As filed with the Securities and Exchange Commission on March 14, 1997
REGISTRATION NO. 333-12989
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
----------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8 B-2
----------------------
PHOENIX LIFE AND ANNUITY VARIABLE UNIVERSAL LIFE ACCOUNT
(EXACT NAME OF TRUST)
PHOENIX LIFE AND ANNUITY COMPANY
(NAME OF DEPOSITOR)
----------------------
ONE AMERICAN ROW
HARTFORD, CONNECTICUT 06115
(COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DONA D. YOUNG, ESQUIRE
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
PHOENIX LIFE AND ANNUITY COMPANY
ONE AMERICAN ROW
HARTFORD, CONNECTICUT 06115
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)
----------------------
COPIES TO:
MICHAEL BERENSON, ESQ. RICHARD J. WIRTH, ESQ.
JORDEN BURT BERENSON & JOHNSON LLP COUNSEL
1025 THOMAS JEFFERSON ST. N.W. PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
SUITE 400 EAST ONE AMERICAN ROW
WASHINGTON, D.C. 20007-0805 HARTFORD, CONNECTICUT 06115
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DECLARATION REQUIRED BY RULE 24F-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has chosen to register an indefinite amount of securities being offered.
----------------------
Approximate date of proposed public offering:
As soon as practicable after the effective date
of this Registration Statement.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
----------------------
Registrant is relying on the exemptive relief provided by Rule 6e-3(T) under the
Investment Company Act of 1940 and elects to be governed by subparagraph
(b)(13)(i)(A) of that Rule.
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<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
1 The VUL Account
2 Phoenix Life and Annuity Company
3 Not Applicable
4 Sales of Policies
5 The VUL Account
6 The VUL Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 The Policy
11 Investments of the VUL Account
12 Investments of the VUL Account
13 Charges and Deductions; Investments of the VUL Account
14 Premium Payment; Allocation of Issue Premium; Right to
Cancel Period
15 Allocation of Issue Premium; Transfer of Policy Value
16 Investments of the VUL Account
17 Surrenders
18 Allocation of Issue Premium; Transfer of Policy Value;
Reinvestment and Redemption
19 Voting Rights; Reports
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Safekeeping of the VUL Account's Assets
24 Not Applicable
25 Phoenix Life and Annuity Company
26 Charges and Other Deductions; Investments of the VUL Account
27 Phoenix Life and Annuity Company
28 Phoenix Life and Annuity Company; The Directors and
Executive Officers of Phoenix Life and Annuity Company
29 Not Applicable
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Phoenix Life and Annuity Company
36 Not Applicable
37 Not Applicable
38 Sales of Policies
39 Sales of Policies
40 Not Applicable
41 Sales of Policies
42 Not Applicable
43 Not Applicable
44 Determination of Subaccount Values
45 Not Applicable
46 Determination of Subaccount Values
47 Allocation of Issue Premium; Determination of Subaccount
Values
48 Not Applicable
49 Not Applicable
50 Not Applicable
<PAGE>
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------
51 Phoenix Life and Annuity Company; The Policy; Charges and
Deductions
52 Investments of the VUL Account
53 Federal Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
<PAGE>
VARIABLE LIFE INSURANCE POLICY
ISSUED BY: PHOENIX LIFE AND ANNUITY COMPANY
101 MUNSON STREET
P.O. BOX 810
GREENFIELD, MASSACHUSETTS 01302-0810
TELEPHONE: (800) 892-4885
PROSPECTUS
___________________, 1997
This Prospectus describes Flexible Premium Variable Life Insurance Policies
(the "Policies"), offered by Phoenix Life and Annuity Company ("Phoenix"). An
applicant chooses the amount of Issue Premium desired and it is then shown in
the Policy. Generally, the minimum Issue Premium Phoenix will accept is 1/6 of
the Planned Annual Premium. Phoenix may, in some cases, accept less than that
amount. The amount and payment frequency of Planned Annual Premiums are as shown
in the Policy. If too much is paid in premium in the early Policy Years, the
Policy could become a "modified endowment contract." This would cause loans and
other amounts received under the Policy to be subject to tax and/or penalties.
Currently, Phoenix notifies a Policyowner when a Policy becomes a modified
endowment contract.
Premium payments are allocated to one or more of the Subaccounts of the
Phoenix Life and Annuity Variable Universal Life Account (the "VUL Account") or
to the Guaranteed Interest Account ("GIA"), as specified in the applicant's
application for insurance. The VUL Account is divided into Subaccounts, each
of which invests in a corresponding series of The Phoenix Edge Series Fund (the
"Fund"). For certain Policyowners, the Issue Premium is first allocated to the
Money Market Subaccount before being allocated according to the instructions
in the application.
There is no guaranteed minimum Policy Value except for that portion of
Policy Value invested in the GIA, which has a 4% minimum interest rate
guarantee. The Policy Value not invested in the GIA will vary to reflect the
investment experience of the Subaccounts of the VUL Account to which premiums
have been allocated. A Policyowner bears the investment risk for all amounts so
allocated. The Policy will remain in effect so long as the Policy Value or Cash
Surrender Value is sufficient to pay certain monthly charges imposed in
connection with the Policy.
The death benefit under the Policy equals the Policy's face amount on the
date of the Insured's death or, if greater, the Policy Value on the date of
death increased by the applicable percentage set forth in the Policy. Other
death benefit options also are available.
A Policyowner may cancel the Policy within 10 days (or longer in some
states), after the Policyowner receives it or 10 days after Phoenix mails or
delivers a written notice of withdrawal right to the Policyowner, or within 45
days of completing the application, whichever is latest.
It may not be advantageous to purchase a Policy as a replacement for your
current life insurance or to supplement an existing life insurance policy.
This Prospectus is valid only if accompanied by or preceded by current
prospectuses for the Funds. This Prospectus and the prospectuses for the Funds
should be read and retained 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.
1
<PAGE>
TABLE OF CONTENTS
Heading Page
- -----------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICY ........................... 1
TABLE OF CONTENTS ........................................ 2
FINANCIAL HIGHLIGHTS ..................................... 3
SPECIAL TERMS ............................................ 3
SUMMARY .................................................. 4
PHOENIX AND THE VUL ACCOUNT............................... 6
Phoenix ............................................... 6
The VUL Account ....................................... 6
The GIA ............................................... 6
THE POLICY ............................................... 7
Introduction .......................................... 7
Eligible Purchasers ................................... 7
Premium Payment ....................................... 7
Allocation of Issue Premium ........................... 7
Right to Cancel Period ................................ 7
Temporary Insurance Coverage .......................... 8
Transfer of Policy Value .............................. 8
Determination of Subaccount Values..................... 8
Death Benefit ......................................... 9
Surrenders ............................................ 9
Policy Loans .......................................... 10
Lapse ................................................. 11
Payment of Premiums During Period of Disability........ 11
Additional Insurance Options .......................... 11
Additional Rider Benefits ............................. 11
INVESTMENTS OF THE VUL ACCOUNT ........................... 12
Participating Mutual Fund.............................. 12
Investment Advisers to The Phoenix Edge Series Fund.... 13
Reinvestment and Redemption ........................... 13
Substitution of Investments ........................... 13
Performance History ................................... 13
CHARGES AND DEDUCTIONS ................................... 14
Monthly Deduction .................................. 14
Premium Taxes ...................................... 15
Federal Tax Charge.................................. 15
Mortality and Expense Risk Charge................... 15
Investment Management Charge ....................... 15
Other Charges ...................................... 16
GENERAL PROVISIONS ....................................... 17
Postponement of Payments .............................. 17
Payment by Check ...................................... 17
The Contract .......................................... 17
Suicide ............................................... 17
Incontestability ...................................... 17
Change of Owner or Beneficiary ........................ 17
Assignment ............................................ 18
Misstatement of Age or Sex ............................ 18
PAYMENT OF PROCEEDS ...................................... 18
Surrender and Death Benefit Proceeds................... 18
Payment Options ....................................... 18
FEDERAL TAX CONSIDERATIONS ............................... 19
Introduction .......................................... 19
Phoenix's Tax Status .................................. 19
Policy Benefits ....................................... 19
Business-Owned Policies................................ 20
Modified Endowment Contracts .......................... 20
Limitations on Unreasonable Mortality
and Expense Charges ................................ 20
Qualified Plans ....................................... 20
Diversification Standards ............................. 21
Change of Ownership or Insured or Assignment........... 21
Other Taxes ........................................... 21
VOTING RIGHTS ............................................ 21
The Fund .............................................. 21
Phoenix................................................ 21
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHOENIX........... 22
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS................... 22
SALES OF POLICIES ........................................ 22
STATE REGULATION ......................................... 22
REPORTS .................................................. 22
LEGAL PROCEEDINGS ........................................ 23
LEGAL MATTERS ............................................ 23
REGISTRATION STATEMENT ................................... 23
FINANCIAL STATEMENTS ..................................... 23
APPENDIX A ............................................... 26
APPENDIX B ............................................... 27
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Subaccounts commenced operations as of the date of this Prospectus;
therefore, data for these Subaccounts is not yet available.
SPECIAL TERMS
- --------------------------------------------------------------------------------
As used in this Prospectus, the following terms have the indicated meanings:
ATTAINED AGE: The age of the Insured on the birthday nearest the most recent
Policy Anniversary.
BENEFICIARY: The person or persons specified by the Policyowner as entitled to
receive the death benefits under a Policy.
CASH SURRENDER VALUE: The Policy Value less any surrender charge that would
apply on the date of surrender and less any Debt.
DEATH BENEFIT GUARANTEE: An additional benefit rider available with the Policy
that guarantees a death benefit equal to the initial face amount or the face
amount as later increased or decreased, provided that Minimum Required Premiums
are paid. See "Additional Rider Benefits."
DEBT: Outstanding loans against a Policy, plus accrued interest.
GENERAL ACCOUNT: The general asset account of Phoenix.
GUARANTEED INTEREST ACCOUNT (GIA): An allocation option under which amounts
deposited are guaranteed to earn a fixed rate of interest. Excess interest also
may be credited, in the sole discretion of Phoenix.
IN FORCE: Conditions under which the coverage under a Policy is in effect and
the Insured's life remains insured.
INSURED: The person upon whose life the Policy is issued.
IN WRITING (WRITTEN REQUEST): In a written form satisfactory to Phoenix and
delivered to Variable and Universal Life Administration.
ISSUE PREMIUM: The premium payment made in connection with the issue of the
Policy.
MINIMUM REQUIRED PREMIUM: The required premium as specified in the Policy. An
increase or decrease in the face amount of the Policy will change the Minimum
Required Premium amount.
MONTHLY CALCULATION DAY: The first Monthly Calculation Day is the same day as
the Policy Date. Subsequent Monthly Calculation Days are the same day of each
month thereafter or, if such day does not fall within a given month, the last
day of that month will be the Monthly Calculation Day.
PAYMENT DATE: The Valuation Date on which a premium payment or loan repayment is
received at Phoenix, unless it is received after the close of the New York Stock
Exchange, in which case it will be the next Valuation Date.
PHOENIX: Phoenix Life and Annuity Company ("Phoenix"), Hartford, Connecticut.
PLANNED ANNUAL PREMIUM: The premium amount that the Policyowner agrees to pay
each Policy Year. It must be at least equal to the Minimum Required Premium
required for the face amount of insurance selected and must be no greater than
the maximum premium allowed for the face amount selected.
POLICY ANNIVERSARY: Each anniversary of the Policy Date.
POLICY DATE: The Policy Date as shown on the Schedule Page of the Policy. It is
the date from which Policy Years and Policy Anniversaries are measured.
POLICY MONTH: The period from one Monthly Calculation Day up to but not
including the next Monthly Calculation Day.
POLICYOWNER (OWNER): The owner of a Policy.
POLICY VALUE: The sum of a Policy's share in the values of each Subaccount of
the VUL Account plus the Policy's share in the values of the GIA.
POLICY YEAR: The first Policy Year is the one-year period from the Policy Date
up to, but not including, the first Policy Anniversary. Each succeeding Policy
Year is the one-year period from the Policy Anniversary up to but not including
the next Policy Anniversary.
PROPORTIONATE: Amounts allocated to Subaccounts on a proportionate basis are
allocated by increasing (or decreasing) a Policy's share in the value of the
affected Subaccounts so that such shares maintain the same ratio to each other
before and after the allocation.
SUBACCOUNTS: Accounts within the VUL Account to which non-loaned assets under a
Policy are allocated.
UNIT: A standard of measurement used in determining the value of a Policy. The
value of a Unit for each Subaccount will reflect the investment performance of
that Subaccount and will vary in dollar amount.
VALUATION DATE: For any Subaccount, each date on which the net asset value of
the Fund is determined.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
Valuation Date through the next.
VARIABLE AND UNIVERSAL LIFE ADMINISTRATION: Variable and Universal Life
Administration Division of Phoenix.
VUL ACCOUNT: Phoenix Life and Annuity Variable Universal Life Account.
3
<PAGE>
SUMMARY
- --------------------------------------------------------------------------------
1. WHAT IS THE DIFFERENCE BETWEEN THE POLICY AND A CONVENTIONAL FIXED
BENEFIT LIFE INSURANCE POLICY?
Like conventional fixed benefit life insurance, so long as the Policy
remains In Force, the Policy will provide for: (1) the payment of a death
benefit to a Beneficiary upon the Insured's death; (2) the accumulation of cash
value; and (3) surrender rights and Policy loan privileges.
The Policy differs from conventional fixed benefit life insurance by
allowing Policyowners to allocate premiums to one or more Subaccounts of the VUL
Account or to the GIA. Each Subaccount invests exclusively in a designated
portfolio of the Fund. Also, under the Policy, the Policy Value invested in the
VUL Account is not guaranteed and may increase or decrease depending upon the
investment experience of the Subaccounts of the VUL Account. Accordingly, the
Policyowner bears the investment risk of any depreciation in value of the
underlying assets but reaps the benefits of any appreciation in value. See
"Policy Value."
In addition, unlike conventional fixed benefit life insurance, a
Policyowner also has the flexibility to make additional premium payments and to
thereby adjust the Policy Value. However, unlike conventional fixed benefit life
insurance, the Policy does not require a Policyowner to adhere to a fixed
premium payment schedule. Moreover, after the payment of the Issue Premium, the
failure to make additional premium payments will not in itself cause the Policy
to lapse. Conversely, the payment of additional premiums will not guarantee that
the Policy will remain In Force. Generally, lapse will occur when the Cash
Surrender Value is insufficient to pay certain charges deducted on the Monthly
Calculation Day, and a grace period expires without payment of the additional
amount required. See "Lapse."
If a Whole Life Exchange Option Rider is attached to the Policy, the Policy
may be exchanged for a fixed benefit whole life policy. (See "Additional Rider
Benefits.")
2. IS THERE A GUARANTEED ACCOUNT OPTION?
Yes. A Policyowner may elect to have premium payments allocated to the GIA.
Amounts allocated to the GIA earn a fixed rate of interest and Phoenix also may,
in its sole discretion, credit excess interest. (See Appendix A.)
3. WHAT IS THE DEATH BENEFIT UNDER THE POLICY?
The Policy provides for the payment of benefits upon the death of the
Insured. Upon application for a Policy, an applicant designates an Issue
Premium. The Policy indicates the face amount of insurance. The death benefit
will equal the face amount on the date of the Insured's death or, if greater,
the Policy Value on the date of the Insured's death increased by the applicable
percentage set forth in the Policy. If the increased death benefit option is
selected, the death benefit will equal the face amount on the date of the
Insured's death plus the Policy Value or, if greater, the Policy Value on the
date of the Insured's death increased by the applicable percentage set forth in
the Policy. Guaranteed death benefit and living benefits riders also are
available. See "Death Benefit."
4. HOW LONG WILL THE POLICY REMAIN IN FORCE?
The Policy will lapse only when the Cash Surrender Value is insufficient to
pay the monthly deduction (see "Charges and Deductions--Monthly Deductions"),
and a grace period expires without payment of the additional amount required. In
this respect, the Policy differs in two important respects from a conventional
fixed benefit life insurance Policy. First, the failure to pay additional
premiums will not automatically cause the Policy to lapse. Second, the payment
of premiums of any prespecified amount does not guarantee that the Policy will
remain In Force. A rider is available to ensure that premium payments will
continue during a period of disability.
5. WHAT CHARGES ARE THERE IN CONNECTION WITH THE POLICY?
MONTHLY DEDUCTION: A deduction is made each Policy Month from the Policy
Value (excluding the value of the loaned portion of the GIA) to pay the cost of
insurance provided under the Policy; the cost of any rider benefits provided;
any unpaid balance of the Issue Expense Charge; and an administrative charge as
shown on the Schedule Page of the Policy. The administrative charge may vary but
in no event will it exceed $10 per month. Currently, the administrative charge
is $5 per month. The administrative charge is set at a level designed to recover
actual costs and is not designed to result in any profit to Phoenix. See
"Charges and Deductions."
OTHER CHARGES: A fee equal to the lesser of $25 or 2% of the partial
surrender amount paid is deducted from the Policy Value for each partial
surrender. A partial surrender charge equal to a pro rata portion of the
applicable surrender charge that would apply to a full surrender, determined by
applying a formula, also is assessed against the VUL Account Subaccounts or the
GIA when a partial surrender is made.
No charges are currently made from the VUL Account or the GIA for federal
or state income taxes. If Phoenix determines that such taxes may be imposed, it
may make deductions from the VUL Account to pay these taxes.
Phoenix charges each Subaccount of the VUL Account the daily equivalent of
.80% for the first 15 years and then 0.25% on an annual basis of the current
value of the Subaccount's net assets for its assumption of certain mortality and
expense risks incurred in connection with the Policy.
Premium amounts also are reduced by any applicable premium tax, a federal
tax charge of 1.50% and, for payments made during a grace period, by the amount
needed to cover any monthly deductions made during the grace period.
Investment advisory charges are imposed on an annual basis based on the
average daily net assets of the Series of the Fund as follows:
4
<PAGE>
PHOENIX INVESTMENT COUNSEL, INC.
--------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $250,000,000 $250,000,000 $500,000,000
- ------ ------------ ------------ ------------
Money Market....... .40% .35% .30%
Multi-Sector....... .50% .45% .40%
Balanced........... .55% .50% .45%
Total Return....... .60% .55% .50%
Growth............. .70% .65% .60%
International...... .75% .70% .65%
Strategic Theme.... .75% .70% .65%
PHOENIX-ABERDEEN ADVISORS, LLC
------------------------------
SERIES
- ------
Asia.............. 1.00%
PHOENIX REALTY SECURITIES, INC.
-------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $1,000,000,000 $1,000,000,000 $2,000,000,000
- ------ -------------- -------------- --------------
Real Estate....... .75% .70% .65%
In addition, each Series pays a portion or all of its other operating
expenses other than the management fees: the Growth, Multi-Sector, Total Return,
Money Market and Balanced Series will pay up to .15%; the Real Estate, Strategic
Theme and Asia Series will pay up to .25%; and the International Series will pay
up to .40% of its average net assets annually. See "Charges and Deductions." See
also table of Fund Expenses and the section entitled "The Trust and Its
Management" in the accompanying Fund prospectus.
6. IS THERE A RIGHT TO CANCEL PERIOD?
Yes. The Policyowner may cancel the Policy within 10 days after the
Policyowner receives it (or longer in some states), or 10 days after Phoenix
mails or delivers a written notice of withdrawal right to the Policyowner, or
within 45 days of completing the application, whichever is latest.
7. HOW ARE PREMIUMS ALLOCATED?
If the applicant elects the Temporary Money Market Allocation Amendment in
the application, Phoenix will allocate the entire Issue Premium, less applicable
charges, to the Money Market Subaccount of the VUL Account. Phoenix requires
this election for all applicants in certain states and for applicants in certain
states who indicate on their application that they intend the Policy to replace
existing insurance. At the expiration of the Right to Cancel Period for such
Policyowners, the Policy Value will be allocated among the Subaccounts of the
VUL Account or to the GIA in accordance with the Policyowner's allocation
instructions in the application for insurance. All other Policyowners will have
their Issue Premium, less applicable charges, allocated according to the
instructions in the application on the date it is received without first having
the premium placed in the Money Market Subaccount. The Policy Value may be
allocated among the available Subaccounts of the VUL Account, each of which
invests in shares of a designated portfolio of the Fund, or to the GIA.
8. AFTER THE INITIAL ALLOCATION, MAY I CHANGE THE ALLOCATION OF
POLICY VALUE?
Yes. A Policyowner may transfer amounts among the Subaccounts of the VUL
Account or the GIA. Only one transfer per Policy Year is permitted from the
unloaned portion of the GIA. The amount of that transfer is limited to the
higher of $1,000 or 25% of the value of the Policy in the unloaned portion of
the GIA. Also, Phoenix reserves the right to require that transfers be made by
written request. Phoenix further reserves the right to permit transfers of less
than $500 only if the entire balance in the Subaccount of the VUL Account or the
GIA is transferred. A systematic transfer program also is available. See
"Transfer of Policy Value."
9. MAY THE POLICY BE SURRENDERED?
Yes. A Policyowner may totally surrender the Policy at any time and receive
the Cash Surrender Value. Subject to certain limitations, the Policyowner also
may partially surrender the Policy at any time prior to the Maturity Date. In
the future, Phoenix may set a minimum partial surrender amount, not to exceed
$500. See "Surrenders--Partial Surrenders." A partial surrender will result in a
decrease in the death benefit under the Policy. See "Death Benefit." If the
Policy is totally or partially surrendered during the first 10 Policy Years, a
Surrender Charge will apply. See "Surrender Charge." In addition, there may be
certain tax consequences as the result of a surrender. For example, a Policy may
be a "modified endowment contract" if the amount of premium paid during the
first seven Policy Years is more than the amount that would have been paid if
the Policy had provided for paid-up benefits after the payment of seven level
annual premiums. Distributions such as loans and full or partial surrenders
under a modified endowment contract may be taxable income to the extent they
exceed the premiums paid. If such income is distributed before the Policyowner
attains age 59 1/2, a 10% penalty tax may be imposed. See "Federal Tax
Considerations."
10. WHAT IS THE POLICY'S LOAN PRIVILEGE?
A Policyowner may obtain Policy loans in an amount up to 90% of the result
of subtracting the remaining Surrender Charge from the Policy Value. The
interest rate on a loan is at an effective annual rate as stated in the Policy,
compounded daily and payable on each Policy Anniversary in arrears. The
requested loan amount is transferred from the VUL Account to the loaned portion
of the GIA and is credited with interest at an effective annual rate as stated
in the Policy. Phoenix reserves the right not to allow loans of less than $500
unless the loans are to pay premiums on another policy issued by Phoenix. See
"The Policy--Policy Loans."
The proceeds of Policy loans may be subject to federal income tax under
certain circumstances. See "Federal Tax Considerations."
11. HOW ARE INSURANCE BENEFITS PAID?
Surrender and death benefits under the Policy may be paid in a lump sum or
under one of the payment options set forth in the Policy. See "Payment Options."
5
<PAGE>
PHOENIX AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PHOENIX
Phoenix Life and Annuity Company is an indirect subsidiary of Phoenix Home
Life Mutual Insurance Company. Its executive office is at One American Row,
Hartford, Connecticut 06115, and its main administrative office is at 100 Bright
Meadow Boulevard, Enfield, Connecticut 06083-1900. Phoenix is a Missouri Stock
Company formed in March 1996 to write life insurance and annuity contracts.
Formerly, it was Savers Life Insurance Company of America, chartered in
Missouri. Phoenix sells insurance policies through its own field force of full
time agents and through brokers. Its operations are conducted in ___ states.
THE VUL ACCOUNT
The VUL Account is a separate account of Phoenix, formed and governed under
the laws of Missouri. It is registered as a unit investment trust under the
Investment Company Act of 1940, as amended, and it meets the definition of a
"separate account" under that Act. Such registration does not involve
supervision of the management of the VUL Account or Phoenix by the Securities
and Exchange Commission.
The VUL Account is divided into Subaccounts each of which is available for
allocation of Policy Value. If, in the future, Phoenix determines that marketing
needs and investment conditions warrant, Phoenix may establish additional ^
Subaccounts which will be made available to existing Policyowners to the extent
and on a basis determined by Phoenix. Each Subaccount will invest solely in
shares of the Funds allocable to one of the available portfolios, each having
the specified investment objective set forth under "Investments of the VUL
Account--Participating Mutual Fund."
Phoenix does not guarantee the investment performance of the VUL Account or
any of its Subaccounts. The Policy Value allocated to the VUL Account depends on
the investment performance of the Fund. Thus, the Policyowner bears the full
investment risk for all monies invested in the VUL Account.
Advertisements, sales literature and other communications may contain
information about any Series' or Advisers' current investment strategies and
management style. Current strategies and style may change to respond to changing
market and economic conditions. From time to time, the Series may discuss
specific portfolio holdings or industries in such communications. To illustrate
components of overall performance, the Series may separate their cumulative and
average annual returns into income results and capital gains or losses; or cite
separately as a return figure the equity or bond portion of a Series' portfolio;
or compare a Series' equity or bond return figure to well-known indices of
market performance, including, but not limited to, the S&P 500 Index, Dow Jones
Industrial Average, First Boston High Yield Index and Salomon Brothers Corporate
and Government Bond Indices.
