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FILE NO. _______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM N-8B-2
___________________________
REGISTRATION STATEMENT OF UNIT INVESTMENT TRUSTS
WHICH ARE CURRENTLY ISSUING SECURITIES
PURSUANT TO SECTION 8(B) OF THE
INVESTMENT COMPANY ACT OF 1940
___________________________
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
(NAME OF UNIT INVESTMENT TRUST)
____________________________________________________
- ------ NOT THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES.
X ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES ONLY FOR THE PURPOSES
- ------ OF INFORMATION PROVIDED HEREIN.
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I
ORGANIZATION AND GENERAL INFORMATION
1. (a) Furnish name of the trust and the Internal Revenue Service Employer
Identification Number.
Sun Life of Canada (U.S.) Variable Account G
I.R.S. Employer Identification Number: None
(b) Furnish title of each class or series of securities issued by the
trust.
Flexible Premium Variable Universal Life Insurance Policies (the
"Policies"). No such Policies have yet been issued.
2. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each depositor of the
trust.
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
I.R.S. Employer Identification Number: 04-2461439
3. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each custodian or trustee
of the trust indicating for which class of series of securities each
custodian or trustee is acting.
The custodian for all securities of the Variable Account is:
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
I.R.S. Employer Identification Number: 04-2461439
4. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each principal
underwriter currently distributing securities of the trust.
No Policies have been distributed or are being distributed
currently. Sun Investment Services Company, One Sun Life
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Executive Park, Wellesley Hills, Massachusetts 02181, a
wholly-owned subsidiary of the depositor, will be the
principal underwriter of the Policies. The I.R.S. Employer
Identification Number of Sun Investment Services Company is
04-2470476.
5. Furnish name of state or other sovereign power, the laws of which govern
with respect to the organization of the trust.
Delaware
6. (a) Furnish the dates of execution and termination of any indenture or
agreement currently in effect under the terms of which the trust was
organized and issued or proposes to issue securities.
There is no indenture or agreement under the terms of which
the Variable Account was organized or proposes to issue
Policies. The Variable Account was organized and the
Policies will be issued pursuant to a resolution of the
Board of Directors of the depositor adopted on December 3,
1985. This resolution will continue in effect indefinitely
unless terminated by the Board of Directors.
(b) Furnish the dates of execution and termination of any indenture or
agreement currently in effect pursuant to which the proceeds of
payments on securities issued or to be issued by the trust are held by
the custodian or trustee.
Not applicable.
7. Furnish in chronological order the following information with respect to
each change of name of the trust since January 1, 1930. If the name has
never been changed, so state.
The name of the Variable Account has never been changed.
8. State the date on which the fiscal year of the trust ends.
December 31.
MATERIAL LITIGATION
9. Furnish a description of any pending legal proceedings, material with
respect to the security holders of the trust by reason of the nature of
the claim or the amount
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thereof, to which the trust, the depositor, or the principal underwriter
is a party or of which the assets of the trust are the subject,
including the substance of the claims involved in such proceeding and
the title of the proceeding. Furnish a similar statement with respect
to any pending administrative proceeding commenced by a governmental
authority or any such proceeding or legal proceeding known to be
contemplated by a governmental authority. Include any proceeding which,
although immaterial itself, is representative of, or one of, a group which
in the aggregate is material.
There are no pending legal proceedings, material with
respect to prospective purchasers of the Policies, to which
the Variable Account, the depositor, or the principal
underwriter is a party or of which the assets of the
Variable Account are the subject. There are no pending
administrative proceedings commenced by or known to be
contemplated by a governmental authority, material with
respect to prospective purchasers of the Policies, to which
the Variable Account, the depositor, or the principal
underwriter is a party or of which the assets of the
Variable Account are the subject.
II
GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING THE
SECURITIES OF THE TRUST AND THE
RIGHTS OF HOLDERS
10. Furnish a brief statement with respect to the following matters for each
class or series of securities issued by the trust:
(a) Whether the securities are of the registered or bearer type.
The Policies are of the registered type, insofar as a Policy
is owned by the person named in the Policy as owner, and
records are kept by the depositor concerning the Policy
owner.
(b) Whether the securities are of the cumulative or distributive type.
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The Policies are of the cumulative type, insofar as
earnings in the Variable Account are reflected in
Policy benefits and are not distributed.
(c) The rights of security holders with respect to withdrawal or
redemption.
See "SUMMARY OF THE POLICY," "THE POLICY -- Free Look
Period," "ACCOUNT VALUE -- Surrender," "ACCOUNT VALUE --
Partial Surrender," "ACCOUNT VALUE -- Allocation of
Partial Surrender," "CHARGES, DEDUCTIONS AND REFUNDS --
Sales Load Refund at Surrender," "POLICY LOANS," and
"GENERAL PROVISIONS -- Maturity" in the Preliminary Prospectus
for the Policies (the "Prospectus") in Exhibit D,
incorporated herein by reference.
(d) The rights of security holders with respect to conversion, transfer,
partial redemption, and similar matters.
See "SUMMARY OF THE POLICY," "ACCOUNT VALUE -- Transfer
Privileges," "ACCOUNT VALUE -- Surrender," "ACCOUNT
VALUE -- Partial Surrender," "ACCOUNT VALUE --
Allocation of Partial Surrender," "CHARGES, DEDUCTIONS
AND REFUNDS -- Sales Load Refund at Surrender" and
"POLICY LOANS" in the Prospectus in Exhibit D,
incorporated herein by reference.
(e) If the trust is the issuer of periodic payment plan certificates, the
substance of the provisions of any indenture or agreement with respect
to lapses or defaults by security holders in making principal
payments, and with respect to reinstatement.
See "SUMMARY OF THE POLICY," "ACCOUNT VALUE --
Insufficient Value" and "ACCOUNT VALUE -- Grace Period"
in the Prospectus in Exhibit D, incorporated herein by
reference.
(f) The substance of the provisions of any indenture or agreement with
respect to voting rights, together with the names of any persons other
than security holders given the right to exercise voting rights
pertaining to the trust's
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securities or the underlying securities and the relationship of
such persons to the trust.
See "GENERAL PROVISIONS -- Voting Rights" in the
Prospectus in Exhibit D, incorporated herein by
reference.
(g) Whether security holders must be given notice of any change in:
(1) the composition of the assets of the trust.
See "GENERAL PROVISIONS -- Additions,
Deletions or Substitution of Investments" and
"GENERAL PROVISIONS -- Change in the
Operation of the Variable Account" in the
Prospectus in Exhibit D, incorporated herein
by reference.
(2) the terms and conditions of the securities issued by the trust.
See "GENERAL PROVISIONS -- Modification" in
the Prospectus in Exhibit D, incorporated
herein by reference.
(3) the provisions of any indenture or agreement of the trust.
Not applicable.
(4) the identity of the depositor, trustee or custodian.
The identity of the depositor cannot be
changed except by operation of law upon a
merger or similar reorganization of the
depositor. No notice to the owner of a
Policy is required for a change in the
custodian.
(h) Whether the consent of security holders is required in order for
action to be taken concerning any change in:
(1) the composition of the assets of the trust.
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See "GENERAL PROVISIONS -- Additions,
Deletions or Substitution of Investments" and
"GENERAL PROVISIONS -- Change in the
Operation of the Variable Account" in the
Prospectus in Exhibit D, incorporated herein
by reference.
(2) the terms and conditions of the securities issued by the trust.
See "GENERAL PROVISIONS -- Modification" in
the Prospectus in Exhibit D, incorporated
herein by reference.
(3) the provisions of any indenture or agreement of the trust.
Not applicable.
(4) the identity of the depositor, trustee or custodian.
The identity of the depositor cannot be
changed except by operation of law upon a
merger or similar reorganization of the
depositor. A change of custodian may be made
without the consent of the Owner of the
Policy.
(i) Any other principal feature of the securities issued by the trust or
any other principal right, privilege or obligation not covered by
subdivisions (a) to (g) or by any other item in this form.
See "THE POLICY -- Application and Issuance of a Policy,"
"PREMIUM PAYMENTS," "DEATH BENEFIT," "ACCOUNT VALUE --
Account Value in the Sub-Accounts," "ACCOUNT VALUE -- Net
Investment Factor," "ACCOUNT VALUE -- Account Value in the
Loan Account," "CHARGES, DEDUCTIONS AND REFUNDS," and
"FEDERAL TAX STATUS" in the Prospectus in Exhibit D,
incorporated herein by reference.
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INFORMATION CONCERNING THE SECURITIES
UNDERLYING THE TRUST'S SECURITIES
11. Describe briefly the kind or type of securities comprising the unit of
specified securities in which security holders have an interest.
The Policy Owner is not the owner of the securities held in
the Variable Account, although the value of those securities
is used to calculate Policy benefits. The shares of the
Funds, described in Item 12, which is incorporated herein by
reference, are owned by the depositor and held in the
Variable Account pursuant to Delaware insurance law, which
governs the operation of separate accounts of Delaware
insurance companies. The Funds are registered, open-end
diversified management investment companies.
If the trust owns or will own any securities of its regular brokers or
dealers as defined in Rule 10b-1 under the Investment Company Act of
1940, or their parents, identify those brokers or dealers and state
the value of the registrant's aggregate holdings of the securities of
each subject issuer as of the close of the registrant's most recent
fiscal year.
The Variable Account will not own any securities of its
regular brokers or dealers as defined in Rule 10b-1 under
the Investment Company Act of 1940, or their parents.
12. If the trust is the issuer of periodic payment plan certificates and if any
underlying securities were issued by another investment company, furnish
the following information for each such company:
(a) Name of company.
See "SUMMARY OF THE POLICY" and "THE COMPANY,
THE VARIABLE ACCOUNT AND THE FUNDS -- The
Funds" in the Prospectus in Exhibit D,
incorporated herein by reference.
(b) Name and principal business address of depositor.
Not applicable.
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(c) Name and principal business address of trustee or custodian.
For the MFS/Sun Life Series Trust ("MFS Series Fund"):
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
For the Fidelity Variable Insurance Product Fund ("VIP
Fund") Money Market and High Income Portfolios:
The Bank of New York
110 Washington Street
New York, New York
For the VIP Fund Equity-Income Portfolio:
The Chase Manhattan Bank, N.A.
1211 Avenue of the Americas
New York, New York 10036
For VIP Fund Growth Portfolio and Fidelity Variable
Insurance Product Fund II ("VIP Fund II") Contrafund and
Index 500 Portfolios:
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts
For Neuberger & Berman Advisers Management Trust:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
For Templeton Variable Products Series Fund:
Chase Manhattan Bank
MetroTech Center
Brooklyn, New York 11245
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Expected for the JPM Series Trust II:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(d) Name and principal business address of principal underwriter.
For MFS Series Fund:
Clarendon Insurance Agency, Inc.
500 Boylston Street
Boston, Massachusetts 02116
For VIP Fund and VIP Fund II:
Fidelity Distributors Corporation
82 Devonshire Street
Boston, Massachusetts 02109
For Neuberger & Berman Advisers Management Trust:
Neuberger & Berman Management Inc.
605 Third Avenue, 2nd Floor
New York, New York 10158
For Templeton Variable Products Series Fund:
Franklin Templeton Distributors, Inc.
P. O. Box 33030
St. Petersburg, Florida 33733-8030
Expected for JPM Series Trust II:
Funds Distributors, Inc.
60 State Street
Boston, Massachusetts 02109
(e) The period during which the securities of such company have been
the underlying securities.
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The Variable Account has not yet acquired
shares of the Funds.
INFORMATION CONCERNING LOADS, FEES,
CHARGES AND EXPENSES
13. (a) Furnish the following information with respect to each load, fee,
expense or charge to which (1) principal payments, (2) underlying
securities, (3) distributions, (4) cumulated or reinvested
distributions or income, and (5) redeemed or liquidated assets of the
trust's securities are subject:
(A) the nature of such load, fee, expense, or charge;
(B) the amount thereof;
(C) the name of the person to whom such amounts are paid
and his relationship to the trust;
(D) the nature of the services performed by such person in
consideration for such load, fee, expense or charge.
(1) With respect to principal payments and sub-paragraphs
(A) through (D) of this sub-item, see "SUMMARY OF THE
POLICY," "THE COMPANY, THE VARIABLE ACCOUNT AND THE FUNDS --
The Funds," "CHARGES, DEDUCTIONS AND REFUNDS -- Expense
Charges Deducted as a Percent of Premium," "CHARGES,
DEDUCTIONS AND REFUNDS -- Sales Load Refund at Surrender,"
"CHARGES, DEDUCTIONS AND REFUNDS -- Expense Charges Deducted
as a Percent of Assets," "CHARGES, DEDUCTIONS AND REFUNDS --
Expense Charges Deducted on a Per Policy Basis," "CHARGES,
DEDUCTIONS AND REFUNDS -- Monthly Cost of Insurance" and
"DISTRIBUTION OF THE POLICIES" in the Prospectus in Exhibit
D, incorporated herein by reference.
(2) With respect to underlying securities, the following
information is responsive to sub-paragraphs (A) through (D)
of this item.
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See "THE COMPANY, THE VARIABLE ACCOUNT AND THE FUNDS --
The Funds" in the Prospectus in Exhibit D, incorporated
herein by reference. In addition, the Prospectuses for the
Funds made available to Registrant disclose the following
expenses:
Massachusetts Financial Services Company ("MFS") makes
investment decisions for each series of the MFS Series Fund.
For these services and facilities, MFS receives the
following fees computed and paid monthly at an annual rate
equal to (i) 0.55% of the average daily net assets of the
Government Securities Series for the MFS Series Fund's then-
current fiscal year; (ii) 0.75% of the average daily net
assets of the Capital Appreciation Series for the MFS Series
Fund's then-current fiscal year; (iii) 0.75% of the first
$300 million of average daily net assets of the Total Return
Series and the Emerging Growth Series for the MFS Series
Fund's then-current fiscal year, and 0.675% of the average
daily net assets of each of these series in excess of $300
million (effective January 1, 1995, the fee for the Total
Return Series was reduced to 0.60% of the average daily net
assets of such series in excess of $1 billion); and (iv)
0.90% of the average daily net assets of the World Growth
Series for the MFS Series Fund's then-current fiscal year.
Each VIP Fund and VIP Fund II portfolio's management fee is
calculated and paid to Fidelity Management & Research
Company ("FMR") every month. The fee for each fund
(excluding Money Market and Index 500 Portfolios) is
calculated by adding a group fee rate to an individual fund
fee rate, and multiplying the result by the fund's average
net assets.
Index 500's management fee is calculated and paid to FMR
every month. The fund pays the fee at the annual rate of
0.28% of its average net assets.
Money Market's management fee is calculated by multiplying
the sum of two components by the fund's average net assets
and adding an income-based fee. One component, the group
fee rate, is discussed below. The other component, the
individual fund fee rate, is 0.03%. The income-based fee is
6% of the fund's gross income in excess of a 5% yield and
cannot rise above 0.24% of the fund's average net assets.
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The group fee rate is based on the average net assets of all
the mutual funds advised by FMR. This rate cannot rise
above 0.52% for Equity-Income, Growth and Contrafund
Portfolios and 0.37% for Money Market and High Income
Portfolios, and it drops as total assets under management
increase.
For December 31, 1995, the group fee rate was 0.3097% for
Equity-Income, Growth and Contrafund Portfolios, and 0.1482%
for Money Market and High Income Portfolios.
The funds' individual fund fee rates and total management
fees for fiscal year 1995 are outlined in the chart below.
Individual fund Management
Fund fee rate fee
---- --------------- ----------
Money Market Portfolio 0.03% 0.24%
Equity-Income Portfolio 0.20% 0.51%
Growth Portfolio 0.30% 0.61%
Contrafund Portfolio 0.30% 0.61%
High Income Portfolio 0.45% 0.60%
Neuberger & Berman Management Incorporated provides
investment management services and administrative services
to the Neuberger & Berman Advisers Management Trust
portfolios, for which it receives the following fees:
Partners Management
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0.55% of first $250 million
0.525% of next $250 million
0.50% of next $250 million
0.475% of next $250 million
0.45% of next $500 million
0.425% of over $1.5 billion
Administration
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0.30%
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Limited Maturity Bond Management
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0.25% of first $500 million
0.225% of next $500 million
0.20% of next $500 million
0.175% of next $500 million
0.15% of over $2 billion
Administration
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0.40%
Templeton Investment Counsel, Inc. is the investment manager
for Templeton Variable Products Series Fund. As
compensation for this service, the Fund pays a monthly fee
equal on an annual basis to .50% of its average daily assets
during the year.
It is expected that Morgan Guaranty Trust Company of New
York, a wholly-owned subsidiary of J.P. Morgan & Co.
Incorporated, will be the investment advisor for the JPM
Series Trust II portfolios. It is expected that as
compensation for this service Morgan will receive the
following fees as an annual percentage of the average daily
net asset value of each portfolio:
Bond Portfolio .30%
Equity Portfolio .40%
Small Company Portfolio .60%
(3) With respect to distributions and sub-paragraphs (A)
through (D) of this sub-item, the response to Item 13(a)(1)
is incorporated herein by reference.
(4) With respect to cumulated or reinvested distributions
or income and sub-paragraphs (A) through (D) of this sub-
item, the response to Item 13(a)(1) is incorporated herein
by reference.
(5) With respect to redeemed or liquidated assets of the
trust's securities and sub-paragraphs (A) through (D) of
this
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sub-item, the response to Item 13(a)(1) is incorporated
herein by reference.
(b) For each installment payment type of periodic payment plan certificate
of the trust, furnish the following information with respect to sales
load and other deductions from principal payments.
Not applicable.
(c) State the amount of total deductions as a percentage of the net amount
invested for each type of security issued by the trust. State each
different sales charge available as a percentage of the public
offering price and as a percentage of the net amount invested. List
any special purchase plans or methods established by rule or exemptive
order that reflect scheduled variations in, or elimination of, the
sales load and identify each class of individuals or transactions to
which such plans apply.
See (a) above, which is incorporated herein by
reference. See also "CHARGES, DEDUCTIONS AND
REFUNDS -- Reduction of Charges" in the Prospectus
in Exhibit D, incorporated herein by reference.
(d) Explain fully the reasons for any difference in the price at which
securities are offered generally to the public, and the price at which
securities are offered for any class of transactions to any class or
group of individuals, including officers, directors, or employees of
the depositor, trustee custodian or principal underwriter.
See "CHARGES, DEDUCTIONS AND REFUNDS -- Reduction
of Charges" in the Prospectus in Exhibit D,
incorporated herein by reference.
(e) Furnish a brief description of any loads, fees, expenses or charges
not covered in Item 13(a) which may be paid by security holders in
connection with the trust or its securities.
None.
(f) State whether the depositor, principal underwriter, custodian or
trustee, or any affiliated person of the foregoing may receive profits
or other benefits not included in answer to Item 13(a) or 13(d)
through the sale or purchase
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of the trust's securities or interests in such securities, or
underlying securities or interests in underlying securities, and
describe fully the nature and extent of such profits or benefits.
Not applicable.
(g) State the percentage that the aggregate annual charges and deductions
for maintenance and other expenses of the trust bear to the dividend
and interest income from the trust property during the period covered
by the financial statements filed herewith.
Not applicable.
INFORMATION CONCERNING THE
OPERATIONS OF THE TRUST
14. Describe the procedure with respect to applications (if any) and the
issuance and authentication of the trust's securities, and state the
substance of the provisions of any indenture or agreement pertaining
thereto.
See "THE POLICY -- Application and Issuance of a Policy," in
the Prospectus in Exhibit D, incorporated herein by
reference.
15. Describe the procedure with respect to the receipt of payments from
purchasers of the trust's securities and the handling of the proceeds
thereof, and state the substance of the provisions of any indenture or
agreement pertaining thereto.
See "THE POLICY -- Application and Issuance of a Policy,"
"THE POLICY -- Free Look Period," "PREMIUM PAYMENTS --
Planned Periodic Premiums," "PREMIUM PAYMENTS -- Allocation
of Net Premium," "ACCOUNT VALUE -- Account Value in the Sub-
Accounts" and "ACCOUNT VALUE -- Transfer Privileges" in the
Prospectus in Exhibit D, incorporated herein by reference.
16. Describe the procedure with respect to the acquisition of underlying
securities and the disposition thereof, and state the substance of the
provisions of any indenture or agreement pertaining thereto.
See "PREMIUM PAYMENTS -- Allocation of Net Premium,"
"ACCOUNT VALUE -- Account Value in the Sub-Accounts,"
"ACCOUNT VALUE -- Net Investment
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Factor," "ACCOUNT VALUE -- Account Value in the Loan Account,"
"ACCOUNT VALUE -- Transfer Privileges," "ACCOUNT VALUE --
Allocation of Partial Surrender" and "POLICY LOANS" in the
Prospectus in Exhibit D, incorporated herein by reference.
17. (a) Describe the procedure with respect to withdrawal or redemption by
security holders.
See "THE POLICY -- Free Look Period,""ACCOUNT VALUE --
Surrender," "ACCOUNT VALUE -- Partial Surrender,"
"ACCOUNT VALUE -- Allocation of Partial Surrender" and
"POLICY LOANS" in the Prospectus in Exhibit D,
incorporated herein by reference.
(b) Furnish the names of any persons who may redeem or repurchase, or are
required to redeem or repurchase, the trust's securities or underlying
securities from security holders, and the substance of the provision
of any indenture or agreement pertaining thereto.
The depositor is required to comply with surrender
requests as described in Items 10(c) and 17(a) above.
(c) Indicate whether repurchased or redeemed securities will be cancelled
or may be resold.
If the Owner surrenders the Policy, the Policy will be
cancelled upon payment of the cash surrender value.
18. (a) Describe the procedure with respect to the receipt, custody and
disposition of the income and other distributable funds of the trust
and state the substance of the provisions of any indenture or
agreement pertaining thereto.
See "THE COMPANY, THE VARIABLE ACCOUNT AND THE
FUNDS -- The Variable Account," "ACCOUNT VALUE --
Account Value in the Sub-Accounts" and "ACCOUNT
VALUE -- Net Investment Factor" in the Prospectus
in Exhibit D, incorporated herein by reference.
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(b) Describe the procedure, if any, with respect to the reinvestment of
distributions to security holders and state the substance of the
provisions of any indenture or agreement pertaining thereto.
Not applicable.
(c) If any reserves or special funds are created out of income or
principal, state with respect to each such reserve or fund the purpose
and ultimate disposition thereof, and describe the manner of handling
of same.
