Dollar
Cost Averaging" p. 34.)
32
<PAGE>
Dollar cost averaging requires regular investment regardless of
fluctuating prices and does not guarantee profits nor prevent losses in a
declining market. Before electing this option, individuals should consider their
financial ability to continue purchases through periods of both high and low
price levels.
Transfers
An Owner can transfer Policy Value from one Investment Option to
another within certain limits.
Subject to the limitations and restrictions described below, transfers
from an Investment Option may be made, up to thirty days prior to the Annuity
Commencement Date, by sending Written Notice, signed by the Owner, to the
Administrative and Service Office. The minimum amount which may be transferred
from a Subaccount of the Mutual Fund Account is the lesser of $500 or the entire
Subaccount value. If the Subaccount value remaining after a transfer is less
than $500, PFL reserves the right, at its discretion, to include that amount as
part of the transfer.
Transfers currently may be made without charge as often as the Owner
wishes, subject to the minimum dollar amounts specified above. PFL reserves the
right to limit these transfers to no more than 12 per Policy Year in the future
or to charge up to $10 per transfer in excess of 12 per Policy Year.
Transfers of funds from any of the Guaranteed Period Option(s) of the
Fixed Account to any Subaccount(s) of the Mutual Fund Account are allowed only
at the end of the Guaranteed Period(s), except that PFL may, at its discretion,
offer the Owner the option to transfer the interest credited in any of the
Guaranteed Period Option(s) to any Subaccount(s) of the Mutual Fund Account
prior to the end of the Guaranteed Period. The maximum transfer permitted from
any Guaranteed Period Option before the end of the Guaranteed Period will be the
cumulative amount of interest credited for the Guaranteed Period Option at the
time of, but prior to, the transfer. No Excess Interest Adjustment will apply to
such transfers of interest.
Transfers out of the Dollar Cost Averaging Fixed Account, except
through a Dollar Cost Averaging program, are not allowed. (See "Dollar Cost
Averaging," below.)
After the Annuity Commencement Date, transfers out of the Fixed Account
are not permitted. (See "DISTRIBUTIONS UNDER THE POLICY--Annuity Payment
Options," p. 45.)
Transfers may be made by telephone, subject to the provisions described
below under "Telephone Transactions."
Reinstatements
Requests are occasionally received by PFL to reinstate funds which had
been transferred to another life insurance company pursuant to a Code Section
1035 exchange or trustee-to-trustee transfer. In this situation PFL
33
<PAGE>
will require the Owner to replace the same total dollar amount of funds in the
applicable Subaccounts and/or Fixed Accounts as was taken from them to effect
the exchange. The total dollar amount of funds reapplied to the Mutual Fund
Account will be used to purchase a number of Accumulation Units available for
each Subaccount based on the Accumulation Unit values at the date of
reinstatement (within two days of the date the funds are received by PFL). It
should be noted that the number of Accumulation Units available on the
Reinstatement date may be more or less than the number surrendered for the
exchange. Amounts reapplied to the Fixed Account will be entitled to receive the
interest rate they would otherwise have received had they not been withdrawn.
However, an adjustment will be made to the amount reapplied to compensate PFL
for the additional interest credited during the period of time between the
withdrawal and the reapplication of the funds. Owners should consult a qualified
personal tax adviser concerning the tax consequences of any Code Section 1035
exchanges or reinstatements.
Telephone Transactions
Owners (or their designated registered representative) may make
transfers and/or change the allocation of subsequent Premium Payments by
telephone if the "Telephone Transfer/Reallocation Authorization" box in the
Policy application has been initialed or telephone transfers have been
subsequently authorized by the Owner by appropriate Written Request. PFL will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. However, PFL will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
If PFL fails to do so, it may be liable for any losses due to unauthorized or
fraudulent instructions. All telephone requests will be recorded on voice
recorder equipment for the protection of the Owner. The Owner, when making
telephone requests, will be required to provide the Owner's social security
number, and/or other information for identification purposes.
Telephone requests must be received at the Administrative and Service
Office no later than 3:00 p.m. Central time in order to assure same-day pricing
of the transaction.
The telephone transaction privilege may be discontinued at any time as
to some or all Owners and PFL may require written confirmation of a telephone
transaction request at its discretion.
Dollar Cost Averaging (DCA)
Under the Dollar Cost Averaging program, prior to the Annuity
Commencement Date, the Owner can instruct PFL to automatically transfer a dollar
amount specified by the Owner from the DCA Fixed Account Option to any other
Subaccount or Subaccounts of the Mutual Fund Account. The automatic transfers
can occur monthly or quarterly and will occur on the 28th day of the month. If
the DCA request is received prior to the 28th day of any month, the first
transfer will occur on the 28th day of that month. If the DCA request is
received on or after the 28th day of any month, the first transfer will occur on
the 28th day of the following month. The amount transferred each time must be at
least $500. A minimum of six monthly or four quarterly
34
<PAGE>
transfers are required and a maximum of 24 monthly or eight quarterly transfers
are allowed from the DCA Fixed Account.
Dollar Cost Averaging results in the purchase of more Accumulation
Units when the Accumulation Unit value is low, and fewer Accumulation Units when
the Accumulation Unit value is high. However, there is no guarantee that the
Dollar Cost Averaging program will result in higher Policy Values or will
otherwise be successful.
The Policy Owner may request Dollar Cost Averaging when purchasing the
Policy or later. The program will terminate when the amount in the DCA Fixed
Account is insufficient for the next transfer, at which time the entire
remaining balance is transferred.
The Owner may discontinue the program after satisfying the required
minimum number of transfers at any time by sending a Written Notice to the
Administrative and Service Office. The required minimum number of transfers (6
monthly or 4 quarterly) must be satisfied each time the DCA program is restarted
following termination of the program for any reason. There is no charge for
participation in this program.
Asset Rebalancing
Prior to the Annuity Commencement Date the Owner may instruct PFL to
automatically transfer amounts among the Subaccounts of the Mutual Fund Account
on a regular basis to maintain a desired allocation of the Policy Value among
the various Subaccounts offered. Rebalancing will occur on a monthly, quarterly,
semi-annual, or annual basis based on the Policy Date, and beginning on a date
selected by the Owner. The Owner must select the percentage of the Policy Value
desired in each of the various Subaccounts offered (totaling 100%). Any amounts
in the Fixed Account are ignored for purposes of asset rebalancing. Rebalancing
may be started, stopped, or changed at any time, except that rebalancing will
not be available when:
(1) a Dollar Cost Averaging program is in effect; or
(2) any other transfer is requested.
There is no charge for participation in this program.
THE POLICY
The Retirement Income Builder Variable Annuity Policy is a flexible
premium variable annuity policy. The rights and benefits under the Policy are
summarized below; however, the description of the Policy contained in this
Prospectus is qualified in its entirety by reference to the Policy itself, a
copy of which is available upon request from PFL. The Policy may be purchased on
a non-tax qualified basis ("Nonqualified Policy"). The Policy may also be
purchased and used in connection with retirement plans or individual retirement
accounts that qualify for favorable federal income tax treatment ("Qualified
Policy").
35
<PAGE>
Policy Application and Issuance of Policies
Before it will issue a Policy, PFL must receive a completed Policy
application or transmittal form and a minimum initial Premium Payment of $2,000
for a Nonqualified or Qualified Policy. There is no minimum initial Premium
Payment required for tax deferred 403(b) annuities. A Policy ordinarily will be
issued only in respect of Annuitants Age 0 through 80. Acceptance or declination
of an application shall be based on PFL's underwriting standards, and PFL
reserves the right to reject any application or Premium Payment based on those
underwriting standards.
If the application or transmittal form can be accepted in the form
received, the initial Premium Payment will be credited to the Policy Value
within two Business Days after the later of receipt of the information needed to
issue the Policy or receipt of the initial Premium Payment. If the initial
Premium Payment cannot be credited because the application or other issuing
requirements are incomplete, the applicant will be contacted within five
Business Days and given an explanation for the delay and the initial Premium
Payment will be returned at that time unless the applicant consents to PFL's
retaining the initial Premium Payment and crediting it as soon as the necessary
requirements are fulfilled.
PFL may, if the application or transmittal form can be accepted in the
form received, credit the initial Premium Payment to the Policy Value within one
Business Day after the later of receipt by PFL's agent of the information needed
or the Premium Payment.
The date on which the initial Premium Payment is credited to the Policy
Value is the Policy Date. The Policy Date is the date used to determine Policy
Years and Policy Anniversaries.
Premium Payments
All initial Premium Payment checks or drafts should be made payable to
PFL Life Insurance Company and sent to the Administrative and Service Office.
Subsequent Additional Premium Payments should also be sent to the Administrative
and Service Office. The Death Benefit will not take effect until the check or
draft for the Premium Payment is honored.
Initial Premium Payment. The minimum initial Premium Payment that PFL
currently will accept under a Policy is $2,000 under a Nonqualified or Qualified
Policy. There is no minimum initial Premium Payment required for tax deferred
403(b) annuity purchases. PFL reserves the right to increase or decrease this
amount for a class of Policies issued after some future date. The initial
Premium Payment is the only Premium Payment required to be paid under a Policy.
Subsequent Additional Premium Payments. While the Annuitant is living
and prior to the Annuity Commencement Date, the Owner may make Subsequent
Additional Premium Payments at any time, and in any frequency. The minimum
Subsequent Additional Premium Payment under both a Nonqualified Policy and a
Qualified Policy is $50. Subsequent Additional Premium Payments will be credited
to the Policy and added to the Policy
36
<PAGE>
Value as of the Business Day when the premium and required information are
received.
Maximum Total Premium Payments. The maximum total Premium Payments
allowed without prior approval of PFL is $1,000,000.
Allocation of Premium Payments. An Owner must allocate Premium Payments
to one or more of the Investment Options. The Owner must specify the initial
allocation in the Policy application or transmittal form. This allocation will
be used for Subsequent Additional Premium Payments unless the Owner requests a
change of allocation. All allocations must be made in whole percentages and must
total 100%. However, the portion of the initial Premium Payment which is
allocated to the Mutual Fund Account will be temporarily allocated entirely to
the Money Market Portfolio of the Mutual Fund Account only for a period of time
equal to the greater of the Policy's Right to Cancel Period, or fourteen (14)
days following the Policy Date. (See "SUMMARY--Right to Cancel Period," p. 10.)
Based on current state laws, the maximum right to cancel period, and therefore
maximum period of time the funds are expected to be allocated to the money
market account, is 30 days from the date the policy is issued. At the end of
that period, the Policy Value in the Money Market Portfolio will then be
allocated to the Subaccount(s) of the Mutual Fund Account in accordance with the
allocation percentages specified by the Owner. If Premium Payments are allocated
to the Dollar Cost Averaging Fixed Account, directions regarding the
Subaccount(s) to which transfers are to be made must be specified on the
application or other proper Written Request. If the Owner fails to specify how
Premium Payments are to be allocated, the Premium Payment(s) cannot be
accepted.
The Owner may change the allocation instructions for future Subsequent
Additional Premium Payments by sending a Written Notice, signed by the Owner, to
PFL's Administrative and Service Office, or by telephone (subject to the
provisions described under "THE RETIREMENT BUILDER ACCOUNTS--Telephone
Transactions," p. 34). The allocation change will apply to Premium Payments
received after the date the Written Notice or telephone request is received.
Payment Not Honored by Bank. Any payment due under the Policy which is
derived, all or in part, from any amount paid to PFL by check or draft may be
postponed until such time as PFL determines that such instrument has been
honored.
Introductory Premium Credit
For Initial Premium Payments that are received on or before February
28, 1997, PFL will credit an additional amount equal to three percent (3%) of
such Premium Payments to the Policy Value effective as of the Policy Date
provided, however, that the Policy is not canceled pursuant to the "Right to
Cancel" described on page 10. The three percent credit will be entitled to the
same treatment as any other Premium Payment for all purposes under the Policy.
This offer may not be available in all states.
37
<PAGE>
Policy Value
On or before the Annuity Commencement Date, the Policy Value is equal
to the Owner's:
(1) Premium Payments; minus
(2) Partial Withdrawals (including any applicable Excess Interest
Adjustments and/or Surrender Charges on such withdrawals); plus
(3) interest credited in the Fixed Account; plus
(4) accumulated gains or losses in the Mutual Fund Account; minus
(5) Service Charges, premium taxes and transfer fees, if any.
The Policy Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of the selected
Subaccount(s), as well as the deductions for charges. A Valuation Period is the
period between successive Business Days. It begins at the close of business on
each Business Day and ends at the close of business on the next succeeding
Business Day. A Business Day is each day that both the New York Stock Exchange
and PFL's Administrative and Service Office are open for business. Holidays are
generally not Business Days.
The Mutual Fund Policy Value. When a Premium Payment is allocated or an
amount is transferred to a Subaccount of the Mutual Fund Account, it is credited
to the Policy Value in the form of Accumulation Units. Each Subaccount of the
Mutual Fund Account has a distinct Accumulation Unit value. The number of units
credited is determined by dividing the Premium Payment or amount transferred to
the Subaccount by the Accumulation Unit value of the Subaccount as of the end of
the Valuation Period during which the allocation is made. When amounts are
transferred out of, or fully surrendered or partially withdrawn from a
Subaccount, Accumulation Units are canceled or redeemed in a similar manner.
For each Subaccount, the Accumulation Unit Value for a given Business
Day is based on the net asset value of a share of the corresponding Portfolio of
the Underlying Funds less any applicable charges or fees. Therefore, the
Accumulation Unit Values will fluctuate from day to day based on the investment
experience of the corresponding Portfolio. The determination of Subaccount
Accumulation Unit Values is described in detail in the Statement of Additional
Information.
Adjusted Policy Value (APV)
The Adjusted Policy Value is the Policy Value increased or decreased by
any Excess Interest Adjustment.
The Adjusted Policy Value will be used on the Annuity Commencement Date
to provide the amount of annuity payments under a Policy.
Amendments
38
<PAGE>
No change in the Policy is valid unless made in writing by PFL and
approved by one of PFL's officers. No Registered Representative has authority to
change or waive any provision of the Policy.
PFL reserves the right to amend the Policies to meet the requirements
of the Code, regulations or published rulings. An Owner can refuse such a change
by giving Written Notice, but a refusal may result in adverse tax consequences.
Non-participating Policy
The Policy does not participate or share in the profits or surplus
earnings of PFL. No dividends are payable on the Policy.
DISTRIBUTIONS UNDER THE POLICY
Surrenders
Prior to the Annuity Commencement Date, the Owner may surrender all or
a portion of the Cash Value in exchange for a payment from PFL. The Cash Value
is the Adjusted Policy Value, less the Surrender Charge, if any. (See
"DISTRIBUTIONS UNDER THE POLICY--Annuity Payment Options," p. 45.) The Policy
cannot be surrendered after the Annuity Commencement Date. (See "DISTRIBUTIONS
UNDER THE POLICY--Annuity Payments," p. 43.)
When requesting a partial surrender ($500 minimum), the Owner must
instruct PFL how the amount withdrawn is to be allocated among various
Guaranteed Period Options of the Fixed Account and/or the Subaccount(s) of the
Mutual Fund Account. If the Owner's request for a partial surrender from a
Guaranteed Period Option of the Fixed Account is greater than the Cash Value of
that Guaranteed Period Option, PFL will pay the Owner the amount of the Cash
Value of that Guaranteed Period Option. If no allocation instructions are given,
the withdrawal will be deducted from each Investment Option in the same
proportion that the Owner's interest in each Investment Option bears to the
total Policy Value. PFL reserves the right to defer payment of the Cash Value
from the Fixed Account for up to six months.
In each Policy Year the Owner may request partial surrenders ($500
minimum) of up to 10% of the Policy Value free of Surrender Charges. The amount
that may be taken free of Surrender Charges each Policy Year is cumulative. This
is referred to as the Cumulative Free Percentage. That is, Cumulative Free
Percentages which are not taken are carried forward and are available to be
taken in the following Policy Year free of Surrender Charges. Cumulative Free
percentage withdrawals previously taken reduce the Cumulative Free Percentage
that is available. For example, 10% Cumulative Free Percentage is available at
the beginning of the first policy year. If no partial withdrawals are taken in
the first policy year, the first year unused Cumulative Free Percentage of 10%
is carried forward to the second policy year. The unused 10% from year one plus
10% additional Cumulative Free Percentage available at the beginning of policy
year two accumulates to a 20% Cumulative Free Percentage as of the beginning of
policy year two.
39
<PAGE>
Assume only 5% is used in policy year two. Thus the Cumulative Free Percentage
available as of the beginning of policy year three would be 25% (i.e., 20% - 5%
= 15% unused from policy year two, plus an additional 10% available at the
beginning of policy year three). Amounts withdrawn in excess of the available
Cumulative Free Percentage will be subject to a Surrender Charge (up to 6%).
Neither a Surrender Charge nor an Excess Interest Adjustment will be assessed if
the withdrawal is necessary to meet the minimum distribution requirements for
that Policy specified by the IRS for tax qualified plans.
Upon full surrender or partial withdrawal, the cumulative interest
credited at the time of, but prior to, the surrender or withdrawal will not be
subject to an Excess Interest Adjustment.
Surrenders or partial withdrawals that are allowed free of Surrender
Charges will reduce the Policy Value by the amount withdrawn. Surrendered or
partially withdrawn amounts in excess of the portion that is free of Surrender
Charges are Excess Partial Withdrawals. Excess Partial Withdrawals will reduce
the Policy Value by an amount equal to (X - Y + Z) where:
X = Excess Partial Withdrawal
A = Amount of Partial Withdrawal subject to Excess Interest Adjustment.
Y = Excess Interest Adjustment = (A) x (G - C) x (M/12) where G, C, and
M are defined in the Excess Interest Adjustment Section (see
below), with "A" substituted for "S" in the definitions of G and M.
Z = Surrender Charge on X - Y.
For a discussion of the Surrender Charge, see "CHARGES AND DEDUCTIONS--
Surrender Charge," p. 52. For a discussion of the Excess Interest Adjustment,
see Appendix "A" and "DISTRIBUTIONS UNDER THE POLICY--Excess Interest
Adjustment," p. 42.
Since the Owner assumes the investment risk with respect to all Premium
Payments allocated to the Mutual Fund Account, and because withdrawals may be
subject to an Excess Interest Adjustment and to a Surrender Charge, and possibly
premium taxes, the total amount paid upon total surrender of the Cash Value
(taking any prior surrenders into account) may be more or less than the total
Premium Payments made. Following a surrender of the total Cash Value, or at any
time the Policy Value is zero, all rights of the Owner and Annuitant will
terminate .
In addition to the Excess Interest Adjustment and Surrender Charge and
any applicable premium taxes, surrenders and partial withdrawals may be subject
to income taxes and, if taken prior to age 59-1/2, a ten percent penalty tax.
(See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES," p. 55.)
40
<PAGE>
Nursing Care and Terminal Condition Withdrawal Option
In some states, if the Owner or Owner's spouse (Annuitant or
Annuitant's spouse if the Owner is not a natural person)-(1) has been confined
in a hospital or nursing facility for 30 consecutive days or (2) has been
diagnosed after the Policy Date as having a terminal condition as defined in the
Policy or endorsement, and the individual was not so confined or diagnosed as of
the Policy Date, then the Surrender Charge, Excess Interest Adjustment, and
partial withdrawals adjustment as described in the Guaranteed Minimum Death
Benefit calculation, (See "DISTRIBUTIONS UNDER THE POLICY--Death Benefit,"
p. 48.) are not imposed on surrenders or partial withdrawals. (Since this
benefit may not be available in all states --see the Policy or endorsement for
details.) (See DISTRIBUTIONS UNDER THE POLICY--Nursing Care and Terminal
Condition Withdrawal Option," p. 41.)
Unemployment Waiver
The Owner may withdraw all or a portion of the Policy Value free of
Surrender Charges and free of Excess Interest Adjustments if the Owner or
Owner's spouse (Annuitant or Annuitant's spouse, if the Owner is not a natural
person) becomes unemployed. In order to qualify, the affected individual 1)
must have been employed full time for at least two years prior to becoming
unemployed, 2) must have been employed full time on the Policy Date, 3) must
have been unemployed for at least 60 consecutive days at the time of withdrawal,
and 4) must have a minimum Cash Value at the time of withdrawal of $5,000.
Proof of unemployment will consist of providing PFL with a determination letter
from the applicable State's Department of Labor which verifies that the
individual qualifies for and is receiving unemployment benefits at the time of
withdrawal. The determination letter must be received by PFL no later than
fifteen (15) days following the date PFL receives the withdrawal request. (This
benefit may not be available in all states--see the Policy or endorsement for
details.)
41
<PAGE>
Excess Interest Adjustment (EIA)
Full surrenders, partial withdrawals, and amounts applied to an Annuity
Payment Option (prior to the end of any Guaranteed Period) from the Fixed
Account Guaranteed Period Options will be subject to an Excess Interest
Adjustment except as provided for under "Surrenders" above or "Systematic Payout
Option," below.
EIA = S x (G-C) x (M/12)
where: S is the gross amount (i.e. before Surrender Charges and premium
taxes, if any) being surrendered, partially withdrawn, or applied to
an Annuity Payment Option that is subject to the Excess Interest
Adjustment.
G is the guaranteed interest rate applicable to S.
C is the current guaranteed interest rate then being offered on new
Premium Payments for the next longer Guaranteed Period Option than
"M". If this Policy form or such a Guaranteed Period Option is no
longer offered, "C" will be the U.S. Treasury rate for the next longer
maturity (in whole years) than "M" on the 25th day of the previous
calendar month, plus up to 2%.
M is the number of months remaining in the Guaranteed Period Option
for S, rounded up to the next higher whole number of months.
Generally, if G (the guaranteed interest rate applicable to the amount
surrendered) is lower than C (the current guaranteed interest rate offered on
new Premium Payments), the application of the Excess Interest Adjustment (a
negative Excess Interest Adjustment) will result in a lower payment upon a full
surrender, or a reduction in the Policy Value which is larger than the amount of
a requested partial surrender. Conversely, if G is higher than C, the
application of the Excess Interest Adjustment (a positive Excess Interest
Adjustment) will result in a higher payment upon full surrender, or a reduction
in the Policy Value which is smaller than the amount of a requested partial
withdrawal.
Upon taking a partial withdrawal from any Guaranteed Period Option, or
upon full surrender of the Policy, the Excess Interest Adjustment for each
Guaranteed Period Option will not reduce the Adjusted Policy Value for that
Guaranteed Period Option below the amount paid into, less any prior withdrawals
and transfers from that Guaranteed Period Option, plus interest at the 3%
guaranteed effective annual interest rate.
The formula for calculating the Excess Interest Adjustment and examples
of the application of the Excess Interest Adjustment are set forth in Appendix A
to this Prospectus.
42
<PAGE>
Systematic Payout Option
Under the Systematic Payout Option, Owners can instruct PFL to make
automatic payments to them monthly, quarterly, semi-annually or annually from a
specified Subaccount. Monthly and quarterly payments can only be accomplished
by electronic funds transfer directly to a checking or savings account. The
minimum payment is $50. The maximum payment is 10% of the Policy Value at the
time the Systematic Payout is made divided by the number of payments made per
year (e.g. 12 for monthly). If this requested amount is below the minimum
distribution requirements for that Policy specified by the IRS for tax qualified
plans, the maximum payment will be increased to this minimum required
distribution amount. Only partial withdrawal requests which are in excess of
the minimum required distribution will be subject to any applicable Surrender
Charge and/or Excess Interest Adjustment. The "Request for Systematic Payout"
form must specify a date for the first payment, which must be at least 30 days
but not more than one year after the form is submitted (i.e., Systematic Payouts
will start at the end of the payment mode selected, but not earlier than 30 days
from the date of request).
The Surrender Charge and Excess Interest Adjustment will be waived for
Owners under age 59-1/2 on Qualified Policies if they take Systematic Payouts
using one of the payout methods described in I.R.S. Notice 89-25, Q&A-12 (the
Life Expectancy Recalculation Option, Amortization, or Annuity Factor) which
generally requires payments for life or life expectancy. These payments must be
continued until the later of age 59-1/2 or five years from commencement of the
payments. No additional withdrawals may be taken during the time these payments
are made. For Qualified Policies, Owners age 59-1/2 or older, the Surrender
Charge and Excess Interest Adjustment will be waived if payments are made using
the Life Expectancy Recalculation Option.
In addition, for either Qualified or Nonqualified Policies, the
Surrender Charge will not be imposed on Systematic Payouts. Only Systematic
Payouts in excess of the cumulative interest credited at the time of, but prior
to, the payout will be subject to an Excess Interest Adjustment.
Qualified Policies are subject to complex rules with respect to
restrictions on and taxation of distributions, including the applicability of
penalty taxes. In addition, the tax treatment of systematic payouts from
Nonqualified Policies has had an unfavorable ruling regarding the ability to
avoid the 10% penalty tax. Therefore, the Owner should consult a qualified tax
adviser before requesting a Systematic Payout. In certain circumstances
withdrawn amounts may be included in the Owner's gross income. (See "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES," p. 55.)
Annuity Payments
Annuity Commencement Date. Unless the Annuity Commencement Date is
changed, Annuity Payments under a Policy will begin on the Annuity Commencement
Date which is selected by the Owner at the time the Policy is applied for. The
Annuity Commencement Date may be changed from time to time by the Owner by
Written Notice to PFL, provided that notice of each
43
<PAGE>
change is received by PFL at its Administrative and Service Office at least
thirty (30) days prior to the then current Annuity Commencement Date. Except as
otherwise permitted by PFL, a new Annuity Commencement Date must be a date which
is: (1) at least thirty (30) days after the date notice of the change is
received by PFL and (2) not later than the last day of the Policy month starting
after the Annuitant attains age 85. In no event will an Annuity Commencement
Date be permitted to be later than the last day of the Policy month following
the month in which the Annuitant attains age 95. The Annuity Commencement Date
may also be changed by the Beneficiary's election of the Annuity Option after
the Annuitant's death.
Election of Payment Option. During the lifetime of the Annuitant and
prior to the Annuity Commencement Date, the Owner may choose a Payment Option or
change the election, but Written Notice of any election or change of election
must be received by PFL at its Administrative and Service Office at least thirty
(30) days prior to the Annuity Commencement Date. If no election is made prior
to the Annuity Commencement Date, Annuity Payments will be made under (i) Option
3, life income with level payments for 10 years certain, using the existing
Adjusted Policy Value of the Fixed Account, or (ii) under Option 3-V, life
income with variable payments for 10 years certain using the existing Policy
Value of the Mutual Fund Account, or (iii) in a combination of (i) and (ii). If
the Adjusted Policy Value on the Annuity Commencement Date is less than $2000,
PFL reserves the right to pay it in one lump sum in lieu of applying it under a
Payment Option.
Prior to the Annuity Commencement Date, the Beneficiary may elect to
receive the Death Benefit in a lump sum or under one of the Payment Options, to
the extent allowed by law and subject to the terms of any settlement agreement.
(See "Death Benefit," p. 48.) Annuity Payments will be made on either a fixed
basis or a variable basis as selected by the Owner (or the Beneficiary, after
the Annuitant's death).
The person who elects a Payment Option can also name one or more
successor payees to receive any unpaid amount PFL has at the death of a payee.
Naming these payees cancels any prior choice of a successor payee.
A payee who did not elect the Payment Option does not have the right to
advance or assign payments, take the payments in one sum, or make any other
change. However, the payee may be given the right to do one or more of these
things if the person who elects the option tells PFL in writing and PFL agrees.
Unless the Owner specifies otherwise, the payee shall be the Annuitant,
or, after the Annuitant's death, the Beneficiary. PFL may require written proof
of the age of any person who has an annuity purchased under Option 3, 3-V, 5 or
5-V.
Premium Tax. PFL may be required by state law to pay premium tax on
the amount applied to a payment option or upon withdrawal. If so, PFL will
deduct the premium tax before applying or paying the proceeds.
Supplementary Contract. Once proceeds become payable and a Payment
Option has been selected, the Policy will terminate and PFL will
44
<PAGE>
issue a Supplementary Contract to reflect the terms of the option selected. The
Supplementary Contract will name the payees and will describe the payment
schedule.
Annuity Payment Options
The Policy provides five Payment Options which are described below.
Two of these are offered as either "Fixed Payment Options" or "Variable Payment
Options," and three are only available as Fixed Payment Options. The Owner may
elect a Fixed Payment Option, a Variable Payment Option, or a combination of
both. If the Owner elects a combination, he must specify what part of the
Policy proceeds are to be applied to the Fixed and Variable Payment Options (and
he must also specify which Subaccounts for the Variable Payment Options).
Note Carefully: Under Payment Options 3(l) and 5 (including 3-V(l) and
5-V), it would be possible for only one Annuity Payment to be made if the
Annuitant(s) were to die before the due date of the second Annuity Payment; only
two Annuity Payments if the Annuitant(s) were to die before the due date of the
third Annuity Payment; and so forth.
On the Annuity Commencement Date, the Adjusted Policy Value will be
applied to provide for Annuity Payments under the selected Annuity Option as
specified. The Adjusted Policy Value is the Policy Value for the Valuation
Period which ends immediately preceding the Annuity Commencement Date, including
the effect of any applicable Excess Interest Adjustment, and reduced by any
applicable taxes.
The effect of choosing a Fixed Payment Option is that the amount of
each payment will be set on the Annuity Commencement Date and will not change.
If a Fixed Payment Option is selected, the Adjusted Policy Value will be
transferred to the general account of PFL, and the Annuity Payments will be
fixed in amount by the fixed annuity provisions selected and the age and sex (if
consideration of sex is allowed) of the Annuitant. For further information,
contact PFL at its Administrative and Service Office.
Guaranteed Values. There are five Fixed Payment Options. Options 1, 2
and 4 are based on a guaranteed interest rate of 3%. Options 3 and 5 are based
on a guaranteed interest rate of 3% using the "1983 Table a" (male, female, and
unisex if required by law) mortality table improved to the year 2000 with
projection scale G. ("The 1983 Table a" mortality rates are adjusted based on
improvements in mortality since 1983 to more appropriately reflect increased
longevity. This is accomplished using a set of improvement factors referred to
as projection scale G.)
Option 1-Interest Payments. The Adjusted Policy Value may be left with
PFL for any agreed-upon term. PFL will pay the interest in equal payments or it
may be left to accumulate. Withdrawal rights will be agreed upon by the Owner
and PFL when the option is elected.
45
<PAGE>
Option 2-Income for a Specified Period. Level payments of the proceeds
with interest are made for the fixed period elected, at which time the funds are
exhausted.
Option 3-Life Income. An election may be made between:
1. "No Period Certain"--- Level payments will be made during
the lifetime of the Annuitant.
2. "10 Years Certain"---Level Payments will be made for the
longer of the Annuitant's lifetime or ten years.
3. "Guaranteed Return of Policy Proceeds"---Level payments
will be made for the longer of the Annuitant's lifetime or
until the total dollar amount of payments made equals the
proceeds applied to the income option.
Option 4-Income of a Specified Amount. Payments are made for any
specified amount until the proceeds with interest are exhausted.
Option 5--Joint and Survivor Annuity. Payments are made during the
joint lifetime of the payee and a joint payee of the Owner's selection.
Payments will be made as long as either person is living.
For Options 2, 3, and 4, in the event of the death of the person
receiving payments prior to the end of the Guaranteed Period, payments will be
continued to that person's beneficiary or their present value may be paid in a
single sum.
Other options may be arranged by agreement with PFL. Certain options
may not be available in some states.
Current immediate annuity rates for the same class of annuities will be
used if higher than the guaranteed rates (guaranteed rates are based upon the
mortality tables and/or guaranteed interest rates specified in the Policy under
the section entitled "Annuity Payments"). Current amounts may be obtained from
PFL.
Variable Payment Options. The dollar amount of the first Variable
Annuity Payment will be determined in accordance with the annuity payment rates
set forth in the applicable table contained in the Policy. The tables are based
on a 5% effective annual Assumed Investment Return and the "1983 Table a" (male,
female, and unisex if required by law) mortality table improved to the year 2000
with projection Scale G. ("The 1983 Table a" mortality rates are adjusted based
on improvements in mortality since 1983 to more appropriately reflect increased
longevity. This is accomplished using a set of improvement factors referred to
as projection scale G.) The dollar amount of subsequent Variable Annuity
Payments will vary based on the investment performance of the Subaccount(s) of
the Mutual Fund Account selected by the Annuitant or Beneficiary. If the actual
investment performance exactly matched the Assumed Investment Return of 5% at
all times, the amount of each Variable Annuity Payment would remain equal. If
actual investment performance exceeds the Assumed Investment Return, the
46
<PAGE>
amount of the Variable Annuity Payments would increase. Conversely, if actual
investment performance is lower than the Assumed Investment Return, the amount
of the Variable Annuity Payments would decrease.
Determination of the First Variable Payment. The amount of the first
variable payment depends upon the sex (if consideration of sex is allowed under
state law) and adjusted age of the Annuitant. The adjusted age is the
Annuitant's actual age nearest birthday, on the Annuity Commencement Date,
adjusted as follows:
<TABLE>
<CAPTION>
Annuity Commencement Date Adjusted Age
------------------------- ------------
<S> <C>
Before 2001 Actual Age
2001-2010 Actual Age minus 1
2011-2020 Actual Age minus 2
2021-2030 Actual Age minus 3
2031-2040 Actual Age minus 4
After 2040 As determined by PFL
</TABLE>
This adjustment assumes an increase in life expectancy, and therefore
it results in lower payments than without such an adjustment.
The following Variable Payment Options generally are available:
Option 3-V-Life Income. An election may be made between:
l. "No Period Certain"---Payments will be made during the
lifetime of the Annuitant.
2. "10 Years Certain"---Payments will be made for the longer
of the Annuitant's lifetime or ten years.
Option 5-V--Joint and Survivor Annuity. Payments are made as long as
either the Annuitant or the joint Annuitant is living.
Certain options may not be available in some states.
Determination of Subsequent Variable Payments. All Variable Annuity
Payments other than the first are calculated using "Annuity Units" which are
credited to the Policy. The number of Annuity Units to be credited in
respect of a particular Subaccount is determined by dividing that portion of
the first Variable Annuity Payment attributable to that Subaccount by the
Annuity Unit Value of that Subaccount on the Annuity Commencement Date. The
number of Annuity Units of each particular Subaccount credited to the Policy
then remains fixed, assuming no transfers to or from that Subaccount occur.
The dollar value of variable Annuity Units in the chosen Subaccount will
increase or decrease reflecting the investment experience of the chosen
Subaccount. The dollar amount of each Variable Annuity Payment after the
first may increase, decrease or remain constant, and is equal to the sum of
the amounts determined by multiplying the number of Annuity Units of each
particular Subaccount credited to the Policy by the Annuity Unit value for
the particular Subaccount on the date the payment is made.
47
<PAGE>
Transfers. A Policy Owner may transfer the value of the Annuity Units
from one Subaccount to another within the Mutual Fund Account or to the Fixed
Account. However, after the Annuity Commencement Date no transfers may be made
from the Fixed Account to the Mutual Fund Account. The minimum amount which may
be transferred is the lesser of $10 of monthly income or the entire monthly
income of the variable Annuity Units in the Subaccount from which the transfer
is being made. The remaining Annuity Units in the Subaccount must provide at
least $10 of monthly income. If, after a transfer, the monthly income of the
remaining Annuity Units in a Subaccount would be less than $10, PFL reserves the
right to include those Annuity Units as part of the transfer. PFL reserves the
right to limit transfers between Subaccounts or from the Mutual Fund Account to
the Guaranteed Period Options of the Fixed Account after the Annuity
Commencement Date to once per Policy Year.
A portion or the entire amount of the Annuity Payments may be taxable
as ordinary income. If, at the time the Annuity Payments begin, the Owner has
not provided PFL with a written election not to have federal income taxes
withheld, PFL must by law withhold such taxes from the taxable portion of such
annuity payments and remit that amount to the federal government. Withholding
is mandatory for certain qualified Policies. (See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES," p. 55.)
Adjustment of Annuity Payments. Payments will be made at 1, 3, 6, or
12 month intervals. If the individual payments provided for would be or become
less than $50, PFL may change, at its discretion, the frequency of payments to
such intervals as will result in payments of at least $50. If the Adjusted
Policy Value on the Annuity Commencement Date is less than $2,000, PFL may pay
such value in one sum in lieu of the payments otherwise provided for.
Death Benefit
Death of Annuitant Prior to Annuity Commencement Date. A Death Benefit
will be paid to the Beneficiary if the Owner, who is the Annuitant, dies prior
to the Annuity Commencement Date. The amount of the Death Benefit will be the
greatest of a) the Policy Value on the date proof of the Owner's death and an
election of the method of settlement are received by PFL's Administrative and
Service Office, b) the Cash Value on the date PFL receives due proof of death
and an election of a method of settlement, or c) the Guaranteed Minimum Death
Benefit ("GMDB") described below.
There are three Guaranteed Minimum Death Benefit options
available, (A) the "Return of Premium Death Benefit", (B) the "5%
Annually Compounding Death Benefit," and (C) the "Annual Step-Up Death
Benefit."
The "Return of Premium Death Benefit" is the total Premium Payments
less any Adjusted Partial Withdrawals (defined below), as of the date of death.
The "5% Annually Compounding Death Benefit" is the total
Premium Payments less any Adjusted Partial Withdrawals (defined below)
48
<PAGE>
plus interest at an effective annual rate of 5% from the payment or withdrawal
date up to the earlier of the date of death or the Owner's 81st birthday. There
is an extra charge for this Death Benefit (See "CHARGES AND DEDUCTIONS--
Mortality and Expense Risk Fee," p. 53.)
The "Annual Step-Up Death Benefit" is the largest Policy Value on the
issue date or on any Policy Anniversary prior to the earlier of the date of
death or the Owner's 81st birthday, plus any premiums paid, less any partial
withdrawals taken, subsequent to the date of the largest anniversary Policy
Value. There is an extra charge for this Death Benefit. (See CHARGES AND
DEDUCTIONS--Mortality and Expense Risk Fee, p. 53.)
Under all three Death Benefit Options, if the surviving spouse
elects to continue the Policy in lieu of receiving the Death Benefit, an amount
equal to the excess, if any, of the Guaranteed Minimum Death Benefit (i.e.,
the Return of Premium Death Benefit, the 5% Annually Compounding Death Benefit,
or the Annual Step-Up Death Benefit) over the Policy Value, will then be added
to the Policy Value. This amount will be added only once, at the time of such
election.
If no choice of Guaranteed Minimum Death Benefit is made in the Policy
application, the "Return of Premium Death Benefit" will apply.
After the Policy Date, an election cannot be made and the Death Benefit
option cannot be changed.
Adjusted Partial Withdrawal. To determine the Guaranteed Minimum Death
Benefit for each partial withdrawal, the Adjusted Partial Withdrawal is the sum
of (1) and (2), where
(1) The Surrender-charge-free withdrawal amount taken and,
(2) (X-Y+Z) as defined in "DISTRIBUTIONS UNDER THE POLICY--Surrenders",
times
(a) the amount of the Death Benefit on the date of, but prior to,
the Excess Partial Withdrawal, divided by
(b) the Policy Value on the date of, but prior to, the Excess
Partial Withdrawal.
If a partial withdrawal is taken when the Guaranteed Minimum Death
Benefit exceeds the Policy Value, then the partial withdrawal amount used to
determine the Guaranteed Minimum Death Benefit will exceed the amount of the
partial withdrawal. In that case, the total proceeds of a partial withdrawal
followed by a Death Benefit could be less than total Premium Payments.
If the Annuitant who is not the Owner dies, the Owner will become the
Annuitant and no Death Benefits are payable unless the Owner specifically
requests on the Policy application or in writing that the Death Benefit be paid
upon the Annuitant's death and PFL agrees to such election. See your Policy's
provisions.
49
<PAGE>
Due Proof of Death of the Annuitant is proof that the Annuitant who is
the Owner died prior to the commencement of Annuity Payments. Upon receipt of
this proof and an election of a method of settlement and return of the Policy,
the Death Benefit generally will be paid within seven days, or as soon
thereafter as PFL has sufficient information about the Beneficiary to make the
payment. The Beneficiary may receive the amount payable in a lump sum cash
benefit, or, subject to any limitation under any state or federal law, rule, or
regulation, under one of the Payment Options described above, unless a
settlement agreement is effective at the death of the Owner preventing such
election.
If the Annuitant was the Owner, and the Beneficiary was not the
Annuitant's spouse, the Death Benefit must (1) be distributed within five years
of the date of the deceased Owner's death, or (2) payments under a Payment
Option must begin within one year of the deceased Owner's death and must be made
for the Beneficiary's lifetime or for a period certain (so long as any certain
period does not exceed the Beneficiary's life expectancy). Death Proceeds which
are not paid to or for the benefit of a natural person must be distributed
within five years of the date of the deceased Owner's death. If the sole
Beneficiary is the deceased Owner's surviving spouse, such spouse may elect to
continue the Policy as the new Annuitant and Owner instead of receiving the
Death Benefit. (See "Federal Tax Matters" in the Statement of Additional
Information.)
If the Annuitant is not the Owner, and the Owner dies prior to the
Annuity Commencement Date, a Successor Owner may surrender the Policy at any
time for the amount of the Adjusted Policy Value. If the successor owner is not
the Owner's spouse, however, the Adjusted Policy Value must be distributed
within five years after the date of death of the Owner.
Death On or After Annuity Commencement Date. The Death Benefit payable
on or after the Annuity Commencement Date depends on the Payment Option
selected. If any Owner dies on or after the Annuity Commencement Date, but
before the entire interest in the Policy is distributed, the remaining portion
of such interest in the Policy will be distributed at least as rapidly as under
the method of distribution being used as of the date of that Owner's death.
Beneficiary. The Beneficiary designation in the application will remain
in effect until changed. The Owner may change the designated Beneficiary by
sending Written Notice to PFL. The Beneficiary's consent to such change is not
required unless the Beneficiary was irrevocably designated or consent is
required by law. (If an irrevocable Beneficiary dies, the Owner may then
designate a new Beneficiary.) The change will take effect as of the date the
Owner signs the Written Notice, whether or not the Owner is living when the
Notice is received by PFL. PFL will not be liable for any payment made before
the Written Notice is received. If more than one Beneficiary is designated, and
the Owner fails to specify their interests, they will share equally.
Death of Owner
50
<PAGE>
Federal tax law requires that if any Owner (including any joint Owner
or any Successor Owner who has become a current Owner) dies before the Annuity
Commencement Date, then the entire value of the Policy must generally be
distributed within five years of the date of death of such Owner. Certain rules
apply where 1) the spouse of the deceased Owner is the sole beneficiary, 2) the
Owner is not a natural person and the primary Annuitant dies or is changed, or
3) any Owner dies after the Annuity Commencement Date. See "Federal Tax
Matters" in the Statement of Additional Information for a detailed description
of these rules. Other rules may apply to Qualified Policies. (See also "Death
Benefit" above.)
Restrictions Under the Texas Optional Retirement Program
Section 36.105 of the Texas Educational Code permits participants in
the Texas Optional Retirement Program (ORP) to withdraw their interest in a
variable annuity Policy issued under the ORP only upon: (1) termination of
employment in the Texas public institutions of higher education; (2) retirement;
or (3) death. Accordingly, a participant in the ORP (or the participant's
estate if the participant has died) will be required to obtain a certificate of
termination from the employer or a certificate of death before the account can
be redeemed.
Restrictions Under Section 403(b) Plans
Section 403(b) of the Internal Revenue Code provides for tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations. In accordance with the requirements of Section 403(b), any
Policy used for a 403(b) plan will prohibit distributions of elective
contributions and earnings on elective contributions except upon death of the
employee, attainment of age 59-1/2, separation from service, disability, or
financial hardship. In addition, income attributable to elective contributions
may not be distributed in the case of hardship.
Restrictions Under Qualified Policies
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified Policies or under the terms
of the plans in respect of which Qualified Policies are issued.
CHARGES AND DEDUCTIONS
No deductions are made from Premium Payments when made, so that the
full amount of each Premium Payment is invested in one or more of the Accounts.
PFL will make certain charges and deductions in connection with the Policy in
order to compensate it for incurring expenses in distributing the Policy,
bearing mortality and expense risks under the Policy, and administering the
Accounts and the Policies. Charges may also be made for premium taxes, federal,
state or local taxes, or for certain transfers or other transactions. Charges
and expenses are also deducted from the Underlying Funds.
51
<PAGE>
Surrender Charge
PFL will incur expenses relating to the sale of Policies, including
commissions to registered representatives and other promotional expenses. PFL
may apply a Surrender Charge, which is a contingent deferred sales charge, to
any amount surrendered (i.e., withdrawn) in connection with a full or partial
Policy surrender in order to cover distribution expenses. A Surrender Charge,
if applicable, will only be applied to withdrawals which exceed the Cumulative
Free Percentage at the time of, but prior to, the withdrawal. (See
"DISTRIBUTIONS UNDER THE POLICY--Surrenders" p. 39.)
In some states, the Surrender Charge is not imposed on partial or full
surrenders if the Owner or Owner's spouse (Annuitant or Annuitant's spouse if
the Owner's not a natural person): 1) has been confined in a hospital or nursing
facility for 30 consecutive days or 2) has been diagnosed after the Policy Date
as having a terminal condition as defined in the Policy or endorsement and the
individual was not so confined or diagnosed on the Policy Date. (This benefit
is not available in all states, see the Policy or endorsement for details.)
(See "DISTRIBUTIONS UNDER THE POLICY--Nursing Care and Terminal Condition
Withdrawal Option," p. 41.) Subject to certain conditions, a Surrender Charge
is not imposed for full or partial surrenders if the Owner or Owner's spouse
becomes unemployed. (See "DISTRIBUTIONS UNDER THE POLICY--Unemployment Waiver,"
p. 41.) A Surrender Charge will also not be applied if the withdrawal is
necessary to meet the minimum distribution requirements for that policy
specified by the IRS for tax qualified plans. The Surrender Charge is also
waived upon certain Systematic Payouts. (See "DISTRIBUTIONS UNDER THE POLICY--
Systematic Payout Option," p. 43.)
The amount of the Surrender Charge is determined by multiplying the
amount of the Premium Payment withdrawn by the applicable Surrender Charge
Percentage. The applicable Surrender Charge Percentage will depend upon the
number of years that have elapsed since the Premium Payment that is being
withdrawn was made. For this purpose, surrenders are allocated to Premium
Payments on a "first-in, first-out" basis, i.e., first to the oldest Premium
Payment, then to the next oldest Premium Payment and so on. Premium Payments
are deemed to be withdrawn before earnings, and after all Premium Payments have
been withdrawn, the remaining Adjusted Policy Value may be withdrawn without any
Surrender Charge. The following is the table of Surrender Charge Percentages:
52
<PAGE>
<TABLE>
<CAPTION>
Applicable Surrender Charge Percentage
Number of Years Since (as percentage of
Premium Payment Premium Payment withdrawn)
--------------------- ---------------------------------------
<S> <C>
Less than 1 6%
At least 1 and less than 2 6%
At least 2 and less than 3 6%
At least 3 and less than 4 4%
At least 4 and less than 5 2%
5 or more 0%
</TABLE>
No Surrender Charge will be applied after the tenth Policy Year.
PFL anticipates that the Surrender Charge will not generate sufficient
funds to pay the cost of distributing the Policies. If this charge is
insufficient to cover the distribution expenses, the deficiency will be met from
PFL's general funds, which will include amounts derived from the fee for
mortality and expense risks.
Mortality and Expense Risk Fee
PFL imposes a daily charge as compensation for bearing certain
mortality and expense risks in connection with the Policies. For Guaranteed
Minimum Death Benefit Option A (Return of Premium Death Benefit), this charge is
equal to an effective annual rate of 1.10% of the daily net asset value in the
Mutual Fund Account for each Subaccount. For Guaranteed Minimum Death Benefit
Options B (5% Annually Compounding Death Benefit), and C (Annual Step-Up Death
Benefit), the corresponding charge is equal to 1.25% of the net assets in the
Mutual Fund Account. The Mortality and Expense Risk Fee is reflected in the
Accumulation or Annuity Unit Values for the Policy for each Subaccount.
Policy Values and Annuity Payments are not affected by changes in
actual mortality experience nor by actual expenses incurred by PFL. The
mortality risks assumed by PFL arise from its contractual obligations to make
Annuity Payments (determined in accordance with the Annuity tables and other
provisions contained in the Policy) and to pay Death Benefits prior to the
Annuity Commencement Date. Thus, Owners are assured that neither an Annuitant's
own longevity nor an unanticipated improvement in general life expectancy will
adversely affect the periodic Annuity payments that the Annuitant will receive
under the Policy.
PFL also bears substantial risk in connection with the Death Benefit
Guarantee since PFL will pay a Death Benefit equal to the Guaranteed Minimum
Death Benefit (i.e., Return of Premium Death Benefit, 5% Annually Compounding
Death Benefit, or Annual Step-Up Death Benefit) if that amount is higher
than the greater of the Policy Value or the Cash Value.
53
<PAGE>
The expense risk assumed by PFL is the risk that PFL's actual expenses
in administering the Policy and the Accounts will exceed the amount recovered
through the Administrative and Service Charges.
If the Mortality and Expense Risk Fee is insufficient to cover PFL's
actual costs, PFL will bear the loss; conversely, if the charge is more than
sufficient to cover costs, the excess will be profit to PFL. PFL expects a
profit from this charge. To the extent that the Surrender Charge is
insufficient to cover the actual cost of Policy distribution, the deficiency
will be met from PFL's general corporate assets, which may include amounts, if
any, derived from the Mortality and Expense Risk Fee. A Mortality and Expense
Risk Fee is assessed during the annuity phase for all Variable Annuity Options.
Administrative Charges
In order to cover the costs of administering the Policies, PFL deducts
a Service Charge from the Policy Value of each Policy.
The annual Service Charge is deducted from the Policy Value of each
Policy on each Policy Anniversary prior to the Annuity Commencement Date. PFL
also reserves the right to charge up to $30 at the time of surrender during any
Policy Year. After the Annuity Commencement Date, the charge is not deducted.
This annual Service Charge is the lesser of 2% of the Policy Value or $30 and it
will not be increased in the future. This charge is waived if either the Policy
Value or the sum of all Premium Payments less the sum of all partial surrenders
equals or exceeds $50,000 on a Policy Anniversary (or date of surrender). PFL
does not anticipate realizing any profit from this charge. The Service Charge
will be deducted from the Guaranteed Period Option(s) of the Fixed Account and
from the Subaccount(s) in the Mutual Fund Account, in the same proportion that
the Owner's interest in each Guaranteed Period Option/Subaccount bears to the
Owner's total Policy Value.
PFL also deducts a daily Administrative Charge from the net assets of
the Mutual Fund Account to partially cover expenses incurred by PFL in
connection with the administration of the Account and the Policies. The
effective annual rate of this charge is .15% of the net assets in the
Mutual Fund Account. (See "CHARGES AND DEDUCTIONS--Administrative
Charges," p. 54.)
Premium Taxes
PFL currently makes no deduction from the Premium Payments for any
state premium taxes PFL pays in connection with Premium Payments under the
Policies. However, PFL will deduct the aggregate premium taxes paid on behalf
of a particular Policy from the Policy Value on (i) the Annuity Commencement
Date (thus reducing the Policy Value), (ii) the total surrender of a Policy, or
(iii) payment of the death proceeds of a Policy. Premium taxes currently
range from 0% to 3.50% of Premium Payments.
Federal, State and Local Taxes
54
<PAGE>
No charges are currently made for federal, state, or local taxes other
than premium taxes. However, PFL reserves the right to deduct charges in the
future for any taxes or other economic burden resulting from the application of
any tax laws that PFL determines to be attributable to the accounts or the
policies.
Transfer Fee
There is no charge for the first 12 allowable transfers among
Investment Options in each Policy Year. PFL reserves the right to impose a $10
charge for the thirteenth and each subsequent transfer request made by the Owner
during a single Policy Year. For the purpose of determining whether a Transfer
Fee is payable, Premium Payment allocations are not considered transfers. All
transfer requests made simultaneously will be treated as a single request. No
Transfer Fee will be imposed for any transfer which is not at the Owner's
request.
Other Expenses Including Investment Advisory Fees
Each of the Portfolios of the Underlying Funds is responsible for all
of its expenses. In addition, charges will be made against each of the
Portfolios of the Underlying Funds for investment advisory services provided to
the Portfolio. The net assets of each Portfolio of the Underlying Funds will
reflect deductions in connection with the investment advisory fee and other
expenses.
For more information concerning the investment advisory fee and other
charges against the Portfolios, see the prospectuses for the Underlying Funds,
current copies of which accompany this Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary does not constitute tax advice. It is a general
discussion of certain of the expected federal income tax consequences of
investment in and distributions with respect to a Policy, based on the Internal
Revenue Code of 1986, as amended (the "Code"), proposed and final Treasury
Regulations thereunder, judicial authority, and current administrative rulings
and practice. This summary discusses only certain federal income tax
consequences to "United States Persons," and does not discuss state, local, or
foreign tax consequences. United States Persons means citizens or residents of
the United States, domestic corporations, domestic partnerships and trusts or
estates that are subject to United States federal income tax regardless of the
source of their income.
At the time the initial Premium Payment is paid, a prospective
purchaser must specify whether he or she is purchasing a Nonqualified Policy or
a Qualified Policy. If the initial Premium Payment is derived from an exchange
or surrender of another annuity policy, PFL may require that the prospective
purchaser provide information with regard to the federal income tax status of
the previous annuity policy. PFL will require that persons purchase separate
Policies if they desire to invest monies qualifying for different annuity tax
treatment under the Code. Each such separate Policy
55
<PAGE>
would require the minimum initial Premium Payment stated above. Subsequent
Additional Premium Payments under a Policy must qualify for the same federal
income tax treatment as the initial Premium Payment under the Policy; PFL will
not accept a Subsequent Additional Premium Payment under a Policy if the federal
income tax treatment of such Premium Payment would be different from that of the
initial Premium Payment.
The Qualified Policies were designed for use by retirement plans and
individual retirement accounts that qualify for special federal income tax
treatment under Sections 401(a), 403(b), or 408(a), or 457 of the Code and
individuals purchasing individual retirement annuities that qualify for special
federal income tax treatment under Section 408(b) of the Code. Certain
requirements must be satisfied in purchasing a Qualified Policy in order for the
plan, account or annuity to retain its special tax treatment. This summary is
not intended to cover such requirements, and assumes that Qualified Policies are
purchased pursuant to retirement plans or individual retirement accounts, or are
individual retirement annuities, that qualify for such special tax treatment.
This summary was prepared by PFL after consultation with tax counsel, but no
opinion of tax counsel has been obtained.
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. EACH
POTENTIAL PURCHASER IS URGED TO CONSULT HIS/HER OWN TAX ADVISER AS TO THE
CONSEQUENCES OF INVESTMENT IN A POLICY UNDER FEDERAL AND APPLICABLE STATE, LOCAL
AND FOREIGN TAX LAWS.
Tax Status of the Policy
The following discussion is based on the assumption that the Policy
qualifies as an annuity contract for federal income tax purposes. The Statement
of Additional Information discusses the tax requirements for qualifying as an
annuity contract.
Taxation of Annuities
The discussion below applies only to those Policies owned by natural
persons, and that qualify as annuity contracts for federal income tax purposes.
With respect to Owners who are natural persons, the Policy should be treated as
an annuity contract for federal income tax purposes.
In General. Except as described below with respect to Owners who are
not natural persons, an Owner who holds a Policy satisfying the diversification
and distribution requirements described in the Statement of Additional
Information should not be taxed on increases in the Policy Value until an amount
is received or deemed received, e.g., upon a partial or full surrender,
assignment, or as Annuity Payments under the Annuity Option selected.
Generally, any amount received or deemed received under a Nonqualified Annuity
Contract prior to the Annuity Commencement Date is deemed to come first from any
"Income on the Contract" and then from the "Investment in the Contract." The
"Investment in the Contract" generally equals total premium payments less
amounts received which were not includable in gross income. To the extent that
the Policy Value (ignoring any surrender charges except on a full surrender)
exceeds the "Investment in the
56
<PAGE>
Contract," such excess constitutes the "Income on the Contract." For these
purposes such "Income on the Contract" shall be computed by reference to the
aggregation rules described below, and the amount includable in gross income
will be taxable as ordinary income. If at the time that any amount is received
or deemed received there is no "Income on the Contract" (e.g., because the gross
Policy Value does not exceed the "Investment in the Contract" and no aggregation
rule applies), then such amount received or deemed received will not be
includable in gross income, and will simply reduce the "Investment in the
Contract."
For this purpose, the assignment, pledge or agreement to assign or
pledge any portion of the Policy Value (including assignment of Owner's right to
receive Annuity Payments prior to the Annuity Commencement Date) generally will
be treated as a distribution in the amount of such portion of the Policy Value.
Additionally, if an Owner designates a new Owner prior to the Annuity
Commencement Date without receiving full and adequate consideration, the old
Owner generally will be treated as receiving a distribution under the Policy in
an amount equal to the Policy Value. A transfer of ownership or an assignment
of a Policy, or designation of an Annuitant or Beneficiary who is not also the
Owner, as well as the selection of certain Annuity Commencement Dates, may
result in certain tax consequences to the Owner that are not discussed herein.
An Owner contemplating any such transfer, designation, selection or assignment
of a Policy should contact a competent tax adviser with respect to the potential
tax effects of such a transaction.
Aggregation Rules. Generally all Nonqualified deferred annuity
contracts issued by the same company (or an affiliated company) to the same
owner during any calendar year shall be treated as one annuity contract, and
"aggregated" for purposes of determining the amount includable in gross income.
In addition, for such purposes all individual retirement annuities and accounts
under Section 408 of the Code for an individual are aggregated, and generally
all distributions therefrom during a calendar year are treated as one
distribution made as of the end of such year.