The VUL Account may from time to time include in advertisements containing
total returns the ranking of those performance figures relative to such figures
for groups of Subaccounts having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc., and Morningstar, Inc.
Additionally, the Funds may compare a Series' performance results to other
investment or savings vehicles (such as certificates of deposit) and may refer
to results published in various publications such as Changing Times, Forbes,
Fortune, Money, Barrons, Business Week, Investor's Daily, The Stanger Register,
Stanger's Investment Adviser, The Wall Street Journal, The New York Times,
Consumer Reports, Registered Representative, Financial Planning, Financial
Services Weekly, Financial World, U.S. News and World Report, Standard & Poor's,
The Outlook, and Personal Investor. The Funds may from time to time illustrate
the benefits of tax deferral by comparing taxable investments to investments
made through tax-deferred retirement plans. The total return also may be used to
compare the performance of a Series against certain widely acknowledged outside
standards or indices for stock and bond market performance, such as the S&P 500
Index, Dow Jones Industrial Average, Europe Australia Far East Index (EAFE),
Consumer's Price Index, Shearson Lehman Corporate Index and Shearson Lehman
T-Bond Index. The S&P 500 is a commonly quoted market value-weighted and
unmanaged index showing the changes in the aggregate market value of 500 common
stocks relative to the base period 1940-43. The S&P is composed almost entirely
of common stocks of companies listed on the New York Stock Exchange, although
the common stocks of a few companies listed on the American Stock Exchange or
traded over the counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
The VUL Account is administered and accounted for as part of the general
business of Phoenix, but the income, gains, or losses of the VUL Account are
credited to or charged against the assets held in the VUL Account without regard
to other income, gains, or losses of any other business Phoenix may conduct.
Under Missouri law, the assets of the VUL Account are not chargeable with
liabilities arising out of any other business Phoenix may conduct. Nevertheless
all obligations arising under the Policy are general corporate obligations of
Phoenix.
THE GIA
The GIA is not part of the VUL Account. It is accounted for as part of the
General Account. Phoenix reserves the right to limit cumulative deposits,
including transfers, to the unloaned portion of the GIA to no more than $250,000
during any one-week period. Phoenix will credit interest daily on the amounts
allocated under the Policy to the GIA. The credited rate will be uniform by
class. The loaned portion of the GIA will be credited interest at an effective
annual fixed rate of 2%. Interest on the unloaned portion of the GIA will be
credited at an effective annual rate of not less than 4%.
Bi-weekly, Phoenix sets the interest rate that will apply to any net
premium or transferred amounts deposited to the unloaned portion of the GIA.
That rate will remain in effect for such deposits for an initial guarantee
period of one full year from the date of deposit. Upon expiration of the initial
one-year guarantee period (and each subsequent one-year guarantee period
thereafter), the rate to be applied to any deposits whose guarantee period has
just ended shall be the same rate as is applied to new deposits allocated to the
GIA at the time that the guarantee period expired. This rate will likewise
remain in effect for a guarantee period of one full year from the date
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the new rate is applied. For more complete information concerning the GIA, see
Appendix A.
THE POLICY
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INTRODUCTION
The Policy is a variable life insurance policy. The Policy has a death
benefit, Cash Surrender Value, and loan privilege such as is associated with a
traditional fixed benefit whole life policy. The Policy differs from a fixed
benefit whole life policy, however, because the Policyowner specifies into which
of several Subaccounts of the VUL Account or the GIA net premium is to be
allocated. Each Subaccount of the VUL Account, in turn, invests its assets
exclusively in a portfolio of the Funds. The Policy Value varies according to
the investment performance of the Series to which Policy Value has been
allocated.
ELIGIBLE PURCHASERS
Any person up to the age of 75 is eligible to be insured under a newly
purchased Policy after providing acceptable evidence of insurability. A person
can purchase a Policy to insure the life of another person provided that the
Policyowner has an insurable interest in the life of the Insured, and the
Insured consents.
PREMIUM PAYMENT
The minimum Issue Premium for a Policy is generally 1/6 of the Planned
Annual Premium. The Issue Premium is due on the Policy Date. The Insured must be
alive when the Issue Premium is paid. Thereafter, the amount and payment
frequency of planned premiums are as shown on the Schedule Page of the Policy.
All premiums are payable at Variable and Universal Life Administration, except
that the Issue Premium may be paid to an authorized agent of Phoenix for
forwarding to the Underwriting Department of Phoenix.
Any premium payments will be reduced by the applicable premium tax and by a
federal tax charge of 1.50%. The Issue Premium also will be reduced by the Issue
Expense Charge on a pro rata basis in equal monthly installments over a 12-month
period. Any unpaid balance of the Issue Expense Charge will be paid to Phoenix
upon policy lapse or termination.
Premium payments received during a grace period also will be reduced by the
amount needed to cover any monthly deductions during the grace period. The
remainder will be applied on the Payment Date to the various Subaccounts of the
VUL Account or to the GIA, based on the premium allocation schedule elected in
the application for the Policy or as later changed. The allocation schedule for
premium payments may be changed by calling or writing to Variable and Universal
Life Administration. Allocations to the VUL Account Subaccounts or to the GIA
must be expressed in terms of whole percentages.
The number of units credited to a Subaccount of the VUL Account will be
determined by dividing the portion of the net premium applied to that Subaccount
by the unit value of the Subaccount on the Payment Date.
A Policyowner may increase or decrease the planned premium amount or
payment frequency at any time by written notice to Variable and Universal Life
Administration. Phoenix reserves the right to limit increases to such maximums
as may be established from time to time. Additional premium payments may be made
at any time. Each premium payment must at least equal $25 or, if made during a
grace period, the payment must equal the amount needed to prevent lapse of the
Policy.
A Policyholder also may elect a Waiver of Premium Rider. This rider
provides for the waiver of certain premium payments under the Policy under
certain conditions during a period of total disability of the Insured. Under its
terms, the specified premium will be waived upon Phoenix's receipt of proof that
the Insured is totally disabled and that the disability occurred while the rider
was In Force.
The Policy contains a total premium limit as shown on the Schedule Page.
This limit is applied to the sum of all premiums paid under the Policy. If the
total premium limit is exceeded, the Policyowner will receive the excess, with
interest at an annual rate of not less than 4%, not later than 60 days after the
end of the Policy Year in which the limit was exceeded. The Policy Value will
then be adjusted to reflect the refund. The amount to be taken from each
Subaccount or the GIA will be allocated in the same manner as provided for
monthly deductions unless the Policyowner requests otherwise in writing. The
total premium limit may be exceeded if additional premium is needed to prevent
lapse or if Phoenix determines that additional premium would be permitted by
federal laws or regulations.
A Policyowner may authorize his bank to draw $25 or more from his/her
personal checking account monthly to purchase Units in any available Subaccount.
The amount the Policyowner designates will be automatically invested in the
Subaccount of his/her choice on the date the bank draws on his account.
Policies sold to officers, directors and employees of Phoenix (and their
spouses and children) will be credited with an amount equal to the first-year
commission that would apply on the amount of premium contributed. This option
also is available to career agents of Phoenix (and their spouses and children).
ALLOCATION OF ISSUE PREMIUM
Phoenix will generally allocate the Issue Premium less applicable charges
to the VUL Account or to the GIA upon receipt of a completed application, in
accordance with the allocation instructions in the application for a Policy.
However, Policies issued in certain states, and Policies issued in certain
states pursuant to applications which state the Policy is intended to replace
existing insurance, are issued with a Temporary Money Market Allocation
Amendment. Under this Amendment, Phoenix temporarily allocates the entire Issue
Premium paid less applicable charges (along with any other premiums paid during
the Right to Cancel Period) to the Money Market Subaccount of the VUL Account,
and, at the expiration of the Right to Cancel Period, the Policy Value of the
Money Market Subaccount is allocated among the Subaccounts of the VUL Account or
to the GIA in accordance with the applicant's allocation instructions in the
application for insurance.
RIGHT TO CANCEL PERIOD
A Policy may be returned by mailing or delivering it to Phoenix within 10
days after the Policyowner receives it (or longer in some states); within 10
days after Phoenix mails or delivers a written notice of withdrawal right to the
Policyowner; or within 45 days after the
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applicant signs the application for insurance, whichever occurs latest (the
"Right to Cancel Period"). The returned Policy is treated as if Phoenix never
issued the Policy and, except for Policies issued with a Temporary Money Market
Allocation Amendment, Phoenix will return the sum of the following as of the
date Phoenix receives the returned Policy: (i) the then current Policy Value
less any unpaid loans and loan interest; plus (ii) any monthly deductions,
partial surrender fees, and other charges made under the Policy, including
investment advisory fees, or any Fund expenses deducted. The amount returned for
Policies issued with the Amendment will equal any premiums paid less any
unrepaid loans and loan interest, and less any partial surrender amounts paid.
Phoenix reserves the right to disapprove an application for processing
within seven days of receipt at Phoenix of the completed application for
insurance, in which event Phoenix will return the premium paid. Even after
approval of the application for processing, Phoenix reserves the right to
decline issuance of the Policy, in which event Phoenix will refund the applicant
the same amount as would have been refunded under the Policy had it been issued
but returned for refund during the Right to Cancel Period.
TEMPORARY INSURANCE COVERAGE
On the date the application for a Policy is signed and submitted with the
Issue Premium, Phoenix issues a Temporary Insurance Receipt (the "Receipt") in
connection with the application. Under the Receipt, the insurance protection
applied for (subject to the limits of liability and in accordance with the terms
set forth in the Policy and in the Receipt) takes effect on the date of the
application.
TRANSFER OF POLICY VALUE
SYSTEMATIC TRANSFER PROGRAM
A Policyowner may elect to transfer funds automatically among the
Subaccounts or the unloaned portion of the GIA on a monthly, quarterly,
semi-annual or annual basis under the Systematic Transfer Program for Dollar
Cost Averaging ("Systematic Transfer Program"). Under this Systematic Transfer
Program, the minimum initial and subsequent transfer amounts are $25 monthly,
$75 quarterly, $150 semi-annually, or $300 annually. A Policyowner must have an
initial value of $1,000 in the GIA or the Subaccount that funds will be
transferred from and if the value in that Subaccount or the GIA drops below the
elected transfer amount, the entire remaining balance will be transferred and no
more systematic transfers will be processed. Funds may be transferred from only
one Subaccount or the GIA, but may be allocated to multiple Subaccounts. Under
the Systematic Transfer Program, Policyowners may make more than one transfer
per Policy Year from the GIA, in approximately equal amounts over a minimum
18-month period. All transfers under the Systematic Transfer Program will be
executed on the basis of the respective values as of the first of the month
following receipt of the transfer request. If the first of the month falls on a
holiday or weekend, then the transfer will be processed on the next succeeding
business day. Enrollment in the Systematic Transfer Program may or may not be in
the Policyowner's best interest.
NON-SYSTEMATIC TRANSFERS
Transfers among available Subaccounts or the GIA and changes in premium
payment allocations may be requested in writing or by calling 1-800-892-4885,
between the hours of 8:30 a.m. and 4:00 p.m. Eastern Time and will be executed
on the date the request is received at Variable and Universal Life
Administration, except as noted below. Unless the Policyowner elects in writing
not to authorize telephone transfers or allocation changes, telephone transfer
orders and allocation changes also will be accepted on behalf of the Policyowner
from his/her registered representative. Phoenix and Phoenix Equity Planning
Corporation ("PEPCO") will employ reasonable procedures to confirm that
telephone instructions are genuine. They will require verification of account
information and will record telephone instructions on tape. All telephone
transfers will be confirmed in writing to the Policyowner. To the extent that
procedures reasonably designed to prevent unauthorized transfers are not
followed, Phoenix and PEPCO may be liable for following telephone instructions
for transfers that prove to be fraudulent. However, the Policyowner would bear
the risk of loss resulting from instructions entered by an unauthorized third
party that Phoenix and PEPCO reasonably believe to be genuine. These telephone
privileges may be modified or terminated at any time and, during times of
extreme market volatility, may be difficult to exercise. In such cases, the
Policyowner should submit a written request.
Phoenix reserves the right to permit transfers of less than $500 only if
the entire balance in the Subaccount or the GIA is transferred or if the
Systematic Transfer Program has been elected.
Phoenix reserves the right to prohibit a transfer to any Subaccount of the
VUL Account where the resultant value of the Policy's share in that Subaccount
immediately after the transfer would be less than $500. It further reserves the
right to require that the entire balance of a Subaccount or the GIA be
transferred if the share of the Policy in the value of that Subaccount would,
immediately after the transfer, be less than $500.
Unless Phoenix agrees otherwise or the Systematic Transfer Program has been
elected, a Policyowner may make only one transfer per Policy Year from the
unloaned portion of the GIA and the amount that may be transferred cannot exceed
the greater of $1,000 or 25% of the value of the Policy in the unloaned portion
of the GIA at the time of the transfer. Non-systematic transfers from the
unloaned portion of the GIA will be effectuated on the date of receipt by
Variable and Universal Life Administration.
For policies issued with the Temporary Money Market Allocation Amendment,
transfers may not be made until termination of the Right to Cancel Period.
DETERMINATION OF SUBACCOUNT VALUES
The unit value of each Subaccount of the VUL Account was set by Phoenix on
the first Valuation Date of each such Subaccount. The unit value of a
Subaccount of the VUL Account on any other Valuation Date is determined by
multiplying the unit value of that Subaccount on the just prior Valuation Date
by the Net Investment Factor for that Subaccount for the then current Valuation
Period. The unit value of each Subaccount of the VUL Account on a day other than
a Valuation Date is the unit value on the next Valuation Date. Unit values are
carried to 6 decimal places. The unit value of each Subaccount of the VUL
Account on a Valuation Date is determined at the end of that day.
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The Net Investment Factor for each Subaccount of the VUL Account is
determined by the investment performance of the assets held by the Subaccount
during the Valuation Period. Each valuation will follow applicable law and
accepted procedures. The Net Investment Factor is equal to item (D) below
subtracted from the result of dividing the sum of items (A) and (B) by item (C).
(A) The value of the assets in the Subaccount on the current Valuation
Date, including accrued net investment income and realized and
unrealized capital gains and losses, but excluding the net value of
any transactions during the current Valuation Period.
(B) The amount of any dividend (or, if applicable, any capital gain
distribution) received by the Subaccount if the "ex- dividend" date
for shares of the Fund occurs during the current Valuation Period.
(C) The value of the assets in the Subaccount as of the just prior
Valuation Date, including accrued net investment income and realized
and unrealized capital gains and losses, and including the net value
of all transactions during the Valuation Period ending on that date.
(D) The sum of the following daily charges multiplied by the number of
days in the current Valuation Period:
1. the mortality and expense risk charge; and
2. the charge, if any, for taxes and reserves for taxes on
investment income, and realized and unrealized capital
gains.
DEATH BENEFIT
GENERAL
The death benefit (under Option 1) equals the Policy's face amount on the
date of the Insured's death or, if greater, the minimum death benefit on the
date of death. Under Option 2, the death benefit equals the Policy's face amount
on the date of the Insured's death plus the Policy Value. Under either Option,
the minimum death benefit is the Policy Value on the date of death of the
Insured increased by the applicable percentage from the table contained in the
Policy, based on the Insured's attained age at the beginning of the Policy Year
in which the death occurs. If no option is elected, Option 1 will apply.
GUARANTEED DEATH BENEFIT OPTION
For Policies with a face amount of at least $50,000, a guaranteed death
benefit rider may be purchased. Under this Policy rider, if a Policyowner pays
the required premium each year as specified in the rider, the death benefit
selected will be guaranteed for a certain specified number of years, regardless
of the investment performance of the Policy, and will equal either the initial
face amount or the face amount as later changed by increases or decreases. In
order to keep this guaranteed death benefit In Force, there may be limitations
on the amount of partial surrenders or decreases in face amount permitted.
LIVING BENEFITS OPTION
In the event of a terminal illness of the Insured, an accelerated payment
of up to 75% of the Policy's death benefit (up to a maximum of $250,000) is
available if a Living Benefits Rider has been purchased. The minimum face amount
of the Policy after any such accelerated benefit payment is $10,000.
REQUESTS FOR INCREASE IN FACE AMOUNT
Any time after the first Policy Anniversary, a Policyowner may request an
increase in the face amount of insurance provided under the Policy. Requests for
face amount increases must be made in writing, and Phoenix requires additional
evidence of insurability. The effective date of the increase generally will be
the Policy Anniversary following approval of the increase. The increase may not
be less than $25,000 and no increase will be permitted after the Insured's age
75. The charge for the increase is $1.50 per $1,000 of face amount increase
requested subject to a maximum of $600. No additional monthly administration
charge will be assessed for face amount increases. Phoenix will deduct any
charges associated with the increase (the increases in cost of insurance
charges), from the Policy Value, whether or not the Policyowner pays an
additional premium in connection with the increase. The surrender charge
applicable to the Policy also will increase. At the time of the increase, the
Cash Surrender Value must be sufficient to pay the monthly deduction on that
date, or additional premiums will be required to be paid on or before the
effective date. Also, a new Right to Cancel Period (see "The Policy--Right to
Cancel Period") will be established for the amount of the increase. For a
discussion of possible implications of a material change in the Policy resulting
from the increase, see "Material Change Rules."
PARTIAL SURRENDER AND DECREASES IN FACE AMOUNT: EFFECT ON DEATH BENEFIT
A partial surrender or a decrease in face amount generally decreases the
death benefit. Upon a decrease in face amount or partial surrender, a partial
surrender charge will be deducted from Policy Value based on the amount of the
decrease or partial surrender. With a decrease in face amount, the death benefit
under a Policy would be reduced on the next Monthly Calculation Day. With a
partial surrender, the death benefit under a Policy would be reduced
immediately. A decrease in the death benefit may have certain tax consequences.
See "Federal Tax Considerations."
REQUESTS FOR DECREASE IN FACE AMOUNT
A Policyowner may request a decrease in face amount at any time after the
first Policy Year. Unless Phoenix agrees otherwise, the decrease must at least
equal $10,000 and the face amount remaining after the decrease must at least
equal $25,000. All face amount decrease requests must be in writing and will be
effective on the first Monthly Calculation Day following the date Phoenix
approves the request. A partial surrender charge will be deducted from the
Policy Value based on the amount of the decrease. The charge will equal the
applicable surrender charge that would apply to a full surrender multiplied by a
fraction (the decrease in face amount divided by the face amount of the Policy
before the decrease).
SURRENDERS
GENERAL
At any time during the lifetime of the Insured and while the Policy is In
Force, the Policyowner may partially or fully surrender the Policy by sending a
written release and surrender in a form satisfactory to Phoenix to Variable and
Universal Life Administration, along with the
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Policy if Phoenix so requires. The amount available for surrender is the Cash
Surrender Value at the end of the Valuation Period during which the surrender
request is received at Variable and Universal Life Administration.
Upon partial or full surrender, Phoenix generally will pay the amount
surrendered to the Policyowner within seven days after Phoenix receives the
Written Request for the surrender. Under certain circumstances, the surrender
payment may be postponed. See "General Provisions--Postponement of Payments."
For the federal tax effects of partial and full surrenders, see "Federal Tax
Considerations."
FULL SURRENDERS
If the Policy is being fully surrendered, the Policy itself must be
returned to Variable and Universal Life Administration, along with the written
release and surrender of all claims in a form satisfactory to Phoenix. A
Policyowner may elect to have the amount paid in a lump sum or under a payment
option. See "Surrender Charge" and "Payment Options."
PARTIAL SURRENDERS
A Policyowner may obtain a partial surrender of the Policy by requesting
that part of the Policy's Cash Surrender Value be paid. The Policyowner may do
this at any time during the lifetime of the Insured while the Policy is In Force
with a Written Request to Variable and Universal Life Administration. Phoenix
reserves the right to require that the Policy be returned before payment is
made. A partial surrender will be effective on the date the Written Request is
received or, if required, the date the Policy is received. Surrender proceeds
may be applied under any of the payment options described under "Payment of
Proceeds--Payment Options."
Phoenix reserves the right not to allow partial surrenders of less than
$500. In addition, if the share of the Policy Value in any Subaccount or in the
GIA (reduced as a result of a partial surrender) would be, immediately after the
partial surrender, less than $500, Phoenix reserves the right to require that as
part of any partial surrender, the entire remaining balance in that Subaccount
or the GIA be surrendered.
Upon a partial surrender, the Policy Value will be reduced by the sum of
the following:
(i) The Partial Surrender Amount Paid. This amount comes from a
reduction in the Policy's share in the value of each Sub account or
the GIA based on the allocation requested at the time of the partial
surrender. If no allocation request is made, the assessment to each
Subaccount will be made in the same manner as that provided for
monthly deductions.
(ii) The Partial Surrender Fee. This fee is the lesser of $25 or 2% of
the partial surrender amount paid. The assessment to each Subaccount
or the GIA will be made in the same manner as provided for the
partial surrender amount paid.
(iii) A Partial Surrender Charge. This charge is equal to a pro rata
portion of the applicable surrender charge that would apply to a
full surrender, determined by multiplying the applicable surrender
charge by a fraction (equal to the partial surrender amount payable
divided by the result of subtracting the applicable surrender charge
from the Policy Value). This amount is assessed against the
Subaccount or the GIA in the same manner as provided for the partial
surrender amount paid.
The Cash Surrender Value will be reduced by the partial surrender amount
paid plus the partial surrender fee. The face amount of the Policy also will be
reduced by the same amount as the Policy Value is reduced as described above.
POLICY LOANS
While the Policy is In Force, a loan may be obtained against the Policy up
to the available loan value. The loan value on any day is 90% of the result of
subtracting the then remaining surrender charge from the Policy Value. The
available loan value is the loan value on the current day less any outstanding
Debt.
The amount of any loan will be added to the loaned portion of the GIA and
subtracted from the Policy's share of the Subaccounts or the unloaned portion of
the GIA, based on the allocation requested at the time of the loan. The total
reduction will equal the amount added to the loaned portion of the GIA.
Allocations generally must be expressed in terms of whole percentages. If no
allocation request is made, the amount subtracted from the share of each
Subaccount or the unloaned portion of the GIA will be determined in the same
manner as provided for monthly deductions. Interest will be credited and the
loaned portion of the GIA will increase at an effective annual rate of 2%,
compounded daily and payable in arrears. At the end of each Policy Year and at
the time of any Debt repayment, interest credited to the loaned portion of the
GIA will be transferred to the unloaned portion of the GIA.
Debt may be repaid at any time during the lifetime of the Insured while the
Policy is In Force. Any Debt repayment received by Phoenix during a grace period
will be reduced to cover any overdue monthly deductions and only the balance
will be applied to reduce the Debt. Such balance, in excess of any outstanding
accrued loan interest, will be applied to reduce the loaned portion of the GIA
and will be transferred to the unloaned portion of the GIA to the extent that
loaned amounts taken from such Account have not been previously repaid.
Otherwise, such balance will be transferred among the Subaccounts as the
Policyowner requests upon repayment and, if no allocation request is made,
according to the most recent premium allocation schedule on file.
While there is outstanding Debt on the Policy, any payments received by
Phoenix for the Policy will be applied directly to reduce the Debt unless
specified as a premium payment by the Policyowner. Until the Debt is fully
repaid, additional Debt repayments may be made at any time during the lifetime
of the Insured while the Policy is In Force.
Failure to repay a policy loan or to pay loan interest will not terminate
the Policy except as otherwise provided under the terms of the Policy concerning
the grace period and lapse.
The proceeds of Policy loans may be subject to federal income tax under
certain circumstances. See "Federal Tax Considerations."
In the future, Phoenix may not allow Policy loans of less than $500, unless
such loan is used to pay a premium on another Phoenix policy.
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The Policyowner will pay interest on the loan at an effective annual rate,
compounded daily and payable in arrears. The loan interest rates in effect are
as follows:
4% for Policy Years 1 through 10 (or the Insured's
age 65 if earlier)
3% for Policy Years 11 through 15
2 1/2% for Policy Years 16 and thereafter
At the end of each Policy Year, any interest due on the Debt will be
treated as a loan and will be offset by a transfer from the Policyowner's values
to the value of the loaned portion of the GIA.
A Policy loan, whether or not repaid, has a permanent effect on the Policy
Value because the investment results of the Subaccounts or unloaned portion of
the GIA will apply only to the amount remaining in the Subaccounts or the
unloaned portion of the GIA. The longer a loan is outstanding, the greater the
effect is likely to be. The effect could be favorable or unfavorable. If the
Subaccounts or the unloaned portion of the GIA earn more than the annual
interest rate for funds held in the loaned portion of the GIA, Policy Value does
not increase as rapidly as it would have had no loan been made. If the
Subaccounts or the unloaned portion of the GIA earn less than the annual
interest rate for funds held in the loaned portion of the GIA, Policy Value is
greater than it would have been had no loan been made. A Policy loan, whether or
not repaid, also has an effect on the Policy's Death Benefit due to any
resulting differences in Cash Surrender Value.
LAPSE
Unlike conventional life insurance policies, the payment of the Issue
Premium, no matter how large, or the payment of additional premiums will not
necessarily continue the Policy In Force to its Maturity Date.