Pursuant to state insurance law requirements, the
depositor maintains reserves to cover its
obligations under the Policies. The assets in the
Variable Account attributable to Policies
constitute a part of these reserves. Although
these reserves support the Policies, owners have
no ownership interest therein and any excess
reserves will be for the benefit of the depositor
and not for Policy owners. The general account of
the depositor, which includes the proceeds of the
cost of insurance charge described in Item 13(a),
which is incorporated herein by reference, is
available to satisfy the depositor's obligations
under the Policies.
(d) Submit a schedule showing the periodic and special distributions which
have been made to security holders during the three years covered by
the financial statements filed herewith. State for each such
distribution the aggregate amount and amount per share. If
distributions from sources other than current income have been made
identify each such other source and indicate whether such distribution
represents the return of principal payments to security holders. If
payments other than cash were made describe the nature thereof, the
account charged and the basis of determining the amount of such
charge.
Not applicable.
19. Describe the procedure with respect to the keeping of records and accounts
of the trust, the making of reports and the furnishing of information to
security holders and the substance of the provisions of any indenture or
agreement pertaining thereto.
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The depositor will maintain appropriate records and accounts
for Policy Owners and the Variable Account. See "GENERAL
PROVISIONS -- Report to Owner" and "OTHER CONTRACTUAL
ARRANGEMENTS -- Administration" in the Prospectus in Exhibit
D, incorporated herein by reference.
20. State the substance of the provisions of any indenture or agreement
concerning the trust with respect to the following:
(a) Amendments to such indenture or agreement.
Not applicable.
(b) The extension or termination of such indenture or agreement.
Not applicable.
(c) The removal or resignation of the trustee or custodian, or the failure
of the trustee or custodian to perform its duties, obligations and
functions.
Not applicable.
(d) The appointment of a successor trustee and the procedure if a
successor trustee is not appointed.
Not applicable.
(e) The removal or resignation of the depositor, or the failure of the
depositor to perform its duties, obligations and functions.
Not applicable.
(f) The appointment of a successor depositor and the procedure if a
successor depositor is not appointed.
Not applicable.
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21. (a) State the substance of the provisions of any indenture or agreement
with respect to loans to security holders.
See "POLICY LOANS" in the Prospectus in Exhibit D,
incorporated herein by reference.
(b) Furnish a brief description of any procedure or arrangement by which
loans are made available to security holders by the depositor,
principal underwriter, trustee or custodian, or any affiliated person
of the foregoing. The following items should be covered:
(1) The name of each person who makes such agreements or arrangements
with security holders.
(2) The rate of interest payment on such loans.
(3) The period for which loans may be made.
(4) Costs or charges for default in repayment at maturity.
(5) Other material provisions of the agreement or arrangement.
See "DEATH BENEFIT -- Benefits at Death," "ACCOUNT
VALUE -- Account Value in the Loan Account" and "POLICY
LOANS" in the Prospectus in Exhibit D, incorporated
herein by reference.
(c) If such loans are made, furnish the aggregate amount of loans
outstanding at the end of the last fiscal year, the amount of interest
collected during the last fiscal year allocated to the depositor,
principal underwriter, trustee or custodian or affiliated person of
the foregoing and the aggregate amount of loans in default at the end
of the last fiscal year covered by financial statements filed
herewith.
Not applicable.
22. State the substance of the provisions of any indenture or agreement with
respect to limitations on the liabilities of the depositor, trustee or
custodian, or any other party to such indenture or agreement.
Not applicable.
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23. Describe any bonding arrangement for officers, directors, partners or
employees of the depositor or principal underwriter of the trust, including
the amount of coverage and the type of bond.
The directors, officers and employees of the depositor and principal
underwriter are bonded in the amount of $25,000,000 by a Financial
Institutions Blanket Bond, for any dishonest, fraudulent, or criminal
act, wherever committed, and whether committed alone or in collusion
with others.
24. State the substance of any other material provisions of any indenture or
agreement concerning the trust or its securities and a description of any
other material functions or duties of the depositor, trustee or custodian
not stated in Item 10 or Items 14 to 23 inclusive.
None.
III
ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
ORGANIZATION AND OPERATIONS OF DEPOSITOR
25. State the form of organization of the depositor of the trust, the name of
the state or other sovereign power under the laws of which the depositor
was organized and the date of organization.
The depositor is a stock life insurance corporation
organized under the laws of the State of Delaware on January
12, 1970.
26. (a) Furnish the following information with respect to all fees received by
the depositor of the trust in connection with the exercise of any
functions or duties concerning securities of the trust during the
period covered by the financial statements filed herewith:
Not applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by the depositor from any underlying
investment company or any affiliated person or investment adviser of
such company:
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(1) The nature of such fee or participation.
(2) The name of the person making payment.
(3) The nature of the services rendered in consideration for such fee
or participation.
(4) The aggregate amount received during the last fiscal year covered
by the financial statements filed herewith.
None with respect to the trust.
27. Describe the general character of the business engaged in by the depositor
including a statement as to any business other than that of depositor of
the trust. If the depositor acts or has acted in any capacity with respect
to any investment company or companies other than the trust, state the name
or names of such company or companies, their relationship, if any, to the
trust, and the nature of the depositor's activities therewith. If the
depositor has ceased to act in such named capacity, state the date of and
circumstances surrounding such cessation.
See "THE COMPANY, THE VARIABLE ACCOUNT, AND THE FUNDS -- The
Company" in the Prospectus in Exhibit D, incorporated herein
by reference.
The depositor offers variable annuity policies and has
offered Variable Life Insurance policies through its other
separate accounts registered as unit investment trusts or
management investment companies under the Investment Company
Act of 1940. The depositor may also offer variable annuity
policies through separate accounts that are not registered
under the 1940 Act, in reliance on exemptions from such
registrations.
The depositor also participated in the organization of Sun
Growth Fund, Inc. and Sun Growth Variable Annuity Fund,
Inc., two open-end diversified management investment
companies. Shares of Sun Growth Fund, Inc. were the sole
investment of Sun Life of Canada (U.S.) Variable Accounts A
and B until April 22, 1982, at which time shares of Sun
Growth Variable Annuity Fund, Inc. were substituted as the
underlying investment of those separate accounts and as the
security to be purchased by the accounts in the future.
This substitution resulted from issuance by the Internal
Revenue
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Service of Revenue Ruling 81-225 which adversely affected the tax
treatment of certain deferred variable annuity contracts funded
with mutual fund shares which are also available for purchase
directly by the general public. Shares of Sun Growth Variable
Annuity Fund, Inc. are available only to the separate accounts.
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR
28. (a) Furnish as at latest practicable date the following information with
respect to the depositor of the trust, with respect to each officer,
director, or partner of the depositor, and with respect to each
natural person directly or indirectly owning, controlling or holding
with power to vote 5% or more of the outstanding voting securities of
the depositor.
See "THE COMPANY, THE VARIABLE ACCOUNT AND THE FUNDS --
The Company" and "THE COMPANY'S DIRECTORS AND EXECUTIVE
OFFICERS" in the Prospectus in Exhibit D, incorporated
herein by reference.
(b) Furnish a brief statement of the business experience during the last
five years of each officer, director or partner of the depositor.
See "THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS" in
the Prospectus in Exhibit D, incorporated herein by
reference.
COMPANIES OWNING SECURITIES OF DEPOSITOR
29. Furnish as at latest practicable date the following information with
respect to each company which directly or indirectly owns, controls of
holds with power to vote 5% or more of the outstanding voting securities of
the depositor.
All outstanding voting securities of the depositor are owned
by Sun Life Assurance Company of Canada.
CONTROLLING PERSONS
30. Furnish as at latest practicable date the following information with
respect to any person, other than those covered by Items 28, 29, and 42 who
directly or indirectly controls the depositor.
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None.
COMPENSATION OF OFFICERS AND DIRECTORS
OF DEPOSITOR, COMPENSATION OF OFFICERS
OF DEPOSITOR
31. Furnish the following information with respect to the remuneration for
services paid by the depositor during the last fiscal year covered by
financial statements filed herewith:
(a) directly to each of the officers or partners of the depositor directly
receiving the three highest amounts of remuneration:
(b) directly to all officers or partners of the depositor as a group
exclusive of persons whose remuneration is included under Item 31(a),
stating separately the aggregate amount paid by the depositor itself
and the aggregate amount paid by all the subsidiaries;
(c) indirectly or through subsidiaries to each of the officers or partners
of the depositor.
Not applicable.
COMPENSATION OF DIRECTORS
32. Furnish the following information with respect to the remuneration for
services, exclusive of remuneration reported under Item 31, paid by the
depositor during the last fiscal year covered by financial statements filed
herewith:
(a) the aggregate direct remuneration to directors
(b) indirectly or through subsidiaries to directors
Not applicable.
COMPENSATION TO EMPLOYEES
33. (a) Furnish the following information with respect to the aggregate amount
of remuneration for services of all employees of the depositor
(exclusive of persons who remuneration is reported in Items 31 and 32)
who received remuneration in excess of $10,000 during the last fiscal
year covered by financial statement filed herewith from the depositor
and any of its subsidiaries.
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Not applicable.
(b) Furnish the following information with respect to the remuneration for
services paid directly during the last fiscal year covered by
financial statements filed herewith to the following classes of
persons (exclusive of those persons covered by Item 33(a)): (1) Sales
managers, branch managers, district managers and other persons
supervising the sale of registrant's securities; (2) Salesmen, sales
agents, canvassers and other persons making solicitations but not in
supervisory capacity; (3) Administrative and clerical employees; and
(4) Others (specify). If a person is employed in more than one
capacity, classify according to predominant type of work.
Not applicable.
COMPENSATION TO OTHER PERSONS
34. Furnish the following information with respect to the aggregate amount of
compensation for services paid any person (exclusive of persons whose
remuneration is reported in Items 31, 32 and 33), whose aggregate
compensation in connection with services rendered with respect to the trust
in all capacities exceeded $10,000 during the last fiscal year covered by
financial statements filed herewith from the depositor and any of its
subsidiaries.
Not applicable.
IV
DISTRIBUTION AND REDEMPTION OF SECURITIES
DISTRIBUTION OF SECURITIES
35. Furnish the names of the states in which sales of the trust's securities
(a) are currently being made, (b) are presently proposed to be made, and
(c) have been discontinued, indicating by appropriate letter the status
with respect to each state.
(a) Sale of the Policies has not commenced in any state.
(b) It is presently proposed that Policies will be sold in all states
except New York and Vermont.
(c) Not applicable.
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36. If sales of the trust's securities have at any time since January 1, 1936
been suspended for more than a month describe briefly the reasons for such
suspension.
Not applicable.
37. (a) Furnish the following information with respect to each instance where
subsequent to January 1, 1937, any federal or state governmental
officer, agency, or regulatory body denied authority to distribute
securities of the trust, excluding a denial which was merely a
procedural step prior to any determination by such officer, etc. which
denial was subsequently rescinded.
(1) Name of officer, agency or body.
(2) Date of denial.
(3) Brief statement of reason given for denial.
Not applicable.
(b) Furnish the following information with regard to each instance where,
subsequent to January 1, 1937, the authority to distribute securities
of the trust has been revoked by any federal or state governmental
officer, agency or regulatory body.
(1) Name of officer, agency or body.
(2) Date of revocation.
(3) Brief statement of reason given for revocation.
Not applicable.
38. (a) Furnish a general description of the method of distribution of
securities of the trust.
See "DISTRIBUTION OF THE POLICIES" in the Prospectus in
Exhibit D, incorporated herein by reference.
(b) State the substance of any current selling agreement between each
principal underwriter and the trust or the depositor, including a
statement as to the
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inception and termination dates of the agreement, any renewal and
termination provisions, and any assignment provisions.
See Item 38(a), which is incorporated herein by
reference.
(c) State the substance of any current agreements or arrangements of each
principal underwriter with dealers, agents, salesmen, etc. with
respect to commissions and overriding commissions, territories,
franchises, qualifications and revocations. If the trust is the
issuer of periodic payment plan certificates, furnish schedules of
commissions and the bases thereof. In lieu of a statement concerning
schedules of commissions, such schedules of commissions may be filed
as Exhibit A(3)(c).
To be filed by amendment to the trust's Registration
Statement on Form S-6.
INFORMATION CONCERNING PRINCIPAL UNDERWRITER
39. (a) State the form of organization of each principal underwriter of
securities of the trust, the name of the state or other sovereign
power under the laws of which each underwriter was organized and the
date of organization.
Sun Investment Services Company is a corporation organized under
the laws of Delaware on August 6, 1970.
(b) State whether any principal underwriter currently distributing
securities of the trust is a member of the National Association of
Securities Dealers, Inc.
No Policies are currently being distributed. Sun Investment
Services Company is a member of the National Association of
Securities Dealers, Inc.
40. (a) Furnish the following information with respect to all fees received by
each principal underwriter of the trust from the sale of securities of
the trust and any other functions in connection therewith exercised by
such underwriter in such capacity or otherwise during the period
covered by the financial statements filed herewith.
Not applicable
(b) Furnish the following information with respect to any fee or any
participation in fees received by each principal underwriter from any
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underlying investment company or any affiliated person or investment
adviser of such company:
(1) The nature of such fee or participation.
(2) The name of the person making payment.
(3) The nature of the services rendered in consideration for
such fee or participation.
(4) The aggregate amount received during the last fiscal year
covered by the financial statements filed herewith.
None with respect to the trust.
41. (a) Describe the general character of the business engaged in by each
principal underwriter, including a statement as to any business other
than the distribution of securities of the trust. If a principal
underwriter acts or has acted in any capacity with respect to any
investment company or companies other than the trust, state the name
or names of such company or companies, their relationship, if any, to
the trust and the nature of such activities. If a principal
underwriter has ceased to act in such named capacity, state the date
of an the circumstances surrounding such cessation.
The principal underwriter is Sun Investment Services Company, a
wholly owned subsidiary of the depositor. It is a broker/dealer
registered under the Securities and Exchange Act of 1934; in this
capacity, its business is limited to distribution of mutual
funds, variable insurance products (life and annuity) and limited
partnerships and it does not act as a broker/dealer in the
execution of transactions for any client's portfolio. It is also
an investment adviser registered under the Investment Advisers
Act; currently, 100% of its business in this area is investment
supervisory services. From October 6, 1981 to November 1, 1982,
Sun Investment Services Company served as investment adviser to
Sun Growth Variable Annuity Fund, at which point MFS, a newly
acquired subsidiary of the depositor, became the investment
adviser. The company served as general distributor for, and
investment adviser to, Sun Growth Fund from November 18, 1970 to
December 15, 1983, at which time Sun Growth Fund was merged into
another mutual fund.
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(b) Furnish as at latest practicable date the address of each branch
office of each principal underwriter currently selling securities of
the trust and furnish the name and residence address of the person in
charge of such office.
Not applicable.
(c) Furnish the number of individual salesmen of each principal
underwriter through whom any of the securities of the trust were
distributed for the last fiscal year of the trust covered by the
financial statements filed herewith and furnish the aggregate amount
of compensation received by such salesmen in such year.
Not applicable.
42. Furnish as at latest practicable date the following information with
respect to each principal underwriter currently distributing securities of
the trust and with respect to each of the officers, directors or partners
of such underwriter.
Not applicable.
43. Furnish, for the last fiscal covered by the financial statements filed
herewith, the amount of brokerage commissions received by any principal
underwriter who is a member of a national securities exchange and who is
currently distributing the securities of the trust or effecting
transactions for the trust in the portfolio securities of the trust.
Not applicable.
44. (a) Furnish the following information with respect to the method of
valuation used by the trust for purpose of determining the offering
price to the public of securities issued by the trust or the valuation
of shares of interests in the underlying securities acquired by the
holder of a periodic payment plan certificate:
(1) The source of quotations used to determine the value of
portfolio securities.
Fund shares are valued at net asset value, as supplied to
the depositor by the Funds or their agents.
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(2) Whether opening, closing, bid, asked or any other price is
used.
Not applicable.
(3) Whether price is as of the day of sale or as of any other
time.
(4) A brief description of the methods used by registrant for
determining other assets and liabilities including accrual
for expenses and taxes.
(5) Other items which registrant adds to the net asset value in
computing offering price of its securities.
(6) Whether adjustments are made for fractions.
(i) before adding distributor's compensation (load);
and
(ii) after adding distributor's compensation (load).
As to (3) through (6), see Item 15, which is
incorporated herein by reference.
(b) Furnish a specimen schedule showing the components of the offering
price of the trust's securities as at the latest practicable date.
Not applicable.
(c) If there is any variation in the offering price of the trust's
securities to any person or classes of persons other than
underwriters, state the nature and amount of such variation and
indicate the person or classes of persons to whom such offering is
made.
The Premiums paid for each Policy depend on factors such as sex,
attained age and risk class of the insured and the amount of
insurance coverage purchased. See also "CHARGES, DEDUCTIONS AND
REFUNDS -- Reduction of Charges" in the Prospectus in Exhibit D,
incorporated herein by reference.
45. Furnish the following information with respect to any suspension
of the redemption rights of the securities issued by the trust
during the three fiscal years covered by the financial statements
filed herewith:
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(a) by whose action redemption rights were suspended.
(b) the number of days' notice given to security holders prior to
suspension of redemption rights.
(c) reason for suspension.
(d) period during which suspension was in effect.
Not applicable.
REDEMPTION VALUATION OF
SECURITIES OF THE TRUST
46. (a) Furnish the following information with respect to the method of
determining the redemption or withdrawal valuation of securities
issued by the trust:
(1) The source of quotation used to determine the value of
portfolio securities.
Item 44(a)(1) is incorporated herein by reference.
(2) Whether opening, closing, bid, asked or any other price is
used.
Not applicable.
(3) Whether price is as of the day of sale or as of any other
time.
(4) A brief description of the methods used by registrant for
determining other assets and liabilities including accrual
for expenses and taxes (including taxes on unrealized
appreciation).
(5) Other items which registrant deducts from the net asset
value in computing redemption value of its securities.
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(6) Whether adjustments are made for fractions.
As to (3) through (6), see Item 15, which is incorporated
herein by reference.
(b) Furnish a specimen schedule showing the components of the redemption
price to the holders of the trust's securities as at the latest
practicable date.
To the extent applicable, see Item 15, which is incorporated
herein by reference.
PURCHASE AND SALE OF INTERESTS IN
UNDERLYING SECURITIES FROM AND TO
SECURITY HOLDERS
47. Furnish a statement as to the procedure with respect to the maintenance of
a position in the underlying securities or interests in the underlying
securities, the extent and nature thereof and the person who maintains such
a position. Include a description of the procedure with respect to the
purchase of underlying securities or interests in the underlying securities
from security holders who exercise redemption or withdrawal rights and the
sale of such underlying securities and interests in the underlying
securities to other security holders. State whether the method of
valuation of such underlying securities or interests in underlying
securities differs from that set forth in Items 44 and 46. If any item of
expenditure included in the determination of the valuation is not or may
not actually be incurred or expended, explain the nature of such item and
who may benefit from the transaction.
None. There is no procedure for the purchase of underlying securities
or interests therein from Owners who exercise cash surrender rights.
V.
INFORMATION CONCERNING THE
TRUSTEE OR CUSTODIAN
48. Furnish the following information as to each trustee or custodian of the
trust.
(a) Name and principal business address
The depositor acts as custodian of the assets of the Variable
Account.
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(b) Form of organization
Corporation.
(c) State or other sovereign power under the laws of which the trustee or
custodian was organized.
Delaware.
(d) Name of governmental supervising or examining authority
The governmental supervising or examining authorities of the
custodian are the Insurance Departments of the various
jurisdictions in which the depositor is licensed to transact
business, with the Insurance Department of Delaware, its
domiciliary state, having primary authority.
49. State the basis for payment of fees or expenses of the trustee or custodian
for services rendered with respect to the trust and its securities, and the
aggregate amount thereof for the last fiscal year. Indicate the person
paying such fees or expenses. If any fees or expenses are prepaid, state
the unearned amount.
Not applicable. The depositor receives no fees for acting as
custodian.
50. State whether the trustee or custodian or any other person has or may
create a lien on the assets of the trust, and if so, give full particulars,
outlining the substance of the provisions of any indenture or agreement
with respect thereto.
Under Delaware law, the income, gains and losses, realized or
unrealized, from assets allocated to a variable account shall be
credited to or charged against the account, without regard to other
income, gains or losses of the depositor. The policies providing
benefits which vary in accordance with the investment performance of
the Variable Account specifically provide that the portion of the
assets of the Variable Account equal to the reserves and other policy
liabilities with respect to such account shall not be chargeable with
liabilities arising out of any other business which the depositor may
conduct.
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VI.
INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
51. Furnish the following information with respect to insurance of holders of
securities:
(a) The name and address of the insurance company.
See Item 2, which is incorporated herein by reference.
(b) The types of policies and whether individual or group policies.
The Policies are flexible premium variable universal life
insurance policies which are issued on an individual basis.
(c) The types of risks insured and excluded.
(d) The coverage of the policies.
(e) The beneficiaries of such policies and the uses to which the proceeds
of policies must be put.
(f) The terms and manner of cancellation and of reinstatement.
(g) The method of determining the amount of premiums to be paid by holders
of securities.
(h) The amount of aggregate premiums paid to the insurance company during
the last fiscal year.
(i) Whether any person other than the insurance company receives any part
of such premiums, the name of each such person and the amounts
involved, and the nature of the services rendered therefor.
(j) The substance of any other material provisions of any indenture or
agreement of the trust relating to insurance
As to (c) through (j), see "THE POLICY", "PREMIUM PAYMENTS",
"DEATH BENEFIT", "ACCOUNT VALUE", "CHARGES, DEDUCTIONS, AND
REFUNDS", "POLICY
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LOANS", and "GENERAL PROVISIONS" in the Prospectus in Exhibit
D, incorporated herein by reference.
VII.
POLICY OF THE REGISTRANT
52. (a) Furnish the substance of the provisions of any indenture or agreement
with respect to the conditions upon which and the method of selection
by which particular portfolio securities must or may be eliminated
from assets of the trust or must or may be replaced by other portfolio
securities. If an investment adviser or other person is to be
employed in connection with such selection, elimination or
substitution, state the name of such person, the nature of any
affiliation to the depositor, trustee or custodian, and any principal
underwriter, and the amount of remuneration to be received for such
services. If any particular person is not designed in the indenture
or agreement, describe briefly the method of selection of such person.
See "GENERAL PROVISIONS -- Addition, Deletion or
Substitution of Investments" in the Prospectus in
Exhibit D, which is incorporated herein by
reference.
(b) Furnish the following information with respect to each transaction
involving the elimination of any underlying security during the period
covered by the financial statements filed herewith:
(1) Title of security.