Surrenders or Withdrawals. In the case of a partial surrender
(including systematic payouts) under a Nonqualified Policy, the amount received
generally will be includable in gross income to the extent that it does not
exceed the "Income on the Contract" which is generally equal to the excess of
the Policy Value immediately before the partial surrender over the "Investment
in the Contract" at that time. However, for these purposes the Policy Value
immediately before a partial surrender may have to be increased by any positive
Excess Interest Adjustment which results from such a partial surrender or which
could result from a simultaneous full surrender, and may need further
adjustments if the aggregation rules apply. There is, however, no definitive
guidance on the proper tax treatment of Excess Interest Adjustments, and the
Owner should contact a competent tax adviser with respect to the potential tax
consequences of an Excess Interest Adjustment that may apply in the case of a
Non-Qualified Policy or a Qualified Policy. In the case of a partial
surrender (including systematic payouts) under a Qualified Policy (other than
one qualified under Section 457 of the Code), a ratable portion of the
amount received is generally excludable from gross income, based on the ratio of
the "Investment in the Contract" to the
57
<PAGE>
individual's total account balance or accrued benefit under the retirement plan
at the time of each such payment. For a Qualified Policy, the "Investment in the
Contract" can be zero, and generally any distribution would therefore be fully
taxable. Special tax rules may be available for certain distributions from a
Qualified Policy. In the case of a full surrender under a Nonqualified Policy or
a Qualified Policy, the amount received generally will be taxable only to the
extent it exceeds the "Investment in the Contract, unless the aggregation rules
apply.
Annuity Payments. Although the tax consequences may vary depending on
the Annuity Payment Option elected under the Policy, in general, for
Nonqualified and certain Qualified Polices, only a portion of the Annuity
Payments received after the Annuity Commencement Date will be includable in the
gross income of the recipient.
For Fixed Annuity Payments, in general the excludable portion of each
payment is determined by dividing the "Investment in the Contract" on the
Annuity Commencement Date by the total expected value of the Annuity Payments
for the term of the payments. The remainder of each Annuity Payment is
includable in gross income. Once the "Investment in the Contract" has been
fully recovered, the full amount of any additional Annuity Payments is
includable in gross income.
For Variable Annuity Payments, the includable portion is generally
determined by an equation that establishes a specific dollar amount of each
payment that is excludable from gross income. This dollar amount is determined
by dividing the "Investment in the Contract" on the Annuity Commencement Date by
the total number of expected periodic payments. The remainder of each Annuity
Payment is includable in gross income. Once the "Investment in the Contract"
has been fully recovered, the full amount of any additional Annuity Payments is
includable in gross income.
Where an Owner allocates a portion of the Adjusted Annuity Purchase
Value on the Annuity Commencement Date to more than one annuity payment option
(fixed or variable), special rules govern the allocation of the Policy's entire
"Investment in the Contract" on such date to each such option, for purposes of
determining the excludable amount of each payment received under that option.
PFL makes no attempt to describe these allocation rules, because they would
prescribe a complex variety of results, depending on how the allocations were
made among the various types of options. Instead, any Owner is advised to
consult a competent tax adviser as to the potential tax effects of allocating
any amount of Adjusted Annuity Purchase Value to any particular annuity payment
option.
If, after the Annuity Commencement Date, Annuity Payments cease by
reason of the death of the Annuitant, the excess (if any) of the "Investment in
the Contract" as of the Annuity Commencement Date over the aggregate amount of
Annuity Payments received on or after the Annuity Commencement Date that was
excluded from gross income is allowable as a deduction for the last taxable year
of the Annuitant.
Taxation of Death Benefit Proceeds. Amounts may be distributed from
the Policy because of the death of an Owner or the Annuitant.
58
<PAGE>
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender, as described above, or (2) if distributed under an Annuity
Option, they are taxed in the same manner as Annuity Payments, as described
above. For these purposes, the "Investment in the Contract" is not affected by
the Owner's or Annuitant's death. That is, the "Investment in the Contract"
remains generally the total premium payments less amounts received which were
not includable in gross income.
Penalty Taxes. In the case of any amount received or deemed received
from the Policy, e.g., upon a surrender of a Policy or a deemed distribution
under a Policy resulting from a pledge, assignment or agreement to pledge or
assign or an Annuity Payment with respect to a Policy, there may be imposed on
the recipient a federal penalty tax equal to 10% of the amount includable in
gross income. The penalty tax generally will not apply to any distribution: (i)
made on or after the date on which the taxpayer attains age 59-1/2; (ii) made as
a result of the death of the holder (generally the Owner); (iii) attributable to
the disability of the taxpayer, or (iv) which is part of a series of
substantially equal periodic payments made (not less frequently than annually)
for the life (or life expectancy) of the taxpayer or the joint lives (or joint
life expectancies) of such taxpayer and the taxpayer's beneficiary. Other rules
may apply to Qualified Policies.
Withholding. The portion of any distribution under a Policy that is
includable in gross income will be subject to federal income tax withholding
unless the recipient of such distribution elects not to have federal income tax
withheld. Election forms will be provided at the time distributions are
requested or made. For certain Qualified Policies, certain distributions are
subject to mandatory withholding.
Qualified Policies. The Qualified Policy is designed for use with
several types of tax-qualified retirement plans. The tax rules applicable to
participants and beneficiaries in tax-qualified retirement plans vary according
to the type of plan and the terms and conditions of the plan. Special favorable
tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59-1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Some retirement plans are
subject to distribution and other requirements that are not incorporated into
PFL's Policy administration procedures. Owners, participants and beneficiaries
are responsible for determining that contributions, distributions and other
transactions with respect to the Policies comply with applicable law.
PFL makes no attempt to provide more than general information about use
of the Policy with the various types of retirement plans. Purchasers of
Policies for use with any retirement plan should consult their legal counsel and
tax adviser regarding the suitability of the Policy.
Individual Retirement Annuities. In order to qualify as an individual
retirement annuity under Section 408(b) of the Code, a Policy must contain
59
<PAGE>
certain provisions: (i) the Owner must be the Annuitant; (ii) the Policy
generally is not transferable by the Owner, e.g., the Owner may not designate a
new Owner, designate a Contingent Owner or assign the Policy as collateral
security; (iii) the total Premium Payments for any calendar year on behalf of
any individual may not exceed $2,000, except in the case of a rollover amount or
contribution under Sections 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the
Code; (iv) Annuity Payments or withdrawals must begin no later than April 1 of
the calendar year following the calendar year in which the Annuitant attains age
70 1/2; (v) an Annuity Payment Option with a Period Certain that will guarantee
Annuity Payments beyond the life expectancy of the Annuitant and the Beneficiary
may not be selected; (vi) certain payments of Death Benefits must be made in the
event the Annuitant dies prior to the distribution of the Policy Value; and
(vii) the entire interest of the Owner is non-forfeitable. Policies intended to
qualify as individual retirement annuities under Section 408(b) of the Code
contain such provisions.
Section 408 of the Code also indicates that no part of the funds for an
individual retirement account or annuity ("IRA") may be invested in a
life insurance contract, but the regulations thereunder allow such funds to be
invested in an annuity policy that provides a death benefit that equals the
greater of the premiums paid or the Cash Value for the contract. The Policy
provides an enhanced death benefit that could exceed the amount of such a
permissible death benefit, but it is unclear to what extent such an enhanced
death benefit could disqualify the Policy under Section 408 of the Code. The
Internal Revenue Service has not reviewed the Policy for qualification as an
IRA, and has not addressed in a ruling of general applicability whether an
enhanced death benefit provision, such as the provision in the Policy, comports
with IRA qualification requirements.
Section 403(b) Plans. Under Section 403(b) of the Code, payments made
by public school systems and certain tax exempt organizations to purchase
Policies for their employees are excludable from the gross income of the
employee, subject to certain limitations. However, such payments may be subject
to FICA (Social Security) taxes. Additionally, in accordance with the
requirements of the Code, Section 403(b) annuities generally may not
permit distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributed to elective contributions held as of the end of the last
year beginning before January 1, 1989. Distributions of such amounts will be
allowed only upon the death of the employee, on or after attainment of age 59
1/2, separation from service, disability, or financial hardship, except that
income attributable to elective contributions may not be distributed in the case
of hardship.
Corporate Pension and Profit Sharing Plans and H.R 10 Plans. Sections
401(a) and 403(a) of the Code permit corporate employers to establish various
types of retirement plans for employees and self-employed individuals to
establish qualified plans for themselves and their employees. Such retirement
plans may permit the purchase of the Policies to accumulate retirement savings.
Adverse tax consequences to the plan, the participant or
60
<PAGE>
both may result if the Policy is assigned or transferred to any individual as a
means to provide benefit payments.
Deferred Compensation Plans. Section 457 of the Code, while not
actually providing for a qualified plan (as that term is not used in the Code),
provides for certain deferred compensation plans with respect to service for
state governments, local governments, political sub-divisions, agencies,
instrumentalities and certain affiliates of such entities and tax exempt
organizations which enjoy special treatment. The Policies can be used with such
plans. Under such plans a participant may specify the form of investment in
which his or her participation will be made. All such investments, however, are
owned by, and are subject to, the claims of the general creditors of the
sponsoring employer. Depending on the terms of the particular plan, the
employer may be entitled to draw on deferred amounts for purposes unrelated to
its Section 457 plan obligations. In general, all amounts received under a
Section 457 plan are taxable and are subject to federal income tax withholding
as wages.
Non-natural Persons. Pursuant to Section 72(u) of the Code, an annuity
contract held by a taxpayer other than a natural person generally will not be
treated as an annuity contract under the Code; accordingly, an Owner who is not
a natural person will recognize as ordinary income for a taxable year the excess
of (i) the sum of the Cash Value as of the close of the taxable year and all
previous distributions under the Policy over (ii) the sum of the Premium
Payments paid for the taxable year and any prior taxable year and the amounts
includable in gross income for any prior taxable year with respect to the
Policy. For these purposes, the Policy Value at year end may have to be
increased by any positive Excess Interest Adjustment which could result from a
full surrender at such time. There is, however, no definitive guidance on the
proper tax treatment of Excess Interest Adjustments and the Owner should contact
a competent tax adviser with respect to the potential tax consequences of an
Excess Interest Adjustment. Notwithstanding the preceding sentences in that
paragraph, Section 72(u) of the Code does not apply to (i) a Policy the nominal
Owner of which is not a natural person but the beneficial Owner of which is a
natural person, (ii) a Policy acquired by the estate of a decedent by reason of
such decedent's death, (iii) a Qualified Policy (other than one qualifying under
Section 457) or (iv) a single-payment annuity the Commencement Date for which is
no later than one year from the date of the single Premium Payment; such
Policies are taxed as described above under the heading "Taxation of Annuities."
Possible Changes in Taxation. In past years, legislation has been
proposed in the U.S. Congress that would have adversely modified federal
taxation of certain annuities. For example, one such proposal would have
changed the tax treatment of Nonqualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this Prospectus Congress was not actively
considering any legislation regarding the taxation of annuities, there is always
the possibility that the tax treatment of annuities could change because of
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
61
<PAGE>
DISTRIBUTOR OF THE POLICIES
AEGON USA Securities, Inc., an affiliate of PFL, located at 4333
Edgewood Road N.E., Cedar Rapids, Iowa, 52499-0001, is the principal underwriter
of the Policies. AEGON USA Securities, Inc. was incorporated under the laws of
the State of Iowa in 1959 and is registered as a broker/dealer under the
Securities Exchange Act of 1934. It is a member of the National Association of
Securities Dealers, Inc. ("NASD").
Policies are sold by registered representatives of AEGON USA
Securities, Inc. or of broker/dealers who have entered into written sales
agreements with the principal underwriter, who are also licensed through various
affiliated or unaffiliated agencies as insurance agents for PFL. PFL has
entered into a distribution agreement with AEGON USA Securities, inc. and
companion sales agreements with agencies and/or agents through which agreements
the Polices are sold and the registered representatives are compensated by the
agencies and/or AEGON USA Securities, Inc. Broker/dealers will generally
receive sales commissions of up to 5% of Premium Payments. These commissions are
not deducted from Premium Payments, they are paid by PFL. In addition, certain
production, persistency and managerial bonuses may be paid. Subject to
applicable Federal and State laws and regulations, PFL may also pay
compensation to banks and other financial institutions for their services in
connection with the sale and servicing of the Policies. The level of such
compensation will not exceed that paid to broker/dealers for their sale of the
Policies. No amounts will be retained by AEGON USA Securities, Inc. for acting
as principal underwriter for the Policies. The offering of Policies will be
made on a continuing basis.
VOTING RIGHTS
To the extent required by law, PFL will vote the Underlying Fund shares
held by the Mutual Fund Account at regular and special shareholder meetings of
the Underlying Funds in accordance with instructions received from persons
having voting interests in the portfolios. If, however, the 1940 Act or any
regulation thereunder should be amended or if the present interpretation thereof
should change, and as a result PFL determines that it is permitted to vote the
Underlying Funds' shares in its own right, it may elect to do so.
Before the Annuity Commencement Date, the Owner holds voting interest
in the selected Portfolios. The number of votes that an Owner has the right to
instruct will be calculated separately for each Subaccount. The number of votes
that an Owner has the right to instruct for a particular Subaccount will be
determined by dividing the Owner's Policy Value in the Subaccount by the net
asset value per share of the corresponding Portfolio in which the Subaccount
invests. Fractional shares will be counted.
After the Annuity Commencement Date, the person receiving Annuity
Payments has the voting interest, and the number of votes decreases as Annuity
Payments are made and as the reserves for the Policy decrease. The person's
number of votes will be determined by dividing the reserve for the Policy
allocated to the applicable Subaccount by the net asset value per share of the
corresponding Portfolio. Fractional shares will be counted.
62
<PAGE>
The number of votes that the Owner or person receiving income payments
has the right to instruct will be determined as of the date established by the
Underlying Funds for determining shareholders eligible to vote at the meeting of
the Underlying Funds. PFL will solicit voting instructions by sending Owners or
other persons entitled to vote written requests for instructions prior to that
meeting in accordance with procedures established by the Underlying Funds.
Portfolio shares as to which no timely instructions are received and shares
held by PFL in which Owners or other persons entitled to vote have no beneficial
interest will be voted in proportion to the voting instructions that are
received with respect to all Policies participating in the same Subaccount.
Each person having a voting interest in a Subaccount will receive proxy
material, reports, and other materials relating to the appropriate Portfolio.
63
<PAGE>
LEGAL PROCEEDINGS
There are no legal proceedings to which the Mutual Fund Account is a party or to
which the assets of the Account are subject. PFL is not involved in any
litigation that is of material importance in relation to its total assets or
that relate to the Mutual Fund Account.
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available (at no cost) which
contains more details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
64
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
The Policy-General Provisions..................................... 3
Owner.......................................................... 3
Entire Policy.................................................. 3
Deferment of Payment and Transfers............................. 3
Misstatement of Age or Sex..................................... 4
Reallocation of Policy Values After the Annuity................
Commencement Date............................................. 4
Assignment..................................................... 4
Evidence of Survival........................................... 4
Non Participating.............................................. 5
Federal Tax Matters............................................... 5
Tax Status of the Policy....................................... 5
Taxation of PFL................................................ 6
Investment Experience............................................ 6
State Regulation of PFL.......................................... 10
Administration................................................... 10
Records and Reports.............................................. 10
Distribution of the Policies..................................... 10
Custody of Assets................................................ 11
Historical Performance Data...................................... 11
Money Market Yields............................................ 11
Other Subaccount Yields........................................ 12
Total Returns.................................................. 13
Other Performance Data......................................... 13
Legal Matters.................................................... 14
Independent Auditors............................................. 14
Other Information................................................ 14
Financial Statements............................................. 14
</TABLE>
<PAGE>
APPENDIX A
Excess Interest Adjustment
The formula which will be used to determine the Excess Interest Adjustment (EIA)
is:
S*(G - C)* (M/12)
S = Gross amount being withdrawn that is subject to the EIA
G = Guaranteed Interest Rate applicable to S.
C = Current Guaranteed Interest Rate then being offered on new Premium Payments
for the next longer Guaranteed Period than "M". If this policy form or such a
Guaranteed period is no longer offered, "C" will be the U.S. Treasury rate for
the next longer maturity (in whole years) than "M" on the 25th day of the
previous calendar month, plus up to 2%.
M = Number of months remaining in the current Guaranteed Period, rounded up to
the next higher whole number of months.
Example 1 (Full Surrender, rates increase by 3%):
<TABLE>
<S> <C>
Single Premium: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3
Policy Value ("PV")
at middle of Contract Year 3 = 50,000 * (1.055) circumflex 2.5 = 57,161.18
Surrender Charge Free
Amount at middle of Policy Year 3 = 57,161.18 * .30 = 17,148.35
EIA Free Amount at middle
of Policy Year 3 = 57,161.18 - 50,000 = 7,161.18
Amount Subject to EIA = 57,161.18 - 7,161.18 = 50,000.00
EIA Floor = 50,000 * (1.03) circumflex 2.5 = 53,834.80
Excess Interest Adjustment
G = .055
C = .085
M = 30
Excess Interest Adjustment = S* (G - C)* (M/12)
= 50,000.00 * (.055 - .085) * (30 / 12)
= (- 3,750.00), but Excess Interest
Adjustment cannot cause the
Adjusted Policy Value to fall below
the floor, so the adjustment is
limited to 53,834.80 - 57,161.18 = (- 3,326.38)
Adjusted Policy Value = PV + EIA = 57,161.18 + (- 3,326.38)
= 53,834.80
Surrender Charge = (50,000 - 17,148.35) * .06
= 1,971.10
</TABLE>
A-1
66
<PAGE>
Cash Value at middle of
Policy Year 3 = PV + EIA - Surrender Charge
= 57,161.18 + (-3,326.38) - 1,971.10
= 51,863.70
Example 2 (Full Surrender, rates decrease by 1%):
Single Premium: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3
Policy Value at middle
of Policy Year 3 = 50,000 * (1.055) circumflex 2.5
= 57,161.18
Surrender Charge Free Amount
at middle of Policy Year 3 = 57,161.18 * .30 = 17,148.35
EIA Free Amount at middle of
Policy Year 3 = 57,161.18 - 50,000 = 7,161.18
Amount Subject to EIA = 57,161.18 - 7,161.18 = 50,000.00
EIA Floor = 50,000 * (1.03) circumflex 2.5
= 53,834.80
Excess Interest Adjustment
G = .055
C = .045
M= 30
Excess Interest Adjustment = S * (G-C) * (M/12)
= 50,000 * (.055 - .045) * (30/12)
= 1,250.00
Adjusted Policy Value = PV + EIA
= 57,161.18 + 1,250.00
= 58,411.18
Surrender Charge = (50,000 - 17,148.35) * .06
= 1,971.10
Cash Value at middle of
Policy Year 3 = PV + EIA - Surrender Charge
= 57,161.18 + (1,250) - 1,971.10
= 56,440.08
On a partial withdrawal, PFL will pay the Owner the full amount of withdrawal
requested (as long as the Policy Value is sufficient). Surrender Charge - Free
withdrawals will reduce the Policy Value by the amount withdrawn. Amounts
withdrawn in excess of the Surrender Charge - Free amount will reduce the Policy
Value by an amount equal to:
X-Y+Z
A-2
67
<PAGE>
X = Excess Partial Withdrawal = Requested withdrawal less Surrender
Charge - Free amount
A = Amount of Partial Withdrawal which is subject to Excess Interest Adjustment
= Requested withdrawal + EIA - Free Amount, where EIA - Free Amount
= Cumulative interest credited at time of, but prior to, withdrawal.
Y = Excess Interest Adjustment = (A)*(G-C)*(M/12) where G, C, and M are defined
above, with "A" substituted for "S" in the definition of G and M.
Z = Surrender Charge on X minus Y.
Example 3 (Partial Withdrawal, rates increase by 1%):
Single Premium: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Partial Surrender: $30,000; Middle of Contract Year 3
Policy Value at middle
of Policy Year 3 = 50,000 * (1.055) circumflex 2.5
= 57,161.18
Surrender Charge Free Amount at
middle of Policy Year 3 = 57,161.18 * .30 = 17,148.35
EIA Free Amount at middle of
Policy Year 3 = 57,161.18 - 50,000 = 7,161.18
Excess Interest Adjustment/Surrender Charge
X = 30,000 - 17,148.35 = 12,851.65
A = 30,000 - 7,161.18 = 22,838.82
G = .055
C = .065
M = 30
Y = 22,838.82 * (.055 - .065) * (30/12) = -570.97
Z = .06 * [12,851.65 - (-570.97)] = 805.36
Reduction to Policy Value due to
Surrender Charge - Free withdrawal: = 17,148.35
Reduction to Policy Value due to
Excess Withdrawal = X - Y + Z
= 12,851.65 - (-570.97) + 805.36
= 14,227.98
Policy Value after withdrawal
at middle of Policy Year 3 = 57,161.18 - [17,148.35 + 14,227.98]
= 57,161.18 - [17,148.35 + 12,851.65
- (-570.97) + 805.36]
= 57,161.18 - [30,000 - (-570.97)
+ 805.36]
= 57,161.18 - 31,376.33
= 25,784.85
A-3
68
<PAGE>
Example 4 (Partial Withdrawal, rates decrease by 1%):
Single Premium: $50,000
Guarantee Period: 5 Years
Guaranteed Rate: 5.50% per annum
Partial Surrender: $30,000; Middle of Contract Year 3
Policy Value at middle of
Policy Year 3 = 50,000* (1.055) circumflex 2.5
= 57,161.18
Surrender Charge Free Amount at
middle of Policy Year 3 = 57,161.18 * .30 = 17,148.35
EIA Free Amount at middle of
Policy Year 3 = 57,161.18 - 50,000 = 7,161.18
Excess Interest Adjustment/Surrender Charge
X = 30,000 - 17,148.35 = 12,851.65
A = 30,000 - 7,161.18 = 22,838.82
G = .055
C = .045
M = 30
Y = 22,838.82 * (.055 - .045) * (30/12) = 570.97
Z = .06 * [12,851.65 - ( 570.97)] = 736.84
Reduction to Policy Value due to
Surrender Charge - Free Withdrawal: = 17,148.35
Reduction to Policy Value due to
Excess Withdrawal: = X-Y+Z
= 12,851.65 - (570.97) + 736.84
= 13,017.52
Policy Value after withdrawal
at middle of Policy Year 3 = 57,161.18 - [17,148.35 + 13,017.52]
= 57,161.18 - [17,148.35 + 12,851.65
- (570.97) + 736.84]
= 57,161.18 - [30,000 - (570.97)
+ 736.84]
= 57,161.18 - 30,165.87
= 26,995.31
(1) * represents multiplication;
circumflex represents exponentiation.
A-4
69
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE RETIREMENT INCOME BUILDER
VARIABLE ANNUITY
Issued through
PFL RETIREMENT BUILDER VARIABLE
ANNUITY ACCOUNT
Offered by
PFL LIFE INSURANCE COMPANY
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Retirement Income Builder Variable Annuity (the
"Policy") offered by PFL Life Insurance Company. You may obtain a copy of the
Prospectus dated December 6, 1996 by calling 1-800-525-6205, or by writing to
the Administrative and Service Office, Financial Markets Division-Variable
Annuity Dept., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. The
Prospectus sets forth information that a prospective investor should know before
investing in a Policy. Terms used in the current Prospectus for the Policy are
incorporated in this Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY AND THE PFL
RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT.
Dated:
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
The Policy-- General Provisions......................................... 3
Owner................................................................. 3
Entire Policy......................................................... 3
Deferment of Payment and Transfers.................................... 3
Misstatement of Age or Sex............................................ 4
Reallocation of Policy Values After the...............................
Annuity Commencement Date............................................ 4
Assignment............................................................ 4
Evidence of Survival.................................................. 4
Non Participating..................................................... 5
Federal Tax Matters..................................................... 5
Tax Status of the Policy.............................................. 5
Taxation of PFL....................................................... 6
Investment Experience................................................... 6
State Regulation of PFL................................................. 10
Administration.......................................................... 10
Records and Reports..................................................... 10
Distribution of the Policies............................................ 10
Custody of Assets....................................................... 11
Historical Performance Data............................................. 11
Money Market Yields................................................... 11
Other Subaccount Yields............................................... 12
Total Returns......................................................... 13
Other Performance Data................................................ 13
Legal Matters........................................................... 14
Independent Auditors.................................................... 14
Other Information....................................................... 14
Financial Statements.................................................... 14
</TABLE>
(Numbers in parenthesis indicate corresponding pages of the Prospectus).
2
<PAGE>
In order to supplement the description in the Prospectus, the following
provides additional information about PFL and the Policy which may be of
interest to a prospective purchaser.
THE POLICY-GENERAL PROVISIONS
Owner
The Policy shall belong to the Owner upon issuance of the Policy after
completion of an application and delivery of the initial Premium Payment. While
the Annuitant is living, the Owner may: (1) assign the Policy; (2) surrender the
Policy; (3) amend or modify the Policy with PFL's consent; (4) receive annuity
payments or name a Payee to receive the payments; and (5) exercise, receive and
enjoy every other right and benefit contained in the Policy. The exercise of
these rights may be subject to the consent of any assignee or irrevocable
Beneficiary; and of the Owner's spouse in a community or marital property state.
A Successor Owner can be named in the Policy application or in a Written
Notice. The Successor Owner will become the new Owner upon the Owner's death,
if the Owner predeceases the Annuitant. If no Successor Owner survives the
Owner and the Owner predeceases the Annuitant, the Owner's estate will become
the Owner.
The Owner may change the ownership of the Policy in a Written Notice. When
this change takes effect, all rights of ownership in the Policy will pass to the
new Owner. A change of ownership may have tax consequences.
When there is a change of Owner or Successor Owner, the change will take
effect as of the date the Owner signs the Written Notice, subject to any payment
PFL has made or action PFL has taken before recording the change. Changing the
Owner or naming a new Successor Owner cancels any prior choice of Successor
Owner, but does not change the designation of the Beneficiary or the Annuitant.
If ownership is transferred (except to the Owner's spouse) because the
Owner dies before the Annuitant, the Adjusted Policy Value generally must be
distributed to the Successor Owner within five years of the Owner's death, or if
the first payment begins within one year of the Owner's death, payments must be
made for a period certain which does not exceed that Successor Owner's life
expectancy.
Entire Policy
The Policy and any endorsements thereon and the Policy application constitute
the entire contract between PFL and the Owner. All statements in the
application are representations and not warranties. No statement will cause the
Policy to be void or to be used in defense of a claim unless contained in the
application.
Deferment of Payment and Transfers
Payment of any amount due from the Mutual Fund Account in respect of a
surrender, the Death Benefit or the death of the Owner of a Nonqualified Policy
generally will occur within seven business days from the date the Written Notice
(and any other required documentation or information) is received, except that
PFL may be permitted to defer such payment from the Mutual Fund Account if: (1)
the New York Stock Exchange is closed for other than usual weekends or holidays
or trading on the Exchange is otherwise restricted; or (2) an emergency exists
as defined by the SEC or the SEC requires that trading be restricted; or (3) the
SEC permits a delay for the protection of Owners. In addition, transfers of
amounts from the Subaccounts may be deferred under these circumstances.
3
<PAGE>
Certain delays and restrictions apply to transfers of amounts out of the
---------
Fixed Account. See p. 33 of the Policy Prospectus.
Misstatement of Age or Sex
If the age or sex of the Annuitant has been misstated, PFL will change the
annuity benefit payable to that which the Premium Payments would have purchased
for the correct age or sex. The dollar amount of any underpayment made by PFL
shall be paid in full with the next payment due such person or the Beneficiary.
The dollar amount of any overpayment made by PFL due to any misstatement shall
be deducted from payments subsequently accruing to such person or Beneficiary.
Any underpayment or overpayment will include interest at 5% per year, from the
date of the wrong payment to the date of the adjustment. The age of the
Annuitant may be established at any time by the submission of proof satisfactory
to PFL.
Reallocation of Policy Values After the Annuity Commencement Date
After the Annuity Commencement Date, the Owner may reallocate the value of
a designated number of Annuity Units of a Subaccount of the Mutual Fund Account
then credited to a Policy into an equal value of Annuity Units of one or more
other Subaccounts of the Mutual Fund Account, or the Fixed Account. The
reallocation shall be based on the relative value of the Annuity Units of the
Account(s) or Subaccount(s) at the end of the Business Day on the next payment
date. The minimum amount which may be reallocated is the lesser of (1) $10 of
monthly income or (2) the entire monthly income of the Annuity Units in the
Account or Subaccount from which the transfer is being made. If the monthly
income of the Annuity Units remaining in an Account or Subaccount after a
reallocation is less than $10, PFL reserves the right to include the value of
those Annuity Units as part of the transfer. The request must be in writing to
PFL's Administrative and Service Office. There is no charge assessed in
connection with such reallocation. PFL reserves the right to limit the number
of times a reallocation of Policy Value may be made in any given Policy Year.
After the Annuity Commencement Date, no transfers may be made from the Fixed
Account to the Mutual Fund Account.
Assignment
During the lifetime of the Annuitant the Owner may assign any rights or
benefits provided by a Nonqualified Policy. An assignment will not be binding
on PFL until a copy has been filed at its Administrative and Service Office.
The rights and benefits of the Owner and Beneficiary are subject to the rights
of the assignee. PFL assumes no responsibility for the validity or effect of
any assignment. Any claim made under an assignment shall be subject to proof of
interest and the extent of the assignment. An assignment may have tax
consequences.
Unless the Owner so directs by filing Written Notice with PFL, no
Beneficiary may assign any payments under the Policy before they are due. To
the extent permitted by law, no payments will be subject to the claims of any
Beneficiary's creditors.
Ownership under Qualified Policies is restricted to comply with the Internal
Revenue Code.
Evidence of Survival
PFL reserves the right to require satisfactory evidence that a person is
alive if a payment is based on that person being alive. No payment will be made
until PFL receives such evidence.
4
<PAGE>
Non-Participating
The Policy will not share in PFL's surplus earnings; no dividends will be
paid.
FEDERAL TAX MATTERS
Tax Status of the Policy
Diversification Requirements. Section 817(h) of the Code provides that in
order for a variable contract which is based on a segregated asset account to
qualify as an annuity contract under the Code, the investments made by such
account must be "adequately diversified" in accordance with Treasury
regulations. The Treasury regulations issued under Section 817(h) (Treas.
Reg. (S) 1.817-5) apply a diversification requirement to each of the Subaccounts
of the Mutual Fund Account. The Mutual Fund Account, through the Underlying
Funds and their Portfolios, intends to comply with the diversification
requirements of the Treasury. PFL has entered into agreements regarding
participation in the Retirement Income Builder that require the Underlying Funds
and their Portfolios to be operated in compliance with the Treasury regulations.
Owner Control. In connection with the issuance of temporary regulations on
diversification requirements, the Treasury also announced that such regulations
do not provide guidance concerning the extent to which Owners may direct their
investments to the Subaccounts of the Mutual Fund Account. It is not clear
whether additional guidance in this regard will be provided nor whether, if
provided, it will be prospective only. It is possible that any such guidance
could treat an Owner as the owner of the assets of the Mutual Fund Account if a
Subaccount is too narrow in its investment strategy (e.g., a fund that invests
only in gold or stock of gold mining companies) or if Owners have too many
Subaccount options to select, even though it technically meets the
diversification requirements. It is possible that if any guidance is provided
then the Mutual Fund Account may not be in compliance. PFL can provide no
assurances that any such guidance will not adversely affect the tax treatment of
existing Policies. For these reasons, PFL reserves the right to modify the
Policy as necessary to prevent the Owner from being considered the owner of the
assets of the Mutual Fund Account or otherwise to qualify the Policy for
favorable tax treatment.
Distribution Requirements. The Code also requires that Nonqualified Policies
contain specific provisions for distribution of Policy proceeds upon the death
of the Owner. In order to be treated as an annuity contract for federal income
tax purposes, the Code requires that such Policies provide that if any Owner
dies on or after the Annuity Commencement Date and before the entire interest in
the Policy has been distributed, the remaining portion must be distributed at
least as rapidly as under the method in effect on such Owners death. If any
Owner dies before the Annuity Commencement Date, the entire interest in the
Policy must generally be distributed within 5 years after such Owner's date of
death or be applied to provide an immediate annuity under which payments
will begin within one year of such Owner's death and will be made for the life
of the Beneficiary or for a period not extending beyond the life expectancy of
the Beneficiary. However, if such Owner's death occurs prior to the Annuity
Commencement Death, and such Owner's surviving spouse is named beneficiary,
then the Policy may be continued with the surviving spouse as the new Owner.
If any Owner is not a natural
5
<PAGE>
person, then for purposes of these distribution requirements, the primary
Annuitant shall be treated as the Owner and any death or change of such primary
Annuitant shall be treated as the Death of the Owner. The Policy contains
provisions intended to comply with these requirements of the Code. No
regulations interpreting these requirements of the Code have yet been issued and
thus no assurance can be given that the provisions contained in the Policies
satisfy all such Code requirements. The provisions contained in the Policies
will be reviewed and modified if necessary to maintain their compliance with the
Code requirements when clarified by regulation or otherwise.
Taxation of PFL
PFL at present is taxed as a life insurance company under part I of
Subchapter L of the Code. The Mutual Fund Account is treated as part of PFL
and, accordingly, will not be taxed separately as a "regulated investment
company" under Subchapter M of the Code. PFL does not expect to incur any
federal income tax liability with respect to investment income and net capital
gains arising from the activities of the Mutual Fund Account retained as part of
the reserves under the Policy. Based on this expectation, it is anticipated
that no charges will be made against the Mutual Fund Account for federal income
taxes. If, in future years, any federal income taxes are incurred by PFL with
respect to the Mutual Fund Account, PFL may make a charge to the Mutual Fund
Account.
INVESTMENT EXPERIENCE
A "Net Investment Factor" is used to determine the value of Accumulation
Units and Annuity Units, and to determine annuity payment rates.
Accumulation Units
Upon allocation to the selected Subaccount of the Mutual Fund Account,
Premium Payments are converted into Accumulation Units of the Subaccount. The
number of Accumulation Units to be credited is determined by dividing the dollar
amount allocated to each Subaccount by the value of an Accumulation Unit for
that Subaccount as next determined after the Premium Payment is received at the
Administrative and Service Office or, in the case of the initial Premium
Payment, when the Policy application is completed, whichever is later. The
value of an Accumulation Unit was arbitrarily established at $1.000000 at the
inception of each Subaccount. Thereafter, the value of an Accumulation Unit is
determined as of the close of trading on each day the New York Stock Exchange
and PFL's Administrative and Service Office are open for business.
An index (the "Net Investment Factor") which measures the investment
performance of a Subaccount during a Valuation Period, is used to determine the
value of an Accumulation Unit for the next subsequent Valuation Period. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of an Accumulation Unit may increase, decrease or remain the same from one
Valuation Period to the next. The Owner bears this investment risk. The net
investment performance of a Subaccount and deduction of certain charges affect
the Accumulation Unit Value.
The Net Investment Factor for any Subaccount for any Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result, where:
(a) is the net result of:
(1) the net asset value per share of the shares held in the
Subaccount determined at the end of the current Valuation Period, plus
6
<PAGE>
(2) the per share amount of any dividend or capital gain
distribution made with respect to the shares held in the Subaccount if
the ex-dividend date occurs during the current Valuation Period, plus
or minus
(3) a per share charge or credit for any taxes determined by PFL to
have resulted from the investment operations of the Subaccount;
(b) the net asset value per share of the shares held in the Subaccount
determined as of the end of the immediately preceding Valuation Period;
and
(c) is the charge for mortality and expense risk during the Valuation Period
(equal on an annual basis to 1.10% for the Return of Premium Death Benefit
and 1.25% for both the 5% Annually Compounding Death Benefit or the Annual
Step-Up Death Benefit) of the daily net asset value of the Subaccount, plus
the .15% administrative charge for all three Death Benefit Options.
Illustration of Accumulation Unit Value Calculations
Formula and Illustration for Determining
the Net Investment Factor
Assume Either the 5% Annually Compounding Death Benefit
or the Annual Step-Up Death Benefit is in effect.
Investment Experience Factor = A + B - C - F
---------
D - E
Where: A = The Net Asset Value of an Underlying Fund share as of the
end of the current Valuation Period.
Assume.............................. A = $11.57
B = The per share amount of any dividend or capital gains
distribution since the end of the immediately preceding
Valuation Period.
Assume.............................. B = 0
C = The per share charge or credit for any taxes reserved for at the
end of the current Valuation Period.
Assume.............................. C = 0
D = The Net Asset Value of an Underlying Fund share at the end of
the immediately preceding Valuation Period.
Assume.............................. D = $11.40
E = The per share amount of any taxes reserved for at the end of the
immediately preceding Valuation Period.
Assume.............................. E = 0
F = The daily deduction for Mortality and Expense Risk Fee and
Administrative Charges, which totals 1.40% on an annual basis.
On a daily basis.................... = .0000380909
Then, the Investment Experience Factor =
11.57 + 0 - 0 - .0000380909 = Z = 1.0148741898
-------------
11.40 - 0
7
<PAGE>
Formula and Illustration for Determining Accumulation Unit Value
Accumulation Unit Value = A x B
Where: A = The Accumulation Unit Value for the immediately
preceding Valuation Period.
Assume......................................... = $ X
B = The Net Investment Factor for the current Valuation Period.
Assume......................................... = Y
Then, the Accumulation Unit Value = $ X x Y = $ Z
Annuity Unit Value And Annuity Payment Rates
The amount of Variable Annuity Payments will vary with Annuity Unit
Values. Annuity Unit Values rise if the net investment performance of the
Subaccount exceeds the assumed interest rate of 5% annually. Conversely,
Annuity Unit Values fall if the net investment performance of the Subaccount is
less than the assumed rate. The value of a variable Annuity Unit in each
Subaccount was established at $1.00 on the date operations began for that
Subaccount. The value of a variable Annuity Unit on any subsequent Business Day
is equal to (a) multiplied by (b) multiplied by (c), where:
(a) is the variable Annuity Unit Value for that Subaccount on the immediately
preceding Business Day;
(b) is the net investment factor for that Subaccount for the valuation period;
and
(c) is the investment result adjustment factor for the valuation period.
The investment result adjustment factor for the valuation period is the
product of discount factors of .99986634 per day to recognize the 5% effective
annual Assumed Investment Return. The valuation period is the period from the
close of the immediately preceding Business Day to the close of the current
Business Day.
The net investment factor for the Policy used to calculate the value of a
variable Annuity Unit in each Subaccount for the valuation period is determined
by dividing (i) by (ii) and subtracting (iii) from the result, where:
(i) is the result of:
(1) the net asset value of a fund share held in that Subaccount determined
at the end of the current valuation period; plus
(2) the per share amount of any dividend or capital gain distributions
made by the fund for shares held in that Subaccount if the ex-dividend
date occurs during the valuation period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which PFL
determines to have resulted from the investment operations of the
Subaccount.
(ii) is the net asset value of a fund share held in that Subaccount determined
as of the end of the immediately preceding valuation period.
(iii) is a factor representing the Mortality and Expense Risk Fee and
Administrative Charge. This factor is equal, on an annual basis, to 1.25%
(for Death Benefit Option A) or 1.40% (for
8
<PAGE>
Death Benefit Options B and C) of the daily net asset value of a fund share
held in that Subaccount.
The dollar amount of subsequent Variable Annuity Payments will depend upon
changes in applicable Annuity Unit Values.
The annuity payment rates vary according to the Annuity Option elected and
the sex and adjusted age of the Annuitant at the Annuity Commencement Date. The
Policy also contains a table for determining the adjusted age of the Annuitant.
Illustration of Calculations for Annuity Unit Value
and Variable Annuity Payments
Formula and Illustration for Determining Annuity Unit Value
Annuity Unit Value = A x B x C
Where: A = Annuity Unit Value for the immediately preceding Valuation
Period.
Assume............................. = $ X
B = Investment Experience Factor for the Valuation Period for which
the Annuity Unit Value is being calculated.
Assume............................. = Y
C = A factor to neutralize the assumed interest rate of 5% built into
the Annuity Tables used.
Assume............................. = Z
Then, the Annuity Unit Value is:
$ X x Y x Z = $ Q
Formula and Illustration for Determining Amount of First Monthly
Variable Annuity Payment
First Monthly Variable Annuity Payment = A x B
------
$1,000
Where: A = The Policy Value as of the Annuity Commencement Date.
Assume............................. = $ X
B = The Annuity purchase rate per $1,000 based upon the option
selected, the sex and adjusted age of the Annuitant according to
the tables contained in the Policy.
Assume............................. = $ Y
Then, the first Monthly Variable Annuity Payment
= $ X / 1,000 x $ Y = $ Z
Formula and Illustration for Determining the Number of Annuity
Units Represented by Each Monthly Variable Annuity Payment
9
<PAGE>
Number of Annuity Units = A
-
B
Where: A = The dollar amount of the first monthly Variable Annuity
Payment.
Assume....................................... = $ X
B = The Annuity Unit Value for the Valuation Date on which the first
monthly payment is due.
Assume....................................... = $ Y
Then, the number of Annuity Units = $ X = Z
---
$ Y
STATE REGULATION OF PFL
PFL is subject to the laws of Iowa governing insurance companies and
to regulation by the Iowa Division of Insurance. An annual statement in a
prescribed form is filed with the Division of Insurance each year covering the
operation of PFL for the preceding year and its financial condition as of the
end of such year. Regulation by the Division of Insurance includes periodic
examination to determine PFL's contract liabilities and reserves so that the
Division may determine the items are correct. PFL's books and accounts are
subject to review by the Division of Insurance at all times and a full
examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. In addition, PFL is subject to
regulation under the insurance laws of other jurisdictions in which it may
operate.
ADMINISTRATION
PFL performs administrative services for the Policies. These services
include issuance of the Policies, maintenance of records concerning the
Policies, and certain valuation services.
RECORDS AND REPORTS
All records and accounts relating to the Mutual Fund Account will be
maintained by PFL. As presently required by the Investment Company Act of 1940
and regulations promulgated thereunder, PFL will mail to all Policy Owners at
their last known address of record, at least annually, reports containing such
information as may be required under that Act or by any other applicable law or
regulation. Policy Owners will also receive confirmation of each financial
transaction and any other reports required by law or regulation.
DISTRIBUTION OF THE POLICIES
The Policies are offered to the public through brokers licensed under the
federal securities laws and state insurance laws. The offering of the Policies
is continuous and PFL does not anticipate discontinuing the offering of the
Policies. However, PFL reserves the right to discontinue the offering of the
Policies.
AEGON USA Securities, Inc., an affiliate of PFL, will be the principal
underwriter of the Policies. AEGON USA Securities, Inc. may enter into
agreements with broker-dealers for the distribution of the Policies.
10
<PAGE>
CUSTODY OF ASSETS
The assets of each of the Subaccounts of the Mutual Fund Account are held
by PFL. The assets of each of the Subaccounts of the Mutual Fund Account are
segregated and held separate and apart from the assets of the other Subaccounts
and from PFL's general account assets. PFL maintains records of all purchases
and redemptions of shares of the Underlying Funds held by each of the
Subaccounts. Additional protection for the assets of the Mutual Fund Account is
afforded by PFL's fidelity bond, presently in the amount of $5,000,000, covering
the acts of officers and employees of PFL.
HISTORICAL PERFORMANCE DATA
Money Market Yields
PFL may from time to time disclose the current annualized yield of the
Money Market Subaccount for a 7-day period in a manner which does not take into
consideration any realized or unrealized gains or losses on shares of the
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of securities
and unrealized appreciation and depreciation) at the end of the 7-day period in
the value of a hypothetical account having a balance of 1 unit at the beginning
of the 7-day period, dividing such net change in account value by the value of
the account at the beginning of the period to determine the base period return,
and annualizing this quotient on a 365-day basis. The net change in account
value reflects (i) net income from the Portfolio attributable to the
hypothetical account; and (ii) charges and deductions imposed under a Policy
that are attributable to the hypothetical account. The charges and deductions
include the per unit charges for the hypothetical account for (i) the
Administrative Charges; and (ii) the Mortality and Expense Risk Fee. Current
Yield will be calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) x (365/7)
Where:
NCS= The net change in the value of the Portfolio (exclusive of realized gains
and losses on the sale of securities and unrealized appreciation and
depreciation) for the 7-day period attributable to a hypothetical account
having a balance of 1 Subaccount unit.
ES= Per unit expenses of the Subaccount for the 7-day period.
UV= The unit value on the first day of the 7-day period.
Because of the charges and deductions imposed under a Policy, the yield
for the Money Market Subaccount will be lower than the yield for the Money
Market Portfolio. The yield calculations do not reflect the effect of any
premium taxes or Surrender Charges that may be applicable to a particular
Policy. Surrender Charges range from 6% to 0% of the amount of Premium Payments
withdrawn based on the number of years since the Premium Payment was made.
However, Surrender Charges will not be assessed after the tenth Policy Year.
PFL may also disclose the effective yield of the Money Market Subaccount
for the same 7-day period, determined on a compounded basis. The effective
yield is calculated by compounding the base period return according to the
following formula:
11
<PAGE>
Effective Yield = (1 + ((NCS - ES) / UV)/365/7/ - 1
Where:
NCS = The net change in the value of the account (exclusive of realized gains
and losses on the sale of securities and unrealized appreciation and
depreciation) for the 7-day period attributable to a hypothetical account
having a balance of 1 Subaccount unit.
ES = Per unit expenses of the Subaccount for the 7-day period.
UV = The unit value on the first day of the 7-day period.
The yield on amounts held in the Money Market Subaccount normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Subaccount actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio, the types and quality of portfolio securities held by
the Money Market Portfolio and its operating expenses.
Other Subaccount Yields
PFL may from time to time advertise or disclose the current annualized
yield of one or more of the Subaccounts of the Mutual Fund Account (except the
Money Market Subaccount) for 30-day periods. The annualized yield of a
Subaccount refers to income generated by the Subaccount over a specific 30-day
period. Because the yield is annualized, the yield generated by a Subaccount
during the 30-day period is assumed to be generated each 30-day period over a
12-month period. The yield is computed by: (i) dividing the net investment
income of the Subaccount less Subaccount expenses for the period, by (ii) the
maximum offering price per unit on the last day of the period times the daily
average number of units outstanding for the period, compounding that yield for a
6-month period, and (iv) multiplying that result by 2. Expenses attributable to
the Subaccount include (i) the Administrative Charge and (ii) the Mortality and
Expense Risk Fee. The 30-day yield is calculated according to the following
formula:
Yield = 2 x ((((NI - ES)/(U x UV)) + 1)/6/ - 1)
Where:
NI = Net investment income of the Subaccount for the 30-day period attributable
to the Subaccount's unit.
ES = Expenses of the Subaccount for the 30-day period.
U = The average number of units outstanding.
UV = The unit value at the close (highest) of the last day in the 30-day
period.
Because of the charges and deductions imposed by the Mutual Fund Account,
the yield for a Subaccount of the Mutual Fund Account will be lower than the
yield for its corresponding Portfolio. The yield calculations do not reflect
the effect of any premium taxes or Surrender Charges that may be applicable to a
particular Policy. Surrender Charges range from 6% to 0% of the amount of
Premium Payments withdrawn based on the number of years since the Premium
Payment was made. However, Surrender Charges will not be assessed after the
tenth Policy Year.
12
<PAGE>
The yield on amounts held in the Subaccounts of the Mutual Fund Account
normally will fluctuate over time. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates of
return. A Subaccount's actual yield is affected by the types and quality of its
investments and its operating expenses.
Total Returns
PFL may from time to time also advertise or disclose total returns for one
or more of the Subaccounts of the Mutual Fund Account for various periods of
time. One of the periods of time will include the period measured from the date
the Subaccount commenced operations. When a Subaccount has been in operation
for 1, 5 and 10 years, respectively, the total return for these periods will be
provided. Total returns for other periods of time may from time to time also be
disclosed. Total returns represent the average annual compounded rates of
return that would equate an initial investment of $1,000 to the redemption value
of that investment as of the last day of each of the periods. The ending date
for each period for which total return quotations are provided will be for the
most recent month end practicable, considering the type and media of the
communication and will be stated in the communication.
Total returns will be calculated using Subaccount Unit Values which PFL
calculates on each Business Day based on the performance of the Subaccount's
underlying Portfolio, and the deductions for the Mortality and Expense Risk Fee
and the Administrative Charges. Total return calculations will reflect the
effect of Surrender Charges that may be applicable to a particular period. The
total return will then be calculated according to the following formula:
P(1 + T)/N/ = ERV
Where: T = The average annual total return net of Subaccount recurring
charges.
ERV = The ending redeemable value of the hypothetical account at
the end of the period.
P = A hypothetical initial payment of $1,000.
N = The number of years in the period.
Other Performance Data
PFL may from time to time also disclose average annual total returns in
a non-standard format in conjunction with the standard format described above.
The non-standard format will be identical to the standard format except that the
Surrender Charge percentage will be assumed to be 0%.
PFL may from time to time also disclose cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the Surrender
Charge percentage will be 0%.
CTR=(ERV/P) - 1
Where:
CTR = The cumulative total return net of Subaccount recurring charges
for the period.
ERV = The ending redeemable value of the hypothetical investment at the
end of the period.
P = A hypothetical initial payment of $1,000.
13
<PAGE>
All non-standard performance data will only be advertised if the
standard performance data for the same period, as well as for the required
period, is also disclosed.
Hypothetical Performance Data
From time to time, sales literature or advertisements may quote
average annual total returns for periods prior to the date the Mutual Fund
Account commenced operations. Such performance information for the Subaccounts
will be calculated based on the performance of the various Portfolios and the
assumption that the Subaccounts were in existence for the same periods as those
indicated for the Portfolios, with the level of Policy charges that were in
effect at the inception of the Subaccounts.
LEGAL MATTERS
Legal advice relating to certain matters under the federal securities laws
applicable to the issue and sale of the Policies has been provided to PFL by
Sutherland, Asbill & Brennan, of Washington D.C.
INDEPENDENT AUDITORS
The Financial Statements of PFL as of December 31, 1995 and 1994, and for
each of the three years in the period ended December 31, 1995, included in this
Statement of Additional Information have been audited by Ernst & Young LLP,
Independent Auditors, Suite 3400, 801 Grand Avenue, Des Moines, Iowa 50309.
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
Policies 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 the Prospectus or this Statement of Additional
Information. Statements contained in the Prospectus and this Statement of
Additional Information 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 values of the interest of Owners in the Mutual Fund Account will be
affected solely by the investment results of the selected Subaccount(s). The
Financial Statements of PFL, which are included in this Statement of Additional
Information, should be considered only as bearing on the ability of PFL to meet
its obligations under the Policies. They should not be considered as bearing on
the investment performance of the assets held in the Mutual Fund Account.
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors PFL Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of PFL Life
Insurance Company as of December 31, 1995 and 1994, and the related statutory-
basis statements of operations, changes in capital and surplus and cash flows
for each of the three years in the period ended December 31, 1995. Our audits
also included the statutory-basis financial statement schedules required by
Regulation S-X, Article 7. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedules 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.
The Company presents its financial statements in conformity with the
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa. The variances between such
practices and generally accepted accounting principles are described in Note
1. The effects of these variances have not been determined but we believe they
are material.
In our opinion, because of the materiality of the effects of the variances
between generally accepted accounting principles and the accounting practices
referred to in the preceding paragraph, the financial statements referred to
above are not intended to and do not present fairly, in conformity with
generally accepted accounting principles, the financial position of PFL Life
Insurance Company at December 31, 1995 and 1994, or the results of its
operations or its cash flows for each of the three years in the period ended
December 31, 1995.
In addition, in our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of PFL Life
Insurance Company at December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa. Also, in our opinion, the related statutory-basis financial statement
schedules, when considered in relation to the basic statutory-basis financial
statements taken as a whole, present fairly in all material respects
information set forth therein.
Ernst & Young, LLP
Des Moines, Iowa
February 23, 1996
- 15 -
<PAGE>
PFL LIFE INSURANCE COMPANY
BALANCE SHEETS--STATUTORY BASIS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
---------- ----------
<S> <C> <C>
ADMITTED ASSETS
Cash and invested assets:
Cash and short-term investments........................ $ 79,852 $ 34,062
Bonds.................................................. 4,613,334 4,094,407
Stocks:
Preferred............................................ 9,336 12,667
Common (cost: 1995--$19,061; 1994--$15,812).......... 24,866 16,754
Affiliated entities (cost: 1995--$14,661; 1994--
$13,155)............................................ 6,794 26,530
Mortgage loans on real estate.......................... 680,414 527,410
Real estate, at cost less accumulated depreciation
($12,493 in 1995; $12,318 in 1994):
Home office properties............................... 20,403 21,226
Properties acquired in satisfaction of debt.......... 2,648 10,381
Investment properties................................ 40,453 45,859
Policy loans........................................... 52,675 51,798
Other invested assets.................................. 5,586 4,593
---------- ----------
Total cash and invested assets......................... 5,536,361 4,845,687
Premiums deferred and uncollected........................ 17,026 18,386
Accrued investment income................................ 68,065 61,969
Receivable from affiliates............................... 79,913 31,843
Federal income taxes recoverable......................... 9,776 10,274
Other assets............................................. 40,774 29,441
Separate account assets.................................. 1,418,157 1,120,391
---------- ----------
Total admitted assets.................................. $7,170,072 $6,117,991
========== ==========
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Aggregate reserves for policies and contracts:
Life................................................. $ 596,039 $ 545,870
Annuity.............................................. 4,220,274 3,693,388
Accident and health.................................. 114,884 99,240
Policy and contract claim reserves:
Life................................................. 6,225 7,493
Accident and health.................................. 70,517 66,407
Other policyholders' funds............................. 105,371 87,574
Remittances and items not allocated.................... 123,710 35,415
Asset valuation reserve................................ 43,921 37,975
Interest maintenance reserve........................... 26,376 22,826
Other liabilities...................................... 67,070 73,071
Separate account liabilities........................... 1,418,157 1,120,391
---------- ----------
Total liabilities...................................... 6,792,544 5,789,650
Commitments and contingencies
Capital and surplus:
Common stock, $10 par value, 500 shares authorized, 266
issued and outstanding................................ 2,660 2,660
Paid-in surplus........................................ 154,129 114,129
Unassigned surplus..................................... 220,739 211,552
---------- ----------
Total capital and surplus.............................. 377,528 328,341
---------- ----------
Total liabilities and capital and surplus.............. $7,170,072 $6,117,991
========== ==========
</TABLE>
See accompanying notes.
- 16 -
<PAGE>
PFL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS--STATUTORY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Premiums and other considerations, net of
reinsurance:
Life................................... $ 114,704 $ 148,954 $ 98,670
Annuity................................ 921,452 1,067,406 740,787
Accident and health.................... 232,738 230,889 266,789
Net investment income.................... 392,685 343,880 322,393
Amortization of interest maintenance
reserve................................. 4,341 2,871 2,674
Commissions and expense allowances on
reinsurance ceded....................... 77,071 94,635 62,584
---------- ---------- ----------
1,742,991 1,888,635 1,493,897
Benefits and expenses:
Benefits paid or provided for:
Life and accident and health benefits.. 146,346 141,632 162,308
Surrender benefits..................... 498,626 392,064 217,998
Other benefits......................... 88,607 73,306 50,195
Increase in aggregate reserves for
policies and contracts:
Life................................. 50,071 82,062 26,703
Annuity.............................. 528,330 569,341 250,241
Accident and health.................. 17,694 22,144 19,216
Other................................ 16,017 11,223 4,352
---------- ---------- ----------
1,345,691 1,291,772 731,013
Insurance expenses:
Commissions............................ 200,706 215,635 198,251
General insurance expenses............. 57,623 52,166 53,367
Taxes, licenses and fees............... 15,700 15,368 10,781
Transfer to separate account........... 42,981 243,806 414,819
Other expenses......................... 760 1,014 814
---------- ---------- ----------
317,770 527,989 678,032
---------- ---------- ----------
1,663,461 1,819,761 1,409,045
---------- ---------- ----------
Gain from operations before federal income
taxes and net realized capital losses on
investments............................... 79,530 68,874 84,852
Federal income tax expense................. 33,335 23,858 31,667
---------- ---------- ----------
Gain from operations before net realized
capital losses on investments............. 46,195 45,016 53,185
Net realized capital losses on investments
(net of related federal income taxes and
transfer to interest maintenance reserve). (18,096) (3,624) (451)
---------- ---------- ----------
Net income................................. $ 28,099 $ 41,392 $ 52,734
========== ========== ==========
</TABLE>
See accompanying notes.
- 17 -
<PAGE>
PFL LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS--STATUTORY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN UNASSIGNED CAPITAL AND
STOCK CAPITAL SURPLUS SURPLUS
------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1993............ $2,660 $ 99,129 $213,665 $315,454
Net income for 1993................. -- -- 52,734 52,734
Net unrealized capital gains........ -- -- 1,719 1,719
Increase in non-admitted assets..... -- -- (5) (5)
Increase in asset valuation reserve. -- -- (10,773) (10,773)
Dividend to stockholder............. -- -- (46,000) (46,000)
Surplus effect of sale of division.. -- -- (862) (862)
Cancellation of coinsurance
agreement.......................... -- -- (288) (288)
Decrease in liability for
reinsurance in unauthorized
companies.......................... -- -- 2,340 2,340
Prior period adjustment............. -- -- 452 452
------ -------- -------- --------
Balance at December 31, 1993.......... 2,660 99,129 212,982 314,771
Capital contribution................ -- 15,000 -- 15,000
Net income for 1994................. -- -- 41,392 41,392
Net unrealized capital losses....... -- -- (25,350) (25,350)
Increase in non-admitted assets..... -- -- (248) (248)
Decrease in asset valuation reserve. -- -- 6,040 6,040
Dividend to stockholder............. -- -- (20,900) (20,900)
Surplus effect of ceding commissions
associated with the sale of a
division........................... -- -- 184 184
Amendment of reinsurance agreement.. -- -- 391 391
Decrease in liability for
reinsurance in unauthorized
companies.......................... -- -- 505 505
Prior period adjustment............. -- -- (3,444) (3,444)
------ -------- -------- --------
Balance at December 31, 1994.......... 2,660 114,129 211,552 328,341
Capital contribution................ -- 40,000 -- 40,000
Net income for 1995................. -- -- 28,099 28,099
Net unrealized capital losses....... -- -- (7,574) (7,574)
Decrease in non-admitted assets..... -- -- 50 50
Increase in asset valuation reserve. -- -- (5,946) (5,946)
Surplus effect of ceding commissions
associated with the sale of a
division........................... -- -- 35 35
Cancellation of reinsurance
agreement.......................... -- -- 585 585
Amendment of reinsurance agreement.. -- -- 419 419
Dividend of subsidiary to
stockholder........................ -- -- (3,250) (3,250)
Change in reserve valuation
methodology........................ -- -- (501) (501)
Increase in liability for
reinsurance in unauthorized
companies.......................... -- -- (2,730) (2,730)
------ -------- -------- --------
Balance at December 31, 1995.......... $2,660 $154,129 $220,739 $377,528
====== ======== ======== ========
</TABLE>
See accompanying notes.