If on any Monthly Calculation Day during the first two Policy Years, the
Policy Value is insufficient to cover the monthly deduction, a grace period of
61 days will be allowed for the payment of an amount equal to three times the
required monthly deduction. If on any Monthly Calculation Day during any
subsequent Policy Year, the Cash Surrender Value (which has become positive) is
less than the required monthly deduction, a grace period of 61 days will be
allowed for the payment of an amount equal to three times the required monthly
deduction. However, until the Cash Surrender Value becomes positive for the
first time, the Policy will not lapse as long as all premiums planned at issue
have been paid.
The Policy will continue In Force during any such grace period although
Subaccount transfers, loans, partial or full surrenders will not be permitted.
Failure to pay the additional amount within the grace period will result in
lapse of the Policy, but not before 30 days have elapsed since Phoenix mailed
written notice to the Policyowner. If a premium payment for the additional
amount is received by Phoenix during the grace period, any amount of premium
over what is required to prevent lapse will be allocated among the Subaccounts
of the VUL Account or to the GIA in accordance with the then current premium
allocation schedule. In determining the amount of "excess" premium to be applied
to the Subaccounts or the GIA, Phoenix will deduct the premium tax and the
amount needed to cover any monthly deductions made during the grace period. If
the Insured dies during the grace period, the death benefit will equal the
amount of the death benefit immediately prior to the commencement of the grace
period.
PAYMENT OF PREMIUMS DURING PERIOD OF DISABILITY
A Policyholder also may elect a Waiver of Premium Rider. This rider
provides for the waiver of certain premium payments under the Policy under
certain conditions during a period of total disability of the Insured. Under its
terms, the specified premium will be waived upon Phoenix's receipt of proof that
the Insured is totally disabled and that the disability occurred while the rider
was In Force. The terms of this rider may vary by state.
ADDITIONAL INSURANCE OPTIONS
While the Policy is In Force and the Insured is insurable, the Policyowner
will have the option to purchase additional insurance on the same Insured with
the same guaranteed rates as the Policy without being assessed an Issue Expense
Charge. Phoenix will require evidence of insurability and charges will be
adjusted for the Insured's new attained age and any change in risk
classification. However, if elected on the application, the Policyowner may, at
predetermined future dates, purchase additional insurance protection on the same
Insured without evidence of insurability. (See "Purchase Protection Plan
Riders.")
In addition, once each Policy Year a Policyowner may request an increase in
face amount. This request should be made within 90 days prior to the Policy
Anniversary and is subject to an issue expense charge of $1.50 per $1,000 of
increase in face amount, up to a maximum of $600, and to Phoenix's receipt of
adequate evidence of insurability. A Right to Cancel Period as described in "The
Policy" section of this Prospectus applies to each increase in face amount.
ADDITIONAL RIDER BENEFITS
A Policyowner may purchase additional benefits under a Policy. These
benefits are cancellable by the Policyowner at any time. A charge will be
deducted monthly from the Policy Value for each additional rider benefit chosen
except where noted below. More details will be included in the form of a rider
to the Policy if any of these benefits is chosen. The following benefits are
currently available; however, additional riders may be available as described in
the Policy.
o DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER
Phoenix waives the specified premium if the Insured becomes totally
disabled and the disability continues for at least six months. Premiums
will be waived to the Policy Anniversary nearest the Insured's 65th
birthday (provided that the disability continues), unless premiums have
been waived continuously during the entire five years prior to such date in
which case the waiver will continue beyond that date. The premium will be
waived upon Phoenix's receipt of proof that the Insured is totally disabled
and that the disability occurred while the rider was In Force.
o ACCIDENTAL DEATH BENEFIT RIDER
An additional death benefit will be paid if the Insured dies from bodily
injury that results from an accident if the Insured dies no later than 90
days after injury and before the Policy Anniversary nearest the Insured's
75th birthday.
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o DEATH BENEFIT PROTECTION RIDER
The purchase of this rider provides that the death benefit will be
guaranteed. The amount of the guaranteed death benefit is equal to the
initial face amount, or the face amount that later may be increased or
decreased by the Policyholder, provided that certain minimum premiums are
paid. Unless Phoenix agrees otherwise, the initial face amount and the face
amount remaining after any decrease must at least equal $50,000 and the
minimum issue age of the Insured is 20. Three (3) Death Benefit Guarantee
periods are available in all states except New York. The minimum premium
required to maintain the guaranteed death benefit is based on the length of
the guarantee period as elected on the application. The three available
guarantee periods are:
LEVEL: EXPIRY DATE OF DEATH BENEFIT GUARANTEED, THE LATER OF:
1 The Policy Anniversary nearest the Insured's 70th
birthday or the 7th Policy Year
2 The Policy Anniversary nearest the Insured's 80th
birthday or the 10th Policy Year
3 The Policy Anniversary nearest the Insured's 95th
birthday.
Level 1 or 2 guarantees may be extended provided that the Policy's Cash
Surrender Value is sufficient and the Policyowner pays the new Minimum
Required Premium.
o WHOLE LIFE EXCHANGE OPTION RIDER
This rider permits the Policyowner to exchange his Policy for a fixed
benefit whole life policy at the later of age 65 or Policy Year 15. There
is no charge for this rider.
o PURCHASE PROTECTION PLAN RIDER
Under this rider a Policyowner may, at predetermined future dates, purchase
additional insurance protection without evidence of insurability.
o LIVING BENEFITS RIDER
Under certain conditions, in the event of the terminal illness of the
Insured, an accelerated payment of up to 75% of the Policy's death benefit
(up to a maximum of $250,000) is available. The minimum face amount of the
Policy after any such accelerated benefit payment is $10,000. There is no
charge for this rider.
o CASH VALUE ACCUMULATION RIDER
This rider generally permits a Policyowner to pay more in premium than
otherwise would be permitted. This rider must be elected before the Policy
is issued. There is no charge for this rider.
INVESTMENTS OF THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PARTICIPATING MUTUAL FUNDS
THE PHOENIX EDGE SERIES FUND
The VUL Account invests in corresponding Series of The Phoenix Edge Series
Fund. The Fund currently has the following Series available through the
Policies:
MONEY MARKET SERIES: The investment objective of the Money Market Series is
to provide maximum current income consistent with capital preservation and
liquidity.
GROWTH SERIES: The investment objective of the Growth Series is to achieve
intermediate and long-term growth of capital, with income as a secondary
consideration.
MULTI-SECTOR FIXED INCOME ("MULTI-SECTOR") SERIES: The investment objective
of the Multi-Sector Series is to seek long-term total return by investing in a
diversified portfolio of high yield (high risk) and high quality fixed income
securities. For a discussion of the risks associated with investing in high
yield bonds, please see the accompanying Fund prospectus.
TOTAL RETURN SERIES: The investment objective of the Total Return Series is
to realize as high a level of total rate of return over an extended period of
time as is considered consistent with prudent investment risk (total rate of
return consists of capital appreciation, current income, including dividends and
interest, possible premiums and short-term gains from purchasing and selling
options and financial futures).
INTERNATIONAL SERIES: The investment objective of the International Series
is to seek a high total return consistent with reasonable risk. The
International Series intends to invest primarily in an internationally
diversified portfolio of equity securities. It intends to reduce its risk by
engaging in hedging transactions involving options, futures contracts and
foreign currency transactions. The International Series provides a means for
investors to invest a portion of their assets outside the United States.
BALANCED SERIES: The investment objective of the Balanced Series is to seek
reasonable income, long-term capital growth and conservation of capital. The
Balanced Series intends to invest based on combined considerations of risk,
income, capital enhancement and protection of capital value.
REAL ESTATE SERIES: The investment objective of the Real Estate Securities
Series is to seek capital appreciation and income with approximately equal
emphasis. It intends under normal circumstances to invest in marketable
securities of publicly traded real estate investment trusts (REITs) and
companies that operate, develop, manage and/or invest in real estate located
primarily in the United States.
STRATEGIC THEME SERIES: The investment objective of the Strategic Theme
Series is to seek long-term appreciation of capital by identifying securities
benefiting from long-term trends present in the United States and abroad. The
Strategic Theme Series intends to invest primarily in common stocks believed to
have substantial potential for capital growth.
ASIA SERIES: The investment objective of the Asia Series is to seek
long-term capital appreciation. The Asia Series will invest primarily in a
diversified portfolio of equity securities of issuers organized and principally
operating in Asia, excluding Japan.
Each Series will be subject to the market fluctuations and risks inherent
in the ownership of any security and there can be no assurance that any Series'
stated investment objective will be realized.
In addition to being sold to the VUL Account, shares of the Fund also may
be sold to other separate accounts of Phoenix or its affiliates or of other
insurance companies.
12
<PAGE>
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Fund simultaneously. Although neither Phoenix nor the Fund
currently foresees any such disadvantages either to variable life insurance
Policyowners or to variable annuity Contract Owners, the Funds' Trustees intend
to monitor events in order to identify any material conflicts between variable
life insurance Policyowners and variable annuity Contract Owners and to
determine what action, if any, should be taken in response thereto. Material
conflicts could result from, for example, (1) changes in state insurance laws,
(2) changes in federal income tax laws, (3) changes in the investment management
of any portfolio of the Fund, or (4) differences in voting instructions between
those given by variable life insurance Policyowners and those given by variable
annuity Contract Owners. Phoenix will, at its own expense, remedy such material
conflict including, if necessary, segregating the assets underlying the variable
life insurance policies and the variable annuity contracts and establishing a
new registered investment company.
INVESTMENT ADVISERS TO THE PHOENIX EDGE SERIES FUND
The Phoenix Edge Series Fund's investment advisers are Phoenix Investment
Counsel, Inc. ("PIC"), Phoenix Realty Securities, Inc. ("PRS") and
Phoenix-Aberdeen International Advisors, LLC ("PAIA"); collectively, the
"Advisers," which are located at 56 and 38 Prospect Street and One American Row,
respectively, Hartford, Connecticut 06115. PIC was originally organized in 1932
as John P. Chase, Inc. In addition to the Fund, it serves as investment adviser
to the Phoenix Series Fund, Phoenix Total Return Fund, Inc. and Phoenix Multi-
Portfolio Fund and as subadviser to American Skandia, Chubb America Fund, Inc.,
Sun America Series Trust and JNL Series Trust. PIC also serves as subadviser to
the Asia Series.
PRS was formed in 1994 as an indirect subsidiary of Phoenix Home Life
Mutual Insurance Company. In addition to the Fund, it serves as investment
adviser to the Real Estate Portfolio of the Phoenix Multi-Portfolio Fund.
PAIA, a Delaware limited liability company formed in 1996 and jointly owned
and managed by PM Holdings, Inc., is a direct subsidiary of Phoenix and Aberdeen
Fund Managers, Inc., a wholly-owned subsidiary of Aberdeen Trust plc. Aberdeen
Fund Managers, Inc. has its principal offices located at 1 Financial Plaza,
Suite 2210, NationsBank Tower, Fort Lauderdale, Florida 33394. While many of the
officers and directors of the Adviser have extensive experience as investment
professionals, due to its recent formation, the Adviser has no prior operating
history. Aberdeen Fund Managers, Inc. also serves as subadviser to the Asia
Series.
Aberdeen Trust was founded in 1983 and through subsidiaries operating from
offices in Aberdeen, Scotland; London, England; Singapore; and Fort Lauderdale,
Florida, provides investment management services to unit and investment trusts,
segregated pension funds and other institutional and private portfolios. As of
September 30, 1995, Aberdeen Trust, and its advisory subsidiaries, had
approximately $4 billion in assets under management.
ABKB/LaSalle Securities Limited Partnership (ABKB), a subsidiary of LaSalle
Partners, serves as subadviser to the Real Estate Series. ABKB's principal place
of business is located at 100 East Pratt Street, Baltimore, Maryland 21202. ABKB
has been a registered investment adviser since 1979.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("PEPCO"), an indirect majority-owned subsidiary of Phoenix Home
Life Mutual Insurance Company. PEPCO also performs bookkeeping and pricing and
administrative services for the Fund. PEPCO is registered as a broker-dealer in
50 states. The executive offices of Phoenix Home Life Mutual Insurance Company
are located at One American Row, Hartford, Connecticut 06115, and the principal
offices of PEPCO are located at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200.
REINVESTMENT AND REDEMPTION
All dividend distributions of the Fund are automatically reinvested in
shares of the Fund at their net asset value on the date of distribution; all
capital gains distributions of the Fund, if any, are likewise reinvested at the
net asset value on the record date. Phoenix redeems Fund shares at their net
asset value to the extent necessary to make payments under the Policy.
SUBSTITUTION OF INVESTMENTS
Phoenix reserves the right, subject to compliance with the law as currently
applicable or subsequently changed, to make additions to, deletions from, or
substitutions for the investments held by the VUL Account. In the future,
Phoenix may establish additional Subaccounts within the VUL Account, each of
which will invest in shares of a designated portfolio of the Fund with a
specified investment objective. These portfolios will be established if, and
when, in the sole discretion of Phoenix, marketing needs and investment
conditions warrant, and will be made available under existing Policies to the
extent and on a basis to be determined by Phoenix.
If shares of any of the portfolios of the Fund should no longer be
available for investment, or if in the judgment of Phoenix's management further
investment in shares of any of the portfolios should become inappropriate in
view of the objectives of the Policy, then Phoenix may substitute shares of
another mutual fund for shares already purchased, or to be purchased in the
future, under the Policy. No substitution of mutual fund shares held by the VUL
Account may take place without prior approval of the Securities and Exchange
Commission and prior notice to the Policyowner. In the event of a substitution,
the Policyowner will be given the option of transferring the Policy Value of the
Subaccount in which the substitution is to occur to another Subaccount.
PERFORMANCE HISTORY
From time to time, the VUL Account may include the performance history of
any or all Subaccounts, in advertisements, sales literature or reports.
PERFORMANCE INFORMATION ABOUT EACH SUBACCOUNT IS BASED ON PAST PERFORMANCE ONLY
AND IS NOT AN INDICATION OF FUTURE PERFORMANCE. Performance information may be
expressed as yield and effective yield of the Money Market Subaccount, as yield
of the Multi-Sector Subaccount and as total return of any Subaccount. Current
yield for the Money Market Subaccount will be based on the income earned by the
Subaccount over a given seven-day period (less a hypothetical charge reflecting
deductions for expenses taken during the period) and then annualized, i.e., the
income earned in the period is assumed to be earned every seven days over a
52-week period and
13
<PAGE>
is stated in terms of an annual percentage return on the investment. Effective
yield is calculated similarly but reflects the compounding effect of earnings on
reinvested dividends. Yield and effective yield reflect the recurring charges on
the Account level including the monthly administrative charge.
Yield calculations of the Money Market Subaccount used for illustration
purposes are based on the consideration of a hypothetical participant's account
having a balance of exactly one Unit at the beginning of a seven-day period,
which period will end on the date of the most recent financial statements. The
yield for the Subaccount during this seven-day period will be the change in the
value of the hypothetical participant's account's original Unit. The following
is an example of this yield calculation for the Money Market Subaccount based on
a seven-day period ending December 31, 1995.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly
one unit at the beginning of the period:................ 1.324187
Value of the same account (excluding capital changes)
at the end of the seven-day period:..................... 1.325408
Calculation:
Ending account value ................................... 1.325408
Less beginning account value ........................... 1.324187
Net change in account value ............................ 0.001221
Base period return:
(adjusted change/beginning account value) .............. 0.000922
Current yield = return x (365/7) = ........................ 4.81%
Effective yield = [(1 + return)365/7] - 1 = ............... 4.92%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies, due to charges which
will be deducted on the account level.
For the Multi-Sector Subaccount, quotations of yield will be based on all
investment income per unit earned during a given 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
maximum offering price per unit on the last day of the period.
When a Subaccount advertises its total return, it usually will be
calculated for one year, five years, and ten years or since inception if the
Subaccount has not been in existence for at least ten years. Total return is
measured by comparing the value of a hypothetical $10,000 investment in the
Subaccount at the beginning of the relevant period to the value of the
investment at the end of the period, assuming the reinvestment of all
distributions at net asset value and the deduction of applicable Policy charges
except for the cost of insurance and any surrender charges and premium taxes.
For those Subaccounts within the VUL Account that have not been available
for one of the quoted periods, the standardized average annual total return
quotations will show the investment performance such Subaccount would have
achieved (reduced by the applicable charges) had it been available to invest in
shares of the Fund for the period quoted.
Below are quotations of standardized average annual total return of Series
of the Phoenix Edge Series Fund. POLICY CHARGES ARE NOT REFLECTED.
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED 12/31/95
-----------------------------
COMMENCEMENT LIFE OF
SERIES DATE 1 YEAR 5 YEARS 10 YEARS FUND
- ------ ---- ------ ------- -------- ----
Multi-Sector...... 01/01/83 20.06% 10.47% 8.87% 9.41%
Balanced.......... 05/01/92 19.88% N/A N/A 8.17%
Total Return...... 09/17/84 14.87% 11.34% 10.51% 11.33%
Growth............ 01/01/83 27.23% 18.32% 15.25% 17.33%
International..... 05/01/90 6.46% 7.86% N/A 5.02%
Money Market...... 01/01/83 2.67% 2.62% 4.38% 5.12%
ANNUAL TOTAL RETURNS*
---------------------
MULTI- TOTAL INTER- MONEY
YEAR SECTOR BALANCED RETURN GROWTH NATIONAL MARKET
- ---- ------ -------- ------ ------ -------- ------
1983......... 5.1% N/A N/A 31.7% N/A 7.4%
1984......... 10.3% N/A -1.4% 9.7% N/A 9.2%
1985......... 19.5% N/A 26.2% 33.7% N/A 7.1%
1986......... 18.2% N/A 14.7% 19.4% N/A 5.6%
1987......... 0.2% N/A 11.6% 6.0% N/A 5.6%
1988......... 9.5% N/A 1.4% 3.0% N/A 6.5%
1989......... 6.9% N/A 18.4% 34.4% N/A 7.9%
1990......... 4.4% N/A 5.1% 3.2% -8.9% 7.4%
1991......... 18.5% N/A 28.1% 41.5% 18.7% 5.0%
1992......... 9.1% 8.8% 9.7% 9.3% -13.6% 2.7%
1993......... 15.0% 7.8% 10.1% 18.8% 37.3% 2.1%
1994......... -6.2% -3.6% -2.2% 0.7% -0.7% 3.0%
1995......... 22.6% 22.4% 17.3% 29.9% 8.7% 4.9%
*Sales charges have not been deducted from the Annual Total Returns
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE
PERFORMANCE. THEY DO NOT ILLUSTRATE HOW ACTUAL PERFORMANCE WILL AFFECT THE
BENEFITS UNDER A POLICY; FOR THIS INFORMATION SEE APPENDIX B "ILLUSTRATIONS OF
DEATH BENEFITS, POLICY VALUES AND CASH SURRENDER VALUES."
The Fund's Annual Reports, available upon request and without charge,
contain a discussion of the performance of the Fund and a comparison of that
performance to a securities market index.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
Charges are deducted in connection with the Policy to compensate Phoenix
for: (1) incurring expenses in distributing the Policy; (2) issuing the Policy;
(3) state and federal tax charge incurred on premiums received; (4) providing
the insurance benefits set forth in the Policy; and (5) assuming certain risks
in connection with the Policy. The nature and amount of these charges are
described more fully below.
1. MONTHLY DEDUCTION
A charge is deducted monthly from the Policy Value under a Policy ("monthly
deduction") to pay: the cost of insurance provided under the Policy, the cost of
any rider benefits provided, any unpaid balance
14
<PAGE>
of the Issue Expense Charge, and an administrative charge. This administrative
charge is currently set at $5 per month but it is guaranteed not to exceed $10
per month. The monthly deduction is deducted on each Monthly Calculation Day. It
is allocated among the Subaccounts of the VUL Account and the unloaned portion
of the GIA based on the allocation schedule for monthly deductions specified by
the applicant in the application for a Policy or as later changed by the
Policyowner. In the event that the Policy's share in the value of the
Subaccounts or the unloaned portion of the GIA is insufficient to permit the
withdrawal of the full monthly deduction, the remainder will be taken on a
proportionate basis from the Policy's share of each of the other Subaccounts and
the unloaned portion of the GIA. The number of units deducted will be determined
by dividing the portion of the monthly deduction allocated to each Subaccount or
to the unloaned portion of the GIA by the unit value on the Monthly Calculation
Day. Because portions of the monthly deduction, such as the cost of insurance,
can vary from month to month, the monthly deduction itself may vary in amount
from month to month.
(A) ISSUE EXPENSE CHARGE. A cost-based issue administration charge is
assessed on a pro rata basis in equal monthly installments over a
12-month period to compensate Phoenix for underwriting and start-up
expenses in connection with issuing a Policy. The issue administrative
charge is $1.50 per $1,000 of face amount, up to a maximum charge of
$600. Phoenix may reduce or eliminate the Issue Expense Charge for
Policies issued under group or sponsored arrangements. Generally,
administrative costs per Policy vary with the size of the group or
sponsored arrangement, its stability as indicated by its term of
existence and certain characteristics of its members, the purposes for
which the Policies are purchased and other factors. The amounts of any
reductions will be considered on a case-by-case basis and will reflect
the reduced administration costs expected as a result of sales to a
particular group or sponsored arrangement.
(B) COST OF INSURANCE. In order to calculate the monthly cost of insurance
charge, Phoenix multiplies the applicable cost of insurance rate by
the difference between the death benefit selected (death benefit
Option 1 if no selection is made) and the Policy Value. Generally,
cost of insurance rates are based on the sex, issue age, duration and
risk class. However, in certain states and for policies issued in
conjunction with certain qualified plans, cost of insurance rates are
not based on sex. The actual monthly cost of insurance rates are based
on Phoenix's expectations of future mortality experience. They will
not, however, be greater than the guaranteed cost of insurance rates
set forth in the Policy. These guaranteed maximum rates are equal to
100% of the 1980 Commissioner's Standard Ordinary ("CSO") Mortality
Table, with appropriate adjustment for the Insured's risk
classification. Any change in the cost of insurance rates will apply
to all persons of the same sex, issue age and risk class whose
Policies have been In Force for the same length of time. The risk
class of an Insured may affect the cost of insurance rate. Phoenix
currently places Insureds into a preferred or standard risk class or a
risk class involving a higher mortality risk, depending upon the
health of the Insured as determined by medical information that
Phoenix requests. In an otherwise identical Policy, Insureds in the
preferred or standard risk class will have a lower cost of insurance
than those in the risk class with the higher mortality risk. The
standard risk class also is divided into categories: smokers,
nonsmokers and those who have never smoked. Non-smokers will generally
incur a lower cost of insurance than similarly situated Insureds who
smoke.
2. PREMIUM TAXES
Various states and subdivisions impose a tax on premiums received by
insurance companies. Premium taxes vary from state to state. Currently, such
taxes range from 0.75% to 4% of premiums paid. Moreover, certain municipalities,
in states such as Louisiana, Kentucky and South Carolina, also impose taxes on
premiums paid, in addition to the state taxes imposed. Phoenix charges an
average premium tax charge of 2.25%. The premium tax charge represents an amount
Phoenix considers necessary to pay all premium taxes imposed by such states and
any subdivisions thereof, and Phoenix does not expect to derive a profit from
this charge. These taxes are deducted from the Issue Premium, and from each
subsequent premium payment.
3. FEDERAL TAX CHARGE
A charge equal to 1.50% of each premium will be deducted from each premium
payment to cover the estimated cost to Phoenix of the federal income tax
treatment of deferred acquisition costs. The SEC maximum sales load has been
reduced to reflect this charge.
4. MORTALITY AND EXPENSE RISK CHARGE
Phoenix will deduct a daily charge from the VUL Account at an annual rate
of 0.80% of the average daily net assets of the VUL Account to compensate for
certain risks assumed in connection with the Policy. A reduced annual rate of
.25% will apply after the 15th Policy Year. This charge is not deducted from the
GIA.
The mortality risk assumed by Phoenix is that Insureds may live for a
shorter time than projected because of inaccuracies in that projecting process
and, accordingly, that an aggregate amount of death benefits greater than that
projected will be payable. The expense risk assumed is that expenses incurred in
issuing the Policies may exceed the limits on administrative charges set in the
Policies. If the expenses do not increase to an amount in excess of the limits,
or if the mortality projecting process proves to be accurate, Phoenix may profit
from this charge. Phoenix also assumes risks with respect to other contingencies
including the incidence of Policy loans, which may cause Phoenix to incur
greater costs than anticipated when designing the Policies. To the extent
Phoenix profits from this charge, it may use those profits for any proper
purpose, including the payment of sales expenses or any other expenses that may
exceed income in a given year.
5. INVESTMENT MANAGEMENT CHARGE
As compensation for investment management services to the Funds, the
Advisers are entitled to fees, payable monthly and based on an annual percentage
of the average aggregate daily net asset values of each Series as summarized in
the following table:
15
<PAGE>
PHOENIX INVESTMENT COUNSEL, INC.
--------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $250,000,000 $250,000,000 $500,000,000
- ------ ------------ ------------ ------------
Money Market........ .40% .35% .30%
Multi-Sector........ .50% .45% .40%
Balanced............ .55% .50% .45%
Total Return........ .60% .55% .50%
Growth.............. .70% .65% .60%
International....... .75% .70% .65%
Strategic Theme..... .75% .70% .65%
PHOENIX-ABERDEEN ADVISORS, LLC
------------------------------
SERIES
- ------
Asia................ 1.00%
PHOENIX REALTY SECURITIES, INC.