(2) Date of elimination.
(3) Reasons for elimination.
(4) The use of the proceeds from the sale of the eliminated security.
(5) Title of security substituted, if any.
(6) Whether depositor, principal underwriter, trustee or custodian or
any affiliated person of the foregoing were involved in the
transaction.
(7) Compensation or remuneration received by each such person
directly or indirectly as a result of the transaction.
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Not applicable.
(c) Describe the policy of the trust with respect to the substitution and
elimination of the underlying securities of the trust with respect to:
(1) the grounds for elimination and substitution;
(2) the type of securities which may be substituted for any
underlying security;
(3) whether the acquisition of such substituted security or
securities would constitute the concentration of investment in a
particular industry or group of industries or would conform to a
policy of concentration of investment in a particular industry or
group of industries;
(4) whether such substituted securities may be the securities of
another investment company; and
(5) the substance of the provisions of any indenture or agreement
which authorize or restrict the policy of the registrant in this
regard.
See Items 10(g), 10(h) and 52(a), which are
incorporated herein by reference.
(d) Furnish a description of any policy (exclusive of policies covered by
paragraphs (a) and (b) herein) of the trust which is deemed a matter
of fundamental policy and which is elected to be treated as such.
None.
REGULATED INVESTMENT COMPANY
53. (a) State the taxable status of the trust.
See "FEDERAL TAX STATUS -- Tax Treatment of the Company and the
Variable Account" in the Prospectus in Exhibit D, incorporated
herein by reference.
(b) State whether the trust qualified for the last taxable year as a
regulated investment company as defined in Section 851 of the Internal
Revenue Code of 1954, and state its present intention with respect to
such qualifications during the current taxable year.
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Not applicable. See Item 53(a), which is incorporated
herein by reference.
VIII.
FINANCIAL AND STATISTICAL INFORMATION
54. If the trust is not the issuer of periodic payment plan certificates
furnish the following information with respect to each class or series of
its securities:
Not applicable.
55. If the trust is the issuer of periodic payment plan certificates, a
transcript of a hypothetical account shall be filed in approximately the
following form on the basis of the certificate calling for the smallest
amount of payments. The schedule shall cover a certificate of the type
currently being sold assuming that such certificate had been sold at a date
approximately ten years prior to the date of registration or at the
approximate date of organization of the trust.
Not applicable.
56. If the trust is the issuer of periodical payment plan certificates, furnish
by years for the period covered by the financial statements filed herewith
in respect of certificates sold during such period, the following
information for each fully paid type and each installment payment type of
periodic payment plan certificate currently being issued by the trust.
Not applicable.
57. If the trust is the issuer of periodic payment plan certificates, furnish
by years for the period covered by the financial statements filed herewith
the following information for each installment payment type of periodic
payment plan certificate currently being issued by the trust.
Not applicable.
58. If the trust is the issuer of periodic payment plan certificates furnish
the following information for each installment payment type of periodic
payment plan certificate outstanding as at the latest practicable date.
Not applicable.
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59. Financial statements shall be filed in accordance with the instructions
given below:
Financial Statements of the Trust:
None
Financial Statements of the depositor:
The Financial Statements of the depositor will be contained in a pre-
effective amendment to the Registration Statement on Form S-6 filed by
the Registrant pursuant to the Securities Act of 1933. They are
incorporated herein by reference.
IX.
EXHIBITS
A. (1) Resolution of Board of Directors of the depositor dated December 3,
1985 authorizing the establishment of the variable account.*
(2) Not applicable.
(3) Distributing Policies:
(a) Agreement between the trust or depositor and principal
underwriter.**
(b) Specimen of typical agreement(s) between principal underwriter
and dealers, managers, sales supervisors and salesmen.**
(c) Schedule of sales commissions referred to in Item 38(c).**
(4) Not applicable.
(5) Form of Flexible Premium Variable Universal Life Insurance Policy.**
(6) (a) Certificate of Incorporation of the depositor.***
(b) By-Laws of the depositor.***
(7) Not applicable.
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(8) (i) Agreements between the trust or the depositor concerning the
trust with the issuer, depositor, principal underwriter or
investment advice of any underlying investment company or any
affiliated person or such persons.**
(9) All other material contracts not entered into in the ordinary course
of business of the trust or of the depositor concerning the trust.**
(10) Form of Application for Flexible Premium Variable Universal Life
Insurance Policy.**
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
D. Preliminary Prospectus for the Sun Life Corporate VUL
___________________
* Incorporated by reference to the Registration Statement of Sun Life of
Canada (U.S.) Variable Account F on Form N-4, File No. 33-29852.
** To be filed by pre-effective amendment to the trust's Registration
Statement on Form S-6.
*** Incorporated by reference to the Registration Statement of the depositor on
Form S-1, File No. 33-29851.
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SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
depositor of the registrant has caused this registration statement to be duly
signed on behalf of the registrant in the Town of Wellesley and Commonwealth of
Massachusetts on the __ day of September, 1996.
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
(Name of Registrant)
By: SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Name of Depositor)
By: ________________________________________________________
David D. Horn, Senior Vice President and General Manager
Attest: ______________________________
Margaret Sears Mead
Secretary
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PROSPECTUS
DECEMBER , 1996
SUN LIFE CORPORATE VUL-TM-
--------------------------------------------------
ISSUED BY
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
A WHOLLY-OWNED SUBSIDIARY OF SUN LIFE ASSURANCE COMPANY OF CANADA.
ONE SUN LIFE EXECUTIVE PARK (ATTN: CORPORATE MARKETS)
WELLESLEY HILLS, MASSACHUSETTS 02181
(800) 432-1102 EXT. 2438
- --------------------------------------------------------------------------------
This Prospectus describes Sun Life Corporate VUL, a flexible premium
variable universal life insurance policy (the "Policy") offered by Sun Life
Assurance Company of Canada (U.S.) (the "Company"). The Policy is designed for
use by corporations and other employers, to provide life insurance benefits,
flexibility of premium payments, and a variety of investment options.
The Policy provides a choice of two death benefit options and two tests to
be used to determine if the Policy qualifies as "life insurance" under federal
tax laws. The Policy has a Cash Surrender Value which generally increases with
the payment of each Premium, decreases to reflect charges, and varies with the
investment performance of the underlying investment options. There is no minimum
Cash Surrender Value. You may also borrow against your Account Value, within
certain limits. Additional life insurance coverage is available under an
Additional Protection Benefit Rider.
The Policy will remain in effect so long as the Account Value less your
Policy Debt is sufficient to cover charges assessed against the Policy.
The Policy allows you to allocate Net Premiums and Account Value among 17
Sub-Accounts, each of which invests in a corresponding investment portfolio of
one of the following mutual funds: MFS/Sun Life Series Trust, Fidelity Variable
Insurance Products Fund, Fidelity Variable Insurance Products Fund II, Neuberger
& Berman Advisers Management Trust, JPM Series Trust II and Templeton Variable
Products Series Fund.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
MFS/SUN LIFE SERIES TRUST, FIDELITY VARIABLE INSURANCE PRODUCTS FUND, FIDELITY
VARIABLE INSURANCE PRODUCTS FUND II, NEUBERGER & BERMAN ADVISERS MANAGEMENT
TRUST, JPM SERIES TRUST II AND TEMPLETON VARIABLE PRODUCTS SERIES FUND. YOU
SHOULD RETAIN THESE PROSPECTUSES FOR FUTURE REFERENCE.
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
Summary 1
Definitions 4
Summary of the Policy 7
Use of the Policy 8
The Company, the Variable Account and the Funds 8
The Company 8
The Variable Account 9
The Funds 10
Performance Information 12
The Policy 14
Application and Issuance of a Policy 14
Free Look Period 15
Premium Payments 15
Planned Periodic Premiums 15
General Premium Limits 15
Tax Limits on Premium Payments 16
Allocation of Net Premium 16
Modified Endowment Contracts 16
Death Benefit 16
Death Benefit Compliance Test 16
Death Benefit Options 17
Benefits at Death 17
Changes in the Death Benefit Option 17
APB Rider 18
Minimum Face Amount 18
Changes in Face Amount 18
Decreases in Face Amount 19
Increases in Face Amount 19
Account Value 19
Account Value in the Sub-Accounts 19
Net Investment Factor 20
Account Value in the Loan Account 21
Transfer Privileges 21
Surrender 21
Partial Surrender 21
Allocation of Partial Surrender 22
Insufficient Value 22
Grace Period 22
Charges, Deductions and Refunds 22
Expense Charges Deducted as a Percent of Premium 22
Sales Load Refund at Surrender 23
Expense Charges Deducted as a Percent of Assets 23
Expense Charges Deducted on a Per Policy Basis 23
Monthly Cost of Insurance 23
Reduction of Charges 24
Policy Loans 24
</TABLE>
2
<PAGE>
TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Provisions 25
Addition, Deletion or Substitution of Investments 25
Alteration 25
Assignments 25
Change in Operation of the Variable Account 25
Conversion 25
Deferral of Payment 25
Entire Contract 26
Illustrations 26
Incontestability 26
Maturity 26
Misstatement of Age or Sex (Non-Unisex Policy) 26
Modification 26
Nonparticipating 26
Procedure 27
Report to Owner 27
Rights of Beneficiary 27
Rights of Owner 27
Splitting Units 27
Suicide 27
Termination 27
Voting Rights 27
Distribution of the Policies 28
Other Contractual Arrangements 28
Administration 28
Custodian 29
Reinsurance 29
Federal Tax Status 29
Tax Treatment of the Company and the Variable Account 29
Taxation of Policy Proceeds 29
The Company's Directors and Executive Officers 31
State Regulation 34
Legal Proceedings 35
Legal Matters 35
Accountants 35
Registration Statement 35
Financial Statements 35
Appendix A--Illustrations of Death Benefits, Account Values
and Cash Surrender Values
</TABLE>
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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUSES.
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<PAGE>
DEFINITIONS
The following terms as used in the Prospectus have the indicated meanings.
ACCOUNT VALUE: The sum of the amounts in each Sub-Account of the Variable
Account with respect to the Policy and the amount of the Loan Account.
ADDITIONAL PROTECTION BENEFIT RIDER ("APB RIDER"): A rider available that
allows you to add life insurance coverage to the Policy.
ANNIVERSARY: The same day in each succeeding year as the day of the year
corresponding to the Issue Date.
APB RIDER DEATH BENEFIT: The death benefit under the APB Rider.
APB RIDER FACE AMOUNT: The amount of APB Rider coverage you request, as
specified in the Application. It is used in determining the Death Benefit. You
may apply for a varying amount of APB Rider coverage, subject to the Company's
limits and requirements, as described in this prospectus.
APPLICATION: Your application for the Policy.
ATTAINED AGE: The Insured's Issue Age plus the number of completed Policy
Years.
BASE DEATH BENEFIT: The death benefit under the Policy, exclusive of any
APB Rider Death Benefit or any other supplemental benefits.
BENEFICIARY: The person or entity entitled to receive the Policy Proceeds
as they become due at death.
BUSINESS DAY: Any day that we are open for business.
CASH SURRENDER VALUE: The Account Value decreased by the balance of any
outstanding Policy Debt, increased by the Sales Load Refund at Surrender, if
any.
CLASS: The risk, underwriting, and substandard table rating, if any,
classification of the Insured.
COMPANY: Sun Life Assurance Company of Canada (U.S.) (also referred to as
"we, us, our").
DAILY RISK PERCENTAGE: The daily rate for deduction of the mortality and
expense risk charge.
DEATH BENEFIT: The sum of the Base Death Benefit and the APB Rider Death
Benefit, if any.
DUE PROOF: Such evidence as we may reasonably require in order to establish
that Policy Proceeds are payable.
EFFECTIVE DATE OF COVERAGE: Initially, the Investment Start Date; with
respect to any increase in the Total Face Amount, the Monthly Anniversary Day
that falls on or next follows the date we approve the supplemental application
for such increase; with respect to any decrease in the Total Face Amount, the
Monthly Anniversary Day that falls on or next follows the date we receive your
request.
EXPENSE CHARGES APPLIED TO PREMIUM: The expense charges applied to Premium,
consisting of the charges for premium tax, the federal deferred acquisition cost
("DAC") tax, and the sales load.
FUND: A mutual fund in which a Sub-Account invests.
GENERAL ACCOUNT: The assets held by us other than those allocated to the
Sub-Accounts of the Variable Account or any other separate account of the
Company. There is no General Account investment option available under this
Policy.
INSURED: The person on whose life the Policy is issued.
INVESTMENT START DATE: The date the first Premium is applied, which will be
the later of the Issue Date, the Business Day we approve the application for a
Policy, or the Business Day we receive a Premium equal to or in excess of the
Minimum Premium.
ISSUE AGE: The Insured's age as of the Insured's birthday nearest the Issue
Date.
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<PAGE>
ISSUE DATE: A date specified in your Policy as the date from which Policy
Anniversaries, Policy Years and Policy Months are measured.
LOAN ACCOUNT: An account established for the Policy, the value of which is
the principal amount of any outstanding loan against the Policy, plus credited
interest thereon.
MATURITY: The Anniversary on which the Insured's Attained Age is 100.
MINIMUM PREMIUM: The Premium amount due and payable as of the Issue Date,
as specified in your Policy. The Minimum Premium varies based on the Issue Age,
sex, and Class of the Insured and the Total Face Amount of the Policy.
MONTHLY ANNIVERSARY DAY: The same day in each succeeding month as the day
of the month corresponding to the Issue Date.
MONTHLY COST OF INSURANCE: A deduction made on a monthly basis for the
insurance coverage provided by the Policy.
MONTHLY EXPENSE CHARGE: A per Policy deduction made on a monthly basis for
administration and other expenses.
MORTALITY AND EXPENSE RISK PERCENTAGE: The annual percentage rate deducted
from the Account Value in the Sub-Accounts for the mortality and expense risk
charge. This annual rate is converted to a daily rate, the Daily Risk
Percentage, and deducted from the Account Value on a daily basis.
NET PREMIUM: The Premium you pay less the Expense Charges Applied to
Premium.
OUR PRINCIPAL OFFICE: Sun Life Assurance Company of Canada (U.S.) (Attn:
Corporate Markets), One Sun Life Executive Park, Wellesley Hills, Massachusetts,
02181, or such other address as we may specify to you by written notice.
OWNER: The person, persons or entity entitled to the ownership rights
stated in the Policy while the Insured is alive (also referred to as "you,
your").
PARTIAL SURRENDER: A surrender of a portion of the Owner's rights under the
Policy in exchange for a payment to the Owner, in accordance with the Policy.
POLICY: The life insurance contract, Sun Life Corporate VUL, including the
Application, any riders or endorsements and any applications therefor.
POLICY DEBT: The principal amount of any outstanding loan against the
Policy, plus accrued but unpaid interest on such loan.
POLICY MONTH: A Policy Month is a one-month period commencing on the Issue
Date or any Monthly Anniversary Day and ending on the next Monthly Anniversary
Day.
POLICY PROCEEDS: The amount determined in accordance with the terms of this
Policy that is payable at the death of the Insured prior to Maturity. This
amount is the Base Death Benefit, decreased by the amount of any outstanding
Policy Debt, and increased by the amounts payable under any APB Rider Death
Benefit and any other supplemental benefits.
POLICY YEAR: A Policy Year is a one-year period commencing on the Issue
Date or any Anniversary and ending on the next Anniversary.
PREMIUM: An amount paid to us by the Owner or on the Owner's behalf as
consideration for the benefits provided by the Policy.
SALES LOAD REFUND AT SURRENDER: The amount refunded upon surrender in the
first three Policy Years, determined in the manner specified in the Policy.
SERVICE CENTER: Andesa TPA, Inc., 1605 N. Cedar Crest Blvd., Suite 502,
Allentown, Pennsylvania, 18104-2351, or such other service center or address as
we may hereafter specify to you by written notice.
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<PAGE>
SPECIFIED FACE AMOUNT: The amount of life insurance coverage you request as
specified in the Policy, exclusive of any APB Rider. It is used in determining
the Death Benefit. You may increase or decrease the Specified Face Amount as
described in this Prospectus.
SUB-ACCOUNTS: Sub-Accounts into which the assets of the Variable Account
are divided, each of which corresponds to an investment choice available to you.
TARGET PREMIUM: An amount of Premium specified in your Policy. The Target
Premium varies based on the Insured's Issue Age, sex, and Specified Face Amount.
The sales load deduction applied to Premiums paid in the first seven Policy
Years and the Sales Load Refund at Surrender for surrender in the first three
Policy Years vary depending on whether Premiums paid in the given Policy Year
are below or above the Target Premium. Use of the APB Rider may affect the
Target Premium.
TOTAL FACE AMOUNT: The sum of the Specified Face Amount and the APB Rider
Face Amount.
UNIT: A unit of measurement that we use to calculate the value of each
Sub-Account.
UNIT VALUE: The value of each Unit of assets in a Sub-Account.
VALUATION DATE: Any day that benefits vary and on which the New York Stock
Exchange, we, and the relevant Fund are open for business. A Valuation Date will
also include any day that may be required by any applicable Securities and
Exchange Commission Rules and Regulations.
VALUATION PERIOD: A period of time from one determination of Unit Values to
the next subsequent determination of Unit Values. We will determine Unit Values
for each Valuation Date as of the close of the New York Stock Exchange on that
Valuation Date.
VARIABLE ACCOUNT: Sun Life of Canada (U.S.) Variable Account G, a separate
account of the Company consisting of assets set aside by the Company, the
investment performance of which is kept separate from that of the general assets
of the Company (also referred to as "Variable Account G").
WE, US AND OUR: The Company and the Company's.
YOU AND YOUR: The Owner and the Owner's.
6
<PAGE>
SUMMARY OF THE POLICY
The Policy is an individual flexible premium variable universal life
insurance policy offered by Sun Life Assurance Company of Canada (U.S.). The
Policy may be owned by an individual, a corporation or other entity. The Policy
may be used for such purposes as financing nontax qualified executive benefit
plans. The Policy is subject to our policy issue rules. You must have an
insurable interest in the life of the Insured. (See "USE OF THE POLICY.")
Premium payments under the Policy are flexible, and you choose the amount
and frequency of your Premium payments. The Policy will remain in effect so long
as your Account Value less Policy Debt is sufficient to cover any charges
against the Policy. (See "PREMIUM PAYMENTS.")
Net Premiums and Account Value may be allocated among any of the investment
options available under the Policy, each of which is represented by a
Sub-Account under the Policy. Each Sub-Account invests in a corresponding
portfolio (the "Portfolios") of one of the following mutual funds (the "Funds"):
MFS/Sun Life Series Trust
<TABLE>
<S> <C>
- - Capital Appreciation Series - Total Return Series
- - Emerging Growth Series - World Growth Series
- - Government Securities Series
</TABLE>
Fidelity Variable Insurance Products Fund ("VIP Fund") and Fidelity Variable
Insurance Products Fund II ("VIP Fund II")
<TABLE>
<S> <C>
- - VIP II Contrafund Portfolio - VIP High Income Portfolio
- - VIP EquityIncome Portfolio - VIP II Index 500 Portfolio
- - VIP Growth Portfolio - VIP Money Market Portfolio
</TABLE>
Neuberger & Berman Advisers Management Trust
<TABLE>
<S> <C>
- - Limited Maturity Bond Portfolio - Partners Portfolio
</TABLE>
JPM Series Trust II
<TABLE>
<S> <C>
- - Bond Portfolio - Small Company Portfolio
- - Equity Portfolio
</TABLE>
Templeton Variable Products Series Fund
<TABLE>
<S> <C>
- - Templeton Stock Fund
</TABLE>
(See "THE COMPANY, THE VARIABLE ACCOUNT AND THE FUNDS -- The Funds.")
You may change your allocation percentages and transfer your Account Value
among Sub-Accounts, within certain limits. (See "PREMIUM PAYMENTS -- Allocation
of Net Premium" and "ACCOUNT VALUE -- Transfer Privileges.")
The Policy offers a choice of death benefit options and a choice between two
tests to be used to determine if the Policy qualifies as "life insurance" under
federal tax laws. The two tests are the Cash Value Accumulation Test and the
Guideline Premium Test. If the Cash Value Accumulation Test is chosen, only
death benefit Option A is available. Death benefit Option A results in a level
Base Death Benefit equal to the Specified Face Amount, unless the life insurance
test requires a greater amount. Death benefit Option B results in a variable
Base Death Benefit equal to the Specified Face Amount plus Account Value, unless
the life insurance test chosen requires a greater amount. The life insurance
test you choose cannot be changed after issue. If you choose the Guideline
Premium Test, you may change your death benefit option. (See "DEATH BENEFIT.")
We deduct from Premium payments a charge to cover our federal deferred
acquisition tax cost, which is currently 1.25% of Premium (guaranteed not to
exceed this rate), and for premium tax, which is currently the rate charged in
your state of residence for state and local taxes (guaranteed not to exceed 4%
of Premium in most states). In each of the first seven Policy Years, we deduct a
sales load equal to 8.75% of Premium up to
7
<PAGE>
Target Premium, as specified in your Policy, and 2.25% of Premium in excess of
Target Premium. No sales load is deducted after the seventh Policy Year. We also
deduct a daily mortality and expense risk charge, currently at an annual rate of
0.75% of the Variable Account's net asset value for the first ten Policy Years
and 0.35% thereafter (guaranteed not to exceed 0.90%), and monthly cost of
insurance charges for the insurance protection provided under the Policy. We
deduct a monthly expense charge of $13.75 during the first Policy Year, and
$7.50 thereafter (guaranteed not to exceed $13.75 per month). Account Value also
reflects the deduction of management fees and other expenses incurred by the
underlying investment Portfolios. (See "CHARGES, DEDUCTIONS AND REFUND.")
There are no surrender charges. Upon full surrender during the first three
Policy Years, you will receive a partial refund of the sales load deducted in
that year. Partial Surrenders are permitted once per Policy Year after the first
Policy Year. No refund of sales load is provided for Partial Surrenders. Loans
are available under the Policy at any time. (See "CHARGES, DEDUCTIONS AND
REFUNDS.")
An APB Rider, which provides additional life insurance coverage, is
available with the Policy as an optional benefit. The cost of the APB Rider is
included in the Monthly Cost of Insurance deduction. There is no Premium
allocated to the APB Rider. As a result, there is no sales load, DAC tax charge,
or premium tax charge associated with this coverage. Conversion rights described
in this Prospectus do not apply to the APB Rider and guaranteed maximum cost of
insurance rates associated with the APB Rider Death Benefit exceed those
associated with the Base Death Benefit. (See "DEATH BENEFIT -- APB Rider.")