- 18 -
<PAGE>
PFL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS--STATUTORY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
SOURCES OF CASH
Premiums and other considerations, net of
reinsurance............................... $1,348,559 $1,547,797 $1,169,096
Net investment income...................... 398,051 339,856 326,480
---------- ---------- ----------
1,746,610 1,887,653 1,495,576
Life and accident and health claims........ (140,798) (137,602) (159,968)
Surrender benefits and other fund withdraw-
als....................................... (498,626) (392,064) (217,998)
Other benefits to policyholders............ (88,519) (73,237) (50,180)
Commissions, other expenses and other tax-
es........................................ (273,397) (288,151) (264,124)
Net transfers to separate accounts......... (42,981) (243,806) (414,819)
Dividends to policyholders................. (940) (1,155) (1,200)
Federal income taxes, excluding tax on cap-
ital gains and IRS settlements............ (32,905) (39,864) (32,548)
Increase in policy loans................... (877) (3,202) (677)
Increase in remittances and items not allo-
cated..................................... 88,295 16,177 3,982
---------- ---------- ----------
Net cash provided by operations............ 755,862 724,749 358,044
Proceeds from investments sold, matured or
repaid:
Bonds and preferred stocks............... 1,757,229 1,430,339 1,532,807
Common stocks............................ 20,338 12,941 11,121
Mortgage loans on real estate............ 36,550 43,495 47,460
Real estate.............................. 23,203 9,536 8,286
Other proceeds........................... 381 189 1,407
---------- ---------- ----------
Total cash from investments................ 1,837,701 1,496,500 1,601,081
Capital contribution....................... 40,000 15,000 --
Cash received as the result of coinsurance
cancellations............................. -- -- 114
Dividend from subsidiary................... -- 10,000 --
Cash received from ceding commissions asso-
ciated with the sale of a division........ 55 284 --
Other sources.............................. 10,135 24,855 8,475
---------- ---------- ----------
Total sources of cash...................... 2,643,753 2,271,388 1,967,714
APPLICATIONS OF CASH
Cost of investments acquired:
Bonds and preferred stocks............... $2,294,195 $2,043,615 $1,846,839
Common stocks............................ 23,284 11,228 18,832
Mortgage loans on real estate............ 192,292 160,068 94,557
Real estate.............................. 10,188 14,801 8,587
Other invested assets.................... 2,670 664 347
---------- ---------- ----------
Total investments acquired................. 2,522,629 2,230,376 1,969,162
Dividends to stockholder................... -- 20,900 46,000
Cash transferred as the result of sale of
division.................................. -- -- 8,773
Issuance/(repayment) of intercompany notes
and receivables, net...................... 48,070 365 31,478
Other applications, net.................... 27,264 3,820 15,026
---------- ---------- ----------
Total applications of cash................. 2,597,963 2,255,461 2,070,439
---------- ---------- ----------
Net change in cash and short-term invest-
ments..................................... 45,790 15,927 (102,725)
Cash and short-term investments at begin-
ning of year.............................. 34,062 18,135 120,860
---------- ---------- ----------
Cash and short-term investments at end of
year...................................... $ 79,852 $ 34,062 $ 18,135
========== ========== ==========
</TABLE>
See accompanying notes.
- 19 -
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
PFL Life Insurance Company ("the Company") is a stock life insurance company
and is a wholly-owned subsidiary of First AUSA Life Insurance Company ("First
AUSA"), which, in turn, is a wholly-owned subsidiary of AEGON USA, Inc.
("AEGON"). AEGON is a wholly-owned subsidiary of AEGON nv, a holding company
organized under the laws of The Netherlands. Effective June 1, 1995, the
Company declared a dividend to transfer the common stock of its wholly-owned
subsidiary, Equity National Life Insurance Company ("Equity National"), to its
stockholder, First AUSA. Equity National was then merged with Life Investors
Insurance Company of America, a subsidiary of First AUSA. The financial
statements presented herein are prepared on the statutory accounting
principles basis for the Company only; as such, the accounts of the Company's
subsidiary, Equity National, are not consolidated with those of the Company.
In connection with the sale of certain affiliated companies, the Company has
assumed various blocks of business from these former affiliates through
mergers. In addition, the Company has canceled or entered into several
coinsurance and reinsurance agreements with affiliates and non-affiliates. The
following is a description of those transactions:
. Effective December 31, 1995, the Company canceled a coinsurance
agreement with its parent, First AUSA. As a result of the
cancellation, the Company transferred $825 of assets and $1,712 of
liabilities. The difference between the assets and the liabilities,
net of a tax effect of $302 was credited directly to surplus.
. On January 1, 1994, the Company entered into a three-year agreement
with a non-affiliate reinsurer to reduce the reinsurance ceded by 2
1/2% each year (primarily group health business). As a result, the
Company transferred $3,881 in assets and $4,080 in liabilities during
1994. The difference between the assets and liabilities of $199, plus
a tax credit of $192, was credited directly to unassigned surplus.
During 1995, the Company transferred $4,303 in assets and liabilities
of $4,467. The difference between the assets and liabilities of $164,
plus a tax credit of $255, was credited directly to unassigned
surplus.
. During 1993, the Company sold the Oakbrook Division (primarily group
health business). The initial transfer of risk occurred through an
indemnity reinsurance agreement. The policies will then be assumed by
the reinsurer by novation as state regulatory and policyholder
approvals are received. In addition, the Company will receive from
the third party administrator a ceding commission of one percent of
the premiums collected between January 1, 1994 and December 31, 1996.
As a result of the sale, in 1993, the Company transferred $12,094 in
assets including $8,773 in cash and short-term investments and
$10,570 in liabilities to the assuming company. The difference
between the assets and liabilities transferred, net of a tax effect
of $662, was charged directly to unassigned surplus. The income
statement for 1993 includes revenues of $53,558 and net income of
$2,839 earned by the division prior to its sale. During 1994, the
Company received $284 for ceding commissions; the commissions net of
the related tax effect of $100 was credited directly to unassigned
surplus. During 1995, the Company received $55 for ceding
commissions; the commissions net of the related tax effect of $20 was
credited directly to unassigned surplus.
- 20 -
<PAGE>
. During 1993, the Company canceled several coinsurance agreements with
affiliated and non-affiliated companies. As a result of the
cancellations with affiliates, the Company received $1,006 in assets,
and $1,051 in liabilities. As a result of the cancellations with non-
affiliates, the Company received $6,736 in assets, including $114 in
cash and short-term investments, and $7,131 in liabilities. The
difference between the assets and liabilities, net of a tax effect of
$152, was charged directly to surplus.
Nature of Business
The Company sells individual non-participating whole life, endowment and
term contracts, as well as a broad line of single fixed and flexible premium
annuity products. In addition, the Company offers group life, universal life,
and individual and specialty health coverages. The Company is licensed in 49
states and the District of Columbia. Sales of the Company's products are
primarily through an independent insurance agency of the Company's Insurance
Center, the Company's agents, and financial institutions.
Basis of Presentation
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
Significant estimates and assumptions are utilized in the calculation of
aggregate policy reserves, policy and contract claim reserves, guaranty fund
assessment accruals and valuation allowances on investments. It is reasonably
possible that actual experience could differ from the estimates and
assumptions utilized which could have a material impact on the financial
statements.
The accompanying financial statements have been prepared on the basis of
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa, which practices differ in some
respects from generally accepted accounting principles. The more significant
of these differences are as follows: (a) bonds are generally carried at
amortized cost rather than segregating the portfolio into held-to-maturity
(carried at amortized cost), available-for-sale (carried at fair value), and
trading (carried at fair value) classifications; (b) acquisition costs of
acquiring new business are charged to current operations as incurred rather
than deferred and amortized over the life of the policies; (c) policy reserves
on traditional life products are based on statutory mortality rates and
interest which may differ from reserves based on reasonable assumptions of
expected mortality, interest, and withdrawals which include a provision for
possible unfavorable deviation from such assumptions; (d) policy reserves on
certain investment products use discounting methodologies utilizing statutory
interest rates rather than full account values; (e) reinsurance amounts are
netted against the corresponding receivable or payable rather than shown as
gross amounts on the balance sheet; (f) deferred income taxes are not provided
for the difference between the financial statement and income tax bases of
assets and liabilities; (g) net realized gains or losses attributed to changes
in the level of interest rates in the market are deferred and amortized over
the remaining life of the bond or mortgage loan, rather than recognized as
gains or losses in the statement of operations when the sale is completed; (h)
declines in the estimated realizable value of investments are provided for
through the establishment of a formula-determined statutory investment reserve
(carried as a liability) changes to which are charged directly to surplus,
rather than through recognition in the statement of operations for declines in
value, when such declines are judged to be other than temporary; (i) certain
assets designated as "non-admitted assets" have been charged to surplus rather
than being reported as assets; (j) revenues for universal life and investment
products
- 21 -
<PAGE>
consist of premiums received rather than policy charges for the cost of
insurance, policy administration charges, amortization of policy initiation
fees and surrender charges assessed; (k) pension expense is recorded as
amounts are paid; (l) adjustments to federal income taxes of prior years are
charged or credited directly to unassigned surplus, rather than reported as a
component of expense in the statement of operations; (m) gains or losses on
dispositions of business are charged or credited directly to unassigned
surplus rather than being reported in the statement of operations; (n) a
liability is established for "unauthorized reinsurers" and changes in this
liability are charged or credited directly to unassigned surplus; and (o) the
financial statements of subsidiaries are not consolidated with those of the
Company. The effects of these variances have not been determined by the
Company.
The National Association of Insurance Commissioners (NAIC) currently is in
the process of recodifying statutory accounting practices, the result of which
is expected to constitute the only source of "prescribed" statutory accounting
practices. Accordingly, that project, which is expected to be completed in
1996, will likely change, to some extent, prescribed statutory accounting
practices and may result in changes to the accounting practices that the
Company uses to prepare its statutory-basis financial statements.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly liquid investments with remaining maturity of one year or less when
purchased to be cash equivalents.
Investments
Investments in bonds (except those to which the Securities Valuation Office
of the NAIC has ascribed a value), mortgage loans on real estate and short-
term investments are reported at cost adjusted for amortization of premiums
and accrual of discounts. Amortization is computed using methods which result
in a level yield over the expected life of the security. The Company reviews
its prepayment assumptions on mortgage and other asset backed securities at
regular intervals and adjusts amortization rates prospectively when such
assumptions are changed due to experience and/or expected future patterns.
Investments in preferred stocks in good standing are reported at cost.
Investments in preferred stocks not in good standing are reported at the lower
of cost or market. Common stocks of unaffiliated companies, which may include
shares of mutual funds (money market and other), are carried at market. Common
stock of the Company's insurance subsidiary is recorded at the equity in net
assets. Real estate is reported at cost less allowances for depreciation.
Depreciation is computed principally by the straight-line method. Policy loans
are reported at unpaid principal. Other invested assets consist principally of
investments in various joint ventures and are recorded at equity in underlying
net assets. Other "admitted assets" are valued, principally at cost, as
required or permitted by Iowa Insurance Laws.
Realized capital gains and losses are determined on the basis of specific
identification and are recorded net of related federal income taxes. The Asset
Valuation Reserve (AVR) is established by the Company to provide for
anticipated losses in the event of default by issuers of certain invested
assets. These amounts are determined using a formula prescribed by the NAIC
and are reported as a liability. The formula for the AVR provides for a
corresponding adjustment for realized gains and losses, net of amounts
attributed to changes in the general level of interest rates. Under a
- 22 -
<PAGE>
formula prescribed by the NAIC, the Company defers, in the Interest
Maintenance Reserve (IMR), the portion of realized gains and losses on sales
of fixed income investments, principally bonds and mortgage loans,
attributable to changes in the general level of interest rates and amortizes
those deferrals over the remaining period to maturity of the security.
Interest income is recognized on an accrual basis. The Company does not
accrue income on bonds in default, mortgage loans on real estate in default
and/or foreclosure or which are delinquent more than twelve months, or real
estate where rent is in arrears for more than three months. Further, income is
not accrued when collection is uncertain. At December 31, 1995, 1994 and 1993,
the Company excluded investment income due and accrued of $2,272, $4,622 and
$1,876, respectively, with respect to such practices.
The Company entered into an interest-rate cap agreement on Five Year
Constant Maturities Treasury futures to hedge the exposure of increasing
interest rates. The cash flows from the interest rate cap will help offset
losses that might occur from disintermediation resulting from a rise in
interest rates. The Company paid a one-time premium to receive the difference
between the reference rate and the strike rate after a two-year delay. The
cost is included in interest expense ratably during the life of the agreement.
Income received as a result of the cap agreement will be recognized in
investment income as earned. Unamortized cost of the agreements is included in
other assets.
Aggregate Policy Reserves
Life, annuity and accident and health benefit reserves are developed by
actuarial methods and are determined based on published tables using
statutorily specified interest rates and valuation methods that will provide,
in the aggregate, reserves that are greater than or equal to the minimum
required by law.
The aggregate policy reserves for life insurance policies are based
principally upon the 1941, 1958, and 1980 Commissioners' Standard Ordinary
Mortality and American Experience Mortality Tables. The reserves are
calculated using interest rates ranging from 2.00 to 6.00 percent and are
computed principally on the Net Level Valuation and the Commissioners' Reserve
Valuation Methods. Reserves for universal life policies are based on account
balances adjusted for the Commissioners' Reserve Valuation Method.
Deferred annuity reserves are calculated according to the Commissioners'
Annuity Reserve Valuation Method including excess interest reserves to cover
situations where the future interest guarantees plus the decrease in surrender
charges are in excess of the maximum valuation rates of interest. Reserves for
immediate annuities and supplementary contracts with and without life
contingencies are equal to the present value of future payments assuming
interest rates ranging from 2.50 to 11.25 percent and mortality rates, where
appropriate, from a variety of tables.
Accident and health policy reserves are equal to the greater of the gross
unearned premiums or any required midterminal reserves plus net unearned
premiums and the present value of amounts not yet due on both reported and
unreported claims.
Policy and Contract Claim Reserves
Claim reserves represent the estimated accrued liability for claims reported
to the Company and claims incurred but not yet reported through the statement
date. These reserves are estimated using either individual case-basis
valuations or statistical analysis techniques. These estimates are subject to
the effects of trends in claim severity and frequency. The estimates are
continually reviewed and adjusted as necessary as experience develops or new
information becomes available.
- 23 -
<PAGE>
Separate Account
Assets held in trust for purchases of variable annuity contracts and the
Company's corresponding obligation to the contract owners are shown separately
in the balance sheets. The assets in the separate account are valued at
market. Income and gains and losses with respect to the assets in the separate
account accrue to the benefit of the policyholders. The Company received
variable contract premiums of $133,386, $308,305 and $439,586 in 1995, 1994
and 1993, respectively. All variable account contracts are subject to
discretionary withdrawal by the policyholder at the market value of the
underlying assets less the current surrender charge.
Reclassifications
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform to the 1995 presentation.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments, whether or not recognized in the statutory-basis
balance sheet, for which it is practicable to estimate that value. SFAS No.
119, "Disclosures about Derivative Financial Instruments and Fair Value of
Financial Instruments" requires additional disclosure about derivatives. 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 cannot be substantiated by comparisons to independent markets
and, in many cases, could not be realized in immediate settlement of the
instrument. Statement of Financial Accounting Standards No. 107 and No. 119
exclude certain financial instruments and all nonfinancial instruments from
their disclosure requirements and allow companies to forego the disclosures
when those estimates can only be made at excessive cost. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value
of the Company.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash equivalents, short-term investments: The carrying amounts
reported in the balance sheet for these instruments approximate their fair
values.
Investment securities: Fair values for fixed maturity securities
(including redeemable preferred stocks) are based on quoted market prices,
where available. For fixed maturity securities not actively traded, fair
values are estimated using values obtained from independent pricing
services or, in the case of private placements, are estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality, and maturity of the investments.
The fair values for equity securities other than insurance subsidiaries are
based on quoted market prices and are recognized in the balance sheet. Fair
value for the Company's insurance subsidiary is the statutory net book
value of that subsidiary.
Mortgage loans and policy loans: The fair values for mortgage loans are
estimated utilizing discounted cash flow analyses, using interest rates
reflective of current market conditions and the risk characteristics of the
loans. The fair value of policy loans are assumed to equal their carrying
value.
Investment contracts: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using discounted cash
flow calculations, based on interest
- 24 -
<PAGE>
rates currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Interest rate cap: Estimated fair value of the interest rate cap is based
upon the latest quoted market price.
Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, which minimizes exposure
to changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.
The following sets forth a comparison of the fair values and carrying values
of the Company's financial instruments subject to the provisions of Statement
of Financial Accounting Standards No. 107 and No. 119:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------------
1995 1994
--------------------- ---------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ADMITTED ASSETS
Bonds........................... $4,613,334 $4,824,635 $4,094,407 $3,952,849
Preferred stocks................ 9,336 12,275 12,667 12,905
Common stocks................... 24,866 24,866 16,754 16,754
Affiliated common and preferred
stock.......................... 6,794 6,794 26,530 26,530
Mortgage loans on real estate... 680,414 714,399 527,410 499,350
Policy loans.................... 52,675 52,675 51,798 51,798
Cash and short-term investments. 79,852 79,852 34,062 34,062
Interest rate cap............... 7,971 7,250 -- --
Separate account assets......... 1,418,157 1,418,157 1,120,391 1,120,391
LIABILITIES
Investment contract liabilities. 4,323,188 4,310,505 3,779,199 3,468,226
Separate account annuities...... 1,417,842 1,417,842 1,119,002 1,119,002
</TABLE>
3. INVESTMENTS
The carrying value and estimated fair value of investments in debt
securities were as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995
Bonds:
United States Government and
agencies..................... $ 117,054 $ 5,808 $ 135 $ 122,727
State, municipal and other
government................... 46,236 3,109 2 49,343
Public utilities.............. 156,342 9,578 1,092 164,828
Industrial and miscellaneous.. 1,781,149 112,074 7,146 1,886,077
Mortgage-backed securities.... 2,512,553 93,420 4,313 2,601,660
---------- -------- ------- ----------
4,613,334 223,989 12,688 4,824,635
Preferred stocks................ 9,336 3,348 409 12,275
---------- -------- ------- ----------
$4,622,670 $227,337 $13,097 $4,836,910
========== ======== ======= ==========
</TABLE>
- 25 -
<PAGE>
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Bonds:
United States Government and
agencies..................... $ 104,798 $ 395 $ 1,958 $ 103,235
State, municipal and other
government................... 51,650 390 2,739 49,301
Public utilities.............. 164,975 1,860 5,710 161,125
Industrial and miscellaneous.. 1,891,899 27,082 69,137 1,849,844
Mortgage-backed securities.... 1,881,085 9,074 100,815 1,789,344
---------- ------- -------- ----------
4,094,407 38,801 180,359 3,952,849
Preferred stocks................ 12,667 778 540 12,905
---------- ------- -------- ----------
$4,107,074 $39,579 $180,899 $3,965,754
========== ======= ======== ==========
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1995,
by contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
---------- ----------
<S> <C> <C>
Due in one year or less............................... $ 104,697 $ 105,157
Due after one year through five years................. 858,586 889,832
Due after five years through ten years................ 934,627 995,403
Due after ten years................................... 202,871 232,583
---------- ----------
2,100,781 2,222,975
Mortgage and other asset-backed securities............ 2,512,553 2,601,660
---------- ----------
$4,613,334 $4,824,635
========== ==========
</TABLE>
A detail of net investment income is presented below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Interest on bonds and notes...................... $342,182 $294,145 $286,013
Dividends on equity investments.................. 1,822 12,091 3,990
Interest on mortgage loans....................... 52,702 42,385 37,587
Rental income on real estate..................... 10,443 9,360 8,753
Interest on policy loans......................... 3,112 3,182 2,943
Other investment income.......................... 1,803 282 555
-------- -------- --------
Gross investment income.......................... 412,064 361,445 339,841
Investment expenses.............................. 19,379 17,565 17,448
-------- -------- --------
Net investment income............................ $392,685 $343,880 $322,393
======== ======== ========
</TABLE>
- 26 -
<PAGE>
Proceeds from sales and maturities of debt securities and related gross
realized gains and losses were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Proceeds................................. $1,757,229 $1,430,339 $1,532,807
========== ========== ==========
Gross realized gains..................... $ 19,721 $ 15,411 $ 42,020
Gross realized losses.................... 34,399 33,044 9,071
---------- ---------- ----------
Net realized gains (losses).............. $ (14,678) $ (17,633) $ 32,949
========== ========== ==========
</TABLE>
At December 31, 1995, investments with an aggregate carrying value of
$5,404,474 were on deposit with regulatory authorities or were restrictively
held in bank custodial accounts for the benefit of such regulatory authorities
as required by statute.
Realized investment gains (losses) and changes in unrealized gains (losses)
for investments are summarized below:
<TABLE>
<CAPTION>
REALIZED
YEAR ENDED DECEMBER 31
----------------------------
1995 1994 1993
-------- --------- -------
<S> <C> <C> <C>
Debt securities............................... $(14,678) $ (17,633) $32,949
Short-term investments........................ 24 (309) 679
Equity securities............................. 504 1,322 (348)
Mortgage loans on real estate................. (1,053) (2,186) 199
Real estate................................... (1,908) (2,858) (41)
Other invested assets......................... (970) 14 33
-------- --------- -------
(18,081) (21,650) 33,471
Tax effect.................................... 7,878 7,236 (12,519)
Transfer to interest maintenance reserve...... (7,891) 10,790 (21,403)
-------- --------- -------
Net realized losses........................... $(18,096) $ (3,624) $ (451)
======== ========= =======
<CAPTION>
CHANGE IN UNREALIZED
YEAR ENDED DECEMBER 31
----------------------------
1995 1994 1993
-------- --------- -------
<S> <C> <C> <C>
Debt securities............................... $355,560 $(322,346) $28,210
Equity securities............................. (16,379) (23,202) 3,449
-------- --------- -------
Change in unrealized appreciation (deprecia-
tion)........................................ $339,181 $(345,548) $31,659
======== ========= =======
</TABLE>
Gross unrealized gains and gross unrealized losses on equity securities were
as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Unrealized gains................................... $ 6,833 $20,244 $42,045
Unrealized losses.................................. 8,895 5,927 4,526
------- ------- -------
Net unrealized gains (losses)...................... $(2,062) $14,317 $37,519
======= ======= =======
</TABLE>
During 1995, the Company issued mortgage loans with interest rates ranging
from 7.41% to 9.86%. The maximum percentage of any one mortgage loan to the
value of the underlying real estate at origination was 85%. Mortgage loans
with a carrying value of $12,782 were non-income producing for the previous
twelve months. Accrued interest of $1,957 related to these mortgage
- 27 -
<PAGE>
loans was excluded from investment income. The Company requires all mortgage
loans to carry fire insurance equal to the value of the underlying property.
During 1995, 1994 and 1993, mortgage loans of $1,644, $799 and $101,
respectively, were foreclosed and transferred to real estate. At December 31,
1995 and 1994, the Company held a mortgage loan loss reserve in the asset
valuation reserve of $6,168 and $5,204, respectively. At December 31, 1995,
the mortgage loan portfolio is diversified by geographic region and specific
collateral property type as follows:
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION
- -----------------------------
<S> <C>
South Atlantic.......... 26.2%
Mountain................ 12.4
W. South Central........ 14.3
Pacific................. 16.7
E. North Central........ 13.0
E. South Central........ 5.3
W. North Central........ 5.5
Middle Atlantic......... 3.1
New England............. 3.5
</TABLE>
<TABLE>
<CAPTION>
PROPERTY TYPE DISTRIBUTION
- -----------------------------
<S> <C>
Retail.................. 31.2%
Apartment............... 20.4
Office.................. 29.1
Industrial.............. 3.8
Hotel/Motel............. 1.4
Other................... 14.1
</TABLE>
At December 31, 1995, the Company had the following investments (excluding
U.S. Government guaranteed or insured issues) which individually represented
more than ten percent of capital and surplus and the asset valuation reserve:
<TABLE>
<CAPTION>
CARRYING
DESCRIPTION OF SECURITY OR ISSUER VALUE
--------------------------------- --------
<S> <C>
Bonds:
Standard Credit Card Trust.......................................... $84,607
G E Capital......................................................... 48,290
Green Tree Financial Corporation.................................... 44,128
</TABLE>
4. REINSURANCE
The Company reinsures portions of risk on certain insurance policies which
exceed its established limits, thereby providing a greater diversification of
risk and minimizing exposure on larger risks. The Company remains contingently
liable with respect to any insurance ceded, and this would become an actual
liability in the event that the assuming insurance company became unable to
meet its obligation under the reinsurance treaty.
Reinsurance assumption and cession treaties are transacted primarily with
affiliates. Premiums earned reflect the following reinsurance assumed and
ceded amounts:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Direct premiums.......................... $1,591,531 $1,857,446 $1,472,409
Reinsurance assumed...................... 2,356 1,832 3,040
Reinsurance ceded........................ (324,993) (412,029) (369,203)
---------- ---------- ----------
Net premiums earned...................... $1,268,894 $1,447,249 $1,106,246
========== ========== ==========
</TABLE>
The Company received reinsurance recoveries in the amount of $167,287,
$148,414 and $97,409 during 1995, 1994 and 1993, respectively. At December 31,
1995 and 1994, estimated amounts recoverable from reinsurers that have been
deducted from policy and contract claim
- 28 -
<PAGE>
reserves totaled $65,503 and $62,882, respectively. The aggregate reserves for
policies and contracts were reduced for reserve credits for reinsurance ceded
at December 31, 1995 and 1994 of $2,920,034 and $2,977,954, respectively.
At December 31, 1995, amounts recoverable from unauthorized reinsurers of
$70,516 (1994--$43,055) and reserve credits for reinsurance ceded of $48,992
(1994--$59,131) were associated with a single reinsurer and its affiliates.
The Company holds collateral under these reinsurance agreements in the form of
trust agreements totaling $110,714 at December 31, 1995 that can be drawn on
for amounts that remain unpaid for more than 120 days.
5. INCOME TAXES
For federal income tax purposes, the Company joins in a consolidated tax
return filing with certain affiliated companies. Under the terms of a tax-
sharing agreement between the Company and its affiliates, the Company computes
federal income tax expense as if it were filing a separate income tax return,
except that tax credits and net operating loss carryforwards are determined on
the basis of the consolidated group. Additionally, the alternative minimum tax
is computed for the consolidated group and the resulting tax, if any, is
allocated back to the separate companies on the basis of the separate
companies' alternative minimum taxable income.
Federal income tax expense differs from the amount computed by applying the
statutory federal income tax rate to gain from operations before taxes and
realized capital gains (losses) for the following reasons:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Computed tax at federal statutory rate (35%)...... $27,835 $24,106 $29,698
Tax reserve adjustment............................ 2,405 1,150 1,433
Excess tax depreciation........................... (365) (406) (248)
Deferred acquisition costs--tax basis............. 4,581 7,378 5,200
Prior year over accrual........................... (306) (644) (330)
Dividend received deduction....................... (56) (3,513) (1,202)
Charitable contribution........................... -- (3,935) --
Other items--net.................................. (759) (278) (2,884)
------- ------- -------
Federal income tax expense........................ $33,335 $23,858 $31,667
======= ======= =======
</TABLE>
Prior to 1984, as provided for under the Life Insurance Company Tax Act of
1959, a portion of statutory income was not subject to current taxation but
was accumulated for income tax purposes in a memorandum account referred to as
the policyholders' surplus account. No federal income taxes have been provided
for in the financial statements on income deferred in the policyholders'
surplus account ($20,387 at December 31, 1995). To the extent dividends are
paid from the amount accumulated in the policyholders' surplus account, net
earnings would be reduced by the amount of tax required to be paid. Should the
entire amount in the policyholders' surplus account become taxable, the tax
thereon computed at current rates would amount to approximately $7,135.
The Company's federal income tax returns have been examined and closing
agreements have been executed with the Internal Revenue Service through 1986.
During 1993, there was a $452 prior period adjustment to the tax accrual. An
examination is underway for years 1987 through 1992.
6. POLICY AND CONTRACT ATTRIBUTES
Participating life insurance policies are issued by the Company which
entitle policyholders to a share in the earnings of the participating
policies, provided that a dividend distribution, which
- 29 -
<PAGE>
is determined annually based on mortality and persistency experience of the
participating policies, is authorized by the Company. Participating insurance
constituted approximately 1.2% of ordinary life insurance in force at December
31, 1995 and 1994.
A portion of the Company's policy reserves and other policyholders' funds
(including separate account liabilities) relate to liabilities established on
a variety of the Company's products that are not subject to significant
mortality or morbidity risk; however, there may be certain restrictions placed
upon the amount of funds that can be withdrawn without penalty. The amount of
reserves on these products, by withdrawal characteristics are summarized as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------
1995 1994
------------------ ------------------
PERCENT PERCENT
OF OF
AMOUNT TOTAL AMOUNT TOTAL
---------- ------- ---------- -------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal
with market value adjustment......... $ 699 --% $ 29,625 --%
Subject to discretionary withdrawal at
book value less surrender charge..... 733,796 8% 521,631 7%
Subject to discretionary withdrawal at
market value......................... 1,390,156 16% 1,090,032 14%
Subject to discretionary withdrawal at
book value (minimal or no charges or
adjustments)......................... 6,395,719 74% 6,116,461 78%
Not subject to discretionary
withdrawal provision................. 139,330 2% 109,542 1%
---------- --- ---------- ---
8,659,700 100% 7,867,291 100%
Less reinsurance ceded................ 2,866,160 2,931,320
---------- ----------
Total policy reserves on annuities and
deposit fund liabilities............. $5,793,540 $4,935,971
========== ==========
</TABLE>
Reserves on the Company's traditional life products are computed using mean
reserving methodologies. These methodologies result in the establishment of
assets for the amount of the net valuation premiums that are anticipated to be
received between the policy's paid-through date to the policy's next
anniversary date. At December 31, 1995 and 1994, these assets (which are
reported as premiums deferred and uncollected) and the amounts of the related
gross premiums and loadings, are as follows:
<TABLE>
<CAPTION>
GROSS LOADING NET
------- ------- -------
<S> <C> <C> <C>
DECEMBER 31, 1995
Life and annuity:
Ordinary direct first year business............. $ 3,151 $ 2,223 $ 928
Ordinary direct renewal business................ 24,250 7,792 16,458
Group life direct business...................... 1,537 779 758
Reinsurance ceded............................... (1,362) (141) (1,221)
------- ------- -------
27,576 10,653 16,923
Accident and health:
Direct.......................................... 1,296 -- 1,296
Reinsurance ceded............................... (1,193) -- (1,193)
------- ------- -------
Total accident and health......................... 103 -- 103
------- ------- -------
$27,679 $10,653 $17,026
======= ======= =======
</TABLE>
- 30 -
<PAGE>
<TABLE>
<CAPTION>
GROSS LOADING NET
------- ------- -------
<S> <C> <C> <C>
DECEMBER 31, 1994
Life and annuity:
Ordinary direct first year business............. $ 3,940 $ 2,865 $ 1,075
Ordinary direct renewal business................ 26,155 8,979 17,176
Group life direct business...................... 1,386 522 864
Reinsurance ceded............................... (943) (67) (876)
------- ------- -------
30,538 12,299 18,239
Accident and health:
Direct.......................................... 2,186 -- 2,186
Reinsurance ceded............................... (2,039) -- (2,039)
------- ------- -------
Total accident and health......................... 147 -- 147
------- ------- -------
$30,685 $12,299 $18,386
======= ======= =======
</TABLE>
At December 31, 1995 and 1994, the Company had insurance in force
aggregating $87,010 and $92,680, respectively, in which the gross premiums are
less than the net premiums required by the standard valuation standards
established by the Insurance Division, Department of Commerce, of the State of
Iowa. The Company established policy reserves of $1,417 and $1,616 to cover
these deficiencies at December 31, 1995 and 1994, respectively.
In 1994, the NAIC enacted a guideline to clarify reserving methodologies for
contracts that require immediate payment of claims upon proof of death of the
insured. Companies were allowed to grade the effects of the change in
reserving methodologies over five years. A direct charge to surplus of $501
was made for the year ended December 31, 1995, related to the change in
reserve methodology.
7. DIVIDEND RESTRICTIONS
Generally, an insurance company's ability to pay dividends is limited to the
amount that their net assets, as determined in accordance with statutory
accounting practices, exceed minimum statutory capital requirements. However,
payment of such amounts as dividends may be subject to approval by regulatory
authorities.
The Company paid dividends to its parent of $0, $20,900 and $46,000 in 1995,
1994 and 1993, respectively.
8. RETIREMENT AND COMPENSATION PLANS
The Company's employees participate in a qualified benefit pension plan
sponsored by AEGON. The Company has no legal obligation for the plan. The
Company recognizes pension expense equal to its allocation from AEGON. The
pension expense is allocated among the participating companies based on the
FASB No. 87 expense as a percent of salaries. The benefits are based on years
of service and the employee's compensation during the highest five consecutive
years of employment. Pension expense aggregated $942, $966 and $782 for the
years ended December 31, 1995, 1994 and 1993, respectively. The plan is
subject to the reporting and disclosure requirements of the Employee
Retirement and Income Security Act of 1974.
The Company's employees also participate in a contributory defined
contribution plan sponsored by AEGON which is qualified under Section 401(k)
of the Internal Revenue Service Code. Employees of the Company who customarily
work at least 1,000 hours during each calendar year and meet the other
eligibility requirements, are participants of the plan. Participants may
- 31 -
<PAGE>
elect to contribute up to fifteen percent of their salary to the plan. The
Company will match an amount up to three percent of the participant's salary.
Participants may direct all of their contributions and plan balances to be
invested in a variety of investment options. The plan is subject to the
reporting and disclosure requirements of the Employee Retirement and Income
Security Act of 1974. Expense related to this plan was $465, $411 and $386 for
the years ended December 31, 1995, 1994 and 1993, respectively.
AEGON sponsors supplemental retirement plans to provide the Company's senior
management with benefits in excess of normal pension benefits. The plans are
noncontributory and benefits are based on years of service and the employee's
compensation level. The plans are unfunded and nonqualified under the Internal
Revenue Service Code. In addition, AEGON has established incentive deferred
compensation plans for certain key employees of the Company. AEGON also
sponsors an employee stock option plan for individuals employed at least three
years and a stock purchase plan for its producers, with the participating
affiliated companies establishing their own eligibility criteria, producer
contribution limits and company matching formula. These plans have been
accrued or funded as deemed appropriate by management of AEGON and the
Company.
In addition to pension benefits, the Company participates in plans sponsored
by AEGON that provide postretirement medical, dental and life insurance
benefits to employees meeting certain eligibility requirements. Portions of
the medical and dental plans are contributory. The expenses of the
postretirement plans calculated on the pay-as-you-go basis are charged to
affiliates in accordance with an intercompany cost sharing arrangement. The
Company expensed $164, $169 and $0 for the years ended December 31, 1995, 1994
and 1993, respectively.
9. RELATED PARTY TRANSACTIONS
The Company receives data processing, investment advisory and management,
marketing and administration services from certain affiliates. During 1995,
1994 and 1993, the Company paid $14,214, $11,820 and $11,689, respectively,
for these services, which approximates their costs to the affiliates.
Payable to affiliates and intercompany borrowings bear interest at the
thirty-day commercial paper rate of 5.64% at December 31, 1995. During 1995,
1994 and 1993, the Company paid net interest of $794, $363 and $283,
respectively, to affiliates.
During 1995 and 1994, the Company received capital contributions of $40,000
and $15,000, respectively, in cash from its parent and during 1994 received a
dividend of $10,000 from its subsidiary, Equity National, which was included
in net investment income.
During 1995, the Company sold real estate with a book value of approximately
$13,270 to an affiliated entity in exchange for a short-term note receivable.
No gain was recognized on this sale. This note bears interest at 5.65% and
matures on March 28, 1996.
During the year ended December 31, 1995, the Company restructured demand
notes and accrued interest of $13,250 and $745, respectively, related to an
affiliate. The Company received 9,750 shares of preferred stock from the
affiliate for satisfaction of debt. The Company realized a loss of $8,695
related to this transaction. At December 31, 1995, the preferred stock related
to this affiliate was deemed to have no value and an unrealized loss of $4,555
was recognized.
10. COMMITMENTS AND CONTINGENCIES
The Company is a party to legal proceedings incidental to its business.
Although such litigation sometimes includes substantial demands for
compensatory and punitive damages, in
- 32 -
<PAGE>
addition to contract liability, it is management's opinion, after consultation
with counsel and a review of available facts, that damages arising from such
demands will not be material to the Company's financial position.
The Company is subject to insurance guaranty laws in the states in which it
writes business. These laws provide for assessments against insurance
companies for the benefit of policyholders and claimants in the event of
insolvency of other insurance companies. Assessments are charged to operations
when received by the Company except where right of offset against other taxes
paid is allowed by law; amounts available for future offsets are recorded as
an asset on the Company's balance sheet. Potential future obligations for
unknown insolvencies are not determinable by the Company. The future
obligation has been based on the most recent information available from the
National Organization of Life and Health Insurance Guaranty Associations
(NOLHGA). The Company has established a reserve of $21,747 and $18,344 and an
offsetting premium tax benefit of $9,457 and $10,556 at December 31, 1995 and
1994, respectively, for its estimated share of future guaranty fund
assessments related to several major insurer insolvencies. During 1994, $3,444
was charged to surplus as prior period adjustments to provide for this net
reserve plus certain assessments paid that related to several major insurer
insolvencies prior to 1992. The guaranty fund expense was $5,859, $4,054 and
$0 for December 31, 1995, 1994 and 1993, respectively.
11. SUBSEQUENT EVENT
Effective January 10, 1996, the Company announced it had signed a Memorandum
of Understanding with United Insurance Companies, Inc. to sell its North
Richland Hills, Texas health administrative operations known as The Insurance
Center. The transaction, which is subject to approval by the Board of
Directors of both companies, will result in the transfer of all employees and
office facilities to United Insurance Companies, Inc. All inforce business
will continue to be shared by United Insurance Companies, Inc. and the Company
and its affiliates through the existing coinsurance agreements. After a short
transition period, all new business produced by United Group Association, an
independent insurance agency, will be written by the insurance subsidiaries of
United Insurance Companies, Inc. and will not be shared with the Company and
its affiliates through coinsurance arrangements. The transaction is expected
to be completed on or about April 1, 1996.
- 33 -
<PAGE>
SCHEDULE I
PFL LIFE INSURANCE COMPANY
SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AMOUNT AT WHICH
MARKET SHOWN IN THE
TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET (2)
------------------ ---------- ---------- ------------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds:
United States Government and
government agencies and
authorities........................ $1,616,094 $1,674,088 $1,613,124
States, municipalities and political
subdivisions....................... 3,975 4,576 3,975
Foreign governments................. 43,053 45,128 42,261
Public utilities.................... 158,821 165,107 156,619
All other corporate bonds........... 2,809,545 2,935,736 2,797,355
Redeemable preferred stock............ 9,336 12,275 9,336
---------- ---------- ----------
Total fixed maturities................ 4,640,824 4,836,910 4,622,670
EQUITY SECURITIES
Common stocks:
Banks, trust and insurance.......... 5,114 6,221 6,221
Industrial, miscellaneous and all
other.............................. 13,947 18,645 18,645
---------- ---------- ----------
Total equity securities............... 19,061 24,866 24,866
Mortgage loans on real estate......... 680,414 680,414
Real estate........................... 60,856 60,856
Real estate acquired in satisfaction
of debt.............................. 2,648 2,648
Policy loans.......................... 52,675 52,675
Other long-term investments........... 5,586 5,586
Cash and short-term investments....... 79,852 79,852
---------- ----------
Total investments..................... $5,541,916 $5,529,567
========== ==========
</TABLE>
- --------
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual of discounts.
(2) Amount differs from cost as certain bonds have been adjusted to reflect
other than temporary decline in value charged to surplus, as prescribed by
the NAIC.
- 34 -
<PAGE>
SCHEDULE III
PFL LIFE INSURANCE COMPANY
SUPPLEMENTARY INSURANCE INFORMATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FUTURE POLICY POLICY AND
BENEFITS AND UNEARNED CONTRACT
EXPENSES PREMIUMS LIABILITIES
------------- -------- -----------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Individual life.............................. $ 594,274 $ -- $ 6,066
Individual health............................ 24,225 7,768 11,863
Group life and health........................ 67,994 16,662 58,813
Annuity...................................... 4,220,274 -- --
---------- ------- -------
$4,906,767 $24,430 $76,742
========== ======= =======
YEAR ENDED DECEMBER 31, 1994
Individual life.............................. $ 544,087 $ -- $ 7,298
Individual health............................ 16,649 6,487 8,643
Group life and health........................ 60,207 17,680 57,959
Annuity...................................... 3,693,388 -- --
---------- ------- -------
$4,314,331 $24,167 $73,900
========== ======= =======
YEAR ENDED DECEMBER 31, 1993
Individual life.............................. $ 402,985 $ -- $ 8,424
Individual health............................ 11,714 4,623 6,494
Group life and health........................ 108,355 17,783 55,265
Annuity...................................... 3,124,527 -- --
---------- ------- -------
$3,647,581 $22,406 $70,183
========== ======= =======
</TABLE>
- 35 -
<PAGE>
<TABLE>
<CAPTION>
NET BENEFITS, CLAIMS OTHER
PREMIUM INVESTMENT LOSSES AND OPERATING PREMIUMS
REVENUE INCOME SETTLEMENT EXPENSES EXPENSES WRITTEN
------- ---------- ------------------- --------- ----------
<S> <C> <C> <C> <C>
$ 111,918 $ 49,929 $ 97,065 $ 37,933 $ --
47,692 4,091 25,793 26,033 47,690
187,832 11,665 106,065 139,640 184,545
921,452 327,000 1,116,768 114,164 921,448
- ---------- -------- ---------- -------- ----------
$1,268,894 $392,685 $1,345,691 $317,770 $1,153,683
========== ======== ========== ======== ==========
$ 146,328 $ 43,025 $ 124,736 $ 42,309 $ --
38,811 3,983 22,323 22,707 38,797
194,704 10,531 108,400 143,645 192,034
1,067,406 286,341 1,036,313 319,328 1,067,404
- ---------- -------- ---------- -------- ----------
$1,447,249 $343,880 $1,291,772 $527,989 $1,298,235
========== ======== ========== ======== ==========
$ 95,716 $ 36,471 $ 71,638 $ 56,462 $ --
28,388 1,024 16,663 15,987 28,434
241,356 13,465 135,764 148,254 239,575
740,786 271,433 506,949 457,328 740,900
- ---------- -------- ---------- -------- ----------
$1,106,246 $322,393 $ 731,014 $678,031 $1,008,909
========== ======== ========== ======== ==========
</TABLE>
- 36 -
<PAGE>
SCHEDULE IV
PFL LIFE INSURANCE COMPANY
REINSURANCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1995
Life insurance in force.. $4,594,434 $468,811 $ 22,936 $4,148,559 .6%
========== ======== ======== ========== ===
Premiums:
Individual life........ $ 113,934 $ 3,841 $ 1,825 $ 111,918 1.6%
Individual health...... 60,309 12,617 -- 47,692 --
Group life and health.. 408,097 220,265 -- 187,832 --
Annuity................ 1,009,191 88,270 531 921,452 .05%
---------- -------- -------- ---------- ---
$1,591,531 $324,993 $ 2,356 $1,268,894 .2%
========== ======== ======== ========== ===
YEAR ENDED DECEMBER 31,
1994
Life insurance in force.. $4,713,817 $468,811 $112,054 $4,357,060 2.6%
========== ======== ======== ========== ===
Premiums:
Individual life........ $ 148,702 $ 3,639 $ 1,265 $ 146,328 .9%
Individual health...... 50,303 11,492 -- 38,811 --
Group life and health.. 412,200 217,496 -- 194,704 --
Annuity................ 1,246,241 179,402 567 1,067,406 .05%
---------- -------- -------- ---------- ---
$1,857,446 $412,029 $ 1,832 $1,447,249 .1%
========== ======== ======== ========== ===
YEAR ENDED DECEMBER 31,
1993
Life insurance in force.. $4,773,533 $387,843 $192,203 $4,577,893 4.2%
========== ======== ======== ========== ===
Premiums:
Individual life........ $ 95,982 $ 2,640 $ 2,373 $ 95,715 2.5%
Individual health...... 37,709 9,321 -- 28,388 --
Group life and health.. 401,906 160,550 -- 241,356 --
Annuity................ 936,812 196,692 667 740,787 .1%
---------- -------- -------- ---------- ---
$1,472,409 $369,203 $ 3,040 $1,106,246 .3%
========== ======== ======== ========== ===
</TABLE>
- 37 -
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement. Note 2
(b) Exhibits:
(1) (a) Resolution of the Board of Directors of PFL Life Insurance
Company authorizing establishment of the Mutual Fund
Account. Note 1.
(2) Not Applicable.
(3) (a) Principal Distribution Agreement by and between PFL Life
Insurance Company on its own behalf and on the behalf of the
Mutual Fund Account, and AEGON USA Securities, Inc. Note 2.
(b) Form of Broker/Dealer Supervision and Sales Agreement by and
between AEGON USA Securities, Inc. and the Broker/Dealer.
Note 2.
(4) Form of Policy for the Retirement Income Builder Variable
Annuity. Note 2
(5) Form of Application for the Retirement Income Builder
Variable Annuity. Note 2
(6) (a) Articles of Incorporation of PFL Life Insurance Company.
Note 1.
(b) ByLaws of PFL Life Insurance Company. Note 1.
(7) Not Applicable.
(8) Participation Agreement by and between PFL Life Insurance
Company and Fidelity Distributors Corporation and Addendum
thereto. Note 2
(9) Opinion and Consent of Counsel. Note 2
<PAGE>
(10) (a) Consent of Independent Auditors. Note 2
(b) Opinion and Consent of Actuary. Note 2
(11) Not applicable.
(12) Not applicable.
(13) Performance Data Calculations. Note 2
(14) Powers of Attorney. Note 1. (Patrick S. Baird, Craig D.
Vermie, William L. Busler, Patrick E. Falconio, Douglas C.
Kolsrud, Robert J. Kontz) Note 2. Brendy K. Clancy.
------------------------
Note 1. Previously filed.
Note 2. Filed herewith.
<PAGE>
Item 25. Directors and Officers of the Depositor
Principal Positions
Name and and Offices with
Business Address Depositor
- ---------------- ---------
William L. Busler Director, Chairman of the Board and
4333 Edgewood Road N.E. President
Cedar Rapids, Iowa 52499-0001
Patrick S. Baird Director, Senior Vice President and
4333 Edgewood Road N.E. Chief Financial Officer
Cedar Rapids, Iowa 52499-0001
Craig D. Vermie Director, Vice President, Secretary and
4333 Edgewood Road N.E. Corporate Counsel
Cedar Rapids, Iowa 52499-0001
Douglas C. Kolsrud Director, Vice President and
4333 Edgewood Road N.E. Corporate Actuary
Cedar Rapids, Iowa 52499-0001
Patrick E. Falconio Director, Senior Vice President and
4333 Edgewood Road N.E. Chief Investment Officer
Cedar Rapids, Iowa 52499-0001
Robert J. Kontz Vice President and
4333 Edgewood Road N.E. Controller
Cedar Rapids, Iowa 52499-0001
Brenda K. Clancy Treasurer
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
---------------------------
VERENIGING AEGON
NETHERLANDS MEMBERSHIP
ASSOCIATION
---------------------------
+
53.00%
---------------------------
AEGON N.V.
NETHERLANDS CORPORATION
----------------------------
+
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ + + +
100% 100% 100% 100%
---------------------- ------------------------ ------------------------ -----------------------------
AEGON Netherland N.V. AEGON INTERNATIONAL N.V. AEGON NEWAK HOLDING S.V. GRONINGER FINANCIERINGEN B.V.
Netherlands Corporation Netherlands Corporation Netherlands Corporation Netherlands Corporation
---------------------- ------------------------ ------------------------ -----------------------------
+
DE
-------------------
VOTING TRUST
Trustees: K.J. Storm
Donald J. Sheperd
H.B. Van Wild
Dennis Hersch
-------------------
+
DE 100%
-------------------
AEGON U.S. HOLDING
CORPORATION
-------------------
+ +
++++++++++++++++++++++++++++++++++++ +
+ IA 100%(1)
+ -------------------
+ AEGON USA, INC.
+ -------------------
+ +
+ +++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ + +
+ MD 100% MD
+ ----------------- ------------
+ FIRST AUSA LIFE AUSA HOLDING
+ INSURANCE COMPANY COMPANY
+ ----------------- ------------
+ + +
+ + ++++++++++++++++++++++++++++++++++++++++++++++
+ + + ++
+ + MD 100% IA 100% DE
+ + -------------------- ------------- ++ ----------------------
+ + MONUMENTAL GENERAL AUSA FINACIAL +++ DIVERSIFIED INVESTMENT
+ + INSURANCE GROUP, INC ++ MARKETS, INC. ++ ADVISORS, INC.
+ + -------------------- + ------------- ++ ----------------------
NJ 100% + NY + MD 100% + ++
- ----------------- + ------------------- + ----------------- + ++
SHORT HILLS + AUSA LIFE INSURANCE +++ MONUMENTAL LIFE + IA 100% ++ DE 100%
MANAGEMENT COMPANY+ COMPANY, INC + INSURANCE COMPANY++ MD 100% + ----------- ++ ---------------------
- ----------------- + ------------------- + ----------------- + ------------------- + UNIVERSAL ++ DIVERSIFIED INVESTORS
+ + + MONUMENTAL GENERAL + BENEFITS +++++++ SECURITIES CORP.
+ + + ADMINISTRATORS, INC.+ CORPORATION ++ --------------------
+ + MD 100% + ------------------- + ++
NY + ----------------- + ----------------- + + ----------- ++
- ---------------- + LIFE INVESTORS + MONUMENTAL GENERAL+ + + ++ IA 100%
CORPA REINSURANCE + INSURANCE COMPANY + CASUALTY COMPANY + + IA 100% ++ ----------------
COMPANY ++ ++ OF AMERICA ++ ----------------- + MD 100% + ---------- ++++++++ AEGON USA
- ---------------- ++ ----------------- + MD 100% + ----------------- + INVESTORS ++ +++ SECURITIES, INC.
++ + --------------- + EXECUTIVE MANAGE- + WARRANTY ++ + ----------------
IN 100% ++ ------------------- + UNITED FINACIAL + MENT AND CONSULT- + OF AMERICA, ++ +
- ---------------- +++BANKERS UNITED LIFE + SERVICES, INC. +++ ANT SERVICES, INC.+ + INC. ++ +
AEGON MANAGEMENT ++ ASSURANCE COMPANY +++ --------------- + ----------------- + ---------- ++ + MD
COMPANY + ------------------- + + MD 100% + IA 100% ++ + -----------------
- ---------------- + + AZ (*) + ------------------ + ------------- ++ +++ AEGON USA MANAGED
+ ----------------- + ---------------- + MONUMENTAL GENERAL+ + MASSACHUSETTS ++ PORTFOLIOS INC.
DE 100% + PFL LIFE ++++ BANKERS FINACIAL + MASS MARKETING INC. FIDELTY TRUST +++ -----------------
- ----------------- + INSURANCE COMPANY + LIFE INSURANCE +++ ------------------- COMPANY ++
RRC NORTH AMERICA + ----------------- + COMPANY + ------------ ++
INC. ++ AZ 100% VOTING + ---------------- + DE 100% ++ IA 100%
- ----------------- + CHAIRMAN MD 100% + ------------------ ++ ------------------
---------------------+ -------------- + MONEY SERVICES, INC.++++ AMERICAN FORUM FOR
SOUTHWEST EQUITY LIFE+ THE WHITESTONE + ------------------- ++ FISCAL FITNESS, INC.
INSURANCE COMPANY+++ CORPORATION +++++ CA 100% -------------------
---------------------+ -------------- ------------------- ++ IN 100%
AZ 100% Voting Chairman (2) + IA 100% ZAHORIK COMPANY INC+++ --------------
----------------------- + ------------------ --------------------++ SUPPLEMENTAL
IOWA FIDELITY LIFE +++ CADET HOLDING CORP + ++ INSURANCE
INSURANCE COMPANY + ------------------ AL 100% ++ DIVISION INC.
----------------------- + ---------- +++++++ --------------
OH 100% + ZCI, INC. ++ MI 100%
--------------------- --------- +++++++ ------------------
WESTERN RESERVE LIFE + +++++++++++++++++++++++++++++++++++++ CREDITOR RESOURCES
++++ ASSURANCE CO. OF OHIO+++ DE + IA 100% ++ INC.
+ --------------------- --------------- + ----------------- ++ ------------------
+ --------------- INTERSECURITIES+++++++++++++ TRANSUNION ++ +
++++++++ WRL SERIES FUND ++++++ INC. +++++ + CASUALITY COMPANY ++++++++ CN 100%
INC. + --------------- + + ----------------- ++ -------------------
--------------- + + + ++ CRC CREDITOR
MA + CA 100% + + MN 100% RESOURCES CANADIAN
--------- + ---------------- + + ------------------------ ++ DEALER NETWORK, INC.
IDEX FUND++++++ ISI INSURANCE + + AUSA INSTITUTIONAL ++++++++++ -------------------
--------- + AGENCY INC. AND+++++ + MARKETING PARTNERS, INC. ++
+ ITS SUBSIDIARIES + + ------------------------ ++ IA 100%
MA + ---------------- + + MN 100% ++ --------------------
----------- + MN 100% + + ---------------- ++++ AEGON USA INVEST-
IDEX II +++++++ ------------------- + + COLORADO ANNUITY+++++++++++++++ MENT MANAGEMENT, INC.
SERIES FUND + ASSOCIATED MARINER ++ + AGENCY INC. + ---------------------
----------- + FINANCIAL GROUP, INC.+++ + ---------------- + IA 100%(12)
MA + ------------------- + + + -----------------
----------- + MI 100% + +++++ AEGON USA REALTY
IDEX FUND 3 +++++ ----------------- + + ++++ ADVISORS, INC.
----------- + MARINER FINANCIAL+++++ + + -----------------
+ SERVICES, INC. + + + DE 100%
+ ----------------- + + + -----------
+ + + +++++++ QUANTRA
+ MI 100% + + + CORPORATION
+ ------------------ + + + -----------
+ MARINER'S PLANNING + + + +
+ CORPORATION + + + DE 100%
+ ------------------ + + + ----------------
+ + + + QUANTRA SOFTWARE
+ MI 100%(10) + + + CORPORATION
+ ------------------- + + + ----------------
+ ASSOCIATED MARINER + + + IA 100%
+ AGENCY INC. AND ITS++++ + + ---------------
+ SUBSIDIARIES + + ++++LANDAUER REALTY
+ ------------------- + + + ADVISORS, INC.
+ MI 100% + + + ---------------
+ ---------------- + + + DE 100%
+ MARINER MORTGAGE + + + ----------------
+ CORP. ++++++ + ++++++ LANDAUER
+ ---------------- + + ASSOCIATES, INC.
+ + + ----------------
+ FL 100% + + IA 100%
+ -------------- + + ----------------
+ IDEX INVESTOR +++++++++++++ ++++++ AEGON USA REALTY
+++++SERVICES, INC. + + MANAGEMENT, INC
+ -------------- + + ----------------
+ DE 50%(7) + + IA 100%(11)
+ --------------- + + ------------------
+ IDEX MANAGEMENT,+++++++++++ +++++ REALTY INFORMATION
++++ INC. SYSTEMS, INC.
--------------- ------------------
IA (4)
----------------
USP REAL ESTATE++++
INVESTMENT TRUST +
---------------- +
(5) +
----------------- +
CEDAR INCOME FUND+++
LTD.
-----------------
</TABLE>
See Footnotes Page 2
Effective July 1, 1996
<PAGE>
Page 2
Footnotes
(1) 150,000 shares of Class B Non-Voting Common Stock owned by Ennia
Reinsurance Antilles N.V.
(2) Ordinary common stock is allowed 60% of total cumulative vote.
Participating common stock is allowed 40% of total cumulative vote.
(3) Denotes relationships as advisor, administrator, sponsor, underwriter or
general partner.
(4) First AUSA Life Insurance Company owns 12.89%. PFL Life Insurance Company
owns 13.11%. Bankers United Life Assurance Company owns 4.86%.
(5) PFL Life Insurance Company owns 16.73%. Bankers United Life Assurance
Company owns 3.77%. Life Investors Insurance Company of America owns
3.38%. AEGON USA Realty Advisors, Inc. owns 1.97%. First AUSA Life
Insurance Company owns .18%.
(6) Class B Common stock is allocated 75% of total cumulative vote. Class A
Common stock is allocated 25% of total cumulative vote.
(7) 50% of Idex Management, Inc. is owned by Janus Capital Corporation, a
Colorado corporation.