-------------------------------
RATE FOR
RATE FOR FIRST RATE FOR NEXT EXCESS OVER
SERIES $1,000,000,000 $1,000,000,000 $2,000,000,000
- ------ -------------- -------------- --------------
Real Estate......... .75% .70% .65%
In addition, each Series pays a portion or all of its other annual
operating expenses other than the management fees: the Growth, Multi-Sector,
Total Return, Money Market and Balanced Series will pay up to .15%; the Real
Estate, Strategic Theme and Asia Series will pay up to .25%; the International
Series will pay up to .40%; of its average net assets annually. See "Charges and
Deductions."
6. OTHER CHARGES
SURRENDER CHARGE
During the first 10 Policy Years, there is a difference between the amount
of Policy Value and the amount of Cash Surrender Value of the Policy. This
difference is the Surrender Charge, consisting of a contingent deferred sales
charge designed to recover expenses for the distribution of Policies that are
terminated by surrender before distribution expenses have been recouped, and a
contingent deferred issue charge designed to recover expenses for the
administration of Policies that are terminated by surrender before
administrative expenses have been recouped. These are contingent charges because
they are paid only if the Policy is surrendered (or the face amount is reduced
or the Policy lapses) during this period. They are deferred charges because they
are not deducted from premiums. The contingent deferred issue charge is set at a
level designed to recover actual costs and is not designed to result in any
profit to Phoenix.
During the first 10 Policy Years, the full surrender charge as described
below will apply if the Policyowner either surrenders the Policy for its Cash
Surrender Value or lets the Policy lapse. The applicable surrender charge in any
Policy Month is the full surrender charge minus any surrender charges that have
been previously paid. There is no surrender charge after the 10th Policy Year.
During the first two Policy Years the maximum surrender charge that a
Policyowner could pay while he/she owns the Policy is equal to either A plus B
(as defined below) or the amount shown in the Policy's Surrender Charge
Schedule, whichever is less. After the first two Policy Years the maximum
surrender charge that a Policyowner could pay is based on the amount shown in
the Policy's Surrender Charge Schedule.
A (the contingent deferred sales charge) is equal to:
1) 28.5% of all premiums paid (up to and including the amount stated
in the Policy's Surrender Charge Schedule, which is calculated
according to a formula contained in a Securities and Exchange
Commission rule); plus
2) 8.50% of all premiums paid in excess of this amount but not
greater than twice this amount; plus
3) 7.5% of all premiums paid in excess of twice this amount.
B (the contingent deferred issue charge) is equal to:
$5 per $1,000 of initial face amount.
As an example, the following illustrates the maximum surrender charge on a
$100,000 Policy for a male age 35 who has never smoked, who has paid $3,000 in
premium payments, and who surrenders the Policy in the 70th Policy Month. The
Policy's Surrender Charge Schedule would show that the maximum surrender charge
to be paid would be equal to either A plus B (shown below) or the amount shown
in the chart in the Policy (also shown below), whichever is less:
Example: If this Policyowner surrenders his policy in the 70th Policy month
his surrender charge will be $1,186.78, as given in the table.
Example: If this Policyowner surrenders his policy in the first two years
he may be eligible to receive a refund of a portion of the surrender charge,
depending on the amount of premium paid, or, in other words, his surrender
charge may be reduced. The surrender charge in the first 2 years would be equal
to the lesser of the amount in the surrender charge table and the sum of the
following:
1) 28.5% of premiums paid up to $1,076.72, plus
2) 8.5% of premiums paid in excess of $1,076.72 but not greater than
$2,153.43, plus
3) 7.5% of premiums paid in excess of $2,153.43, plus $500
If this Policyowner surrendered his policy in the 2nd year after paying
$2,000 of premiums his surrender charge would be the lesser of $1,307.54 from
the table, and $385.34, thus equaling $385.34. Thus, in this case, the
Policyowner would pay less surrender charge if he surrenders his policy in the
first two Policy Years.
16
<PAGE>
SURRENDER CHARGE TABLE
Policy Surrender Policy Surrender Policy Surrender
Month Charge Month Charge Month Charge
----- ------ ----- ------ ----- ------
1-60 $1307.54 80 $1066.03 100 $727.09
61 1295.46 81 1053.95 101 690.65
62 1283.39 82 1041.88 102 654.22
63 1271.31 83 1029.80 103 617.78
64 1259.24 84 1017.73 104 581.35
65 1247.16 85 1005.65 105 544.91
66 1235.08 86 993.58 106 508.48
67 1223.01 87 981.50 107 472.05
68 1210.93 88 969.43 108 435.61
69 1198.86 89 957.35 109 399.18
70 1186.78 90 945.28 110 362.74
71 1174.71 91 933.20 111 326.31
72 1162.63 92 921.13 112 289.97
73 1150.56 93 909.05 113 253.44
74 1138.48 94 896.97 114 217.01
75 1126.41 95 884.90 115 180.57
76 1114.33 96 872.82 116 144.14
77 1102.26 97 836.39 117 107.70
78 1090.18 98 799.95 118 71.27
79 1078.10 99 763.52 119 34.83
120 .00
Phoenix may reduce the surrender charges for Policies issued under group or
sponsored arrangements. The amount of reduction will be considered on a
case-by-case basis and will reflect the reduced costs to Phoenix expected as a
result of sales to a particular group or sponsored arrangement.
PARTIAL SURRENDER FEE
A fee equal to the lesser of $25 or 2% of the amount withdrawn from the
Policy is deducted from the Policy Value upon a partial surrender of the Policy
to recover the actual costs of processing the partial surrender request. The
assessment to each Subaccount or to the GIA will be made in the same manner as
provided for the partial surrender amount paid. That is, that the Policy's share
in the value of each Subaccount or the GIA will be reduced based on the
allocation made at the time of the partial surrender. If no allocation request
is made, the assessment to each Subaccount and to the GIA will be made in the
same manner as provided for monthly deductions.
PARTIAL SURRENDER CHARGE
A charge as described below is deducted from the Policy Value upon a
partial surrender of the Policy. The charge is equal to a pro rata portion of
the applicable surrender charge that would apply to a full surrender, determined
by multiplying the applicable surrender charge by a fraction (equal to the
partial surrender amount payable divided by the result of subtracting the
applicable surrender charge from the Policy Value). This amount is assessed
against the Subaccounts or the GIA in the same manner as provided for with
respect to the partial surrender amount paid.
A partial surrender charge also is deducted from Policy Value upon a
decrease in face amount. The charge is equal to the applicable surrender charge
multiplied by a fraction (equal to the decrease in face amount divided by the
face amount of the Policy prior to the decrease).
TAXES
Currently no charge is made to the VUL Account for federal income taxes
that may be attributable to the VUL Account. Phoenix may, however, make such a
charge in the future. Charges for other taxes, if any, attributable to the VUL
Account also may be made. See "Charges and Deductions--Other Charges."
GENERAL PROVISIONS
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POSTPONEMENT OF PAYMENTS
GENERAL
Payment of any amount upon complete or partial surrender, Policy loan, or
benefits payable at death (in excess of the initial face amount) or maturity may
be postponed: (i) for up to six months from the date of the request, for any
transactions dependent upon the value of the GIA; (ii) whenever the New York
Stock Exchange is closed other than for customary weekend and holiday closings,
or trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; or (iii) whenever an emergency exists, as
determined by the 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 VUL Account's net assets. Transfers also may be postponed under
these circumstances.
PAYMENT BY CHECK
Payments under the Policy of any amounts derived from premiums paid by
check may be delayed until such time as the check has cleared the Policyowner's
bank.
THE CONTRACT
The Policy and the copy of the application attached thereto are the entire
contract. Only statements in the application can be used to void the Policy. The
statements are considered representations and not warranties. Only an executive
officer of Phoenix can agree to change or waive any provisions of the Policy.
SUICIDE
If the Insured commits suicide within two years after the Policy's Date of
Issue, Phoenix will pay only the Policy Value adjusted by the addition of any
monthly deductions and other fees and charges made under the Policy and the
subtraction of any Debt owed to Phoenix under the Policy.
INCONTESTABILITY
Phoenix cannot contest the Policy or any rider attached to it after it has
been In Force during the lifetime of the Insured for two years from the Policy
Date.
CHANGE OF OWNER OR BENEFICIARY
The Beneficiary, as named in the Policy application or subsequently
changed, will receive the Policy benefits at the Insured's death. If the named
Beneficiary dies before the Insured, the contingent Beneficiary, if named,
becomes the Beneficiary. If no Beneficiary survives the Policyowner, the
benefits payable at the Insured's death will be paid to the Policyowner's
estate.
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As long as the Policy is In Force, the Policyowner and the Beneficiary may
be changed by Written Request, satisfactory to Phoenix. A change in Beneficiary
will take effect as of the date the notice is signed, whether or not the Insured
is living when the notice is received by Phoenix. Phoenix will not, however, be
liable for any payment made or action taken before receipt of the notice.
ASSIGNMENT
The Policy may be assigned. Phoenix will not be bound by the assignment
until a written copy has been received and will not be liable with respect to
any payment made prior to receipt. Phoenix assumes no responsibility for
determining whether an assignment is valid.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Insured has been misstated, the death benefit will
be adjusted based on what the cost of insurance charge for the most recent
monthly deduction would have purchased based on the correct age and sex.
PAYMENT OF PROCEEDS
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SURRENDER AND DEATH BENEFIT PROCEEDS
Death benefit proceeds and the proceeds of full or partial surrenders will
be processed at unit values next computed after Phoenix receives the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death benefit proceeds usually will be made in
one lump-sum within seven days, unless another payment option has been elected.
Payment of the death benefit proceeds, however, may be delayed if the claim for
payment of the death benefit proceeds needs to be investigated; e.g., to ensure
payment of the proper amount to the proper payee. Any such delay will not be
beyond that reasonably necessary to investigate such claims consistent with
insurance practices customary in the life insurance industry. In addition, under
certain conditions, in the event of the terminal illness of the Insured, an
accelerated payment of up to 75% of the Policy's death benefit (up to maximum of
$250,000), is available under the Living Benefits Rider. The minimum face amount
remaining after any such accelerated benefit payment is $10,000.
While the Insured is living, the Policyowner may elect a payment option for
payment of the death benefit proceeds to the Beneficiary. The Policyowner may
revoke or change a prior election before the Insured's death, unless such right
has been waived. The Beneficiary may make or change an election prior to payment
of the death benefit proceeds, unless the Policyowner has made an election which
does not permit such further election or changes by the Beneficiary.
A written form satisfactory to Phoenix is required to elect, change, or
revoke a payment option.
The minimum amount of surrender or death benefit proceeds that may be
applied under any income option is $1,000.
If the Policy is assigned as collateral security, Phoenix will pay any
amount due the assignee in one lump sum. Any remaining proceeds will remain
under the option elected.
PAYMENT OPTIONS
All or part of the surrender or death proceeds of a Policy may be applied
under one or more of the following payment options or such other payment options
or alternative versions of the options listed as Phoenix may choose to make
available in the future.
OPTION 1--LUMP SUM.
Payment in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest during the payee's lifetime on the amount payable as
a principal sum. Interest rates are guaranteed to be at least 3% per year.
OPTION 3--PAYMENT FOR A SPECIFIC PERIOD.
Equal income installments are paid for a specified period of years whether
the payee lives or dies. The first payment will be on the date of settlement.
The assumed interest rate on the unpaid balance is guaranteed not to be less
than 3% per year.
OPTION 4--LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN.
Equal installments are paid until the later of: (A) The death of the payee;
(B) The end of the period certain. The first payment will be on the date of
settlement. The period certain must be chosen at the time this option is
elected. The periods certain that may be chosen are as follows: (A) Ten years;
(B) Twenty years; (C) Until the installments paid refund the amount applied
under this option; and if the payee is not living when the final payment falls
due, that payment will be limited to the amount which needs to be added to the
payments already made to equal the amount applied under this option. If, for the
age of the payee, a period certain is chosen that is shorter than another period
certain paying the same installment amount, Phoenix will deem the longer period
certain as having been elected. Any life annuity provided under Option 4 is
calculated using an interest rate guaranteed to be no less than 3 3/8% per year,
except that any life annuity providing a period certain of 20 years or more is
calculated using an interest rate guaranteed to be no less than 3 1/4% per year.
OPTION 5--LIFE ANNUITY.
Equal installments are paid only during the lifetime of the payee. The
first payment will be on the date of settlement. Any life annuity as may be
provided under Option 5 is calculated using an interest rate guaranteed to be no
less than 3 1/2% per year.
OPTION 6--PAYMENTS OF A SPECIFIED AMOUNT.
Equal installments of a specified amount, out of the principal sum and
interest on that sum, are paid until the principal sum remaining is less than
the amount of the installment. When that happens, the principal sum remaining
with accrued interest will be paid as a final payment. The first payment will be
on the date of settlement. The payments will include interest on the principal
sum remaining at a rate guaranteed to equal at least 3% per year. This interest
will be credited at the end of each year. If the amount of interest credited at
the end of the year exceeds the income payments made in the last 12 months, that
excess will be paid in one sum on the date credited.
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OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10 YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal income
installments are paid until the latest of: (A) The end of the 10-year period
certain; (B) The death of the Insured; (C) The death of the other named
annuitant. The other annuitant must be named at the time this option is elected
and cannot later be changed. The other annuitant must have an attained age of at
least 40. Any joint survivorship annuity as may be provided under this option is
calculated using an interest rate guaranteed to be no less than 3 3/8% per year.
For additional information concerning the above payment options, see the
Policy.
FEDERAL TAX CONSIDERATIONS
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INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to the Policyowner or Beneficiary depends on
Phoenix's tax status and upon the tax status of the individual concerned. The
discussion contained herein is general in nature and is not intended as tax
advice. For complete information on federal and state tax considerations, a
qualified tax adviser should be consulted. No attempt is made to consider any
estate and inheritance taxes, or any state, local or other tax laws. Because the
discussion herein is based upon Phoenix's understanding of federal income tax
laws as they are currently interpreted, Phoenix cannot guarantee the tax status
of any Policy. No representation is made regarding the likelihood of
continuation of current federal income tax laws, Treasury regulations, or of the
current interpretations by the Internal Revenue Service. Phoenix reserves the
right to make changes to the Policy in order to assure that it will continue to
qualify as a life insurance contract for federal income tax purposes.
PHOENIX'S TAX STATUS
Phoenix is taxed as a life insurance company under the Internal Revenue
Code of 1986, as amended (the "Code"). For federal income tax purposes, neither
the VUL Account nor the GIA is a separate entity from Phoenix and their
operations form a part of Phoenix.
Investment income and realized capital gains on the assets of the VUL
Account are reinvested and taken into account in determining the value of the
VUL Account. Investment income of the VUL Account, including realized net
capital gains, is not taxed to Phoenix. Due to Phoenix's tax status under
current provisions of the Code, no charge currently will be made to the VUL
Account for Phoenix's federal income taxes which may be attributable to the VUL
Account. Phoenix reserves the right to make a deduction for taxes if the federal
tax treatment of Phoenix is determined to be other than what Phoenix currently
believes it to be, if changes are made affecting the tax treatment to Phoenix of
variable life insurance contracts, or if changes occur in Phoenix's tax status.
If imposed, such charge would be equal to the federal income taxes attributable
to the investment results of the VUL Account.
POLICY BENEFITS
DEATH BENEFIT PROCEEDS. The Policy, whether or not it is a "modified
endowment contract" (see the discussion on modified endowment contracts below),
should be treated as meeting the definition of a life insurance contract for
federal income tax purposes under Section 7702 of the Code. As such, the death
benefit proceeds thereunder should be excludable from the gross income of the
Beneficiary under Code Section 101(a)(1). Also, the Policyowner should not be
deemed to be in constructive receipt of the Policy Value, including increments
thereon. See, however, the sections below on possible taxation of amounts
received under the Policy, via full surrender, partial surrender or loan. In
addition, a benefit paid under a Living Benefit Rider may be taxable as income
in the year of receipt.
Code Section 7702 imposes certain conditions with respect to premiums
received under a Policy. Phoenix intends to monitor the premiums to assure
compliance with such conditions. However, in the event that the premium
limitation is exceeded during the year, Phoenix may return the excess premium,
with interest, to the Policyowner within 60 days after the end of the Policy
Year, and maintain the qualification of the Policy as life insurance for federal
income tax purposes.
FULL SURRENDER. Upon full surrender of a Policy for its Cash Surrender
Value, the excess, if any, of the Policy Value (unreduced by any outstanding
indebtedness) over the premiums paid will be treated as ordinary income for
federal income tax purposes. The full surrender of a Policy which is a "modified
endowment contract" may result in the imposition of an additional 10% tax on any
income received.
PARTIAL SURRENDER. If the Policy is a "modified endowment contract,"
partial surrenders are fully taxable to the extent of income in the Policy and
are possibly subject to an additional 10% tax. See the discussion on "modified
endowment contracts" below. If the Policy is not a "modified endowment
contract," partial surrenders still may be taxable, as follows. Code Section
7702(f)(7) provides that where a reduction in death benefits occurs during the
first 15 years after a Policy is issued and there is a cash distribution
associated with that reduction, the Policyowner may be taxed on all or a part of
the amount distributed. A reduction in death benefits may result from a partial
surrender. After 15 years, the proceeds will not be subject to tax, except to
the extent such proceeds exceed the total amount of premiums paid but not
previously recovered. Phoenix suggests you consult with your tax adviser in
advance of a proposed decrease in death benefits or a partial surrender as to
the portion, if any, which would be subject to tax, and, in addition, as to the
impact such partial surrender might have under the rules affecting "modified
endowment contracts." The benefit payment under the Living Benefits Rider is not
considered a partial surrender.
LOANS. Phoenix believes that any loan received under a Policy will be
treated as indebtedness of the Policyowner. If the Policy is a "modified
endowment contract," loans are fully taxable to the extent of income in the
Policy and are possibly subject to an additional 10% tax. See the discussion on
"modified endowment contracts" below. If the Policy is not a "modified endowment
contract," Phoenix believes that no part of any loan under a Policy will
constitute income to the Policyowner.
The deductibility by the Policyowner of loan interest under a Policy may be
limited under Code Section 264, depending on the circumstances. Any Policyowner
intending to fund premium payments
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through borrowing should consult a tax adviser with respect to the tax
consequences thereof. Under the "personal" interest limitation provisions of the
Code, interest on Policy loans used for personal purposes is not tax deductible.
Other rules may apply to allow all or part of the interest expense as a
deduction if the loan proceeds are used for "trade or business" or "investment"
purposes. See your tax adviser for further guidance.
BUSINESS-OWNED POLICIES
If the Policy is owned by a business or a corporation, the Code may impose
additional restrictions. The Code limits the interest deduction on
business-owned Policy loans and may impose tax upon the inside build-up of
corporate-owned life insurance policies through the corporate alternative
minimum tax.
MODIFIED ENDOWMENT CONTRACTS
GENERAL. Pursuant to Code Section 72(e), loans and other amounts received
under "modified endowment contracts" will, in general, be taxed to the extent of
accumulated income (generally, the excess of Policy Value over premiums paid).
Policies are "modified endowment contracts" if they meet the definition of life
insurance, but fail the "7-pay test." This test essentially provides that the
cumulative premiums paid under the Policy at any time during the Policy's first
seven years cannot exceed the sum of the net level premiums that would have been
paid on or before that time had the Policy provided for paid-up future benefits
after the payment of seven level annual premiums. In addition, a modified
endowment contract includes any life insurance contract that is received in
exchange for a modified endowment contract. Premiums paid during a Policy Year
that are returned by Phoenix (with interest) within 60 days after the end of the
Policy Year will not cause the Policy to fail the 7-pay test.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS. If there is a reduction
in benefits during the first seven Policy Years, the premiums are redetermined
for purposes of the 7-pay test as if the Policy had originally been issued at
the reduced death benefit level and the new limitation is applied to the
cumulative amount paid for each of the first seven Policy Years.
DISTRIBUTIONS AFFECTED. If a Policy fails to meet the 7-pay test, it is
considered a modified endowment contract only as to distributions in the year in
which the death benefit reduction takes effect and all subsequent Policy Years.
However, distributions made in anticipation of such failure (there is a
presumption that distributions made within two years prior to such failure were
"made in anticipation") also are considered distributions under a modified
endowment contract. If the Policy satisfies the "7-pay test" for seven years,
distributions and loans generally will not be subject to the modified endowment
contract rules.
PENALTY TAX. Any amounts taxable under the modified endowment contract rule
will be subject to an additional 10 percent excise tax, with certain exceptions.
This additional tax will not apply in the case of distributions: (i) made on or
after the taxpayer attains age 59 1/2; (ii) which are attributable to the
taxpayer's disability (within the meaning of Code Section 72(m)(7)); or (iii)
which are part of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the taxpayer
or the joint lives (or life expectancies) of the taxpayer and his Beneficiary.
MATERIAL CHANGE RULES. Any determination of whether the Policy meets the
"7-pay test" will begin again any time the Policy undergoes a "material change,"
which includes any increase in death benefits or any increase in or addition of
a qualified additional benefit, with the following two exceptions. First, if an
increase is attributable to premiums paid "necessary to fund" the lowest death
benefit and qualified additional benefits payable in the first seven Policy
Years or to the crediting of interest with respect to these premiums, the
"increase" does not constitute a material change. Second, to the extent provided
in regulations, if the death benefit or qualified additional benefit increases
as a result of a cost-of-living adjustment based on an established broad-based
index specified in the Policy, this does not constitute a material change if (1)
the cost-of-living determination period does not exceed the remaining premium
payment period under the Policy, and (2) the cost-of-living increase is funded
ratably over the remaining premium payment period of the Policy. A reduction in
death benefits is not considered a material change unless accompanied by a
reduction in premium payments.
A material change may occur at any time during the life of the Policy
(within the first seven years or thereafter), and future taxation of
distributions or loans would turn on whether the Policy satisfied the applicable
"7-pay test" from the time of the material change. An exchange of policies is
considered to be a material change for all purposes.
SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS. All modified endowment
contracts issued by the same insurer (or affiliated companies of the insurer) to
the same Policyowner within the same calendar year will be treated as one
modified endowment contract in determining the taxable portion of any loans or
distributions made to the Policyowner. The Treasury has been given specific
legislative authority to issue regulations to prevent the avoidance of the new
distribution rules for modified endowment contracts. A qualified tax adviser
should be consulted about the tax consequences of the purchase of more than one
modified endowment contract within any calendar year.
LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES
The Code imposes limitations on unreasonable mortality and expense charges
for purposes of ensuring that a Policy qualifies as a life insurance contract
for federal income tax purposes. The mortality charges taken into account to
calculate permissible premium levels may not exceed those charges required to be
used in determining the federal income tax reserve for the Policy, unless
Treasury regulations prescribe a higher level of charge. In addition, the
expense charges taken into account under the guideline premium test are required
to be reasonable, as defined by the Treasury regulations. Phoenix intends to
comply with the limitations in calculating the premium it is permitted to
receive from the Policyowner.
QUALIFIED PLANS
A Policy may be used in conjunction with certain qualified plans. Since the
rules governing such use are complex, a purchaser should not use the Policy in
conjunction with a qualified plan until he has consulted a competent pension
consultant or tax adviser.
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DIVERSIFICATION STANDARDS
To comply with the diversification regulations under Code Section 817(h),
("Diversification Regulations") each Portfolio of the Fund is required to
diversify its investments. The Diversification Regulations generally require
that on the last day of each quarter of a calendar year no more than 55 percent
of the value of the Fund's assets is represented by any one investment, no more
than 70 percent is represented by any two investments, no more than 80 percent
is represented by any three investments, and no more than 90 percent is
represented by any four investments. A "look-through" rule applies to treat a
pro rata portion of each asset of the Fund as an asset of the VUL Account;
therefore, each Series of the Fund will be tested for compliance with the
percentage limitations. For purposes of these diversification rules, all
securities of the same issuer are treated as a single investment, but each
United States government agency or instrumentality is treated as a separate
issuer.
The general diversification requirements are modified if any of the assets
of the VUL Account are direct obligations of the United States Treasury. In this
case, there is no limit on the investment that may be made in United States
Treasury securities, and for purposes of determining whether assets other than
United States Treasury securities are adequately diversified, the generally
applicable percentage limitations are increased based on the value of the VUL
Account's investment in United States Treasury securities. Notwithstanding this
modification of the general diversification requirements, the portfolios of the
Fund will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with these standards.
In connection with the issuance of the Diversification Regulations, the
Treasury announced that such regulations do not provide guidance concerning the
extent to which Policyowners may direct their investments to particular
divisions of a separate account. It is possible that a revenue ruling or other
form of administrative pronouncement in this regard may be issued in the near
future. It is not clear, at this time, what such a revenue ruling or other
pronouncement will provide. It is possible that the Policy may need to be
modified to comply with such future Treasury announcements. For these reasons,
Phoenix reserves the right to modify the Policy, as necessary, to prevent the
Policyowner from being considered the owner of the assets of the VUL Account.
Phoenix intends to comply with the Diversification Regulations to assure
that the Policies continue to qualify as a life insurance contract for federal
income tax purposes.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Changing the Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances. Code Section
1035 provides that a life insurance contract can be exchanged for another life
insurance contract, without recognition of gain or loss, assuming that no money
or other property is received in the exchange, and that the policies relate to
the same Insured. If the surrendered policy is subject to a policy loan, this
may be treated as the receipt of money on the exchange. Phoenix recommends that
any person contemplating such actions seek the advice of a qualified tax
consultant.