The Policy offers other benefits and features described in greater detail in
this Prospectus. You should consult the Policy concerning the insurance coverage
and rights afforded to you under the Policy.
This summary is intended to provide only a very brief overview of the more
significant aspects of the Policy. Further detail is provided in the Prospectus
and the Policy.
USE OF THE POLICY
The Policy is designed to provide to corporations and other entities life
insurance coverage on their employees or other persons in whose lives they have
an insurable interest, and may be used in connection with various types of
nontax qualified executive benefit plans. At the same time, the Policy provides
an Account Value which will be to some extent responsive to changes in the
economic environment, including inflationary forces and changes in rates of
return available from various types of investments. A range of investment
options is provided under the Policy. You, as the Owner, will have all rights
and privileges under the Policy.
The Policy's Account Value and Cash Surrender Value will fluctuate and are
subject to the risks of changing economic conditions, as well as the risks
inherent in the ability of the various Funds' managements to make necessary
changes in their portfolios to anticipate changes in economic conditions. There
is no minimum or guaranteed Account Value attainable or Cash Surrender Value
payable under the Policy.
It may not be advantageous to replace existing insurance or supplement an
existing life insurance policy with the Policy.
THE COMPANY, THE VARIABLE ACCOUNT, AND THE FUNDS
THE COMPANY
The Company is a stock life insurance company incorporated under the laws of
Delaware on January 12, 1970. Its Executive Office mailing address is One Sun
Life Executive Park, Wellesley Hills, Massachusetts 02181, telephone (617)
237-6030. It has obtained authorization to do business in forty-eight states,
the District of Columbia and Puerto Rico, and it is anticipated that the Company
will be authorized to do business in all states except New York. The Company
issues life insurance policies and individual and group annuities. The Company
has formed a wholly-owned subsidiary, Sun Life Insurance and Annuity Company of
New York, which issues individual fixed and combination fixed/variable annuity
contracts and group life and long-term disability insurance in New York. The
Company's other subsidiaries are Massachusetts Financial Services Company and
Sun Capital Advisers, Inc., registered investment advisers, Sun Investment
8
<PAGE>
Services Company, a registered broker-dealer and investment adviser, Sun Benefit
Services, Company, Inc., which offers claims, administrative and pension
brokerage services, New London Trust, F.S.B., a federally chartered savings
bank, Massachusetts Casualty Insurance Company, which issues individual
disability income policies, and Sun Life Financial Services Limited, which
provides administrative services to Sun Life Assurance Company of Canada in
connection with non-U.S. business.
The Company is a wholly-owned subsidiary of Sun Life Assurance Company of
Canada, 150 King Street West, Toronto, Ontario, Canada MFH 1J9. Sun Life
Assurance Company of Canada is a mutual life insurance company incorporated
pursuant to Act of Parliament of Canada in 1865 and currently transacts business
in all of the Canadian provinces and territories, in all states except New York,
and in the District of Columbia, Puerto Rico, the Virgin Islands, Great Britain,
Ireland, Hong Kong, Bermuda and the Philippines.
THE VARIABLE ACCOUNT
Pursuant to a resolution of the Board of Directors, the Variable Account was
established by the Company on July 25, 1996. Under Delaware insurance law and
under the Policy, the income, gains or losses of the Variable Account are
credited to or charged against the assets of the Variable Account without regard
to the other income, gains or losses of the Company. These assets are held in
relation to the Policies described in this Prospectus and such other variable
life insurance contracts as we have issued and designated and may, in the
future, issue and designate as providing benefits which vary in accordance with
the investment performance of the Variable Account. Although the assets
maintained in the Variable Account will not be charged with any liabilities
arising out of any other business conducted by the Company, all obligations
arising under the Policy, including the promise to make all benefit payments,
are general corporate obligations of the Company.
The Company is the legal owner of the assets of the Variable Account. We are
required to maintain at all times assets in the Variable Account with a total
market value at least equal to the reserves and other liabilities relating to
the variable life insurance benefits under the contracts participating in the
Variable Account. In addition to these assets, the Variable Account's assets may
include amounts we have contributed to commence operation of the Variable
Account, and may include accumulations of the charges we make against the
Variable Account. From time to time these additional assets may be transferred
in cash to our General Account. Before making any such transfer, we will
consider any possible adverse impact the transfer might have on the Variable
Account.
The Variable Account meets the definition of a separate account under the
federal securities laws and is registered as a unit investment trust under the
Investment Company Act of 1940. Registration with the Securities and Exchange
Commission (the "Commission") does not involve supervision of the management or
investment practices or policies of the Variable Account or of the Company by
the Commission. For state law purposes, the Variable Account is treated as a
part or division of the Company. We are the custodian of the assets of the
Variable Account.
The assets of the Variable Account are divided into Sub-Accounts, each of
which invests exclusively in shares of a single corresponding investment
portfolio. Currently there are 17 Sub-Accounts, and Sub-Accounts may be added or
deleted in the future. Income, gains and losses, whether or not realized, from
the assets of each Sub-Account are credited to or charged against that
Sub-Account without regard to income, gains or losses in other Sub-Accounts of
the Variable Account. All amounts allocated to the Variable Account will be used
to purchase shares of one or more of the Funds, as you designate. Deductions and
surrenders from the Variable Account will, in effect, be made by redeeming the
number of Fund shares at net asset value equal in total value to the amount to
be deducted. The Variable Account will be fully invested in Fund shares at all
times.
The Variable Account can choose to receive distributions from the Funds in
either cash or additional shares. It is expected that the Variable Account will
choose to receive distributions in additional shares. If the Variable Account
chooses to receive distributions in cash, it will reinvest the cash in the Funds
to purchase additional shares at their net asset value.
9
<PAGE>
THE FUNDS
The following is a brief description of the Funds and a summary of the
investment objectives of each Portfolio. More comprehensive information,
including a discussion of potential risks, is found in the current prospectuses
for each Fund, which are distributed with and must accompany this Prospectus.
You should read the accompanying prospectuses carefully before investing.
Additional prospectuses and the Statements of Additional Information for each of
the Funds can be obtained from the Company's Office at the address and telephone
number listed on the cover of this Prospectus.
MFS/SUN LIFE SERIES TRUST. MFS/Sun Life Series Trust (the "MFS Series
Fund") is an open-end investment management company registered under the
Investment Company Act of 1940 (a "mutual fund") organized as a Massachusetts
business trust. The MFS Series Fund is managed by Massachusetts Financial
Services, Inc. ("MFS"), a subsidiary of the Company. In addition, the World
Growth Series is managed by the following subadvisers: Oechsle International
Advisors, L.P., an independent international investment adviser, Foreign &
Colonial Management Limited ("FCM"), and Foreign & Colonial Emerging Markets
Limited, a subsidiary of FCM. The MFS Series Fund is composed of nineteen
independent portfolios of securities, five of which are currently available for
investment by the Variable Account.
- CAPITAL APPRECIATION SERIES seeks capital appreciation by investing in
securities of all types, with major emphasis on common stocks.
- EMERGING GROWTH SERIES seeks long term growth of capital by investing
primarily (i.e., at least 80% of its assets under normal circumstances) in
common stocks of emerging growth companies. Emerging growth companies
include companies that MFS believes are early in their life cycle but
which have the potential to become major enterprises. Dividend and
interest income from portfolio securities, if any, is incidental to its
objective of long-term growth of capital.
- GOVERNMENT SECURITIES SERIES seeks current income and preservation of
capital by investing in U.S. Government and U.S. Government-related
securities.
- TOTAL RETURN SERIES seeks primarily to obtain above-average income
(compared to a portfolio entirely invested in equity securities)
consistent with prudent employment of capital; its secondary objective is
to take advantage of opportunities for growth of capital and income.
Assets will be allocated and reallocated from time to time between money
market, fixed income and equity securities. Under normal market
conditions, at least 25% of the series assets will be invested in fixed
income securities and at least 40% and no more than 75% of its assets will
be invested in equity securities.
- WORLD GROWTH SERIES seeks capital appreciation by investing in securities
of companies worldwide growing at rates expected to be well above the
growth rate of the overall U.S. economy.
FIDELITY VIP FUND AND VIP FUND II. Variable Insurance Products Fund ("VIP
Fund") and Variable Insurance Products Fund II ("VIP Fund II") are mutual funds
organized as Massachusetts business trusts. VIP Fund and VIP Fund II are both
managed by Fidelity Management & Research Company ("FMR"), located at 82
Devonshire Street, Boston, Massachusetts 02109. FMR is the management arm of
Fidelity Investments, which was established in 1946 and is one of the largest
investment management organizations in the United States. Various Fidelity
companies perform activities required for the operation of VIP Fund and VIP Fund
II, and affiliates of FMR may assist it in the choosing of investments for the
funds.
Each of the VIP Fund and VIP Fund II is composed of five portfolios of
securities, for a total of 10 portfolios, of which six portfolios, in the
aggregate, are available for investment under the Policy.
- VIP II CONTRAFUND PORTFOLIO seeks long-term capital appreciation.
Portfolio purchases will normally be common stock and securities
convertible into common stock of companies believed to be undervalued due
to an overly pessimistic appraisal by the public.
- VIP EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily
in income producing equity securities. The portfolio seeks to achieve a
yield in excess of the composite yield of the Standard & Poor's 500
Composite Stock Index ("S&P 500"), a recognized measure of U.S. stock
10
<PAGE>
market performance. At least 65% of the portfolio's assets will be
invested in income-producing common or preferred stock, with the remainder
normally invested in convertible and non-convertible debt obligations.
- VIP GROWTH PORTFOLIO seeks capital appreciation. Portfolio purchases
normally will be common stocks of both smaller, less-known companies and
well-known, established companies although the investments are not
restricted to any one type of security. Dividend income will only be
considered if it might have an effect on stock values.
- VIP HIGH INCOME PORTFOLIO seeks a high level of current income by
investing in high income producing, lower-rated debt securities (sometimes
called "junk bonds"), preferred stocks including convertible securities
and restricted securities.
- VIP II INDEX 500 PORTFOLIO seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
presented by the S&P 500. The portfolio will primarily invest in equity
securities of companies that compose the S&P 500. The portfolio will also
purchase short-term debt securities for cash management purposes and use
various investment techniques, such as futures contracts, to adjust its
exposure to the S&P 500.
- VIP 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 in high quality U.S. dollar-denominated money
market instruments of domestic and foreign issuers.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST. Neuberger & Berman Advisers
Management Trust ("AMT") is a mutual fund organized as a Delaware business
trust. AMT is composed of seven separate portfolios (each an "AMT Portfolio").
Each AMT Portfolio invests all of its net investable assets in its corresponding
series (each an "AMT Series") of Advisers Managers Trust, an openend management
investment company. All AMT Series of Advisers Managers Trust are managed by
Neuberger & Berman Management Inc. Each AMT Series invests in accordance with an
investment objective, policies, and limitations identical to those of its
corresponding AMT Portfolio. The Policy provides for investment in shares of the
two AMT Portfolios described below.
- LIMITED MATURITY BOND PORTFOLIO primarily seeks the highest current income
and total return consistent with low risk to principal and liquidity; and
secondarily, total return. AMT Limited Maturity Bond Portfolio invests in
a diversified portfolio of fixed and variable rate debt securities and
seeks to increase income and preserve or enhance total return by actively
managing average portfolio duration in light of market conditions and
trends. This AMT Series' dollar-weighted average portfolio duration may
range up to four years.
- PARTNERS PORTFOLIO seeks capital growth through an investment approach
that is designed to increase capital with reasonable risk. Its investment
program seeks securities believed to be undervalued based on strong
fundamentals such as low price-to-earning ratios, consistent cash flow,
and support from asset values.
JPM SERIES TRUST II. The JPM Series Trust II ("JPM") is a mutual fund
organized as a Delaware business trust. JPM is composed of five separate
portfolios of securities, each of which has separate investment objectives and
policies. The Policy provides for investment in the three portfolios of JPM
described below.
- JPM BOND PORTFOLIO seeks to provide a high total return consistent with
moderate risk of capital and maintenance of liquidity by investing broadly
in the fixed-income markets.
- JPM EQUITY PORTFOLIO seeks to provide a high total return by investing in
selected equity securities of large and mid-sized U.S. corporations with
market capitalizations above $1.5 billion.
- JPM SMALL COMPANY PORTFOLIO seeks to provide a high total return by
investing in equity securities of companies primarily with market
capitalizations of less than $2 billion.
11
<PAGE>
TEMPLETON VARIABLE PRODUCTS SERIES FUND. Templeton Variable Products Series
Fund ("TVPSF") is a mutual fund organized as a Massachusetts business trust.
TVPSF has contracted with Templeton Investment Counsel, Inc. to manage the
Templeton Stock Fund. TVPSF is composed of six separate series, each of which
has separate investment objectives and policies. The Policy provides for
investment in the series of TVPSF described below.
- TEMPLETON STOCK FUND seeks capital growth through a policy of investing
primarily in common stocks issued by companies, large and small,
throughout the world. In pursuit of this objective, the fund will normally
maintain at least 65% of its assets in common and preferred stocks.
INVESTMENT ADVISORY FEES AND EXPENSES. Each Fund has an investment adviser
and pays an investment advisory fee, which is deducted daily from each Fund's
net assets. In addition, each Fund incurs operational and other expenses that
are deducted from each Fund's net assets. See the prospectus for each Fund for
the amount of these fees and expenses.
Certain of the investment advisers to the Funds may reimburse us for
administrative costs in connection with administering the Funds as variable
funding options. These amounts are not charged to the Funds or Owners, but are
paid from assets of the advisers.
MIXED AND SHARED FUNDING. Shares of all the Funds are sold to insurance
company separate accounts that issue both variable annuity and variable life
insurance policies ("mixed funding"). Shares of all Funds other than the MFS
Series Fund are sold to separate accounts of insurance companies that may or may
not be affiliated with the Company or each other ("shared funding"). The MFS
Series Fund sells shares only to separate accounts of the Company and its
affiliates. It is conceivable that, in the future, such mixed or shared funding
may not be advantageous for certain variable life insurance or variable annuity
policy owners. Although neither the Company nor the Funds currently foresee any
such disadvantages either to variable life insurance or to variable annuity
policy owners, the Company and each Fund's Board of Trustees/Directors have
agreed to monitor events in order to identify any material irreconcilable
conflicts between policy owners that may arise and to determine what action, if
any, should be taken in response thereto. If such a conflict were to occur, one
of the separate accounts might withdraw its investment in a Fund. This might
force that Fund to sell portfolio securities at disadvantageous prices.
PERFORMANCE INFORMATION
From time to time we may advertise "Total Return" and "Average Annual Total
Return." Such figures are based on historical earnings and are not intended to
indicate future performance.
"Total Return" for a Portfolio refers to the total of the income generated
by the Portfolio net of total Portfolio operating expenses plus capital gains
and losses, realized or unrealized. "Total Return" for the Sub-Accounts refers
to the total of the income generated by the Portfolio net of total Portfolio
operating expenses plus capital gains and losses, realized or unrealized, and
the mortality and expense risk charge. "Average Annual Total Return" reflects
the hypothetical annually compounded return that would have produced the same
cumulative return if the Portfolio's or Sub-Account's performance had been
constant over the entire period. Because Average Annual Total Returns tend to
smooth out variations in the return of the Portfolio, they are not the same as
actual year-by-year results.
Performance information may be compared, in reports and promotional
literature, to: (i) the S&P 500, Dow Jones Industrial Average, Lehman Brothers
Aggregate Bond Index or other unmanaged indices so that investors may compare
the Sub-Account results with those of a group of unmanaged securities widely
regarded by investors as representative of the securities markets in general;
(ii) other groups of variable life separate accounts or other investment
products tracked by Lipper Analytical Services, a widely used independent
research firm which ranks mutual funds and other investment products by overall
performance, investment objectives, and assets, or tracked by other services,
companies, publications, or persons, such as Morningstar, Inc., who rank such
investment products on overall performance or other criteria; or (iii) the
Consumer Price Index (a measure for inflation) to assess the real rate of return
from an investment in the Sub-Account. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
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<PAGE>
We may provide in advertising, sales literature, periodic publications or
other materials information on various topics of interest to Owners and
prospective Owners. These topics may include the relationship between sectors of
the economy and the economy as a whole and its effect on various securities
markets, investment strategies and techniques (such as value investing, market
timing, dollar cost averaging, asset allocation, constant ratio transfer and
account rebalancing), the advantages and disadvantages of investing in
taxdeferred and taxable investments, customer profiles and hypothetical purchase
and investment scenarios, financial management and tax and retirement planning,
and investment alternatives to certificates of deposit and other financial
instruments, including comparisons between the Policies and the characteristics
of and market for such financial instruments.
The Policies are first being offered to the public in 1996. However, total
return data may be advertised based on the period of time that the Portfolios
have been in existence. The results for any period prior to the Policies being
offered will be calculated as if the Policies had been offered during that
period of time, with all charges assumed to be those applicable to the Policies.
PORTFOLIO PERFORMANCE FOR PERIOD ENDING: ___________, 1996
The following performance information of the Portfolios reflects the total
of the income generated by the Portfolio net of total Portfolio operating
expenses plus capital gains and losses, realized or unrealized. It does not
reflect any Policy or Variable Account charges.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN OF THE PORTFOLIOS
- ---------------------------------------------------------------------------------------------------------------
LIFE OF
PORTFOLIO 1 YR. 3 YR. 5 YR. 10 YR. PORTFOLIO
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
MFS/Sun Life Capital Appreciation Series
MFS/Sun Life Emerging Growth Series
MFS/Sun Life Government Securities Series
MFS/Sun Life Total Return Series
MFS/Sun Life World Growth Series
Fidelity VIP Fund II Contrafund Portfolio
Fidelity VIP Fund Equity Income Portfolio
Fidelity VIP Fund Growth Portfolio
Fidelity VIP Fund High Income Portfolio
Fidelity VIP Fund II Index 500 Portfolio
Fidelity VIP Fund Money Market Portfolio
Advisers Management Trust Limited Maturity
Bond Portfolio
Advisers Management Trust Partners Portfolio
JPM Bond Portfolio
JPM Equity Portfolio
JPM Small Company Portfolio
Templeton Stock Fund
</TABLE>
Portfolio Inception Dates:
The annualized yield for the Fidelity VIP Money Market Portfolio for the
seven days ending ___________, 1996 was______%.
SUB-ACCOUNT INVESTMENT PERFORMANCE
Although as of the date of this Prospectus the Sub-Accounts have not
commenced operations and therefore have no performance history, the following
performance information of the Sub-Accounts assumes that the Sub-Accounts have
been in operation for the same periods as the corresponding Portfolio and
investing in the corresponding Portfolio. It reflects the total of the income
generated by the Portfolio net of total Portfolio operating expenses, plus
capital gains and losses, realized or unrealized, net of the mortality and
expense risk charge (at the current rate of 0.75% of net asset value for the
first ten years and 0.35% thereafter, rather than the guaranteed rate of 0.90%).
THE FOLLOWING SUB-ACCOUNT PERFORMANCE FIGURES DO NOT REFLECT THREE
SIGNIFICANT CHARGES. IF THESE CHARGES WERE INCLUDED, THE TOTAL RETURN FIGURES
WOULD BE LOWER. FIRST, THE TOTAL RETURN FIGURES
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<PAGE>
DO NOT REFLECT THE DEDUCTION FROM PREMIUMS OF THE EXPENSE CHARGES APPLIED TO
PREMIUM. SECOND, MONTHLY COST OF INSURANCE CHARGES HAVE NOT BEEN DEDUCTED.
THIRD, THE FIGURES DO NOT REFLECT THE DEDUCTION OF THE MONTHLY EXPENSE CHARGE.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN OF THE SUB-ACCOUNT
- ---------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT 1 YR. 3 YR. 5 YR. 10 YR. LIFE OF SUB-ACCOUNT
- ------------------------------------------ ---------- ---------- ---------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
MFS/Sun Life Capital Appreciation Series
MFS/Sun Life Emerging Growth Series
MFS/Sun Life Government Securities Series
MFS/Sun Life Total Return Series
MFS/Sun Life World Growth Series
Fidelity VIP Fund II Contrafund Portfolio
Fidelity VIP Fund Equity Income Portfolio
Fidelity VIP Fund Growth Portfolio
Fidelity VIP Fund High Income Portfolio
Fidelity VIP Fund II Index 500 Portfolio
Fidelity VIP Fund Money Market Portfolio
Advisers Management Trust Limited Maturity
Bond Portfolio
Advisers Management Trust Partners
Portfolio
JPM Bond Portfolio
JPM Equity Portfolio
JPM Small Company Portfolio
Templeton Stock Fund
</TABLE>
THE POLICY
This Prospectus describes the standard features of the Policy. There may be
differences in your Policy due to requirements of the state where your Policy is
issued. Any such changes will be defined in your Policy.
APPLICATION AND ISSUANCE OF A POLICY
To purchase a Policy, you must submit an application to our Principal
Office, so that we may follow certain underwriting procedures designed to
determine the insurability of the proposed Insured. We offer the Policy on a
regular (medical) underwriting, simplified underwriting, and guaranteed issue
basis (each such basis is referred to as an underwriting Class). The proposed
Insured generally must be less than 81 years old for medical issue, 76 years old
for simplified issue, and 71 years old for guaranteed issue underwriting
classes. Medical and simplified issue policies may require medical exams and
further information before the proposed application is approved. Availability of
guaranteed issue policies must be pre-approved based on information you provide
on a master application along with specific requirements which must be met by
all members of the group of proposed Insureds. Proposed Insureds must be
acceptable risks based on our underwriting limits and standards. A policy cannot
be issued until the underwriting process has been completed to our satisfaction
and we reserve the right to reject an application that does not meet our
underwriting requirements or to "rate" an insured as a substandard risk, which
will result in the charging of increased Monthly Cost of Insurance charges
and/or flat extra charges.
The Policy is designed for use only by an Owner who has an insurable
interest in the life of the Insured. Under the applicable state law and for tax
purposes, the Policy will not qualify as life insurance unless this insurable
interest requirement is satisfied. You should consult with a qualified adviser
to ensure that you have an insurable interest in the life of the Insured up to
the full amount of the Death Benefit. You should consult with a qualified
adviser when determining the Total Face Amount of the Policy and prior to
undertaking any action or making any change that increases the Policy's Death
Benefit.
Pending approval of the application, any initial Premium will be held in our
General Account. Upon approval of the application, your Policy on the life of
the Insured will be issued to you, which will set forth your rights and our
obligations. The Minimum Premium is due and payable as of the Issue Date. The
Effective Date of Coverage for the Policy, which initially is the Investment
Start Date, will be the later of the Issue Date, the date we approve the
application for the Policy, or the date you pay a Premium equal to or in excess
of the Minimum Premium. If an application is not approved, any Premium payment
will be returned promptly.