(8) RCC Group: FGH Realty Credit Corp., FGH USA, Inc., RCC North America,
Inc., FGH USA Realty, Inc., FGH Eastern Region, Inc., FGH Appraisal
Services, Inc., FGH Western Region, Inc., ALH Properties, Inc., First FGP,
Inc., Second FGP, Inc., Third FGP, Inc., Fourth FGP, Inc., Fifth FGP, Inc.,
Sixth FGP, Inc., Seventh FGP, Inc., FGP Midwood, Inc., FGP Parsippany,
Inc., ALH Properties Two, Inc., ALH Properties Three, Inc., ALH Properties
Four, Inc., ALH Properties Five, Inc., ALH Properties Six, Inc., ALH
Properties Seven, Inc., ALH Properties Eight, Inc., ALH Properties Nine,
Inc., ALH Properties Ten, Inc., ALH Properties Eleven, Inc., ALH Properties
Twelve, Inc., ALH Properties Thirteen, Inc., ALH Properties Fourteen, Inc.,
ALH Properties Fifteen, Inc., ALH Properties Sixteen, Inc., ALH Properties
Seventeen, Inc., FGP Keene, Inc., FGP Broadway, Inc., FGP West Street,
Inc., FGP West Street Two, Inc., FGP 90 West Street, Inc., FGP Branford,
Inc., FGP Franklin, Inc., FGP Bala, Inc., FGP Twenty-One, Inc., FGP Twenty-
Two, Inc., FGP Twenty-Five, Inc., FGP Schenectady, Inc., FGP Country
Estates, Inc., FGP Eleventh Street, Inc., FGP 109th Street, Inc., FGP
Seventy-Second Street, Inc., FGP Gaithersburg, Inc., FGP West 32nd Street,
Inc., FGP Beekman, Inc., Dutch Hotel Management, Inc., FGP Landmark, Inc.,
FGP Islandia, Inc., FGP Bridgeport, Inc., FGP Varick, Inc., The RCC Group,
Inc., FGP Union Gardens, Inc., FGP Burkewood, Inc., FGP Stamford, Inc., FGP
Meadow Lane, Inc., FGP Main Street, Inc., FGP Property Services, Inc., FGP
Merrick, Inc., FGP West 14th Street, Inc., FGP 106 Fulton, Inc., FGP Bush
<PAGE>
Terminal, Inc., FGP Northern Boulevard, Inc., FGP Seventh Avenue, Inc., FGP
Parsons, Inc., FGP City Hall, Inc., FGP West 88th Street, Inc., FGP
Lincoln, Inc., FGP Emerson, Inc., FGP Brooke, Inc., FGP 86th Street, Inc.,
FGP Edison, Inc., FGP Rider Avenue, Inc., FGP Remsen, Inc., FGP Rockbeach,
Inc., FGP Carter Drive, Inc., FGP Centereach, Inc., FGP Colonial Plaza,
Inc., FGP Coram, Inc., FGP Herald Center, Inc., Eighty Six Yorkville, Inc.
(9) Subsidiaries of ISI Insurance Agency, Inc. are: ISI Insurance Agency of
Ohio, Inc., ISI Insurance Agency of Massachusetts, Inc., and ISI Insurance
Agency of Texas, Inc.
(10) Subsidiaries of Associated Mariner Agency, Inc. are Associated Mariner
Agency of Hawaii, Inc., Associated Mariner Insurance Agency of
Massachusetts, Inc., Associated Mariner Agency Ohio, Inc., Associated
Mariner Agency Texas, Inc., and Associated Mariner Agency New Mexico, Inc.
(11) Owns 50% interest in DJA Partners (a.k.a. "Teleres"), a Delaware general
partnership. Also owns 10% interest in Datalytics, Inc., an Ohio
corporation.
(12) Owns 49% of Quantra Consulting, Inc., a Delaware corporation.
*Includes qualifying shares for Directors.
notes96
AEGON USA, Inc. - Holding Company
Life Investors Insurance Company of America - Insurance
International Life Investors Insurance Company - Insurance
Transunion Casualty Company - Insurance
Investors Warranty of America, Inc. - Provider of automobile extended
maintenance contracts
Supplemental Insurance Division, Inc. - Insurance
Creditor Resources, Inc. - Credit Insurance
AEGON USA Investment Management, Inc. - Investment Advisor
AEGON USA Realty Advisors, Inc. - Provides real estate administrative and real
estate investment services
AEGON USA Realty Management, Inc. - Real Estate Management
AEGON USA Securities, Inc. - Broker-Dealer
<PAGE>
AEGON USA Managed Portfolios, Inc. - Mutual Fund
USP Real Estate Investment Trust - Real Estate Investment Trust
Cedar Income Fund, Ltd. - Real Estate Investment Trust
First AUSA Life Insurance Company - Insurance
Bankers United Life Assurance Company - Insurance
Universal Benefits Corporation - Third party administrator
Massachusetts Fidelity Trust Company - Trust company
Money Services, Inc. - Provides financial counseling for employees and agents of
affiliated companies
Zahorik Company, Inc. - Broker-Dealer
Cadet Holding Corp. - Holding company
ISI Insurance Agency, Inc. - Broker/Dealer
Southwest Equity Life Insurance Company - Insurance
Iowa Fidelity Life Insurance Company - Insurance
The Whitestone Corporation - Insurance agency
Monumental Life Insurance Company - Insurance
United Financial Services, Inc. - General agency
Monumental General Insurance Group, Inc. - Holding company
Monumental General Administrators, Inc. - Provides management services to
unaffiliated third party administrator
Executive Management and Consultant Services, Inc. - Provides actuarial
consulting services
Monumental General Mass Marketing, Inc. - Marketing arm for sale of mass
marketed insurance coverages
Bankers Financial Life Insurance Company - Insurance
Monumental General Casualty Company - Insurance
AUSA Holding Company - Holding company
JLW Financial Management Systems, Inc. - Management and Administrative Services
<PAGE>
ZCI, Inc. - Insurance agency
AUSA Financial Markets, Inc. - Marketing
CRC Creditor Resources Canadian Dealer Network Inc. - Insurance agency
American Forum For Fiscal Fitness, Inc. - Marketing
Western Reserve Life Assurance Co. of Ohio - Insurance
Landauer Realty Advisors, Inc. - Real estate counseling
Landauer Associates, Inc. - Real estate counseling
WRL Series Fund, Inc. - Mutual fund
Intersecurities, Inc. - Broker-dealer
Idex Investor Services, Inc. - Shareholder services
Idex Management, Inc. - Investment advisor
Idex Total Income Trust - Mutual fund
Idex Fund - Mutual fund
Idex II Series Fund - Mutual fund
Idex Fund 3 - Mutual fund
AUSA Life Insurance Company, Inc. - Insurance
Diversified Investment Advisors, Inc. - Registered Investment Advisor
Diversified Investors Securities Corp. - Broker-Dealer
Associated Mariner Financial Group, Inc. - Holding company management services
Mariner Financial Services, Inc. - Broker/Dealer
Mariner/ISI Planning Corporation - Financial planning
Associated Mariner Agency, Inc. - Insurance agency
Mariner Mortgage Corp. - Mortgage origination
AUSA Institutional Marketing Group, Inc. - Insurance agency
Colorado Annuity Agency, Inc. - Insurance agency
Realty Information Systems, Inc. - Information Systems for real estate
investment management
<PAGE>
Melson and Associates, Inc. - Real estate financial management consulting
Item 27. Number of Contract Owners
As of June 1, 1996, there were 0 Owners of the Policies.
Item 28. Indemnification
The Iowa Code (Sections 490.850 et. seq.) provides for permissive
--------
indemnification in certain situations, mandatory indemnification in other
situations, and prohibits indemnification in certain situations. The Code also
specifies procedures for determining when indemnification payments can be made.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Depositor of expenses incurred
or paid by a director, officer or controlling person in connection with the
securities being registered), the Depositor will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
Item 29. Principal Underwriters
AEGON USA Securities, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
The directors and officers of
AEGON USA Securities, Inc.
are as follows:
<TABLE>
<S> <C>
Patrick E. Falconio
Director
William L. Busler Thomas K. Walsh
Director Vice President
Brenda K. Clancy Donna M. Craft
Director Vice President
Robert A. Thelen Frank A. Camp
Senior Vice President Secretary
Lorri E. Mehaffey
President and Treasurer
Billy J. Berger
Vice President and Assistant Treasurer
</TABLE>
- --------------------
The principal business address of each person listed is AEGON USA Securities,
Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001.
Commissions and Other Compensation Received by Principal Underwriter.
- --------------------------------------------------------------------
AEGON USA Securities, Inc. and/or the broker-dealers received $0 from the
Registrant during the last fiscal year for its services in distributing the
Policies. No other commission or compensation was received by the principal
underwriter, directly or indirectly, from the Registrant during the fiscal year.
AEGON USA Securities, Inc. also serves as the principal underwriter for the PFL
Endeavor Variable Annuity Account, the PFL Endeavor Platinum Variable Annuity
Account, and the AUSA Endeavor Variable Annuity Account. These accounts are
separate accounts of PFL Life Insurance Company or AUSA Life Insurance Company,
Inc., life insurance company affiliates of AEGON USA Securities, Inc.
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
PFL Life Insurance Company at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-0001.
<PAGE>
Item 31. Management Services.
All management Contracts are discussed in Part A or Part B.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as Premiums under the Policy may be
accepted.
(b) Registrant undertakes that it will include either (i) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information or
(ii) a space in the Policy application that an applicant can check to
request 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 to PFL at the address or phone number
listed in the Prospectus.
(d) PFL Life Insurance Company hereby represents that the fees and charges
deducted under the policies, in the aggregate, are reasonable in relation
to the services rendered, the expenses expected to be incurred, and the
risks assumed by PFL Life Insurance Company.
Section 403(b) Representations
- ------------------------------
PFL represents that it is relying on a no-action letter dated November 28, 1988,
to the American Council of Life Insurance (Ref. No. IP-6-88), regarding Sections
22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in connection
with redeemability restrictions on Section 403(b) Policies, and that paragraphs
numbered (1) through (4) of that letter will be complied with.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Cedar Rapids and State of Iowa, on this 5th day of
December, 1996.
PFL RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT
PFL LIFE INSURANCE COMPANY
Depositor
/s/ William L. Busler
---------------------
William L. Busler
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Patrick S. Baird * Director December 5, 1996
- ---------------------------
Patrick S. Baird
/s/ Craig D. Vermie Director December 5, 1996
- ---------------------------
Craig D. Vermie
/s/ William L. Busler Director December 5, 1996
- ---------------------------
William L. Busler (Principal Executive Officer)
/s/ Patrick E. Falconio * Director December 5, 1996
- ---------------------------
Patrick E. Falconio
/s/ Douglas C. Kolsrud * Director December 5, 1996
- ---------------------------
Douglas C. Kolsrud
/s/ Robert J. Kontz * Vice President and December 5, 1996
- --------------------------- Corporate Controller
Robert J. Kontz
/s/ Brenda K. Clancy * Treasurer December 5, 1996
- ---------------------------
Brenda K. Clancy
</TABLE>
* By: Craig D. Vermie, attorney-in-fact
<PAGE>
Registration No.
333 - 7509
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
EXHIBITS
TO
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
---------------
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit Page No.*
- ----------- ---------------------- --------
(3)(a) Principal Distribution Agreement by
and between PFL Life Insurance Company, on
its own behalf and on the behalf of the Mutual
Fund Account, and AEGON USA Securities, Inc.
(3)(b) Form of Broker/Dealer Supervision and Sales
Agreement by and between AEGON USA Securities,
Inc. and the Broker/Dealer
(4) Form of Policy for the Retirement Income Builder
Variable Annuity.
(5) Form of Application for the Retirement Income
Builder Variable Annuity.
(8) Participation Agreement by and between PFL
Life Insurance Company and Fidelity Distributors
Corporation and Addendum thereto.
(9) Opinion and Consent of Counsel
(10)(a) Consent of Independent Auditors
(10)(b) Opinion and Consent of Actuary
(13) Performance Data Calculations
- ------------------------------------------
* Page numbers included only in manually executed original.
<PAGE>
EXHIBIT (3)(a)
--------------
PRINCIPAL DISTRIBUTION AGREEMENT BY AND BETWEEN PFL LIFE
INSURANCE COMPANY ON ITS OWN BEHALF AND ON THE BEHALF OF
THE MUTUAL FUND ACCOUNT,
AND AEGON USA SECURITIES, INC.
<PAGE>
PRINCIPAL DISTRIBUTION AGREEMENT
THIS PRINCIPAL DISTRIBUTION AGREEMENT is made this 20th day of
November, 1996, by and between AEGON USA Securities, Inc. (hereinafter the
"Distributor") and PFL Life Insurance Company (hereinafter the "Insurance
Company"), on its own behalf and on behalf of PFL Retirement Builder Variable
Annuity Account (hereinafter the "Account"), a separate account of the Insurance
Company, as follows:
WHEREAS, the Account was established under authority of a resolution
of the Insurance Company's Board of Directors on March 29, 1996, in order to set
aside and invest assets attributable to certain flexible premium variable
annuity contracts (hereinafter "Policies") issued by the Insurance Company;
WHEREAS, the Insurance Company has registered the PFL Retirement
Builder Variable Annuity Account as a unit investment trust under the Investment
Company Act of 1940 (the "Investment Company Act") and has registered the
Policies under the Securities Act of 1933;
WHEREAS, the Distributor is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Insurance Company and the Account desire to have Policies
sold and distributed through the Distributor and the Distributor is willing to
sell and distribute such Policies under the terms stated herein.
NOW THEREFORE, the parties hereto agree as follows:
1. The Insurance Company grants to the Distributor the right to be,
and the Distributor agrees to serve as, distributor and principal underwriter of
the Policies during the term of this agreement. The Distributor agrees to use
its best efforts to solicit applications for the Policies, and to undertake, at
its own expense, to provide all sales services relative to the Policies and
otherwise to perform all duties and functions which are necessary and proper for
the distribution of the Policies.
<PAGE>
2. All premiums for Policies shall be remitted promptly in full
together with such application, forms and any other required documentation to
the Insurance Company. Checks or money orders in payment of premiums shall be
drawn to the order of "PFL Life Insurance Company".
3. The Distributor agrees to offer the Policies for sale in
accordance with the prospectus therefor then in effect. The Distributor is not
authorized to give any information or to make any representations concerning the
Policies other than those contained in the current prospectus therefore filed
with the Securities and Exchange Commissions or in such sales literature as may
be authorized by the Insurance Company.
4. On behalf of the Account, the Insurance Company shall furnish the
Distributor with copies of all prospectuses, financial statements and other
documents which the Distributor reasonably requests for use in connection with
the distribution of the Policies.
5. The Distributor represents that it is duly registered as a
broker/dealer under the Securities Exchange Act of 1934 ("1934 Act") and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD") and, to the extent necessary to offer the Policies, shall be duly
registered or otherwise qualified under the securities laws of any state or
other jurisdiction. The Distributor shall be responsible for carrying out its
sales and underwriting obligations hereunder in continued compliance with the
NASD Rules of Fair Practice and federal and state securities laws and
regulations. Without limiting the generality of the foregoing, the Distributor
agrees that it shall be fully responsible for:
(a) ensuring that no person shall offer or sell the Policies on its
behalf until such person is duly registered as a representative of the
Distributor, duly licensed and appointed by the Insurance Company, and
appropriately licensed, registered or otherwise qualified to offer and sell
such Policies under the federal securities laws and any applicable
securities laws of each state or other jurisdiction in which such Policies
may be lawfully sold, in which the Insurance Company is licensed to sell
the Policies and in which such persons shall offer or sell the Policies;
and
2
<PAGE>
(b) training, supervising, and controlling of all such persons for
purposes of complying on a continuous basis with the NASD Rules of Fair
Practice and with federal and state securities law requirements applicable
in connection with the offering and sale of the Policies. In this
connection, the Distributor shall:
(1) conduct such training (including the preparation and
utilization of training materials) as in the opinion of the
Distributor is necessary to accomplish the purposes of this Agreement;
(2) establish and implement reasonable written procedures for
supervision of sales practices of agents, representatives or brokers
selling the Policies; and
(3) take reasonable steps to ensure that its associated persons
shall not make recommendations to an applicant to purchase a Policy
and shall not sell a Policy in the absence of reasonable grounds to
believe that the purchase of the Policy is suitable for such
applicant.
6. Notwithstanding anything in the Agreement to the contrary, the
Distributor or the Insurance Company may enter into sales agreements with the
independent broker/dealers for the sale of the Policies. All such sales
agreements entered into by the Insurance Company or the Distributor shall
provide that each independent broker/dealer will assume full responsibility for
continued compliance by itself and its associated persons with the NASD Rules of
Fair Practice and applicable federal and state securities laws. All associated
persons of such independent broker/dealers soliciting applications for the
Policies shall be duly and appropriately licensed or appointed for the sale of
the Policies under the insurance laws of the applicable states or jurisdictions
in which such Policies may be lawfully sold.
7. The Insurance Company shall apply for the proper insurance licenses in
the appropriate states or jurisdictions for the designated persons associated
with the Distributor or with other independent broker/dealers which have entered
into agreements
3
<PAGE>
with the Distributor for the sale of the Polices, provided that the Insurance
Company reserves the right to refuse to appoint any proposed registered
representative as an agent or broker, and to terminate an agent or broker once
appointed.
8. The Insurance Company and the Distributor shall cause to be maintained
and preserved for the periods prescribed such accounts, books, and other
documents as are required of them by the Investment Company Act of 1940, the
1934 Act, and any other applicable laws and regulations. The books, accounts
and records of the Insurance Company, the Account, and the Distributor as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. The Insurance Company
shall maintain such books and records of the Distributor pertaining to the sale
of the Policies and required by the 1934 Act as may be mutually agreed upon from
time to time by the Insurance Company and the Distributor; provided that such
books and records shall be the property of the Distributor, and shall at all
times be subject to such reasonable periodic, special or other examination by
the SEC and all other regulatory bodies having jurisdiction. The Insurance
Company or the Distributor, as may be mutually agreed upon, shall be responsible
for sending all required confirmations on customer transactions in compliance
with applicable regulations, as modified by an exemptions or other relief
obtained by the Insurance Company or Distributor. The Distributor shall cause
the Insurance Company to be furnished with such reports as the Insurance Company
may reasonably request for the purpose of meetings its reporting and
recordkeeping requirements under the insurance laws of the Insurance Company's
domicile state and any other applicable states or jurisdictions.
9. The Distributor shall have the responsibility for paying (i) all
commission or other fees to its associate persons which are due for the sale of
the Policies and (ii) any compensation to other independent broker/dealer and
their associated persons due under the terms of any sales agreements between the
Distributor and such broker/dealers. Notwithstanding the preceding sentence, no
associated person or broker/dealer shall have an interest in any deductions or
other fees payable to the Distributor as set forth herein. The Distributor
shall have the responsibility for calculating and furnishing periodic reports
4
<PAGE>
to the Insurance Company as to the sale of the Policies, and as to the
commissions and service fees payable to persons selling the Policies.
10. The Distributor shall be compensated for its distribution services as
set forth in a schedule to be determined by Insurance Company and Distributor.
Any commission paid to the Distributor in connection with a Policy must be
returned to the Insurance Company if the Policy is tendered for redemption
within the "free-look" period as defined in the Account's prospectus.
11. The services of the Distributor to the Account hereunder are not to be
deemed exclusive and the Distributor shall be free to render similar services to
other so long as its services hereunder are not impaired or interfered with
thereby.
12. (a) This Agreement may be terminated by either party hereto upon 60
days' written notice to the other party.
(b) This Agreement may be terminated upon written notice of one party
to the other party hereto in the event of bankruptcy or insolvency of such party
to which notice is given.
(c) This Agreement may be terminated at any time upon the mutual
written consent of the parties thereto.
(d) This Agreement shall automatically be terminated in the event of
its assignment.
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts hereunder,
including payments or premiums or contributions subsequently received for
Policies in effect at the time of termination or issued pursuant to applications
received by the Insurance Company prior to terminations.
13. This Agreement shall be subject to the provisions of the Investment
Company Act and the Securities Exchange Act and the rules, regulations, and
rulings thereunder and of the NASD, from time to time in effect, including such
exemptions from the Investment Company Act as the Securities and Exchange
Commission may grant, and the terms hereof shall be interpreted and construed in
accordance therewith. Without
5
<PAGE>
limiting the generality of the foregoing, the term "assigned" shall not include
any transaction exempted from Section 15(b)(2) of the Investment Company Act.
The Distributor shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of the Account, present or further, any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws or regulations.
14. If any provision of this Agreement shall be held or made invalid by a
court decision, statue, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
15. This Agreement shall be construed and enforced in accordance with that
governed by the laws of the State of Iowa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunder duly authorized and seals to be
affixed, as of the day and year first above written.
PFL LIFE INSURANCE
COMPANY
Attest:
/s/ William A. Waldie By: /s/ William L. Busler
- ---------------------- ---------------------------
AEGON USA SECURITIES, INC.
Attest:
/s/ Robert Thelen By: /s/ Lorri E. Mehaffey
- ------------------ ---------------------------
6
<PAGE>
EXHIBIT (3)(b)
--------------
FORM OF BROKER/DEALER SUPERVISION AND SALES AGREEMENT BY
AND BETWEEN AEGON USA SECURITIES, INC. AND THE
BROKER/DEALER
<PAGE>
SELECTED BROKER AGREEMENT
AGREEMENT dated__________________________,19____, by and between AEGON USA
Securities, Inc. (Distributor), an Iowa corporation and________________________
___________________________________ (Broker), a ___________________________
corporation. This Agreement supersedes and replaces any prior Selected Broker
Agreement regarding the subject matter between the parties hereto.
WITNESSETH:
In consideration of the mutual promises contained herein, the parties hereto
agree as follows:
A. Definitions
-----------
(1) Contracts--Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by PFL
Life Insurance Company ("Company") and for which Distributor has been
appointed the principal underwriter pursuant to Distribution
Agreements, copies of which have been furnished to Broker.
(2) Accounts--Separate accounts established and maintained by Company
pursuant to the laws of Iowa, as applicable, to fund the benefits under
the Contracts.
(3) The Funds--, open-end management investment companies registered under
the 1940 Act, shares of which are sold to the Accounts in connection
with the sale of the Contracts, as described in the Prospectus for
the Contracts.
(4) Registration Statement--The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Funds,
including financial statements and all exhibits.
(5) Prospectus--The prospectuses included within the Registration
Statements.
(6) 1933 Act--The Securities Act of 1933, as amended.
(7) 1934 Act--The Securities Exchange Act of 1934, as amended.
(8) 1940 Act--The Investment Company Act of 1940, as amended.
(9) SEC--The Securities and Exchange Commission.
(10) NASD--The National Association of Securities Dealers, Inc.
B. Agreements of Distributor
-------------------------
(1) Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there is
an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application
will be solicited. In connection with the solicitation of applications
for Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions furnished
by Distributor or Company.
(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the
Contracts in any state or jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
C. Agreements of Broker
--------------------
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the NASD and that the agents or
representatives of Broker who will be soliciting applications for the
Contracts also will be duly registered representative of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use commercially reasonable efforts to find purchasers
for the Contracts acceptable to Company. In meeting its obligation to
use its commercially reasonable efforts to solicit applications for
Contracts, Broker shall, during the term of this Agreement, engage in
the following activities:
(a) Regularly utilize only training, sales and promotional materials
relating to the Contracts which have been approved by Company.
(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may be
requested on the results of such inspections and the compliance with
such procedures.
(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to an
applicant to purchase a Contract in the absence of reasonable grounds
to believe that
<PAGE>
the purchase of the Contract is suitable for such applicant. While not
limited to the following, a determination of suitability shall be based
on information furnished to a representative after reasonable inquiry
of such applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and, if applicable, the
likelihood that the applicant will make the premium payments
contemplated by the Contract.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the Company designated by
Distributor. Checks or money orders in payment of initial premiums
shall be drawn to the order of "PFL Life Insurance Company." Broker
acknowledges that the Company retains the ultimate right to control the
sale of the Contracts and that the Distributor or Company shall have
the unconditional right to reject, in whole or part, any application
for the Contract. In the event Company or Distributor rejects an
application, Company immediately will return all payments directly to
the purchaser and Broker will be notified of such action. In the event
that any purchaser of an Contract elects to return such Contract
pursuant to the free look right, the purchaser will receive a refund of
the greater of premium payments or the value of the invested portion of
such premiums. The Broker will be notified of any such action.
(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or
any employees thereof as employees of Company or Distributor in
connection with solicitation of applications for Contracts. Broker, its
agents or representatives, and its employees shall not hold themselves
out to be employees of Company or Distributor in this connection or in
any dealings with the public.
(5) Broker agrees that any material, including material it develops,
approves or uses for sales, training, explanatory or other purposes in
connection with the solicitation of applications for Contracts
hereunder (other than generic advertising materials which do not make
specific reference to the Company or the Contracts) will only be used
after receiving the written consent of Distributor to such material
and, where appropriate, the endorsement of Company to be obtained by
Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only in
accordance with applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the contracts
until duly licensed and appointed by Company (such appointment not to
be unreasonably withheld by the Company) as a life insurance and
variable contract broker or agent of Company in the appropriate states
or other jurisdictions. Broker shall ensure that such agents or
representatives fulfill any training requirements necessary to be
licensed and that such agents or representatives are properly
supervised and controlled pursuant to the rules and regulations of the
SEC and the NASD. Broker shall certify agents' and representatives'
qualifications to the satisfaction of Distributor, including certifying
a General Letter of Recommendation set forth in Exhibit A hereto.
Broker understands and acknowledges that neither it nor its agents or
representatives is authorized by Distributor or Company to give any
information or make any representation in connection with this
Agreement or the offering of the Contracts other than those contained
in the Prospectus or other solicitation material authorized in writing
by Distributor or Company.
(7) Broker shall not have authority on behalf of Distributor or Company to:
make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.
(8) Broker shall have the responsibility for maintaining the records of its
representatives licensed, registered and otherwise qualified to sell
the Contracts. Broker shall maintain such other records as are required
of it by applicable laws and regulations. The books, accounts and
records of the Company, the Account, Distributor and Broker relating to
the sale of the Contracts shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions. All
records maintained by the Broker in connection with this Agreement
shall be the property of the Company and shall be returned to the
Company upon termination of this Agreement, free from any claims or
retention of rights by the Broker. Nothing in this Section C(8) shall
be interpreted to prevent the Broker from retaining copies of any such
records which the Broker, in its discretion, deems necessary or
desirable to keep. The Broker shall keep confidential any information
obtained pursuant to this Agreement and shall disclose such information
only if the Company has authorized such disclosure or if such
disclosure is expressly required by applicable federal or state
regulatory authorities.
D. Compensation
------------
(1) Pursuant to the Distribution Agreement between Distributor and Company,
Distributor shall cause Company to arrange for the payment of
commissions to Broker as compensation for the sale of each contract
sold by an agent or representative of Broker. Such amounts shall be
paid to Broker or its subsidiary insurance agency, whichever is
authorized to receive insurance commissions under applicable insurance
laws, in accordance with the schedules attached hereto, the General
Agent Agreement, and the commission schedules attached thereto.
<PAGE>
All terms and conditions of the General Agent Agreement not otherwise
conflicting with the terms herein, shall be incorporated by reference
herein. Company shall identify to Broker with each such payment the
name of the agent or representative of Broker who solicited each
Contract covered by the payment.
(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive
for purposes of payment of commission or otherwise. Neither Broker nor
any of its agents or representatives shall have an interest in any
compensation paid by Company to Distributor, now or hereafter, in
connection with the sale of any Contracts hereunder .
E. Complaints and Investigations
-----------------------------
(1) Broker and Distributor jointly agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts marketed
under this Agreement. Broker, upon receipt, will notify Distributor of
any customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding in connection with the Contracts.
Broker and Distributor further agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial
proceeding with respect to Broker, Distributor, their affiliates and
their agents or representatives to the extent that such investigation
or proceeding is in connection with Contracts marketed under this
Agreement. Broker shall furnish applicable federal and state regulatory
authorities with any information or reports in connection with its
services under this Agreement which such authorities may request in
order to ascertain whether the Company's operations are being conducted
in a manner consistent with any applicable law or regulation. Each
party shall bear its own costs and expenses of complying with any
regulatory requests, subject to any right of indemnification that may
be available pursuant to Section G of this Agreement.
F. Term of Agreement
-----------------
(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section
E hereof; (b) the indemnity set forth in Section G hereof; and (c) the
obligations to settle accounts hereunder, including commission payments
on premiums subsequently received for Contracts in effect at the time
of termination or issued pursuant to applications received by Broker
prior to termination.
(3) Distributor and Company reserve the right, without notice to Broker, to
suspend, withdraw or modify the offering of the Contracts or to change
the conditions of their offering.
G. Indemnity
---------
(1) Broker shall be held to the exercise of reasonable care in carrying out
the provisions of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liability, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact, required to be stated therein or
necessary to make the statements therein not misleading, contained in
any Registration Statement or any post-effective amendment thereto or
in the Prospectus or any amendment or supplement to the Prospectus, or
any sales literature provided by the Company or by the Distributor.
(3) Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each
person, if any, who controls or has controlled Company or Distributor
within the meaning of the 1933 Act or the 1934 Act, against any losses,
claims, damages or liabilities to which Company or Distributor and any
such director or officer or controlling person may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon:
(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers, its agents, employees or representatives; or
(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other compensation
or remuneration of any type;
(c) The failure of Broker, its officers, employees, or agents to comply
with the provisions of this Agreement; and Broker will reimburse
Company and Distributor and any director or officer or controlling
person of either for any legal or other expenses reasonably incurred by
Company, Distributor, or such director, officer of controlling person
in connection with investigating or defending any such loss, claims,
damage, liability or action. This indemnity agreement will be in
addition to any liability which Broker may otherwise have.
H. Assignability
-------------
This Agreement shall not be assigned by either party without the
written consent of the other.
<PAGE>
I. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa.
J. Notices
-------
All communications under the Agreement shall be in writing and shall be
deemed delivered when mailed by certified mail, postage prepaid.
Alternatively, communications shall be deemed delivered by timely
transmission of the writing, delivery charges prepaid, to a third party
company or governmental entity providing delivery services in the
ordinary course of business, which guarantees delivery to the other
party on the next business day. Notices shall be sent to the following
addresses unless and until the addressee notifies the other party of a
change in address according to the terms of this Section:
(1) if to Broker, to: (2) if to the Distributor, to:
____________________________ AEGON USA Securities, Inc.
________________ 4333 Edgewood Road NE
________________(street address) Cedar Rapids, Iowa 52499-0001
________________(telephone no.) (319) 369-2345 (telephone no.)
________________(fax no.) (319) 369-2591 (fax no.)
Attention:____________ Attention: Lorri E Mehaffey,
_________________ President
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
--------------------------------
(Broker Name)
By:
-----------------------------
Title:
--------------------------
AEGON USA SECURITIES, INC.
(Distributor)
By:
-----------------------------
President
<PAGE>
EXHIBIT A
General Letter of Recommendation
BROKER-DEALER hereby certifies to the Company that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of the Company
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to the Company in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare
that each applicant is personally known to us, has been examined by us, is
known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as an agent for
the Company to hold himself out in good faith to the general public.
2. We have on file a U-4 form which was completed (and has been amended, as
required) by each applicant. We have fulfilled all the necessary
investigative requirements for the registration of each applicant as a
registered representative through our NASD member firm, including but not
limited to: (i) checking for and investigating criminal arrest and
conviction records available to Broker-Dealer on the CRD system; and (ii)
communicating with each employer of the applicant for 3 years prior to the
applicant's registration with our firm. Each applicant is presently
registered as an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information is favorable.
At the time of application, in those states required by the Company, we
shall provide the Company with a copy of the entire U-4 form, or designated
pages, thereof, completed by each applicant, including any amendments or
updates thereto, and we certify those items are true copies of the
original.
3. We certify that all educational requirements have been met for the
specified state each applicant is requesting a license in, and that all
such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a license,
we certify that those items forwarded to the Company are those of the
applicant and the securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with the
Company in order to place insurance chiefly and solely on his life or
property, or lives or property of his relatives, or property or liability
of his associates.
6. We will not permit any applicant to transact insurance in a state as an
agent until duly licensed and appointed therefor with the appropriate State
Insurance Department. No applicants have been given a contract or furnished
supplies, nor have any applicants been permitted to write, solicit
business, or act as an agent in any capacity, and they will not be so
permitted until the certificate of authority or license applied for is
received.
<PAGE>
GENERAL AGENT SCHEDULE A
APPLICABLE ANNUITY PRODUCTS
This Schedule shall be deemed an integral part of the above referenced Agreement
and shall supersede and control any portions of that Agreement which conflict
with the provision hereof, and all other provisions of the Agreement remain in
full force and effect.
PFL Life Insurance Company ("Company") and AEGON USA Securities, Inc.
("Distributor") authorize Broker to offer and solicit for sale the following
securities product through Persons who are registered with the NASD and in
accordance with the appropriate state insurance licensing requirements. Such
person, where required, have authorized Broker to receive such commissions.
RETIREMENT INCOME BUILDER variable annuity
Form Number: AV288-101-95-796 (May vary by state.)
COMMISSION
Option 1: {Six percent (6.0%)} on all cash flexible premium purchase payments.
Option 2: {Five percent commission (5.0%)} on all cash flexible premium purchase
payments. A trail commission will be paid on the amount of annuity policy value
for policies which are more than one year old. One fourth of the annual trail
commission shown in the following schedule will be paid on the policy value in
force at the end of each calendar quarter. The first payment will be made
following the close of the calendar quarter one year after this schedule is
effective and will be paid within 30 days after the close of the quarter. The
Company will not be obligated to pay such trail commissions if they are
prohibited or exceed limits imposed by law or regulation.
Trail Policy year
-----------
5 basis points 2
10 basis points 3
15 basis points 4
20 basis points 5
50 basis points 6 and after
At the time the policy is purchased, should the annuitant and/or policyowner be
age 81 through 84 (not yet 85), the commission will be one half of the above
stated amount. No commissions will be paid on premium received by the Company
after termination of this Agreement.
CHARGEBACKS
The chargeback will equal any surrender charges waived by the Company in order
to meet the guaranteed return of premium provision for the Fixed Account, but
not more than the commission paid on the policy. No chargebacks apply to death
proceeds, SPO payments, or other types of penalty free withdrawals. In the first
policy year there will be a 100% chargeback of commission when the withdrawal is
taken under the Nursing Care/Terminal Conditions Provision, the Unemployment
Waiver provision or when the policy is annuitized. However if annuitized in the
first year, the Company will pay the appropriate immediate annuity commission on
the funds that were annuitized. General Agent's obligation to pay Company
chargebacks shall survive the termination or expiration of the General Agent's
Agreement, for any reason. Chargeback percentages will not be applied to
withdrawals once the entire premium received has been withdrawn.
Commissions will not be paid on funds transferred between RETIREMENT INCOME
BUILDER fund accounts or when premium comes from other annuity and insurance
policies of the Company or from other subsidiary companies of AEGON USA.
- ---------------------------------------
General Agent (please print)
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
PFL LIFE INSURANCE COMPANY
4333 Edgewood Rd. NE, Cedar Rapids, IA 52499
Financial Markets Division
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
AEGON USA Securities, Inc.
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
<PAGE>
EXHIBIT (4)
-----------
FORM OF POLICY FOR THE RETIREMENT INCOME BUILDER
VARIABLE ANNUITY.
<PAGE>
[LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE]
================================================================================
ANNUITANT: JOHN DOE
OWNER(S): PRUDENTIAL SECURITIES CUST FBO
JOHN DOE
POLICY NUMBER: CO - 000006
POLICY DATE: January 10, 1995
WE AGREE
*To provide annuity payments as set forth in this policy,
*Or to pay withdrawal benefits in accordance with Section 5 of this policy,-
*Or to pay death proceeds in accordance with Section 9 of this policy.
Withdrawals may be subject to an Excess Interest Adjustment reflecting changes
in interest rates in accordance with Section 5 of this policy.
These agreements are subject to the provisions of this policy. This policy is
issued in consideration of any application and payment of the initial premium.
This policy may be applied for and issued to qualify as a tax-qualified annuity
under the applicable sections of Internal Revenue Code.
10 DAY RIGHT TO CANCEL
You may cancel this policy by returning it to us or to your agent. You must
return the policy before midnight of the tenth day after the day you receive it.
Notice given by mail and return of the policy by mail are effective on being
postmarked, properly addressed and postage prepaid.
We will pay you an amount equal to the greater of:
*the premium payments made; and
*the Policy Value
If this policy is a replacement of another annuity policy, the Right To Cancel
period is extended to 20 days.
The initial premium payment which you designate to the Separate Account will be
allocated entirely to the Money Market Portfolio of the Separate Account only
for a period of time equal to the greater of the policy's Right To Cancel
period, or 14 days following the Policy Date.
Signed for us at our home office.
SECRETARY PRESIDENT
This policy is a legal contract between the policyowner and the company.
READ YOUR POLICY CAREFULLY
Flexible Premium Variable Annuity
Income Payable At Annuity Commencement Date
Benefits Based On The Performance Of The Separate Account
Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 1OC)
Non-Participating
AV288 101 95 796
<PAGE>
DEFINITIONS
ANNUITANT
The person to whom annuity payments will be made.
ANNUITY COMMENCEMENT DATE
Date the annuitant will begin receiving payments from this policy, which may not
be later than the last day of the policy month starting after the Annuitant
attains age 85, except as expressly allowed by us, but in no event later than
the last day of the month following the month in which the Annuitant attains age
95.
ADJUSTED POLICY VALUE
Amount defined in Section 4, that can be used to fund one of the Payment
Options.
CASH VALUE
Amount defined in Section 5, that can be withdrawn if the annuity is
surrendered.
CUMULATIVE FREE PERCENTAGE (CFP)
The percentage (as applied to the Policy Value) which is available to you free
of any Surrender Charge. The CFP is 10% as of the Policy Date and accumulates
at 10% on each successive Policy Anniversary. The unused portion of the CFP in
any Policy Year will be carried forward at each successive Policy Anniversary.
Any portion of the CFP previously taken will reduce the CFP currently available.
DISTRIBUTION
A withdrawal or disbursement of funds from the Policy Value or Cash Value.
PAYMENT OPTIONS
Options through which the distribution of the Adjusted Policy Value can be
directed.
POLICY ANNIVERSARY
The anniversary of the Policy Date for each year the policy remains in force.
POLICY DATE
The date shown on page 3 of this policy and the date on which this policy
becomes effective.
POLICY YEAR
The 12 month periods following the Policy Date shown on the Policy Data page.
The first Policy Year starts on the Policy Date. Each subsequent year starts on
the anniversary of the Policy Date.
SEPARATE ACCOUNT
The separate investment account established by us, as described in Section 6.
SUB-ACCOUNT
A division of the Separate Account as described in Section 6.
SURRENDER
A partial or full withdrawal of funds from the Policy Value or Cash Value.
WITHDRAWAL
A distribution of funds from the Policy Value or Cash Value.
YIELD
The effective annual interest rate applicable to the Fixed Account.
YOU, YOUR
The owner of this policy. Unless otherwise specified on the Policy Data page,
the annuitant and the owner shall be one and the same person.
AVB288
PAGE 2
<PAGE>
SECTION 2 - POLICY DATA
POLICY NUMBER: 07- 000052 ANNUITANT: JOHN DOE
INITIAL ISSUE AGE/SEX: 35 / MALE
PREMIUM:
POLICY DATE: January 10, 1995 OWNER(S): PRUDENTIAL SECURITIES
CUST FBO
JOHN DOE
ANNUITY
COMMENCEMENT DEATH BENEFIT
DATE: March 9, 2018 OPTION: A
Death Benefit Option A -
Mortality and Expense Risk Fee and Administrative Charge: 1.25%
Death Benefit Option B or C-
Mortality and Expense Risk Fee and Administrative Charge: 1.40%
AV288 101 95 796 SP
PAGE 3
<PAGE>
SECTION 3 - PREMIUM PAYMENTS
PAYMENT OF PREMIUMS
Premium payments may be made any time while this policy is in force before the
Annuity Commencement Date. You may start or stop, increase or decrease, or skip
any premium payment.
MAXIMUM AND MINIMUM PREMIUM PAYMENT The premium payment may not be more than the
amount permitted by law if this is a tax-qualified annuity. The minimum initial
premium payment is $2,000, except that no minimum initial premium payment will
be required for 403(b) annuities. The minimum subsequent premium payment we will
accept is $50. The maximum total premium payments which we will accept without
prior Company approval is $1,000,000.
PREMIUM PAYMENT DATE
The premium payment date is the date on which the premium payment is credited to
the policy. The initial premium payment less any premium taxes will be credited
to the policy within two business days of receipt of the premium payment and the
information needed. Subsequent additional premium payments will be credited to
the policy as of the business day when the premium payment and required
information are received. A business day is any day on which the New York Stock
Exchange is open for trading.
ALLOCATION OF PREMIUM PAYMENTS
Premium payments may be applied to various Guaranteed Period Options of the
Fixed Account and/or to one or more of the Subaccounts which we make available.
You must indicate what percent of each premium payment to allocate to various
Guaranteed Period Options of the Fixed Account and/or among one or more of the
Subaccounts (making a total of 100%). Each percent may be either zero or any
whole number.
We will use the allocation percentages you choose for all premium payments until
you change the allocation percentages. However, the initial premium payment
which you designate to the Separate Account will be allocated entirely to the
Money Market Portfolio of the Separate Account only for a period of time equal
to the greater of the policy's Right To Cancel period, or 14 days following the
Policy Date. At the end of this period of time, the Policy Value in the Money
Market Portfolio will then be allocated to the Subaccount(s) of the Separate
Account in accordance with the allocation percentages specified by the Owner.
CHANGE OF ALLOCATION
You may change the allocation of premium payments to various Guaranteed Period
Options of the Fixed Account and/or among the Subaccounts. You must tell us in a
notice you sign which gives us the facts that we need. Premium payments
received after the date on which we receive your notice will be applied on the
basis of the new allocation.
SECTION 4 - POLICY VALUE
POLICY VALUE
On or before the Annuity Commencement Date, the Policy Value is equal to your:
(a) premium payments; minus
(b) partial withdrawals; plus
(c) interest credited in the Fixed Account; plus
(d) accumulated gains or losses in the Separate Account; minus
(e) service charges, premium taxes and transfer fees, if any.
ADJUSTED POLICY VALUE
The Adjusted Policy Value is the Policy Value increased or decreased by any
Excess interest Adjustment
You may only use the Adjusted Policy Value on the Annuity Commencement Date to
provide lifetime income or income for a period of five or more years under the
Payment Options in Section 10.
SERVICE CHARGE
On each Policy Anniversary and at the time of surrender during any Policy Year
before the Annuity Commencement Date, we reserve the right to charge up to $30
for policy administration expenses. It will be deducted from each Subaccount
and/or Guaranteed Period Option (GPO) in proportion to the portion of policy
Value (prior to such charge) in each Subaccount and/or GPO on that Policy
Anniversary. In no event will the Service Charge exceed 2% of the Policy Value
on that Policy Anniversary or at the time of surrender.
The Service Charge will not be deducted on a Policy Anniversary (or at the time
of surrender) if either (1) or (2) equals or exceeds $50,000 on that Policy
Anniversary (or at the time of surrender), where (1) equals the sum of all
premium Payments made less sum of all withdrawals taken and (2) equals the
Policy Value.
M712
PAGE 4
<PAGE>
SECTION 5 - CASH VALUE AND PARTIAL WITHDRAWALS
CASH VALUE
The Cash Value may be partially withdrawn or will be paid in the event of a full
surrender of the policy. We must receive your written withdrawal or surrender
request before the Annuity Commencement Date.
On or before the Annuity Commencement Date, the Cash Value is equal to the
Adjusted Policy Value less any surrender charges. There is no Cash Value after
the Annuity Commencement Date. The current amount of your policy's Cash Value
is available upon request
EXCESS INTEREST ADJUSTMENT
Full Surrenders and Partial Withdrawals and amounts applied to a Payment Option
(prior to the end of any Guaranteed Period) from the Fixed Account Guaranteed
Period Options described in Section 7, and amounts applied to a Payment Option
will be subject to an Excess Interest Adjustment except as provided for in the
Partial Withdrawals provision below.
Excess Interest Adjustment = S x (G-C) x (M/12)
where: S is the gross (i.e. before surrender charges and premium taxes, if
any) amount being surrendered or withdrawn or applied to a Payment
Option that is subject to the Excess Interest Adjustment
G is the guaranteed interest rate applicable to S.
C is the current guaranteed interest rate then being offered on new
premium payments for the next longer Guaranteed Period than "M". If this
policy form or such a Guaranteed Period is no longer offered, "C" will
be the US Treasury rate for the next longer maturity (in whole
years) than "M" on the 25th day of the previous calendar month, plus up
to 2%.
M is the number of months remaining in the Guaranteed Period for S,
rounded up to the next higher whole number of months.
Upon partial or full surrender, the Excess Interest Adjustment (EIA) for each
Guaranteed Period Option will not reduce the Adjusted Policy Value for that
Period Option below the amount paid into, less any Prior withdrawals and
transfers from that Guaranteed Period Option, plus interest at the 3% guaranteed
effective annual interest rate. Upon full surrender the cumulative interest
credited at the time of surrender will not be subject to an EIA.
PARTIAL WITHDRAWALS
We will pay you a portion of or all of the Cash Value as a lump sum Partial
Withdrawal provided we receive your written request while the policy is in
effect and before the Annuity Commencement Date. When you request a Partial
Withdrawal you must tell us how it is to be allocated among the various
Guaranteed Period Options of the Fixed Account and/or the Subaccounts. If your
request for a Partial Withdrawal from any Guaranteed Period Option of the Fixed
Account and/or a Subaccount is greater than the Cash Value in that account we
will pay you the Cash Value of that account.
Partial Withdrawals may be made with no Excess Interest Adjustment and free of
Surrender Charges in four different ways:
1. LUMP SUM
At any time, you may withdraw free of Surrender Charges an amount ($500
minimum) up to the Cumulative Free Percentage (CFP) times the Policy Value
at the time of, but prior to, the withdrawal. On the Policy Date the CFP is
10%. Thereafter, 10% will be added to the CFP on each Policy Anniversary.
Any Partial Withdrawals will reduce the CFP by the ratio of the amount
withdrawn to the Policy Value at the time of, but prior to, the Partial
withdrawal. The CFP will not be in excess of 100% nor less than zero.
2. SYSTEMATIC PAYOUT OPTION
During any Policy Year, including the first, a Systematic Payout Option
(SPO) is available on a monthly, quarterly, semi-annual or annual basis. SPO
payouts must be at least $50 and may not exceed 10% of the Policy Value at
the time a SPO payout is made divided by the number of payouts made per year
(eg. 12 for monthly). No Surrender Charges will apply to the SPO payout SPO
payouts from the Guaranteed Period Options of the Fixed Account which are in
excess of the interest credited to the applicable Guaranteed Period Options
at the time of SPO payout will be subject to an EIA. Monthly and quarterly
payouts must be sent through electronic funds transfer directly to your
checking or savings account. You may start or stop SPO payouts at any time;
however, 30 days written notice is required to stop SPO Payouts.
Once you have elected a SPO, you must wait a minimum time before the first
SPO payment: one month for a monthly SPO, three months for quarterly, six
months for semi-annual, or twelve months for annual.
U712
PAGE 5
<PAGE>
SECTION 5 - CONT
3. MINIMUM REQUIRED DISTRIBUTION
For tax-qualified plans, Partial Withdrawals taken to satisfy minimum
distribution requirements under Section 401 (a)(9) of the Internal Revenue
Code (IRC) are available with no Surrender Charges and no EIA. The amount
available from this policy with respect to the minimum distribution
requirement is based solely on this policy.
The owner must be at least 70 1/2 years old in the calendar year of
distribution, must submit a written request to us and must take the
contribution before year end. If the Owner attains age 70 1/2 in the
calendar year of distribution, a written request which is postmarked no
later than the end of the current calendar year must be submitted to us.
Any amount requested in excess of the IRC minimum required distribution will
have the appropriate Surrender Charges and EIA applied, unless the excess
distribution qualifies as Surrender Charge free or EIA free under 1. or 2.
above, or 4. below.
4. UNEMPLOYMENT WAIVER
Beginning in the first Policy Year, you may withdraw all or a portion of the
Policy Value free of Surrender Charges and free of any EIA if the owner or
owner's spouse (annuitant or annuitant's spouse, if the owner is not a
natural person) becomes unemployed. In order to qualify, you 1) must have
been employed full time for at least two years prior to your becoming
unemployed, 2) must have been employed full time on your Policy Date, 3)
must have been unemployed for at least 60 consecutive days at the time of
withdrawal, and 4) must have a minimum Cash Value at the time of withdrawal
of $5000. Proof of unemployment will consist of providing us with a
determination letter from the applicable State Department of Labor which
verifies that you qualify for and are receiving unemployment benefits at the
time of withdrawal. The determination letter must be received by us no later
than 15 days following the date of the withdrawal request.
Partial Withdrawals in the amount of the cumulative interest credited in the
GPO(S) of the Fixed Account at the time of withdrawal may be withdrawn from the
Guaranteed Period Option(s) of the Fixed Account free of any Excess Interest
Adjustment Surrender Charges may be waived as described under 1-4 above.
Surrender Charge free withdrawals will reduce the Policy Value by the amounts
withdrawn.
Excess Partial Withdrawals are withdrawal amounts in excess of the Surrender
Charge free portion. Excess Partial Withdrawals will reduce the Policy Value by
an amount equal to (X-Y+Z) where:
X = Excess Partial Withdrawal
A = Amount of Partial Withdrawal subject to Excess Interest Adjustment
Y = Excess Interest Adjustment = (A) x (G-C) x (M/12) where G, C and M are
defined in the Excess Interest Adjustment provision above, with "A"
substituted for "S" in the definitions of G and M.
Z = Surrender Charge on X minus Y.
If any Partial Withdrawal reduces the Cash Value below $500, we reserve the
right to pay the full Cash Value and terminate this policy. We may delay
payment of the Cash Value from the Fixed Account for up to 6 months after we
receive your request.
Premium payments withdrawn five or more years after their payment date are not
subject to Surrender Charges. In any event, Partial Withdrawals made after the
tenth Policy Year are not subject to a Surrender Charge.
SURRENDER CHARGES
Amounts withdrawn in excess of the Surrender Charge free withdrawal provisions
above are subject to a Surrender Charge. The amount of this charge, if any,
will be a percentage, as shown in the table below, of the amount of premium
withdrawn:
Number of Years
Since Premium Percentage of
Payment Date Premium Withdrawn
0-1 6%
1-2 6%
2-3 6%
3-4 4%
4-5 2%
5 or more 0%
In any event Surrender Charges will be waived after the tenth Policy Year.
For Surrender Charge purposes, the oldest premium is considered to be withdrawn
first. If the amount withdrawn exceeds this, the next oldest premium is
considered to be withdrawn, and so on until the most recent premium Payment is
considered to be withdrawn. Premium Payments are deemed to be withdrawn before
earnings.
After all premium payments are considered to be withdrawn, the remaining
Adjusted policy Value may be withdrawn free of any Surrender Charge.
GUARANTEED RETURN OF FIXED ACCOUNT PREMIUM PAYMENTS
Upon full surrender of the policy, you will always receive at least the premium
payments made to, less prior withdrawals and transfers from, the Fixed Account.
P885
PAGE 6
<PAGE>
SECTION 6 - SEPARATE ACCOUNT
SEPARATE ACCOUNT
We have established and will maintain a Separate Account under the laws of the
state of Iowa. Any realized or unrealized income, net gains and losses from the
assets of the Separate Account are credited to or charged against it without
regard to our other income, gains or losses. Assets are put in the Separate
Account for this policy, as well as for other variable life insurance and
annuity policies. The Separate Account may invest assets in shares of one or
more funds. Fund shares are purchased, redeemed and valued on behalf of the
Separate Account.
The Separate Account is divided into Subaccounts. Each Subaccount invests
exclusively in shares of one of the portfolios of an underlying fund. We
reserve the right to add or remove any Subaccount of the Separate Account.
The assets of the Separate Account are our property. These assets will equal or
exceed the reserves and other contract liabilities of the Separate Account.
These assets will not be chargeable with liabilities arising out of any other
business we conduct. We reserve the right to transfer assets of a Subaccount in
excess of the reserves and other contract liabilities with respect to that
Subaccount, to another Subaccount or to our General Account.
We will determine the fair market value of the assets of the Separate Account in
accordance with a method of valuation which we establish in good faith.
Valuation Period means the period of time from one determination of the value of
each Subaccount to the next. Such determinations are made when the value of the
assets and liabilities of each Subaccount is calculated. This is generally each
day on which the New York Stock Exchange is open.
We also reserve the right to transfer assets of the Separate Account which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If this type of transfer is made, the
term "Separate Account", as used in this policy, shall then mean the separate
account to which the assets were transferred.
We also reserve the right when permitted by law, to:
(a) deregister the Separate Account under the Investment Company Act of 1940;
(b) manage the Separate Account under the direction of a Committee at any time;
(c) restrict or eliminate any voting rights of policyowners or other persons
who have voting rights as to the Separate Account; and
(d) combine the Separate Account with one or more other separate accounts;
(e) create new Separate Accounts;
(f) add new Subaccounts to or remove existing Subaccounts from the Separate
Account, or combine Subaccounts;
(g) add new underlying mutual funds, remove existing mutual funds, or
substitute a new fund for an existing fund.
CHANGE IN INVESTMENT OBJECTIVE OR POLICY OF A MUTUAL FUND
If required by law or regulation, an investment policy of the Separate Account
will only be changed if approved by the appropriate insurance official of the
State of Iowa or deemed approved in accordance with such law or regulation. If
so required, the process for obtaining such approval is filed with the insurance
official of the state or district in which this policy is delivered.
ACCUMULATION UNITS
The Policy Value in the Separate Account before the Annuity Commencement Date is
represented by accumulation units. The dollar value of accumulation units for
each Subaccount may change from day to day reflecting the investment experience
of the Subaccount.
Premium payments allocated to and any amounts transferred to the Subaccounts
will be applied to provide accumulation units in those Subaccounts. The number
of accumulation units purchased in a Subaccount will be determined by dividing
the premium payment allocated to or any amount transferred to the Subaccount by
the value of an accumulation unit for that Subaccount on the premium payment or
transfer date.
The number of accumulation units withdrawn or transferred from the Subaccounts
will be determined by dividing the amount withdrawn or transferred by the value
of an accumulation unit for that Subaccount on the withdrawal or transfer date.
PB885
PAGE 7
<PAGE>
SECTION 6 - SEPARATE ACCOUNT - CONT
The value of an accumulation unit on any business day is determined by
multiplying the value of that unit at the end of the immediately preceding
valuation period by the net investment factor for the valuation period.
The net investment factor used to calculate the value of an accumulation unit in
each Subaccount for the Valuation Period is determined by dividing (a) by (b)
and subtracting (c) from the result where:
(a) is the result of:
(1) the net asset value of a fund share held in that Subaccount determined
as of the and of the current valuation period; plus
(2) the per share amount of any dividend or capital gain distributions
made by the fund for shares held in that Subaccount if the ex-dividend
date occurs during the valuation period, plus or minus
(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the investment operations of that
Subaccount
(b) is the net asset value of a fund share held in that Subaccount determined
as of the end of the immediately preceding valuation period.
(c) is a factor representing the Mortality and Expense Risk Fee and
Administrative Charge. This factor is less than or equal to, on an annual
basis, the percentage shown on page 3 of the daily net asset value of a
fund share held in that Subaccount.
Since the net investment factor may be greater or less than one, the
accumulation unit value may increase or decrease.
SECTION 7 - FIXED ACCOUNT
FIXED ACCOUNT
Premium payments applied to and any amounts transferred to the Fixed Account
will reflect a fixed interest rate. The interest rates we set will be credited
for increments of at least one year measured from each premium payment or
transfer date. These rates will never be less than an effective annual interest
rate of 3%.
GUARANTEED PERIODS
We may offer optional Guaranteed Periods, i.e. Guaranteed Period Option(s), into
which premium payments may be paid or amounts transferred. The current interest
rate we set for funds entering each Guaranteed Period Option (GPO) is guaranteed
until the end of that option's Guaranteed Period. At that time, the premium
payment made or amount transferred into the GPO less any withdrawals or
transfers from that GPO, plus accrued interest will be rolled into a new GPO or
may be transferred to any Subaccount(s) within the Separate Account.
You may choose the GPO(S) or Subaccount(s) you want the funds rolled into by
giving us notice within 30 days before the end of the expiring option's
Guaranteed Period. In the absence of such election, the funds will be rolled
into a new GPO which is the same as the expiring GPO unless that GPO is no
longer offered, in which case, the next shorter GPO offered will be used.
We reserve the right for new premium payments, transfers, or rollovers to offer
or not to offer any GPO, except that we will always offer at least a one year
GPO.
For purposes of crediting interest when funds are withdrawn from or transferred
into a Guaranteed Period Option, the amount of the oldest premium payment or
rollover into that Guaranteed Period Option is considered to be withdrawn first.
If the amount withdrawn exceeds this amount, the next oldest premium payment or
rollover is considered to be withdrawn next, and so on until the most recent
premium payment or rollover is considered to be withdrawn (this is a "First-In,
First-Out" or FIFO procedure). Premium payment(s) or rollover(s) are deemed to
be withdrawn first, then interest credited.
Partial withdrawals and Surrenders from a Guaranteed Period Option which occur
prior to the end of that option's Guaranteed Period are subject to an Excess
interest Adjustment as described in Section 5.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION
We may offer a Dollar Cost Averaging (DCA) Fixed Account Option separate from
the Guaranteed Period Options. The DCA Option will only be available under a
Dollar Cost Averaging program as described in Section 8.
V895
PAGE 8
<PAGE>
SECTION 8-TRANSFERS
A. TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE
Prior to the Annuity Commencement Date, you may transfer the value of the
accumulation units from one another within the Separate Account or Guaranteed
Period Option (GPO) of the Fixed Account. If you want to transfer, you must
tell us in a notice that you sign or through an electronic notice which gives us
the facts that we need.
Transfers of funds from any of the GPOs of the Fixed Subaccount(s) of the
Separate Account are allowed at the end of the applicable Guaranteed Period(s).
However, prior to the end of the applicable period, we may at our discretion,
offer you the option to transfer an amount equal to the interest credited in the
GPOs on a "First-In, First-Out" basis. Transfers may be made monthly,
quarterly, semi-annually, or annually. Each transfer will be subject to a
minimum amount of $50. No Excess Interest Adjustment will apply to such
transfers or interest. The maximum transfer permitted from any GPO before the
end of the Guaranteed Period will be the cumulative interest credited for that
GPO at the time of, but prior to, the transfer. No Excess Interest Adjustment
will apply to fund transfers at the end of the applicable Guaranteed Period.
You may choose which Guaranteed Period Options(s) to transfer to or from. No
transfers will be allowed out of the Dollar Cost Averaging Fixed Account Option
except through dollar cost averaging.