OTHER TAXES
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary. Phoenix does not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
VOTING RIGHTS
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THE FUND
Phoenix will vote the Fund shares held by the Subaccounts of the VUL
Account at any regular and special meetings of shareholders of the Fund. To the
extent required by law, such voting will be in accordance with instructions
received from the Policyowner. However, if the Investment Company Act of 1940 or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result Phoenix determines that it is permitted
to vote the Fund shares at its own discretion, it may elect to do so.
The number of votes that a Policyowner has the right to cast will be
determined by applying the Policyowner's percentage interest in a Subaccount to
the total number of votes attributable to the Subaccount. In determining the
number of votes, fractional shares will be recognized.
Fund shares held in a Subaccount for which no timely instructions are
received, and Fund shares which are not otherwise attributable to Policyowners,
will be voted by Phoenix in proportion to the voting instructions that are
received with respect to all Policies participating in that Subaccount. Voting
instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by Phoenix.
Each Policyowner will receive proxy materials, reports, and other materials
relating to the Fund.
Phoenix may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the portfolios of the Fund or to approve or disapprove an
investment advisory contract for the Fund. In addition, Phoenix itself may
disregard voting instructions in favor of changes initiated by a Policyowner in
the investment policies or the Investment Adviser of the Fund if Phoenix
reasonably disapproves of such changes. A change would be disapproved only if
the proposed change is contrary to state law or prohibited by state regulatory
authorities or Phoenix determined that the change would have an adverse effect
on the General Account because the proposed investment policy for a portfolio
may result in overly speculative or unsound investments. In the event Phoenix
does disregard voting instructions, a summary of that action and the reasons for
such action will be included in the next periodic report to Policyowners.
PHOENIX
A Policyowner (or the payee entitled to payment under a payment option if a
different person) will have the right to vote at annual meetings of all Phoenix
Policyholders for the election of members of the Board of Directors of Phoenix
and on other corporate matters, if
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any, where a Policyholder's vote is taken. At meetings of all of the Phoenix
Policyholders, a Policyholder (or payee) may cast only one vote as the holder of
a Policy, irrespective of Policy Value or the number of the Policies held.
THE DIRECTORS AND EXECUTIVE OFFICERS OF PHOENIX
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Phoenix is managed by its Board of Directors, the members of which are
elected by its Policyholders, including Owners of the Policies. See "Voting
Rights."
The following are the Directors and Executive Officers of Phoenix:
Robert William Fiondella, Chairman of the Board, President
Chairman and President and Chief Executive Officer
Richard Henry Booth, Executive Vice President, Strategic
Director and Executive Development; formerly President,
Vice President Traveler's Insurance Company
Robert Gerald Chipkin Senior Vice President and
Director Corporate Actuary
Philip Robert McLoughlin, Executive Vice President and Chief
Director and Executive Investment Officer
Vice President
Charles J. Paydos, Executive Vice President
Director and Executive
Vice President
David William Searfoss, Executive Vice President and Chief
Director and Executive Financial Officer
Vice President, CFO &
Treasurer
Dona Davis Young, Executive Vice President, Individual
Director and Executive Insurance and General Counsel
Vice President
Joseph Edward Kelleher, Senior Vice President
Director and Senior
Vice President
Robert George Lautensack, Senior Vice President
Director and Senior
Vice President
Simon Yeh-Cheng Tan, Senior Vice President, Individual
Director and Senior Market Development
Vice President
The above positions listed under Principal Occupation are held in the
Company's parent, Phoenix Home Life Mutual Insurance Company (except where
otherwise indicated) and reflect the last held position in the organization
during the past five years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
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The assets of the VUL Account are held by Phoenix. The assets of the VUL
Account are kept physically segregated and held separate and apart from the
general account of Phoenix. Phoenix maintains records of all purchases and
redemptions of shares of the Fund.
SALES OF POLICIES
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Policies may be purchased from registered representatives of W.S. Griffith
& Co., Inc. ("W. S. Griffith"), a corporation formed under the laws of the state
of New York on August 7, 1970, licensed to sell Phoenix insurance policies, as
well as policies, annuity contracts and funds of companies affiliated with
Phoenix. W. S. Griffith, an indirect wholly-owned subsidiary of Phoenix Home
Life Mutual Insurance Company, is registered as a broker-dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers, Inc. Policies
also may be purchased from other broker-dealers registered under the Securities
Exchange Act of 1934 whose representatives are authorized by applicable law to
sell Policies under terms of agreements provided by PEPCO. Sales commissions
will be paid to registered representatives on purchase payments received by
Phoenix under these Policies. Total sales commission of a maximum of 50% of
premiums will be paid by Phoenix to PEPCO. To the extent that the sales charge
under the Policies is less than the sales commissions paid with respect to the
Policies, Phoenix will pay the shortfall from its general account assets, which
will include any profits it may derive under the Policies.
Phoenix through PEPCO will sponsor sales contests, training and educational
meetings and provide to all qualifying dealers, from its own profits and
resources, additional compensation in the form of trips, merchandise or expense
reimbursement. Brokers and dealers other than PEPCO also may make customary
additional charges for their services in effecting purchases, if they notify the
Fund of their intention to do so.
STATE REGULATION
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Phoenix is subject to the provisions of the Missouri insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Missouri Superintendent of Insurance. Phoenix also is subject to the
applicable insurance laws of all the other states and jurisdictions in which it
does an insurance business.
State regulation of Phoenix includes certain limitations on the investments
which it may make, including investments for the VUL Account and the GIA. It
does not include, however, any supervision over the investment policies of the
VUL Account.
REPORTS
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All Policyowners will be furnished with those reports required by the
Investment Company Act of 1940 and regulations promulgated thereunder, or under
any other applicable law or regulation.
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LEGAL PROCEEDINGS
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The VUL Account is not engaged in any litigation. Phoenix is not involved
in any litigation that would have a material adverse effect on the ability of
Phoenix to meet its obligations under the Policies.
LEGAL MATTERS
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The organization of Phoenix, its authority to issue variable life insurance
Policies, and the validity of the Policy have been passed upon by Richard J.
Wirth, Counsel, Phoenix. Legal matters relating to the federal securities and
income tax laws have been passed upon for Phoenix by Jorden Burt Berenson &
Johnson, LLP.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
securities offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and amendments thereto and exhibits
filed as a part thereof, to all of which reference is made for further
information concerning the VUL Account, Phoenix and the Policy. Statements
contained in this Prospectus as to the content of the Policy and other legal
instruments are summaries. For a complete statement of the terms thereof,
reference is made to such instruments as filed.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated financial statements of Phoenix contained herein should be
considered only as bearing upon Phoenix's ability to meet its obligations under
the Policy, and they should not be considered as bearing on the investment
performance of the VUL Account. The financial statements of the VUL Account are
for the Subaccounts available as of the period ended December 31, 1995.
23
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
[TO BE FILED BY AMENDMENT]
24
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
VARIABLE UNIVERSAL LIFE ACCOUNT
THE EFFECTIVE DATE OF THE PHOENIX LIFE AND ANNUITY VARIABLE UNIVERSAL LIFE
ACCOUNT IS THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THEREFORE,
FINANCIAL DATA IS NOT AVAILABLE.
25
<PAGE>
APPENDIX A
THE GUARANTEED INTEREST ACCOUNT
Contributions to the Guaranteed Interest Account ("GIA") under the Policy
and transfers to the GIA become part of the Phoenix General Account (the
"General Account"), which supports insurance and annuity obligations. Because of
exemptive and exclusionary provisions, interest in the General Account has not
been registered under the Securities Act of 1933 ("1933 Act") nor is the General
Account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the General Account nor any interest
therein is specifically subject to the provisions of the 1933 or 1940 Acts and
the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this Prospectus concerning the GIA. Disclosures regarding the GIA
and the General Account, however, may be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
The General Account is made up of all of the general assets of Phoenix
other than those allocated to any separate account. Premium payments will be
allocated to the GIA and, therefore, the General Account, as elected by the
Policyowner at the time of purchase or as subsequently changed. Phoenix will
invest the assets of the General Account in assets chosen by it and allowed by
applicable law. Investment income from General Account assets is allocated
between Phoenix and the contracts participating in the General Account, in
accordance with the terms of such contracts.
Investment income from the General Account allocated to Phoenix includes
compensation for mortality and expense risks borne by it in connection with
General Account contracts.
The amount of investment income allocated to the Policies will vary from
year to year in the sole discretion of Phoenix. However, Phoenix guarantees that
it will credit interest at a rate of not less than 4% per year, compounded
annually, to amounts allocated to the unloaned portion of the GIA. The loaned
portion of the GIA will be credited interest at an effective annual rate of 2%.
Phoenix may credit interest at a rate in excess of 4% per year; however, it is
not obligated to credit any interest in excess of 4% per year.
Bi-weekly, Phoenix will set the excess interest rate, if any, that will
apply to amounts deposited to the GIA. That rate will remain in effect for such
deposits for an initial guarantee period of one full year from the date of
deposit. Upon expiration of the initial one-year guarantee period (and each
subsequent one-year guarantee period thereafter), the rate to be applied to any
deposits whose guaranteed period has just ended will be the same rate as is
applied to new deposits allocated at that time to the GIA. This rate will
likewise remain in effect for a guarantee period of one full year from the date
the new rate is applied.
Excess interest, if any, will be determined by Phoenix based on information
as to expected investment yields. Some of the factors that Phoenix may consider
in determining whether to credit interest to amounts allocated to the GIA and
the amount thereof, are general economic trends, rates of return currently
available and anticipated on investments, regulatory and tax requirements and
competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE GIA IN
EXCESS OF 4% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF PHOENIX AND
WITHOUT REGARD TO ANY SPECIFIC FORMULA. THE CONTRACT OWNER ASSUMES THE RISK THAT
INTEREST CREDITED TO GIA ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 4%
FOR ANY GIVEN YEAR.
Phoenix is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in Phoenix's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
Policyholders and Contract Owners.
Excess interest, if any, will be credited on the GIA Policy Value. Phoenix
guarantees that, at any time, the GIA Policy Value will not be less than the
amount of premium payments allocated to the GIA, plus interest at the rate of 4%
per year, compounded annually, plus any additional interest which Phoenix may,
in its discretion, credit to the GIA, less the sum of all annual administrative
or surrender charges, any applicable premium taxes, and less any amounts
surrendered or loaned. If the Policyowner surrenders the Policy, the amount
available from the GIA will be reduced by any applicable surrender charge and
annual administration charge. See "Deductions and Charges."
IN GENERAL, ONE TRANSFER PER CONTRACT YEAR IS ALLOWED FROM THE GIA. THE AMOUNT
WHICH CAN BE TRANSFERRED IS LIMITED TO THE GREATER OF $1,000 OR 25% OF THE
CONTRACT VALUE IN THE GIA AS OF THE LAST CONTRACT ANNIVERSARY. UNDER THE
SYSTEMATIC TRANSFER PROGRAM, TRANSFERS OF APPROXIMATELY EQUAL AMOUNTS MAY BE
MADE OVER A MINIMUM 18-MONTH PERIOD. NON-SYSTEMATIC TRANSFERS FROM THE GIA WILL
BE EFFECTUATED ON THE DATE OF RECEIPT BY VARIABLE PRODUCTS OPERATIONS, UNLESS
OTHERWISE REQUESTED BY THE CONTRACT OWNER.
26
<PAGE>
APPENDIX B
ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES ("ACCOUNT VALUES"),
AND CASH SURRENDER VALUES.
The tables on the following pages illustrate how a Policy's death benefits,
account values and Cash Surrender Value could vary over time assuming constant
hypothetical gross (after tax) annual investment returns of 0% and 12%. The
Policy benefits will differ from those shown in the tables if the annual
investment returns are not absolutely constant. That is, the figures will be
different if the returns averaged 0% to 12% over a period of years but went
above or below those figures in individual Policy Years. The Policy benefits
also will differ, depending on your premium allocations to each Subaccount of
the VUL Account, if the overall actual rates of return averaged 0% to 12% but
went above or below those figures for the individual Subaccounts. The tables
are for standard risk males and females who have never smoked. In states where
cost of insurance rates are not based on the insured's sex, the tables
designated "male" apply to all standard risk insureds who have never smoked.
Account values and Cash Surrender Values may be lower for smokers or former
smokers or for risk classes involving higher mortality risk. Planned premium
payments are assumed to be paid at the beginning of each Policy Year. The
difference between the Policy Value and the Cash Surrender Value in the first 10
years is the surrender charge. Tables are included for death benefit Option 1
and Option 2.
The Death Benefit, Account Value, and Cash Surrender Value amounts reflect
the following current charges:
1. Issue Expense Charge of $150.
2. Monthly Administrative Charge of $5 per month ($10 per month guaranteed
maximum).
3. Premium Tax Charge of 2.25%.
4. A Federal Tax Charge of 1.5%.
5. Cost of Insurance Charge. The tables illustrate cost of insurance at both
the current rates and at the maximum rates guaranteed in the Policies. (See
"Charges and Deductions--Cost of Insurance.")
6. Mortality and Expense Risk Charge, which is a daily charge equivalent to
.80% on an annual basis (for 15 Policy Years, then .25% on an annual basis
in subsequent years), against the VUL Account for mortality and expense
risks. (See "Charges and Deductions--Mortality and Expense Risk Charge.")
These illustrations also assume an average investment advisory
fee of .66% on an annual basis, of the average daily net asset value of each of
the Series of the Funds. These illustrations also assume other ongoing average
Fund expenses of .18%. Management may decide to limit the amount of expense
reimbursement in the future. If this reimbursement had not been in place for the
fiscal year ended December 31, 1995, total operating expenses for the
Multi-Sector, Real Estate, Strategic Theme and Asia Series, would have been
approximately 0.73%, 1.98%, 1.33% and 2.40% respectively, of the average net
assets of the Series. (See "Charges and Deductions--Investment Management
Charge.")
Taking into account the Mortality and Expense Risk Charge and the investment
advisory fees and expenses, the gross annual investment return rates of 0% and
12% on the Funds' assets are equivalent to net annual investment return rates of
approximately -1.63% and 10.28%, respectively. For individual illustrations,
interest rates ranging between 0% and 12% may be selected in place of the 12%
rate.
The hypothetical returns shown in the tables are without any tax charges
that may be attributable to the VUL Account in the future. If such tax charges
are imposed in the future, then in order to produce after tax returns equal to
those illustrated for 0% and 12%, a sufficiently higher amount in excess of the
hypothetical interest rates would have to be earned. (See "Charges and
Deduction--Other Charges--Taxes.")
The second column of each table shows the amount that would accumulate if an
amount equal to the premiums paid were invested to earn interest, after taxes,
at 5% compounded annually. These tables show that if a Policy is returned in its
very early years for payment of its Cash Surrender Value, that Cash Surrender
Value may be low in comparison to the amount of the premiums accumulated with
interest. Thus, the cost of owning a Policy for a relatively short time may be
high.
On request, we will furnish the Policyowner with a comparable illustration
based on the age and sex of the proposed insured person(s), standard risk
assumptions and the initial face amount and planned premium chosen.
27
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 1
MALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
<TABLE>
<CAPTION>
ASSUMING
------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
---------------------------------- ----------------------------------
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 12.00% @ 12.00% @ 12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 667 0 100,000 513 0 100,000
2 1,000 2,153 1,553 668 100,000 1,159 274 100,000
3 1,000 3,310 2,521 1,214 100,000 1,786 479 100,000
4 1,000 4,526 3,579 2,272 100,000 2,391 1,084 100,000
5 1,000 5,802 4,734 3,427 100,000 2,975 1,668 100,000
6 1,000 7,142 5,995 4,833 100,000 3,536 2,373 100,000
7 1,000 8,549 7,372 6,355 100,000 4,072 3,054 100,000
8 1,000 10,027 8,878 8,005 100,000 4,583 3,711 100,000
9 1,000 11,578 10,522 10,087 100,000 5,068 4,632 100,000
10 1,000 13,207 12,322 12,322 100,000 5,526 5,526 100,000
11 1,000 14,917 14,297 14,297 100,000 5,956 5,956 100,000
12 1,000 16,713 16,467 16,467 100,000 6,354 6,354 100,000
13 1,000 18,599 18,853 18,853 100,000 6,721 6,721 100,000
14 1,000 20,579 21,479 21,479 100,000 7,054 7,054 100,000
15 1,000 22,657 24,369 24,369 100,000 7,352 7,352 100,000
16 1,000 24,840 27,706 27,706 100,000 7,656 7,656 100,000
17 1,000 27,132 31,404 31,404 100,000 7,917 7,917 100,000
18 1,000 29,539 35,504 35,504 100,000 8,131 8,131 100,000
19 1,000 32,066 40,052 40,052 100,000 8,292 8,292 100,000
20 1,000 34,719 45,100 45,100 100,000 8,391 8,391 100,000
@ 65 30,000 69,761 138,936 138,936 169,502 4,309 4,309 100,000
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
33.
Death Benefit, Account Value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
28
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 1
FEMALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
<TABLE>
<CAPTION>
ASSUMING
------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
---------------------------------- ----------------------------------
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 12.00% @ 12.00% @ 12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 695 0 100,000 535 0 100,000
2 1,000 2,153 1,613 759 100,000 1,201 347 100,000
3 1,000 3,310 2,615 1,420 100,000 1,847 652 100,000
4 1,000 4,526 3,711 2,516 100,000 2,472 1,277 100,000
5 1,000 5,802 4,908 3,713 100,000 3,075 1,880 100,000
6 1,000 7,142 6,217 5,153 100,000 3,654 2,591 100,000
7 1,000 8,549 7,646 6,714 100,000 4,209 3,276 100,000
8 1,000 10,027 9,209 8,408 100,000 4,738 3,937 100,000
9 1,000 11,578 10,921 10,522 100,000 5,243 4,844 100,000
10 1,000 13,207 12,798 12,798 100,000 5,725 5,725 100,000
11 1,000 14,917 14,863 14,863 100,000 6,182 6,182 100,000
12 1,000 16,713 17,137 17,137 100,000 6,615 6,615 100,000
13 1,000 18,599 19,642 19,642 100,000 7,021 7,021 100,000
14 1,000 20,579 22,402 22,402 100,000 7,401 7,401 100,000
15 1,000 22,657 25,446 25,446 100,000 7,753 7,753 100,000
16 1,000 24,840 28,963 28,963 100,000 8,120 8,120 100,000
17 1,000 27,132 32,865 32,865 100,000 8,456 8,456 100,000
18 1,000 29,539 37,196 37,196 100,000 8,758 8,758 100,000
19 1,000 32,066 42,005 42,005 100,000 9,022 9,022 100,000
20 1,000 34,719 47,347 47,347 100,000 9,246 9,246 100,000
@ 65 30,000 69,761 146,721 146,721 179,001 8,829 8,829 100,000
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
39.
Death Benefit, Account Value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
29
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 1
MALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
<TABLE>
<CAPTION>
ASSUMING
------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
---------------------------------- ----------------------------------
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 12.00% @ 12.00% @ 12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 665 0 100,666 512 0 100,512
2 1,000 2,153 1,549 663 101,549 1,156 271 101,156
3 1,000 3,310 2,512 1,205 102,512 1,779 472 101,779
4 1,000 4,526 3,561 2,254 103,562 2,379 1,072 102,380
5 1,000 5,802 4,704 3,397 104,704 2,956 1,649 102,957
6 1,000 7,142 5,949 4,786 105,949 3,509 2,347 103,509
7 1,000 8,549 7,303 6,285 107,303 4,035 3,018 104,035
8 1,000 10,027 8,777 7,905 108,778 4,534 3,662 104,535
9 1,000 11,578 10,381 9,946 110,382 5,005 4,570 105,005
10 1,000 13,207 12,129 12,129 112,129 5,447 5,447 105,448
11 1,000 14,917 14,039 14,039 114,039 5,857 5,857 105,858
12 1,000 16,713 16,127 16,127 116,127 6,234 6,234 106,234
13 1,000 18,599 18,411 18,411 118,411 6,575 6,575 106,576
14 1,000 20,579 20,911 20,911 120,911 6,881 6,881 106,881
15 1,000 22,657 23,647 23,647 123,647 7,147 7,147 107,147
16 1,000 24,840 26,792 26,792 126,792 7,414 7,414 107,414
17 1,000 27,132 30,254 30,254 130,255 7,634 7,634 107,635
18 1,000 29,539 34,065 34,065 134,065 7,801 7,801 107,802
19 1,000 32,066 38,260 38,260 138,260 7,910 7,910 107,911
20 1,000 34,719 42,876 42,876 142,877 7,952 7,952 107,953
@ 65 30,000 69,761 123,877 123,877 223,878 3,030 3,030 103,031
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
33.
Death Benefit, Account Value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
30
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 1
FEMALE 35 NEVERSMOKE
FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
<TABLE>
<CAPTION>
ASSUMING
------------------------------------------------------------------------
CURRENT CHARGES GUARANTEED CHARGES
---------------------------------- ----------------------------------
ASSUMED CASH CASH
ANNUAL PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 12.00% @ 12.00% @ 12.00% @ 0.0% @ 0.0% @ 0.0%
- ------- -------- -------- --------- --------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 694 0 100,695 534 0 100,534
2 1,000 2,153 1,609 755 101,609 1,198 344 101,199
3 1,000 3,310 2,607 1,411 102,607 1,841 646 101,841
4 1,000 4,526 3,695 2,500 103,696 2,461 1,266 102,462
5 1,000 5,802 4,882 3,686 104,882 3,058 1,863 103,058
6 1,000 7,142 6,175 5,111 106,176 3,630 2,566 103,630
7 1,000 8,549 7,584 6,651 107,584 4,175 3,242 104,175
8 1,000 10,027 9,119 8,318 109,120 4,693 3,892 104,693
9 1,000 11,578 10,794 10,395 110,795 5,184 4,785 105,185
10 1,000 13,207 12,624 12,624 112,625 5,650 5,650 105,651
11 1,000 14,917 14,630 14,630 114,631 6,090 6,090 106,090
12 1,000 16,713 16,831 16,831 116,832 6,502 6,502 106,503
13 1,000 18,599 19,246 19,246 119,246 6,886 6,886 106,887
14 1,000 20,579 21,896 21,896 121,896 7,240 7,240 107,240
15 1,000 22,657 24,806 24,806 124,806 7,563 7,563 107,564
16 1,000 24,840 28,155 28,155 128,156 7,897 7,897 107,898
17 1,000 27,132 31,854 31,854 131,855 8,197 8,197 108,198
18 1,000 29,539 35,939 35,939 135,940 8,459 8,459 108,459
19 1,000 32,066 40,450 40,450 140,450 8,677 8,677 108,677
20 1,000 34,719 45,432 45,432 145,433 8,851 8,851 108,851
@ 65 30,000 69,761 135,439 135,439 235,440 7,658 7,658 107,659
</TABLE>
Based on 0% interest rate and guaranteed charges, the policy will lapse in year
38.
Death Benefit, Account Value, and Cash Surrender Value are based on hypothetical
gross interest rates shown, assume current and guaranteed charges and no policy
loans or withdrawals, and are calculated at the end of the Policy Year. Assumed
Premium Payments shown are assumed paid in full at the beginning of the Policy
Year. Payment of premiums shown other than in full at the beginning of the
Policy Year would reduce values and benefits below the hypothetical illustrated
amounts shown. Values shown reflect an effective annual asset charge of 1.64%
(includes mortality and expense risk charge of 0.8% for fifteen years, then
0.25% and average fund operating expenses of 0.84% applicable to the investment
Subaccounts of the VUL Separate Account). Hypothetical gross interest rates are
presented for illustrative purposes only to illustrate funds allocated entirely
to the investment Subaccounts of the VUL Separate Account and do not in any way
represent actual results or suggest that such results will be achieved in the
future. Actual values will differ from those shown whenever actual investment
results differ from hypothetical gross interest rates illustrated. A Guaranteed
Interest Account providing interest at a minimum guaranteed rate of 4% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
31
<PAGE>
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
RULE 484 UNDERTAKING
Section 351.355 of the General and Business Corporation Law of Missouri,
provides that a corporation may indemnify any director or officer of the
corporation made, or threatened to be made, a party to an action or proceeding
other than one by or in the right of the corporation to procure a judgment in
its favor, whether civil or criminal, including an action by or in the right of
any other corporation of any type or kind, by reason of the fact that he, his
testator or intestate, served such other corporation in any capacity at the
request of the indemnifying corporation.
Article VII of the By-Laws of Phoenix Life and Annuity Company provides
that: "Each person who is or was a director, officer or employee of the
Corporation, or is or was serving at the written request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Corporation in
the manner and to the fullest extent that the Corporation has power to indemnify
such person under...the General and Business Corporation Law of Missouri..."
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATIONS, DESCRIPTION AND UNDERTAKINGS PURSUANT TO PARAGRAPH
(B)(13)(III)(F) OF RULE 6E-3(T) UNDER THE INVESTMENT COMPANY ACT OF 1940.
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) is being relied upon.
(2) The level of the mortality and expense risk charge is within the range
of industry practice for comparable flexible or scheduled contracts.