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<PAGE>
FREE LOOK PERIOD
Your Policy has a "Right to Return" provision, which gives you certain
cancellation rights. If you are not satisfied with your Policy, you may return
it by delivering or mailing it to our Principal Office or to the agent from whom
you purchased the Policy within 20 days from the date you receive it (unless a
different period is applicable under state law) or within 45 days after your
application is signed, whichever period ends later (the "Free Look Period").
A Policy returned under this provision will be deemed void from the
beginning. You will receive a refund equal to the sum of (1) the difference
between any Premium payments made, including fees and charges, and the amounts
allocated to the Variable Account, (2) the value of the amounts allocated to the
Variable Account on the date the cancellation request is received by the Company
or its agent from whom you purchased the Policy, and (3) any fees or charges
imposed on amounts allocated to the Variable Account. However, if your Policy
provides for a full refund under its "Right to Return" provision, you will
receive a refund of all Premium payments made, with no adjustment for investment
experience.
If your Policy provides for such a full refund during the Free Look Period,
beginning on the Investment Start Date all Net Premium will be allocated to the
VIP Money Market Sub-Account until the expiration of the Free Look Period, at
which time your Account Value and future Net Premium will be allocated in
accordance with your instructions. (See "PREMIUM PAYMENTS -- Allocation of Net
Premium.")
PREMIUM PAYMENT
The Policy is designed to offer you a wide range of Premium flexibility. In
general, subject to the limits described below, you may choose the frequency and
amount of Premium payments (your Premium pattern). The charges and deductions
and Policy rights with respect to transfers, loans and partial surrenders remain
the same regardless of the Premium pattern you choose. Your Premium pattern may
affect whether the Policy is treated as a Modified Endowment Contract, which can
cause Policy distributions and loans to be subject to tax. (See "FEDERAL TAX
STATUS -- Taxation of Policy Proceeds.")
All Premium payments are payable to us, and should be mailed to our
Principal Office.
PLANNED PERIODIC PREMIUMS
While you are not required to make Premium payments according to a fixed
schedule, you may select a planned periodic Premium schedule and corresponding
billing period, subject to our Premium limits. In general, the billing period
must be annual or semiannual. We will send reminder notices for the planned
periodic Premium at the beginning of each billing period. However, you are not
required to pay the planned periodic Premium; you may increase or decrease
Premium payments, subject to our limits, and you may skip a planned payment or
make unscheduled payments. You may change your planned payment schedule or the
billing period, subject to our approval. Depending on the investment performance
of the Sub-Accounts you select, the planned periodic Premium may not be
sufficient to keep your Policy in force, and you may need to change your planned
payment schedule or make additional payments in order to prevent termination of
your Policy. We will suspend reminder notices at your written request, and we
reserve the right to suspend reminder notices if Premiums are not being paid
(except for notices in connection with the grace period (see "ACCOUNT VALUE --
Grace Period")).
GENERAL PREMIUM LIMIT
We reserve the right to limit the number of Premium payments we accept on an
annual basis. No Premium payment may be less than $100 without our consent,
although we will accept a smaller Premium payment if it is necessary to keep
your Policy in force. We reserve the right not to accept a Premium payment that
causes the Base Death Benefit to increase by an amount that exceeds the Premium
received. Evidence of insurability satisfactory to us may be required before we
accept such a Premium. Moreover, you should consult with a qualified adviser
concerning whether such a Premium causes the Death Benefit to exceed your
insurable interest in the Insured. (See "THE POLICY -- Application and Issuance
of a Policy.")
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<PAGE>
TAX LIMITS ON PREMIUM PAYMENTS
If the death benefit compliance test you have specified is the Guideline
Premium Test (see "DEATH BENEFIT -- Death Benefit Compliance Test"), we will not
accept Premium payments that would cause the Policy to fail to qualify as life
insurance under that test. The maximum Premium limit for each year is the
largest Premium that can be paid such that the sum of all Premiums paid will not
exceed the limitations referred to in Section 7702 of the Internal Revenue Code,
or any successor provision. Maximum Premium limits for each year will be shown
in your annual report. If a Premium payment is made in excess of these limits,
we will accept only that portion of the Premium within those limits, and will
refund the remainder. No such maximum Premium limitations apply under the Cash
Value Accumulation Test.
ALLOCATION OF NET PREMIUM
The Net Premium is the Premium you pay less the Expense Charges Applied to
Premium. In general, Net Premium will be allocated to the Sub-Accounts in
accordance with the allocation percentages specified by you, subject to special
provisions applicable during the Free Look Period. (See "THE POLICY -- Free Look
Period.") Your initial allocation of Net Premium will be specified in the
application. There are no limitations concerning the number of Sub-Accounts to
which Net Premium may be allocated, although the minimum allocation for any
Sub-Account to which you choose to allocate Account Value is 5%, and percentages
must be in whole numbers.
You may change the allocation of future Net Premium at any time pursuant to
written or telephone request to the Service Center. Telephone requests will be
honored only if we have a properly completed telephone authorization form for
you on file. We and our agents and affiliates will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be genuine.
We will use reasonable procedures to confirm that instructions communicated by
telephone are genuine. The procedures we follow for transactions initiated by
telephone include requirements that you identify yourself by name and identify a
personal identification number. For additional protection, all changes in
allocation percentages by telephone will be recorded. An allocation change will
be effective as of the date of receipt of the notice of change at the Service
Center. The Policy also permits certain transfers of Account Value among
Sub-Accounts. (See "ACCOUNT VALUE -- Transfer Privileges.")
MODIFIED ENDOWMENT CONTRACTS
Federal income tax law provides special rules for the income taxation of
proceeds from life insurance policies that are defined as "Modified Endowment
Contracts." If your Policy is a Modified Endowment Contract, some or all of the
Policy loans, surrenders, partial surrenders and other distributions under the
Policy will likely be taxable and subject to an additional 10% tax. Whether your
Policy is a Modified Endowment Contract depends primarily upon whether you have
paid Premiums in excess of a prescribed "7-pay" limit or undertaken other
actions with respect to the Policy. For further discussion of this determination
and the rules that will apply, see "FEDERAL TAX STATUS -- Taxation of Policy
Proceeds."
At the time a Premium is received that would cause the Policy to become a
Modified Endowment Contract, the Company will so notify the Owner and will not
credit the Premium unless it has received specific instructions from the Owner
to do so. If such instructions are not received within 24 hours of notification
to the Owner, the Premium will be immediately returned.
DEATH BENEFIT
DEATH BENEFIT COMPLIANCE TEST
The Policy must satisfy either of two death benefit compliance tests in
order to qualify as life insurance under Section 7702 of the Internal Revenue
Code: the Cash Value Accumulation Test or the Guideline Premium Test. Each test
effectively requires that the Policy's Death Benefit must always be equal to or
greater than the Account Value multiplied by a certain percentage (the "Death
Benefit Percentage"). Thus, the Policy has been structured so that your Base
Death Benefit may increase above your Specified Face Amount in order to comply
with the applicable test. The Death Benefit Percentage for the Guideline Premium
Test varies only by age. The Death Benefit Percentage for the Cash Value
Accumulation Test varies by age
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<PAGE>
and sex. As a general matter, the Death Benefit Percentages for the Guideline
Premium Test are lower than those for the Cash Value Accumulation Test. The
Guideline Premium Test also imposes maximum Premium limits whereas the Cash
Value Accumulation Test does not.
You must select and specify one of the two death benefit compliance tests in
your application. Once your policy is issued, you may not change this selection.
In general, where maximum accumulation of Account Value during the initial
Policy Years is a primary objective, the Cash Value Accumulation Test is more
appropriate. Where your primary objective is the most economically efficient
method of obtaining a specified amount of coverage, the Guideline Premium Test
is generally more appropriate. Since your selection of the death benefit
compliance test depends on complex factors and may not be changed, you should
consult with a qualified tax adviser before making this election.
DEATH BENEFIT OPTIONS
The Policy provides the following two death benefit options for determining
the Base Death Benefit. You must select and specify one of the two death benefit
options in your application. You may change your death benefit option in the
manner described below.
Option A -- Specified Face Amount. The Base Death Benefit is the greater of
the Specified Face Amount, or the Account Value multiplied by the applicable
Death Benefit Percentage.
Option B -- Specified Face Amount Plus Account Value. The Base Death Benefit
is the greater of the Specified Face Amount plus the Account Value, or the
Account Value multiplied by the applicable Death Benefit Percentage. Option B is
not available if the death benefit compliance test is the Cash Value
Accumulation Test.
At any time the Base Death Benefit is defined as the Account Value
multiplied by the applicable Death Benefit Percentage, and the Base Death
Benefit less the Account Value exceeds the Total Face Amount, we reserve the
right to distribute Account Value to you as a partial surrender to the extent
necessary so that the Base Death Benefit less the Account Value equals the Total
Face Amount. You will not have the option of providing evidence of insurability
to maintain your level of death benefit.
BENEFITS AT DEATH
The Policy Proceeds will be paid as they become due upon the death of the
Insured prior to Maturity. We will make payment when we receive Due Proof of
that death. The Policy Proceeds equal the amount of the Base Death Benefit
decreased by the amount of any outstanding Policy Debt, and increased by the
amounts payable under any APB Rider Death Benefit and any other supplemental
benefits. The Death Benefit at death is based on the Specified Face Amount and
Total Face Amount in effect and Account Value, if applicable, on the date of
death.
CHANGES IN THE DEATH BENEFIT OPTION
If the death benefit compliance test you have chosen is the Guideline
Premium Test, you may change the death benefit option either from Option A to
Option B, or from Option B to Option A. If the death benefit compliance test you
have chosen is the Cash Value Accumulation Test, only Option A is available, and
you may not change to Option B. Changes in the death benefit option are subject
to our underwriting rules in effect at the time of change. Requests for a change
must be made in writing to our Service Center. The effective date of the change
will be the Policy Anniversary on or next following the date of receipt of your
request.
If the death benefit option change is from Option B to Option A, the
Specified Face Amount will be increased by the Account Value. If the death
benefit option change is from Option A to Option B, the Specified Face Amount
will be reduced by the Account Value. In either case, the amount of the Base
Death Benefit at the time of change will not be altered, but the change in death
benefit option will affect the determination of the Base Death Benefit from that
point on. Under the Guideline Premium Test, a change in death benefit option
could cause total Premiums theretofore paid to exceed the maximum premium
limitation determined under the test. The change also could reduce the maximum
premium limitation for future Premium payments. If the change results in total
Premiums paid exceeding the maximum premium
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<PAGE>
limitation, the Company will require you to undertake a partial surrender of the
Policy (see "DEATH BENEFIT -- Partial Surrender" and "FEDERAL TAX STATUS --
Taxation of Policy Proceeds"). You should consult a qualified tax adviser prior
to changing the death benefit option.
APB RIDER
The Policy can be issued with an APB Rider, which provides life insurance
coverage, annually renewable to Attained Age 100, on the life of the Insured.
The amount of coverage under the APB Rider, the APB Rider Death Benefit, is
initially the APB Rider Face Amount that is specified in your Policy.
Subsequently, the amount of the APB Rider Death Benefit is adjusted
automatically by the Company; if the Base Death Benefit under the Policy exceeds
the Specified Face Amount (or for death benefit Option B, the Specified Face
Amount plus Account Value) as a result of an increase in Account Value (see
"DEATH BENEFIT -- Death Benefit Compliance Test"), the APB Rider Death Benefit
will be reduced by an equivalent amount, under the formula set forth below.
The APB Rider Death Benefit is the greater of zero or the result of (a) less
(b) where:
(a) is the APB Rider Face Amount, and
(b) is the excess, if any, of the Base Death Benefit over
- the Specified Face Amount for death benefit Option A policies, or
- the Specified Face Amount plus the Account Value for death benefit
Option B policies.
The cost of the APB Rider is included in the Monthly Cost of Insurance
deduction. (See "CHARGES, DEDUCTIONS AND REFUNDS -- Monthly Cost of Insurance.")
There is no Premium allocated to the APB Rider. As a result, there is no sales
load, DAC tax charge or premium tax charge associated with this coverage.
Conversion rights do not apply to the APB Rider (see "GENERAL PROVISIONS --
Conversion") and guaranteed maximum cost of insurance rates associated with the
APB Rider Death Benefit exceed those associated with the Base Death Benefit
(see"CHARGES, DEDUCTIONS AND REFUNDS -- Monthly Cost of Insurance").
An APB Rider will terminate on the earliest of the following dates: (1)
receipt of your written request for termination, (2) lapse of the Policy because
of insufficient value, or (3) termination of the Policy.
MINIMUM FACE AMOUNT
The sum of the Specified Face Amount and the APB Rider Face Amount, the
Total Face Amount, generally must be at least equal to a minimum of $50,000, of
which the Specified Face Amount must be at least equal to a minimum of $5,000.
The Company reserves the right to waive these minimums and also reserves the
right to offer the Policy only in conjunction with an APB Rider with a certain
APB Rider Face Amount.
CHANGES IN FACE AMOUNT
After the end of the first Policy Year, you may change the Specified Face
Amount and, if it is part of the Policy, the APB Rider Face Amount. Unless you
specify otherwise, a change in the Policy's Total Face Amount will first be
applied, to the extent possible, to the APB Rider Face Amount. You must send
your request for a change to our Service Center, in writing. The Effective Date
of Coverage for changes is:
- for any increase in coverage, the Monthly Anniversary Day that falls on or
next follows the date we approve the supplemental application for such
increase, and
- for any decrease in coverage, the Monthly Anniversary Day that falls on or
next follows the date we receive your request.
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<PAGE>
DECREASES IN FACE AMOUNT
The Specified Face Amount may not decrease to less than the minimum
Specified Face Amount. A decrease in Specified Face Amount or APB Rider Face
Amount may not decrease the Policy's Total Face Amount to an amount less than
the minimum Total Face Amount. A decrease in face amount will be applied to the
initial face amount and to each increase in face amount in the following order:
- first, to the most recent increase;
- second, to the next most recent increases in reverse chronological order;
and
- finally, to the initial face amount.
If you have chosen the Guideline Premium Test, a decrease in the Specified
Face Amount or APB Rider Face Amount could cause total Premiums theretofore paid
to exceed the maximum premium limitation determined under the test. The decrease
also will reduce the maximum premium limitation for future Premium payments. If
the decrease results in total Premiums paid exceeding the maximum premium
limitation, the Company will require you to undertake a partial surrender of the
Policy (see"DEATH BENEFIT -- Partial Surrender" and "FEDERAL TAX STATUS --
Taxation of Policy Proceeds"). You should consult a qualified tax adviser prior
to decreasing the Specified Face Amount or APB Rider Face Amount.
INCREASES IN FACE AMOUNT
An increase in the face amount is subject to our underwriting rules in
effect at the time of the increase. You may be required to submit evidence of
the Insured's insurability satisfactory to us. Moreover, you should consult with
a qualified adviser concerning whether your insurable interest in the Insured
will support such an increase. (See "THE POLICY -- Application and Issuance of a
Policy.")
ACCOUNT VALUE
The Account Value is the sum of the amounts in each Sub-Account of the
Variable Account with respect to your Policy, plus the amount of the Loan
Account. The Account Value varies depending upon the Premiums paid, Expense
Charges Applied to Premium, Mortality and Expense Risk Percentage deductions,
Monthly Expense Charges, Monthly Cost of Insurance charges, Policy loans and
loan repayments, Partial Surrenders, fees, and the Net Investment Factor
(determined as provided below) for the Sub-Accounts to which your Account Value
is allocated.
We measure the amounts in the Sub-Accounts in terms of Units and Unit
Values. On any given day, the amount you have in a Sub-Account is equal to the
Unit Value multiplied by the number of Units credited to you in that
Sub-Account. The Units for each Sub-Account will have different Unit Values.
Amounts allocated to a Sub-Account will be used to purchase Units of the
Sub-Account. Units are redeemed when you make partial surrenders, undertake
Policy loans or transfer amounts from a Sub-Account, and for payment of the
Mortality and Expense Risk Charge, the Monthly Expense Charge, and the Monthly
Cost of Insurance Charge. The number of Units of each Sub-Account purchased or
redeemed is determined by dividing the dollar amount of the transaction by the
Unit Value for the Sub-Account. The Unit Value for each Sub-Account was
initially established at $10.00. The Unit Value for any subsequent Valuation
Date is equal to the Unit Value for the preceding Valuation Date multiplied by
the Net Investment Factor. The Unit Value of a Sub-Account for any Valuation
Date is determined as of the close of the Valuation Period ending on that
Valuation Date.
Transactions are processed on the date we receive a Premium at Our Principal
Office or any acceptable written or telephonic request is received at the
Service Center. If your Premium or request is received on a date that is not a
Valuation Date, or after the close of the New York Stock Exchange on a Valuation
Date, the transaction will be processed on the next subsequent Valuation Date.
ACCOUNT VALUE IN THE SUB-ACCOUNTS
The Account Value attributable to each Sub-Account of the Variable Account
on the Investment Start Date equals:
- that portion of Net Premium received and allocated to the Sub-Account,
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<PAGE>
minus
- the Monthly Expense Charges due on the Issue Date and subsequent Monthly
Anniversary Days through the Investment Start Date, and
- the Monthly Cost of Insurance deductions due from the Issue Date through
the Investment Start Date.
The Account Value attributable to each Sub-Account of the Variable Account
on subsequent Valuation Dates is equal to:
- the Account Value attributable to the Sub-Account on the preceding
Valuation Date multiplied by that Sub-Account's Net Investment Factor,
less the Daily Risk Percentage multiplied by the number of days in the
Valuation Period multiplied by the Account Value in the Sub-Account,
plus
- that portion of Net Premium received and allocated to the Sub-Account
during the current Valuation Period,
- any amounts transferred by you to the Sub-Account from another Sub-Account
during the current Valuation Period,
- that portion of any loan repayment allocated to the Sub-Account during the
current Valuation Period, and
- that portion of any interest credited on outstanding Policy loans which is
allocated to the Sub-Account during the current Valuation Period,
less
- any amounts transferred by you from the Sub-Account to another Sub-Account
during the current Valuation Period,
- that portion of any partial surrenders deducted from the Sub-Account
during the current Valuation Period,
- that portion of any Policy loan transferred from the Sub-Account to the
Loan Account during the current Valuation Period,
- if a Monthly Anniversary Day occurs during the current Valuation Period,
that portion of the Monthly Expense Charge for the Policy month just
beginning charged to the Sub-Account,
- if a Monthly Anniversary Day occurs during the current Valuation Period,
that portion of the Monthly Cost of Insurance for the Policy month just
ending charged to the Sub-Account, and
- if you surrender during the current Valuation Period, that portion of the
pro-rata Monthly Cost of Insurance for the Policy month charged to the
Sub-Account.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore your
Account Value allocated to the Sub-Account may increase, decrease or remain the
same.
The Net Investment Factor for each Sub-Account for any Valuation Period is
determined by dividing (a) by (b) where
(a) is the net result of:
(1) the net asset value of a Fund share held in the Sub-Account
determined as of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution declared
on Fund shares held in the Sub-Account if the"ex-dividend" date
occurs during the Valuation Period, plus or minus
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(3) a per share credit or charge with respect to any taxes paid, or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Sub-Account (no federal income taxes are applicable under present
law); and
(b) is the net asset value of a Fund share held in the Sub-Account
determined as of the end of the preceding Valuation Period.
ACCOUNT VALUE IN THE LOAN ACCOUNT
The Account Value in the Loan Account is zero on the Investment Start Date.
The Account Value in the Loan Account on any day after the Investment Start
Date equals:
- the Account Value in the Loan Account on the preceding day credited with
interest at the rate specified in the Policy as the "interest credited on
Loan Account rate" of 4%,
plus
- any amount transferred from Sub-Accounts to the Loan Account for Policy
loans requested on that day,
less
- any loan repayments made on that day, and
- if that day is a Policy Anniversary, any amount transferred to the
Sub-Accounts by which the Loan Account Value exceeds the outstanding
Policy loan.
TRANSFER PRIVILEGES
Subject to our rules as they may exist from time to time and to any limits
that may be imposed by the Funds, including those set forth in the Policy, you
may at any time transfer to another Sub-Account all or a portion of the Account
Value allocated to a Sub-Account. All requests for transfers must be made to the
Service Center. We will make transfers pursuant to a valid written or telephone
request received by the Service Center. Telephone requests will be honored only
in accordance with the procedures described above for changes in allocation
percentages. (See "PREMIUM PAYMENTS -- Allocation of Net Premium.") Transfers
may be requested by indicating the transfer of either a specified dollar amount
or a specified percentage of the Sub-Account's value from which the transfer
will be made. If you request a transfer based on a specified percentage of the
Sub-Account's value, that percentage will be converted into a request for the
transfer of a specified dollar amount based on application of the specified
percentage to the Sub-Account's value at the time the request is received. All
telephone transfer requests will be recorded.
These transfer privileges are subject to our consent. We reserve the right
to impose limitations on transfers, including, but not limited to: (1) the
minimum amount that may be transferred; and (2) the minimum amount that may
remain in a Sub-Account following a transfer from that Sub-Account. In addition,
transfer privileges are subject to any restrictions that may be imposed by the
Funds.
SURRENDER
You may surrender the Policy for the Cash Surrender Value at any time. The
Cash Surrender Value is the Account Value, decreased by the balance of any
outstanding Policy Debt, increased by the Sales Load Refund at Surrender, if
any.
PARTIAL SURRENDER
You may make a Partial Surrender of the Policy once each Policy Year after
the first Policy Year by written request to the Service Center. The maximum
amount of any Partial Surrender is the Account Value decreased by the balance of
any outstanding Policy Debt. Unless you provide evidence satisfactory to us that
the Insured is still an acceptable risk based on our underwriting limits and
standards, the Total Face Amount will be reduced to the extent necessary so
that:
- the Death Benefit less the Account Value immediately after the Partial
Surrender,
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does not exceed
- the Death Benefit less the Account Value immediately before the Partial
Surrender.
If you provide such evidence, you will have the option of keeping the Death
Benefit equal to what it was immediately prior to the Partial Surrender. The
Specified Face Amount remaining in force after the Partial Surrender must be no
lower than the minimum Specified Face Amount. A Partial Surrender may not
decrease the Policy's Total Face Amount to an amount less than the minimum Total
Face Amount.