The minimum amount which may be transferred from the Separate Account is the
lesser of $500 or the entire Subaccount value. However, if the remaining
Subaccount value is less than $500, we have the right to include that amount as
part of the transfer.
We reserve the right to limit transfers to no more than 12 in any Policy Year.
Any transfers in excess of 12 per Policy Year may be charged a $10 per transfer
fee.
DOLLAR COST AVERAGING OPTION
Prior to the Annuity Commencement Date, you may instruct us to automatically
transfer a specified amount from the Dollar Cost Averaging Account Option to any
other Subaccount or Subaccounts of the Separate Account. The automatic transfers
can occur monthly or quarterly and will occur on the 28th day of the month. If
the Dollar Cost Averaging request is received prior to the 28th day of any
month, the first transfer will occur on the 28th day of that month. If the
Dollar Cost Averaging request is received on or after the 28th day of any month,
the first transfer will occur on the 28th following month.
You may elect Dollar Cost Averaging at any time. Transfers will continue until
the DCA Fixed Account value is depleted. The amount transferred each time must
be at least $500. A minimum of 6 monthly or 4 quarterly transfers are required
each time the Dollar Cost Averaging program is started or restarted following
termination of the program for any reason.
You may discontinue Dollar Cost Averaging after satisfying the minimum number of
required transfers by sending written notice to us.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION
Prior to the Annuity Commencement Date, no transfers, except through Dollar Cost
Averaging (DCA) will be allowed from the DCA Fixed Account. DCA transfers must
begin within 30 days after the premium payment or transfer to the DCA Fixed
Account. Transfers must be scheduled for at least 6 but not more than 24 months
or for at least 4, but not more than 8 quarters. This option will have a one
year interest rate guarantee. No changes to the amount transferred will be
allowed, but changes can be made to the Subaccounts to which these transfers are
allocated. DCA transfers from the DCA Fixed Account will not be subject to an
Excess Interest Adjustment
ASSET REBALANCING
Prior to the Annuity Commencement Date, you may instruct us to automatically
transfer amounts among the Subaccounts of the Separate Account on a regular
basis to maintain a desired allocation of the Policy Value among the various
Subaccounts offered. Rebalancing will occur on a monthly, quarterly, semi-
annual or annual basis, beginning on a date you select. You must select the
percentage of the Policy Value you desire in each of the various Subaccounts
offered (totaling 100%). Any amounts in the Fixed Account are ignored for the
purposes of asset rebalancing. Rebalancing can be started, stopped or changed
at any time, except that rebalancing will not be available when:
1) Dollar Cost Averaging is in effect, or
2) any other transfer is requested
B. TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE
After the Annuity Commencement Date, you may transfer the value of the variable
annuity units from one Subaccount to another within the Separate Account or to
the Guaranteed Period Options of the Fixed Account. If you want to transfer the
value of the variable annuity units, you must tell us in a notice you sign or
through an electronic notice which gives us the facts that we need.
The minimum amount which may be transferred is the lesser of $10 monthly income
or the entire monthly income of the variable annuity units in the Subaccount
from which the transfer is being made. If the monthly income of the remaining
units in a Subaccount is less than $10, we have the right to include the value
of those variable annuity units as part of the transfer.
After the Annuity Commencement Date, no transfers may be made from the Fixed
Account to the Separate Account.
We reserve the right to limit transfers between the Subaccounts or to the Fixed
Account to once per Policy Year except under the Dollar Cost Averaging Option.
VB895
PAGE 9
<PAGE>
SECTION 9 - DEATH PROCEEDS
A. DEATH PROCEEDS PRIOR TO ANNUITY COMMENCEMENT DATE
The amount of death proceeds will be the greatest of
(a), (b) or (c) where:
(a) is the Policy Value on the date we receive due proof of death and an
election of a method of settlement
(b) is the Cash Value on the date we receive due proof of death and an election
of a method of settlement, and;
(c) is the Guaranteed Minimum Death Benefit (GMDB).
If you have not selected a payment option by the date of death, the beneficiary
may make such election within 60 days of the date we receive due proof of death.
The beneficiary may elect to receive the death proceeds as a lump sum payment or
may use the death proceeds to provide any of the annuity payment options
described in Section 10. Interest on death proceeds will be paid as required by
law.
B. GUARANTEED MINIMUM DEATH BENEFIT
The amount of the Guaranteed Minimum Death Benefit depends on the option shown
on page 3. You may not change the Guaranteed Minimum Death Benefit option after
the policy is issued
Option A: Return of Premium Death Benefit The Guaranteed Minimum Death
Benefit is equal to the total premiums paid for this policy, less any
partial withdrawals, as of the date of death.
Option B: 5% Annually Compounding Death Benefit
The Guaranteed Minimum Death Benefit is equal to the total premiums paid for
this policy, less any partial withdrawals, accumulated at 5% interest per
annum from the payment or withdrawal date to the earlier of the date of
death or the Owner's 81st birthday.
Option C: Annual Step-Up Death Benefit The Guaranteed Minimum Death Benefit
is equal to the largest Policy Value on the issue date or on any Policy
Annniversary prior to the earlier of the date of death or prior to the
owner's 81st birthday plus any premiums paid, less any partial withdrawals
taken, subsequent to the date of the largest anniversary Policy Value.
Each Partial Withdrawal as used in the above GMDB definition is the sum or (1)
and (2) where:
(1) = The Surrender Charge free withdrawal, as described in Section 5
(Partial Withdrawals), and
(2) = (X-Y+Z) as defined in Section 5 (Partial Withdrawals), times a) the
amount of the death proceeds on the date of, but prior to the Excess
Partial Withdrawal, divided by b) the Policy Value on the date of, but
prior to the Excess Partial Withdrawal.
C. DEATH PRIOR TO ANNUITY COMMENCEMENT DATE
Death proceeds are payable contingent upon the relationships between the owner,
successor owner and beneficiary as outlined below. The policy must be
surrendered upon settlement or on proof of death.
I. Annuitant and owner are the same
When we have due proof that the owner died before the Annuity Commencement
Date, we will provide the death proceeds to the beneficiary.
(a) Beneficiary is the deceased owner's surviving spouse. The beneficiary
may elect to continue this policy rather than receiving the death
proceeds. If the policy is continued, an amount to the excess, if any,
of the Guaranteed Minimum Death Benefit over the Policy Value will then
be added to the Policy Value. This amount will be added only once, at
the time of such election.
If this beneficiary elects to have the death proceeds paid, the death
proceeds must be distributed:
(1) by the end of 5 years after the date of the deceased owner's
death, or
(2) payments must begin no later than one year after the deceased
owner's death and must be made for a period certain or for this
beneficiary's lifetime, so long as any period certain does not
exceed this beneficiary's life expectancy.
S870
PAGE 10
<PAGE>
SECTION 9 - CONT
(b) Beneficiary is not the deceased owner's surviving spouse. The death
proceeds must be distributed as provided in I.a)(1) or I.a(2) above.
(c) Death proceeds which are not paid to or for the benefit of a natural person
must be distributed by the end of 5 years after the date of the deceased
owner's death.
II. Annuitant and owner are different and the annuitant dies.
When we have due proof that the annuitant died prior to the Annuity
Commencement Date, the owner will become the new annuitant and no death
proceeds are payable.
However, the owner may elect to have the death proceeds paid upon the
annuitant's death if we agree to such an election. In such case, when we
have due proof that the annuitant died prior to the Annuity Commencement
Date, we will provide the death proceeds to the beneficiary.
a) Beneficiary is the deceased annuitants surviving spouse. The
beneficiary may elect to continue this policy rather than receiving the
death proceeds. If the policy is continued, an amount to the excess, if
any, of the Guaranteed Minimum Death Benefit over the Policy Value will
then be added to the Policy Value. This amount will be added only once,
at the time of such election.
If this beneficiary elects to have the death proceeds paid, the death
proceeds must be distributed as provided in I.a)(1) or I.a)(2) above.
b) Beneficiary is not the deceased annuitants surviving spouse. The death
proceeds must be distributed as provided in I.a)(1) or I.a)(2) above.
c) Death proceeds which are not paid to or for the benefit of a natural
person must be distributed by the end of 5 years after the date of the
annuitant's death.
III. Annuitant and owner are different and the owner dies. If the owner dies
prior to the Annuity Commencement Date and before the entire interest in
the policy is distributed, the successor owner will become the new
owner. The remaining portion of any interest in the policy must be
distributed to the extent provided below in III.a), III.b) or III.c).
a) Successor owner is the deceased owner's surviving spouse. The
successor owner may elect to continue this policy rather than
receive the Adjusted Policy Value. If the successor owner elects to
receive the Adjusted Policy Value, the Adjusted Policy Value must
be distributed.
(1) by the end of 5 years after the date of the deceased owner's
death, or
(2) payments must begin no later than one year after the deceased
owner's death and must be made for a period certain or for the
successor owner's lifetime, so long as any period certain does
not exceed the successor owner's life expectancy.
b) Successor owner is not the deceased owner's surviving spouse. The
Adjusted Policy Value must be distributed as provided in III.a)(1)
or III.a(2) above.
c) Successor owner is not a natural person. The Adjusted Policy Value
must be distributed as provided in III.a)(1) above.
d) No successor owner survives the deceased owner. The deceased owner's
estate will become the new owner and the Adjusted Policy Value must
be distributed by the end of 5 years after the date of the deceased
owner's death.
IV. More than one Owner.
If there is more than one owner, then the death of any owner will be
treated the same as the death of the owner.
D. DEATH ON OR AFTER THE ANNUITY COMMENCEMENT DATE
The death proceeds on or after the Annuity Commencement Date depend on the
payment option selected. If any owner dies on or after the Annuity Commencement
Date, but before the entire interest in the policy is distributed, the remaining
portion of such interest in the policy will be distributed at least as rapidly
as under the method of distribution being used of the date of the owner's death.
E. AN OWNER IS NOT AN INDIVIDUAL
In the case of a non tax-qualified annuity, if any owner or beneficial owner, is
not an individual, then for purposes of the federal income tax mandatory
distribution provisions in subsection C or D above, (1) the primary annuitant
will be treated as the owner of the policy, and (2) if there is any change in
the primary such a change will be treated as the death of the owner.
SB870
PAGE 11
<PAGE>
SECTION 10 - ANNUITY PAYMENTS
A. GENERAL PAYMENT PROVISIONS
Payment
If this policy is in force on the Annuity Commencement Date, we will use the
Fixed Account portion and/or the Separate Account portion of the Adjusted Policy
Value to make annuity payments to the Payee under Option 3 and/or 3-V,
respectively, with 10 years certain, or if elected, under one or more of the
other options described in this section. You may become the annuitant at the
Annuity Commencement Date, or the prior annuitant may continue as the annuitant
Payments will be made at 1, 3, 6 or 12 month intervals. We reserve the right to
change the frequency of payments to avoid making payments of less than $50.00.
Before the Annuity Commencement Date, if the death proceeds become payable or if
you surrender this policy, we will pay any proceeds in one sum, or if elected,
all or part of these proceeds may be placed under one or more of the options
described in this section. If we agree, the proceeds may be placed under some
other method of payment instead.
Election of Optional Method of Payment
Before the Annuity Commencement Date you can elect or change a payment option.
You may elect, in a notice you sign which gives us the facts that we need,
annuity payments that may be either variable, fixed, or a combination of both.
If you elect a combination, you must also tell us what part of the policy
proceeds on the Annuity Commencement Date are to be applied to provide each type
of payment (You must also specify which Subaccounts.) The amount of a combined
payment will be the sum of the variable and fixed payments. Payments under a
variable payment option will reflect the investment performance of the selected
Subaccount of the Separate Account.
Payee
Unless you specify otherwise, the payee shall be the annuitant, or the
beneficiary as specified in the Beneficiary provision.
Facility of Payment
No payment will be made to any payee who, in our opinion, is not capable of
giving valid receipt and discharge for the payment. We may make payment, in
increments of not more than $50 per month, to the persons who, in our opinion,
are owing for and supporting such payee. Such payment will be made until claim
is made by a legal representative of such payee. Payment to such persons will
discharge our liability to the extent of such payment. We will not be
responsible for the proper use of the payments.
Proof of Age
We may require proof of the age of any person who has an annuity purchased under
Options 3, 3-V, 5 and 5-V of this section before we make the first payment.
Minimum Profit
If the proceeds are less than $2,000, we reserve the right to pay them out as a
lump sum instead of applying them to a payment option.
Premium Tax
We may be required by law to pay premium tax on the amount applied to a payment
option. If so, we will deduct the premium tax before applying the proceeds.
Supplementary Contract
Once proceeds become payable and a payment option has been selected, this policy
will terminate and we will issue a supplementary contract to reflect the terms
of the selected option. The contract will name the payees and will describe the
payment schedule.
B. FIXED ACCOUNT PAYMENTS
Guaranteed Payment Options
The fixed account payment is determined by multiplying each $1,000 of policy
proceeds allocated to a fixed payment option by the amounts shown on page 12 for
the option you select. Options 1, 2 and 4 are based on a guaranteed interest
rate of 3%. Options 3 and 5 are based on a guaranteed interest rate of 3% and
the "1983 Table a" (male, female, and unisex if required by law) mortality table
improved to the year 2000 with projection scale G (The "1983 Table a" mortality
rates are adjusted based on improvements in mortality since 1983 to more
appropriately reflect increased longevity. This is accomplished using a set of
improvement factors referred to as projection scale G.)
Option 1 - Interest Payments
The Adjusted Policy Value may be left with us for any term agreed to. We will
pay the interest in periodic payments or it may be left to accumulate.
Withdrawal rights will be agreed upon by you and us when the option is elected.
Option 2 - Income for a Specified Period
Payments are made for the fixed period elected. In the event of the death of
the person receiving payments prior to the end of the guaranteed period payments
will be continued to that person's beneficiary or their present value may be
paid in a single sum.
Option 3 - Life Income
An election may be made between "No Period Certain", "10 Years Certain", or
"Guaranteed Return of Policy Proceeds". In the event of the death of the person
receiving payments prior to the end of the guaranteed period, payments will be
continued to that person's beneficiary or their present value may be paid in a
single sum.
Option 4 - Income of a Specified Amount
Payments are made for any specified amount until the proceeds with interest are
exhausted. In the event of the death of the person receiving payments prior to
the end of the guaranteed period, payments will be continued to that person's
beneficiary or their present value may be paid in a single sum.
Option 5 - Joint and Survivor Annuity
Payments are made during the joint lifetime of the payee and a nominee of your
selection. Payments will be made as long as either person is living.
S871
PAGE 11(A)
<PAGE>
SECTION 10 - CONT
Current Payment Options
The amounts shown in the tables on page 12 are the guaranteed amounts. Current
amounts may be obtained from us.
C. VARIABLE ACCOUNT PAYMENT OPTIONS
Variable Annuity Units
The policy proceeds you tell us to apply to a variable payment option will be
used to purchase variable annuity units in your chosen Subacccounts. The dollar
value of variable annuity units in your chosen Subaccounts will increase or
decrease reflecting the investment experience of your chosen Subaccounts.
The value of a variable annuity unit in a particular Subaccount on any business
day is equal to (a) multiplied by (b) multiplied by (c), where:
(a) is the variable annuity unit value for that Subaccount on the immediately
preceeding business day;
(b) is the net investment factor for that Subaccount for the Valuation Period;
and
(c) is the Assumed Investment Return adjustment factor for the Valuation
Period.
The Assumed Investment Return adjustment factor for the valuation period is the
product of discount factors of .99986634 per day to recognize the 5.0% effective
annual Assumed Investment Return.
The net investment factor used to calculate the value of a variable annuity unit
in each Subaccount for the Valuation Period is determined by dividing (a) by (b)
and subtracting (c) from the result, where:
(a) is the net result of:
(1) the net asset value of a fund share held in that Subaccount determined
as of the end of the current valuation period; plus
(2) the per share amount of any dividend or capital gain distributions made
by the fund for shares held in that Subaccount if the ex-dividend date
occurs during the Valuation Period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the investment operations of the
Subaccount.
(b) is the net asset value of a fund share held in that Subaccount determined
as of the end of the immediately preceding Valuation Period.
(c) is a factor representing the Mortality and Expense Risk Fee and
Administrative Charge. This factor is less than or equal to, on an annual
basis, the percentage shown on page 3 of the daily net asset value of a
fund share held in the Separate Account for that Subaccount.
Determination of the First Variable Payment
The amount of the first variable payment is determined by multiplying each
$1,000 of policy proceeds allocated to a variable payment option by the amounts
shown on page 13 for the variable option you select. The tables are based on a
5% effective annual Assumed Investment Return and the "1983 Table a" (male,
female, and unisex if required by law) mortality table improved to the year 2000
with projection scale G. (The "1983 Table a" mortality rates are adjusted based
on improvements in mortality since 1983 to more appropriately reflect increased
longevity. This is accomplished using a set of improvement factors referred to
as projection scale G.)
The amount of the first payment depends upon the adjusted age of the annuitant.
The adjusted age is the annuitant's actual age on the annuitant's nearest
birthday, at the Annuity Commencement Date, adjusted as follows:
Annuity Commencement
Date Adjusted Age
- ---- ------------
Before 2001 Actual Age
2001-2010 Actual Age minus 1
2011-2020 Actual Age minus 2
2021-2030 Actual Age minus 3
2031-2040 Actual Age minus 4
After 2040 as determined by us.
Option 3 - V - Life Income
An election may be made between:
1. "No Period Certain" - Payments will be made during the lifetime of the
annuitant.
2. "10 Years Certain" - Payments will be made for the longer of the annuitant's
lifetime or 10 years.
Option 5 - V - Joint and Survivor Annuity
Payments are made as long as either the annuitant or the joint annuitant is
living.
Determination of Subsequent Variable Payments
The amount of each variable annuity payment after the first will increase or
decrease according to the value of the variable annuity units which reflect the
investment experience of the selected Subaccounts. Each variable annuity
payment after the first will be equal to the number of variable annuity units in
the selected Subaccounts multiplied by the variable annuity unit value on the
date the payment is made. The number of variable annuity units in each selected
Subaccount is determined by dividing the first variable annuity payment
allocated to the Subaccount by the variable annuity unit value of that
Subaccount on the Annuity Commencement Date.
SB871
PAGE 11(B)
<PAGE>
GUARANTEED FIXED ACCOUNT PAYMENT OPTIONS
The amounts shown in these tables are the guaranteed amounts for each $1,000 of
the policy proceeds. Higher current amounts may be available at the time of
settlement.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Option 2, Table 1 Option 3, Table II Option 3, Table III Option . Table IV
- ------------------------------------------------------------------------------------------------------------------------------------
Number Amount of Monthly Installment For Life
of Years Monthly Monthly Installment For Life Monthly Installment for Life Guaranteed Return Of Policy
Payable Installment No Period Certain 10 Years Certain Proceeds
- ------------------------------------------------------------------------------------------------------------------------------------
Age Male Female Unisex Male Female Unisex Male Female Unisex
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 3.87 3.55 $3.71 $3.84 $3.54 $3.70 $3.73 $3.49 $3.61
- ------------------------------------------------------------------------------------------------------------------------------------
51 3.93 3.60 3.77 3.90 3.59 3.75 3.79 3.53 3.66
- ------------------------------------------------------------------------------------------------------------------------------------
52 4.00 3.65 3.83 3.97 3.64 3.81 3.84 3.58 3.71
- ------------------------------------------------------------------------------------------------------------------------------------
53 4.07 3.71 3.90 4.04 3.70 3.87 3.90 3.63 3.76
- ------------------------------------------------------------------------------------------------------------------------------------
5 $17.91 54 4.15 3.77 3.97 4.11 3.75 3.94 3.96 3.68 3.82
- ------------------------------------------------------------------------------------------------------------------------------------
6 15.14 55 4.23 3.83 4.04 4.19 3.82 4.01 4.03 3.73 3.88
- ------------------------------------------------------------------------------------------------------------------------------------
7 13.16 56 4.32 3.90 4.11 4.27 3.88 4.08 4.10 3.79 3.94
- ------------------------------------------------------------------------------------------------------------------------------------
8 11.68 57 4.41 3.97 4.19 4.35 3.95 4.15 4.17 3.85 4.00
- ------------------------------------------------------------------------------------------------------------------------------------
9 10.53 58 4.50 4.05 4.28 4.44 4.02 4.24 4.24 3.91 4.07
- ------------------------------------------------------------------------------------------------------------------------------------
10 9.61 59 4.61 4.13 4.37 4.53 4.10 4.32 4.32 3.97 4.14
- ------------------------------------------------------------------------------------------------------------------------------------
11 8.86 60 4.72 4.21 4.47 4.63 4.18 4.41 4.40 4.04 4.22
- ------------------------------------------------------------------------------------------------------------------------------------
12 8.24 61 4.84 4.30 4.57 4.74 4.26 4.51 4.49 4.12 4.30
- ------------------------------------------------------------------------------------------------------------------------------------
13 7.71 62 4.96 4.40 4.68 4.85 4.35 4.61 4.58 4.19 4.38
- ------------------------------------------------------------------------------------------------------------------------------------
14 7.26 63 5.10 4.50 4.80 4.97 4.45 4.71 4.68 4.28 4.47
- ------------------------------------------------------------------------------------------------------------------------------------
15 6.87 64 5.24 4.61 4.93 5.09 4.55 4.83 4.78 4.36 4.56
- ------------------------------------------------------------------------------------------------------------------------------------
16 6.53 65 5.40 4.73 5.06 5.22 4.66 4.95 4.88 4.45 4.66
- ------------------------------------------------------------------------------------------------------------------------------------
17 6.23 66 5.56 4.85 5.21 5.36 4.77 5.07 4.99 4.55 4.76
- ------------------------------------------------------------------------------------------------------------------------------------
18 5.96 67 5.74 4.99 5.36 5.50 4.89 5.20 5.11 4.65 4.87
- ------------------------------------------------------------------------------------------------------------------------------------
19 5.73 68 5.93 5.13 5.53 5.65 5.02 5.34 5.24 4.76 4.98
- ------------------------------------------------------------------------------------------------------------------------------------
20 5.51 69 6.13 5.29 5.71 5.80 5.15 5.49 5.37 4.87 5.10
- ------------------------------------------------------------------------------------------------------------------------------------
70 6.34 5.45 5.90 5.96 5.30 5.64 5.51 4.99 5.23
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Option 5, Table V
Monthly Installment For Joint and Full Survivor
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Male Age of Female Annuitant
Annuitant
- -----------------------------------------------------------------------------------------------------------------------------------
15 Years 12 Years 9 Years 6 Years 3 Years Same As 3 Years
Less Than Less Than Less Than Less Than Less Than Male More Than
Male Male Male Male Male Male
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 2.99 $ 3.05 $3.11 $3.18 $3.25 $3.32 $3.39
- ------------------------------------------------------------------------------------------------------------------------------------
55 3.11 3.19 3.27 3.35 3.44 3.53 3.63
- ------------------------------------------------------------------------------------------------------------------------------------
60 3.27 3.37 3.47 3.58 3.70 3.82 3.95
- ------------------------------------------------------------------------------------------------------------------------------------
65 3.47 3.60 3.74 3.89 4.05 4.22 4.39
- ------------------------------------------------------------------------------------------------------------------------------------
70 3.74 3.91 4.10 4.31 4.53 4.77 5.02
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Option 5, Table V
Monthly Installment for Unisex Joint and Full Survivor
- ------------------------------------------------------------------------------------------------------------------------------------
Age of First Age of Joint Annuitant *
Annuitant*
- ------------------------------------------------------------------------------------------------------------------------------------
15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
First First First First First First First
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $ 3.04 $ 3.09 $3.15 $3.21 $3.27 $3.33 $3.39
- ------------------------------------------------------------------------------------------------------------------------------------
55 3.17 3.24 3.32 3.40 3.48 3.56 3.63
- ------------------------------------------------------------------------------------------------------------------------------------
60 3.34 3.44 3.54 3.64 3.75 3.85 3.95
- ------------------------------------------------------------------------------------------------------------------------------------
65 3.57 3.70 3.83 3.97 4.11 4.26 4.39
- ------------------------------------------------------------------------------------------------------------------------------------
70 3.87 4.04 4.22 4.42 4.62 4.82 5.01
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Age nearest birthday
- --------------------------------------------------------------------------------
The annual, semi-annual or quarterly installments under Option 2 shall be the
monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and
-----------------
for Options 3 and 5 the monthly installment shown multiplied by 11.80, 5.95 or
- --------------------------------------------------------------------------------
2.99 respectively. Dollar amounts of monthly installments not shown in the
- --------------------
above tables will be calculated on the same basis as those shown and may be
obtained from the Company.
T819
PAGE 12
<PAGE>
VARIABLE PAYMENT OPTIONS
BASED ON ASSUMED INVESTMENT RETURN
The amounts shown in these tables are the initial payment amounts based on a
5.0% Assumed Investment Return for each $1,000 of the policy proceeds.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Option 3 - V, Table II Option 3 - V, Table III
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Installment for Life Monthly Installment For Life
No Period Certain 10 Years Certain
- ------------------------------------------------------------------------------------------------------------------------------------
Age Male Female Unisex Male Female Unisex
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $5.11 $4.81 $4.96 $5.07 $4.79 $4.94
---------------------------------------------------------------------------------
51 5.17 4.85 5.02 5.13 4.83 4.99
---------------------------------------------------------------------------------
52 5.24 4.90 5.07 5.19 4.88 5.04
---------------------------------------------------------------------------------
53 5.31 4.95 5.13 5.25 4.93 5.10
---------------------------------------------------------------------------------
54 5.38 5.01 5.20 5.32 4.98 5.16
---------------------------------------------------------------------------------
55 5.46 5.06 5.26 5.39 5.04 5.22
---------------------------------------------------------------------------------
56 5.54 5.12 5.34 5.47 5.09 5.28
---------------------------------------------------------------------------------
57 5.63 5.19 5.41 5.54 5.16 5.36
---------------------------------------------------------------------------------
58 5.72 5.26 5.49 5.63 5.22 5.43
---------------------------------------------------------------------------------
59 5.82 5.34 5.58 5.72 5.29 5.51
---------------------------------------------------------------------------------
60 5.93 5.42 5.68 5.81 5.37 5.60
---------------------------------------------------------------------------------
61 6.04 5.50 5.78 5.91 5.44 5.69
---------------------------------------------------------------------------------
62 6.17 5.60 5.89 6.02 5.53 5.78
---------------------------------------------------------------------------------
63 6.30 5.69 6.00 6.13 5.62 5.88
---------------------------------------------------------------------------------
64 6.44 5.80 6.13 6.25 5.71 5.99
---------------------------------------------------------------------------------
65 6.60 5.91 6.26 6.37 5.82 6.10
---------------------------------------------------------------------------------
66 6.76 6.04 6.40 6.50 5.92 6.22
---------------------------------------------------------------------------------
67 6.94 6.17 6.56 6.63 6.04 6.35
---------------------------------------------------------------------------------
68 7.13 6.31 6.72 6.77 6.16 6.48
---------------------------------------------------------------------------------
69 7.33 6.46 6.90 6.92 6.29 6.62
---------------------------------------------------------------------------------
70 7.55 6.63 7.09 7.07 6.43 6.76
---------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Option 5V, Table V
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Installment For Joint and Full Survivor
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Male Annuitant Age of Female Annuitant
*
- ------------------------------------------------------------------------------------------------------------------------------------
15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Male Male Male Male Male Male Male
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.32 $4.36 $4.41 $4.46 $4.51 $4.57 $4.62
- ------------------------------------------------------------------------------------------------------------------------------------
55 4.42 4.47 4.53 4.60 4.67 4.75 4.83
- ------------------------------------------------------------------------------------------------------------------------------------
60 4.54 4.62 4.70 4.80 4.90 5.01 5.12
- ------------------------------------------------------------------------------------------------------------------------------------
65 4.72 4.82 4.94 5.07 5.22 5.37 5.53
- ------------------------------------------------------------------------------------------------------------------------------------
70 4.95 5.10 5.27 5.46 5.67 5.89 6.13
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Installment for Unisex Joint and Full Survivor
- ------------------------------------------------------------------------------------------------------------------------------------
Age of First Annuitant* Age of Joint Annuitant *
- ------------------------------------------------------------------------------------------------------------------------------------
15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
First First First First First First First
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.40 $4.45 $4.50 $4.55 $4.61 $4.67 $4.72
- ------------------------------------------------------------------------------------------------------------------------------------
55 4.52 4.59 4.66 4.73 4.81 4.89 4.96
- ------------------------------------------------------------------------------------------------------------------------------------
60 4.69 4.78 4.87 4.97 5.08 5.19 5.29
- ------------------------------------------------------------------------------------------------------------------------------------
65 4.91 5.04 5.17 5.31 5.46 5.62 5.77
- ------------------------------------------------------------------------------------------------------------------------------------
70 5.22 5.40 5.59 5.79 6.02 6.24 6.47
- ------------------------------------------------------------------------------------------------------------------------------------
* Age nearest birthday
</TABLE>
- --------------------------------------------------------------------------------
The annual, semi-annual or quarterly installments under Option 2 shall be the
monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and
for Options 3-V and 5-V the monthly installment shown multiplied by 11.80, 5.95
or 2.99 respectively.
- --------------------------------------------------------------------------------
Dollar amounts of monthly installments not shown in the above tables will be
calculated on the same basis as those shown and may be obtained from the
Company.
TB819
PAGE 13
<PAGE>
SECTION 11 - GENERAL PROVISIONS
THE CONTRACT
The entire contract consists of this policy, endorsements, if any, and any
application.
MODIFICATION OF POLICY
No change in this policy is valid unless made in writing by us and approved by
one of our officers. No Registered Representative has authority to change or
waive any provision of your policy.
TAX QUALIFICATION
This policy is intended to qualify as an annuity contract for federal income tax
purposes. The provisions of this policy are to be interpreted to maintain such
qualification, notwithstanding any other provisions to the contrary. To
maintain such tax qualification, we reserve the right to amend this policy to
reflect any clarifications that may be needed or are appropriate to maintain
such tax qualification or to conform this policy to any applicable changes in
the tax qualification requirements. We will send you a copy in the event of any
such amendment. If you refuse such an amendment it must be by giving us written
notice, and your refusal may result in adverse tax consequences.
NON-PARTICIPATING
This policy will not share in our surplus earnings.
AGE OR SEX CORRECTIONS
If the age or sex of the annuitant has been misstated, the benefits will be
those which the premiums paid would have purchased for the correct age and sex.
If required by law to ignore differences in the sex of the annuitant the payment
options will be determined using the unisex factors in Section 10.
Any underpayment made by us will be paid with the payment. Any overpayment made
by us will be deducted from future payments. Any underpayment or overpayment
will include interest at 5% per year, from the date of the wrong payment to the
date of the adjustment.
INCONTESTABILITY
This policy shall be incontestable from the policy date.
EVIDENCE OF SURVIVAL
We have the right to require satisfactory evidence that a person was alive if a
payment is based on that person being alive. No payment will be made until we
receive the evidence.
SETTLEMENT
Any payment by us under this policy is payable at our Home Office.
PREMIUM TAXES
Your state may impose a premium tax. It may be imposed when a premium payment
is made, or on the Annuity Commencement Date, date of death, or date of
withdrawal. When permitted by state law, we will not deduct the tax until the
Annuity Commencement Date, date of death, or date of withdrawal.
RIGHTS OF OWNER
The owner may, while the annuitant is living:
1. Assign this policy.
2. Surrender the policy to us.
3. Amend or modify the policy with our consent
4. Receive annuity payments or name a Payee to receive the payments.
5. Exercise, receive and enjoy every other right and benefit contained in the
policy.
The use of these rights may be subject to the consent of any assignee or
irrevocable beneficiary; and of the spouse in a community or marital property
state.
SUCCESSOR OWNER
A successor owner can be named in any application, or in a notice you sign which
gives us the facts we need. The successor owner will become the new owner when
you die, if you die before the annuitant. If no successor owner survives you
and you die before the annuitant, your estate will become the new owner.
CHANGE OF OWNERSHIP
In the case of a non-tax qualified annuity, you can change the owner of this
policy, from yourself to a new owner, in a notice you sign which gives us the
facts that we need. When this change takes effect, all rights of ownership in
this policy will pass to the new owner.
A change of owner or successor owner will not be effective until it is recorded
in our records. After it has been so recorded, the change will take effect as
of the date you signed the notice. However, if the annuitant dies before the
notice has been so recorded, it will not be effective as to those proceeds we
have paid before the change was recorded in our records. We may require that
the change be endorsed in the policy. Changing the owner or naming a new
successor owner cancels any prior choice of successor owner, but does not change
the beneficiary or the annuitant.
OPTION TO CHANGE ANNUITY COMMENCEMENT DATE
You may change the Annuity Commencement Date at any time before the Annuity
Commencement Date. You must give us 30 days written notice. However, the
Annuity Commencement Date may not be later than the last day of the policy month
starting after the Annuitant attains age 85, except as expressly allowed by us,
but in no event later than the last day of the policy month following the month
in which the Annuitant attains age 95.
H510
PAGE 14
<PAGE>
SECTION 11 - CONT
ASSIGNMENT
(a) In the case of a non-tax qualified annuity, this policy may be assigned.
The assignment must be in writing and filed with us.
(b) We assume no responsibility for the validity of any assignment. Any claim
made under an assignment shall be subject to proof of interest and the
extent of the assignment.
(c) This policy may be applied for and issued to qualify as a tax-qualified
annuity under certain sections of the Internal Revenue Code. Ownership of
this policy then is restricted so that it will comply with provisions of
the Internal Revenue Code.
BENEFICIARY
Death proceeds, when payable in accordance with Section 9, are payable to the
designated beneficiary or beneficiaries. Such beneficiary(ies) must be named in
any application and may be changed without consent (unless irrevocably
designated or required by law) by notifying us in writing on a form acceptable
to us. The change will take effect upon the date you sign it, whether or not
you are living when we receive it. The notice must have been postmarked (or
show other evidence of delivery that is acceptable to us) on or before the date
of death. Your most recent change of beneficiary notice will replace any prior
beneficiary designations. No change will apply to any payment we made before
the written notice was received. If an irrevocable beneficiary dies, you may
designate a new beneficiary.
You may direct that the beneficiary shall not have the right to withdraw, assign
or commute any sum payable under an option. In the absence of such election or
direction, the beneficiary may change the manner of payment or make an election
of any option.
If any primary or contingent beneficiary dies before the annuitant, that
beneficiary's interest in this policy ends with that beneficiary's death. Only
those beneficiaries living at the time of the annuitant's death will be eligible
to receive their share of the Death Proceeds. In the event no contingent
beneficiaries have been named and all primary beneficiaries have died before the
death proceeds become payable, the owner will become the beneficiary unless
elected otherwise in accordance with Section 9. If both primary and contingent
beneficiaries have been named, payment will be made to the named primary
beneficiaries living at the time the death proceeds become payable. If there is
more than one beneficiary and you failed to specify their interest they will
share equally. Payment will be made to the named contingent beneficiary(ies)
only if all primary beneficiaries have died before the death proceeds become
payable. If any primary beneficiary is alive at the time the death proceeds
become payable, but dies before receiving their payment their share will be paid
to their estate.
In cases where the annuitant dies and the owner (who is not the annuitant)
elected to receive the death benefit in accordance with Section 9, if the
annuitants estate has been named as beneficiary, then payment will be made to
the owner.
PROTECTION OF PROCEEDS
Unless you so direct by filing written notice with us, no beneficiary may assign
any payments under this policy before the same are due. To the extent permitted
by law, no payments under this policy will be subject to the claims of creditors
of any beneficiary.
DEFERMENT
We will pay any partial withdrawals or surrender proceeds within 7 days after we
receive all requirements that we need. However, it may happen that the New York
Stock Exchange is closed for trading (other than the usual weekend or holiday
closings), or the Securities and Exchange Commission restricts trading or
determines that an emergency exists. If so, it may not be practical for us to
determine the investment experience of the Separate Account. In that case, we
may defer transfers among the Subaccounts and to the Fixed Account, and
determination or payment of partial withdrawals or surrender proceeds.
When permitted by law, we may defer paying any partial withdrawals or surrender
proceeds from the Fixed Account for up to 6 months from the withdrawal or
surrender date. Interest will be paid on any amount deferred for 30 days or
more. This rate will be 3% per year unless otherwise required by law.
REPORTS TO OWNER
We will give you an annual report at least once each Policy Year. This report
will show the number and value of the accumulation units held in each of the
Subaccounts as well as the value of the Fixed Account. It will also give you any
other facts required by law or regulation.
MINIMUM VALUES
Benefits available under this policy are not less than those required by any
statute of the state in which the policy is delivered.
J510
PAGE 15
<PAGE>
PFL Life Insurance Company
Home Office located at 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499
[LOGO OF PFL LIFE APPEARS HERE]
Flexible Premium Variable Annuity
Income Payable At Annuity Commencement Date
Benefits Based On The Performance Of The Separate Account
Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and
10C.)
Non-Participating
INDEX
Page
Accumulation Units....................................................... 7
Age or Sex Corrections...................................................14
Annuity Payments......................................................11(A)
Adjusted Policy Value................................................. 2, 4
Assignment............................................................. 15
Beneficiary............................................................ 15
Cash Value............................................................. 5
Contract............................................................... 14
Death Proceeds......................................................... 10
Definitions............................................................ 2
Dollar Cost Averaging.................................................. 9
Evidence of Survival................................................... 14
Excess Interest Adjustment............................................ 5, 6
Fixed Account.......................................................... 8
Guaranteed Minimum Death Benefit....................................... 10
Guaranteed Return of Fixed Account.....................................
Premium Payments....................................................... 6
Guaranteed Periods..................................................... 8
Incontestability....................................................... 14
Modification of Policy................................................. 14
Nonparticipating....................................................... 14
Option to Change Annuity Commencement Date............................. 14
Owner.................................................................. 14
Partial Withdrawals................................................... 5, 6
Payee............................................................... 11(A)
Payment Option Tables............................................... 12, 13
Policy Data Page....................................................... 3
Policy Value........................................................... 4
Premium Payments....................................................... 4
Proof of Age.......................................................... 11(A)
Protection of Proceeds................................................. 15
Separate Account....................................................... 7
Service Charge......................................................... 4
Settlement............................................................. 14
Surrender Charges...................................................... 6
Ten Day Right To Cancel................................................ 1
Transfers.............................................................. 9
Y466
<PAGE>
EXHIBIT (5)
-----------
FORM OF APPLICATION FOR THE
RETIREMENT INCOME BUILDER VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
RETIREMENT INCOME BUILDER VARIABLE ANNUITY
Issued by PFL Life Insurance Company ("PFL Life") * 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001 * Policyholder Service:
800-525-6205 Mail the application and check payable to: PFL Life Insurance Company * 4333 Edgewood Road N.E., Cedar Rapids, IA
52499-0001, Attn: Variable Annuity Dept.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Owner(s) Name __________________________________________________ [_] M [_] F Birthdate _____ / _____ / _____
Address ____________________________________________________________________________________________________
Street City State Zip
Soc. Sec. No. ____________________________________________ Phone No. ___________________________________
Name __________________________________________________ [_] M [_] F Birthdate _____ / _____ / _____
Address ____________________________________________________________________________________________________
Street City State Zip
Soc. Sec. No. ___________________________________________ Phone No. ___________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Annuitant Name _________________________________________________ [_] M [_] F Birthdate _____ / _____ / _____
Leave blank Address ____________________________________________________________________________________________________
if Annuitant Street City State Zip
is same as Soc. Sec. No. ____________________________________________ Relationship to Owner__________________________
sole Owner * If you, the policyowner, have named someone other than yourself as the annuitant, please select one of
the following regarding payment of the death proceeds. If neither is selected, the first option will be
deemed in effect:
[_] At the named annuitant's death, I wish to become the annuitant and defer payment of death proceeds
until my death
[_] At the named annuitant's death, I wish to have the death proceeds paid to the named beneficiary.
Policy Owner Signature Required: ___________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficiary(ies) Primary _____________________________________ Relationship to Owner _________________ Percentage _____
Contingent __________________________________ Relationship to Owner _________________ Percentage _____
- ------------------------------------------------------------------------------------------------------------------------------------
2. Premium Initial Premium $ ____________________ (Min:$2000) Investment Allocation (whole % only, no fractions)
Payment/Plan Variable Options: PFL Life Fixed Options:
Options Fidelity VIP Options: [_] 1 Year for DCA only (must
[_] VIP II Asset Manager .0% [_] VIP Equity-Income .0% complete DCA form) .0%
------ ------ ------
[_] VIP II Asset Manager - Growth .0% [_] VIP Overseas .0% PFL Life Guarantee Periods:
------ ------
[_] VIP Growth .0% [_] VIP High Income .0% [_] 1 Year .0%
------ ------ ------
[_] VIP II Contrafund .0% [_] VIP II Investment .0% [_] 3 Year .0%
------ Grade Bond ------ ------
[_] VIP II Index 500 .0% [_] VIP Money Market .0% [_] 5 Year .0%
------ ------ ------
[_] 7 Year .0%
------
Note: Initial variable premium payments will be invested in the VIP Total (variable and fixed) 100%
Money Market Option for at least 14 days, or longer, based on your ------
state's "Right to Cancel" period. See your policy for details.
Enhanced Death Benefit Option (Select only one):
-----------------------------
Your selection cannot be changed after the policy has been issued. If no option has been specified, the
contract will be issued with the option for return of premium less distributions (Option A below).
[_] Option A - Return of premiums paid less distributions taken: Annual Mortality and Expense (M&E) risk fee
and administrative charge is 1.25%.
[_] Option B - 5% Annually Compounding Death Benefit. Compounds to the earlier of the Annuitant's death or
Owner's age 81: Annual M&E risk fee and administrative charge is 1.40%.
[_] Option C - Annual Step-Up Death Benefit: Annual M&E risk fee and administrative charge 1.40%.
[_] 5% Annually Compounding Death Benefit. Compounds to the earlier of the Annuitant's death or Owner's age
81: Annual Mortality and Expense (M&E) risk fee and administrative charge is 1.40%.
[_] Return of premiums paid less distributions taken: Annual M&E risk fee and administrative charge is 1.25%.
- ------------------------------------------------------------------------------------------------------------------------------------
Special Please initial one: I authorize my Registered Rep. ______ myself only ______ to make telephone transfer
Instructions requests.
Registered Representative's Name _________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Replacement Will this annuity replace or change any existing annuity or life insurance? [_] Yes [_] No (If Yes,
Information complete the following.)
Company ____________________________________________________ Policy No. ______________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Qualified Plan [_] Yes [_] No (If Yes, Complete the following.) [_] Other Tax Qualified Plan _________________ (type)
[_] IRA Rollover: $ _______ [_] IRA: $ _______ Yr. of Contribution:_____ [_] IRA Transfer [_] Qualified Plan
Rollover
- ------------------------------------------------------------------------------------------------------------------------------------
3. * IRS disclosure regarding distributions from this policy: Under penalties of perjury, I hereby certify
(1) that the Social Security or Taxpayer I.D. number listed in Section 1 of this application is correct
and (2) that I am currently not subject to withholding. (Cross out (2) if NOT correct.) See reverse for
an explanation of this disclosure.
The Internal Revenue Service does not require your consent to any provision of this document other than
the certifications required to avoid backup withholding.
Signature Required
____________________________________
---------------------------------------------------------------------------------------------------------------
* I understand that Policy Values, when allocated to any of the variable options above are not guaranteed
as to a fixed dollar amount.
* When funds are allocated to the Fixed Account guarantee Periods, Policy Values under the policy may
increase or decrease in accordance with the Excess Interest Adjustment prior to the end of the Guarantee
Period.
* I have reviewed my existing Insurance coverage and find this policy suitable for my needs.
* AZ, CA, ID, LA, NM, NV, TX, WA and WI: Spousal consent is required when the spouse is not designated a
Policy Owner and/or a Primary Beneficiary and has purchased this annuity in, and/or resides in a
community or marital property state, at the time of sale. By signing below, I (consenting spouse)
understand and hereby give my consent for the Policy Owner to designate someone other than myself as
Primary Beneficiary or Owner of the policy represented by this application. I also understand that this
designation may affect my community or marital rights to the proceeds of this policy.
Spouse's Signature _______________________________________________ Date ______ / ______ / ______
* I [_] was never married. [_] am divorced. [_] My spouse is deceased.
* To the best of my knowledge and belief, my answers to the questions on this application are correct and
true, and I agree that this application becomes a part of the annuity policy when issued to me. If this
application is part of an instant issue policy, I acknowledge that I am in receipt of a complete copy of
the policy provisions herewith.
* This application is subject to acceptance by PFL Life. If this application is rejected for any reason,
PFL Life will be liable only for return of premiums paid.
* Send me a copy of the Statement of Additional Information. [_]
* I am in receipt of a current prospectus for this variable annuity.
- ------------------------------------------------------------------------------------------------------------------------------------
Signature(s) Signed at _________________________________________________________________ Date ______ / ______ / ______
Owner(s) _____________________________ Annuitant (if not Owner)
- ------------------------------------------------------------------------------------------------------------------------------------
Agent Use Do you have reason to believe the annuity applied for will replace or change any existing annuity or life
Only insurance? [_] Yes [_] No
Registered Rep/Agent (Please print) _______________________________ Signed ________________________________
Phone No. __________________________ Soc. Sec. No. ___________________ PFL Agent # ______________________
- ------------------------------------------------------------------------------------------------------------------------------------
RBKVA-APP(1) 796 SEE YOUR PROSPECTUS AND POLICY PROVISIONS FOR TERM EXPLANATIONS.
</TABLE>
<PAGE>
**Purpose of Statement. This statement is for the payer (Insurance
Company) of interest, dividends, and certain other payments so that you will not
be subject to the 20% backup withholding that became effective January 1, 1984.
This statement is used to report and certify your taxpayer identification
number (TIN) to the payer, to certify that you are not subject to backup
withholding because of underreporting interest and dividends on your tax return,
and to claim exemption from backup withholding if you are an exempt payee.
If you do not certify your TIN, the payer may be required to withhold 20%
of payments made to you.
What is Backup Withholding. The Interest and Dividend Tax Compliance Act of 1983
requires payers to withhold and pay to IRS 20% Of payments of interest,
dividends, and certain other payments under certain conditions. This is called
"backup withholding." If you give your correct TIN, certify your TIN when
required, and report all your taxable interest and dividends on your tax return,
your payments will not be subject to backup withholding.
Payments you receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the payer, or
(2) IRS notifies the payer that you furnished an incorrect TIN, or
(3) You are notified by IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for interest and dividend accounts only), or
(4) You fail to certify to the payer that you are not subject to backup
withholding under (3) above (for interest and dividend accounts opened
after 1983 only), or
(5) You fail to certify your TIN. This applies only to interest, dividend
broker, or barter exchange accounts opened after 1983, or broker accounts
considered inactive in 1983.
For other payments, you are subject to backup withholding only if (1) or (2)
above applies.
<PAGE>
EXHIBIT (8)
-----------
PARTICIPATION AGREEMENT BY AND BETWEEN
PFL LIFE INSURANCE COMPANY AND
FIDELITY DISTRIBUTORS CORPORATION
AND ADDENDUM THERETO.
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND,
--------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
PFL LIFE INSURANCE COMPANY
--------------------------
THIS AGREEMENT, made and entered into this 1st day of April, 1991 by
and among PFL LIFE INSURANCE COMPANY, (hereinafter the "Company"), an Iowa
corporation, on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"), a segregated asset
account of the Company, and the VARIABLE INSURANCE PRODUCTS FUND, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter") , a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive order"); and
- 1 -
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register the Accounts as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, (hereinafter the "1934 Act") , and is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of the Accounts to fund certain of the aforesaid variable annuity contracts and
the Underwriter is authorized to sell such shares to unit investment trusts such
as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE 1. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Accounts orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from the
Accounts and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities
- 2 -
<PAGE>
and Exchange Commission and the Fund shall use reasonable efforts to calculate
such net asset value on each day which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Board of Trustees of the Fund
(hereinafter the "Trustees") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Sections 2.5 and 2.12 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts with the form number(s) which are
listed on Schedule B attached hereto and incorporated herein by this reference,
as such Schedule B may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios Of the Fund; or (b) the Company
gives the Fund and the Underwriter 45 days written notice of its intention to
make such other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the Company so
informs the Fund and Underwriter prior to their signing this Agreement; or (d)
the Fund or Underwriter consents to the use of such other investment company.
- 3 -
<PAGE>
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For the purpose of Sections 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Funds' shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under Section 508A.1 of the Iowa Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register the Account as
a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the state of Iowa and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in
- 4 -
<PAGE>
order to affect the continuous offering of its shares. The Fund shall register
and qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently treated
as endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no feel" or "defensive" Rule 12b-i Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
state of Iowa and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the state of Iowa to the extent required to perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the state of Iowa and all applicable state and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
- 5 -
<PAGE>
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the state of Iowa and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Section 17g-(l) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions or may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.12. The Company represents and warrants that it will not purchase
Fund shares with Account assets derived from the sale of Contracts to deferred
compensation plans with respect to service for state and local governments which
qualify under Section 457 of the federal Internal Revenue Code, as may be
amended. The Company may purchase Fund shares with Account assets derived from
any sale of a Contract to any other type of tax-advantaged employee benefit
plan; provided however that such plan has no more than 500 employees who are
--------
eligible to participate at the time of the first such purchase by the Company of
Fund shares derived from the sale of such Contract.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
- 6 -
<PAGE>
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is available
from the Fund), and the Underwriter (or the Fund), at its expense, shall print
and provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such portfolio
for which instructions have been received: so long as and to the
extent that the Securities and Exchange Commission continues to
interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to
vote Fund shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their
separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on
Schedule C attached hereto and incorporated herein by this
reference, which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen Business
Days after receipt of such material.
- 7 -
<PAGE>
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to such use
within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for the Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or the Account, contemporaneously with the filing of such document
with the Securities and Exchange Commission.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material", includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
- 8 -
<PAGE>
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerps of any
other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-i to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state ,laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation S1.817-5 relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations.
- 9 -
<PAGE>
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account;
- 10 -
<PAGE>
provided, however that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Underwriter and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulators decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive order, then (a) the Fund and/or the Participating Insurance companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
- 11 -
<PAGE>
ARTICLE VIII. Indemnification
---------------
8.l. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company: or
- 12 -
<PAGE>
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 9.1(b) and 8.1(c)
hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on ,any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2 (a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims,
- 13 -
<PAGE>
damages, liabilities (including amounts paid in settlement with the written
consent of the Underwriter) or litigation (including legal and other expenses)
to which the Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with, information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares: or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature for the Contracts not supplied by the Underwriter or
persons under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
- 14 -
<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties , under this Agreement or
to the Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company ,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
- 15 -
<PAGE>
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Trustees or any member
thereof, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
- 16 -
<PAGE>
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable-Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written
notice to the other parties; or
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements
of the Contracts as determined by the Company, provided however,
that such termination shall apply only to the Portfolio(s) not
reasonably available. Prompt notice of the election to terminate
for such cause shall be furnished by the Company; or
(c) at the option of the Fund in the event that formal
administrative proceedings are instituted against the Company by
the NASD, the Securities and Exchange Commission, the Insurance
Commissioner or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that the Fund determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse affect
upon the ability of the Company to perform its obligations under
this Agreement; or
(d) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the NASD, the Securities and Exchange Commission,
or any state securities or insurance department or any other
regulatory body, provided,
- 17 -
<PAGE>
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund
or Underwriter to perform its obligations under this Agreement;
or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in such Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those
Portfolio shares had been selected to serve as the underlying
investment media. The Company will give 30 days prior written
notice to the Fund of the date of any proposed vote to replace
the Fund's shares; or
(f) at the option of the Company, in the event any of the fund's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(g) at the option of the Company, if the Fund ceases to qualify
as a Regulated Investment Company under Subchapter X of the Code
or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Fund or the Underwriter, if (1)
the Fund or the Underwriter, respectively, shall determine, in
their sole judgment reasonably exercised in good faith, that the
Company has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and such material adverse change or material adverse
publicity will have a material adverse impact upon the business
and operations of either the Fund or the Underwriter, (2) the
Fund or the Underwriter shall notify the Company in writing of
such determination and its intent to terminate this Agreement,
and (3) after considering the actions taken by the Company and
any other changes in circumstances since the giving of such
notice, such determination of the Fund or the Underwriter shall
continue to apply on the sixtieth (60th) day following the giving
of such notice, which sixtieth day shall be the effective date of
termination; or
- 18 -
<PAGE>
(j) at the option of the Company, if (1) the Company shall
determine, in its sole judgment reasonably exercised in good
faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business or financial condition or
is the subject of material adverse publicity and such material
adverse change or material adverse publicity will have a material
adverse impact upon the business and operations of the Company,
(2) the Company shall notify the Fund and the Underwriter in
writing of such determination and its intent to terminate the
Agreement, and (3) after considering the actions taken by the
Fund and/or the Underwriter and any other changes in
circumstances since the giving of such notice, such determination
shall continue to apply on the sixtieth (60th) day following the
giving of such notice, which sixtieth day shall be the effective
date of termination; or
(k) at the option of either the Fund or the Underwriter, if the
Company gives the Fund and the Underwriter the written notice
specified in Section 1.6(b) hereof and at the time such notice
was given there was no notice of termination outstanding under
any other provision of this Agreement; provided, however any
termination under this Section 10.1(k) shall be effective forty
five (45) days after the notice specified in Section 1.6(b) was
given.
10.2. It is understood and agreed that the right of any party hereto
to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3. Notice Requirement. No termination of this Agreement shall be
------------------
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to terminate
which notice shall set forth the basis for such termination. Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of Section 10.1(a),
10.1(i), 10.1(j) or 10.1(k) of this Agreement, such prior written
notice shall be given in advance of the effective date of
termination as required by such provisions; and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, such
prior written notice shall be given at least ninety (90) days
before the effective date of termination.
10.4. Effect of Termination. Notwithstanding any all at termination
---------------------
of this Agreement, the Fund and the underwriter shall at the option of the
Company, continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation,
- 19 -
<PAGE>
the owners of the Existing Contracts shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.4 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article V3:1 of this Agreement.
10.5. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably satisfactory to the Fund and the Underwriter)
to the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
PFL Life Insurance Company
4333 Edgewood Road, Northeast
Cedar Rapids, Iowa 52499
Attention: Annuities Division, Law Department
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
- 20 -
<PAGE>
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
- 21 -
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
PFL LIFE INSURANCE COMPANY
By its authorized officer,
SEAL By: /s/ William J. Busler
-----------------------------
Title: Executive Vice President
-----------------------------
Date: 5/24/91
-----------------------------
Fund:
VARIABLE INSURANCE PRODUCTS FUND
By its authorized officer,
By: /s/ J. Gary Burkhead
-----------------------------
SEAL Title: Senior Vice President
-----------------------------
Date: _____________________________
Underwriter:
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
SEAL By: /s/ Zeta B. Kencaid
-----------------------------
Title: President
-----------------------------
Date: 9/5/91
-----------------------------
- 22 -
<PAGE>
Schedule A
----------
Contracts
---------
1. Contract Form _________________________
- 23 -
<PAGE>
Schedule B
----------
Accounts
--------
Name of Account Date of Resolution of Company's Board
which Established the Account
Fidelity Variable Annuity Account August 24, 1978 (Pacific Fidelity Life
Insurance Company)
- 24 -
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to
call in the number of Customers to Fidelity, as soon as possible,
but no later than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide at least one copy of the last Annual
Report to the Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
- 25 -
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company). Contents of envelope sent to Customers by Company
will include:
a. Voting Instruction Card(s)
b. one proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
- 26 -
<PAGE>
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provided a standard from for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
- 27 -
<PAGE>
AMENDMENT NO. 1
Amendment to the Participation Agreement among PFL Life Insurance Company
(the "Company"), Variable Insurance Products Fund (the "Fund") and Fidelity
Distributors Corporation the "Underwriter")dated April 1, 1991 (the
"Agreement").
WHEREAS, each of the parties is desirous of expanding the ability of
Company to participate in the qualified markets, the Company, the Underwriter
and the Fund hereby agree to amend the Agreement by deleting from Section 1.4
the reference to Section 2.12 and by deleting Section 2.12 in its entirety.
In witness whereof, each of the parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representative as
of November 1, 1991.
PFL LIFE INSURANCE COMPANY FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Craig D. Vermie By: /s/ Roger T. Servison
-------------------------- ----------------------------
Name:________________________ Name: Roger T. Servison
--------------------------
Title:_______________________ Title: President
-------------------------
VARIABLE INSURANCE PRODUCTS FUND
By: /s/ J. Gary Burkhead
--------------------------
Name: J. Gary Burkhead
------------------------
Title: Senior Vice President
-----------------------
<PAGE>
AMENDMENT NO. 2 TO PARTICIPATION AGREEMENT AMONG
-
VARIABLE INSURANCE PRODUCTS FUND
FIDELITY DISTRIBUTORS CORPORATION
and
PFL LIFE INSURANCE COMPANY
WHEREAS, PFL LIFE INSURANCE COMPANY (the "Company"), VARIABLE INSURANCE
PRODUCTS FUND (the "Fund") and FIDELITY DISTRIBUTORS CORPORATION have previously
entered into a Participation Agreement (the "Agreement") containing certain
arrangements concerning prospectus costs; and
WHEREAS, the Trustees of the Fund have approved certain changes to the
expense structure of the Fund; and
NOW THEREFORE, the parties do hereby agree to amend the Agreement by
substituting the following arrangement in place of any inconsistent language in
the Participation Agreement, wherever found:
1. The Fund will provide to the Company each year, at the Fund's cost,
such number of prospectuses and Statements of Additional Information as are
actually distributed to the Company's then existing variable life and/or
variable annuity contract owners.
2. If the Company takes camera-ready film or computer diskettes
containing the Fund's prospectus and/or Statement of Additional Information in
lieu of receiving hard copies of these documents, the Fund will reimburse the
Company in an amount computed as follows. The number of prospectuses and
Statements of Additional Information actually distributed to existing contract
owners by the Company will be multiplied by the Fund's actual per-unit cost of
printing the documents.
3. The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund in order to verify that
the prospectuses and Statements of Additional Information provided to the
Company, or the reimbursement made to the Company, are or have been used only
for the purposes set forth hereinabove.