(3) Phoenix Life and Annuity Company has concluded that there is a
reasonable likelihood that the distribution financing arrangement of
Phoenix Life and Annuity Variable Universal Life Account (the "VUL
Account") will benefit the VUL Account and Policyowners.
(4) The VUL Account will invest only in management companies which have
undertaken to have a board of directors, a majority of whom are not
interested persons of the Phoenix Life and Annuity Company, formulate
and approve any plan under Rule 12b-1 to finance distribution
expenses.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of selected variable life insurance policies whose
registration statements have been declared effective by the Commission which
contain similar guarantees and are sold in similar markets. Registrant
undertakes to keep and make available to the Commission on request the documents
used to support the representation in paragraph (2) above and a memorandum
setting forth the basis for the representation in paragraph (3) above.
II-1
<PAGE>
Pursuant to Section 26(e)(2)(A) of the Investment Company Act of 1940, as
amended, Phoenix Life and Annuity Company represents that the fees and charges
deducted under the Policies, in the aggregate, are reasonable in relation to the
expenses expected to be incurred and the risks to be assumed thereunder by
Phoenix Life and Annuity Company.
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Registration Statement comprises the following papers and
documents:
The facing sheet.
The cross-reference sheet to Form N-8B-2.
The Prospectus describing Phoenix Life and Annuity Company Policy Form V604
and riders thereto ("Flex Edge Success"), consisting of 31 pages.
The undertaking to file reports.
The Rule 484 undertaking.
Representations, Description and Undertakings Pursuant to Paragraph
(b)(13)(iii)(F) of Rule 6e-3(T) under the Investment Company Act of 1940.
The signature page.
The powers of attorney, filed via Edgar with the Registration Statement on
September 27, 1996 and incorporated herein by reference.
Written consents of the following persons:
(a) Richard J. Wirth, Esq.
(b) Jorden Burt Berenson & Johnson LLP
(c) Price Waterhouse, LLP
(d) M. Spencer Hamilton, F.S.A.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A to the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of the Board of Directors of Depositor establishing
the VUL Account, filed via Edgar with the Registration Statement
on September 27, 1996 and incorporated herein by reference.
(2) Not Applicable.
(3) Distribution of Policies:
(a) Form of Underwriting Agreement between Depositor and Phoenix
Equity Planning Corporation.
(b) Form of Agreement between Phoenix Equity Planning Corporation
and Independent Brokers with respect to the sale of Policies.
(c) Not Applicable.
(4) Not Applicable.
(5) Specimen Policies with optional riders.
Flexible Premium Variable Universal Life Insurance Policy Form
Number V604 of Depositor.*
(6) (a) Charter of Phoenix Life and Annuity Company, filed via Edgar
with the Registration Statement on September 27, 1996 and
incorporated herein by reference.
(1) Certificate of Incorporation dated November 2, 1981.
(2) Certificate of Amendment of its Articles of
Incorporation dated March 16, 1984.
(3) Certificate of Amendment of its Articles of
Incorporation dated April 18, 1985.
(4) Certificate of Amendment of its Articles of
Incorporation dated December 3, 1992.
(5) Certificate of Amendment of its Articles of
Incorporation dated May 9, 1996.
II-2
<PAGE>
(b) By-Laws of Phoenix Life and Annuity Company, filed via Edgar
with the Registration Statement on September 27, 1996 and
incorporated herein by reference.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Form of application for Flex Edge Success.*
(11) Memorandum describing transfer and redemption procedures and
method of computing adjustments in payments and cash values upon
conversion to fixed benefit policies.*
2. Opinion of Richard J. Wirth, Esq., Counsel of Depositor as to the legality
of the securities being registered. (See number 8 below.)
3. Not Applicable. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not Applicable.
5. Financial Data Schedule
6. Consent of Jorden Burt Berenson & Johnson, LLP.
7. Consent of Price Waterhouse, LLP.
8. Opinion and Consent of Richard J. Wirth, Esq.
9. Consent of M. Spencer Hamilton, F.S.A.
- --------------
* Filed herewith.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Phoenix Life and Annuity Variable Universal Life Account has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Hartford, State of Connecticut on the 14th day
of March, 1997.
PHOENIX LIFE AND ANNUITY VARIABLE UNIVERSAL LIFE ACCOUNT
--------------------------------------------------------
(Registrant)
By: PHOENIX LIFE AND ANNUITY COMPANY
--------------------------------------------
(Depositor)
By: /s/ Dona D. Young
--------------------------------------------
*Dona D. Young, Executive Vice President,
Individual Insurance and General Counsel
ATTEST: /s/Keith D. Robbins
------------------------------
Keith D. Robbins, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director March 14, 1997
- ---------------------------------------
*Richard H. Booth
Director March 14, 1997
- ---------------------------------------
*Robert G. Chipkin
Chairman of the Board, President and Chief March 14, 1997
- --------------------------------------- Executive Officer (Principal Executive Officer)
*Robert W. Fiondella
Director March 14, 1997
- ---------------------------------------
*Joseph E. Kelleher
Director March 14, 1997
- ---------------------------------------
*Robert G. Lautensack
Director March 14, 1997
- ---------------------------------------
*Philip R. McLoughlin
Director March 14, 1997
- ---------------------------------------
*Charles J. Paydos
Director, Executive Vice President, Chief March 14, 1997
- --------------------------------------- Financial Officer and Treasurer (Principal
*David W. Searfoss Accounting and Financial Officer)
Director March 14, 1997
- ---------------------------------------
*Simon Y. Tan
Director March 14, 1997
- ---------------------------------------
*Dona D. Young
</TABLE>
By: /s/ Dona D. Young
---------------------------------
* Dona D. Young as Attorney-in-Fact pursuant to Powers of Attorney, copies
of which were previously filed.
S-1(c)
EXHIBIT 99.1.A(5)
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
POLICY FORM NUMBER V604 OF DEPOSITOR
<PAGE>
(Phoenix Phoenix Home Life Phoenix Life and Annuity Company
Logo Main Administrative Office:
Here) One American Row
Hartford, CT 06115
- -------------------------------------------------------------------------------
INSURED: John Doe 35 - Male :ISSUE AGE AND SEX
POLICY NUMBER: 2,000,000 November 1, 1995 :POLICY DATE
FACE AMOUNT: $100,000.00
Dear Policyowner:
We agree to pay the benefits of this policy in accordance with its provisions.
It is important to us that you are satisfied with your policy and that it meets
your insurance goals. For service or information on this policy, contact the
agent who sold the policy, any of our agency offices, or our Variable and
Universal Life Administration at the following address:
PHOENIX LIFE AND ANNUITY COMPANY
VARIABLE PRODUCTS OPERATIONS
101 MUNSON STREET
P.O. BOX 942
GREENFIELD, MA 01302-0942
RIGHT TO CANCEL. You have the right to cancel this policy within a limited time
after the policy is delivered to you. The policy may be cancelled by returning
the policy to us at our Variable and Universal Life Administration before the
later of:
1. 10 days after the policy is delivered to you; or
2. 10 days after a Notice of Right to Cancel is delivered to you; or
3. 45 days after Part 1 of the application is signed;
for a refund of:
1. the policy value less debt, if any; plus
2. any monthly deductions, partial surrender fees, and other charges made
under the policy.
The policy value and debt will be determined as of the nearest Valuation Date
coincident with or following the date we receive the returned policy at our
Variable and Universal Life Division.
Signed for Phoenix Life and Annuity Company at its Main Administrative Office
in Hartford, Connecticut.
Sincerely yours,
/s/ Dona D. Young /s/ Robert W. Fiondella
- ----------------------------------- -----------------------------------
Dona D. Young Robert W. Fiondella
Secretary Chief Executive Officer
Registrar
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE
RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST
ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE SUB-ACCOUNTS WITHIN OUR SEPARATE
ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER
VALUES MAY INCREASE OR DECREASE IN AMOUNT OR DURATION. SEE PART 7 FOR A
DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
V604 ELIGIBLE FOR ANNUAL DIVIDENDS
<PAGE>
SCHEDULE PAGE
BASIS INFORMATION
INSURED: John Doe 35-Male: ISSUE AGE AND SEX
POLICY NUMBER: 2,000,000 November 1, 1995: POLICY DATE
FACE AMOUNT: $100,000.00
OWNER AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
DEATH BENEFIT OPTION: Death Benefit Option 1 or as later changed as provided
herein.
BENEFICIARY AS STATED IN THE APPLICATION UNLESS LATER CHANGED.
PREMIUMS
--------
ISSUE PREMIUM: $1,000.00 due on November 1, 1995
SUBSEQUENT PLANNED ANNUAL PREMIUM: $1,000.00
TOTAL PREMIUM LIMIT: Greater of $16,257.00 and result of $1,331.00 multiplied
by the number of policy elapsed years (or fraction
thereof) ending on November 1, 2060
PREMIUM DUE DATES: The amount and time of premium payments following the
Policy Date are flexible. Subsequent planned premiums are
payable on the first day of each November thereafter for
the life of the insured, but not beyond November 1, 2060.
SUB-ACCOUNT ALLOCATION SCHEDULE ON THE POLICY DATE
--------------------------------------------------
MONTHLY
SUB-ACCOUNT* PREMIUMS DEDUCTIONS**
Money Market 100% Proportionate
* See next page for description of sub-accounts.
** See Part 1 for definition of Proportionate. Sub-accounts marked "NONE" will
be charged with a portion of the monthly deduction only if the sub-accounts
market "PROPORTIONATE" are not sufficient to make the full monthly
deduction.
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 1 OF 7
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
SEPARATE ACCOUNT SUB-ACCOUNTS
FUND: THE PHOENIX EDGE SERIES FUND
MONEY MARKET The investment objective of the Money Market
Sub-Account is to provide maximum current income
consistent with capital preservation and
liquidity.
GROWTH The investment objective of the Growth Sub-Account
is to achieve intermediate and long-term growth of
capital, with income as a secondary consideration.
BOND The investment objective of the Bond Sub-Account
is to seek long-term total return by investing in
a diversified portfolio of high yield (high risk)
and high quality fixed income securities.
TOTAL RETURN The investment objective of the Total Return
Sub-Account is to realize as high a level of the
total rate of return over an extended period of
time as is considered consistent with prudent
investment risk.
INTERNATIONAL The investment objective of the International
Sub-Account is to seek a high total return
consistent with reasonable risk. The International
Sub-Account intends to invest primarily in an
internationally diversified portfolio of equity
securities. The International Portfolio provides a
means for investors to invest a portion of their
assets outside the United States.
BALANCED The investment objective of the Balanced
Sub-Account is to seek a reasonable income,
long-term capital growth and conservation of
capital. The Balanced Sub-Account intends to
invest based on combined considerations of risk,
income, capital enhancement and protection of
capital value.
REAL ESTATE The investment objective of the Real Estate
SECURITIES Securities Sub-Account is to seek capital
appreciation and income with approximately equal
emphasis. It intends under normal circumstances to
invest in marketable securities of publicly traded
Real Estate Investment Trusts (REITS) and
companies that operate, develop, manage and/or
invest in real estate located primarily in the
United States.
STRATEGIC THEME The investment objective of the Strategic Theme
Sub-Account is to seek long-term appreciation of
capital by identifying securities benefiting from
long-term trends present in the United States and
abroad. The Strategic Theme Sub-Account intends to
invest primarily in common stocks believed to have
substantial potential for capital growth.
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 2 OF 7
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
ABERDEEN NEW ASIA The investment objective of the Aberdeen New Asia
Sub-account is to provide long-term capital
appreciation. This Sub-account will invest
primarily in a diversified portfolio of equity
securities of issuers located in at least three
different countries throughout Asia, other than
Japan.
GENERAL ACCOUNT SUB-ACCOUNTS
GUARANTEED INTEREST The Guaranteed Interest Account is not part of the
ACCOUNT Separate Account. We reserve the right to limit
cumulative deposits made to the Guaranteed
Interest Account during any one-week period to not
more than $250,000. It is accounted for as part of
our General Account. We will credit interest daily
on any amounts held under the unloaned portion of
the Guaranteed Interest Account at such rates as
we shall determine but in no event will the
effective annual rate of interest be less than 4%.
Twice each calendar month we will set the interest
rate that will apply to any deposit made to the
unloaned portion of the Guaranteed Interest
Account, during the applicable period of that
month. That rate will remain in effect for such
deposits for an initial guaranteed period, of one
full year. Upon expiry of the initial one-year
guarantee period and for any deposits whose
guarantee has just ended, the applicable rate
shall be the same rate that applies to new
deposits made at the time the guarantee period
expires. Such rate shall likewise remain in effect
for such deposits for a subsequent guarantee
period of one full year.
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 3 OF 7
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
SUB-ACCOUNT FEES
----------------
MAXIMUM DAILY MORTALITY AND EXPENSE RISK FEE:
0.0000219 (Based on Annual Rate of 0.80% for 15
Policy Years)
0.0000068 (Based on Annual Rate of 0.25% after 15
Policy Years)
MAXIMUM DAILY TAX FEE: 0 or such greater amount as may be assessed as a
result of a change in tax laws.
POLICY CHARGES
--------------
ISSUE EXPENSE CHARGE: $150.00
ISSUE EXPENSE CHARGE
FOR FACE INCREASES
AFTER POLICY DATE: $1.50 per thousand of Face Increase, but not to
exceed $600.
PREMIUM TAX CHARGE: 2.25% of premiums
FEDERAL TAX CHARGE: 1.50% of premiums
MONTHLY DEDUCTION: See Part 4, "Monthly Deduction".
Includes cost of insurance, any rider charges, any
flat extra mortality charges, a monthly
administrative charge which shall not exceed $10
and is currently set at $5, and one-twelfth of the
Issue Expense Charge for the first policy year and
for the first policy year after an increase in
face amount.
MAXIMUM TRANSFER $0 - First two transfers per policy year.
CHARGE: $10 - Subsequent transfers per policy year.
PARTIAL SURRENDER FEE: Lesser of $25.00 or 2% of partial surrender amount
paid.
SURRENDER CHARGE: See Table on next page.
OTHER RATES
-----------
GUARANTEED INTEREST ACCOUNT:
UNLOANED PORTION: Minimum Rate 4%
LOANED PORTION: 2%
LOAN INTEREST RATE: 4% for the first 10 policy years or until
age 65 whichever is sooner,
3% thereafter.
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 4 OF 7
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
SURRENDER CHARGE
----------------
In Policy Years 1 through 10 the full Surrender Charge is given in the table
below. The applicable Surrender Charge in any Policy Month is the full Surrender
Charge minus any Surrender Charges previously paid, but not less than zero. In
all policy years after the 10th policy year, the Surrender Charge is zero.
SURRENDER CHARGE TABLE
Policy Surrender Policy Surrender Policy Surrender
Month Charge Month Charge Month Charge
- ----- ------ ----- ------ ----- ------
1-60 1295.14 80 1056.12 100 720.48
61 1283.19 81 1044.16 101 684.37
62 1271.24 82 1032.21 102 648.27
63 1259.29 83 1020.26 103 612.17
64 1247.34 84 1008.31 104 576.06
65 1235.39 85 996.36 105 539.96
66 1223.44 86 984.41 106 503.85
67 1211.48 87 972.46 107 467.75
68 1199.53 88 960.50 108 431.65
69 1187.58 89 948.55 109 395.54
70 1175.63 90 936.60 110 359.44
71 1163.68 91 924.65 111 323.33
72 1151.73 92 912.70 112 287.23
73 1139.78 93 900.75 113 251.13
74 1127.82 94 888.80 114 215.02
75 1115.87 95 876.84 115 178.92
76 1103.92 96 864.89 116 142.82
77 1091.97 97 828.79 117 106.71
78 1080.02 98 792.69 118 70.61
79 1068.07 99 756.58 119 34.50
120 0.00
If you fully surrender your policy in the first two policy years, you may be
entitled to a reduction in the amount of the above Surrender Charge. Any such
reduction will depend on the amount of premium paid. Assuming that you pay the
planned premium stated in the Schedule Pages in each of the first two policy
years, such reduced Surrender Charge would equal $785.00 in the first policy
year, and $882.04 in the second policy year.
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 5 OF 7
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
BASED ON 1980 CSO MORTALITY TABLE
PER $1,000 OF NET AMOUNT AT RISK
RISK CLASSIFICATION: MALE NON SMOKER
Attained Monthly Attained Monthly Attained Monthly
Age Rate Age Rate Age Rate
--- ---- --- ---- --- ----
35 .1408 57 .7908 79 7.1433
36 .1475 58 .8683 80 7.8058
37 .1567 59 .9558 81 8.5433
38 .1667 60 1.0533 82 9.3767
39 .1783 61 1.1617 83 10.3158
40 .1908 62 1.2850 84 11.3425
41 .2058 63 1.4258 85 12.4333
42 .2208 64 1.5850 86 13.5667
43 .2383 65 1.7608 87 14.7325
44 .2558 66 1.9500 88 15.9075
45 .2767 67 2.1550 89 17.1075
46 .2992 68 2.3750 90 18.3492
47 .3233 69 2.6150 91 19.6533
48 .3492 70 2.8858 92 21.0625
49 .3783 71 3.1925 93 22.6358
50 .4092 72 3.5467 94 24.6375
51 .4458 73 3.9533 95 27.4967
52 .4883 74 4.4100 96 32.0458
53 .5358 75 4.9000 97 40.0167
54 .5908 76 5.4217 98 54.8317
55 .6517 77 5.9700 99 83.3333
56 .7192 78 6.5392
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 6 OF 7
<PAGE>
SCHEDULE PAGE
(CONTINUED)
INSURED: John Doe POLICY NUMBER: 2,000,000
TABLE OF FACE AMOUNTS OF INSURANCE
---------------------------------
ISSUE DATE FACE AMOUNTS RISK CLASSIFICATION
---------- ------------ -------------------
November 1, 1995 $100,000.00 Male Non-Smoker
RIDERS AND RIDER BENEFITS
-------------------------
RIDER PAYABLE MONTHLY
RIDER DESCRIPTION DATE AMOUNT PREMIUM TO CHARGE
- ----------------- ----- ------ ------- ------- -------
V604 DATE PREPARED: OCTOBER 1, 1996 PAGE 7 OF 7
<PAGE>
TABLE OF CONTENTS
Part Page
Schedule Page(s)
Basic Information
Description of Sub-accounts
Policy Charges and Rates
Table of Surrender Charges
Table of Guaranteed Maximum Insurance
Rates
Table of Face Amounts of Insurance
and Riders
Table of Contents
1. Definitions................................... 1-2
2. About the Policy.............................. 2
Effective Date of Insurance............... 2
Entire Contract........................... 2
Dividends................................. 2
Contestability............................ 2
Suicide................................... 3
Misstatement of Age or Sex................ 3
Assignments............................... 3
Annual Reports............................ 4
Transaction Rules......................... 4
3. Rights of Owner............................... 4
Who is the Owner.......................... 4
What are the Rights of the Owner 4
How to Change the Owner................... 5
4. Premiums and Charges.......................... 5
Premium Payments.......................... 5
Premium Deductions........................ 5
Net Premium Allocation
to Sub-Accounts........................ 6
Premium Flexibility....................... 6
Total Premium Limit....................... 6
Grace Period & Lapse...................... 7
Policy Value.............................. 7
Monthly Deduction......................... 7
5. The Accounts
Guaranteed Interest Account............... 8
Separate Account.......................... 9
Voting Rights............................. 10
Share of Separate Account
Sub-Account Values...................... 10
Unit Value................................ 10
Net Investment Factor..................... 11
6. Lifetime Benefits............................. 11
Transfers................................. 11
Loans..................................... 12
Loan Interest............................. 13
Cash Surrender Value...................... 13
Full Surrender............................ 13
Partial Surrender......................... 13
Additional Insurance Option............... 14
7. Death Benefits................................ 15
Death Benefit Option 1.................... 15
Death Benefit Option 2.................... 15
Minimum Death Benefit..................... 15
Death Benefit Following Insured's
Age 100................................. 16
How to Change the Death
Benefit Option.......................... 16
Request for an Increase in
Face Amount............................. 17
Right to Cancel Face Amount Increases..... 17
Request for Decrease in Face Amount....... 17
Death Proceeds............................ 17
Interest on Death Proceeds................ 18
The Beneficiary........................... 18
How to Change the Beneficiary............. 18
8. Payment Options............................... 18
Who May Elect Payment
Options................................. 18
How to Elect a Payment Option............. 18
Payment Options........................... 19
(1) Payment in One Sum.................... 19
(2) Left to Earn Interest................. 19
(3) Payments for a Specified
Period............................. 19
(4) Life Annuity with Specified
Period Certain..................... 19
(5) Life Annuity.......................... 20
(6) Payments of Specified
Amount............................. 20
(7) Joint Survivorship Annuity
with 10-year Period Certain........ 20
Additional Interest....................... 20
9. Tables of Payment Option Amounts.............. 21
V604
<PAGE>
PART 1: DEFINITIONS
ATTAINED AGE Age of the insured on the birthday nearest the
most recent policy anniversary.
DEBT Unpaid loans against this policy plus accrued
interest.
GENDER The terms "he," "his" and "him" are applicable
without regard to sex. Where proper, "she," "hers"
or "her" may be substituted.
IN FORCE The policy has not terminated.
IN WRITING (WRITTEN In a written form satisfactory to us and filed at
REQUEST) our VPO.
VPO Our Variable Products Operations. The address
shown on the cover page of this policy.
MONTHLY CALCULATION DAY The first Monthly Calculation Day of a policy is
the same day as its Policy Date as shown on the
Schedule Page. Subsequent Monthly Calculation Days
are the same day for each month thereafter or, if
such day does not fall within a given month, the
last day of that month will be the Monthly
Calculation Day.
PAYMENT DATE The Valuation Date on which a premium payment or
loan repayment is received at our VPO unless it is
received after the close of the New York Stock
Exchange in which case it will be the next
Valuation Date.
POLICY ANNIVERSARY The anniversary of the Policy Date.
POLICY DATE The policy date as shown on the Schedule Page. It
is the date from which policy years and policy
anniversaries are measured.
POLICY MONTH The period from one Monthly Calculation Day up
to, but not including, the next Monthly
Calculation Day.
POLICY VALUE The policy value as defined in Part 4.
POLICY YEAR The first policy year is the one-year period
from the Policy Date to, but not including, the
first policy anniversary. Each succeeding policy
year is the one-year period from the period from
the policy anniversary to but not including the
next policy anniversary.
PROPORTIONATE Amounts are allocated to sub-accounts on a
proportionate basis such that the ratios of this
policy's sub-account values to each other are the
same before and after the allocation.
SEPARATE ACCOUNT Phoenix Life and Annuity Variable Universal Life
Account.
SUB-ACCOUNTS The Guaranteed Interest Account (exclusive of the
loaned portion of such account) and the accounts
within our Separate Account to which non-loaned
assets under the policy are allocated as described
in Part 5.
V604 -1-
<PAGE>
UNIT A standard of measurement, as described in
Part 4, used to determine the share of this policy
in the value of each sub-account of the Separate
Account.
VALUATION DATE Every day the New York Stock Exchange is open for
trading and Phoenix Home Life is open for
business.
VALUATION PERIOD The period in days from the end of one Valuation
Date through the next Valuation Date.
WE (OUR, US) Phoenix and Annuity Company.
YOU (YOUR) The owner of this policy.
PART 2: ABOUT THE POLICY
EFFECTIVE DATE OF This policy will begin in force on the Policy
INSURANCE Date, provided the issue premium is paid while
the insured is alive.
ENTIRE CONTRACT This policy and the written application of the
policyholder, a copy of which is attached to and
made a part of the policy, are the entire
contract between you and us. Any change in the
provisions of the contract, to be in effect, must
be signed by one of our executive officers and
countersigned by our registrar or one of our
executive officers. This policy is issued by us at
our Main Administrative Office in Hartford,
Connecticut. Any benefits payable under this
policy are payable at our Main Administrative
Office.
DIVIDENDS While this policy is in force it will share in
our divisible surplus to the extent that we may
provide. We do not expect any dividends to be
apportioned to this policy. The share to be
apportioned to this policy, if any, will be
determined annually by us and credited no later
than the end of the policy year for which it was
determined. You may elect that the dividend be
paid to you in cash or applied under any other
method mutually agreed to by you and us.
CONTESTABILITY We rely on all statements made by or for the
insured in the written application. These
statements are considered to be representations
and not warranties. We can contest the validity of
this policy and any coverage under it for any
material misrepresentation of fact. To do so,
however, the misrepresentation must be contained
in an application and the application must be
attached to this policy when issued or made a part
of this policy when a change is made.
We cannot contest the validity of the original
face amount of this policy after it has been in
force during the insured's lifetime for two years
form its Policy Date. If we contest the policy, it
will be based on the application for this policy.
We cannot contest the validity of any increase in
face amount after the policy has been in force
during the insured's lifetime for two years from
the issue date of the increase. Any such contest
will be based on the supplemental application for
the increase.
V604 -2-
<PAGE>
If we contest the validity of all or a portion of
the face amount provided under this policy, the
amount we pay with respect to such portion of the
face amount will be limited to the higher of a
return of any paid premium required by us for the
contested Face Amount, or the sum of any monthly
deductions made under this policy for the
contested face amount.