ALLOCATION OF PARTIAL SURRENDER
You may allocate the Partial Surrender among the Sub-Accounts of the
Variable Account. If you do not specify the allocation, then the Partial
Surrender will be allocated among the Sub-Accounts in the same proportion that
the Account Value of each Sub-Account bears to the aggregate Account Value of
all Sub-Accounts on the date of Partial Surrender.
INSUFFICIENT VALUE
If, on a Valuation Date, the Account Value less the outstanding Policy Debt
is less than or equal to zero, then the Policy will terminate for no value,
subject to the grace period.
GRACE PERIOD
If, on a Valuation Date, your Policy will terminate by reason of
insufficient value, we will allow a grace period. This grace period will allow
61 calendar days from that Valuation Date for the payment of a Net Premium that
is sufficient to cover the deductions from the Account Value. These deductions
include the Monthly Cost of Insurance, the Monthly Expense Charge and the Daily
Risk Percentage charge. Notice of Premium due will be mailed to your last known
address or the last known address of any assignee of record. We will assume that
your last known address is the address shown on the application (or notice of
assignment), unless we receive written notice of a change in address in a form
satisfactory to us. If the Premium due is not paid within 61 days after the
beginning of the grace period, then the Policy and all rights to benefits will
terminate without value at the end of the 61 day period. The Policy will
continue to remain in force during this grace period. If the Policy Proceeds
become payable during the grace period, then any overdue Monthly Cost of
Insurance and Monthly Expense Charge will be deducted from the amount payable by
us.
CHARGES, DEDUCTIONS AND REFUNDS
EXPENSE CHARGES DEDUCTED AS A PERCENT OF PREMIUM
The Expense Charges Applied to Premium will be the sum of the charges for
premium tax, the federal deferred acquisition cost ("DAC") tax, and the
applicable sales load rates. The Expense Charges Applied to Premium are
multiplied by each Premium you pay and the result will be deducted from the
Premium payment.
All states and a few cities and municipalities impose taxes on premiums paid
for life insurance. These charges vary from 2% to 4% of premium in most states,
depending on the state of residence of the Owner (Kentucky currently charges a
tax of 7% of premium). The premium tax percentage rate charged against the
Premium on your Policy will be determined from time to time and will equal the
rate we expect to pay for premium taxes in your state of residence. In no event
will the premium tax rate exceed 4%, except that for Kentucky Policy Owners, in
no event will the premium tax rate exceed 9%. In the event your state of
residence changes, the premium tax rate will be adjusted to reflect the rate for
the new state of residence.
We also make a deduction of 1.25% of Premium, which is the rate
approximately equal to our expenses in paying federal DAC taxes associated with
the Policies. The charge for DAC tax expenses is guaranteed not to exceed this
rate.
A sales load rate of 8.75% is deducted from Premium paid up to Target
Premium for each of the first seven Policy Years. A sales load rate of 2.25% is
deducted from Premium paid in excess of Target Premium for each of the first
seven Policy Years. The amount of Target Premium is specified in your Policy.
All Premium paid in a Policy Year is aggregated to determine which portion of a
Premium exceeds Target Premium. There
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is no sales load imposed after the seventh Policy Year. The sales load rates are
guaranteed not to exceed these amounts. The sales load is designed primarily to
compensate us for a portion of the expenses incurred in distributing the Policy,
including agent compensation, the cost of prospectuses, and advertising. We may
reduce or waive the sales load for certain group or sponsored arrangements or
corporate purchasers. (See "CHARGES, DEDUCTIONS, AND REFUNDS -- Reduction of
Charges.")
SALES LOAD REFUND AT SURRENDER
If you surrender your Policy during the first three Policy Years, a portion
of the sales load charged against the Premium payments made in the Policy Year
of surrender will be refunded. We will refund 6% of Premium paid up to Target
Premium, and the entire sales load charged against Premium paid in excess of
Target Premium. The refund only applies to Premiums paid in the Policy Year of
surrender (rather than applying to Premiums paid since issue). This refund is
not available for partial surrenders or Policy loans. There is no refund for
surrenders occurring after the third Policy Year.
EXPENSE CHARGES DEDUCTED AS A PERCENT OF ASSETS
We deduct a daily charge from the assets of the Variable Account for
mortality and expense risks we assume in connection with the Policy. The amount
of the daily charge is the Daily Risk Percentage multiplied by the net asset
value of the Variable Account. During the first ten Policy Years, the Daily Risk
Percentage is currently .0020471%, which is equivalent to an annual rate of
0.75%; beginning in the eleventh Policy Year, the Daily Rate Percentage
decreases to .0009572%, which is equivalent to an annual rate of 0.35%. We
reserve the right to change the mortality and expense risk charge if we believe
that circumstances have changed so that current charges are no longer
appropriate. In no event will the charge exceed an effective annual rate of
0.90%.
Because the Variable Account purchases shares of the Funds, your Account
Value will reflect investment management fees and other expenses incurred by the
Funds. These fees and expenses are more fully described in the accompanying
prospectuses.
No charges are currently made against the Sub-Accounts for taxes, or for any
amount set aside as a reserve for taxes attributable to the operation or
maintenance of the sub-account. We reserve the right to impose such charges.
EXPENSE CHARGES DEDUCTED ON A PER POLICY BASIS
We deduct a Monthly Expense Charge of $13.75 at the beginning of each month
during the first Policy Year and $7.50 for months thereafter. The Monthly
Expense Charge will be determined from time to time based on our expectations of
future expenses. However, the Monthly Expense Charge will not be greater than
$13.75 in any Policy month. This charge is designed to reimburse us for actual
administrative costs we incur, and we do not expect to make a profit from this
charge. The Monthly Expense Charge deduction will be allocated among
Sub-Accounts in the same proportion that the Account Value of each Sub-Account
bears to the aggregate Account Value of all Sub-Accounts immediately prior to
the deduction.
MONTHLY COST OF INSURANCE
We deduct a Monthly Cost of Insurance charge from your Account Value to
cover anticipated costs of providing insurance coverage. This charge is made, in
arrears, on each Monthly Anniversary Day. If you surrender your Policy on any
day other than a Monthly Anniversary Day, a pro-rata charge will be made. The
Monthly Cost of Insurance deduction will be allocated among Sub-Accounts in the
same proportion that the Account Value of each Sub-Account bears to the
aggregate Account Value of all Sub-Accounts immediately prior to the deduction.
The Monthly Cost of Insurance deduction is the sum of
- the monthly cost of insurance rate (described below )multiplied by the Net
Amount at Risk (as defined below) divided by 1000; the "Net Amount at
Risk" equals the Base Death Benefit at the end of the Policy Month before
the deduction of the Monthly Cost of Insurance less the Account Value at
the end of the Policy Month before the deduction of the Monthly Cost of
Insurance;
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- the monthly cost of insurance rate for the APB Rider Death Benefit, if
any, times the APB Rider Death Benefit divided by 1000;
- the monthly rider cost for any other riders that are a part of the Policy;
- the flat extra, if any, specified in the Policy, times the Total Face
Amount divided by 1000.
The Account Value deduction occurs first to the initial Total Face Amount and
second to successive increases.
The monthly cost of insurance rates are based on the length of time the
Policy has been in force and the Insured's sex (in the case of Non-Unisex
Policies), Issue Age, Class and table rating, if any. The monthly cost of
insurance rates for the Base Death Benefit and the APB Rider Death Benefit are
currently the same but may differ in the future. The monthly cost of insurance
rates will be determined by us from time to time based on our expectations of
future experience with respect to mortality, persistency, interest rates,
expenses and taxes. However, the maximum monthly cost of insurance rates for the
Base Death Benefit for Insureds that are not rated substandard risks will not
exceed the monthly rates based on the 1980 CSO Mortality Tables A (for male and
unisex) and G (for females). Generally, the maximum monthly cost of insurance
rates for the APB Rider Death Benefit for Insureds that are not rated
substandard risks will not exceed 125% of the monthly rates based on the 1980
CSO Mortality Tables A (for male and unisex) and G (for females). Monthly cost
of insurance rates for Classes with substandard risk ratings are based on
multiples of these tables. Flat extras apply only with respect to certain types
of substandard risk Classes, and, if applicable, will be specified in your
Policy.
REDUCTION OF CHARGES
We reserve the right to reduce any of the charges and deductions described
in this section in connection with the sale of any Policy when it is expected
that the nature of the sale will result in savings of costs underlying the
charge or deduction. We will determine the propriety and amount of the reduction
in our discretion. We may modify the qualification requirements that enable a
sale to receive such a reduction as experience is gained. Any such reduction
will not be unfairly discriminatory against the interests of any Policy Owner.
POLICY LOANS
You may request a Policy loan of up to 90% of your Account Value, decreased
by the balance of any outstanding Policy Debt on the date the Policy loan is
made. Account Value equal to the amount of the Policy loan will be transferred
from the Sub-Accounts to the Loan Account on the date the Policy loan is made.
You may allocate the Policy loan among the Sub-Accounts. If you do not specify
the allocation, then the Policy loan will be allocated among the Sub-Accounts in
the same proportion that the Account Value of each Sub-Account bears to the
aggregate Account Value of all Sub-Accounts immediately prior to the loan.
Interest on the Policy loan will accrue daily at the Policy loan interest
rate of 5% in Policy Years one through ten and 4.25% thereafter. This interest
shall be due and payable to us in arrears on each Policy Anniversary. Any unpaid
interest will be added to the principal amount as an additional Policy loan and
will bear interest at the same rate and in the same manner as the prior Policy
loan.
All funds we receive from you will be credited to your Policy as Premium
unless we have received written notice, in form satisfactory to us, that the
funds are for loan repayment. In the event you have a loan against the Policy,
it is generally advantageous to repay the loan rather than make a Premium
payment because Premium payments incur expense charges whereas loan repayments
do not. Loan repayments will first reduce the outstanding balance of the Policy
loan and then accrued but unpaid interest on such loans. We will accept
repayment of any Policy loan at any time before Maturity. The amount of the loan
repayment up to the outstanding balance of the Policy loan will be transferred
from the Loan Account to the Sub-Accounts. You may allocate the loan repayment
among the Sub-Accounts. If you do not specify the allocation, then the loan
repayment will be allocated among the Sub-Accounts in the same proportion that
the Account Value of each Sub-Account bears to the total Account Value less the
Loan Account immediately prior to the loan repayment.
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GENERAL PROVISIONS
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
Shares of any or all of the Portfolios may not always be available for
purchase by the Sub-Accounts of the Variable Account, or we may decide that
further investment in any such shares is no longer appropriate. In either event,
shares of other registered open end investment companies or unit investment
trusts may be substituted both for Portfolio shares already purchased by the
Variable Account and/or as the security to be purchased in the future, provided
that these substitutions have been approved, if required, by the Securities and
Exchange Commission. In addition, the investment policy of the Variable Account
will not be changed without the approval of the Insurance Commissioner of the
State of Delaware. We also reserve the right to eliminate or combine existing
Sub-Accounts or to transfer assets between Sub-Accounts. In the event of any
substitution or other act pursuant to this provision, we may make appropriate
endorsement to the Policy to reflect the substitution.
ALTERATION
Our agents do not have the authority to alter or modify the Policy or to
waive any of its provisions. The only persons with this authority are our
president, actuary, secretary, or one of our vice presidents.
ASSIGNMENTS
During the lifetime of the Insured, you may assign all or some of your
rights under the Policy. All assignments must be filed at our Service Center and
must be in written form satisfactory to us. The assignment will then be
effective as of the date you signed the form, subject to any action taken before
it was received by us at our Service Center. We are not responsible for the
validity or legal effect of any assignment.
CHANGE IN THE OPERATION OF THE VARIABLE ACCOUNT
At our election, and subject to any necessary vote by those having voting
rights, the Variable Account may be operated as a unit investment trust or a
management company under the Investment Company Act of 1940. It is currently
registered as an investment company under the Investment Company Act of 1940 and
may be deregistered in the event registration is no longer required. In the
event of any change in the operation of the Variable Account pursuant to this
provision, we may make appropriate amendment to the Policy to reflect the change
and take such other action as may be necessary and appropriate to effect the
change.
CONVERSION
You may convert the Policy into a flexible premium universal life policy
offered by Sun Life Assurance Company of Canada during the first 24 months after
the Issue Date while the Policy is in force. Choice of a new policy is subject
to our approval and will be restricted to those policies that offer the same
Class and rating as your Policy. The new policy will be issued without evidence
with the same Class and rating as your Policy. The conversion provision does not
apply to the APB Rider, if any, or to any supplemental benefits that may be
attached to the Policy.
DEFERRAL OF PAYMENT
We will usually pay any amount due from the Variable Account within seven
days after the Valuation Date following our receipt of written notice or, in the
case of death of the Insured, Due Proof of such death. Payment of any amount
payable from the Variable Account on death, surrender, partial surrender, or
Policy loan may be postponed whenever:
- the New York Stock Exchange ("NYSE") is closed, other than customary
weekend and holiday closing, or trading on the NYSE is otherwise
restricted,
- the Securities and Exchange Commission, by order, permits postponement for
the protection of Policy Owners, or
- an emergency exists as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not reasonably
practicable, or it is not reasonably practicable to determine the value of
the assets of the Variable Account.
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ENTIRE CONTRACT
The entire contract with us consists of the Policy, including the
Application and any attached copies of supplemental applications for increases
in the face amount. Any illustrations prepared in connection with the Policy do
NOT form a part of our contract with you and are intended solely to provide
information about possible future performance, based solely on data available at
the time such illustrations are prepared.
ILLUSTRATIONS
Upon request, we will provide you with an illustration of future Account
Value and Death Benefits. This illustration will be furnished to you for a
nominal fee not to exceed $25.
INCONTESTABILITY
All statements made in the Application or in a supplemental application are
representations and not warranties. We will rely on these statements when
approving the issuance, increase in face amount, increase in Base Death Benefit
over Premium paid, or change in death benefit option of the Policy. No statement
can be used by us in defense of a claim unless the statement was made in the
application or in a supplemental application. In the absence of fraud, after the
Policy has been in force during the lifetime of the Insured for a period of two
years from its Issue Date, we cannot contest it except for non-payment of
Premiums in accordance with the Insufficient Value provision. However, any
increase in the Total Face Amount which is effective after the Issue Date will
be incontestable only after such increase has been in force during the lifetime
of the Insured for two years from the effective date of such increase. Any
increase in Base Death Benefit over Premium paid or increase in Base Death
Benefit due to a death benefit option change will be incontestable only after
such increase has been in force during the lifetime of the Insured for two years
from the date of the increase.
MATURITY
If the Insured is living and the Policy is in force on the date of Maturity,
the Cash Surrender Value is payable to you. It is possible that insurance
coverage may not continue to Maturity, even if planned periodic Premiums are
paid in a timely manner.
MISSTATEMENT OF AGE OR SEX (NON-UNISEX POLICY)
If the age or (in the case of a Non-Unisex Policy) sex of the Insured is
stated incorrectly in the Application, the amounts payable by us will be
adjusted as follows:
- Misstatement discovered at death: The Death Benefit will be that which
would be purchased by the most recently charged Monthly Cost of Insurance
rate for the correct age or (for a Non-Unisex Policy) sex.
- Misstatement discovered prior to death: The Account Value will be
recalculated from the Issue Date using the Monthly Cost of Insurance rates
based on the correct age or (for a Non-Unisex Policy) sex.
MODIFICATION
Upon notice to you, we may modify the Policy if such modification:
- is necessary to make the Policy or the Variable Account comply with any
law or regulation issued by a governmental agency to which the Company or
the Variable Account is subject, or
- is necessary to assure continued qualification of the Policy under the
Internal Revenue Code or other federal or state laws as a life insurance
policy, or
- is necessary to reflect a change in the operation of the Variable Account
or the Sub-Accounts, or
- adds, deletes or otherwise changes Sub-Account options.
We also reserve the right to modify certain provisions of the Policy as stated
in those provisions. In the event of any such modification, we may make
appropriate endorsement to the Policy to reflect such modification.
NONPARTICIPATING
The Policy does not pay dividends.
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PROCEDURE
You do not need the consent of a Beneficiary or a contingent Owner in order
to exercise any of your rights. However, you must give us written notice of the
requested action. The request must be filed at our Service Center and must be in
written form satisfactory to us. Your request will then, except as otherwise
specified in the Policy, be effective as of the date you signed the form,
subject to any action taken before it was received by us at our Service Center.
REPORT TO OWNER
We will send you a report at least once each Policy Year. The report will
show current Policy values, Premiums paid, and deductions made since the last
report. It will also show the balance of any outstanding Policy loans and
accrued interest on such loans. There is no charge for this report.
RIGHTS OF BENEFICIARY
The Beneficiary has no rights in the Policy until the death of the Insured.
If a Beneficiary is alive at that time, the Beneficiary will be entitled to
payment of the Policy Proceeds as they become due.
RIGHTS OF OWNER
While the Insured is alive, unless you have assigned any of these rights,
you may:
- transfer ownership to a new Owner;
- name a contingent Owner who will automatically become the Owner of the
Policy if you die before the Insured;
- change or revoke a contingent Owner;
- change or revoke a Beneficiary;
- exercise all other rights in the Policy;
- increase or decrease the Specified Face Amount or APB Rider Face Amount,
subject to the provisions of the Policy;
- change the death benefit option, subject to the provisions of the Policy.
When you transfer your rights to a new Owner, you automatically revoke any prior
contingent Owner designation. When you want to change or revoke a prior
Beneficiary designation, you have to specify that action. You do not affect a
prior Beneficiary when you merely transfer ownership, or change or revoke a
contingent Owner designation.
SPLITTING UNITS
We reserve the right to split or combine the value of Units. In effecting
any such change, strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of the Policy.
SUICIDE
In most states, if the Insured, whether sane or insane, commits suicide
within two years after the Issue Date, we will not pay any part of the Policy
Proceeds. We will refund the Premiums paid, less the amount of any Policy Debt
and any Partial Surrenders.
TERMINATION
The Policy terminates on the earlier of the date we receive your request to
surrender, the expiration date of the grace period (see "Account Value -- Grace
Period"), the date of death of the Insured, or the date of Maturity.
VOTING RIGHTS
To the extent required by law, we will vote shares of the Funds held by each
Sub-Account in accordance with instructions received from Policy Owners with
Account Value allocated to the relevant Sub-Account. Each person having a voting
interest will be provided with proxy materials of the relevant Fund together
with an appropriate form with which to give us voting instructions. Shares held
in each Sub-Account for which no
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timely instructions are received will be voted in proportion to the instructions
received from all persons with an interest in such Sub-Account who furnish us
with voting instructions. We will also vote shares held in the Separate Account
that we own and which are not attributable to Policies in the same proportion.
We will determine the number of votes as to which you have the right to give
voting instructions as of the record date established for the relevant Fund.
This number is determined by dividing your Account Value in the Sub-Account, if
any, by the net asset value of one share in the corresponding Fund in which the
assets of the Sub-Account are invested.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that the shares be voted so as
(1) to cause a change in the subclassification or investment objective of one or
more of the Funds; or (2) to approve or disapprove an investment advisory
contract for a Fund. In addition, we may disregard voting instructions in favor
of any change in the investment policies or in any investment advisor or
principal underwriter initiated by Policy Owners or the Board of
Trustees/Directors any of the Funds. Our disapproval of any such change must be
reasonable and, in the case of a change in investment policies or investment
adviser, based on a good faith determination that such change would be contrary
to state law or otherwise is inappropriate in light of the objectives and
purposes of the Fund. In the event we disregard voting instructions, a summary
of and the reasons for that action will be included in the next periodic report
to Policy Owners.
If the Investment Company Act of 1940 or any rules thereunder should be
amended or if the present interpretation of the Investment Company Act of 1940
or such rules should change, and as a result the Company determines that it is
permitted to vote shares in its own right, whether or not such shares are
attributable to the Policies, we reserve the right to do so.
DISTRIBUTION OF THE POLICIES
The Policy will be sold by licensed insurance agents in those states where
the Policy may be lawfully sold. Such agents will be registered representatives
of broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. ("NASD") and who
have entered into distribution agreements with the Company and the General
Distributor, Sun Investment Services Company ("Sun Investment"). Sun Investment
is a corporation organized under the laws of Delaware on August 6, 1970, and is
a wholly-owned subsidiary of the Company. Sun Investment is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member of the
NASD. As such, it serves as the principal underwriter for the Policies. Sun
Investment is located at One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02181.
The maximum commission payable by us will be 15% of Premium in the first
Policy Year and 9% of Premium in Policy Years two through seven. A maximum
commission rate of 0.10% of Account Value in the Sub-Accounts for Policy Years
one through seven and 0.20% of Account Value in the Sub-Accounts thereafter may
also be paid.
We may also pay expense allowances, bonuses, and training allowances.
Registered representatives who meet specified production levels may qualify,
under our sales incentive programs, to receive non-cash compensation such as
expense-paid trips, expense-paid educational seminars and merchandise.
OTHER CONTRACTUAL ARRANGEMENTS
ADMINISTRATION
We have entered into a contract with Andesa TPA, Inc. (1605 N. Cedar Crest
Blvd., Suite 502, Allentown, Pennsylvania, 18104-2351) under which Andesa TPA,
Inc. has agreed to perform certain administrative functions relating to the
Policies and the Variable Account. These functions include, among other things,
maintaining records of the name, address, taxpayer identification number, Policy
number and Account Value of each Policy and other pertinent information
necessary for the administration of the Policies. Andesa TPA, Inc. is not an
affiliate of the Company.
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CUSTODIAN
We are the custodian of the assets of the Variable Account. We will purchase
shares in connection with amounts allocated to the Sub-Accounts in accordance
with the instructions of the Owner, redeem shares for the purposes of meeting
the contractual obligations of the Variable Account and pay charges relative to
the Variable Account. The shares of the Funds purchased by the Variable Account,
to the extent represented by separate certificates, will be kept physically
segregated and held separate from the assets of our General Account or any other
separate account.
REINSURANCE
We intend to reinsure a portion of the risks assumed under the Policies. You
will not have any rights against the reinsurer(s); we remain fully liable for
the benefits under the Policy.
FEDERAL TAX STATUS
The discussion contained herein is general in nature, is based upon the
Company's understanding of current federal income tax laws and is not intended
as tax advice. Congress has the power to enact legislation affecting the tax
treatment of life insurance contracts, and such legislation--as well as any new
judicial or administrative interpretation of federal income tax law-could be
applied retroactively. Also, because the Internal Revenue Code of 1986, as
amended (the "Code"), is not in force in the Commonwealth of Puerto Rico, some
references in this discussion will not apply to Policies issued in Puerto Rico.