IN WITNESS WHEREOF we have set our hand as of the 15th day of December,
1994.
PFL LIFE INSURANCE COMPANY
By: /s/ Craig D. Vermie
---------------------
Name: Craig D. Vermie
---------------------
Title: Vice President, Assistant Secretary
-------------------
and Associate General Counsel
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS CORPORATION
By: /s/ J. Gary Burkhead By: /s/ Kurt A. Lange
--------------------- ---------------------
Name: J. Gary Burkhead Name: Kurt A. Lange
--------------------- ---------------------
Title: Senior Vice President Title: President
--------------------- ---------------------
<PAGE>
PARTICIPATION AGREEMENT ADDEMDUM
SCHEDULE A
----------
Accounts
--------
This Schedule shall be effective as of the date of the last signature below, and
replaces and supersedes Schedule A to the Participation Agreement dated April 1,
1991 (as amended) among the VIP Funds, Fidelity Distributors Corporation and PFL
Life Insurance Company.
<TABLE>
<CAPTION>
Date of Resolutions of
Company's Board which
Name of Contracts Name of Accounts established the Accounts
----------------- ---------------- ------------------------
<S> <C> <C>
Fidelity Income Plus Fidelity Variable Annuity August 24, 1979 (by an
Individual Variable Annuity Account affiliate subsequently
Contracts acquired by the Company)
PFL Retirement Builder Retirement Builder Variable
Individual Variable Annuity Annuity Account March 29, 1996
Contracts
</TABLE>
In witness whereof, we have hereunto set our hand as of the dates indicated:
PFL Life Insurance Company
4/19/96 By: /s/ Ronald Ziegler
- ---------------------- --------------------------------
Date Signed
Title: Vice President & Actuary
-----------------------------
Variable Insurance Product Fund
4/29/96 By: /s/ J. Gary Burkhead
- ---------------------- --------------------------------
Date Signed
Title: Senior Vice President
-----------------------------
Fidelity Distributors Corporation
4/23/96 By: /s/ Neil Litvack
- ---------------------- --------------------------------
Date Signed
Title: President
-----------------------------
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
-----------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
PFL LIFE INSURANCE COMPANY
--------------------------
THIS AGREEMENT, made and entered into this lst day of April, 1991 by
and among PFL LIFE INSURANCE COMPANY, (hereinafter the "Company"), an Iowa
corporation, on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"), a segregated asset
account of the Company, and the VARIABLE INSURANCE PRODUCTS FUND II, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2 (b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
- 1 -
<PAGE>
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register the Accounts as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, (hereinafter the "1934 Act") , and is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of the Accounts to fund certain of the aforesaid variable annuity contracts and
the Underwriter is authorized to sell such shares to unit investment trusts such
as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1. The Underwriter agrees to sell to the Company those shares of
the Fund which each Accounts orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from the
Accounts and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Trustees") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any
- 2 -
<PAGE>
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles 1, 111, V, VII and Sections 2.5 and 2.12 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts with the form number(s) which are
listed on Schedule B attached hereto and incorporated herein by this reference,
as such Schedule B may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund; or (b) the Company
gives the Fund and the Underwriter 45 days written notice of its intention to
make such other investment company available as a-funding vehicle for the
Contracts; or (c) such other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the Company so
informs the Fund and Underwriter prior to their signing this Agreement; or (d)
the Fund or Underwriter consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For the purpose of Sections 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
- 3 -
<PAGE>
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Funds' shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE II. Representations and Warranties
------------------------------
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under Section 508A.1 of the Iowa Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register the Account as
a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the state of Iowa and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
- 4 -
<PAGE>
2.4. The Company represents that the Contracts are currently treated
as endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
state of Iowa and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the state of Iowa to the extent required to perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the state of Iowa and all applicable state and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the state of Iowa and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Section 17g-(l) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
- 5 -
<PAGE>
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by entities subject to the requirements of Rule 17g-1 of the 1940 Act or
related provisions or may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.12. The Company represents and warrants that it will not purchase
Fund shares with Account assets derived from the sale of Contracts to deferred
compensation plans with respect to service for state and local governments which
qualify under Section 457 of the federal internal Revenue Code, as may be
amended. The Company may purchase Fund shares with Account assets derived from
any sale of a Contract to any other type of tax-advantaged employee benefit
plan; provided however that such plan has no more than 500 employees who are
eligible to participate at the time of the first such purchase by the Company of
Fund shares derived from the sale of such Contract.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1. The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is available
from the Fund), and the Underwriter (or the Fund), at its expense, shall print
and provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such portfolio
for which instructions have been received:
- 6 -
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-throughvoting privileges for
variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule C
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen Business
Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to such use
within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for the
- 7 -
<PAGE>
Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or the Account, contemporaneously with the filing of such document
with the Securities and Exchange Commission.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
----
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
-----------------
5.1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The
- 8 -
<PAGE>
Fund shall bear the expenses for the cost of registration and qualification of
the Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus in
type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes an
annual report), the preparation of all statements and notices required by any
federal or state law, all taxes on the issuance or transfer of the Fund's
shares.
5.3. The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification
---------------
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation (S)1.817-5 relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations.
ARTICLE VII. Potential Conflicts
-------------------
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
- 9 -
<PAGE>
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
----
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners
- 10 -
<PAGE>
materially adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
---------------
8.1. Indemnification By The Company
------------------------------
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
Registration Statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
- 11 -
<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its control) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information
furnished to the Fund by or on behalf of the Company: or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company, as limited by and in accordance
with the provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified
- 12 -
<PAGE>
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Company will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Underwriter
----------------------------------
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus for the Fund or
in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares: or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or
- 13 -
<PAGE>
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission
was made in reliance upon information furnished to the Company by
or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
8.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
- 14 -
<PAGE>
8.3. Indemnification By the Fund
---------------------------
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Trustees or any member
thereof, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3
(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees
- 15 -
<PAGE>
and expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
-----------
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written
notice to the other parties; or
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements of
the Contracts as determined by the Company, provided however, that
such termination shall apply only to the Portfolio(s) not
reasonably available. Prompt notice of the election to terminate
for such cause shall be furnished by the Company; or
(c) at the option of the Fund in the event that formal
administrative proceedings are instituted against the Company by
the NASD, the Securities and Exchange Commission, the Insurance
Commissioner or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that the Fund determines in its
sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of
the Company to perform its obligations under this Agreement; or
- 16 -
<PAGE>
(d) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the NASD, the Securities and Exchange Commission, or
any state securities or insurance department or any other
regulatory body, provided, however, that the Company determines in
its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon
the ability of the Fund or Underwriter to perform its obligations
under this Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in such Account (or any
subaccount) to substitute the shares of another investment company
for the corresponding Portfolio shares of the Fund in accordance
with the terms of the Contracts for which those Portfolio shares
had been selected to serve as the underlying investment media. The
Company will give 30 days' prior written notice to the Fund of the
date of any proposed vote to replace the Fund's shares; or
(f) at the option of the Company, in the event any of the Fund's
Shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(g) at the option of the Company, if the Fund ceases to qualify as
a Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Fund or the Underwriter, if (1)
the Fund or the Underwriter, respectively, shall determine, in
their sole judgment reasonably exercised in good faith, that the
Company has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity
and such material adverse change or material adverse publicity will
have a material adverse impact upon the business and operations of
either the Fund or the Underwriter, (2) the Fund or the Underwriter
shall notify the Company in writing of such determination and its
intent to terminate this Agreement, and (3) after considering the
actions taken by the Company and any other changes in circumstances
since the giving of such notice, such continue to determination of
the Fund or the Underwriter shall apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be
the effective date of termination; or
- 17 -
<PAGE>
(j) at the option of the Company, if (1) the Company shall
determine, in its sole judgment reasonably exercised in good faith,
that either the Fund or the Underwriter has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse
change or material adverse publicity will have a material adverse
impact upon the business and operations of the Company, (2) the
Company shall notify the Fund and the Underwriter in writing of
such determination and its intent to terminate the Agreement, and
(3) after considering the actions taken by the Fund and/or the
Underwriter and any other changes in circumstances since the giving
of such notice, such determination shall continue to apply on the
sixtieth (60th) day following the giving of such notice, which
sixtieth day shall be the effective date of termination; or
(k) at the option of either the Fund or the Underwriter, if the
Company gives the Fund and the Underwriter the written notice
specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any
other provision of this Agreement; provided, however any
termination under this Section 10.1(k) shall be effective forty
five (45) days after the notice specified in Section 1.6(b) was
given.
10.2. It is understood and agreed that the right of any party hereto
to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3. Notice Requirement. No termination of this Agreement shall be
------------------
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to terminate
which notice shall set forth the basis for such termination. Furthermore,
(a) In the event that any termination is based upon the provisions
of Article VII, or the provision of Section 10.1(a), 10.1(i),
10.1(j) or 10.1(k) of this Agreement, such prior written notice
shall be given in advance of the effective date of termination as
required by such provisions; and
(b) in the event that any termination is based upon the provisions
of Section 10.1(c) or 10.1(d) of this Agreement, such prior written
notice shall be given at least ninety (90) days before the
effective date of termination.
10.4. Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate
- 18 -
<PAGE>
investments in the Fund, redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.4 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
10.5. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably satisfactory to the Fund and the Underwriter)
to the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
PFL Life Insurance Company
4333 Edgewood Road, Northeast
Cedar Rapids, Iowa 52499
Attention: Annuities Division, Law Department
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
-------------
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
- 19 -
<PAGE>
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any Provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
PFL LIFE INSURANCE COMPANY
By its authorized officer,
SEAL By: /s/ William L. Busler
---------------------------------
Title: Executive Vice President
---------------------------------
Date: 5/24/91
---------------------------------
Fund:
VARIABLE INSURANCE PRODUCTS FUND II
By its authorized officer,
By: /s/ J. Gary Burkhead
---------------------------------
SEAL Title: Senior Vice President
---------------------------------
Date: _________________________________
Underwriter:
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
SEAL By: /s/ Seth B. Kincaid
---------------------------------
Title: President
---------------------------------
Date: 2/5/91
---------------------------------
- 20 -
<PAGE>
Schedule A
----------
Contracts
---------
1. Contract Form ______________________
- 21 -
<PAGE>
Schedule B
----------
Accounts
--------
Name of Account Date of Resolution Of Company's Board
which Established the Account
- 22 -
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/ policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to
call in the number of Customers to Fidelity, as soon as possible,
but no later than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
- 23 -
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company). Contents of envelope sent to Customers by Company
will include:
a. Voting Instruction Card(s)
b. One proxy-notice and statement (one document)
c. return envelope (postage pro-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
----
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including) the meeting,
---
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
- 24 -
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelops. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
--- --------
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
------
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provided a standard from for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
- 25 -
<PAGE>
Participation Agreement Addendum
SCHEDULE A
----------
Accounts
--------
This Schedule shall be effective as of the date of the last signature below, and
replaces and supersedes Schedule A to the Participation Agreement dated April 1,
1991 (as amended) among the VIP Funds, Fidelity Distributors Corporation and PFL
Life Insurance Company.
Date of Resolutions of
Company's Board which
Name of Contracts Name of Accounts established the Accounts
----------------- ---------------- ------------------------
Fidelity Income Plus Fidelity Variable Annuity August 24, 1979 (by an
Individual Variable Annuity Account affiliate subsequently
Contracts acquired by the Company)
PFL Retirement Builder Retirement Builder Variable
Individual Variable Annuity Annuity Account March 29, 1996
Contracts
In witness whereof, we have hereunto set our hand as of the dates indicated:
PFL Life Insurance Company
11/22/96 By: Ronald L. Ziegler
- -------------- -------------------------------
Date Signed
Title: Vice President & Actuary
----------------------------
Variable Insurance Products Fund II
11/19/96 By: J. Gary Burkheed
- -------------- --------------------------------
Date Signed
Title: Senior Vice President
-----------------------------
Fidelity Distributors Corporation
11/11/96 By: Neil Litvack
- -------------- --------------------------------
Date Signed Title: President
-----------------------------
<PAGE>
EXHIBIT (9)
-----------
OPINION AND CONSENT OF COUNSEL
------------------------------
<PAGE>
[LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE]
December 4, 1996
PFL Life Insurance Company
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
Dear Sir/Madam:
With reference to the Registration Statement on Form N-4 by PFL Life Insurance
Company and PFL Retirement Builder Variable Annuity Account with the Securities
and Exchange Commission covering individual variable annuity contracts, I have
examined such documents and such law as I considered necessary and appropriate,
and on the basis of such examination, it is my opinion that:
1. PFL Life Insurance Company is duly organized and validly existing under the
laws of the State of Iowa and has been duly authorized to issue individual
variable annuity contracts by the Department of Insurance of the State of
Iowa.
2. PFL Retirement Builder Variable Annuity Account is a duly authorized and
existing separate account established pursuant to the provisions of Section
508A.1 of the Iowa Insurance Code.
3. The Individual Variable Annuity Contracts, when issued as contemplated by
said Form N-4 Registration Statement, will constitute legal, validly issued
and binding obligations of PFL Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to said N-4
Registration Statement.
Very truly yours,
PFL LIFE INSURANCE COMPANY
/s/ Frank A. Camp
Frank A. Camp
Division General Counsel
Financial Markets Division
<PAGE>
EXHIBIT (10)(a)
---------------
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Financial
Statements" and "Independent Auditors" and to the use of our report dated
February 23, 1996 with respect to the statutory-basis financial statements and
schedules of PFL Life Insurance Company, included in Pre-Effective Amendment No.
1 to Registration Statement (Form N-4 No. 333-7509) and related Prospectus of
The Retirement Income Builder Variable Annuity.
Des Moines, Iowa
December 2, 1996
<PAGE>
EXHIBIT (10)(b)
---------------
OPINION AND CONSENT OF ACTUARY
------------------------------
<PAGE>
[LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE]
November 21, 1996
PFL Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
Re: PFL Retirement Builder Variable Annuity Account Registration on Form N-4
SEC File No. 333-7509
Dear Sir/Madam:
With regard to the above registration statement, I have examined such documents
and made such inquiries as I have deemed necessary and appropriate, and on the
basis of such examination, have the following opinions:
Fees and charges deducted under the Retirement Income Builder Variable Annuity
policies are those deemed necessary to appropriately reflect:
(1) the expenses incurred in the acquisition and distribution of the Policies,
(2) the expenses associated with the development and servicing of the Policies,
(3) the assumption of certain risks arising from the operation and management
of the Policies and that provides for a reasonable margin of profit.
Fees and charges assessed against the policy values in the Variable Account
include:
(i) Service Charge and Administrative Charge
(ii) Contingent Deferred Sales Charge (Surrender Charge)
(iii)Mortality and Expense Risk Fee (M&E)
(iv) Taxes (including Premium and other Taxes if applicable)
The magnitude of each of the individual charges listed above in (i) through (iv)
is established in the pricing of the Retirement Income Builder, to achieve a
reasonable Return on Investment (ROI), which is within the range of industry
practice with respect to comparable variable annuity products.
In the process of determining the reasonable ROI, each individual charge is also
established within the reasonable range of industry practice. For example, in
conjunction with the pricing process the company has analyzed publicly available
information pertaining to similar industry products, taking into consideration
such factors as current charge levels, the existence of charge level guarantees,
guaranteed death benefits, and guaranteed annuity rates. The methodology and
results of the comparative surveys included in this analysis are maintained at
the company's administrative offices.
- --------------------------------------------------------------------------------
<PAGE>
Except by coincidence, it is not expected that actual charges assessed in a
given year would exactly offset actual expenses incurred. Acquisition expenses
(as well as major product and/or systems development expenses) are incurred "up
front" and recovered, with a reasonable profit margin, through future years'
charges. In addition, the company cannot increase certain charges under the
Policies in the pricing process.
Therefore, in my opinion, the fees and charges deducted under the Policies, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the company.
I hereby consent to the use of this opinion, which is included as an Exhibit to
the Registration Statement.
/s/ Calvin R. Birkey
- ---------------------------
Calvin R. Birkey, FSA, MAAA
Associated Actuary
PFL Life Insurance Company
<PAGE>
EXHIBIT (13)
------------
PERFORMANCE DATA CALCULATIONS
-----------------------------
<PAGE>
PFL/FIDELITY BANK VA
HYPOTHETICAL PERFORMANCE SUMMARY
STANDARDIZED CALCULATION METHOD
Return of premium Death Benefit: M&E=125 bp
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1 Year 3 Year 5 Year Life Inception Date
Money Market* 2.85% 3.01% 3.31% 4.72%** 31-Mar-82
High Income 17.88% 11.23% 17.40% 10.02%** 11-Sep-85
Equity Income 32.11% 18.03% 19.74% 11.86% 08-Oct-86
Growth 32.70% 15.82% 19.20% 13.34% 08-Oct-86
Overseas 5.66% 13.46% 6.73% 5.90% 27-Jan-87
Investment Grade Bond 12.89% 6.09% 7.83% 7.55% 05-Jun-89
Asset Manager 12.92% 8.29% 11.29% 10.77% 29-May-90
Asset Manager: Growth N/A N/A N/A 16.66% 03-Jan-95
Contrafund N/A N/A N/A 33.40% 03-Jan-95
Index 500 31.85% 13.15% N/A 13.41% 27-Aug-92
</TABLE>
This performance data is hypothetical for the Bank Va product. It is based on
the performance of other products which use the same underlying mutual funds.
These calculations were adjusted for differences in the level of charges. For
purposes of this calculation, the deductions for the mortality and expense risk
charge and administrative charge are made on a monthly basis rather than a daily
basis. Principal investment returns (except Money Market Portfolio) and yields
will fluctuate and there is no guarantee you will receive back your original
principal. Average Annual Total Returns and Yield include all insurance contract
charges.
*The underlying Money Market Portfolio seeks to maintain a stable $1.00 share
price, however, there is no assurance that it will be able to do so. An
investment in the Portfolio is not insured by the U.S. government.
**Figure for 10 years.
<PAGE>
PFL/FIDELITY BANK VA
HYPOTHETICAL PERFORMANCE SUMMARY
NON-STANDARDIZED CALCULATION METHOD
Return of premium Death Benefit: M&E=125 bp
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1 Year 3 Year 5 Year Life Inception Date
Money Market* 4.51% 3.10% 3.31% 4.72%** 31-Mar-82
High Income 19.04% 11.23% 17.40% 10.02%** 11-Sep-85
Equity Income 33.35% 18.03% 19.74% 11.86% 08-Oct-86
Growth 33.62% 15.82% 19.20% 13.34% 08-Oct-86
Overseas 8.25% 13.76% 6.73% 5.90% 27-Jan-87
Investment Grade Bond 15.81% 6.41% 7.83% 7.55% 05-Jun-89
Asset Manager 15.44% 8.53% 11.29% 10.77% 29-May-90
Asset Manager: Growth N/A N/A N/A 22.01% 03-Jan-95
Contrafund N/A N/A N/A 38.63% 03-Jan-95
Index 500 35.52% 13.53% N/A 13.75% 27-Aug-92
</TABLE>
This performance data is hypothetical for the Bank Va product. It is based on
the performance of other products which use the same underlying mutual funds.
These calculations were adjusted for differences in the level of charges. For
purposes of this calculation, the deductions for the mortality and expense risk
charge and administrative charge are made on a monthly basis rather than a daily
basis. Principal investment returns (except Money Market Portfolio) and yields
will fluctuate and there is no guarantee you will receive back your original
principal. Average Annual Total Returns and Yield include all insurance contract
charges.
*The underlying Money Market Portfolio seeks to maintain a stable $1.00 share
price, however, there is no assurance that it will be able to do so. An
investment in the Portfolio is not insured by the U.S. government.
**Figure for 10 years.
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr
<S> <C> <C> <C> <C> <C> <C>
30-Jun-91 1.966104 1000 1,966.10 0.00042865 0.80 1,875.27
31-Jul-91 1.974097 1000 1,974.10 0.00042865 0.80 1,882.09
29-Aug-91 1.981733 1000 1,981.73 0.00042865 0.81 1,888.56
30-Sep-91 1.989970 1000 1,989.97 0.00042865 0.81 1,895.60
30-Oct-91 1.997411 1000 1,997.41 0.00042865 0.81 1,901.88
29-Nov-91 2.004585 1000 2,004.59 0.00042865 0.82 1,907.89
31-Dec-91 2.011998 1000 2,012.00 0.00042865 0.82 1,914.13
31-Jan-92 2.018841 1000 2,018.84 0.00042865 0.82 1,919.82
28-Feb-92 2.024454 1000 2,024.45 0.00042865 0.82 1,924.33
31-Mar-92 2.030480 1000 2,030.48 0.00042865 0.82 1,929.24
30-Apr-92 2.035857 1000 2,035.86 0.00042865 0.83 1,933.52
29-May-92 2.040751 1000 2,040.75 0.00042865 0.83 1,937.34
30-Jun-92 2.046057 1000 2,046.06 0.00042865 0.83 1,941.55
31-Jul-92 2.051019 1000 2,051.02 0.00042865 0.83 1,945.42
31-Aug-92 2.055796 1000 2,055.80 0.00042865 0.83 1,949.12
30-Sep-92 2.060295 1000 2,060.30 0.00042865 0.84 1,952.55
30-Oct-92 2.064643 1000 2,064.64 0.00042865 0.84 1,955.83
30-Nov-92 2.069170 1000 2,069.17 0.00042865 0.84 1,959.28
31-Dec-92 2.073920 1000 2,073.92 0.00042865 0.84 1,962.94 2,150.96 4.00% 40.00% 2,145.38
29-Jan-93 2.078344 1000 2,078.34 0.00042865 0.84 1,966.29
26-Feb-93 2.082383 1000 2,082.38 0.00042865 0.84 1,969.26
31-Mar-93 2.086987 1000 2,086.99 0.00042865 0.84 1,972.77
30-Apr-93 2.091096 1000 2,091.10 0.00042865 0.85 1,975.81
28-May-93 2.094893 1000 2,094.89 0.00042865 0.85 1,978.55
30-Jun-93 2.099369 1000 2,099.37 0.00042865 0.85 1,981.93
30-Jul-93 2.103397 1000 2,103.40 0.00042865 0.85 1,984.89
31-Aug-93 2.107638 1000 2,107.64 0.00042865 0.85 1,988.04
30-Sep-93 2.111596 1000 2,111.60 0.00042865 0.85 1,990.92
</TABLE>
<TABLE>
<CAPTION>
Avg Ann Avg Ann $1,000 $1,000
Date n W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C> <C>
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 3 3.01% 3.10% 1,092.94 1,095.79
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C>
29-Oct-93 2.115430 1000 2,115.43 0.00042865 0.85 1,993.68
30-Nov-93 2.119701 1000 2,119.70 0.00042865 0.85 1,996.85
31-Dec-93 2.124046 1000 2,124.05 0.00042865 0.86 2,000.09
31-Jan-94 2.128327 1000 2,128.33 0.00042865 0.86 2,003.26
28-Feb-94 2.132184 1000 2,132.18 0.00042865 0.86 2,006.03
31-Mar-94 2.136833 1000 2,136.83 0.00042865 0.86 2,009.55
29-Apr-94 2.141554 1000 2,141.55 0.00042865 0.86 2,013.13
31-May-94 2.147430 1000 2,147.43 0.00042865 0.86 2,017.79
30-Jun-94 2.153412 1000 2,153.41 0.00042865 0.86 2,022.54
29-Jul-94 2.159445 1000 2,159.45 0.00042865 0.87 2,027.34
31-Aug-94 2.166601 1000 2,166.60 0.00042865 0.87 2,033.19
30-Sep-94 2.173487 1000 2,173.49 0.00042865 0.87 2,038.78
31-Oct-94 2.180839 1000 2,180.84 0.00042865 0.87 2,044.80
30-Nov-94 2.188470 1000 2,188.47 0.00042865 0.88 2,051.08
31-Dec-94 2.196945 1000 2,196.95 0.00042865 0.88 2,058.15 2,150.96 6.00% 20.00% 2,116.78 1
31-Jan-95 2.206310 1000 2,206.31 0.00042865 0.88 2,066.04
28-Feb-95 2.214886 1000 2,214.89 0.00042865 0.89 2,073.18
31-Mar-95 2.224538 1000 2,224.54 0.00042865 0.89 2,081.33
28-Apr-95 2.233263 1000 2,233.26 0.00042865 0.89 2,088.60
31-May-95 2.243548 1000 2,243.55 0.00042865 0.90 2,097.32
30-Jun-95 2.252864 1000 2,252.86 0.00042865 0.90 2,105.13
31-Jul-95 2.262030 1000 2,262.03 0.00042865 0.90 2,112.79
31-Aug-95 2.271798 1000 2,271.80 0.00042865 0.91 2,121.01
29-Sep-95 2.280534 1000 2,280.53 0.00042865 0.91 2,128.26
31-Oct-95 2.290149 1000 2,290.15 0.00042865 0.91 2,136.32
30-Nov-95 2.299129 1000 2,299.13 0.00042865 0.92 2,143.78
31-Dec-95 2.307819 1000 2,307.82 0.00042865 0.92 2,150.96
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 2.85% 4.51% 1,028.49 1,045.10
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 6
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Dec-95 2,150.96
<CAPTION>
ERV of ERV of
Model Acct Value Avg Ann Avg Ann $1,000 $1,000
Date AUV # Units Before Chrge Factor W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
</TABLE>
Page 7
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1,000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
11-Sep-85 1.000000 1000 1,000.00 1,000.00 2,755.47 0.00% 100.00% 2,755.47 10.30
30-Sep-85 1.001970 1000 1,001.97 0.00042865 0.43 1,001.54
31-Oct-85 1.013858 1000 1,013.86 0.00042865 0.43 1,012.99
29-Nov-85 1.027558 1000 1,027.56 0.00042865 0.43 1,026.25
31-Dec-85 1.061544 1000 1,061.54 0.00042865 0.44 1,059.75 2,755.47 0.00% 100.00% 2,755.47 10.00
31-Jan-86 1.073973 1000 1,073.97 0.00042865 0.45 1,071.71
28-Feb-86 1.109646 1000 1,109.65 0.00042865 0.46 1,106.84
31-Mar-86 1.136266 1000 1,136.27 0.00042865 0.47 1,132.92
30-Apr-86 1.154801 1000 1,154.80 0.00042865 0.49 1,150.92
30-May-86 1.171653 1000 1,171.65 0.00042865 0.49 1,167.22
30-Jun-86 1.186687 1000 1,186.69 0.00042865 0.50 1,181.70
31-Jul-86 1.181193 1000 1,181.19 0.00042865 0.51 1,175.72
29-Aug-86 1.185162 1000 1,185.16 0.00042865 0.50 1,179.16
30-Sep-86 1.194450 1000 1,194.45 0.00042865 0.51 1,187.90
31-Oct-86 1.229324 1000 1,229.32 0.00042865 0.51 1,222.07
28-Nov-86 1.232460 1000 1,232.46 0.00042865 0.52 1,224.67
31-Dec-86 1.239420 1000 1,239.42 0.00042865 0.52 1,231.06
30-Jan-87 1.283793 1000 1,283.79 0.00042865 0.53 1,274.60
27-Feb-87 1.305223 1000 1,305.22 0.00042865 0.55 1,295.33
31-Mar-87 1.316041 1000 1,316.04 0.00042865 0.56 1,305.52
30-Apr-87 1.274052 1000 1,274.05 0.00042865 0.56 1,263.30
29-May-87 1.261763 1000 1,261.76 0.00042865 0.54 1,250.58
30-Jun-87 1.288222 1000 1,288.22 0.00042865 0.54 1,276.26
31-Jul-87 1.288733 1000 1,288.73 0.00042865 0.55 1,276.22
31-Aug-87 1.298560 1000 1,298.56 0.00042865 0.55 1,285.41
30-Sep-87 1.252311 1000 1,252.31 0.00042865 0.55 1,239.08
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg. Ann Avg. Ann $1,000 $1,000
Date W/Surr W/o Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
11-Sep-85 10.33% 10.33% 2,755.47 2,755.47
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85 10.02% 10.02% 2,600.11 2,600.11
31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr
<S> <C> <C> <C> <C> <C> <C>
30-Oct-87 1.190964 1000 1,190.96 0.00042865 0.53 1,177.85
30-Nov-87 1.225642 1000 1,225.64 0.00042865 0.50 1,211.64
31-Dec-87 1.244613 1000 1,244.61 0.00042865 0.52 1,229.87
29-Jan-88 1.284919 1000 1,284.92 0.00042865 0.53 1,269.17
29-Feb-88 1.322703 1000 1,322.70 0.00042865 0.54 1,305.95
31-Mar-88 1.312291 1000 1,312.29 0.00042865 0.56 1,295.11
29-Apr-88 1.321752 1000 1,321.75 0.00042865 0.56 1,303.89
31-May-88 1.318870 1000 1,318.87 0.00042865 0.56 1,300.49
30-Jun-88 1.344383 1000 1,344.38 0.00042865 0.56 1,325.09
29-Jul-88 1.598735 1000 1,598.74 0.00042865 0.57 1,575.23
31-Aug-88 1.351416 1000 1,351.42 0.00042865 0.68 1,330.87
30-Sep-88 1.361392 1000 1,361.39 0.00042865 0.57 1,340.12
31-Oct-88 1.375336 1000 1,375.34 0.00042865 0.57 1,353.27
30-Nov-88 1.369180 1000 1,369.18 0.00042865 0.58 1,346.64
31-Dec-88 1.380187 1000 1,380.19 0.00042865 0.58 1,356.88
31-Jan-89 1.411469 1000 1,411.47 0.00042865 0.58 1,387.06
28-Feb-89 1.417558 1000 1,417.56 0.00042865 0.59 1,392.45
31-Mar-89 1.398248 1000 1,398.25 0.00042865 0.60 1,372.88
28-Apr-89 1.381908 1000 1,381.91 0.00042865 0.59 1,356.25
31-May-89 1.406591 1000 1,406.59 0.00042865 0.58 1,379.89
30-Jun-89 1.447534 1000 1,447.53 0.00042865 0.59 1,419.47
31-Jul-89 1.435498 1000 1,435.50 0.00042865 0.61 1,407.06
31-Aug-89 1.426144 1000 1,426.14 0.00042865 0.60 1,397.28
30-Sep-89 1.375082 1000 1,375.08 0.00042865 0.60 1,346.66
31-Oct-89 1.314955 1000 1,314.96 0.00042865 0.58 1,287.19
30-Nov-89 1.315211 1000 1,315.21 0.00042865 0.55 1,286.89
31-Dec-89 1.310687 1000 1,310.69 0.00042865 0.55 1,281.92
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date n W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C> <C>
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
31-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Jan-90 1.280482 1000 1,280.48 0.00042865 0.55 1,251.82
28-Feb-90 1.259919 1000 1,259.92 0.00042865 0.54 1,231.18
31-Mar-90 1.245801 1000 1,245.80 0.00042865 0.53 1,216.86
30-Apr-90 1.248657 1000 1,248.66 0.00042865 0.52 1,219.13
31-May-90 1.273569 1000 1,273.57 0.00042865 0.52 1,242.93
30-Jun-90 1.293254 1000 1,293.25 0.00042865 0.53 1,261.61
31-Jul-90 1.311982 1000 1,311.98 0.00042865 0.54 1,279.34
31-Aug-90 1.289064 1000 1,289.06 0.00042865 0.55 1,256.44
30-Sep-90 1.257459 1000 1,257.46 0.00042865 0.54 1,225.10
31-Oct-90 1.225946 1000 1,225.95 0.00042865 0.53 1,193.87
30-Nov-90 1.254075 1000 1,254.08 0.00042865 0.51 1,220.75
31-Dec-90 1.269032 1000 1,269.03 0.00042865 0.52 1,234.79 2,755.47 0.00% 60.00% 2,755.47 5.002
31-Jan-91 1.296914 1000 1,296.91 0.00042865 0.53 1,261.39
28-Feb-91 1.367929 1000 1,367.93 0.00042865 0.54 1,329.92
31-Mar-91 1.415535 1000 1,415.54 0.00042865 0.57 1,375.63
30-Apr-91 1.464717 1000 1,464.72 0.00042865 0.59 1,422.84
31-May-91 1.485227 1000 1,485.23 0.00042865 0.61 1,442.15
30-Jun-91 1.518240 1000 1,518.24 0.00042865 0.62 1,473.59
31-Jul-91 1.572715 1000 1,572.72 0.00042865 0.63 1,525.83
29-Aug-91 1.587815 1000 1,587.82 0.00042865 0.65 1,539.82
30-Sep-91 1.627808 1000 1,627.81 0.00042865 0.66 1,577.95
30-Oct-91 1.680315 1000 1,680.32 0.00042865 0.68 1,628.17
29-Nov-91 1.695276 1000 1,695.28 0.00042865 0.70 1,641.97
31-Dec-91 1.703009 1000 1,703.01 0.00042865 0.70 1,648.75
31-Jan-92 1.792744 1000 1,792.74 0.00042865 0.71 1,734.92
28-Feb-92 1.856703 1000 1,856.70 0.00042865 0.74 1,796.08
31-Mar-92 1.915385 1000 1,915.39 0.00042865 0.77 1,852.07
<CAPTION>
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 17.40% 17.40% 2,231.53 2,231.53
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr
<S> <C> <C> <C> <C> <C> <C>
30-Apr-92 1.927666 1000 1,927.67 0.00042865 0.79 1,863.15
29-May-92 1.949637 1000 1,949.64 0.00042865 0.80 1,883.59
30-Jun-92 1.969516 1000 1,969.52 0.00042865 0.81 1,901.99
31-Jul-92 2.006776 1000 2,006.78 0.00042865 0.82 1,937.16
31-Aug-92 2.047841 1000 2,047.84 0.00042865 0.83 1,975.97
30-Sep-92 2.067698 1000 2,067.70 0.00042865 0.85 1,994.28
30-Oct-92 2.035532 1000 2,035.53 0.00042865 0.85 1,962.40
30-Nov-92 2.059172 1000 2,059.17 0.00042865 0.84 1,984.35
31-Dec-92 2.078934 1000 2,078.93 0.00042865 0.85 2,002.54 2,755.47 4.00% 40.00% 2,755.47
29-Jan-93 2.135280 1000 2,135.28 0.00042865 0.86 2,055.96
26-Feb-93 2.170380 1000 2,170.38 0.00042865 0.88 2,088.87
31-Mar-93 2.218870 1000 2,218.87 0.00042865 0.90 2,134.65
30-Apr-93 2.232005 1000 2,232.01 0.00042865 0.92 2,146.37
28-May-93 2.263967 1000 2,263.97 0.00042865 0.92 2,176.19
30-Jun-93 2.320614 1000 2,320.61 0.00042865 0.93 2,229.70
30-Jul-93 2.341977 1000 2,341.98 0.00042865 0.96 2,249.27
31-Aug-93 2.365286 1000 2,365.29 0.00042865 0.96 2,270.70
30-Sep-93 2.372044 1000 2,372.04 0.00042865 0.97 2,276.21
29-Oct-93 2.426590 1000 2,426.59 0.00042865 0.98 2,327.58
30-Nov-93 2.447714 1000 2,447.71 0.00042865 1.00 2,346.84
31-Dec-93 2.485444 1000 2,485.44 0.00042865 1.01 2,382.01
31-Jan-94 2.566627 1000 2,566.63 0.00042865 1.02 2,458.79
28-Feb-94 2.561983 1000 2,561.98 0.00042865 1.05 2,453.29
31-Mar-94 2.473999 1000 2,474.00 0.00042865 1.05 2,367.99
29-Apr-94 2.447480 1000 2,447.48 0.00042865 1.02 2,341.59
31-May-94 2.450304 1000 2,450.30 0.00042865 1.00 2,343.29
30-Jun-94 2.439639 1000 2,439.64 0.00042865 1.00 2,332.08
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date n W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C> <C>
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 3 11.23% 11.23% 1,375.98 1,375.98
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
29-Jul-94 2.447149 1000 2,447.15 0.00042865 1.00 2,338.26
31-Aug-94 2.445389 1000 2,445.39 0.00042865 1.00 2,335.58
30-Sep-94 2.461872 1000 2,461.87 0.00042865 1.00 2,350.32
31-Oct-94 2.437614 1000 2,437.61 0.00042865 1.01 2,326.15
30-Nov-94 2.415698 1000 2,415.70 0.00042865 1.00 2,304.24
31-Dec-94 2.427652 1000 2,427.65 0.00042865 0.99 2,314.66 2,755.47 6.00% 20.00% 2,728.53 1
31-Jan-95 2.450757 1000 2,450.76 0.00042865 0.99 2,335.70
28-Feb-95 2.533325 1000 2,533.33 0.00042865 1.00 2,413.39
31-Mar-95 2.563135 1000 2,563.14 0.00042865 1.03 2,440.75
28-Apr-95 2.636698 1000 2,636.70 0.00042865 1.05 2,509.75
31-May-95 2.702608 1000 2,702.61 0.00042865 1.08 2,571.42
30-Jun-95 2.708097 1000 2,708.10 0.00042865 1.10 2,575.54
31-Jul-95 2.771566 1000 2,771.57 0.00042865 1.10 2,634.79
31-Aug-95 2.791440 1000 2,791.44 0.00042865 1.13 2,652.56
29-Sep-95 2.835563 1000 2,835.56 0.00042865 1.14 2,693.35
31-Oct-95 2.860136 1000 2,860.14 0.00042865 1.15 2,715.53
30-Nov-95 2.872736 1000 2,872.74 0.00042865 1.16 2,726.33
31-Dec-95 2.904665 1000 2,904.67 0.00042865 1.17 2,755.47
31-Dec-95 2,755.47
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 17.88% 19.04% 1,178.81 1,190.44
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
EQUITY INCOME
FUND #56 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
08-Oct-86 1.000000 1000 1,000.00 1,000.00 2,815.70 0.00% 100.00% 2,815.70 9.235
31-Oct-86 1.010476 1000 1,010.48 0.00042865 0.43 1,010.05
28-Nov-86 1.031847 1000 1,031.85 0.00042865 0.43 1,030.98
31-Dec-86 1.001137 1000 1,001.14 0.00042865 0.44 999.85
30-Jan-87 1.114270 1000 1,114.27 0.00042865 0.43 1,112.41
27-Feb-87 1.139525 1000 1,139.52 0.00042865 0.48 1,137.15
31-Mar-87 1.167641 1000 1,167.64 0.00042865 0.49 1,164.72
30-Apr-87 1.137811 1000 1,137.81 0.00042865 0.50 1,134.46
29-May-87 1.144098 1000 1,144.10 0.00042865 0.49 1,140.24
30-Jun-87 1.167131 1000 1,167.13 0.00042865 0.49 1,162.71
31-Jul-87 1.210774 1000 1,210.77 0.00042865 0.50 1,205.69
31-Aug-87 1.243257 1000 1,243.26 0.00042865 0.52 1,237.52
30-Sep-87 1.216367 1000 1,216.37 0.00042865 0.53 1,210.22
30-Oct-87 0.978343 1000 978.34 0.00042865 0.52 972.88
30-Nov-87 0.933933 1000 933.93 0.00042865 0.42 928.30
31-Dec-87 0.978927 1000 978.93 0.00042865 0.40 972.63
29-Jan-88 1.050124 1000 1,050.12 0.00042865 0.42 1,042.95
29-Feb-88 1.101418 1000 1,101.42 0.00042865 0.45 1,093.45
31-Mar-88 1.081511 1000 1,081.51 0.00042865 0.47 1,073.21
29-Apr-88 1.098719 1000 1,098.72 0.00042865 0.46 1,089.83
31-May-88 1.112678 1000 1,112.68 0.00042865 0.47 1,103.21
30-Jun-88 1.175213 1000 1,175.21 0.00042865 0.47 1,164.74
29-Jul-88 1.172343 1000 1,172.34 0.00042865 0.50 1,161.40
31-Aug-88 1.151301 1000 1,151.30 0.00042865 0.50 1,140.05
30-Sep-88 1.184736 1000 1,184.74 0.00042865 0.49 1,172.67
31-Oct-88 1.204366 1000 1,204.37 0.00042865 0.50 1,191.60
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
08-Oct-86 11.86% 11.86% 2,815.70 2,815.70
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
EQUITY INCOME
FUND #56 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Nov-88 1.184234 1000 1,184.23 0.00042865 0.51 1,171.17
31-Dec-88 1.194265 1000 1,194.26 0.00042865 0.50 1,180.59
31-Jan-89 1.267141 1000 1,267.14 0.00042865 0.51 1,252.12
28-Feb-89 1.259868 1000 1,259.87 0.00042865 0.54 1,244.40
31-Mar-89 1.286284 1000 1,286.28 0.00042865 0.53 1,269.96
28-Apr-89 1.335110 1000 1,335.11 0.00042865 0.54 1,317.62
31-May-89 1.373810 1000 1,373.81 0.00042865 0.56 1,355.25
30-Jun-89 1.373849 1000 1,373.85 0.00042865 0.58 1,354.71
31-Jul-89 1.452963 1000 1,452.96 0.00042865 0.58 1,432.14
31-Aug-89 1.475308 1000 1,475.31 0.00042865 0.61 1,453.55
30-Sep-89 1.457798 1000 1,457.80 0.00042865 0.62 1,435.67
31-Oct-89 1.372736 1000 1,372.74 0.00042865 0.62 1,351.29
30-Nov-89 1.379675 1000 1,379.68 0.00042865 0.58 1,357.54
31-Dec-89 1.390307 1000 1,390.31 0.00042865 0.58 1,367.42
31-Jan-90 1.295478 1000 1,295.48 0.00042865 0.59 1,273.56
28-Feb-90 1.302359 1000 1,302.36 0.00042865 0.55 1,279.78
31-Mar-90 1.303652 1000 1,303.65 0.00042865 0.55 1,280.50
30-Apr-90 1.257598 1000 1,257.60 0.00042865 0.55 1,234.72
31-May-90 1.339901 1000 1,339.90 0.00042865 0.53 1,314.99
30-Jun-90 1.325720 1000 1,325.72 0.00042865 0.56 1,300.51
31-Jul-90 1.292394 1000 1,292.39 0.00042865 0.56 1,267.26
31-Aug-90 1.188389 1000 1,188.39 0.00042865 0.54 1,164.74
30-Sep-90 1.095530 1000 1,095.53 0.00042865 0.50 1,073.23
31-Oct-90 1.066825 1000 1,066.82 0.00042865 0.46 1,044.65
30-Nov-90 1.142542 1000 1,142.54 0.00042865 0.45 1,118.34
31-Dec-90 1.168338 1000 1,168.34 0.00042865 0.48 1,143.11 2,815.70 0.00% 60.00% 2,815.70 5.002
31-Jan-91 1.230158 1000 1,230.16 0.00042865 0.49 1,203.11
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Nov-88
31-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90
31-Jan-91 19.74% 19.74% 2,463.19 2,463.19
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
EQUITY INCOME
FUND #56 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C>
28-Feb-91 1.314070 1000 1,314.07 0.00042865 0.52 1,284.66
31-Mar-91 1.340512 1000 1,340.51 0.00042865 0.55 1,309.96
30-Apr-91 1.345806 1000 1,345.81 0.00042865 0.56 1,314.57
31-May-91 1.418707 1000 1,418.71 0.00042865 0.56 1,385.22
30-Jun-91 1.374941 1000 1,374.94 0.00042865 0.59 1,341.89
31-Jul-91 1.435926 1000 1,435.93 0.00042865 0.58 1,400.83
29-Aug-91 1.469093 1000 1,469.09 0.00042865 0.60 1,432.59
30-Sep-91 1.454234 1000 1,454.23 0.00042865 0.61 1,417.48
30-Oct-91 1.481306 1000 1,481.31 0.00042865 0.61 1,443.27
29-Nov-91 1.412872 1000 1,412.87 0.00042865 0.62 1,375.97
31-Dec-91 1.523641 1000 1,523.64 0.00042865 0.59 1,483.26
31-Jan-92 1.543167 1000 1,543.17 0.00042865 0.64 1,501.63
28-Feb-92 1.592306 1000 1,592.31 0.00042865 0.64 1,548.80
31-Mar-92 1.571695 1000 1,571.70 0.00042865 0.66 1,528.09
30-Apr-92 1.619869 1000 1,619.87 0.00042865 0.66 1,574.27
29-May-92 1.631787 1000 1,631.79 0.00042865 0.67 1,585.18
30-Jun-92 1.616373 1000 1,616.37 0.00042865 0.68 1,569.53
31-Jul-92 1.664779 1000 1,664.78 0.00042865 0.67 1,615.86
31-Aug-92 1.627202 1000 1,627.20 0.00042865 0.69 1,578.69
30-Sep-92 1.643019 1000 1,643.02 0.00042865 0.68 1,593.36
30-Oct-92 1.661598 1000 1,661.60 0.00042865 0.68 1,610.69
30-Nov-92 1.720715 1000 1,720.72 0.00042865 0.69 1,667.31
31-Dec-92 1.768091 1000 1,768.09 0.00042865 0.71 1,712.50 2,815.70 4.00% 40.00% 2,815.70 3
29-Jan-93 1.818363 1000 1,818.36 0.00042865 0.73 1,760.46
26-Feb-93 1.858073 1000 1,858.07 0.00042865 0.75 1,798.15
31-Mar-93 1.912068 1000 1,912.07 0.00042865 0.77 1,849.63
30-Apr-93 1.902871 1000 1,902.87 0.00042865 0.79 1,839.94
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 18.03% 18.03% 1,644.20 1,644.20
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT ---------------------
EQUITY INCOME SURRENDER PROVISIONS:
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS Year Rate % Free
--- ---- ------
Initial investment 1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount using
.80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C>
28-May-93 1.936119 1000 1,936.12 0.00042865 0.79 1,871.30
30-Jun-93 1.957484 1000 1,957.48 0.00042865 0.80 1,891.15
30-Jul-93 1.982820 1000 1,982.82 0.00042865 0.81 1,914.82
31-Aug-93 2.057238 1000 2,057.24 0.00042865 0.82 1,985.86
30-Sep-93 2.048031 1000 2,048.03 0.00042865 0.85 1,976.12
29-Oct-93 2.065450 1000 2,065.45 0.00042865 0.85 1,992.08
30-Nov-93 2.027938 1000 2,027.94 0.00042865 0.85 1,955.05
31-Dec-93 2.073414 1000 2,073.41 0.00042865 0.84 1,998.05
31-Jan-94 2.163270 1000 2,163.27 0.00042865 0.86 2,083.79
28-Feb-94 2.106274 1000 2,106.27 0.00042865 0.89 2,027.99
31-Mar-94 2.016790 1000 2,016.79 0.00042865 0.87 1,940.96
29-Apr-94 2.084966 1000 2,084.97 0.00042865 0.83 2,005.74