SUICIDE If within two years from the Policy Date the
insured dies by suicide, while sane or insane, and
while this policy is in force, the amount of death
benefit will be limited to the policy value
adjusted as follows:
a. we will add any monthly deductions made under
this policy;
b. we will subtract any debt owed us under this
policy.
If within two years from the issue date of an
increase in face amount the insured dies by
suicide, while sane or insane, and while the
policy is in force, the death benefit for that
increase will be limited to a pro-rata portion of
the policy value corresponding to such increase
adjusted as follows:
a. we will add the sum of the monthly deductions
corresponding to such increase;
b. we will subtract any debt owed us under this
policy.
MISSTATEMENT OF If the age or sex of the insured has been
AGE OR SEX misstated, any benefits payable under this policy
will be adjusted to reflect the correct age and
sex as follows:
(A) For adjustments made prior to the insured's
death, no change will be made to the then
current cost of insurance rates, but
subsequent cost of insurance rates will be
adjusted to such rates that would apply had
this policy been issued based on the correct
age and sex.
(B) For adjustments made at the time of the
insured's death, the death benefit payable
will be adjusted to reflect the amount of
coverage that would have been supported by the
most recent monthly deduction based on the
then current cost of insurance rates for the
correct age and sex.
ASSIGNMENTS Except as otherwise provided herein, any or
all of the rights in this policy may be assigned.
We will not be considered to have notice of any
assignment until we receive the original or copy
of the assignment at our VPO. We are not
responsible for the validity of any assignment.
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ANNUAL REPORTS We will annually send you a report showing for
this policy.
a. the then current policy value, cash surrender
value, death benefit and face amount;
b. the premiums paid, and deductions and partial
surrenders made since the last report;
c. any outstanding debt;
d. an accounting of the change in policy value
since the last report; and
e. such additional information as required by
applicable law or regulation.
TRANSACTION RULES Requests for transactions involving sub-accounts
will usually be processed within 7 days after we
receive the written request at our VUL. However,
we may, at our discretion, postpone the payment of
any death benefit in excess of the initial face
amount, any policy loans, partial withdrawals,
surrenders or transfers:
(A) For up to six months from the date of request,
for any transactions dependent upon the value
of the Guaranteed Interest Account; or
(B) Otherwise, for any period during which the New
York Stock Exchange is closed for trading
(except for normal holiday closing) or when
the Securities and Exchange Commission has
determined that a state of emergency exists
which may make processing such transactions
impractical.
PART 3: RIGHTS OF OWNER
WHO IS THE OWNER The owner is the person named as owner in the
application, unless later changed as provided in
this policy. If you, the owner, are not the
insured and you die before the insured, ownership
rights in this policy will pass to the successive
owner if one has been named, except that if joint
owners are designated, this policy would remain
with the surviving joint owners until death of the
survivors. The insured will be the owner if no
other person is named the owner. If more than one
person is named as owner, they must act jointly
unless you and we agree otherwise.
WHAT ARE THE RIGHTS You control this policy during the insured's
OF THE OWNER lifetime but not until this policy begins in
force. Unless you and we agree otherwise, you may
exercise all rights provided under this policy
without the consent of anyone else. These rights
include the right to:
a. Receive any amounts payable under this policy
during the insured's lifetime.
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b. change the owner or the interest of any owner.
c. Change the planned premium payment amount and
frequency. See Part 4.
d. Change the sub-account allocation schedule for
premium payments and monthly deductions. See
Part 4.
e. Transfer amounts between and among
sub-accounts. See Part 6.
f. Obtain policy loans. See Part 6.
g. Obtain a partial surrender. See Part 6.
h. Surrender this policy for its cash surrender
value. See Part 6.
i. Select a payment option for any cash surrender
value that becomes payable. See Part 6.
j. Request changes in the insurance amount. See
Part 7.
k. Change the beneficiary of the death benefit.
See Part 7.
l. Assign, release, or surrender any interest in
the policy.
m. Change the death benefit option. See Part 7.
You may exercise these rights only while the
insured is alive. Exercise of any of these rights
will, to the extent thereof, assign, release, or
surrender the interest of the insured and all
other beneficiaries and owners under this policy.
HOW TO CHANGE THE You may change the owner by written request,
OWNER satisfactory to us, filed at our VPO.
PART 4: PREMIUMS
PREMIUM PAYMENTS The issue premium as shown on the Schedule Page
is due on the Policy Date. The insured must be
alive when the issue premium is paid. Thereafter,
the amount and payment frequency of planned
premiums are as shown on the Schedule Page unless
later changed as described below. All premiums are
payable at our VPO, except that the issue premium
may be paid to an authorized agent of ours for
forwarding to our VPO. No benefit associated with
any premium shall be provided until it is actually
received by us at our VPO.
PREMIUM DEDUCTIONS Premium tax charges and federal tax charges as
stated on the Schedule Page, will be deducted from
any premiums received by us at our VPO. If the
issue premium is received by us at our VPO after
the policy date, then it will also be reduced by
the amount necessary to cover any past unpaid
monthly deductions described below. In addition,
payments received by us during a grace period will
also be reduced by the amount needed to cover any
monthly deductions during the grace period.
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NET PREMIUM ALLOCATION The premiums, net of these charges, will be
TO SUB-ACCOUNTS applied on the Payment Date to the various
sub-accounts based on the premium allocation
schedule elected in the application for this
policy or as later changed by you. You may change
the allocation schedule for premium payments by
written notice filed with us at our VPO.
Allocations to each sub-account must be expressed
in whole percentages unless we agree otherwise.
The number of units credited to each sub-account
of the Separate Account will be determined by
dividing the net premium applied to that
sub-account by the unit value of that sub-account
on the Payment Date. The number of units credited
to each sub-account is carried to four decimal
places.
PREMIUM FLEXIBILITY Subject to the total premium limit described in
the next section and except for the issue premium,
you may change the amount and frequency of premium
payments while this policy is in force during the
lifetime of the insured as follows:
a. You may increase or decrease the planned
premium amount or payment frequency at any
time by written notice to us. We reserve the
right to limit increases to such maximums as
we may establish from time to time.
b. Additional premium payments may be made at any
time.
c. Each premium payment made must at least equal
$25 or, if during a grace period, the amount
needed to prevent lapse of this policy. We
reserve the right to reduce this limit.
TOTAL PREMIUM LIMIT The total premium limit is shown on the Schedule
Page and is applied to the sum of all premiums
received by us for this policy to date, reduced by
the sum of all partial surrender amounts paid by
us to date. if the total premium limit is
exceeded, we will pay you the excess, with
interest at an annual rate of not less than 4%,
not later than 60 days after the end of the policy
year in which the limit was exceeded. The policy
value will be adjusted to reflect such refund. The
amount to be taken from the sub-account will be
allocated in the same manner as provided for
monthly deductions unless you request another
allocation in writing.
The total premium limit may be exceeded if
additional premium is needed to prevent lapse
under the grace period and lapse provision. The
total premium limit may change due to:
a. a partial surrender or a decrease in face
amount;
b. addition, cancellation, or change of a rider;
or
c. a change in federal tax laws or regulations.
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If the total premium limit changes, we will send
you a Revised Schedule Page reflecting the change.
However, we reserve the right to require that this
policy be returned to us so that we may endorse
the change.
GRACE PERIOD AND LAPSE If, on any Monthly Calculation Day, the required
monthly deduction exceeds the policy value during
the first three policy years, or the cash
surrender value after the third policy year, a
grace period of 61 days will be allowed for the
payment of an amount equal to three times the
required monthly deduction. This policy will
continue in force during any such grace period. We
will main a written notice to you and any assigns
at the post office addresses last known to us as
to the amount of premium required. If such premium
is not paid to us by the end of the grace period
this policy will lapse without value, but not
before 30 days have elapsed since we mailed our
written notice to you. The "date of lapse" will be
the Monthly Calculation Day on which the deduction
was to be made, and any insurance and rider
benefits provided under this policy will terminate
as of that date.
POLICY VALUE The policy value is the sum of this policy's
share in the value of each sub-account of the
Separate Account and the value of this policy's
Guaranteed Interest Account. See Part 5 for an
explanation as to how this policy's share in the
value of each sub-account of the Separate Account
is determined and for a description of the
Guaranteed Interest Account.
MONTHLY DEDUCTION A deduction is made each policy month from the
policy value (excluding the value of the loaned
portion of the Guaranteed Interest Account) to
pay:
(a) the cost of insurance provided under this
policy;
(b) any flat extra mortality charges;
(c) the cost of any rider benefits provided;
(d) an administrative charge as shown on the
Schedule Page. The administrative charge may
vary but in no event will exceed the maximum
amount shown on the Schedule Page. We will
send you a written notice of any change at
least 30 days in advance of such change; and
(e) for the first policy year and for the first
policy year after a face amount increase,
one-twelfth of the Issue Expense charge shown
on the Schedule Page. Any unpaid balance of
the Issue Expense Charge will be paid to us
upon policy lapse or termination.
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Deductions are made on each Monthly Calculation
Day. If the Monthly Calculation Day is not a
valuation date, the monthly deduction for that
policy month will be made on the next valuation
date.
You may request in the application for this policy
that monthly deductions not be taken from certain
specified sub-accounts. Such a request may later
be changed by notifying us in writing, but only
with respect to future monthly deductions. Monthly
deductions will be taken from this policy's share
of the remaining sub-accounts exclusive of the
loaned portion of the Guaranteed Interest Account,
on a proportionate basis. In the event this
policy's share in the value of such sub-accounts
is not sufficient to permit the withdrawal of the
full monthly deduction, the remainder will be
taken on a proportionate basis from this policy's
share of each of the other sub-accounts exclusive
of the loaned portion of the Guaranteed Interest
Account. The number of units deducted from each
sub-account of the Separate Account will be
determined by dividing the portion of the monthly
deduction allocated to each such sub-account by
the unit value of that sub-account on the Monthly
Calculation Day.
Each monthly deduction will pay the cost of
insurance from the Monthly Calculation Day on
which the deduction is made up to, but not
including, the next Monthly Calculation Day. The
cost of insurance is equal to the cost of
insurance rate for the current policy month
divided by 1,000 and then multiplied by the result
of:
(a) the death benefit on the Monthly Calculation
Day; minus
(b) the policy value on the Monthly Calculation
Day.
The cost of insurance rate for the current policy
month is based on the insured's attained age and
risk classification. The rate used in computing
the cost of insurance is obtained from the Table
of Guaranteed Maximum Cost of Insurance Rates on
the Schedule Page for the risk classification(s)
shown, or such lower rate as we may declare. Any
change we make in the declared cost of insurance
rates will be uniform by class and based on our
future mortality, expense and lapse expectations.
The declared cost of insurance rates for an
insured will not be affected by a change in the
insured's health or occupation.
PART 5: THE ACCOUNTS
Assets under this policy may be allocated either
to the Guaranteed Interest Account or to any of
the sub-accounts of the Separate Account.
GUARANTEED INTEREST The Guaranteed interest account is not part of
ACCOUNT the Separate Account. It is part of our General
Account. It is part of our General Account. We
reserve the right to limit cumulative deposits,
including transfers, to the unloaned
V604 -8-
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portion of the Guaranteed Interest Account during
any one-week period to no more than $250,000. We
will credit interest daily on the amounts
allocated under this policy to the Guaranteed
Interest Account. The loaned portion of the
Guaranteed Interest Account will be credited
interest at an effective annual fixed rate as
shown on the Schedule Page. We will credit
interest on the unloaned portion of the Guaranteed
Interest Account at such rates as we shall
determine but in no event will the effective
annual rate of interest on such portion be less
than the minimum interest rate shown on the
Schedule Page.
Twice each calendar month we will set the interest
rate that will apply to any net premium or
transferred amounts deposited to the unloaned
portion of the Guaranteed Interest Account during
the applicable period of that month. That rate
will remain in effect for such deposits, for an
initial guarantee period of one full year. Upon
expiry of the initial one-year guarantee period,
and each subsequent one-year guarantee period
thereafter, the rate applicable for any deposits
in the unloaned portion of the Guaranteed Interest
Account whose guarantee period has just ended
shall be the same rate that applied to new
deposits to such sub-account at the time the
guarantee period expires. Such rate shall likewise
remain in effect for such deposits for a
subsequent guarantee period of one full year.
All transfers, partial surrenders, and deductions
from the unloaned portion of the Guaranteed
Interest will be assessed on a Last-In, First-Out
basis based on the date the deposit was initially
made to the unloaned portion of such sub-account.
At the end of each policy year and at the time of
any debt repayment, interest credited to the
loaned portion of the Guaranteed Interest Account
will be transferred to the unloaned portion of the
Guaranteed Interest Account. We reserve the right
to add other Guaranteed Interest Accounts,
subject, where required, to approval by the
insurance supervisory official of the state where
this policy is delivered.
SEPARATE ACCOUNT The Separate Account has been established by us
as a separate account pursuant to Missouri law and
is registered as a unit investment trust under the
Investment Company Act of 1940 (1940 Act). Income
and realized and unrealized gains and losses from
assets in the Separate account are credited to or
charged against it without regard to our other
income, gains or losses. We own the Separate
Account assets and they are kept separate from the
Assets of our General Account. Separate Account
assets will be valued on each valuation date. The
portion of the Separate Account equal to reserves
and liabilities for policies supported by the
Separate Account will not be charged with any
liabilities arising out of our other business. We
reserve the right to use assets of the Separate
Account in excess of these reserves and
liabilities for any purposes.
The Separate Account has several sub-accounts
available under this policy as shown on the
Schedule Page. We have the right to add
V604 -9-
<PAGE>
additional sub-accounts of the Separate Account
subject to approval by the Securities and Exchange
Commission and, where required, by the insurance
supervisory official of the state where this
policy is delivered. We use the assets of the
Separate Account to buy shares of the Fund
identified on the Schedule Page according to your
allocation instructions. The Fund is registered
under the 1940 Act as an open-end, diversified
management investment company. The Fund has
separate Portfolios that correspond to the
sub-accounts of the Separate Account. Assets of
each such sub-account are invested in shares of
the corresponding Fund Portfolio.
A Portfolio of the Fund might make a material
change in its investment policy. If that occurs,
you will be notified of the change. In addition,
no change will be made in the investment policy of
any of the sub-accounts of the Separate Account
without approval of the appropriate insurance
supervisory official of our domiciliary state of
Missouri. The approval process is on file with the
insurance supervisory official of the state where
the policy is delivered. If, in our judgment, a
Portfolio of the Fund becomes unsuitable for
investment by a sub-account of the Separate
Account for any reason, we may substitute shares
of another Portfolio of the Fund or shares of
another mutual fund. Any such change will be
subject to approval by the Securities and Exchange
Commission and, where required, by the insurance
supervisory official of the state where this
policy is delivered.
VOTING RIGHTS Although we are the legal owner of the Fund
shares, we will vote the shares at regular and
special meetings of the shareholders of the Fund
in accordance with instructions received from you
and the other owners of the policies. Any shares
held by us will be voted in the same proportion as
voted by you and the other owners of the policies.
However, we reserve the right to vote the shares
of the Fund without direction from you if there is
a change in the law which would permit this to be
done.
SHARES OF SEPARATE The share of this policy in the value of each
ACCOUNT SUB-ACCOUNT sub-account of Separate Account on a valuation
VALUES date is the unit value of that sub-account on that
date multiplied by the number of this policy's
units in that sub-account after all transactions
for the valuation period ending on that day have
been processed. For any day which does not fall on
a valuation date, the share of this policy in the
value of each sub-account of the Separate Account
is determined using the number of units on that
day after all transactions for that day have been
processed and the unit values on the next
valuation date.
UNIT VALUE The unit value of each sub-account of the
Separate Account was set by us on the first
valuation date of each such sub-account. The unit
value of a sub-account of the Separate Account on
any other valuation date is determined by
multiplying the unit value of that sub-account on
the just prior valuation date by the Net
Investment Factor for that sub-account for the
then current valuation period. The unit value of
each sub-account of the Separate Account on a day
other than a valuation date is the unit value on
the next valuation date.
V604 -10-
<PAGE>
Unit values are carried to 6 decimal places. The
unit value of each sub-account of the Separate
Account on a valuation date is determined at the
end of that day.
NET INVESTMENT FACTOR The Net Investment Factor for each sub-account of
the Separate Account is determined by the
investment performance of the assets held by the
sub-account during the valuation period. Each
valuation will follow applicable law and accepted
procedures. The Net Investment factor is equal to
item (D) below subtracted from the result of
dividing the sum of items (A) and (B) by item (C)
as defined below.
(A) The value of the assets in the sub-account on
the current valuation date, including accrued
net investment income and realized and
unrealized capital gains and losses, but
excluding the net value of any transactions
during the current valuation period.
(B) The amount of any dividend (or, if applicable,
any capital gain distribution) received by the
sub-account if the "ex-dividend" date for
shares of the fund occurs during the current
valuation period.
(C) The value of the assets in the sub-account as
of the just prior valuation date, including
accrued net investment income and realized and
unrealized capital gains and losses, and
including the net value of all transactions
during the valuation period ending on that
date.
(D) The sum of the following daily charges as
shown on the Schedule page, multiplied by the
number of days in the current valuation
period.
(1) the mortality and expense risk charge; and
(2) the charge, if any, for taxes and reserves
for taxes on investment income, and
realized and unrealized capital gains.
PART 6: LIFETIME BENEFITS
TRANSFERS You may transfer all or a portion of this policy's
value among one or more of the sub-accounts of the
Separate Account and the unloaned portion of the
Guaranteed Interest Account. We reserve the right
to limit the number of transfers you may make,
however, you can make up to six transfers per
contract year from sub-accounts of the Separate
Account and only one transfer per contract year
from the unloaned portion of the Guaranteed
Interest Account unless the Systematic Transfer
Program is elected. Under that program, funds may
be transferred automatically among the
sub-accounts on a monthly, quarterly, semi-annual
or annual basis. Unless we agree otherwise, the
minimum initial and subsequent transfer amounts
are $25 monthly, $75 quarterly, $150 semi-annually
or $300 annually. Except as otherwise provided
under the Systematic Transfer Program, the amount
that may be transferred from the Guaranteed
Interest Account at any one time cannot exceed the
higher of $1,000 or 25% of the value of the
Guaranteed Interest Account.
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<PAGE>
Transfers may be made by written or telephone
request. The maximum transfer charge is shown on
the Schedule Page. There is no transfer charge for
the Systematic Transfer Program. Any such charge
will be deducted from the sub-accounts from which
the amounts are to be transferred in the same
proportion as the amounts to be transferred bear
to the total amount transferred. The value of each
sub-account will be determined on the Valuation
Date that coincides with the date of transfer.
LOANS While this policy is in force, a loan may be
obtained against this policy in any amount up to
the available loan value. To obtain a loan, this
policy must be properly assigned to us as
security. We need no other collateral. We reserve
the right not to allow loans of less than $500
unless the loans are to pay premiums on another
policy issued by us.
The loan value is 90% of the result of subtracting
the then applicable surrender charge from the then
policy value. The "available loan value" is the
loan value on the current day less any outstanding
debt.
The amount of the loan will be added to the loaned
portion of the Guaranteed Interest Account and
subtracted from this policy's share of the
sub-accounts based on the allocation you request
at the time of the loan. The total reduction will
equal the amount added to the loaned portion of
the Guaranteed Interest Account. Unless we agree
otherwise, allocations to each sub-account must be
expressed in whole percentages. If no allocation
request is made, the amount subtracted from the
share of each sub-account will be determined in
the same manner as provided for monthly
deductions.
Debt may be repaid at any time during the lifetime
of the insured while this policy is in force. Such
repayment, in excess of any outstanding accrued
loan interest, will be applied to reduce the
loaned portion of the Guaranteed Interest Account
and will be transferred to the unloaned portion of
the Guaranteed Interest Account to the extent that
loaned amounts taken from such account have not
previously been repaid. Otherwise, such balance
will be transferred among the sub-accounts you
request upon repayment and, if no allocation
request is made, we will use your most recent
premium allocation schedule on file with us. Any
debt repayment received by us during a grace
period as described in Part 4 will be reduced to
cover any overdue monthly deductions and only the
balance applied to reduce the debt. Such balance
will also be applied as described to reduce the
loaned portion of the Guaranteed Interest Account.
While there is any outstanding debt against this
policy, any payments received by us for this
policy will be applied directly to reduce the debt
unless specified as a premium payment. Until the
debt is fully repaid, additional debt repayments
may be made at any time during the lifetime of the
insured while this policy is in force.
Failure to repay a policy loan or to pay loan
interest will not terminate this policy except as
otherwise provided under Grace Period and
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<PAGE>
Lapse in Part 4 when the policy does not have
sufficient remaining value to pay the monthly
deductions, in which event, that grace period
provision will apply.
LOAN INTEREST Loans will bear interest at an effective annual
rate equal to the loan interest rate shown on the
Schedule Page and will be compounded daily.
Interest will accrue on a daily basis from the
date of the loan and is included as part of the
debt under this policy. Loan interest will be due
on each policy anniversary. If not paid when due,
the outstanding accrued interest on that date will
be charged as a loan against this policy.
CASH SURRENDER VALUE The cash surrender value of this policy is the
policy value as defined in Part 4 less any
applicable surrender charge on the date of
surrender and less any debt. The surrender charge
for a full surrender is an stated on the Schedule
Pages, or Revised Schedule Pages if there has been
an increase in face amount.
FULL SURRENDER You may fully surrender this policy for its cash
surrender value by returning this policy to us at
our VPO along with a written release and surrender
of all claims under this policy signed by you and
any assigns. You may do this at any time during
the lifetime of the insured while this policy is
in force. The written surrender must be in a form
satisfactory to us and must include such tax
withholding information as we may reasonably
require. The surrender will be effective on the
"date of surrender" which is the later of the
dates on which we receive the returned policy and
the written surrender. Upon full surrender all
insurance and any rider benefits provided under
this policy will terminate. You may direct that we
apply the surrender proceeds under any of the
Payment Options described in Part 8.
PARTIAL SURRENDER You may obtain a partial surrender of this policy
by requesting that a part of this policy's cash
surrender value be paid to you. You may do this at
any time during the lifetime of the insured while
this policy is in force with a written request
signed by you and any assigns. We reserve the
right to require that this policy first be
returned to us before payment is made. A partial
surrender will be effective on the date we receive
the written request or, if required, the date we
receive this policy if later. You may direct that
we apply the surrender proceeds under any of the
Payment Options described in Part 8.
A partial surrender will be denied if the
resultant cash surrender value would be less than
or equal to zero. We reserve the right not to
allow partial surrenders if the resulting death
benefit would be less than $25,000 or if the
amount of the partial surrender is less than $500.
We further reserve the right to require that the
entire balance of a sub-account be surrendered and
withdrawn if the share of this policy in the value
of that sub-account would, immediately after a
partial surrender, be less than $500.
Upon a partial surrender, the policy value will be
reduced by the sum of the following:
(A) The partial surrender amount paid. This amount
comes from a reduction in this policy's share
in the value of each sub-account based on the
allocation you request at the time of the
partial
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surrender. If no allocation request is made,
the assessment to each sub-account will be
made in the same manner as provided for
monthly deductions.
(B) The partial surrender fee. The fee is the
lesser of $25 and 2% of the partial surrender
amount paid. The assessment to each
sub-account will be made in the same manner as
provided for the partial surrender amount
paid.
(C) A partial surrender charge. This charge is
equal to a pro-rata portion of the applicable
surrender charge that would apply to a full
surrender, determined by multiplying such
applicable surrender charge by a fraction
equal to the partial surrender amount payable
divided by the result of subtracting the
applicable surrender charge from the policy
value. This amount is assessed against the
sub-accounts in the same manner as provided
for the partial surrender amount paid.
The cash surrender value will be reduced by the
partial surrender amount paid plus the partial
surrender fee. The face amount of this policy will
be reduced by the same amount as the policy value
is reduced as described above. We will send you a
Revised Schedule Page reflecting this change.
ADDITIONAL INSURANCE While this policy is in force and subject to the
OPTION terms of this provision, including our receipt
of evidence satisfactory to us of the insured's
then insurability, you have the option to purchase
additional insurance on the same insured under the
same plan of insurance as this policy without our
assessment of any issue expense charge under the
new policy. Except for our waiver of the issue
expense charge, the new policy will be based on
the same guaranteed rates and charges as are in
effect for this plan on the Policy date of this
policy as adjusted for the insured's new attained
age and change, if any, in risk classification.
The new policy will only include such rider
benefits as we may agree based on our rules and
practices in effect on the Policy Date of the new
policy. The amount of insurance under the new
policy, when added to all other insurance with our
company on the life of the insured, cannot exceed
our total insurance amount limitations in effect
on the Policy Date of the new policy.
To elect this option, you must file a written
application with our VPO. It must be signed by you
and the insured. We must also receive:
(A) Evidence that you have a satisfactory
insurable interest in the life of the insured.
(B) Evidence, satisfactory to us, that the insured
is then insurable under our established
practice in the selection of risks for this
plan of insurance, including the new amount
applied for and rider benefits requested.
Selection of risks includes health and non-
health factors.
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<PAGE>
(C) Payment, while the insured is alive, of the
full issue premium for the new policy. The
payment must equal or exceed our minimum issue
premium requirements in effect for this plan
on the Policy Date of the new policy.