Any person contemplating the purchase of a Policy or any transaction involving a
Policy should consult a qualified tax adviser. THE COMPANY DOES NOT MAKE ANY
REPRESENTATION OR PROVIDE ANY GUARANTEE REGARDING THE TAX STATUS, FEDERAL, STATE
OR LOCAL, OF ANY POLICY OR ANY TRANSACTION INVOLVING THE POLICIES.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
The Company is taxed as a life insurance company under Subchapter L of the
Code. Although the operations of the Variable Account are accounted for
separately from other operations of the Company for purposes of federal income
taxation, the Variable Account currently is not separately taxable as a
regulated investment company or other taxable entity.
Taxes paid or reserved for by the Company that are attributable to the
earnings of the Variable Account could affect the Net Investment Factor, which
affects your Account Value (see "ACCOUNT VALUE -- Net Investment Factor). Under
existing federal income tax law, however, the income (consisting primarily of
interest, dividends and net capital gains) of the Variable Account, to the
extent that it is applied to increase reserves under the Policy, is not taxable
to the Company. Similarly, no significant state or local income taxes are
attributable to the earnings of the Variable Account. Therefore, the Company
currently does not take any federal, state or local taxes into account when
determining the Net Investment Factor. The Company may take taxes into account
when determining the Net Investment Factor in future years if, due to a change
in law, a change in the Company's tax status or otherwise, such taxes are
attributable to the earnings of the Variable Account.
TAXATION OF POLICY PROCEEDS
Section 7702 of the Code provides that, if certain tests are met, a life
insurance policy will be treated as a life insurance contract for tax purposes.
Provided that the Owner has an insurable interest in the Insured, the Company
believes that the Policy meets these tests, and hence should receive the same
federal income tax treatment as a fixed life insurance contract. As such: (1)
the Death Benefit will be eligible for exclusion from the gross income of the
Beneficiary under Section 101 of the Code; and (2) the Owner will not be deemed
to be in constructive receipt of the increases in Cash Surrender Values,
including additions attributable to interest, dividends, appreciation or gains
realized upon transfers among the Sub-Accounts, under the Policy until actual
receipt thereof. CORPORATE OWNERS, HOWEVER, MIGHT BE SUBJECT TO ALTERNATIVE
MINIMUM TAX ON THE ANNUAL INCREASES IN CASH SURRENDER VALUES AND ON THE DEATH
BENEFIT.
To qualify as a life insurance contract under Section 7702 of the Code, the
Policy must satisfy certain actuarial requirements. Section 7702 specifies that
the required actuarial calculations be based on mortality charges that meet the
reasonable mortality charge requirements set forth in the Code, and other
charges
29
<PAGE>
reasonably expected to be actually paid. The law relating to reasonableness
standards for mortality and other charges is based on statutory language and
certain IRS pronouncements that do not address all relevant issues. Accordingly,
although the Company believes that the mortality and other charges that are used
in the calculations (including those used with respect to Policies issued to
so-called "sub-standard risks") meet the applicable requirements, it cannot
offer complete assurance. It is possible that future regulations will contain
standards that would require the Company to modify the mortality and other
charges used in the calculations, and the Company reserves the right to make any
such modifications.
For a variable contract like the Policy to qualify as life insurance for
federal income tax purposes, it also must comply with the diversification rules
found in Code Section 817 and the regulations promulgated thereunder. The
Company believes that the Variable Account complies with the diversification
requirements prescribed by Treas. Reg. Section 1.817-5. When these regulations
were proposed, the preamble to the regulations stated that the Internal Revenue
Service may promulgate guidelines under which a variable contract will not be
treated as a life insurance contract for tax purposes if the owner has excessive
control over the investments underlying the contract. Although the Company
believes that the Owner does not have excessive control over the assets
underlying the Policy, it cannot offer complete assurance prior to the issuance
of such guidelines, which may have retroactive effect. If guidelines are
promulgated, the Company will take any action (including modification of the
Policy or the Variable Account) necessary to comply with the guidelines.
Upon the complete surrender or lapse of a Policy, the amount by which the
sum of the Policy's Cash Surrender Value and any unpaid Policy Debt exceeds the
Owner's Investment in the Policy (as defined below) is treated as ordinary
income subject to tax. Any loss incurred upon surrender generally is not
deductible.
For purposes of the preceding paragraph and the following paragraphs, the
term Investment in the Policy means (i) the aggregate amount of any Premiums or
other consideration paid for a Policy, minus (ii) the aggregate amount received
under a Policy which is excluded from gross income of the Owner (other than loan
amounts), plus (iii) the amount of any loan from, or secured by,a Policy that is
a Modified Endowment Contract (defined below) to the extent that such amount is
included in the gross income of the Owner. The repayment of a Policy loan (or
the payment of interest on a loan) does not affect Investment in the Policy.
The tax consequences of distributions from, and loans taken from or secured
by, a Policy depend on whether the Policy is classified as a Modified Endowment
Contract under Section 7702A of the Code. Due to the flexibility of the payment
of premiums and other rights you have under the Policy, classification of the
Policy as a Modified Endowment Contract will depend upon the individual
operation of each Policy. A Policy is a Modified Endowment Contract if the
aggregate amount paid under the Policy at any time during the first seven Policy
Years exceeds the sum of the net level premiums that would have been paid on or
before such time if the Policy provided for paid up future benefits after the
payment of seven level annual premiums. If there is a reduction in benefits
during the first seven Policy Years, the foregoing computation is made as if the
Policy originally had been issued at the reduced benefit level. If there is a
"material change" to the Policy, the seven year testing period for Modified
Endowment Contract status is restarted. A life insurance contract received in
exchange for a Modified Endowment Contract also will be treated as a Modified
Endowment Contract.
The Company has undertaken measures to prevent payment of a Premium from
inadvertently causing the Policy to become a Modified Endowment Contract (see
"PREMIUM PAYMENTS -- Modified Endowment Contracts"). In general, an Owner should
consult a qualified tax adviser before undertaking any transaction involving the
Policy to determine whether such transaction would cause the Policy to become a
Modified Endowment Contract.
Provided that a Policy is not a Modified Endowment Contract, cash
distributions from the Policy are treated first as a nontaxable return of the
Owner's Investment in the Policy and then as a distribution of the Policy's
inside buildup, which is subject to tax. (An exception to this general rule
occurs in the case that a cash distribution is made in connection with certain
reductions in the Death Benefit under the Policy in the
30
<PAGE>
first fifteen contract years. Such a cash distribution is taxed in whole or in
part as ordinary income.) Loans from, or secured by, a Policy that is not a
Modified Endowment Contract generally are treated as bona fide indebtedness, and
hence are not included in the gross income of the Owner.
If a Policy is a Modified Endowment Contract, distributions from the Policy
are treated as ordinary income subject to tax up to the amount equal to the
excess of the Account Value (which includes unpaid policy loans) immediately
before the distribution over the Investment in the Policy. Loans taken from, or
secured by, such a Policy, as well as due but unpaid interest thereon, are taxed
in the same manner as distributions from the Policy. A 10 percent additional tax
is imposed on the portion of any distribution from, or loan taken from or
secured by, a Modified Endowment Contract that is included in income except
where the distribution or loan is made on or after the Owner attains age 59 1/2,
is attributable to the Owner's becoming disabled, or is part of a series of
substantially equal periodic payments for the life (or life expectancy) of the
Owner or the joint lives (or joint life expectancies) of the Owner and the
Owner's Beneficiary. These exceptions likely do not apply where the Policy is
not owned by an individual (or held in trust for an individual). For purposes of
the computations described in this paragraph, all Modified Endowment Contracts
issued by the Company (or its affiliates) to the same Owner during any calendar
year are treated as one Modified Endowment Contract.
Because there are limits on the deductibility of policy loan interest, an
Owner should consult a qualified tax adviser regarding the deducting of any
Policy loan interest.
An Owner generally will not recognize gain upon the exchange of the Policy
for another life insurance policy issued by the Company or another insurance
company, except to the extent that the Owner receives cash in the exchange or is
relieved of Policy indebtedness as a result of the exchange. In no event will
the gain recognized exceed the amount by which the Policy's Account Value (which
includes unpaid Policy loans) exceeds the Owner's Investment in the Policy.
A transfer of the Policy, a change in the Owner, a change in the
Beneficiary, certain other changes to the Policy and particular uses of the
Policy (including use in a so called "split-dollar" arrangement) may have tax
consequences depending upon the particular circumstances and should not be
undertaken prior to consulting with a qualified tax adviser. For instance, if
the Owner transfers the Policy or designates a new Owner in return for valuable
consideration (or, in some cases, if the transferor is relieved of a liability
as a result of the transfer), then the Death Benefit payable upon the death of
the Insured may in certain circumstances be includible in taxable income to the
extent that the Death Benefit exceeds the prior consideration paid for the
transfer and any Premiums and other amounts subsequently paid by the transferee.
Further, in such a case, if the consideration received exceeds the transferor's
Investment in the Policy, the difference will be taxed to the transferor as
ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the individual
circumstances of each Owner or Beneficiary.
THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
The directors and principal officers of the Company are listed below,
together with information as to their ages, dates of election and principal
business occupations during the last five years (if other than their present
business occupations). Except as otherwise indicated, the directors and officers
of the Company who are associated with Sun Life Assurance Company of Canada
and/or its subsidiaries have been associated with Sun Life Assurance Company of
Canada for more than five years either in the position shown or in other
positions.
JOHN D. MCNEIL, 62, Chairman and Director (1982*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Chairman and a Director of Sun Life Assurance Company of Canada and
Sun Life Insurance and Annuity Company of New York; a Director of Massachusetts
Financial Services Company; President and a
- ---------
* Year elected director.
31
<PAGE>
Director of Sun Growth Variable Annuity Fund, Inc.; Chairman and a Trustee of
MFS/Sun Life Series Trust; Chairman and a Member of the Boards of Managers of
Money Market Variable Account, High Yield Variable Account, Capital Appreciation
Variable Account, Government Securities Variable Account, World Governments
Variable Account, Total Return Variable Account and Managed Sectors Variable
Account; and a Director of Shell (Canada) Limited and Canadian Pacific, Ltd.
JOHN R. GARDNER, 58, President and Director (1986*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is President and a Director of Sun Life Assurance Company of Canada, and
Sun Life Insurance and Annuity Company of New York; and a Director of
Massachusetts Financial Services Company, Massachusetts Casualty Insurance
Company and Sun Life Financial Services Limited.
DAVID D. HORN, 55, Senior Vice President and General Manager and Director (1970,
1985*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Senior Vice President and General Manager for the United States of Sun
Life Assurance Company of Canada; Chairman and President and a Director of Sun
Investment Services Company; Senior Vice President and a Director of Sun Life
Insurance and Annuity Company of New York; Vice President and a Director of Sun
Growth Variable Annuity Fund, Inc.; President and a Director of Sun Benefit
Services Company, Inc., Sun Canada Financial Co., and Sun Life Financial
Services Limited; a Director of Sun Capital Advisers, Inc.; Chairman and a
Director of Massachusetts Casualty Insurance Company; a Trustee of MFS/ Sun Life
Series Trust; and a Member of the Boards of Managers of Money Market Variable
Account, High Yield Variable Account, Capital Appreciation Variable Account,
Government Securities Variable Account, World Governments Variable Account,
Total Return Variable Account and Managed Sectors Variable Account.
ANGUS A. MACNAUGHTON, 65, Director (1985*)
Metro Tower, Suite 1170,
950 Tower Lane
Foster City, California 94404
He is President of Genstar Investment Corporation and a Director of Sun Life
Assurance Company of Canada, Sun Life Insurance and Annuity Company of New York,
Canadian Pacific, Ltd., Stelco, Inc. and Varian Associates, Inc.
JOHN S. LANE, 61, Director (1991*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Senior Vice President, Investments of Sun Life Assurance Company of
Canada; and a Director of Sun Investment Services Company, Sun Capital Advisers,
Inc. and Sun Life Insurance and Annuity Company of New York.
RICHARD B. BAILEY, 69, Director (1983)
500 Boylston Street
Boston, Massachusetts 02116
He is a Director of Sun Life Insurance and Annuity Company of New York and a
Director/Trustee of certain Funds in the MFS Family of Funds. Prior to October
1, 1991, he was Chairman and a Director of Massachusetts Financial Services
Company.
- ---------
* Year elected director.
32
<PAGE>
A. KEITH BRODKIN, 61, Director (1990*)
500 Boylston Street
Boston, Massachusetts 02116
He is Chairman and a Director of Massachusetts Financial Services Company; a
Director of Sun Life Insurance and Annuity Company of New York; and a
Director/Trustee and/or Officer of the Funds in the MFS Family of Funds.
M. COLYER CRUM, 64, Director (1986*)
Harvard Business School
Soldiers Field Road
Boston, Massachusetts 02163
He is a Professor at the Harvard Business School; and a Director of Sun Life
Assurance Company of Canada, Sun Life Insurance and Annuity Company of New York,
Merrill Lynch Ready Assets Trust, Merrill Lynch Basic Value Fund, Inc., Merrill
Lynch Special Value Fund, Inc., Merrill Lynch Capital Fund, Inc., Merrill Lynch
U.S.A. Government Reserves, Merrill Lynch Natural Resources Trust, Merrill Lynch
U.S. Treasury Money Fund, MuniVest California Insured Fund, Inc., MuniVest
Florida Fund, Inc., MuniVest Michigan Insured Fund, Inc., MuniVest New Jersey
Fund,Inc., MuniVest New York Insured Fund, Inc., MuniYield Florida Insured Fund,
MuniYield Insured Fund II, Inc., MuniYield Michigan Insured Fund, Inc.,
MuniYield New Jersey Insured Fund, Inc., MuniYield New York Insured Fund III,
Inc. and MuniYield Pennsylvania Fund.
ROBERT A. BONNER, 52, Vice President, Pensions (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Pensions for the United States of Sun Life Assurance
Company of Canada.
ROBERT E. MCGINNESS, 55, Vice President and Counsel (1983)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President and Counsel for the United States of Sun Life Assurance
Company of Canada; Vice President and Counsel and a Director of Sun Investment
Services Company and Sun Benefit Services Company, Inc.; Assistant Secretary and
a Director of New London Trust, F.S.B.; and a Director of Massachusetts Casualty
Insurance Company.
C. JAMES PRIEUR, 45, Vice President, Investments (1993)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Investments for the United States of Sun Life
Assurance Company of Canada; Vice President, Investments of Sun Investment
Services Company and Sun Life Insurance and Annuity Company of New York; and a
Director of Sun Capital Advisers, Inc., New London Trust, F.S.B. and Sun Canada
Financial Co.
S. CAESAR RABOY, 60, Vice President, Individual Insurance (1991)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Individual Insurance for the United States of Sun Life
Assurance Company of Canada; Vice President of Sun Life Insurance and Annuity
Company of New York; and Vice President and a Director of Sun Life Financial
Services Limited. Prior to 1990 he was President and Chief Operating Officer of
Connecticut Mutual Life Insurance Company.
ROBERT P. VROLYK, 43, Vice President and Actuary (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
- ---------
* Year elected director.
33
<PAGE>
He is Vice President, Finance for the United States of Sun Life Assurance
Company of Canada; Vice President, Controller and Actuary of Sun Life Annuity
Company of New York; a Director of Massachusetts Casualty Insurance Company; and
Vice President and a Director of Sun Canada Financial Co.
MARGARET SEARS MEAD, 46, Secretary (1996)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
She is Assistant Vice President and Counsel for the Unites States of Sun
Life Assurance Company of Canada and Secretary of Sun Life Insurance and Annuity
Company of New York.
L. BROCK THOMSON, 55, Vice President and Treasurer (1974)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Portfolio Management for the United States of Sun Life
Assurance Company of Canada; Vice President and Treasurer of Sun Investment
Services Company, Sun Capital Advisers, Inc., Sun Benefit Services Company, Inc.
and Sun Life Insurance and Annuity Company of New York; and Assistant Treasurer
of Massachusetts Casualty Insurance Company.
The directors, officers and employees of the Company are covered under a
commercial blanket bond and a liability policy. The directors, officers and
employees of Massachusetts Financial Services Company and Sun Investment
Services Company are covered under a fidelity bond and errors and omissions
policy.
No shares of the Company are owned by any executive officer or director. The
Company is a wholly-owned subsidiary of Sun Life Assurance Company of Canada,
150 King Street West, Toronto, Ontario, Canada M5H 1J9.
STATE REGULATION
The Company is subject to the laws of the State of Delaware governing life
insurance companies and to regulation by the Commissioner of Insurance of
Delaware. An annual statement is filed with the Commissioner of Insurance on or
before March 1st in each year relating to the operations of the Company for the
preceding year and its financial condition on December31st of such year. Its
books and records are subject to review or examination by the Commissioner or
his agents at any time and a full examination of its operations is conducted at
periodic intervals.
The Company is also subject to the insurance laws and regulations of the
other states and jurisdictions in which it is licensed to operate. The laws of
the various jurisdictions establish supervisory agencies with broad
administrative powers with respect to licensing to transact business, overseeing
trade practices, licensing agents, approving policy forms, establishing reserve
requirements, fixing maximum interest rates on life insurance policy loans and
minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulating the type and amounts of
investments permitted. Each insurance company is required to file detailed
annual reports with supervisory agencies in each of the jurisdictions in which
it does business and its operations and accounts are subject to examination by
such agencies at regular intervals.
In addition, many states regulate affiliated groups of insurers, such as the
Company, its parent and its affiliates, under insurance holding company
legislation. Under such laws, inter-company transfers of assets and dividend
payments from insurance subsidiaries may be subject to prior notice or approval,
depending on the size of such transfers and payments in relation to the
financial positions of the companies involved.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed (up to prescribed limits) for policyholder losses
incurred by insolvent companies. The amount of any future assessments of the
Company under these laws cannot be reasonably estimated. However, most of these
laws do provide that an assessment may be excused or deferred if it would
threaten an insurer's own financial strength and many permit the deduction of
all or a portion of any such assessment from any future premium or similar taxes
payable.
34
<PAGE>
Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit regulation,
removal of barriers preventing banks from engaging in the insurance business,
tax law changes affecting the taxation of insurance companies, the tax treatment
of insurance products and its impacton the relative desirability of various
personal investment vehicles, and proposed legislation to prohibit the use of
gender in determining insurance and pension rates and benefits.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. The
Company and its subsidiaries are engaged in various kinds of routine litigation
which, in management's judgment, is not of material importance to their
respective total assets or material with respect to the Variable Account.
LEGAL MATTERS
The organization of the Company, its authority to issue the Policies and the
validity of the form of the Policies have been passed upon by David D. Horn,
Esq., Senior Vice President and General Manager of the Company.
ACCOUNTANTS
The financial statements of the Variable Account for the period ended
, 1996 and the financial statements of the Company as of December
31, 1995 and 1994, and for the years ended December 31, 1995, 1994 and 1993
included in this Prospectus have been audited by ,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
REGISTRATION STATEMENTS
A registration statement has been filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933 as amended, with
respect to the Policies offered by this Prospectus. This Prospectus does not
contain all the information set forth in the registration statement and the
exhibits filed as part of the registration statement, to all of which reference
is hereby made for further information concerning the Variable Account, the
Company, MFS/Sun Life Series Trust, Fidelity Variable Insurance Products Fund,
Fidelity Variable Insurance Products Fund II, Neuberger & Berman Advisers
Management Trust, JPM Series Trust II, Templeton Variable Products Series Fund,
and the Policy. Statements found in this Prospectus as to the terms of the
Policies and other legal instruments are summaries, and reference is made to
such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of the Company for the period ended ,
and for the year ended December 31, 1995, which are included in this Prospectus,
should be considered only as bearing on the ability of the Company to meet its
obligations with respect to the death benefit and the Company's assumption of
the mortality and expense risks. They should not be considered as bearing on the
investment performance of the shares of the MFS Series Fund, VIP Fund, VIP Fund
II, AMT, JPM, and TVPSF held in the Sub-Accounts of the Variable Account. The
Variable Account value of the interests of Owners and Beneficiaries under the
Policies is affected primarily by the investment results of the MFS/Sun Life
Series Trust, Fidelity Variable Insurance Products Fund, Fidelity Variable
Insurance Products Fund II, Neuberger & Berman Advisers Management Trust, JPM
Series Trust II and Templeton Variable Products Series Fund.
35
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS,
ACCOUNT VALUES AND CASH SURRENDER VALUES
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, SURRENDER VALUES
AND ACCUMULATED PREMIUMS
The Tables on the following pages illustrate the way in which a Policy's
Death Benefit, Account Value and Cash Surrender Value could vary over an
extended period of time. They assume that all Premiums are allocated to and
remain in the Variable Account for the entire period shown and are based on
hypothetical gross annual investment returns for the Portfolios (i.e.,
investment income and capital gains and losses, realized or unrealized)
equivalent to constant gross annual rates of 0%, 6%, and 12% over the periods
indicated.
All Tables illustrate a Policy where the Insured is a male, Issue Age 45, in
the preferred (non-tobacco) rate class. These illustrations all assume a Total
Face Amount of $500,000 and payment of an annual Premium of $12,600. Tables 1,
2, 5 & 6 assume a Specified Face Amount of $500,000. Tables 3 and 4 assume a
Specified Face Amount of $50,000 and an APB Rider Face Amount of $450,000.
Tables 1 and 2 are based on guaranteed issue underwriting, Death Benefit Option
A, the Cash Value Accumulation Test and a Specified Face Amount of $500,000.
Tables 3 and 4 are based on the same assumptions, except that the Total Face
Amount reflects a Specified Face Amount of $50,000 and an APB Rider Face Amount
of $450,000. Tables 5 and 6 are based on full medical underwriting, Death
Benefit Option B, the Guideline Premium Test, and a Specified Face Amount of
$500,000. Tables 1, 3 and 5 differ from Tables 2, 4 and 6, respectively, only in
that Tables 1, 3 and 5 reflect the deduction of current Policy charges as
outlined below, while Tables 2, 4 and 6 reflect the deduction of Policy charges
at the guaranteed maximum rates (except that Kentucky Policy Owners will have
higher premium tax deductions than those reflected).
The Account Values and Death Benefits would be different from those shown if
the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above or below such averages for individual
Policy Years. The values would also be different depending on the allocation of
a Policy's total Account Value among the Sub-Accounts of the Variable Account,
if the actual rates of return averaged 0%, 6% or 12%, but the rates of each
Portfolio varied above and below such averages.