31-May-94 2.103338 1000 2,103.34 0.00042865 0.86 2,022.56
30-Jun-94 2.088974 1000 2,088.97 0.00042865 0.87 2,007.88
29-Jul-94 2.157384 1000 2,157.38 0.00042865 0.86 2,072.77
31-Aug-94 2.266750 1000 2,266.75 0.00042865 0.89 2,176.96
30-Sep-94 2.228155 1000 2,228.16 0.00042865 0.93 2,138.96
31-Oct-94 2.272354 1000 2,272.35 0.00042865 0.92 2,180.47
30-Nov-94 2.196644 1000 2,196.64 0.00042865 0.93 2,106.89
31-Dec-94 2.202346 1000 2,202.35 0.00042865 0.90 2,111.46 2,815.70 6.00% 20.00% 2,789.49 1
31-Jan-95 2.235217 1000 2,235.22 0.00042865 0.91 2,142.07
28-Feb-95 2.319031 1000 2,319.03 0.00042865 0.92 2,221.47
31-Mar-95 2.397489 1000 2,397.49 0.00042865 0.95 2,295.67
28-Apr-95 2.462665 1000 2,462.67 0.00042865 0.98 2,357.10
31-May-95 2.535055 1000 2,535.06 0.00042865 1.01 2,425.37
30-Jun-95 2.569795 1000 2,569.80 0.00042865 1.04 2,457.57
31-Jul-95 2.666893 1000 2,666.89 0.00042865 1.05 2,549.38
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 32.11% 33.35% 1,321.12 1,333.53
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
EQUITY INCOME
FUND #56 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Aug-95 2.698518 1000 2,698.52 0.00042865 1.09 2,578.52
29-Sep-95 2.786345 1000 2,786.35 0.00042865 1.11 2,661.33
31-Oct-95 2.752358 1000 2,752.36 0.00042865 1.14 2,627.73
30-Nov-95 2.869485 1000 2,869.49 0.00042865 1.13 2,738.43
31-Dec-95 2.951686 1000 2,951.69 0.00042865 1.17 2,815.70
31-Dec-95 2,815.70
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
W/ Surr W/O Surr W/ Surr W/O Surr
Date
<S> <C> <C> <C> <C>
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
GROWTH
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08-Oct-86 1.000000 1000 1,000.00 1,000.00 3,177.85 0.00% 100.00%
31-Oct-86 0.999476 1000 999.48 0.00042865 0.43 999.05
28-Nov-86 1.020854 1000 1,020.85 0.00042865 0.43 1,019.99
31-Dec-86 1.001140 1000 1,001.14 0.00042865 0.44 999.85
30-Jan-87 1.107286 1000 1,107.29 0.00042865 0.43 1,105.43
27-Feb-87 1.161475 1000 1,161.48 0.00042865 0.47 1,159.06
31-Mar-87 1.179606 1000 1,179.61 0.00042865 0.50 1,176.66
30-Apr-87 1.178833 1000 1,178.83 0.00042865 0.50 1,175.38
29-May-87 1.186062 1000 1,186.06 0.00042865 0.50 1,182.08
30-Jun-87 1.220097 1000 1,220.10 0.00042865 0.51 1,215.50
31-Jul-87 1.268041 1000 1,268.04 0.00042865 0.52 1,262.74
31-Aug-87 1.304981 1000 1,304.98 0.00042865 0.54 1,298.98
30-Sep-87 1.289214 1000 1,289.21 0.00042865 0.56 1,282.73
30-Oct-87 1.005247 1000 1,005.25 0.00042865 0.55 999.64
30-Nov-87 0.934085 1000 934.09 0.00042865 0.43 928.45
31-Dec-87 1.028662 1000 1,028.66 0.00042865 0.40 1,022.06
29-Jan-88 1.051356 1000 1,051.36 0.00042865 0.44 1,044.17
29-Feb-88 1.135835 1000 1,135.84 0.00042865 0.45 1,127.62
31-Mar-88 1.124932 1000 1,124.93 0.00042865 0.48 1,116.32
29-Apr-88 1.138400 1000 1,138.40 0.00042865 0.48 1,129.20
31-May-88 1.127486 1000 1,127.49 0.00042865 0.48 1,117.89
30-Jun-88 1.182378 1000 1,182.38 0.00042865 0.48 1,171.84
29-Jul-88 1.176577 1000 1,176.58 0.00042865 0.50 1,165.59
31-Aug-88 1.147445 1000 1,147.45 0.00042865 0.50 1,136.23
30-Sep-88 1.178994 1000 1,178.99 0.00042865 0.49 1,166.98
31-Oct-88 1.181223 1000 1,181.22 0.00042865 0.50 1,168.69
<CAPTION>
ERV of ERV of
EVR Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr n W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C> <C> <C>
08-Oct-86 3,177.85 9.235 13.34% 13.34% 3,177.85 3,177.85
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
GROWTH
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Nov-88 1.169361 1000 1,169.36 0.00042865 0.50 1,156.45
31-Dec-88 1.181690 1000 1,181.69 0.00042865 0.50 1,168.15
31-Jan-89 1.264423 1000 1,264.42 0.00042865 0.50 1,249.43
28-Feb-89 1.237491 1000 1,237.49 0.00042865 0.54 1,222.28
31-Mar-89 1.274038 1000 1,274.04 0.00042865 0.52 1,257.86
28-Apr-89 1.340596 1000 1,340.60 0.00042865 0.54 1,323.03
31-May-89 1.387549 1000 1,387.55 0.00042865 0.57 1,368.80
30-Jun-89 1.368301 1000 1,368.30 0.00042865 0.59 1,349.22
31-Jul-89 1.489558 1000 1,489.56 0.00042865 0.58 1,468.21
31-Aug-89 1.513987 1000 1,513.99 0.00042865 0.63 1,491.66
30-Sep-89 1.526246 1000 1,526.25 0.00042865 0.64 1,503.10
31-Oct-89 1.482504 1000 1,482.50 0.00042865 0.64 1,459.38
30-Nov-89 1.505900 1000 1,505.90 0.00042865 0.63 1,481.78
31-Dec-89 1.540465 1000 1,540.47 0.00042865 0.64 1,515.16
31-Jan-90 1.450114 1000 1,450.11 0.00042865 0.65 1,425.64
28-Feb-90 1.463071 1000 1,463.07 0.00042865 0.61 1,437.77
31-Mar-90 1.479981 1000 1,479.98 0.00042865 0.62 1,453.77
30-Apr-90 1.435912 1000 1,435.91 0.00042865 0.62 1,409.86
31-May-90 1.561961 1000 1,561.96 0.00042865 0.60 1,533.02
30-Jun-90 1.593492 1000 1,593.49 0.00042865 0.66 1,563.31
31-Jul-90 1.567219 1000 1,567.22 0.00042865 0.67 1,536.86
31-Aug-90 1.404824 1000 1,404.82 0.00042865 0.66 1,376.95
30-Sep-90 1.259481 1000 1,259.48 0.00042865 0.59 1,233.90
31-Oct-90 1.213588 1000 1,213.59 0.00042865 0.53 1,188.41
30-Nov-90 1.311077 1000 1,311.08 0.00042865 0.51 1,283.37
31-Dec-90 1.348850 1000 1,348.85 0.00042865 0.55 1,319.80 3,177.85 0.00% 60.00% 3,177.85 5.002
31-Jan-91 1.437731 1000 1,437.73 0.00042865 0.57 1,406.20
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Nov-88
31-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 19.20% 19.20% 2,407.83 2,407.83
31-Jan-91
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
GROWTH
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
28-Feb-91 1.544054 1000 1,544.05 0.00042865 0.60 1,509.59
31-Mar-91 1.589679 1000 1,589.68 0.00042865 0.65 1,553.54
30-Apr-91 1.573725 1000 1,573.73 0.00042865 0.67 1,537.29
31-May-91 1.665671 1000 1,665.67 0.00042865 0.66 1,626.45
30-Jun-91 1.569484 1000 1,569.48 0.00042865 0.70 1,531.83
31-Jul-91 1.686678 1000 1,686.68 0.00042865 0.66 1,645.55
29-Aug-91 1.765776 1000 1,765.78 0.00042865 0.71 1,722.02
30-Sep-91 1.772975 1000 1,772.98 0.00042865 0.74 1,728.30
30-Oct-91 1.809741 1000 1,809.74 0.00042865 0.74 1,763.40
29-Nov-91 1.721181 1000 1,721.18 0.00042865 0.76 1,676.35
31-Dec-91 1.947218 1000 1,947.22 0.00042865 0.72 1,895.78
31-Jan-92 2.064696 1000 2,064.70 0.00042865 0.81 2,009.34
28-Feb-92 2.106600 1000 2,106.60 0.00042865 0.86 2,049.26
31-Mar-92 1.976106 1000 1,976.11 0.00042865 0.88 1,921.44
30-Apr-92 1.897450 1000 1,897.45 0.00042865 0.82 1,844.14
29-May-92 1.880143 1000 1,880.14 0.00042865 0.79 1,826.53
30-Jun-92 1.805866 1000 1,805.87 0.00042865 0.78 1,753.58
31-Jul-92 1.874345 1000 1,874.35 0.00042865 0.75 1,819.33
31-Aug-92 1.821642 1000 1,821.64 0.00042865 0.78 1,767.39
30-Sep-92 1.852574 1000 1,852.57 0.00042865 0.76 1,796.65
30-Oct-92 1.923066 1000 1,923.07 0.00042865 0.77 1,864.24
30-Nov-92 2.050098 1000 2,050.10 0.00042865 0.80 1,986.59
31-Dec-92 2.111765 1000 2,111.77 0.00042865 0.85 2,045.49
29-Jan-93 2.152081 1000 2,152.08 0.00042865 0.88 2,083.67 3,177.85 4.00% 40.00% 3,177.85 3
26-Feb-93 2.106419 1000 2,106.42 0.00042865 0.89 2,038.56
31-Mar-93 2.188839 1000 2,188.84 0.00042865 0.87 2,117.45
30-Apr-93 2.164530 1000 2,164.53 0.00042865 0.91 2,093.03
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 15.82% 15.82% 1,553.59 1,553.59
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
GROWTH
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
28-May-93 2.324338 1000 2,324.34 0.00042865 0.90 2,246.66
30-Jun-93 2.346602 1000 2,346.60 0.00042865 0.96 2,267.22
30-Jul-93 2.338541 1000 2,338.54 0.00042865 0.97 2,258.46
31-Aug-93 2.454250 1000 2,454.25 0.00042865 0.97 2,369.24
30-Sep-93 2.498243 1000 2,498.24 0.00042865 1.02 2,410.69
29-Oct-93 2.520533 1000 2,520.53 0.00042865 1.03 2,431.16
30-Nov-93 2.416847 1000 2,416.85 0.00042865 1.04 2,330.11
31-Dec-93 2.500812 1000 2,500.81 0.00042865 1.00 2,410.07
31-Jan-94 2.561923 1000 2,561.92 0.00042865 1.03 2,467.93
28-Feb-94 2.533952 1000 2,533.95 0.00042865 1.06 2,439.92
31-Mar-94 2.417186 1000 2,417.19 0.00042865 1.05 2,326.44
29-Apr-94 2.430602 1000 2,430.60 0.00042865 1.00 2,338.36
31-May-94 2.372603 1000 2,372.60 0.00042865 1.00 2,281.56
30-Jun-94 2.250485 1000 2,250.49 0.00042865 0.98 2,163.15
29-Jul-94 2.327092 1000 2,327.09 0.00042865 0.93 2,235.86
31-Aug-94 2.457285 1000 2,457.29 0.00042865 0.96 2,359.99
30-Sep-94 2.425882 1000 2,425.88 0.00042865 1.01 2,328.82
31-Oct-94 2.522725 1000 2,522.73 0.00042865 1.00 2,420.79
30-Nov-94 2.420365 1000 2,420.37 0.00042865 1.04 2,321.52
31-Dec-94 2.480539 1000 2,480.54 0.00042865 1.00 2,378.25 3,177.85 6.00% 20.00% 3,155.98 1
31-Jan-95 2.431945 1000 2,431.95 0.00042865 1.02 2,330.64
28-Feb-95 2.531114 1000 2,531.11 0.00042865 1.00 2,424.67
31-Mar-95 2.621217 1000 2,621.22 0.00042865 1.04 2,509.95
28-Apr-95 2.707934 1000 2,707.93 0.00042865 1.08 2,591.91
31-May-95 2.811428 1000 2,811.43 0.00042865 1.11 2,689.86
30-Jun-95 3.058140 1000 3,058.14 0.00042865 1.15 2,924.75
31-Jul-95 3.358259 1000 3,358.26 0.00042865 1.25 3,210.52
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 32.70% 33.62% 1,327.02 1,336.22
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
GROWTH
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Aug-95 3.397164 1000 3,397.16 0.00042865 1.38 3,246.34
29-Sep-95 3.483042 1000 3,483.04 0.00042865 1.39 3,327.01
31-Oct-95 3.445194 1000 3,445.19 0.00042865 1.43 3,289.44
30-Nov-95 3.440651 1000 3,440.65 0.00042865 1.41 3,283.69
31-Dec-95 3.331228 1000 3,331.23 0.00042865 1.41 3,177.85
31-Dec-95 3,177.85
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
27-Jan-87 1.000000 1000 1,000.00 1,000.00 1,668.70 0.00% 90.00% 1,668.70 8.931
30-Jan-87 0.999345 1000 999.35 0.00042865 0.43 998.92
27-Feb-87 0.999733 1000 999.73 0.00042865 0.43 998.88
31-Mar-87 1.043978 1000 1,043.98 0.00042865 0.43 1,042.65
30-Apr-87 1.119147 1000 1,119.15 0.00042865 0.45 1,117.28
29-May-87 1.102489 1000 1,102.49 0.00042865 0.48 1,100.17
30-Jun-87 1.047927 1000 1,047.93 0.00042865 0.47 1,045.25
31-Jul-87 1.035270 1000 1,035.27 0.00042865 0.45 1,032.18
31-Aug-87 1.126094 1000 1,126.09 0.00042865 0.44 1,122.29
30-Sep-87 1.100502 1000 1,100.50 0.00042865 0.48 1,096.30
30-Oct-87 0.870277 1000 870.28 0.00042865 0.47 866.49
30-Nov-87 0.877632 1000 877.63 0.00042865 0.37 873.44
31-Dec-87 0.938767 1000 938.77 0.00042865 0.37 933.91
29-Jan-88 0.906064 1000 906.06 0.00042865 0.40 900.97
29-Feb-88 0.929518 1000 929.52 0.00042865 0.39 923.91
31-Mar-88 0.970977 1000 970.98 0.00042865 0.40 964.72
29-Apr-88 0.986384 1000 986.38 0.00042865 0.41 979.62
31-May-88 0.967682 1000 967.68 0.00042865 0.42 960.62
30-Jun-88 0.950048 1000 950.05 0.00042865 0.41 942.71
29-Jul-88 0.942451 1000 942.45 0.00042865 0.40 934.76
31-Aug-88 0.908811 1000 908.81 0.00042865 0.40 901.00
30-Sep-88 0.947143 1000 947.14 0.00042865 0.39 938.61
31-Oct-88 0.988394 1000 988.39 0.00042865 0.40 979.09
30-Nov-88 1.005686 1000 1,005.69 0.00042865 0.42 995.80
31-Dec-88 1.007020 1000 1,007.02 0.00042865 0.43 996.69
31-Jan-89 1.036179 1000 1,036.18 0.00042865 0.43 1,025.13
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
27-Jan-87 5.90% 5.90% 1,668.70 1,668.70
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
31-Dec-88
31-Jan-89
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
28-Feb-89 1.053451 1000 1,053.45 0.00042865 0.44 1,041.78
31-Mar-89 1.051786 1000 1,051.79 0.00042865 0.45 1,039.68
28-Apr-89 1.082178 1000 1,082.18 0.00042865 0.45 1,069.28
31-May-89 1.041379 1000 1,041.38 0.00042865 0.46 1,028.51
30-Jun-89 1.035695 1000 1,035.70 0.00042865 0.44 1,022.45
31-Jul-89 1.132904 1000 1,132.90 0.00042865 0.44 1,117.98
31-Aug-89 1.124152 1000 1,124.15 0.00042865 0.48 1,108.87
30-Sep-89 1.193284 1000 1,193.28 0.00042865 0.48 1,176.58
31-Oct-89 1.127637 1000 1,127.64 0.00042865 0.50 1,111.35
30-Nov-89 1.187678 1000 1,187.68 0.00042865 0.48 1,170.05
31-Dec-89 1.261608 1000 1,261.61 0.00042865 0.50 1,242.38
31-Jan-90 1.243784 1000 1,243.78 0.00042865 0.53 1,224.29
28-Feb-90 1.214009 1000 1,214.01 0.00042865 0.52 1,194.46
31-Mar-90 1.259073 1000 1,259.07 0.00042865 0.51 1,238.29
30-Apr-90 1.265192 1000 1,265.19 0.00042865 0.53 1,243.77
31-May-90 1.346971 1000 1,346.97 0.00042865 0.53 1,323.63
30-Jun-90 1.376964 1000 1,376.96 0.00042865 0.57 1,352.54
31-Jul-90 1.444607 1000 1,444.61 0.00042865 0.58 1,418.40
31-Aug-90 1.296578 1000 1,296.58 0.00042865 0.61 1,272.45
30-Sep-90 1.172659 1000 1,172.66 0.00042865 0.55 1,150.29
31-Oct-90 1.280963 1000 1,280.96 0.00042865 0.49 1,256.04
30-Nov-90 1.240461 1000 1,240.46 0.00042865 0.54 1,215.79
31-Dec-90 1.229709 1000 1,229.71 0.00042865 0.52 1,204.73 1,668.70 0.00% 60.00% 1,668.70 5.002
31-Jan-91 1.241750 1000 1,241.75 0.00042865 0.52 1,216.01
28-Feb-91 1.282803 1000 1,282.80 0.00042865 0.52 1,255.69
31-Mar-91 1.244519 1000 1,244.52 0.00042865 0.54 1,217.67
30-Apr-91 1.270969 1000 1,270.97 0.00042865 0.52 1,243.03
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 6.73% 6.73% 1,385.13 1,385.13
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-May-91 1.273148 1000 1,273.15 0.00042865 0.53 1,244.63
30-Jun-91 1.210594 1000 1,210.59 0.00042865 0.53 1,182.94
31-Jul-91 1.261348 1000 1,261.35 0.00042865 0.51 1,232.03
29-Aug-91 1.260548 1000 1,260.55 0.00042865 0.53 1,230.72
30-Sep-91 1.315187 1000 1,315.19 0.00042865 0.53 1,283.54
30-Oct-91 1.323405 1000 1,323.41 0.00042865 0.55 1,291.01
29-Nov-91 1.275159 1000 1,275.16 0.00042865 0.55 1,243.39
31-Dec-91 1.319600 1000 1,319.60 0.00042865 0.53 1,286.19
31-Jan-92 1.333809 1000 1,333.81 0.00042865 0.55 1,299.49
28-Feb-92 1.305215 1000 1,305.22 0.00042865 0.56 1,271.08
31-Mar-92 1.277809 1000 1,277.81 0.00042865 0.54 1,243.84
30-Apr-92 1.356401 1000 1,356.40 0.00042865 0.53 1,319.81
29-May-92 1.414572 1000 1,414.57 0.00042865 0.57 1,375.85
30-Jun-92 1.386126 1000 1,386.13 0.00042865 0.59 1,347.59
31-Jul-92 1.297783 1000 1,297.78 0.00042865 0.58 1,261.13
31-Aug-92 1.285732 1000 1,285.73 0.00042865 0.54 1,248.87
30-Sep-92 1.233129 1000 1,233.13 0.00042865 0.54 1,197.24
30-Oct-92 1.148135 1000 1,148.14 0.00042865 0.51 1,114.21
30-Nov-92 1.141276 1000 1,141.28 0.00042865 0.48 1,107.08
31-Dec-92 1.168866 1000 1,168.87 0.00042865 0.47 1,133.37 1,668.70 4.00% 40.00% 1,655.40 3
29-Jan-93 1.200519 1000 1,200.52 0.00042865 0.49 1,163.57
26-Feb-93 1.223286 1000 1,223.29 0.00042865 0.50 1,185.14
31-Mar-93 1.307209 1000 1,307.21 0.00042865 0.51 1,265.94
30-Apr-93 1.393172 1000 1,393.17 0.00042865 0.54 1,348.64
28-May-93 1.422272 1000 1,422.27 0.00042865 0.58 1,376.23
30-Jun-93 1.386157 1000 1,386.16 0.00042865 0.59 1,340.70
30-Jul-93 1.439919 1000 1,439.92 0.00042865 0.57 1,392.12
</TABLE>
<TABLE>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 13.46% 13.76% 1,460.61 1,472.34
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Aug-93 1.516220 1000 1,516.22 0.00042865 0.60 1,465.29
30-Sep-93 1.506986 1000 1,506.99 0.00042865 0.63 1,455.74
29-Oct-93 1.560592 1000 1,560.59 0.00042865 0.62 1,506.90
30-Nov-93 1.493662 1000 1,493.66 0.00042865 0.65 1,441.63
31-Dec-93 1.591344 1000 1,591.34 0.00042865 0.62 1,535.29
31-Jan-94 1.694030 1000 1,694.03 0.00042865 0.66 1,633.70
28-Feb-94 1.663135 1000 1,663.14 0.00042865 0.70 1,603.20
31-Mar-94 1.620772 1000 1,620.77 0.00042865 0.69 1,561.68
29-Apr-94 1.673325 1000 1,673.33 0.00042865 0.67 1,611.65
31-May-94 1.651563 1000 1,651.56 0.00042865 0.69 1,590.00
30-Jun-94 1.632987 1000 1,632.99 0.00042865 0.68 1,571.43
29-Jul-94 1.675148 1000 1,675.15 0.00042865 0.67 1,611.33
31-Aug-94 1.693466 1000 1,693.47 0.00042865 0.69 1,628.26
30-Sep-94 1.648197 1000 1,648.20 0.00042865 0.70 1,584.04
31-Oct-94 1.680948 1000 1,680.95 0.00042865 0.68 1,614.83
30-Nov-94 1.616262 1000 1,616.26 0.00042865 0.69 1,552.00
31-Dec-94 1.605980 1000 1,605.98 0.00042865 0.67 1,541.46 1,668.70 6.00% 20.00% 1,628.73 1
31-Jan-95 1.538286 1000 1,538.29 0.00042865 0.66 1,475.83
28-Feb-95 1.541389 1000 1,541.39 0.00042865 0.63 1,478.17
31-Mar-95 1.587775 1000 1,587.78 0.00042865 0.63 1,522.02
28-Apr-95 1.632144 1000 1,632.14 0.00042865 0.65 1,563.90
31-May-95 1.653622 1000 1,653.62 0.00042865 0.67 1,583.81
30-Jun-95 1.665915 1000 1,665.92 0.00042865 0.68 1,594.90
31-Jul-95 1.740884 1000 1,740.88 0.00042865 0.68 1,665.99
31-Aug-95 1.691409 1000 1,691.41 0.00042865 0.71 1,617.93
29-Sep-95 1.714988 1000 1,714.99 0.00042865 0.69 1,639.79
31-Oct-95 1.679923 1000 1,679.92 0.00042865 0.70 1,605.56
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 5.66% 8.25% 1,056.61 1,082.55
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Nov-95 1.698310 1000 1,698.31 0.00042866 0.69 1,622.45
31-Dec-95 1.747454 1000 1,747.45 0.00042866 0.70 1,668.70
31-Dec-95 1,668.70
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Nov-95
31-Dec-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
05-Jun-89 1.000000 1000 1,000.00 1,000.00 1,613.80 0.00% 70.00% 1,613.80 6.575
30-Jun-89 1.022717 1000 1,022.72 0.00042865 0.43 1,022.29
31-Jul-89 1.038022 1000 1,038.02 0.00042865 0.44 1,037.15
31-Aug-89 1.029047 1000 1,029.05 0.00042865 0.44 1,027.74
30-Sep-89 1.032446 1000 1,032.45 0.00042865 0.44 1,030.69
31-Oct-89 1.047723 1000 1,047.72 0.00042865 0.44 1,045.50
30-Nov-89 1.056073 1000 1,056.07 0.00042865 0.45 1,053.38
31-Dec-89 1.059709 1000 1,059.71 0.00042865 0.45 1,056.56
31-Jan-90 1.056525 1000 1,056.52 0.00042865 0.45 1,052.93
28-Feb-90 1.061887 1000 1,061.89 0.00042865 0.45 1,057.82
31-Mar-90 1.064436 1000 1,064.44 0.00042865 0.45 1,059.91
30-Apr-90 1.064158 1000 1,064.16 0.00042865 0.45 1,059.18
31-May-90 1.080183 1000 1,080.18 0.00042865 0.45 1,074.67
30-Jun-90 1.088195 1000 1,088.20 0.00042865 0.46 1,082.19
31-Jul-90 1.098023 1000 1,098.02 0.00042865 0.46 1,091.50
31-Aug-90 1.097177 1000 1,097.18 0.00042865 0.47 1,090.19
30-Sep-90 1.100801 1000 1,100.80 0.00042865 0.47 1,093.32
31-Oct-90 1.100083 1000 1,100.08 0.00042865 0.47 1,092.14
30-Nov-90 1.106011 1000 1,106.01 0.00042865 0.47 1,097.56
31-Dec-90 1.115679 1000 1,115.68 0.00042865 0.47 1,106.68 1,613.80 0.00% 60.00% 1,613.80 5.002
31-Jan-91 1.118302 1000 1,118.30 0.00042865 0.47 1,108.81
28-Feb-91 1.128858 1000 1,128.86 0.00042865 0.48 1,118.80
31-Mar-91 1.147271 1000 1,147.27 0.00042865 0.48 1,136.57
30-Apr-91 1.163290 1000 1,163.29 0.00042865 0.49 1,151.95
31-May-91 1.171481 1000 1,171.48 0.00042865 0.49 1,159.57
30-Jun-91 1.171812 1000 1,171.81 0.00042865 0.50 1,159.40
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
05-Jun-89 7.55% 7.55% 1,613.80 1,613.80
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 7.83% 7.83% 1,458.24 1,458.24
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Jul-91 1.182249 1000 1,182.25 0.00042865 0.50 1,169.23
29-Aug-91 1.209500 1000 1,209.50 0.00042865 0.50 1,195.68
30-Sep-91 1.227682 1000 1,227.68 0.00042865 0.51 1,213.14
30-Oct-91 1.239179 1000 1,239.18 0.00042865 0.52 1,223.98
29-Nov-91 1.252900 1000 1,252.90 0.00042865 0.52 1,237.01
31-Dec-91 1.289396 1000 1,289.40 0.00042865 0.53 1,272.51
31-Jan-92 1.275731 1000 1,275.73 0.00042865 0.55 1,258.48
28-Feb-92 1.281931 1000 1,281.93 0.00042865 0.54 1,264.05
31-Mar-92 1.278705 1000 1,278.71 0.00042865 0.54 1,260.33
30-Apr-92 1.287187 1000 1,287.19 0.00042865 0.54 1,268.15
29-May-92 1.306162 1000 1,306.16 0.00042865 0.54 1,286.30
30-Jun-92 1.320374 1000 1,320.37 0.00042865 0.55 1,299.75
31-Jul-92 1.346221 1000 1,346.22 0.00042865 0.56 1,324.63
31-Aug-92 1.353440 1000 1,353.44 0.00042865 0.57 1,331.17
30-Sep-92 1.368808 1000 1,368.81 0.00042865 0.57 1,345.71
30-Oct-92 1.350507 1000 1,350.51 0.00042865 0.58 1,327.14
30-Nov-92 1.346117 1000 1,346.12 0.00042865 0.57 1,322.26
31-Dec-92 1.364252 1000 1,364.25 0.00042865 0.57 1,339.51 1,613.80 4.00% 40.00% 1,599.62 3
29-Jan-93 1.391975 1000 1,391.98 0.00042865 0.57 1,366.15
26-Feb-93 1.414742 1000 1,414.74 0.00042865 0.59 1,387.91
31-Mar-93 1.419936 1000 1,419.94 0.00042865 0.59 1,392.41
30-Apr-93 1.427698 1000 1,427.70 0.00042865 0.60 1,399.43
28-May-93 1.429309 1000 1,429.31 0.00042865 0.60 1,400.41
30-Jun-93 1.455555 1000 1,455.56 0.00042865 0.60 1,425.52
30-Jul-93 1.464514 1000 1,464.51 0.00042865 0.61 1,433.69
31-Aug-93 1.489493 1000 1,489.49 0.00042865 0.61 1,457.52
30-Sep-93 1.495941 1000 1,495.94 0.00042865 0.62 1,463.21
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92
29-Jan-93 6.09% 6.41% 1,194.19 1,204.77
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr
<S> <C> <C> <C> <C> <C> <C>
29-Oct-93 1.502414 1000 1,502.41 0.00042865 0.63 1,468.91
30-Nov-93 1.493948 1000 1,493.95 0.00042865 0.63 1,460.01
31-Dec-93 1.501802 1000 1,501.80 0.00042865 0.63 1,467.06
31-Jan-94 1.517778 1000 1,517.78 0.00042865 0.63 1,482.03
28-Feb-94 1.491986 1000 1,491.99 0.00042865 0.64 1,456.21
31-Mar-94 1.456943 1000 1,456.94 0.00042865 0.62 1,421.39
29-Apr-94 1.442935 1000 1,442.94 0.00042865 0.61 1,407.11
31-May-94 1.438005 1000 1,438.00 0.00042865 0.60 1,401.70
30-Jun-94 1.433144 1000 1,433.14 0.00042865 0.60 1,396.36
29-Jul-94 1.455739 1000 1,455.74 0.00042865 0.60 1,417.78
31-Aug-94 1.455996 1000 1,456.00 0.00042865 0.61 1,417.42
30-Sep-94 1.439396 1000 1,439.40 0.00042865 0.61 1,400.65
31-Oct-94 1.439727 1000 1,439.73 0.00042865 0.60 1,400.37
30-Nov-94 1.441388 1000 1,441.39 0.00042865 0.60 1,401.39
31-Dec-94 1.433937 1000 1,433.94 0.00042865 0.60 1,393.54 1,613.80 6.00% 20.00% 1,573.17
31-Jan-95 1.453743 1000 1,453.74 0.00042865 0.60 1,412.19
28-Feb-95 1.480891 1000 1,480.89 0.00042865 0.61 1,437.96
31-Mar-95 1.489307 1000 1,489.31 0.00042865 0.62 1,445.52
28-Apr-95 1.508565 1000 1,508.56 0.00042865 0.62 1,463.59
31-May-95 1.567941 1000 1,567.94 0.00042865 0.63 1,520.57
30-Jun-95 1.578996 1000 1,579.00 0.00042865 0.65 1,530.64
31-Jul-95 1.572562 1000 1,572.56 0.00042865 0.66 1,523.74
31-Aug-95 1.590271 1000 1,590.27 0.00042865 0.65 1,540.25
29-Sep-95 1.604007 1000 1,604.01 0.00042865 0.66 1,552.89
31-Oct-95 1.624315 1000 1,624.32 0.00042865 0.67 1,571.89
30-Nov-95 1.647341 1000 1,647.34 0.00042865 0.67 1,593.50
31-Dec-95 1.669036 1000 1,669.04 0.00042865 0.68 1,613.80
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date n W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C> <C>
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 1 12.89% 15.81% 1,128.90 1,158.05
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Dec-95 1,613.80
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Dec-95
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
ASSET MANAGER
FUND #64 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
29-May-90 1.000000 1000 1,000.00 1,000.00 1,771.81 0.00% 60.00% 1,771.81 5.594
31-May-90 1.012495 1000 1,012.49 0.00042865 0.43 1,012.07
30-Jun-90 1.018732 1000 1,018.73 0.00042865 0.43 1,017.87
31-Jul-90 1.017038 1000 1,017.04 0.00042865 0.44 1,015.74
31-Aug-90 0.982993 1000 982.99 0.00042865 0.44 981.30
30-Sep-90 0.961801 1000 961.80 0.00042865 0.42 959.72
31-Oct-90 0.966007 1000 966.01 0.00042865 0.41 963.51
30-Nov-90 1.012372 1000 1,012.37 0.00042865 0.41 1,009.34
31-Dec-90 1.041041 1000 1,041.04 0.00042865 0.43 1,037.49 1,771.81 0.00% 60.00% 1,771.81 5.002
31-Jan-91 1.090120 1000 1,090.12 0.00042865 0.44 1,085.96
28-Feb-91 1.132102 1000 1,132.10 0.00042865 0.47 1,127.32
31-Mar-91 1.149675 1000 1,149.68 0.00042865 0.48 1,144.33
30-Apr-91 1.166086 1000 1,166.09 0.00042865 0.49 1,160.18
31-May-91 1.191642 1000 1,191.64 0.00042865 0.50 1,185.11
30-Jun-91 1.173621 1000 1,173.62 0.00042865 0.51 1,166.68
31-Jul-91 1.198151 1000 1,198.15 0.00042865 0.50 1,190.56
29-Aug-91 1.223688 1000 1,223.69 0.00042865 0.51 1,215.42
30-Sep-91 1.227885 1000 1,227.89 0.00042865 0.52 1,219.07
30-Oct-91 1.235162 1000 1,235.16 0.00042865 0.52 1,225.77
29-Nov-91 1.214169 1000 1,214.17 0.00042865 0.53 1,204.42
31-Dec-91 1.265768 1000 1,265.77 0.00042865 0.52 1,255.08
31-Jan-92 1.281037 1000 1,281.04 0.00042865 0.54 1,269.69
28-Feb-92 1.305117 1000 1,305.12 0.00042865 0.54 1,293.01
31-Mar-92 1.301028 1000 1,301.03 0.00042865 0.55 1,288.40
30-Apr-92 1.319233 1000 1,319.23 0.00042865 0.55 1,305.88
29-May-92 1.332155 1000 1,332.16 0.00042865 0.56 1,318.11
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
29-May-90 10.77% 10.77% 1.771.81 1,771.81
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 11.29% 11.29% 1,707.78 1,707.78
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
ASSET MANAGER
FUND #64 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Jun-92 1.330168 1000 1,330.17 0.00042865 0.57 1,315.58
31-Jul-92 1.351458 1000 1,351.46 0.00042865 0.56 1,336.07
31-Aug-92 1.346319 1000 1,346.32 0.00042865 0.57 1,330.42
30-Sep-92 1.353877 1000 1,353.88 0.00042865 0.57 1,337.32
30-Oct-92 1.355100 1000 1,355.10 0.00042865 0.57 1,337.95
30-Nov-92 1.383689 1000 1,383.69 0.00042865 0.57 1,365.61
31-Dec-92 1.404870 1000 1,404.87 0.00042865 0.59 1,385.92 1,771.81 4.00% 40.00% 1,760.16 3
29-Jan-93 1.427132 1000 1,427.13 0.00042865 0.59 1,407.29
26-Feb-93 1.439635 1000 1,439.64 0.00042865 0.60 1,419.02
31-Mar-93 1.479324 1000 1,479.32 0.00042865 0.61 1,457.53
30-Apr-93 1.487157 1000 1,487.16 0.00042865 0.62 1,464.62
28-May-93 1.511533 1000 1,511.53 0.00042865 0.63 1,488.00
30-Jun-93 1.522528 1000 1,522.53 0.00042865 0.64 1,498.19
30-Jul-93 1.540195 1000 1,540.20 0.00042865 0.64 1,514.93
31-Aug-93 1.584097 1000 1,584.10 0.00042865 0.65 1,557.46
30-Sep-93 1.584155 1000 1,584.16 0.00042865 0.67 1,556.85
29-Oct-93 1.625881 1000 1,625.88 0.00042865 0.67 1,597.19
30-Nov-93 1.622556 1000 1,622.56 0.00042865 0.68 1,593.24
31-Dec-93 1.687107 1000 1,687.11 0.00042865 0.68 1,655.94
31-Jan-94 1.739540 1000 1,739.54 0.00042865 0.71 1,706.70
28-Feb-94 1.683261 1000 1,683.26 0.00042865 0.73 1,650.75
31-Mar-94 1.603055 1000 1,603.05 0.00042865 0.71 1,571.38
29-Apr-94 1.603183 1000 1,603.18 0.00042865 0.67 1,570.84
31-May-94 1.615795 1000 1,615.80 0.00042865 0.67 1,582.52
30-Jun-94 1.583859 1000 1,583.86 0.00042865 0.68 1,550.56
29-Jul-94 1.610285 1000 1,610.28 0.00042865 0.66 1,575.77
31-Aug-94 1.646814 1000 1,646.81 0.00042865 0.68 1,610.84
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 8.29% 8.53% 1,270.03 1,278.44
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
ASSET MANAGER
FUND #64 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00450 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.005144 6 0.00% 60%
Monthly Factor 0.00042865 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract
Model Acct Value Charge Adjusted Ending
Date AUV # Units Before Chrge Factor Deduction Acct Value Redeemable Surrender W/D ERV
Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-94 1.626322 1000 1,626.32 0.00042865 0.69 1,590.11
31-Oct-94 1.633213 1000 1,633.21 0.00042865 0.68 1,596.16
30-Nov-94 1.608191 1000 1,608.19 0.00042865 0.68 1,571.02
31-Dec-94 1.571804 1000 1,571.80 0.00042865 0.67 1,534.80 1,771.81 6.00% 20.00% 1,733.08 1
31-Jan-95 1.560454 1000 1,560.45 0.00042865 0.66 1,523.06
28-Feb-95 1.584765 1000 1,584.76 0.00042865 0.65 1,546.14
31-Mar-95 1.604608 1000 1,604.61 0.00042865 0.66 1,564.84
28-Apr-95 1.629173 1000 1,629.17 0.00042865 0.67 1,588.12
31-May-95 1.648887 1000 1,648.89 0.00042865 0.68 1,606.66
30-Jun-95 1.661723 1000 1,661.72 0.00042865 0.69 1,618.48
31-Jul-95 1.719703 1000 1,719.70 0.00042865 0.69 1,674.25
31-Aug-95 1.739386 1000 1,739.39 0.00042865 0.72 1,692.70
29-Sep-95 1.760276 1000 1,760.28 0.00042865 0.73 1,712.30
31-Oct-95 1.735916 1000 1,735.92 0.00042865 0.73 1,687.87
30-Nov-95 1.779855 1000 1,779.86 0.00042865 0.72 1,729.87
31-Dec-95 1.823774 1000 1,823.77 0.00042865 0.74 1,771.81
<CAPTION>
ERV of ERV of
Date Avg Ann Avg Ann $1,000 $1,000
W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 12.92% 15.44% 1,129.18 1,154.42
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 3
<PAGE>
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
CONTRAFUND
FUND #66
HYPOTHETICAL PERFORMANCE CALCULATIONS
<TABLE>
<CAPTION>
---------------------
SURRENDER PROVISIONS:
---------------------
Year Rate % Free
---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 10.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 100 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00250 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.003144 6 0.00% 60%
Monthly Factor 0.00026199 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
</TABLE>
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using 1.00%.
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
03-Jan-95 10.000000 100 1,000.00 1,000.00 1,000.00 1,382.58 6.00% 10.00% 1,330.88 0.991
31-Jan-95 9.893697 100 989.37 0.00026199 0.26 989.11
28-Feb-95 10.386900 100 1,038.69 0.00026199 0.26 1,038.16
31-Mar-95 10.898467 100 1,089.85 0.00026199 0.27 1,089.01
28-Apr-95 11.480100 100 1,148.01 0.00026199 0.29 1,146.85
31-May-95 11.719454 100 1,171.95 0.00026199 0.30 1,170.46
30-Jun-95 12.478482 100 1,247.85 0.00026199 0.31 1,245.96
31-Jul-95 13.435390 100 1,343.54 0.00026199 0.33 1,341.18
31-Aug-95 13.593345 100 1,359.33 0.00026199 0.35 1,356.59
29-Sep-95 13.881260 100 1,388.13 0.00026199 0.36 1,384.97
31-Oct-95 13.580487 100 1,358.05 0.00026199 0.36 1,354.60
30-Nov-95 13.817789 100 1,381.78 0.00026199 0.35 1,377.92
31-Dec-95 13.868193 100 1,386.82 0.00026199 0.36 1,382.58
31-Dec-95 1,382.58
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
03-Jan-95 33.40% 36.63% 1,330.88 1,382.58
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
GROWTH
FUND #65 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 10.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00250 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.003144 6 0.00% 60%
Monthly Factor 0.00026199 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using 1.00%.
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
03-Jan-95 10.000000 100 1,000.00 1,000.00 1,216.79 6.00% 10.00% 1,164.09 0.986
31-Jan-95 10.023960 100 1,002.40 0.00026199 0.26 1,002.13
28-Feb-95 10.166184 100 1,016.62 0.00026199 0.26 1,016.09
31-Mar-95 10.297345 100 1,029.73 0.00026199 0.27 1,028.93
28-Apr-95 10.558886 100 1,055.89 0.00026199 0.27 1,054.80
31-May-95 10.698877 100 1,069.89 0.00026199 0.28 1,068.51
30-Jun-95 11.118458 100 1,111.85 0.00026199 0.28 1,110.13
31-Jul-95 11.517120 100 1,151.71 0.00026199 0.29 1,149.64
31-Aug-95 12.024499 100 1,202.45 0.00026199 0.30 1,199.99
29-Sep-95 12.193796 100 1,219.38 0.00026199 0.31 1,216.57
31-Oct-95 11.716359 100 1,171.64 0.00026199 0.32 1,168.62
30-Nov-95 11.915032 100 1,191.50 0.00026199 0.31 1,188.13
29-Dec-95 12.205610 100 1,220.56 0.00026199 0.31 1,216.79
29-Dec-95 1,216.79
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
03-Jan-95 16.66% 22.01% 1,164.09 1,216.79
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
29-Dec-95 1,216.79
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
INDEX 500
FUND #67 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00250 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.003144 6 0.00% 60%
Monthly Factor 0.00026199 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using 1.00%.
<TABLE>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C> <C>
27-Aug-92 10.000000 100 1,000.00 1,000.00 1,537.74 4.00% 40.00% 1,522.34 3.339
30-Sep-92 10.055576 100 1,005.56 0.00026199 0.26 1,005.30
30-Oct-92 10.069129 100 1,006.91 0.00026199 0.26 1,006.39
30-Nov-92 10.403459 100 1,040.35 0.00026199 0.26 1,039.54
31-Dec-92 10.525977 100 1,052.60 0.00026199 0.27 1,051.51 1,537.74 4.00% 40.00% 1,522.34 2.994
29-Jan-93 10.593568 100 1,059.36 0.00026199 0.28 1,057.99
26-Feb-93 10.732918 100 1,073.29 0.00026199 0.28 1,071.63
31-Mar-93 10.959395 100 1,095.94 0.00026199 0.28 1,093.96
30-Apr-93 10.680338 100 1,068.03 0.00026199 0.29 1,065.82
28-May-93 10.949917 100 1,094.99 0.00026199 0.28 1,092.44
30-Jun-93 10.967942 100 1,096.79 0.00026199 0.29 1,093.95
30-Jul-93 10.909003 100 1,090.90 0.00026199 0.29 1,087.78
31-Aug-93 11.312035 100 1,131.20 0.00026199 0.28 1,127.69
30-Sep-93 11.211074 100 1,121.11 0.00026199 0.30 1,117.33
29-Oct-93 11.430992 100 1,143.10 0.00026199 0.29 1,138.95
30-Nov-93 11.309572 100 1,130.96 0.00026199 0.30 1,126.56
31-Dec-93 11.435744 100 1,143.57 0.00026199 0.30 1,138.83
31-Jan-94 11.811379 100 1,181.14 0.00026199 0.30 1,175.94
28-Feb-94 11.482668 100 1,148.27 0.00026199 0.31 1,142.90
31-Mar-94 10.974665 100 1,097.47 0.00026199 0.30 1,092.04
29-Apr-94 11.097007 100 1,109.70 0.00026199 0.29 1,103.93
31-May-94 11.259159 100 1,125.92 0.00026199 0.29 1,119.77
30-Jun-94 10.975818 100 1,097.58 0.00026199 0.29 1,091.30
29-Jul-94 11.328758 100 1,132.88 0.00026199 0.29 1,126.10
31-Aug-94 11.769675 100 1,176.97 0.00026199 0.30 1,169.64
30-Sep-94 11.474364 100 1,147.44 0.00026199 0.31 1,139.98
</TABLE>
<TABLE>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
W/ Surr W/O Surr W/ Surr W/O Surr
Date
<S> <C> <C> <C> <C>
27-Aug-92 13.41% 13.75% 1,522.34 1,537.74
30-Sep-92
30-Oct-92
30-Nov-92 13.15% 13.53% 1,447.77 1,462.41
31-Dec-92
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
RETURN OF PREMIUM DEATH BENEFIT
INDEX 500
FUND #67 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00250 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.003144 6 0.00% 60%
Monthly Factor 0.00026199 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.25% and a model subaccount
using 100%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Oct-94 11.719346 100 1,171.93 0.00026199 0.30 1,164.02
30-Nov-94 11.284045 100 1,128.40 0.00026199 0.30 1,120.48
30-Dec-94 11.439559 100 1,143.96 0.00026199 0.29 1,135.63 1,537.74 6.00% 20.00% 1,496.19 0.997
31-Jan-95 11.732413 100 1,173.24 0.00026199 0.30 1,164.41
28-Feb-95 12.172720 100 1,217.27 0.00026199 0.31 1,207.80
31-Mar-95 12.517999 100 1,251.80 0.00026199 0.32 1,241.74
28-Apr-95 12.876137 100 1,287.61 0.00026199 0.33 1,276.94
31-May-95 13.370217 100 1,337.02 0.00026199 0.33 1,325.61
30-Jun-95 13.662388 100 1,366.24 0.00026199 0.35 1,354.23
31-Jul-95 14.106193 100 1,410.62 0.00026199 0.35 1,397.86
31-Aug-95 14.129167 100 1,412.92 0.00026199 0.37 1,399.77
29-Sep-95 14.708395 100 1,470.84 0.00026199 0.37 1,456.79
31-Oct-95 14.646098 100 1,464.61 0.00026199 0.38 1,450.24
30-Nov-95 15.270727 100 1,527.07 0.00026199 0.38 1,511.71
29-Dec-95 15.537660 100 1,553.77 0.00026199 0.40 1,537.74
29-Dec-95 1,537.74
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Oct-94
30-Nov-94
30-Dec-94 31.85% 35.52% 1,317.50 1,354.08
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
29-Dec-95
</TABLE>
Page 2
<PAGE>
- --------------------------------------------------------------------------------
PFL / FIDELITY BANK VA
HYPOTHETICAL PERFORMANCE SUMMARY
STANDARDIZED CALCULATION METHOD
- --------------------------------------------------------------------------------
5% growth Death Benefit: M&E=140bp
<TABLE>
<CAPTION>
1 Year 3 Year 5 Year Life Inception Date
<S> <C> <C> <C> <C> <C>
Money Market * 2.63% 2.84% 3.15% 4.56%** 31-Mar-82
High Income 17.67% 11.06% 17.23% 9.86%** 11-Sep-85
Equity Income 31.88% 17.85% 19.57% 11.69% 08-Oct-86
Growth 32.47% 15.65% 19.03% 13.17% 08-Oct-86
Overseas 5.45% 13.28% 6.57% 5.74% 27-Jan-87
Investment Grade Bond 12.68% 5.93% 7.67% 7.39% 05-Jun-89
Asset Manager 12.72% 8.13% 11.13% 10.60% 29-May-90
Asset Manager; Growth N/A N/A N/A 16.47% 03-Jan-95
Contrafund N/A N/A N/A 33.20% 03-Jan-95
Index 500 31.63% 12.98% N/A 13.24% 27-Aug-92
</TABLE>
This performance data is hypothetical for the Bank Va product. It is based on
the performance of other products which use the same underlying mutual funds.
These calculations were adjusted for differences in the level of charges. For
purposes of this calculation, the deductions for the mortality and expense risk
charge and administrative charge are made on a monthly basis, rather than a
daily basis. Principal investment returns (except Money Market Portfolio) and
yields will fluctuate and there is no guarantee you will receive back your
original principal. Average Annual Total Returns and Yield include all insurance
contract charges.
*The underlying Money Market Portfolio seeks to maintain a stable $1.00 share
price, however, there is no assurance that it will be able to do so. An
investment in the Portfolio is not insured by the U.S. government.
**Figure for 10 years.
<PAGE>
PFL/FIDELITY BANK VA
HYPOTHETICAL PERFORMANCE SUMMARY
NON-STANDARDIZED CALCULATION METHOD
5% growth Death Benefit: M&E=140 bp
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1 Year 3 Year 5 Year Life Inception Date
Money Market* 4.35% 2.94% 3.15% 4.56%** 31-Mar-82
High Income 18.87% 11.06% 17.23% 9.86%** 11-Sep-85
Equity Income 33.16% 17.85% 19.57% 11.69% 08-Oct-86
Growth 33.43% 15.65% 19.03% 13.17% 08-Oct-86
Overseas 8.09% 13.59% 6.57% 5.74% 27-Jan-87
Investment Grade Bond 15.63% 6.25% 7.67% 7.39% 05-Jun-89
Asset Manager 15.27% 8.37% 11.13% 10.60% 29-May-90
Asset Manager: Growth N/A N/A N/A 21.83% 03-Jan-95
Contrafund N/A N/A N/A 38.43% 03-Jan-95
Index 500 35.32% 13.36% N/A 13.58% 27-Aug-92
</TABLE>
This performance data is hypothetical for the Bank Va product. It is based on
the performance of other products which use the same underlying mutual funds.
These calculations were adjusted for differences in the level of charges. For
purposes of this calculation, the deductions for the mortality and expense risk
charge and administrative charge are made on a monthly basis rather than a daily
basis. Principal investment returns (except Money Market Portfolio) and yields
will fluctuate and there is no guarantee you will receive back your original
principal. Average Annual Total Returns and Yield include all insurance contract
charges.
*The underlying Money Market Portfolio seeks to maintain a stable $1.00 share
price, however, there is no assurance that it will be able to do so. An
investment in the Portfolio is not insured by the U.S. government.
**Figure for 10 years.
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-82 1.000000 1000 1,000.00 1,000.00 2,107.25 0.00% 100.00% 2,107.25 13.76
30-Apr-82 1.010359 1000 1,010.36 0.00055365 0.55 1,009.81
28-May-82 1.020287 1000 1,020.29 0.00055365 0.56 1,019.17
30-Jun-82 1.032123 1000 1,032.12 0.00055365 0.56 1,030.43
30-Jul-82 1.043201 1000 1,043.20 0.00055365 0.57 1,040.92
31-Aug-82 1.053572 1000 1,053.57 0.00055365 0.58 1,050.69
30-Sep-82 1.062302 1000 1,062.30 0.00055365 0.58 1,058.81
29-Oct-82 1.070228 1000 1,070.23 0.00055365 0.59 1,066.13
30-Nov-82 1.078581 1000 1,078.58 0.00055365 0.59 1,073.86
31-Dec-82 1.086122 1000 1,086.12 0.00055365 0.59 1,080.77
31-Jan-83 1.093216 1000 1,093.22 0.00055365 0.60 1,087.23
28-Feb-83 1.099463 1000 1,099.46 0.00055365 0.60 1,092.84
31-Mar-83 1.106393 1000 1,106.39 0.00055365 0.61 1,099.13
29-Apr-83 1.112983 1000 1,112.98 0.00055365 0.61 1,105.06
31-May-83 1.120146 1000 1,120.15 0.00055365 0.61 1,111.56
30-Jun-83 1.127066 1000 1,127.07 0.00055365 0.62 1,117.82
29-Jul-83 1.134474 1000 1,134.47 0.00055365 0.62 1,124.54
31-Aug-83 1.143339 1000 1,143.34 0.00055365 0.62 1,132.71
30-Sep-83 1.151569 1000 1,151.57 0.00055365 0.63 1,140.24
31-Oct-83 1.160014 1000 1,160.01 0.00055365 0.63 1,147.97
30-Nov-83 1.168104 1000 1,168.10 0.00055365 0.64 1,155.34
31-Dec-83 1.176038 1000 1,176.04 0.00055365 0.64 1,162.54
31-Jan-84 1.184622 1000 1,184.62 0.00055365 0.64 1,170.39
29-Feb-84 1.192489 1000 1,192.49 0.00055365 0.65 1,177.51
31-Mar-84 1.200889 1000 1,200.89 0.00055365 0.65 1,185.15
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Mar-82 5.57% 5.57% 2,107.25 2,107.25
30-Apr-82
28-May-82
30-Jun-82
30-Jul-82
31-Aug-82
30-Sep-82
29-Oct-82
30-Nov-82
31-Dec-82
31-Jan-83
28-Feb-83
31-Mar-83
29-Apr-83
31-May-83
30-Jun-83
29-Jul-83
31-Aug-83
30-Sep-83
31-Oct-83
30-Nov-83
31-Dec-83
31-Jan-84
29-Feb-84
31-Mar-84
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Apr-84 1.210032 1000 1,210.03 0.00055365 0.66 1,193.52
31-May-84 1.219503 1000 1,219.50 0.00055365 0.66 1,202.20
30-Jun-84 1.229735 1000 1,229.74 0.00055365 0.67 1,211.62
31-Jul-84 1.239380 1000 1,239.38 0.00055365 0.67 1,220.45
31-Aug-84 1.249945 1000 1,249.95 0.00055365 0.68 1,230.18
30-Sep-84 1.259673 1000 1,259.67 0.00055365 0.68 1,239.08
31-Oct-84 1.270797 1000 1,270.80 0.00055365 0.69 1,249.33
30-Nov-84 1.280047 1000 1,280.05 0.00055365 0.69 1,257.73
31-Dec-84 1.288784 1000 1,288.78 0.00055365 0.70 1,265.62
31-Jan-85 1.297029 1000 1,297.03 0.00055365 0.70 1,273.02
28-Feb-85 1.304225 1000 1,304.23 0.00055365 0.70 1,279.38
31-Mar-85 1.311903 1000 1,311.90 0.00055365 0.71 1,286.20
30-Apr-85 1.320545 1000 1,320.55 0.00055365 0.71 1,293.96
31-May-85 1.328680 1000 1,328.68 0.00055365 0.72 1,301.21
30-Jun-85 1.336301 1000 1,336.30 0.00055365 0.72 1,307.96
31-Jul-85 1.343550 1000 1,343.55 0.00055365 0.72 1,314.33
30-Aug-85 1.350359 1000 1,350.36 0.00055365 0.73 1,320.26
30-Sep-85 1.358594 1000 1,358.59 0.00055365 0.73 1,327.58
31-Oct-85 1.366463 1000 1,366.46 0.00055365 0.74 1,334.54
29-Nov-85 1.373920 1000 1,373.92 0.00055365 0.74 1,341.08
31-Dec-85 1.382250 1000 1,382.25 0.00055365 0.74 1,348.47 2,107.25 0.00% 100.00% 2,107.25 10.01
31-Jan-86 1.390290 1000 1,390.29 0.00055365 0.75 1,355.57
28-Feb-86 1.397430 1000 1,397.43 0.00055365 0.75 1,361.78
31-Mar-86 1.405172 1000 1,405.17 0.00055365 0.75 1,368.57
30-Apr-86 1.412265 1000 1,412.27 0.00055365 0.76 1,374.72
30-May-86 1.418965 1000 1,418.97 0.00055365 0.76 1,380.48
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Apr-84
31-May-84
30-Jun-84
31-Jul-84
31-Aug-84
30-Sep-84
31-Oct-84
30-Nov-84
31-Dec-84
31-Jan-85
28-Feb-85
31-Mar-85
30-Apr-85
31-May-85
30-Jun-85
31-Jul-85
30-Aug-85
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85
31-Jan-86 4.56% 4.56% 1,562.70 1,562.70
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Jun-86 1.425887 1000 1,425.89 0.00055365 0.76 1,386.45
31-Jul-86 1.432722 1000 1,432.72 0.00055365 0.77 1,392.33
29-Aug-86 1.439268 1000 1,439.27 0.00055365 0.77 1,397.92
30-Sep-86 1.445184 1000 1,445.18 0.00055365 0.77 1,402.89
31-Oct-86 1.451221 1000 1,451.22 0.00055365 0.78 1,407.97
28-Nov-86 1.457025 1000 1,457.03 0.00055365 0.78 1,412.82
31-Dec-86 1.463177 1000 1,463.18 0.00055365 0.78 1,418.01
30-Jan-87 1.469475 1000 1,469.48 0.00055365 0.79 1,423.33
27-Feb-87 1.474954 1000 1,474.95 0.00055365 0.79 1,427.85
31-Mar-87 1.481059 1000 1,481.06 0.00055365 0.79 1,432.96
30-Apr-87 1.487189 1000 1,487.19 0.00055365 0.79 1,438.10
29-May-87 1.494002 1000 1,494.00 0.00055365 0.80 1,443.89
30-Jun-87 1.500779 1000 1,500.78 0.00055365 0.80 1,449.64
31-Jul-87 1.507892 1000 1,507.89 0.00055365 0.80 1,455.71
31-Aug-87 1.515019 1000 1,515.02 0.00055365 0.81 1,461.79
30-Sep-87 1.522127 1000 1,522.13 0.00055365 0.81 1,467.84
30-Oct-87 1.529613 1000 1,529.61 0.00055365 0.81 1,474.24
30-Nov-87 1.537143 1000 1,537.14 0.00055365 0.82 1,480.68
31-Dec-87 1.545254 1000 1,545.25 0.00055365 0.82 1,487.68
29-Jan-88 1.553190 1000 1,553.19 0.00055365 0.82 1,494.49
29-Feb-88 1.560121 1000 1,560.12 0.00055365 0.83 1,500.33
31-Mar-88 1.567523 1000 1,567.52 0.00055365 0.83 1,506.62
29-Apr-88 1.574735 1000 1,574.74 0.00055365 0.83 1,512.72
31-May-88 1.582385 1000 1,582.39 0.00055365 0.84 1,519.23
30-Jun-88 1.590200 1000 1,590.20 0.00055365 0.84 1,525.89
29-Jul-88 1.598735 1000 1,598.74 0.00055365 0.84 1,533.24
</TABLE>
<TABLE>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Aug-88 1.607716 1000 1,607.72 0.00055365 0.85 1,541.00
30-Sep-88 1.616875 1000 1,616.88 0.00055365 0.85 1,548.93
31-Oct-88 1.626451 1000 1,626.45 0.00055365 0.86 1,557.24
30-Nov-88 1.635953 1000 1,635.95 0.00055365 0.86 1,565.48
31-Dec-88 1.646165 1000 1,646.17 0.00055365 0.87 1,574.38
31-Jan-89 1.657574 1000 1,657.57 0.00055365 0.87 1,584.42
28-Feb-89 1.667673 1000 1,667.67 0.00055365 0.88 1,593.20
31-Mar-89 1.679536 1000 1,679.54 0.00055365 0.88 1,603.65
28-Apr-89 1.691501 1000 1,691.50 0.00055365 0.89 1,614.19
31-May-89 1.703756 1000 1,703.76 0.00055365 0.89 1,624.99
30-Jun-89 1.715429 1000 1,715.43 0.00055365 0.90 1,635.22
31-Jul-89 1.727189 1000 1,727.19 0.00055365 0.91 1,645.53
31-Aug-89 1.738613 1000 1,738.61 0.00055365 0.91 1,655.50
30-Sep-89 1.749963 1000 1,749.96 0.00055365 0.92 1,665.39
31-Oct-89 1.760822 1000 1,760.82 0.00055365 0.92 1,674.80
30-Nov-89 1.771586 1000 1,771.59 0.00055365 0.93 1,684.11
31-Dec-89 1.783014 1000 1,783.01 0.00055365 0.93 1,694.05
31-Jan-90 1.793477 1000 1,793.48 0.00055365 0.94 1,703.05
28-Feb-90 1.803242 1000 1,803.24 0.00055365 0.94 1,711.38
31-Mar-90 1.814539 1000 1,814.54 0.00055365 0.95 1,721.15
30-Apr-90 1.824737 1000 1,824.74 0.00055365 0.95 1,729.87
31-May-90 1.835750 1000 1,835.75 0.00055365 0.96 1,739.36
30-Jun-90 1.846790 1000 1,846.79 0.00055365 0.96 1,748.85
31-Jul-90 1.857340 1000 1,857.34 0.00055365 0.97 1,757.88
31-Aug-90 1.868176 1000 1,868.18 0.00055365 0.97 1,767.16
30-Sep-90 1.878768 1000 1,878.77 0.00055365 0.98 1,776.20
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
31-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Oct-90 1.889694 1000 1,889.69 0.00055365 0.98 1,785.54
30-Nov-90 1.900354 1000 1,900.35 0.00055365 0.99 1,794.63
31-Dec-90 1.911406 1000 1,911.41 0.00055365 0.99 1,804.07 2,107.25 0.00% 60.00% 2,107.25 5.002
31-Jan-91 1.922299 1000 1,922.30 0.00055365 1.00 1,813.35
28-Feb-91 1.931462 1000 1,931.46 0.00055365 1.00 1,820.99
31-Mar-91 1.939935 1000 1,939.94 0.00055365 1.01 1,827.97
30-Apr-91 1.949420 1000 1,949.42 0.00055365 1.01 1,835.90
31-May-91 1.957877 1000 1,957.88 0.00055365 1.02 1,842.85
30-Jun-91 1.966104 1000 1,966.10 0.00055365 1.02 1,849.57
31-Jul-91 1.974097 1000 1,974.10 0.00055365 1.02 1,856.07
29-Aug-91 1.981733 1000 1,981.73 0.00055365 1.03 1,862.22
30-Sep-91 1.989970 1000 1,989.97 0.00055365 1.03 1,868.93
30-Oct-91 1.997411 1000 1,997.41 0.00055365 1.03 1,874.88
29-Nov-91 2.004585 1000 2,004.59 0.00055365 1.04 1,880.58
31-Dec-91 2.011998 1000 2,012.00 0.00055365 1.04 1,886.49
31-Jan-92 2.018841 1000 2,018.84 0.00055365 1.04 1,891.86
28-Feb-92 2.024454 1000 2,024.45 0.00055365 1.05 1,896.07
31-Mar-92 2.030480 1000 2,030.48 0.00055365 1.05 1,900.67
30-Apr-92 2.035857 1000 2,035.86 0.00055365 1.05 1,904.65
29-May-92 2.040751 1000 2,040.75 0.00055365 1.05 1,908.17
30-Jun-92 2.046057 1000 2,046.06 0.00055365 1.06 1,912.08
31-Jul-92 2.051019 1000 2,051.02 0.00055365 1.06 1,915.66
31-Aug-92 2.055796 1000 2,055.80 0.00055365 1.06 1,919.06
30-Sep-92 2.060295 1000 2,060.30 0.00055365 1.06 1,922.20
30-Oct-92 2.064643 1000 2,064.64 0.00055365 1.06 1,925.19
30-Nov-92 2.069170 1000 2,069.17 0.00055365 1.07 1,928.34
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Oct-90
30-Nov-90
31-Dec-90 3.15% 3.15% 1,168.05 1,168.05
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Dec-92 2.073920 1000 2,073.92 0.00055365 1.07 1,931.70 2,107.25 4.00% 40.00% 2,100.97 3
29-Jan-93 2.078344 1000 2,078.34 0.00055365 1.07 1,934.75
26-Feb-93 2.082383 1000 2,082.38 0.00055365 1.07 1,937.44