The amounts shown for the Death Benefits and Account Values take into
account all charges and deductions imposed under the Policy based on the
assumptions set forth in the Tables. These include: Expense Charges Applied to
Premium, assuming a premium tax rate of 2% for Tables 1, 3 and 5 and 4% for
Tables 2, 4 and 6. The Daily Risk Percentage charged against the Separate
Account' for mortality and expense risks, at an effective annual rate of 0.75%
for the first 10 Policy Years and 0.35% thereafter for Tables 1, 3 and 5, and
0.90% for all Policy Years for Tables 2, 4 and 6; the Monthly Expense Charge of
$13.75 per month for the first Policy Year and $7.50 per month thereafter for
Tables 1, 3 and 5, and $13.75 per month for all Policy Years for Tables 2, 4,
and 6; and the Monthly Cost of Insurance based on current charges for Tables 1,
3 and 5, and guaranteed charges for Tables 2, 4, and 6.
The amounts shown in the Tables also take into account the Portfolios'
advisory fees and operating expenses, which are assumed to be at an annual rate
of 0.76% of the average daily net assets of each Portfolio. This is based upon a
simple average of the advisory fees and expenses of all the Portfolios for the
most recent fiscal year taking into account any applicable expense caps or
expense reimbursement arrangements. Actual fees and expenses of the Portfolios
may be more or less than 0.76%, will vary from year to year, and will depend
upon how Account Value is allocated among the Sub-Accounts. See the individual
prospectus for each Portfolio for more information on Portfolio expenses.
The gross annual rates of investment return of 0%, 6% and 12% correspond to
net annual rates of -1.50%, 4.46%, and 10.41%, respectively, during the first 10
Policy Years and -1.11%, 4.87%, and 10.85%, respectively, thereafter taking into
account the current Daily Risk Percentage and the assumed 0.76% charge for the
Portfolio's advisory fees and operating expenses; and -1.65%, 4.30% and 10.25%,
respectively taking into account the guaranteed Daily Risk Percentage.
A-1
<PAGE>
The hypothetical returns shown in the Tables do not reflect any charges for
income taxes against the Separate Account since no charges are currently made.
If, in the future, such charges are made, in order to produce the illustrated
death benefits and cash values, the gross annual investment rate of return would
have to exceed 0%, 6%, or 12% by a sufficient amount to cover the tax charges.
The second column of each Table shows the amount which would accumulate if
an amount equal to each Premium were invested and earned interest, after taxes,
at 5% per year, compounded annually.
We will furnish upon request a comparable Table using any specific set of
circumstances. In addition to a Table assuming Policy charges at their maximum,
we will furnish a Table assuming current Policy charges.
A-2
<PAGE>
TABLE 1
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, GI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 12%
HYPOTHETICAL 0% HYPOTHETICAL 6% GROSS INVESTMENT
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN RETURN
PREMIUMS NET -1.50% NET 4.46% NET 10.41%
PAID PLUS ----------------------------------- ----------------------------------- ----------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- --------- ----------- ----------- ----------- --------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 13,230 10,925 10,169 500,000 11,565 10,809 500,000 12,204 11,448
2 27,121 20,651 19,895 500,000 22,559 21,803 500,000 24,544 23,788
3 41,708 30,026 29,270 500,000 33,837 33,081 500,000 37,962 37,206
4 57,023 38,380 38,380 500,000 44,741 44,741 500,000 51,905 51,905
5 73,104 47,270 47,270 500,000 56,845 56,845 500,000 68,072 68,072
6 89,989 55,980 55,980 500,000 69,454 69,454 500,000 85,902 85,902
7 107,719 64,535 64,535 500,000 82,616 82,616 500,000 105,603 105,603
8 126,335 74,029 74,029 500,000 97,516 97,516 500,000 128,601 128,601
9 145,881 83,314 83,314 500,000 113,039 113,039 500,000 153,994 153,994
10 166,406 92,406 92,406 500,000 129,232 129,232 500,000 182,060 182,060
11 187,956 101,678 101,678 500,000 146,682 146,682 500,000 213,923 213,923
12 210,584 110,709 110,709 500,000 164,902 164,902 500,000 249,222 249,222
13 234,343 119,502 119,502 500,000 183,943 183,943 500,000 288,090 288,090
14 259,290 128,052 128,052 500,000 203,856 203,856 500,000 330,859 330,859
15 285,484 136,404 136,404 500,000 224,739 224,739 500,000 377,956 377,956
16 312,989 144,417 144,417 500,000 246,552 246,552 500,000 429,661 429,661
17 341,868 152,125 152,125 500,000 269,395 269,395 501,922 486,444 486,444
18 372,191 159,539 159,539 500,000 293,163 293,163 532,725 548,811 548,811
19 404,031 166,616 166,616 500,000 317,799 317,799 563,520 617,238 617,238
20 437,463 173,376 173,376 500,000 343,345 343,345 594,418 692,332 692,332
Age 60 285,484 136,404 136,404 500,000 224,739 224,739 500,000 377,956 377,956
Age 65 437,463 173,376 173,376 500,000 343,345 343,345 594,418 692,332 692,332
Age 70 631,430 201,236 201,236 500,000 484,908 484,908 751,233 1,190,109 1,190,109
Age 75 878,986 216,310 216,310 500,000 650,644 650,644 914,467 1,968,491 1,968,491
<CAPTION>
POLICY DEATH
YEAR BENEFIT
- --------- -----------
<S> <C>
1 500,000
2 500,000
3 500,000
4 500,000
5 500,000
6 500,000
7 500,000
8 500,000
9 500,000
10 500,000
11 500,000
12 529,453
13 595,687
14 666,134
15 741,247
16 821,144
17 906,317
18 997,280
19 1,094,486
20 1,198,605
Age 60 741,247
Age 65 1,198,605
Age 70 1,843,748
Age 75 2,766,675
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or withdrawals
may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH SURRENDER
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL SURRENDERS
WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-3
<PAGE>
TABLE 2
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, GI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 12%
HYPOTHETICAL 0% HYPOTHETICAL 6% GROSS INVESTMENT
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN RETURN
PREMIUMS NET -1.65% NET 4.30% NET 10.25%
PAID PLUS ----------------------------------- ----------------------------------- ----------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- --------- ----------- ----------- ----------- --------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 13,230 9,035 8,279 500,000 9,615 8,859 500,000 10,197 9,441
2 27,121 17,037 16,281 500,000 18,715 17,959 500,000 20,466 19,710
3 41,708 24,758 24,002 500,000 28,061 27,305 500,000 31,646 30,890
4 57,023 31,441 31,441 500,000 36,906 36,906 500,000 43,081 43,081
5 73,104 38,585 38,585 500,000 46,760 46,760 500,000 56,379 56,379
6 89,989 45,429 45,429 500,000 56,875 56,875 500,000 70,904 70,904
7 107,719 51,944 51,944 500,000 67,236 67,236 500,000 86,769 86,769
8 126,335 59,203 59,203 500,000 78,995 78,995 500,000 105,337 105,337
9 145,881 66,076 66,076 500,000 91,044 91,044 500,000 125,672 125,672
10 166,406 72,536 72,536 500,000 103,376 103,376 500,000 147,969 147,969
11 187,956 78,570 78,570 500,000 116,003 116,003 500,000 172,468 172,468
12 210,584 84,159 84,159 500,000 128,935 128,935 500,000 199,442 199,442
13 234,343 89,301 89,301 500,000 142,200 142,200 500,000 229,220 229,220
14 259,290 93,979 93,979 500,000 155,820 155,820 500,000 262,030 262,030
15 285,484 98,173 98,173 500,000 169,819 169,819 500,000 297,607 297,607
16 312,989 101,843 101,843 500,000 184,211 184,211 500,000 336,122 336,122
17 341,868 104,939 104,939 500,000 199,011 199,011 500,000 377,780 377,780
18 372,191 107,397 107,397 500,000 214,233 214,233 500,000 422,784 422,784
19 404,031 109,137 109,137 500,000 229,894 229,894 500,000 471,341 471,341
20 437,463 110,081 110,081 500,000 246,028 246,028 500,000 523,670 523,670
Age 60 285,484 98,173 98,173 500,000 169,819 169,819 500,000 297,607 297,607
Age 65 437,463 110,081 110,081 500,000 246,028 246,028 500,000 523,670 523,670
Age 70 631,430 100,172 100,172 500,000 335,833 335,833 520,281 851,335 851,335
Age 75 878,986 51,312 51,312 500,000 433,735 433,735 609,606 1,316,068 1,316,068
<CAPTION>
POLICY DEATH
YEAR BENEFIT
- --------- -----------
<S> <C>
1 500,000
2 500,000
3 500,000
4 500,000
5 500,000
6 500,000
7 500,000
8 500,000
9 500,000
10 500,000
11 500,000
12 500,000
13 500,000
14 527,558
15 583,667
16 642,379
17 703,859
18 768,268
19 835,781
20 906,607
Age 60 583,667
Age 65 906,607
Age 70 1,318,911
Age 75 1,849,707
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or withdrawals
may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH SURRENDER
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL SURRENDERS
WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-4
<PAGE>
TABLE 3
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VARIABLE UNIVERSAL LIFE POLICY
MALE, PREFERRED, GI, AGE 45
$50,000 SPECIFIED FACE AMOUNT
$450,000 APB RIDER FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 12%
HYPOTHETICAL 0% HYPOTHETICAL 6% GROSS INVESTMENT
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN RETURN
PREMIUMS NET -1.50% NET 4.46% NET 10.41%
PAID PLUS ----------------------------------- ----------------------------------- ----------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- --------- ----------- ----------- ----------- --------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 13,230 11,187 10,800 500,000 11,864 11,477 500,000 12,542 12,155
2 27,121 21,536 21,149 500,000 23,559 23,172 500,000 25,664 25,277
3 41,708 31,527 31,139 500,000 35,571 35,184 500,000 39,949 39,562
4 57,023 40,858 40,858 500,000 47,614 47,614 500,000 55,222 55,222
5 73,104 50,350 50,350 500,000 60,525 60,525 500,000 72,453 72,453
6 89,989 59,655 59,655 500,000 73,980 73,980 500,000 91,464 91,464
7 107,719 68,799 68,799 500,000 88,030 88,030 500,000 112,472 112,472
8 126,335 78,244 78,244 500,000 103,191 103,191 500,000 136,212 136,212
9 145,881 87,481 87,481 500,000 118,989 118,989 500,000 162,428 162,428
10 166,406 96,527 96,527 500,000 135,471 135,471 500,000 191,409 191,409
11 187,956 105,770 105,770 500,000 153,253 153,253 500,000 224,331 224,331
12 210,584 114,775 114,775 500,000 171,825 171,825 500,000 260,714 260,714
13 234,343 123,544 123,544 500,000 191,241 191,241 500,000 300,759 300,759
14 259,290 132,072 132,072 500,000 211,554 211,554 500,000 344,822 344,822
15 285,484 140,403 140,403 500,000 232,862 232,862 500,000 393,344 393,344
16 312,989 148,401 148,401 500,000 255,130 255,130 500,000 446,611 446,611
17 341,868 156,095 156,095 500,000 278,388 278,388 518,677 505,109 505,109
18 372,191 163,498 163,498 500,000 302,528 302,528 549,744 569,358 569,358
19 404,031 170,569 170,569 500,000 327,549 327,549 580,809 639,848 639,848
20 437,463 177,326 177,326 500,000 353,492 353,492 611,986 717,205 717,205
Age 60 285,484 140,403 140,403 500,000 232,862 232,862 500,000 393,344 393,344
Age 65 437,463 177,326 177,326 500,000 353,492 353,492 611,986 717,205 717,205
Age 70 631,430 205,250 205,250 500,000 497,229 497,229 770,321 1,229,956 1,229,956
Age 75 878,986 220,582 220,582 500,000 665,457 665,457 935,287 2,031,707 2,031,707
<CAPTION>
POLICY DEATH
YEAR BENEFIT
- --------- -----------
<S> <C>
1 500,000
2 500,000
3 500,000
4 500,000
5 500,000
6 500,000
7 500,000
8 500,000
9 500,000
10 500,000
11 500,000
12 553,868
13 621,883
14 694,247
15 771,426
16 853,539
17 941,092
18 1,034,616
19 1,134,579
20 1,241,666
Age 60 771,426
Age 65 1,241,666
Age 70 1,905,481
Age 75 2,855,524
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or withdrawals
may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH SURRENDER
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL SURRENDERS
WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-5
<PAGE>
TABLE 4
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VARIABLE UNIVERSAL LIFE POLICY
MALE, PREFERRED, GI, AGE 45
$50,000 SPECIFIED FACE AMOUNT
$450,000 APB RIDER FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION A
CASH VALUE ACCUMULATION TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 12%
HYPOTHETICAL 0% HYPOTHETICAL 6% GROSS INVESTMENT
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN RETURN
PREMIUMS NET -1.65% NET 4.30% NET 10.25%
PAID PLUS ----------------------------------- ----------------------------------- ----------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- --------- ----------- ----------- ----------- --------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 13,230 8,788 8,401 500,000 9,393 9,006 500,000 9,999 9,612
2 27,121 16,873 16,486 500,000 18,611 18,224 500,000 20,426 20,039
3 41,708 24,657 24,270 500,000 28,068 27,681 500,000 31,775 31,388
4 57,023 31,754 31,754 500,000 37,388 37,388 500,000 43,764 43,764
5 73,104 38,919 38,919 500,000 47,342 47,342 500,000 57,270 57,270
6 89,989 45,760 45,760 500,000 57,552 57,552 500,000 72,036 72,036
7 107,719 52,240 52,240 500,000 67,999 67,999 500,000 88,182 88,182
8 126,335 58,795 58,795 500,000 79,165 79,165 500,000 106,377 106,377
9 145,881 64,926 64,926 500,000 90,576 90,576 500,000 126,333 126,333
10 166,406 70,596 70,596 500,000 102,223 102,223 500,000 148,260 148,260
11 187,956 75,787 75,787 500,000 114,117 114,117 500,000 172,418 172,418
12 210,584 80,472 80,472 500,000 126,265 126,265 500,000 199,110 199,110
13 234,343 84,639 84,639 500,000 138,697 138,697 500,000 228,705 228,705
14 259,290 88,265 88,265 500,000 151,435 151,435 500,000 261,458 261,458
15 285,484 91,316 91,316 500,000 164,502 164,502 500,000 296,985 296,985
16 312,989 93,734 93,734 500,000 177,911 177,911 500,000 335,446 335,446
17 341,868 95,449 95,449 500,000 191,675 191,675 500,000 377,045 377,045
18 372,191 96,367 96,367 500,000 205,805 205,805 500,000 421,987 421,987
19 404,031 96,373 96,373 500,000 220,315 220,315 500,000 470,476 470,476
20 437,463 95,350 95,350 500,000 235,238 235,238 500,000 522,733 522,733
Age 60 285,484 91,316 91,316 500,000 164,502 164,502 500,000 296,985 296,985
Age 65 437,463 95,350 95,350 500,000 235,238 235,238 500,000 522,733 522,733
Age 70 631,430 70,310 70,310 500,000 318,907 318,907 500,000 849,945 849,945
Age 75 878,986 0 0 0 415,023 415,023 583,306 1,314,042 1,314,042
<CAPTION>
POLICY DEATH
YEAR BENEFIT
- --------- -----------
<S> <C>
1 500,000
2 500,000
3 500,000
4 500,000
5 500,000
6 500,000
7 500,000
8 500,000
9 500,000
10 500,000
11 500,000
12 500,000
13 500,000
14 526,405
15 582,446
16 641,086
17 702,490
18 766,820
19 834,248
20 904,985
Age 60 582,446
Age 65 904,985
Age 70 1,316,758
Age 75 1,846,860
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or withdrawals
may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH SURRENDER
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL SURRENDERS
WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-6
<PAGE>
TABLE 5
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, MI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION B
GUIDELINE PREMIUM TEST
CURRENT POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 12%
HYPOTHETICAL 0% HYPOTHETICAL 6% GROSS INVESTMENT
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN RETURN
PREMIUMS NET -1.50% NET 4.46% NET 10.41%
PAID PLUS ----------------------------------- ------------------------------------- ----------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- --------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 13,230 11,109 10,353 510,353 11,753 10,997 510,997 12,397 11,641
2 27,121 21,089 20,333 520,333 23,017 22,261 522,261 25,022 24,266
3 41,708 30,765 30,009 530,009 34,623 33,867 533,867 38,798 38,042
4 57,023 39,420 39,420 539,420 45,869 45,869 545,869 53,126 53,126
5 73,104 48,590 48,590 548,590 58,301 58,301 558,301 69,675 69,675
6 89,989 57,633 57,633 557,633 71,300 71,300 571,300 87,959 87,959
7 107,719 66,452 66,452 566,452 84,786 84,786 584,786 108,053 108,053
8 126,335 76,135 76,135 576,135 99,933 99,933 599,933 131,361 131,361
9 145,881 85,548 85,548 585,548 115,627 115,627 615,627 156,965 156,965
10 166,406 94,677 94,677 594,677 131,873 131,873 631,873 185,085 185,085
11 187,956 103,894 103,894 603,894 149,243 149,243 649,243 216,795 216,795
12 210,584 112,759 112,759 612,759 167,202 167,202 667,202 251,682 251,682
13 234,343 121,234 121,234 621,234 185,736 185,736 685,736 290,047 290,047
14 259,290 129,286 129,286 629,286 204,836 204,836 704,836 332,229 332,229
15 285,484 136,927 136,927 636,927 224,536 224,536 724,536 378,650 378,650
16 312,989 143,928 143,928 643,928 244,625 244,625 744,625 429,522 429,522
17 341,868 150,452 150,452 650,452 265,282 265,282 765,282 485,494 485,494
18 372,191 156,510 156,510 656,510 286,541 286,541 786,541 547,124 547,124
19 404,031 162,023 162,023 662,023 308,345 308,345 808,345 614,939 614,939
20 437,463 167,009 167,009 667,009 330,733 330,733 830,733 689,623 689,623
Age 60 285,484 136,927 136,927 636,927 224,536 224,536 724,536 378,650 378,650
Age 65 437,463 167,009 167,009 667,009 330,733 330,733 830,733 689,623 689,623
Age 70 631,430 181,567 181,567 681,567 449,545 449,545 949,545 1,191,958 1,191,958
Age 75 878,986 172,760 172,760 672,760 574,400 574,400 1,074,400 2,003,188 2,003,188
<CAPTION>
POLICY DEATH
YEAR BENEFIT
- --------- -----------
<S> <C>
1 511,641
2 524,266
3 538,042
4 553,126
5 569,675
6 587,959
7 608,053
8 631,361
9 656,965
10 685,085
11 716,795
12 751,682
13 790,047
14 832,229
15 878,650
16 929,522
17 985,494
18 1,047,124
19 1,114,939
20 1,189,623
Age 60 878,650
Age 65 1,189,623
Age 70 1,691,958
Age 75 2,503,188
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or withdrawals
may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH SURRENDER
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL SURRENDERS
WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-7
<PAGE>
TABLE 6
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
SUN LIFE CORPORATE VUL
MALE, PREFERRED, MI, AGE 45
$500,000 SPECIFIED FACE AMOUNT
ANNUAL PREMIUM: $12,600.00
DEATH BENEFIT OPTION B
GUIDELINE PREMIUM TEST
GUARANTEED POLICY CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL 12%
HYPOTHETICAL 0% HYPOTHETICAL 6% GROSS INVESTMENT
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN RETURN
PREMIUMS NET -1.65% NET 4.30% NET 10.25%
PAID PLUS ----------------------------------- ----------------------------------- ----------------------
INTEREST CASH CASH CASH
POLICY AT 5% SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT DEATH SURRENDER ACCOUNT
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE
- --------- ----------- ----------- ----------- --------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 13,230 8,992 8,236 508,236 9,569 8,813 508,813 10,148 9,392
2 27,121 16,908 16,152 516,152 18,572 17,816 517,816 20,308 19,552
3 41,708 24,495 23,739 523,739 27,758 27,002 527,002 31,300 30,544
4 57,023 30,993 30,993 530,993 36,370 36,370 536,370 42,443 42,443
5 73,104 37,894 37,894 537,894 45,900 45,900 545,900 55,315 55,315
6 89,989 44,434 44,434 544,434 55,585 55,585 555,585 69,244 69,244
7 107,719 50,572 50,572 550,572 65,386 65,386 565,386 84,292 84,292
8 126,335 57,366 57,366 557,366 76,421 76,421 576,421 101,752 101,752
9 145,881 63,676 63,676 563,676 87,548 87,548 587,548 120,608 120,608
10 166,406 69,459 69,459 569,459 98,719 98,719 598,719 140,952 140,952
11 187,956 74,695 74,695 574,695 109,907 109,907 609,907 162,903 162,903
12 210,584 79,353 79,353 579,353 121,070 121,070 621,070 186,585 186,585
13 234,343 83,421 83,421 583,421 132,187 132,187 632,187 212,154 212,154
14 259,290 86,876 86,876 586,876 143,220 143,220 643,220 239,767 239,767
15 285,484 89,687 89,687 589,687 154,125 154,125 654,125 269,592 269,592
16 312,989 91,800 91,800 591,800 164,829 164,829 664,829 301,785 301,785
17 341,868 93,152 93,152 593,152 175,248 175,248 675,248 336,512 336,512
18 372,191 93,660 93,660 593,660 185,271 185,271 685,271 373,932 373,932
19 404,031 93,229 93,229 593,229 194,768 194,768 694,768 414,205 414,205
20 437,463 91,769 91,769 591,769 203,610 203,610 703,610 457,514 457,514
Age 60 285,484 89,687 89,687 589,687 154,125 154,125 654,125 269,592 269,592
Age 65 437,463 91,769 91,769 591,769 203,610 203,610 703,610 457,514 457,514
Age 70 631,430 66,580 66,580 566,580 233,634 233,634 733,634 728,037 728,037
Age 75 878,986 590 590 500,590 221,821 221,821 721,821 1,112,891 1,112,891
<CAPTION>
POLICY DEATH
YEAR BENEFIT
- --------- -----------
<S> <C>
1 509,392
2 519,552
3 530,544
4 542,443
5 555,315
6 569,244
7 584,292
8 601,752
9 620,608
10 640,952
11 662,903
12 686,585
13 712,154
14 739,767
15 769,592
16 801,785
17 836,512
18 873,932
19 914,205
20 957,514
Age 60 769,592
Age 65 957,514
Age 70 1,228,037
Age 75 1,612,891
</TABLE>
(1) Assumes a $12,600.00 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loans have been made. Excessive loans or withdrawals
may cause this Policy to lapse due to insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS. THE CASH SURRENDER
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL RATES OF INVESTMENT RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL SURRENDERS
WERE MADE. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-8