31-Mar-93 2.086987 1000 2,086.99 0.00055365 1.07 1,940.65
30-Apr-93 2.091096 1000 2,091.10 0.00055365 1.07 1,943.40
28-May-93 2.094893 1000 2,094.89 0.00055365 1.08 1,945.85
30-Jun-93 2.099369 1000 2,099.37 0.00055365 1.08 1,948.93
30-Jul-93 2.103397 1000 2,103.40 0.00055365 1.08 1,951.59
31-Aug-93 2.107638 1000 2,107.64 0.00055365 1.08 1,954.45
30-Sep-93 2.111596 1000 2,111.60 0.00055365 1.08 1,957.04
29-Oct-93 2.115430 1000 2,115.43 0.00055365 1.08 1,959.51
30-Nov-93 2.119701 1000 2,119.70 0.00055365 1.08 1,962.38
31-Dec-93 2.124046 1000 2,124.05 0.00055365 1.09 1,965.31
31-Jan-94 2.128327 1000 2,128.33 0.00055365 1.09 1,968.19
28-Feb-94 2.132184 1000 2,132.18 0.00055365 1.09 1,970.66
31-Mar-94 2.136833 1000 2,136.83 0.00055365 1.09 1,973.87
29-Apr-94 2.141554 1000 2,141.55 0.00055365 1.09 1,977.14
31-May-94 2.147430 1000 2,147.43 0.00055365 1.09 1,981.47
30-Jun-94 2.153412 1000 2,153.41 0.00055365 1.10 1,985.89
29-Jul-94 2.159445 1000 2,159.45 0.00055365 1.10 1,990.35
31-Aug-94 2.166601 1000 2,166.60 0.00055365 1.10 1,995.85
30-Sep-94 2.173487 1000 2,173.49 0.00055365 1.11 2,001.09
31-Oct-94 2.180839 1000 2,180.84 0.00055365 1.11 2,006.75
30-Nov-94 2.188470 1000 2,188.47 0.00055365 1.11 2,012.66
31-Dec-94 2.196945 1000 2,196.95 0.00055365 1.11 2,019.34 2,107.25 6.00% 20.00% 2,072.54 1
31-Jan-95 2.206310 1000 2,206.31 0.00055365 1.12 2,026.83
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
W/ Surr W/O Surr W/ Surr W/O Surr
<C> <C> <C> <C>
2.84% 2.94% 1,087.63 1,090.88
2.63% 4.35% 1,026.35 1,043.54
</TABLE>
Page 6
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
MONEY MARKET SUBACCOUNT
FUND #20 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
28-Feb-95 2.214886 1000 2,214.89 0.00055365 1.12 2,033.58
31-Mar-95 2.224538 1000 2,224.54 0.00055365 1.13 2,041.32
28-Apr-95 2.233263 1000 2,233.26 0.00055365 1.13 2,048.19
31-May-95 2.243548 1000 2,243.55 0.00055365 1.13 2,056.49
30-Jun-95 2.252864 1000 2,252.86 0.00055365 1.14 2,063.89
31-Jul-95 2.262030 1000 2,262.03 0.00055365 1.14 2,071.15
31-Aug-95 2.271798 1000 2,271.80 0.00055365 1.15 2,078.95
29-Sep-95 2.280534 1000 2,280.53 0.00055365 1.15 2,085.79
31-Oct-95 2.290149 1000 2,290.15 0.00055365 1.15 2,093.43
30-Nov-95 2.299129 1000 2,299.13 0.00055365 1.16 2,100.48
31-Dec-95 2.307819 1000 2,307.82 0.00055365 1.16 2,107.25
31-Dec-95 2,107.25
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 7
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
11-Sep-85 1.000000 1000 1,000.00 1,000.00 2,713.41 0.00% 100.00% 2,713.41 10.30
30-Sep-85 1.001970 1000 1,001.97 0.00055365 0.55 1,001.42
31-Oct-85 1.013858 1000 1,013.86 0.00055365 0.55 1,012.74
29-Nov-85 1.027558 1000 1,027.56 0.00055365 0.56 1,025.87
31-Dec-85 1.061544 1000 1,061.54 0.00055365 0.57 1,059.23 2,713.41 0.00% 100.00% 2,713.41 10.00
31-Jan-86 1.073973 1000 1,073.97 0.00055365 0.59 1,071.05
28-Feb-86 1.109646 1000 1,109.65 0.00055365 0.59 1,106.03
31-Mar-86 1.136266 1000 1,136.27 0.00055365 0.61 1,131.95
30-Apr-86 1.154801 1000 1,154.80 0.00055365 0.63 1,149.79
30-May-86 1.171653 1000 1,171.65 0.00055365 0.64 1,165.93
30-Jun-86 1.186687 1000 1,186.69 0.00055365 0.65 1,180.24
31-Jul-86 1.181193 1000 1,181.19 0.00055365 0.65 1,174.13
29-Aug-86 1.185162 1000 1,185.16 0.00055365 0.65 1,177.42
30-Sep-86 1.194450 1000 1,194.45 0.00055365 0.65 1,186.00
31-Oct-86 1.229324 1000 1,229.32 0.00055365 0.66 1,219.97
28-Nov-86 1.232460 1000 1,232.46 0.00055365 0.68 1,222.40
31-Dec-86 1.239420 1000 1,239.42 0.00055365 0.68 1,228.63
30-Jan-87 1.283793 1000 1,283.79 0.00055365 0.68 1,271.94
27-Feb-87 1.305223 1000 1,305.22 0.00055365 0.70 1,292.46
31-Mar-87 1.316041 1000 1,316.04 0.00055365 0.72 1,302.46
30-Apr-87 1.274052 1000 1,274.05 0.00055365 0.72 1,260.18
29-May-87 1.261763 1000 1,261.76 0.00055365 0.70 1,247.33
30-Jun-87 1.288222 1000 1,288.22 0.00055365 0.69 1,272.80
31-Jul-87 1.288733 1000 1,288.73 0.00055365 0.70 1,272.60
31-Aug-87 1.298560 1000 1,298.56 0.00055365 0.70 1,281.60
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
11-Sep-85 10.17% 10.17% 2,713.41 2,713.41
30-Sep-85
31-Oct-85
29-Nov-85
31-Dec-85 9.86% 9.86% 2,561.68 2,561.68
31-Jan-86
28-Feb-86
31-Mar-86
30-Apr-86
30-May-86
30-Jun-86
31-Jul-86
29-Aug-86
30-Sep-86
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C>
30-Sep-87 1.252311 1000 1,252.31 0.00055365 0.71 1,235.24
30-Oct-87 1.190964 1000 1,190.96 0.00055365 0.68 1,174.05
30-Nov-87 1.225642 1000 1,225.64 0.00055365 0.65 1,207.58
31-Dec-87 1.244613 1000 1,244.61 0.00055365 0.67 1,225.61
29-Jan-88 1.284919 1000 1,284.92 0.00055365 0.68 1,264.62
29-Feb-88 1.322703 1000 1,322.70 0.00055365 0.70 1,301.10
31-Mar-88 1.312291 1000 1,312.29 0.00055365 0.72 1,290.14
29-Apr-88 1.321752 1000 1,321.75 0.00055365 0.71 1,298.73
31-May-88 1.318870 1000 1,318.87 0.00055365 0.72 1,295.18
30-Jun-88 1.344383 1000 1,344.38 0.00055365 0.72 1,319.52
29-Jul-88 1.598735 1000 1,598.74 0.00055365 0.73 1,568.43
31-Aug-88 1.351416 1000 1,351.42 0.00055365 0.87 1,324.93
30-Sep-88 1.361392 1000 1,361.39 0.00055365 0.73 1,333.98
31-Oct-88 1.375336 1000 1,375.34 0.00055365 0.74 1,346.90
30-Nov-88 1.369180 1000 1,369.18 0.00055365 0.75 1,340.13
31-Dec-88 1.380187 1000 1,380.19 0.00055365 0.74 1,350.16
31-Jan-89 1.411469 1000 1,411.47 0.00055365 0.75 1,380.02
28-Feb-89 1.417558 1000 1,417.56 0.00055365 0.76 1,385.21
31-Mar-89 1.398248 1000 1,398.25 0.00055365 0.77 1,365.57
28-Apr-89 1.381908 1000 1,381.91 0.00055365 0.76 1,348.85
31-May-89 1.406591 1000 1,406.59 0.00055365 0.75 1,372.20
30-Jun-89 1.447534 1000 1,447.53 0.00055365 0.76 1,411.38
31-Jul-89 1.435498 1000 1,435.50 0.00055365 0.78 1,398.87
31-Aug-89 1.426144 1000 1,426.14 0.00055365 0.77 1,388.98
30-Sep-89 1.375082 1000 1,375.08 0.00055365 0.77 1,338.48
31-Oct-89 1.314955 1000 1,314.96 0.00055365 0.74 1,279.21
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
31-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Nov-89 1.315211 1000 1,315.21 0.00055365 0.71 1,278.75
31-Dec-89 1.310687 1000 1,310.69 0.00055365 0.71 1,273.64
31-Jan-90 1.280482 1000 1,280.48 0.00055365 0.71 1,243.59
28-Feb-90 1.259919 1000 1,259.92 0.00055365 0.69 1,222.93
31-Mar-90 1.245801 1000 1,245.80 0.00055365 0.68 1,208.55
30-Apr-90 1.248657 1000 1,248.66 0.00055365 0.67 1,210.65
31-May-90 1.273569 1000 1,273.57 0.00055365 0.67 1,234.13
30-Jun-90 1.293254 1000 1,293.25 0.00055365 0.68 1,252.52
31-Jul-90 1.311982 1000 1,311.98 0.00055365 0.69 1,269.97
31-Aug-90 1.289064 1000 1,289.06 0.00055365 0.70 1,247.08
30-Sep-90 1.257459 1000 1,257.46 0.00055365 0.69 1,215.82
31-Oct-90 1.225946 1000 1,225.95 0.00055365 0.67 1,184.67
30-Nov-90 1.254075 1000 1,254.08 0.00055365 0.66 1,211.20
31-Dec-90 1.269032 1000 1,269.03 0.00055365 0.67 1,224.97 2,713.41 0.00% 60.00% 2,713.41 5.002
31-Jan-91 1.296914 1000 1,296.91 0.00055365 0.68 1,251.21
28-Feb-91 1.367929 1000 1,367.93 0.00055365 0.69 1,319.03
31-Mar-91 1.415535 1000 1,415.54 0.00055365 0.73 1,364.20
30-Apr-91 1.464717 1000 1,464.72 0.00055365 0.76 1,410.85
31-May-91 1.485227 1000 1,485.23 0.00055365 0.78 1,429.82
30-Jun-91 1.518240 1000 1,518.24 0.00055365 0.79 1,460.81
31-Jul-91 1.572715 1000 1,572.72 0.00055365 0.81 1,512.42
29-Aug-91 1.587815 1000 1,587.82 0.00055365 0.84 1,526.10
30-Sep-91 1.627808 1000 1,627.81 0.00055365 0.84 1,563.69
30-Oct-91 1.680315 1000 1,680.32 0.00055365 0.87 1,613.27
29-Nov-91 1.695276 1000 1,695.28 0.00055365 0.89 1,626.74
31-Dec-91 1.703009 1000 1,703.01 0.00055365 0.90 1,633.26
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 17.23% 17.23% 2,215.08 2215.08
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Jan-92 1.792744 1000 1,792.74 0.00055365 0.90 1,718.41
28-Feb-92 1.856703 1000 1,856.70 0.00055365 0.95 1,778.77
31-Mar-92 1.915385 1000 1,915.39 0.00055365 0.98 1,834.00
30-Apr-92 1.927666 1000 1,927.67 0.00055365 1.02 1,844.75
29-May-92 1.949637 1000 1,949.64 0.00055365 1.02 1,864.75
30-Jun-92 1.969516 1000 1,969.52 0.00055365 1.03 1,882.73
31-Jul-92 2.006776 1000 2,006.78 0.00055365 1.04 1,917.31
31-Aug-92 2.047841 1000 2,047.84 0.00055365 1.06 1,955.48
30-Sep-92 2.067698 1000 2,067.70 0.00055365 1.08 1,973.36
30-Oct-92 2.035532 1000 2,035.53 0.00055365 1.09 1,941.57
30-Nov-92 2.059172 1000 2,059.17 0.00055365 1.07 1,963.04
31-Dec-92 2.078934 1000 2,078.93 0.00055365 1.09 1,980.79 2,713.41 4.00% 40.00% 2,713.41 3
29-Jan-93 2.135280 1000 2,135.28 0.00055365 1.10 2,033.38
26-Feb-93 2.170380 1000 2,170.38 0.00055365 1.13 2,065.68
31-Mar-93 2.218870 1000 2,218.87 0.00055365 1.14 2,110.69
30-Apr-93 2.232005 1000 2,232.01 0.00055365 1.17 2,122.02
28-May-93 2.263967 1000 2,263.97 0.00055365 1.17 2,151.23
30-Jun-93 2.320614 1000 2,320.61 0.00055365 1.19 2,203.86
30-Jul-93 2.341977 1000 2,341.98 0.00055365 1.22 2,222.93
31-Aug-93 2.365286 1000 2,365.29 0.00055365 1.23 2,243.82
30-Sep-93 2.372044 1000 2,372.04 0.00055365 1.24 2,248.99
29-Oct-93 2.426590 1000 2,426.59 0.00055365 1.25 2,299.46
30-Nov-93 2.447714 1000 2,447.71 0.00055365 1.27 2,318.21
31-Dec-93 2.485444 1000 2,485.44 0.00055365 1.28 2,352.66
31-Jan-94 2.566627 1000 2,566.63 0.00055365 1.30 2,428.20
28-Feb-94 2.561983 1000 2,561.98 0.00055365 1.34 2,422.46
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 11.06% 11.06% 1,369.86 1,369.86
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
HIGH INCOME
FUND #21 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-94 2.473999 1000 2,474.00 0.00055365 1.34 2,337.93
29-Apr-94 2.447480 1000 2,447.48 0.00055365 1.29 2,311.58
31-May-94 2.450304 1000 2,450.30 0.00055365 1.28 2,312.96
30-Jun-94 2.439639 1000 2,439.64 0.00055365 1.28 2,301.61
29-Jul-94 2.447149 1000 2,447.15 0.00055365 1.27 2,307.43
31-Aug-94 2.445389 1000 2,445.39 0.00055365 1.28 2,304.49
30-Sep-94 2.461872 1000 2,461.87 0.00055365 1.28 2,318.75
31-Oct-94 2.437614 1000 2,437.61 0.00055365 1.28 2,294.61
30-Nov-94 2.415698 1000 2,415.70 0.00055365 1.27 2,272.71
31-Dec-94 2.427652 1000 2,427.65 0.00055365 1.26 2,282.70 2,713.41 6.00% 20.00% 2,685.97 1
31-Jan-95 2.450757 1000 2,450.76 0.00055365 1.26 2,303.16
28-Feb-95 2.533325 1000 2,533.33 0.00055365 1.28 2,379.48
31-Mar-95 2.563135 1000 2,563.13 0.00055365 1.32 2,406.17
28-Apr-95 2.636698 1000 2,636.70 0.00055365 1.33 2,473.89
31-May-95 2.702608 1000 2,702.61 0.00055365 1.37 2,534.36
30-Jun-95 2.708097 1000 2,708.10 0.00055365 1.40 2,538.11
31-Jul-95 2.771566 1000 2,771.57 0.00055365 1.41 2,596.19
31-Aug-95 2.791440 1000 2,791.44 0.00055365 1.44 2,613.37
29-Sep-95 2.835563 1000 2,835.56 0.00055365 1.45 2,653.23
31-Oct-95 2.860136 1000 2,860.14 0.00055365 1.47 2,674.75
30-Nov-95 2.872736 1000 2,872.74 0.00055365 1.48 2,685.05
31-Dec-95 2.904665 1000 2,904.67 0.00055365 1.49 2,713.41
31-Dec-95 2,713.41
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 17.67% 18.87% 1,176.66 1,188.68
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
EQUITY INCOME
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
08-Oct-86 1.000000 1000 1,000.00 1,000.00 2,777.23 0.00% 100.00% 2,777.23 9.235
31-Oct-86 1.010476 1000 1,010.48 0.00055365 0.55 1,009.92
28-Nov-86 1.031847 1000 1,031.85 0.00055365 0.56 1,030.72
31-Dec-86 1.001137 1000 1,001.14 0.00055365 0.57 999.48
30-Jan-87 1.114270 1000 1,114.27 0.00055365 0.55 1,111.87
27-Feb-87 1.139525 1000 1,139.53 0.00055365 0.62 1,136.45
31-Mar-87 1.167641 1000 1,167.64 0.00055365 0.63 1,163.86
30-Apr-87 1.137811 1000 1,137.81 0.00055365 0.64 1,133.49
29-May-87 1.144098 1000 1,144.10 0.00055365 0.63 1,139.12
30-Jun-87 1.167131 1000 1,167.13 0.00055365 0.63 1,161.42
31-Jul-87 1.210774 1000 1,210.77 0.00055365 0.64 1,204.21
31-Aug-87 1.243257 1000 1,243.26 0.00055365 0.67 1,235.85
30-Sep-87 1.216367 1000 1,216.37 0.00055365 0.68 1,208.44
30-Oct-87 0.978343 1000 978.34 0.00055365 0.67 971.29
30-Nov-87 0.933933 1000 933.93 0.00055365 0.54 926.67
31-Dec-87 0.978927 1000 978.93 0.00055365 0.51 970.80
29-Jan-88 1.050124 1000 1,050.12 0.00055365 0.54 1,040.87
29-Feb-88 1.101418 1000 1,101.42 0.00055365 0.58 1,091.13
31-Mar-88 1.081511 1000 1,081.51 0.00055365 0.60 1,070.81
29-Apr-88 1.098719 1000 1,098.72 0.00055365 0.59 1,087.25
31-May-88 1.112678 1000 1,112.68 0.00055365 0.60 1,100.46
30-Jun-88 1.175213 1000 1,175.21 0.00055365 0.61 1,161.70
29-Jul-88 1.172343 1000 1,172.34 0.00055365 0.64 1,158.22
31-Aug-88 1.151301 1000 1,151.30 0.00055365 0.64 1,136.79
30-Sep-88 1.184736 1000 1,184.74 0.00055365 0.63 1,169.18
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
08-Oct-86 11.69% 11.69% 2,777.23 2,777.23
31-Oct-86
28-Nov-86
31-Dec-86
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
EQUITY INCOME
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Oct-88 1.204366 1000 1,204.37 0.00055365 0.65 1,187.90
30-Nov-88 1.184234 1000 1,184.23 0.00055365 0.66 1,167.39
31-Dec-88 1.194265 1000 1,194.27 0.00055365 0.65 1,176.63
31-Jan-89 1.267141 1000 1,267.14 0.00055365 0.65 1,247.78
28-Feb-89 1.259868 1000 1,259.87 0.00055365 0.69 1,239.92
31-Mar-89 1.286284 1000 1,286.28 0.00055365 0.69 1,265.23
28-Apr-89 1.335110 1000 1,335.11 0.00055365 0.70 1,312.56
31-May-89 1.373810 1000 1,373.81 0.00055365 0.73 1,349.88
30-Jun-89 1.373849 1000 1,373.85 0.00055365 0.75 1,349.17
31-Jul-89 1.452963 1000 1,452.96 0.00055365 0.75 1,426.12
31-Aug-89 1.475308 1000 1,475.31 0.00055365 0.79 1,447.26
30-Sep-89 1.457798 1000 1,457.80 0.00055365 0.80 1,429.28
31-Oct-89 1.372736 1000 1,372.74 0.00055365 0.79 1,345.09
30-Nov-89 1.379675 1000 1,379.68 0.00055365 0.74 1,351.15
31-Dec-89 1.390307 1000 1,390.31 0.00055365 0.75 1,360.81
31-Jan-90 1.295478 1000 1,295.48 0.00055365 0.75 1,267.24
28-Feb-90 1.302359 1000 1,302.36 0.00055365 0.70 1,273.27
31-Mar-90 1.303652 1000 1,303.65 0.00055365 0.70 1,273.83
30-Apr-90 1.257598 1000 1,257.60 0.00055365 0.71 1,228.12
31-May-90 1.339901 1000 1,339.90 0.00055365 0.68 1,307.82
30-Jun-90 1.325720 1000 1,325.72 0.00055365 0.72 1,293.25
31-Jul-90 1.292394 1000 1,292.39 0.00055365 0.72 1,260.03
31-Aug-90 1.188389 1000 1,188.39 0.00055365 0.70 1,157.93
30-Sep-90 1.095530 1000 1,095.53 0.00055365 0.64 1,066.81
31-Oct-90 1.066825 1000 1,066.83 0.00055365 0.59 1,038.27
30-Nov-90 1.142542 1000 1,142.54 0.00055365 0.57 1,111.38
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Oct-88
30-Nov-88
31-Dec-88
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
EQUITY INCOME
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Dec-90 1.168338 1000 1,168.34 0.00055365 0.62 1,135.86 2,777.23 0.00% 60.00% 2,777.23 5.002
31-Jan-91 1.230158 1000 1,230.16 0.00055365 0.63 1,195.33
28-Feb-91 1.314070 1000 1,314.07 0.00055365 0.66 1,276.20
31-Mar-91 1.340512 1000 1,340.51 0.00055365 0.71 1,301.18
30-Apr-91 1.345806 1000 1,345.81 0.00055365 0.72 1,305.60
31-May-91 1.418707 1000 1,418.71 0.00055365 0.72 1,375.60
30-Jun-91 1.374941 1000 1,374.94 0.00055365 0.76 1,332.40
31-Jul-91 1.435926 1000 1,435.93 0.00055365 0.74 1,390.76
29-Aug-91 1.469093 1000 1,469.09 0.00055365 0.77 1,422.11
30-Sep-91 1.454234 1000 1,454.23 0.00055365 0.79 1,406.94
30-Oct-91 1.481306 1000 1,481.31 0.00055365 0.78 1,432.35
29-Nov-91 1.412872 1000 1,412.87 0.00055365 0.79 1,365.39
31-Dec-91 1.523641 1000 1,523.64 0.00055365 0.76 1,471.68
31-Jan-92 1.543167 1000 1,543.17 0.00055365 0.81 1,489.72
28-Feb-92 1.592306 1000 1,592.31 0.00055365 0.82 1,536.34
31-Mar-92 1.571695 1000 1,571.70 0.00055365 0.85 1,515.60
30-Apr-92 1.619869 1000 1,619.87 0.00055365 0.84 1,561.22
29-May-92 1.631787 1000 1,631.79 0.00055365 0.86 1,571.84
30-Jun-92 1.616373 1000 1,616.37 0.00055365 0.87 1,556.12
31-Jul-92 1.664779 1000 1,664.78 0.00055365 0.86 1,601.86
31-Aug-92 1.627202 1000 1,627.20 0.00055365 0.89 1,564.82
30-Sep-92 1.643019 1000 1,643.02 0.00055365 0.87 1,579.16
30-Oct-92 1.661598 1000 1,661.60 0.00055365 0.87 1,596.14
30-Nov-92 1.720715 1000 1,720.72 0.00055365 0.88 1,652.05
31-Dec-92 1.768091 1000 1,768.09 0.00055365 0.91 1,696.62 2,777.23 4.00% 40.00% 2,777.23 3
29-Jan-93 1.818363 1000 1,818.36 0.00055365 0.94 1,743.92
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Dec-90 19.57% 19.57% 2,445.05 2,445.05
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 17.85% 17.85% 1,636.92 1,636.92
29-Jan-93
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
FUND #56 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
26-Feb-93 1.858073 1000 1,858.07 0.00055365 0.97 1,781.04
31-Mar-93 1.912068 1000 1,912.07 0.00055365 0.99 1,831.81
30-Apr-93 1.902871 1000 1,902.87 0.00055365 1.01 1,821.98
28-May-93 1.936119 1000 1,936.12 0.00055365 1.01 1,852.81
30-Jun-93 1.957484 1000 1,957.48 0.00055365 1.03 1,872.23
30-Jul-93 1.982820 1000 1,982.82 0.00055365 1.04 1,895.42
31-Aug-93 2.057238 1000 2,057.24 0.00055365 1.05 1,965.51
30-Sep-93 2.048031 1000 2,048.03 0.00055365 1.09 1,955.63
29-Oct-93 2.065450 1000 2,065.45 0.00055365 1.08 1,971.18
30-Nov-93 2.027938 1000 2,027.94 0.00055365 1.09 1,934.29
31-Dec-93 2.073414 1000 2,073.41 0.00055365 1.07 1,976.59
31-Jan-94 2.163270 1000 2,163.27 0.00055365 1.09 2,061.16
28-Feb-94 2.106274 1000 2,106.27 0.00055365 1.14 2,005.71
31-Mar-94 2.016790 1000 2,016.79 0.00055365 1.11 1,919.39
29-Apr-94 2.084966 1000 2,084.97 0.00055365 1.06 1,983.21
31-May-94 2.103338 1000 2,103.34 0.00055365 1.10 1,999.59
30-Jun-94 2.088974 1000 2,088.97 0.00055365 1.11 1,984.82
29-Jul-94 2.157384 1000 2,157.38 0.00055365 1.10 2,048.72
31-Aug-94 2.266750 1000 2,266.75 0.00055365 1.13 2,151.45
30-Sep-94 2.228155 1000 2,228.16 0.00055365 1.19 2,113.62
31-Oct-94 2.272354 1000 2,272.35 0.00055365 1.17 2,154.38
30-Nov-94 2.196644 1000 2,196.64 0.00055365 1.19 2,081.41
31-Dec-94 2.202346 1000 2,202.35 0.00055365 1.15 2,085.66 2,777.23 6.00% 20.00% 2,750.55 1
31-Jan-95 2.235217 1000 2,235.22 0.00055365 1.15 2,115.63
28-Feb-95 2.319031 1000 2,319.03 0.00055365 1.17 2,193.79
31-Mar-95 2.397489 1000 2,397.49 0.00055365 1.21 2,266.80
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 31.88% 33.16% 1,318.79 1,331.58
31-Jan-95
28-Feb-95
31-Mar-95
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
EQUITY INCOME
FUND #58 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
28-Apr-95 2.462665 1000 2,462.67 0.00055365 1.26 2,327.17
31-May-95 2.535055 1000 2,535.06 0.00055365 1.29 2,394.29
30-Jun-95 2.569795 1000 2,569.80 0.00055365 1.33 2,425.77
31-Jul-95 2.666893 1000 2,666.89 0.00055365 1.34 2,516.08
31-Aug-95 2.698518 1000 2,698.52 0.00055365 1.39 2,544.53
29-Sep-95 2.786345 1000 2,786.35 0.00055365 1.41 2,625.93
31-Oct-95 2.752358 1000 2,752.36 0.00055365 1.45 2,592.45
30-Nov-95 2.869485 1000 2,869.49 0.00055365 1.44 2,701.34
31-Dec-95 2.951686 1000 2,951.69 0.00055365 1.50 2,777.23
31-Dec-95 2,777.23
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
27-Jan-87 1.000000 1000 1,000.00 1,000.00 1,646.41 0.00% 90.00% 1,646.41 8.931
30-Jan-87 0.999345 1000 999.35 0.00055365 0.55 998.79
27-Feb-87 0.999733 1000 999.73 0.00055365 0.55 998.63
31-Mar-87 1.043978 1000 1,043.98 0.00055365 0.55 1,042.27
30-Apr-87 1.119147 1000 1,119.15 0.00055365 0.58 1,116.74
29-May-87 1.102489 1000 1,102.49 0.00055365 0.62 1,099.50
30-Jun-87 1.047927 1000 1,047.93 0.00055365 0.61 1,044.48
31-Jul-87 1.035270 1000 1,035.27 0.00055365 0.58 1,031.28
31-Aug-87 1.126094 1000 1,126.09 0.00055365 0.57 1,121.18
30-Sep-87 1.100502 1000 1,100.50 0.00055365 0.62 1,095.08
30-Oct-87 0.870277 1000 870.28 0.00055365 0.61 865.39
30-Nov-87 0.877632 1000 877.63 0.00055365 0.48 872.22
31-Dec-87 0.938767 1000 938.77 0.00055365 0.48 932.50
29-Jan-88 0.906064 1000 906.06 0.00055365 0.52 899.49
29-Feb-88 0.929518 1000 929.52 0.00055365 0.50 922.28
31-Mar-88 0.970977 1000 970.98 0.00055365 0.51 962.91
29-Apr-88 0.986384 1000 986.38 0.00055365 0.53 977.65
31-May-88 0.967682 1000 967.68 0.00055365 0.54 958.57
30-Jun-88 0.950048 1000 950.05 0.00055365 0.53 940.58
29-Jul-88 0.942451 1000 942.45 0.00055365 0.52 932.53
31-Aug-88 0.908811 1000 908.81 0.00055365 0.52 898.73
30-Sep-88 0.947143 1000 947.14 0.00055365 0.50 936.14
31-Oct-88 0.988394 1000 988.39 0.00055365 0.52 976.39
30-Nov-88 1.005686 1000 1,005.69 0.00055365 0.54 992.94
31-Dec-88 1.007020 1000 1,007.02 0.00055365 0.55 993.70
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
27-Jan-87 5.74% 5.74% 1,646.41 1,646.41
30-Jan-87
27-Feb-87
31-Mar-87
30-Apr-87
29-May-87
30-Jun-87
31-Jul-87
31-Aug-87
30-Sep-87
30-Oct-87
30-Nov-87
31-Dec-87
29-Jan-88
29-Feb-88
31-Mar-88
29-Apr-88
31-May-88
30-Jun-88
29-Jul-88
31-Aug-88
30-Sep-88
31-Oct-88
30-Nov-88
31-Dec-88
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Jan-89 1.036179 1000 1,036.18 0.00055365 0.55 1,021.93
28-Feb-89 1.053451 1000 1,053.45 0.00055365 0.57 1,038.39
31-Mar-89 1.051786 1000 1,051.79 0.00055365 0.57 1,036.18
28-Apr-89 1.082178 1000 1,082.18 0.00055365 0.57 1,065.55
31-May-89 1.041379 1000 1,041.38 0.00055365 0.59 1,024.78
30-Jun-89 1.035695 1000 1,035.70 0.00055365 0.57 1,018.62
31-Jul-89 1.132904 1000 1,132.90 0.00055365 0.56 1,113.67
31-Aug-89 1.124152 1000 1,124.15 0.00055365 0.62 1,104.45
30-Sep-89 1.193284 1000 1,193.28 0.00055365 0.61 1,171.75
31-Oct-89 1.127637 1000 1,127.64 0.00055365 0.65 1,106.64
30-Nov-89 1.187678 1000 1,187.68 0.00055365 0.61 1,164.95
31-Dec-89 1.261608 1000 1,261.61 0.00055365 0.64 1,236.82
31-Jan-90 1.243784 1000 1,243.78 0.00055365 0.68 1,218.67
28-Feb-90 1.214009 1000 1,214.01 0.00055365 0.67 1,188.82
31-Mar-90 1.259073 1000 1,259.07 0.00055365 0.66 1,232.29
30-Apr-90 1.265192 1000 1,265.19 0.00055365 0.68 1,237.59
31-May-90 1.346971 1000 1,346.97 0.00055365 0.69 1,316.90
30-Jun-90 1.376964 1000 1,376.96 0.00055365 0.73 1,345.50
31-Jul-90 1.444607 1000 1,444.61 0.00055365 0.74 1,410.85
31-Aug-90 1.296578 1000 1,296.58 0.00055365 0.78 1,265.50
30-Sep-90 1.172659 1000 1,172.66 0.00055365 0.70 1,143.85
31-Oct-90 1.280963 1000 1,280.96 0.00055365 0.63 1,248.86
30-Nov-90 1.240461 1000 1,240.46 0.00055365 0.69 1,208.68
31-Dec-90 1.229709 1000 1,229.71 0.00055365 0.67 1,197.54 1,646.41 0.00% 60.00% 1,646.41 5.002
31-Jan-91 1.241750 1000 1,241.75 0.00055365 0.66 1,208.60
28-Feb-91 1.282803 1000 1,282.80 0.00055365 0.67 1,247.89
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
31-Jan-89
28-Feb-89
31-Mar-89
28-Apr-89
31-May-89
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 6.57% 6.57% 1,374.83 1,374.83
31-Jan-91
28-Feb-91
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.008644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-91 1.244519 1000 1,244.52 0.00055365 0.69 1,209.95
30-Apr-91 1.270969 1000 1,270.97 0.00055365 0.67 1,235.00
31-May-91 1.273148 1000 1,273.15 0.00055365 0.68 1,236.43
30-Jun-91 1.210594 1000 1,210.59 0.00055365 0.68 1,175.00
31-Jul-91 1.261348 1000 1,261.35 0.00055365 0.65 1,223.61
29-Aug-91 1.260548 1000 1,260.55 0.00055365 0.68 1,222.16
30-Sep-91 1.315187 1000 1,315.19 0.00055365 0.68 1,274.45
30-Oct-91 1.323405 1000 1,323.41 0.00055365 0.71 1,281.71
29-Nov-91 1.275159 1000 1,275.16 0.00055365 0.71 1,234.28
31-Dec-91 1.319600 1000 1,319.60 0.00055365 0.68 1,276.61
31-Jan-92 1.333809 1000 1,333.81 0.00055365 0.71 1,289.65
28-Feb-92 1.305215 1000 1,305.22 0.00055365 0.71 1,261.29
31-Mar-92 1.277809 1000 1,277.81 0.00055365 0.70 1,234.11
30-Apr-92 1.356401 1000 1,356.40 0.00055365 0.68 1,309.33
29-May-92 1.414572 1000 1,414.57 0.00055365 0.72 1,364.75
30-Jun-92 1.386126 1000 1,386.13 0.00055365 0.76 1,336.55
31-Jul-92 1.297783 1000 1,297.78 0.00055365 0.74 1,250.63
31-Aug-92 1.285732 1000 1,285.73 0.00055365 0.69 1,238.32
30-Sep-92 1.233129 1000 1,233.13 0.00055365 0.69 1,186.98
30-Oct-92 1.148135 1000 1,148.14 0.00055365 0.66 1,104.51
30-Nov-92 1.141276 1000 1,141.28 0.00055365 0.61 1,097.30
31-Dec-92 1.168866 1000 1,168.87 0.00055365 0.61 1,123.21 1,646.41 4.00% 40.00% 1,632.75 3
29-Jan-93 1.200519 1000 1,200.52 0.00055365 0.62 1,153.01
26-Feb-93 1.223286 1000 1,223.29 0.00055365 0.64 1,174.24
31-Mar-93 1.307209 1000 1,307.21 0.00055365 0.65 1,254.14
30-Apr-93 1.393172 1000 1,393.17 0.00055365 0.69 1,335.92
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 13.28% 13.59% 1,453.64 1,465.80
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
OVERSEAS
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
28-May-93 1.422272 1000 1,422.27 0.00055365 0.74 1,363.09
30-Jun-93 1.386157 1000 1,386.16 0.00055365 0.75 1,327.72
30-Jul-93 1.439919 1000 1,439.92 0.00055365 0.74 1,378.48
31-Aug-93 1.516220 1000 1,516.22 0.00055365 0.76 1,450.76
30-Sep-93 1.506986 1000 1,506.99 0.00055365 0.80 1,441.13
29-Oct-93 1.560592 1000 1,560.59 0.00055365 0.80 1,491.59
30-Nov-93 1.493662 1000 1,493.66 0.00055365 0.83 1,426.79
31-Dec-93 1.591344 1000 1,591.34 0.00055365 0.79 1,519.31
31-Jan-94 1.694030 1000 1,694.03 0.00055365 0.84 1,616.51
28-Feb-94 1.663135 1000 1,663.14 0.00055365 0.89 1,586.13
31-Mar-94 1.620772 1000 1,620.77 0.00055365 0.88 1,544.85
29-Apr-94 1.673325 1000 1,673.33 0.00055365 0.86 1,594.09
31-May-94 1.651563 1000 1,651.56 0.00055365 0.88 1,572.48
30-Jun-94 1.632987 1000 1,632.99 0.00055365 0.87 1,553.92
29-Jul-94 1.675148 1000 1,675.15 0.00055365 0.86 1,593.18
31-Aug-94 1.693466 1000 1,693.47 0.00055365 0.88 1,609.72
30-Sep-94 1.648197 1000 1,648.20 0.00055365 0.89 1,565.80
31-Oct-94 1.680948 1000 1,680.95 0.00055365 0.87 1,596.04
30-Nov-94 1.616262 1000 1,616.26 0.00055365 0.88 1,533.74
31-Dec-94 1.605980 1000 1,605.98 0.00055365 0.85 1,523.13 1,646.41 6.00% 20.00% 1,606.16 1
31-Jan-95 1.538286 1000 1,538.29 0.00055365 0.84 1,458.09
28-Feb-95 1.541389 1000 1,541.39 0.00055365 0.81 1,460.22
31-Mar-95 1.587775 1000 1,587.77 0.00055365 0.81 1,503.36
28-Apr-95 1.632144 1000 1,632.14 0.00055365 0.83 1,544.54
31-May-95 1.653622 1000 1,653.62 0.00055365 0.86 1,564.01
30-Jun-95 1.665915 1000 1,665.92 0.00055365 0.87 1,574.77
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 5.45% 8.09% 1,054.51 1,080.93
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
</TABLE>
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
FUND #60 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C>
31-Jul-95 1.740884 1000 1,740.88 0.00055365 0.87 1,644.76
31-Aug-95 1.691409 1000 1,691.41 0.00055365 0.91 1,597.11
29-Sep-95 1.714988 1000 1,714.99 0.00055365 0.88 1,618.49
31-Oct-95 1.679923 1000 1,679.92 0.00055365 0.90 1,584.50
30-Nov-95 1.698310 1000 1,698.31 0.00055365 0.88 1,600.97
31-Dec-95 1.747454 1000 1,747.45 0.00055365 0.89 1,646.41
31-Dec-95 1,646.41
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
31-Dec-95
</TABLE>
Page 5
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
05-Jun-89 1.000000 1000 1,000.00 1,000.00 1,598.04 0.00% 70.00% 1,598.04 6.575
30-Jun-89 1.022717 1000 1,022.72 0.00055365 0.55 1,022.16
31-Jul-89 1.038022 1000 1,038.02 0.00055365 0.57 1,036.89
31-Aug-89 1.029047 1000 1,029.05 0.00055365 0.57 1,027.35
30-Sep-89 1.032446 1000 1,032.45 0.00055365 0.57 1,030.18
31-Oct-89 1.047723 1000 1,047.72 0.00055365 0.57 1,044.85
30-Nov-89 1.056073 1000 1,056.07 0.00055365 0.58 1,052.60
31-Dec-89 1.059709 1000 1,059.71 0.00055365 0.58 1,055.64
31-Jan-90 1.056525 1000 1,056.53 0.00055365 0.58 1,051.89
28-Feb-90 1.061887 1000 1,061.89 0.00055365 0.58 1,056.64
31-Mar-90 1.064436 1000 1,064.44 0.00055365 0.59 1,058.59
30-Apr-90 1.064158 1000 1,064.16 0.00055365 0.59 1,057.73
31-May-90 1.080183 1000 1,080.18 0.00055365 0.59 1,073.07
30-Jun-90 1.088195 1000 1,088.20 0.00055365 0.59 1,080.44
31-Jul-90 1.098023 1000 1,098.02 0.00055365 0.60 1,089.60
31-Aug-90 1.097177 1000 1,097.18 0.00055365 0.60 1,088.16
30-Sep-90 1.100801 1000 1,100.80 0.00055365 0.60 1,091.15
31-Oct-90 1.100083 1000 1,100.08 0.00055365 0.60 1,089.83
30-Nov-90 1.106011 1000 1,106.01 0.00055365 0.60 1,095.10
31-Dec-90 1.115679 1000 1,115.68 0.00055365 0.61 1,104.07 1,598.04 0.00% 60.00% 1,598.04 5.002
31-Jan-91 1.118302 1000 1,118.30 0.00055365 0.61 1,106.05
28-Feb-91 1.128858 1000 1,128.86 0.00055365 0.61 1,115.88
31-Mar-91 1.147271 1000 1,147.27 0.00055365 0.62 1,133.46
30-Apr-91 1.163290 1000 1,163.29 0.00055365 0.63 1,148.66
31-May-91 1.171481 1000 1,171.48 0.00055365 0.64 1,156.11
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
05-Jun-89 7.39% 7.39% 1,598.04 1,598.04
30-Jun-89
31-Jul-89
31-Aug-89
30-Sep-89
31-Oct-89
30-Nov-89
31-Dec-89
31-Jan-90
28-Feb-90
31-Mar-90
30-Apr-90
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 7.67% 7.67% 1,447.41 1,447.41
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00065365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Charge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30-Jun-91 1.171812 1000 1,171.81 0.00055365 0.64 1,155.80
31-Jul-91 1.182249 1000 1,182.25 0.00055365 0.64 1,165.45
29-Aug-91 1.209500 1000 1,209.50 0.00055365 0.65 1,191.67
30-Sep-91 1.227682 1000 1,227.68 0.00055365 0.66 1,208.93
30-Oct-91 1.239179 1000 1,239.18 0.00055365 0.67 1,219.58
29-Nov-91 1.252900 1000 1,252.90 0.00055365 0.68 1,232.41
31-Dec-91 1.289396 1000 1,289.40 0.00055365 0.68 1,267.63
31-Jan-92 1.275731 1000 1,275.73 0.00055365 0.70 1,253.49
28-Feb-92 1.281931 1000 1,281.93 0.00055365 0.69 1,258.89
31-Mar-92 1.278705 1000 1,278.71 0.00055365 0.70 1,255.02
30-Apr-92 1.287187 1000 1,287.19 0.00055365 0.69 1,262.65
29-May-92 1.306162 1000 1,306.16 0.00055365 0.70 1,280.57
30-Jun-92 1.320374 1000 1,320.37 0.00055365 0.71 1,293.79
31-Jul-92 1.346221 1000 1,346.22 0.00055365 0.72 1,318.40
31-Aug-92 1.353440 1000 1,353.44 0.00055365 0.73 1,324.74
30-Sep-92 1.368808 1000 1,368.81 0.00055365 0.73 1,339.05
30-Oct-92 1.350507 1000 1,350.51 0.00055365 0.74 1,320.41
30-Nov-92 1.346117 1000 1,346.12 0.00055365 0.73 1,315.38
31-Dec-92 1.364252 1000 1,364.25 0.00055365 0.73 1,332.37 1,598.04 4.00% 40.00% 1,583.60 3
29-Jan-93 1.391975 1000 1,391.98 0.00055365 0.74 1,358.71
26-Feb-93 1.414742 1000 1,414.74 0.00055365 0.75 1,380.18
31-Mar-93 1.419936 1000 1,419.94 0.00055365 0.76 1,384.49
30-Apr-93 1.427698 1000 1,427.70 0.00055365 0.77 1,391.29
28-May-93 1.429309 1000 1,429.31 0.00055365 0.77 1,392.09
30-Jun-93 1.455555 1000 1,455.56 0.00055365 0.77 1,416.88
30-Jul-93 1.464514 1000 1,464.51 0.00055365 0.78 1,424.82
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 5.93% 6.25% 1,188.56 1,199.39
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
INVESTMENT GRADE BOND
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Aug-93 1.489493 1000 1,489.49 0.00055365 0.79 1,448.33
30-Sep-93 1.495941 1000 1,495.94 0.00055365 0.80 1,453.80
29-Oct-93 1.502414 1000 1,502.41 0.00055365 0.80 1,459.28
30-Nov-93 1.493948 1000 1,493.95 0.00055365 0.81 1,450.25
31-Dec-93 1.501802 1000 1,501.80 0.00055365 0.80 1,457.07
31-Jan-94 1.517778 1000 1,517.78 0.00055365 0.81 1,471.77
28-Feb-94 1.491986 1000 1,491.99 0.00055365 0.81 1,445.94
31-Mar-94 1.456943 1000 1,456.94 0.00055365 0.80 1,411.18
29-Apr-94 1.442935 1000 1,442.94 0.00055365 0.78 1,396.83
31-May-94 1.438005 1000 1,438.06 0.00055365 0.77 1,391.28
30-Jun-94 1.433144 1000 1,433.14 0.00055365 0.77 1,385.81
29-Jul-94 1.455739 1000 1,455.74 0.00055365 0.77 1,406.89
31-Aug-94 1.455996 1000 1,456.00 0.00055365 0.78 1,406.36
30-Sep-94 1.439396 1000 1,439.40 0.00055365 0.78 1,389.55
31-Oct-94 1.439727 1000 1,439.73 0.00055365 0.77 1,389.10
30-Nov-94 1.441388 1000 1,441.39 0.00055365 0.77 1,389.93
31-Dec-94 1.433937 1000 1,433.94 0.00055365 0.77 1,381.98 1,598.04 6.00% 20.00% 1,557.21 1
31-Jan-95 1.453743 1000 1,453.74 0.00055365 0.77 1,400.30
28-Feb-95 1.480891 1000 1,480.89 0.00055365 0.78 1,425.68
31-Mar-95 1.489307 1000 1,489.31 0.00055365 0.79 1,432.99
28-Apr-95 1.508565 1000 1,508.57 0.00055365 0.79 1,450.72
31-May-95 1.567941 1000 1,567.94 0.00055365 0.80 1,507.02
30-Jun-95 1.578996 1000 1,579.00 0.00055365 0.83 1,516.81
31-Jul-95 1.572562 1000 1,572.56 0.00055365 0.84 1,509.79
31-Aug-95 1.590271 1000 1,590.27 0.00055365 0.84 1,525.96
29-Sep-95 1.604007 1000 1,604.01 0.00055365 0.84 1,538.29
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
W/ Surr W/O Surr W/ Surr W/O Surr
<C> <C> <C> <C>
12.68% 15.63% 1,126.80 1,156.34
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
FUND #62 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
31-Oct-95 1.624315 1000 1,624.32 0.00055365 0.85 1,556.92
30-Nov-95 1.647341 1000 1,647.34 0.00055365 0.86 1,578.13
31-Dec-95 1.669036 1000 1,669.04 0.00055365 0.87 1,598.04
31-Dec-95 1,598.04
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Model Acct Value Avg Ann Avg Ann $1,000 $1,000
Date AUV # Units Before Chrge Factor W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
31-Oct-95 1.624315 1000 1,624.32 0.00055365
30-Nov-95 1.647341 1000 1,647.34 0.00055365
31-Dec-95 1.669036 1000 1,669.04 0.00055365
31-Dec-95
</TABLE>
Page 4
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
ASSET MANAGER
FUND #64 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
29-May-90 1.000000 1000 1,000.00 1,000.00 1,756.94 0.00% 60.00% 1,756.94 5.594
31-May-90 1.012495 1000 1,012.50 0.00055365 0.55 1,011.94
30-Jun-90 1.018732 1000 1,018.73 0.00055365 0.56 1,017.61
31-Jul-90 1.017038 1000 1,017.04 0.00055365 0.56 1,015.36
31-Aug-90 0.982993 1000 982.99 0.00055365 0.56 980.81
30-Sep-90 0.961801 1000 961.80 0.00055365 0.54 959.12
31-Oct-90 0.966007 1000 966.01 0.00055365 0.53 962.78
30-Nov-90 1.012372 1000 1,012.37 0.00055365 0.53 1,008.46
31-Dec-90 1.041041 1000 1,041.04 0.00055365 0.56 1,036.46 1,756.94 0.00% 60.00% 1,756.94 5.002
31-Jan-91 1.090120 1000 1,090.12 0.00055365 0.57 1,084.75
28-Feb-91 1.132102 1000 1,132.10 0.00055365 0.60 1,125.92
31-Mar-91 1.149675 1000 1,149.68 0.00055365 0.62 1,142.78
30-Apr-91 1.166086 1000 1,166.09 0.00055365 0.63 1,158.46
31-May-91 1.191642 1000 1,191.64 0.00055365 0.64 1,183.21
30-Jun-91 1.173621 1000 1,173.62 0.00055365 0.66 1,164.66
31-Jul-91 1.198151 1000 1,198.15 0.00055365 0.64 1,188.35
29-Aug-91 1.223688 1000 1,223.69 0.00055365 0.66 1,213.02
30-Sep-91 1.227885 1000 1,227.89 0.00055365 0.67 1,216.51
30-Oct-91 1.235162 1000 1,235.16 0.00055365 0.67 1,223.05
29-Nov-91 1.214169 1000 1,214.17 0.00055365 0.68 1,201.59
31-Dec-91 1.265768 1000 1,265.77 0.00055365 0.67 1,251.98
31-Jan-92 1.281037 1000 1,281.04 0.00055365 0.69 1,266.39
28-Feb-92 1.305117 1000 1,305.12 0.00055365 0.70 1,289.50
31-Mar-92 1.301028 1000 1,301.03 0.00055365 0.71 1,284.74
30-Apr-92 1.319233 1000 1,319.23 0.00055365 0.71 1,302.01
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
29-May-90 10.60% 10.60% 1,756.94 1,756.94
31-May-90
30-Jun-90
31-Jul-90
31-Aug-90
30-Sep-90
31-Oct-90
30-Nov-90
31-Dec-90 11.13% 11.13% 1,695.13 1,695.13
31-Jan-91
28-Feb-91
31-Mar-91
30-Apr-91
31-May-91
30-Jun-91
31-Jul-91
29-Aug-91
30-Sep-91
30-Oct-91
29-Nov-91
31-Dec-91
31-Jan-92
28-Feb-92
31-Mar-92
30-Apr-92
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
ASSET MANAGER
FUND #64 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
29-May-92 1.332155 1000 1,332.16 0.00055365 0.72 1,314.04
30-Jun-92 1.330168 1000 1,330.17 0.00055365 0.73 1,311.35
31-Jul-92 1.351458 1000 1,351.46 0.00055365 0.73 1,331.62
31-Aug-92 1.346319 1000 1,346.32 0.00055365 0.74 1,325.82
30-Sep-92 1.353877 1000 1,353.88 0.00055365 0.73 1,332.53
30-Oct-92 1.355100 1000 1,355.10 0.00055365 0.74 1,332.99
30-Nov-92 1.383689 1000 1,383.69 0.00055365 0.74 1,360.38
31-Dec-92 1.404870 1000 1,404.87 0.00055365 0.75 1,380.45 1,756.94 4.00% 40.00% 1,745.05 3
29-Jan-93 1.427132 1000 1,427.13 0.00055365 0.76 1,401.56
26-Feb-93 1.439635 1000 1,439.64 0.00055365 0.78 1,413.06
31-Mar-93 1.479324 1000 1,479.32 0.00055365 0.78 1,451.23
30-Apr-93 1.487157 1000 1,487.16 0.00055365 0.80 1,458.12
28-May-93 1.511533 1000 1,511.53 0.00055365 0.81 1,481.21
30-Jun-93 1.522528 1000 1,522.53 0.00055365 0.82 1,491.16
30-Jul-93 1.540195 1000 1,540.20 0.00055365 0.83 1,507.64
31-Aug-93 1.584097 1000 1,584.10 0.00055365 0.83 1,549.78
30-Sep-93 1.584155 1000 1,584.16 0.00055365 0.86 1,548.98
29-Oct-93 1.625881 1000 1,625.88 0.00055365 0.86 1,588.92
30-Nov-93 1.622556 1000 1,622.56 0.00055365 0.88 1,584.79
31-Dec-93 1.687107 1000 1,687.11 0.00055365 0.88 1,646.96
31-Jan-94 1.739540 1000 1,739.54 0.00055365 0.91 1,697.23
28-Feb-94 1.683261 1000 1,683.26 0.00055365 0.94 1,641.38
31-Mar-94 1.603055 1000 1,603.06 0.00055365 0.91 1,562.27
29-Apr-94 1.603183 1000 1,603.18 0.00055365 0.86 1,561.53
31-May-94 1.615795 1000 1,615.80 0.00055365 0.86 1,572.95
30-Jun-94 1.583859 1000 1,583.86 0.00055365 0.87 1,540.99
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
29-May-92
30-Jun-92
31-Jul-92
31-Aug-92
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 8.13% 8.37% 1,264.12 1,272.73
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
</TABLE>
Page 2
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
ASSET MANAGER
FUND #64 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00600 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.006644 6 0.00% 60%
Monthly Factor 0.00055365 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
29-Jul-94 1.610285 1000 1,610.29 0.00055365 0.85 1,565.84
31-Aug-94 1.646814 1000 1,646.81 0.00055365 0.87 1,600.50
30-Sep-94 1.626322 1000 1,626.32 0.00055365 0.89 1,579.69
31-Oct-94 1.633213 1000 1,633.21 0.00055365 0.87 1,585.51
30-Nov-94 1.608191 1000 1,608.19 0.00055365 0.88 1,560.34
31-Dec-94 1.571804 1000 1,571.80 0.00055365 0.86 1,524.18 1,756.94 6.00% 20.00% 1,718.02 1
31-Jan-95 1.560454 1000 1,560.45 0.00055365 0.84 1,512.33
28-Feb-95 1.584765 1000 1,584.77 0.00055365 0.84 1,535.05
31-Mar-95 1.604608 1000 1,604.61 0.00055365 0.85 1,553.42
28-Apr-95 1.629173 1000 1,629.17 0.00055365 0.86 1,576.34
31-May-95 1.648887 1000 1,648.89 0.00055365 0.87 1,594.54
30-Jun-95 1.661723 1000 1,661.72 0.00055365 0.88 1,606.07
31-Jul-95 1.719703 1000 1,719.70 0.00055365 0.89 1,661.22
31-Aug-95 1.739386 1000 1,739.39 0.00055365 0.92 1,679.32
29-Sep-95 1.760276 1000 1,760.28 0.00055365 0.93 1,698.56
31-Oct-95 1.735916 1000 1,735.92 0.00055365 0.94 1,674.11
30-Nov-95 1.779855 1000 1,779.86 0.00055365 0.93 1,715.56
31-Dec-95 1.823774 1000 1,823.77 0.00055365 0.95 1,756.94
31-Dec-95 1,756.94
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
29-Jul-94
31-Aug-94
30-Sep-94
31-Oct-94
30-Nov-94
31-Dec-94 12.72% 15.27% 1,127.18 1,152.71
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
31-Dec-95
</TABLE>
Page 3
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP--UP DEATH BENEFIT)
ASSET MANAGER GROWTH
FUND #65 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 10.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 100 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00400 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.004644 6 0.00% 60%
Monthly Factor 0.00038699 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using 1.00%.
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03-Jan-95 10.000000 100 1,000.00 1,000.00 1,215.00 6.00% 10.00% 1,162.29 0.986
31-Jan-95 10.023960 100 1,002.40 0.00038699 0.39 1,002.01
28-Feb-95 10.166184 100 1,016.62 0.00038699 0.39 1,015.84
31-Mar-95 10.297345 100 1,029.73 0.00038699 0.39 1,028.55
28-Apr-95 10.558886 100 1,055.89 0.00038699 0.40 1,054.28
31-May-95 10.698877 100 1,069.89 0.00038699 0.41 1,067.85
30-Jun-95 11.118458 100 1,111.85 0.00038699 0.41 1,109.31
31-Jul-95 11.517120 100 1,151.71 0.00038699 0.43 1,148.66
31-Aug-95 12.024499 100 1,202.45 0.00038699 0.44 1,198.82
29-Sep-95 12.193796 100 1,219.38 0.00038699 0.46 1,215.23
31-Oct-95 11.716359 100 1,171.64 0.00038699 0.47 1,167.16
30-Nov-95 11.915032 100 1,191.50 0.00038699 0.45 1,186.52
29-Dec-95 12.205610 100 1,220.56 0.00038699 0.46 1,215.00
29-Dec-95 1,215.00
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
03-Jan-95 16.47% 21.83% 1,162.29 1,215.00
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
29-Dec-95
</TABLE>
Page 1
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
CONTRAFUND
FUND #66 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 1.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 1,000 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00400 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.004644 6 0.00% 60%
Monthly Factor 0.00038699 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using .80%.
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chnge Factor Deduction Acct Value Value Charge Available W/Surr n
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03-Jan-95 10.000000 100 1,000.00 1,000.00 1,380.56 6.00% 10.00% 1,328.85 0.991
31-Jan-95 9.893697 100 989.37 0.00038699 0.39 988.98
28-Feb-95 10.386900 100 1,038.69 0.00038699 0.38 1,037.90
31-Mar-95 10.898467 100 1,089.85 0.00038699 0.40 1,088.62
28-Apr-95 11.480100 100 1,148.01 0.00038699 0.42 1,146.29
31-May-95 11.719454 100 1,171.95 0.00038699 0.44 1,169.75
30-Jun-95 12.478482 100 1,247.85 0.00038699 0.45 1,245.06
31-Jul-95 13.435390 100 1,343.54 0.00038699 0.48 1,340.05
31-Aug-95 13.593345 100 1,359.33 0.00038699 0.52 1,355.29
29-Sep-95 13.881260 100 1,388.13 0.00038699 0.52 1,383.47
31-Oct-95 13.580487 100 1,358.05 0.00038699 0.54 1,352.96
30-Nov-95 13.817789 100 1,381.78 0.00038699 0.52 1,376.08
31-Dec-95 13.868193 100 1,386.82 0.00038699 0.53 1,380.56
31-Dec-95 1,380.56
</TABLE>
<TABLE>
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
03-Jan-95 38.20% 38.43% 1,328.85 1,380.56
</TABLE>
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
INDEX 500
FUND #67 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 10.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 100 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00400 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.004644 6 0.00% 60%
Monthly Factor 0.00038699 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using 1.00%.
<TABLE>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
27-Aug-92 10.000000 100 1,000.00 1,000.00 1,530.15 4.00% 40.00% 1,514.63 3.339
30-Sep-92 10.055576 100 1,005.56 0.00038699 0.39 1,005.17
30-Oct-92 10.069129 100 1,006.91 0.00038699 0.39 1,006.14
30-Nov-92 10.403459 100 1,040.35 0.00038699 0.39 1,039.15
31-Dec-92 10.525977 100 1,052.60 0.00038699 0.40 1,050.99 1,530.15 4.00% 40.00% 1,514.63 2.994
29-Jan-93 10.593568 100 1,059.36 0.00038699 0.41 1,057.33
26-Feb-93 10.732918 100 1,073.29 0.00038699 0.41 1,070.83
31-Mar-93 10.959395 100 1,095.94 0.00038699 0.41 1,093.01
30-Apr-93 10.680338 100 1,068.03 0.00038699 0.42 1,064.76
28-May-93 10.949917 100 1,094.99 0.00038699 0.41 1,091.22
30-Jun-93 10.967942 100 1,096.79 0.00038699 0.42 1,092.60
30-Jul-93 10.909003 100 1,090.90 0.00038699 0.42 1,086.30
31-Aug-93 11.312035 100 1,131.20 0.00038699 0.42 1,126.01
30-Sep-93 11.211074 100 1,121.11 0.00038699 0.44 1,115.53
29-Oct-93 11.430992 100 1,143.10 0.00038699 0.43 1,136.98
30-Nov-93 11.309572 100 1,130.96 0.00038699 0.44 1,124.46
31-Dec-93 11.435744 100 1,143.57 0.00038699 0.44 1,136.57
31-Jan-94 11.811379 100 1,181.14 0.00038699 0.44 1,173.47
28-Feb-94 11.482668 100 1,148.27 0.00038699 0.45 1,140.35
31-Mar-94 10.974665 100 1,097.47 0.00038699 0.44 1,089.46
29-Apr-94 11.097007 100 1,109.70 0.00038699 0.42 1,101.19
31-May-94 11.259159 100 1,125.92 0.00038699 0.43 1,116.85
30-Jun-94 10.975818 100 1,097.58 0.00038699 0.43 1,088.31
29-Jul-94 11.328758 100 1,132.88 0.00038699 0.42 1,122.89
31-Aug-94 11.769675 100 1,176.97 0.00038699 0.43 1,166.16
</TABLE>
<TABLE>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
27-Aug-92 13.24% 13.58% 1,514.63 1,530.15
30-Sep-92
30-Oct-92
30-Nov-92
31-Dec-92 12.98% 13.36% 1,441.15 1,455.91
29-Jan-93
26-Feb-93
31-Mar-93
30-Apr-93
28-May-93
30-Jun-93
30-Jul-93
31-Aug-93
30-Sep-93
29-Oct-93
30-Nov-93
31-Dec-93
31-Jan-94
28-Feb-94
31-Mar-94
29-Apr-94
31-May-94
30-Jun-94
29-Jul-94
31-Aug-94
</TABLE>
<PAGE>
EXHIBIT 13
RETIREMENT INCOME BUILDER
(5% ANNUALLY COMPOUNDING DEATH BENEFIT)
(ANNUAL STEP-UP DEATH BENEFIT)
INDEX 500
FUND #67 ---------------------
HYPOTHETICAL PERFORMANCE CALCULATIONS SURRENDER PROVISIONS:
---------------------
Year Rate % Free
--- ---- ------
Initial investment $1,000 Annual Fee 30 1 6.00% 10%
AUV 10.000000 Average Policy Size 46,590 2 6.00% 20%
Units purchased 100 Charge per $1,000 0.000644 3 6.00% 30%
Additional M&E* 0.00400 4 4.00% 40%
---------- 5 2.00% 50%
Annual Rate 0.004644 6 0.00% 60%
Monthly Factor 0.00038699 7 0.00% 70%
8 0.00% 80%
9 0.00% 90%
10 0.00% 100%
* Additional M&E is the difference between the total
account charges of 1.40% and a model subaccount
using 1.00%.
<TABLE>
<CAPTION>
Contract Ending
Model Acct Value Charge Adjusted Redeemable Surrender W/D ERV
Date AUV # Units Before Chrge Factor Deduction Acct Value Value Charge Available W/ Surr n
<S> <C> <C> <C> <C> <C> <C> <C>
30-Sep-94 11.474364 100 1,147.44 0.00038699 0.45 1,136.44
31-Oct-94 11.719346 100 1,171.93 0.00038699 0.44 1,160.27
30-Nov-94 11.284045 100 1,128.40 0.00038699 0.45 1,116.72
30-Dec-94 11.439559 100 1,143.96 0.00038699 0.43 1,131.68 1,530.15 6.00% 20.00% 1,488.51 0.997
31-Jan-95 11.732413 100 1,173.24 0.00038699 0.44 1,160.21
28-Feb-95 12.172720 100 1,217.27 0.00038699 0.45 1,203.31
31-Mar-95 12.517999 100 1,251.80 0.00038699 0.47 1,236.97
28-Apr-95 12.876137 100 1,287.61 0.00038699 0.48 1,271.88
31-May-95 13.370217 100 1,337.02 0.00038699 0.49 1,320.20
30-Jun-95 13.662388 100 1,366.24 0.00038699 0.51 1,348.53
31-Jul-95 14.106193 100 1,410.62 0.00038699 0.52 1,391.82
31-Aug-95 14.129167 100 1,412.92 0.00038699 0.54 1,393.55
29-Sep-95 14.708395 100 1,470.84 0.00038699 0.54 1,450.14
31-Oct-95 14.646098 100 1,464.61 0.00038699 0.56 1,443.43
30-Nov-95 15.270727 100 1,527.07 0.00038699 0.56 1,504.43
29-Dec-95 15.537660 100 1,553.77 0.00038699 0.58 1,530.15
29-Dec-95 1,530.15
<CAPTION>
ERV of ERV of
Avg Ann Avg Ann $1,000 $1,000
Date W/ Surr W/O Surr W/ Surr W/O Surr
<S> <C> <C> <C> <C>
30-Sep-94
31-Oct-94
30-Nov-94
30-Dec-94 31.63% 35.32% 1,315.31 1,352.10
31-Jan-95
28-Feb-95
31-Mar-95
28-Apr-95
31-May-95
30-Jun-95
31-Jul-95
31-Aug-95
29-Sep-95
31-Oct-95
30-Nov-95
29-Dec-95
29-Dec-95
</TABLE>
Page 2
<PAGE>
EXHIBIT (14)
------------
POWERS OF ATTORNEY
------------------
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
PFL RETIREMENT BUILDER VARIABLE ANNUITY
Know all men by these presents that Brenda K. Clancy, whose signature appears
below, constitutes and appoints Larry G. Brown and Craig D. Vermie, and each of
them, her attorneys-in-fact, each with the power of substitution, for her in any
and all capacities, to sign any registration statements and amendments thereto
for the PFL Retirement Builder Variable Annuity, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute, may do or cause to be done by
virtue hereof.
/s/ Brenda K. Clancy
----------------------------
Brenda K. Clancy
Treasurer
PFL Life Insurance Company
December 5, 1996
- ----------------------
Date