Any exclusions applicable to the new policy will
be determined in accordance with our rules and
practices in effect on the Policy Date of the new
policy. The new policy will not be subject to any
assignments or liens against this policy. The
owner and the beneficiary under the new policy
shall be as requested in the application for the
new policy. Any subsequent changes will be
governed by the printed provisions of the new
policy.
The new policy will begin in effect as of the
later of:
a. our approval of the application for the new
policy;
b. payment of the full issue premium due on the
new policy.
The Policy Date of the new policy will be as shown
on the schedule pages of the new policy based on
our rules and practices then in effect. The time
periods for the suicide and contestability
provisions in the new policy will be measured from
the Policy Date of the new policy.
PART 7: DEATH BENEFITS
While the policy is in force, you have the right
to elect either of the two death benefit options
as described below. The death benefit option shall
be as elected in the original application unless
later changed as provided below. If no option is
elected, Death Benefit Option 1 shall apply.
DEATH BENEFIT OPTION 1 Under this option, during all policy years until
the policy anniversary which follows the insured's
100th birthday, the death benefit is equal to the
greater of (a) and (b) as defined below:
a. the policy's face amount on date of death.
b. the minimum death benefit on the date of death
as defined below.
DEATH BENEFIT OPTION 2 Under this option, during all policy years until
the policy anniversary which follows the insured's
100th birthday, the death benefit is equal to the
greater of (a) and (b) as defined below:
a. the policy's face amount on the date of death
plus the policy value.
b. the minimum death benefit on the date of
death as defined below.
MINIMUM DEATH BENEFIT The minimum death benefit is the policy value on
the date of death of the insured increased by the
applicable percentage from the table below, based
on the insured's attained age at the beginning of
the policy year in which the death occurs.
V604 -15-
<PAGE>
<TABLE>
<CAPTION>
Attained Attained Attained Attained
Age Pct Age Pct Age Pct Age Pct
--- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Under 40 150% 53 64% 67 18% 81 5%
40 150 54 57 68 17 82 5
41 143 55 50 69 16 83 5
42 136 56 46 70 15 84 5
43 129 57 42 71 13 85 5
44 122 58 38 72 11 86 5
45 115 59 34 73 9 87 5
46 109 60 30 74 7 88 5
47 103 61 28 75 5 89 5
48 97 62 26 76 5 90 5
49 91 63 24 77 5 91 4
50 85 64 22 78 5 92 3
51 78 65 20 79 5 93 2
52 71 66 19 80 5 94 1
95 0
Over 95 0
</TABLE>
DEATH BENEFIT FOLLOWING After the policy anniversary which follows the
INSURED'S AGE 100 insured's 100th birthday, the death benefit will
equal the policy value.
HOW TO CHANGE THE While this policy is in force, you may request in
DEATH BENEFIT OPTION writing that Death Benefit Option be changed from
Option 1 to Option 2, or from Option 2 to Option
1. No evidence of insurability is required. If the
request is to change from Option 1 to Option 2,
the face amount will be decreased by the policy
value and if the request is to change from Option
2 to Option 1, the face amount will be increased
by the policy value. Any such change will be in
effect on the Monthly Calculation Day coincident
with or next following the day we approve the
request.
REQUEST FOR AN INCREASE Anytime that this policy is in force, you may
IN FACE AMOUNT request an increase in its face amount. Unless we
agree otherwise, the minimum such face amount
increase is $25,000, and the increase will be
effective on the first policy anniversary on or
following the date that we approve the request.
Such date will be shown as the issue date for such
increase on the Revised Schedule Pages we send you
reflecting the change. We reserve the right to
limit increases in face amount. All requests to
increase the face amount must be applied for on a
supplemental application and will be subject to
evidence of the insured's insurability
satisfactory to us. The insured must be alive on
the issue date, and you must also pay to us in
advance such issue premium for the increase as we
may require according to our published rules then
in effect. If no issue premium is required, the
increase will not take effect unless the cash
surrender value on the issue date at least equals
the monthly deduction for the total combined face
amount. The Issue Expense Charge for Face Amount
increases is as stated on the Schedule Page.
We will send you Revised Schedule Pages reflecting
the change. We reserve the right to further
require that the policy be returned to us so that
we may incorporate the change.
V604 -16-
<PAGE>
RIGHT TO CANCEL FACE You have the right to cancel any increase in the
AMOUNT INCREASES face amount provided by us under this policy
pursuant to your request, within a limited time as
stated below. The increase in face amount may be
cancelled by returning the policy to us at the
following address:
Phoenix Life and Annuity Company
Variable Products Operations
P.O. Box 942
Greenfield, Massachusetts 01302-0942
To cancel, you must return the policy, including
the Revised Schedule Pages, before the latest of:
1. 10 days after the new Revised Schedule Page
showing such increase in the face amount is
delivered to you; or
2. 10 days after a Notice of Right to Cancel is
delivered to you; or
3. 45 days after Part 1 of the supplementary
application for such increased face amount is
signed.
Upon any such cancellation we will refund the
higher of any paid premium required by us for the
increase or the sum of any monthly deductions and
any other fees and charges made under this policy
for the increase in face amount.
REQUEST FOR A DECREASE You may request a decrease in face amount at any
IN FACE AMOUNT time after the first policy year. Unless we agree
otherwise, the decrease requested must at least
equal $10,000 and the face amount remaining after
the decrease must at least equal $25,000. All
requests to decrease the face amount must be in
writing and will be effective on the first Monthly
Calculation Day following the date we approve the
request. We reserve the right to require that this
policy first be returned to us before the decrease
is made. Upon a decrease in face amount, a partial
surrender charge will be deducted from the policy
value based on the amount of the decrease. The
charge will equal the applicable surrender charge
that would then apply to a full surrender
multiplied by the result of dividing the decrease
in face amount by the face amount of the policy
before the decrease. We will send you a Revised
Schedule Page reflecting the change.
DEATH PROCEEDS Upon receipt of due proof at our VPO that the
insured died while this policy is in force, we
will pay the death proceeds of this policy. The
death proceeds equal the death benefit on the date
of death, with the following adjustments;
(A) We will deduct any debt outstanding against
this policy.
(B) We will deduct any monthly deductions to and
including the policy month of death not
already made.
(C) We will add any premiums received by us after
the Monthly Calculation Day just prior to the
date of death and on or before the date of
death.
V604 -17-
<PAGE>
INTEREST ON DEATH We will pay interest on any death proceeds from
PROCEEDS the date of the insured's death to the date of
payment. The amount of interest will be the same
as would be paid were the death proceeds left for
that period of time to earn interest under Payment
Option 2.
THE BENEFICIARY Unless another payment option is elected as
described in Part 8, any death proceeds that
become payable will be paid in equal shares to
such beneficiaries living at the death of the
insured as stated in the application for this
policy or as later changed. Payments will be made
successively in the following order:
a. Primary beneficiaries.
b. Contingent beneficiaries, if any, provided
beneficiary is living at the death of the
insured.
c. You or your executor or administrator,
provided no primary or contingent beneficiary
is living at the death of the insured.
Unless otherwise stated the relationship of a
beneficiary is the relationship to the insured.
HOW TO CHANGE THE You may change the beneficiary under this policy
BENEFICIARY by written notice signed by you and filed with us
at our VPO. When we receive it, the change will
relate back and take effect as of the date it was
signed. However, the change will be subject to any
payments made or actions taken by us before we
receive the notice at our VPO.
PART 8: PAYMENT OPTIONS
WHO MAY ELECT The proceeds of this policy will be paid in one
PAYMENT OPTIONS sum unless otherwise provided. As an alternative
to payment in one sum as provided under Option 1,
any surrender or death proceeds that become
payable under an account may be applied under one
or more of the alternative income payment options
as described in this part or such other payment
options as may then be currently available for the
policy.
Our consent is required for the election of an
income payment option by a fiduciary or any entity
other than a natural person. Our consent is also
required for elections by any assigns or an owner
other than the insured if the owner has been
changed. You may designate or change one or more
beneficiaries who will be the payee or payees
under the option elected. You may only do this
during the lifetime of the insured. For death
proceeds, if no election is in effect when the
death benefit becomes payable, the beneficiary may
elect a payment option.
Unless we agree otherwise, all payments under any
option chosen will be made to the designated payee
or to his executor or administrator. We may
require proof of age of any payee or payees on
whose life payments depend as well as proof of the
continued survival of any such payee(s).
V604 -18-
<PAGE>
HOW TO ELECT A The election of an income payment option must be
PAYMENT OPTION in a written form satisfactory to us. Payments may
be made on an annual, semi-annual, quarterly, or
monthly basis provided that each installment will
at least equal $25. We also require that at least
$1,000 be applied under any income option chosen.
PAYMENT OPTIONS This section provides a brief description of the
various payment options that are available. In
Part 9 you will find tables illustrating the
guaranteed installment amount provided by several
of the options described in this section. The
amount shown for Options 4, 5, and 7 are the
minimum monthly payments for each $1,000 applied.
The actual payments will be based on the monthly
payment rates we are using when the first payment
is due. They will not be less than shown in the
tables.
Option 1 - Payment in one sum
Option 2 - Left to earn interest
We pay interest during the payee's
lifetime on the amount left with us
under this option as a principal sum.
We guarantee that at least one of the
versions of this option will provide
interest at a rate of at least 3% per
year.
Option 3 - Payments for a specific period
Equal income installments are paid for
a specified period of years whether the
payee lives or dies. The first payment
will be on the date of settlement. The
Option 3 Table shows the guaranteed
amount of each installment for monthly
and annual payment frequencies. The
table assumes an interest rate of 3%
per year on the unpaid balance. The
actual interest rate is guaranteed not
to be less than this minimum rate.
Option 4 - Life annuity with specified period
certain
Equal installments are paid until the
later of:
(A) The death of the payee.
(B) The end of the period certain.
The first payment will be on the date
of settlement. The period certain must
be chosen at the time this option is
elected. The periods certain that may
be chosen are as follows;
(A) Ten years
(B) Twenty years
(C) Until the installments paid refund
the amount applied under this
option. If the payee is not living
when the final payment falls due,
that payment will be
V604 -19-
<PAGE>
limited to the amount which needs
to be added to the payments
already made to equal the amount
applied under this option.
If, for the age of the payee, a
period certain is chosen that is
shorter than another period
certain paying the same
installment amount, we will deem
the longer period certain as
having been elected. The life
annuity provided under this option
is calculated using an interest
rate of 3- 3/8%, except that any
life annuity providing a period
certain of twenty years or more is
calculated using an interest rate
of 3-1/4%.
Option 5 - Life Annuity
Equal installments are paid only during
the lifetime of the payee. The first
payment will be on the date of
settlement. Any life annuity as may be
provided under this option is
calculated using an interest rate of
3-1/2%.
Option 6 - Payments of specified amount.
Equal installments of a specified
amount, out of the principal sum and
interest on that sum, are paid until
the principal sum remaining is less
than the amount of the installment.
When that happens, the principal sum
remaining with accrued interest will be
paid as a final payment. The first
payment will be on the date of
settlement. The payments will include
interest on the principal sum remaining
at a rate guaranteed to at least equal
3% per year. This interest will be
credited at the end of each year. If
the amount of interest credited at the
end of a year exceeds the income
payments made in the last 12 months,
that excess will be paid in one sum on
the date credited.
Option 7 - Joint survivorship annuity with 10-year
period certain
The first payment will be on the date
of settlement. Equal income
installments are paid until the latest
of:
(A) The end of the 10-year period
certain.
(B) The death of the insured.
(C) The death of the other named
annuitant.
The other annuitant must be named at
the time this option is elected and
cannot later be changed. That annuitant
must have an adjusted age as defined in
Part 9 of at least 40. The joint
survivorship annuity provided under
this option is calculated by using an
interest rate of 3-3/8%.
We may offer other payment options or alternative
versions of the options listed in the above
section.
V604 -20-
<PAGE>
ADDITIONAL INTEREST In addition to:
(A) the interest of 3% per year guaranteed on the
principal sum remaining with us under Options
2 or 6; and
(B) the interest of 3% per year included in the
installments payable under Option 3.
We will pay or credit at the end of each year such
additional interest as we may declare.
PART 9: TABLES OF PAYMENT OPTION AMOUNTS
The installment amounts shown in the tables that
follow are shown for each $1,000 applied. Amounts
for payment frequencies, periods or ages not shown
will be furnished upon request. Under Options 4
and 5, the installment amount for younger ages
than shown will be the same as for the first age
shown and for older ages than shown it will be the
same amount as for the last age shown.
The term "age" as used in the tables refers to the
adjusted age. Under Options 4 and 5, the adjusted
age is defined as follows:
(A) For surrender values, the age of the payee on
the payee's birthday nearest to the policy
anniversary nearest the date of surrender.
(B) For death proceeds, the age of the payee on
the payee's birthday nearest the effective
date of the payment option elected.
Under Option 7, the adjusted age is the age on the
birthday nearest to the policy anniversary nearest
the date of surrender.
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Years 5 6 7 8 9 10 11 12 13
- ------------------- ------- ------ ------ ------ ------ ------ ------ ----- -----
Annual Installments $211.99 179.22 155.80 138.31 124.89 113.82 104.93 97.54 91.29
Mo. Installments $17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24 7.71
OPTION 3 - PAYMENTS FOR A SPECIFIED PERIOD (CONTINUED)
Number of Years 14 15 16 17 18 19 20 25 30
- ------------------- ------- ------ ------ ------ ------ ------ ------ ----- -----
Annual Installments $85.95 81.33 77.29 73.74 70.59 67.78 65.26 55.76 49.53
Mo. Installments $7.26 6.87 6.53 6.23 5.96 5.73 5.51 4.71
</TABLE>
*OPTION 4 - LIFE ANNUITY WITH SPECIFIED PERIOD CERTAIN
<TABLE>
<CAPTION>
Age Installment Refund 10 Yrs. Certain 20 Yrs. Certain Age Installment Refund 10 Yrs. Certain 20 Yrs. Certain
of ------------------ --------------- --------------- of ------------------ --------------- ---------------
Payee Male Female Male Female Male Female Payee Male Female Male Female Male Female
- ----- ----- ------ ----- ------ ----- ------ ----- ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $3.08 $3.03 $3.08 $2.99 $3.00 $2.94 50 $4.36 $4.12 $4.50 $4.10 $4.28 $3.99
15 3.14 3.09 3.15 3.04 3.07 3.00 55 4.76 4.47 4.95 4.47 4.61 4.31
20 3.22 3.16 3.24 3.11 3.15 3.07 60 5.28 4.93 5.54 4.96 4.97 4.67
25 3.33 3.24 3.34 3.20 3.25 3.15 65 5.97 5.54 6.30 5.63 5.29 5.06
30 3.45 3.35 3.47 3.30 3.38 3.25 70 6.91 6.39 7.24 6.50 5.43 5.31
35 3.61 3.48 3.64 3.43 3.55 3.38 75 8.21 7.57 8.26 7.56 5.44 5.40
40 3.80 3.64 3.86 3.60 3.74 3.54 80 10.04 9.26 9.12 8.60 5.46 5.46
45 4.05 3.85 4.14 3.82 3.99 3.74 85 12.61 11.68 9.60 9.31 5.46 5.46
</TABLE>
V604 -21-
<PAGE>
OPTION 5 - LIFE ANNUITY
Age of Age of
Payee Male Female Payee Male Female
------ ---- ------ ------ ---- ------
10 3.17 3.12 50 4.62 4.28
15 3.24 3.18 55 5.12 4.68
20 3.32 3.25 60 5.79 5.24
25 3.42 3.34 65 6.75 6.04
30 3.56 3.44 70 8.15 7.22
35 3.73 3.58 75 10.26 9.03
40 3.95 3.75 80 13.54 11.88
45 4.24 3.98 85 18.72 16.54
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN
Age of Age of Insured Age of Age of Insured
Other ------------------ Other ------------------
Annuitant Male Annuitant Male
F 55 60 65 F 55 60 65
- --------- ---- ---- ---- --------- ---- ---- ----
40 3.62 3.64 3.65 60 4.43 4.64 4.82
45 3.80 3.83 3.86 65 4.61 4.93 5.23
50 4.00 4.07 4.12 70 4.75 5.18 5.63
55 4.22 4.34 4.44 75 4.86 5.36 5.96
*OPTION 7 - JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN (CONTINUED)
Age of Age of Insured Age of Age of Insured
Other ------------------ Other ------------------
Annuitant Female Annuitant Female
------------------ ------------------
F 55 60 65 F 55 60 65
- --------- ---- ---- ---- --------- ---- ---- ----
40 3.72 3.77 3.80 60 4.34 4.64 4.93
45 3.89 3.97 4.03 65 4.44 4.82 5.23
50 4.06 4.19 4.31 70 4.50 4.95 5.48
55 4.22 4.43 4.61 75 4.54 5.03 5.65
* Minimum monthly income for each $1,000 applied.
V604 -22-
<PAGE>
Flexible Premium Variable Universal Life Insurance Policy
The death benefit and other values provided under this policy are based on the
rates of interest credited on any amounts allocated to the Guaranteed Interest
Account and the investment experience of the sub-accounts within our Separate
Account to which your premiums are allocated. Thus, the death benefit and other
values may increase or decrease in amount or duration. See Part 7 for a
description of how the death benefit is determined.
Eligible for Annual Dividends
V604
EXHIBIT 99.1.A(10)
FORM OF APPLICATION FOR FLEX EDGE SUCCESS
<PAGE>
<TABLE>
<S> <C>
[PHOENIX PHOENIX LIFE & ANNUITY COMPANY
LOGO HERE] APPLICATION FOR LIFE INSURANCE
====================================================================================================================================
SECTION I - PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Print Name as it is to appear on policy (First, Middle, Last) Sex Birthdate (Month, Day, Year)
[ ] Male [ ] Female
- ------------------------------------------------------------------------------------------------------------------------------------
Birthplace (State or Country) United States Citizen Social Security Number
[ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
Home Telephone Number Business Telephone Number (Include Extension) Driver's License Number (Include State)
( ) - ( ) - ext
- ------------------------------------------------------------------------------------------------------------------------------------
Home Address (Include Street, Apt. Number, City, State, and Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Give Prior Address if at address less than 2 years (Include Street, Apt. Number, City, State, and Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Current Occupation and Duties Employer Length of Employment
- ------------------------------------------------------------------------------------------------------------------------------------
Business Address (Include Street, Apt. Number, City, State, and Zip Code)
====================================================================================================================================
SECTION II - OWNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] A. Insured [ ] D. Partnership (Include Name of all Partners - if partnership is
limited, indicate which partners are general partners)
[ ] B. Successive Owners OR [ ] Owners Jointly [ ] E. Sole Proprietorship (Include Name of Sole Proprietor)
[ ] C. Corporation its successors or assigns [ ] F. Trust (Include Name and Date of Trust, Name of Trustee(s)
(include state of incorporation) and of Grantor)
IF OWNER IS OTHER THAN PROPOSED INSURED, give Owner's name, Mailing Address, Relationship to Proposed Insured, and Social Security
Number or Tax Identification Number:
Name: __________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________
Address: __________________________________________________________________________________________________________________________
Social Security or Tax I.D. Number __________________________ Relationship: __________________________ Date of Birth: ______________
CONTINGENT OWNER
Name: ____________________________________________________________________________________________ Date of Birth: ______________
Relationship: ______________________________________________________________________________________________________________________
ULTIMATE OWNER, Check one. If none checked, insured will be ultimate owner.
[ ] Insured [ ] Executor or administrator of the survivor of the primary and contingent owners
- ------------------------------------------------------------------------------------------------------------------------------------
Send premium notices to: (in addition to owner)
[ ] Proposed Insured: [ ] Home Address [ ] Business Address
[ ] Other (Name and Address) _______________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
Confirm Statements and Proxies (in addition to owner)
[ ] Insured [ ] Other ______________________________________________________________________________________________________________
====================================================================================================================================
SECTION III - BENEFICIARY FOR THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Primary Beneficiary Relationship to Proposed Insured Date of Birth Social Security No.
(If Available) (If known)
- ------------------------------------------------------------------------------------------------------------------------------------
Contingent Beneficiary Relationship to Proposed Insured Date of Birth Social Security No.
(If Available) (If known)
- ------------------------------------------------------------------------------------------------------------------------------------
Trust
[ ] Trust under insured's will
[ ] Inter vivos - Provide name of Trustee ____________________________________________________________ Date of Trust _______________
- ------------------------------------------------------------------------------------------------------------------------------------
A beneficiary to qualify for payment must be living: (Check A or B, otherwise A will apply)
[ ] A. at the Proposed Insured's death.
[ ] B. on the 30th day after the date of the Proposed Insured's death.
- ------------------------------------------------------------------------------------------------------------------------------------
1 of 5
</TABLE>
<PAGE>
<TABLE>
<S> <C>
====================================================================================================================================
SECTION IV - COVERAGE APPLIED FOR
- ------------------------------------------------------------------------------------------------------------------------------------
Plan of Insurance For Proposed Insured's Ages 18 Years and Older Only Basic Policy Amount
[ ] Smoker [ ] Nonsmoker [ ] Neversmoke $
====================================================================================================================================
SECTION V - RIDERS AND FEATURES FOR TRADITIONAL PLANS OF INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Accidental Death Benefit Dividend Option
------------------------------------------------------------------
[ ] Disability Waiver of Premium on Insured [ ] Optionterm
[ ] Conditional Exchange Optionterm Death Benefit $ ___________________________________
------------------------------------------------------------------
[ ] Guaranteed Renewability Rider Premium Paying Coverage [ ] Yes [ ] No OR
[ ] Purchase Protector _______________________________ units % of Increase ________________________________________________
[ ] Family Protection [ ] Accumulate at Interest
[ ] Children's Protection [ ] Paid-up Additional Insurance (PUA)
[ ] Living Benefit Rider [ ] One Year Term with Balanced to:
[ ] Other __________________________________________________ [ ] Cash [ ] PUA [ ] ACCUM
- --------------------------------------------------------------
ADDITIONAL DEATH BENEFIT RIDERS: [ ] Reduce Premium
PITR $ _______________ [ ] Cash
Other Rider Name __________________ Amount $ ________________ [ ] Other ________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] PAPOR (check one) Automatic Premium Loan, if applicable (If none checked
"Yes" will apply.)
[ ] A-Flexible [ ] B-Flexible with Option term [ ] Yes [ ] No
------------------------------------------------------------------
Number of years payable __________________________ Policy Loan Interest Rate, if applicable (If none checked,
Intended premium payments for the first 7 years: "Variable" will apply.)
Year 1 __________________ Year 5 __________________ [ ] Variable [ ] Fixed
------------------------------------------------------------------
Year 2 __________________ Year 6 __________________ Total Insurance Face Amount (Total of all shaded areas)
Year 3 __________________ Year 7 __________________
Year 4 __________________ MAXIMUM AMOUNT $ _______________ $ __________________
====================================================================================================================================
SECTION VI - RIDERS AND FEATURES FOR VARIABLE OR UNIVERSAL PLANS OF INSURANCE
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Disability Payment of a specified Annual Premium Amount. Death Benefit Option (check one): If none checked Option 1
Annual Amount $ ________________________________________ will apply.
[ ] Accidental Death Benefit [ ] Option 1 - Level Face Amount
[ ] Enhanced Flex Edge (Guaranteed Death Benefit) [ ] Option 2 - Increasing Face Amount
[ ] Age 70 [ ] Age 80 [ ] Age 95 [ ] Living Benefit Rider
[ ] Other Insured Person Rider (VistaFlex ONLY) [ ] Purchase Protector _____________________________________ units
[ ] Guaranteed Insurability Option Rider (VistaFlex and [ ] Other ________________________________________________________
UNIVISTA ONLY) Amount $ ________________________________ __________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
First Year Anticipated, BILLED Premium (Excluding 1035 Subsequent Planned Annual Premium
Exchange, Lump Sum Funds, etc.)
- ------------------------------------------------------------------------------------------------------------------------------------
Sub-Account Allocation Do Not Use Fractional Percentages.(Must total 100%)
_____% Growth _____% Total Return _____% GIA _____% Other
_____% International _____% Balanced _____% Other _____% Other
_____% Money Market _____% Bond _____% Other _____% Other
TEMPORARY MONEY MARKET ALLOCATION [ ] Yes [ ] No If yes, I elect to temporarily allocate my premiums to the Money Market
sub-account until termination of the Right to Cancel period as stated in the policy. (Yes will apply to all states which require
Temporary Money Market).
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone Transfers/Exchanges
[ ] Yes [ ] No Telephone transfers/and changes in payment allocation are subject to the terms of the prospectus. If you check
the "yes" box, telephone orders will be accepted from you and your registered representative and you agree that,
because we cannot verify the authenticity of telephone instructions, we will not be liable for any loss caused
by our acting on telephone instructions, unless caused by our gross negligence.
====================================================================================================================================
SECTION VII - MODE OF PREMIUM PAYMENT
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Annual [ ] PCS (Phoenix Check-O-Matic Service) [ ] Quarterly [ ] Semi-Annual [ ] Monthly (Variable Life Insurance only)
Multiple Billing Option - Give # or Details ________________________________________________________________________________________
________________________________________________________________________________________
[ ] List Bill [ ] EICS [ ] Salary Allotment [ ] Pension [ ] Money Purchase Pension
[ ] Other __________________________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
2 of 5
</TABLE>
<PAGE>
<TABLE>
<S> <C>
====================================================================================================================================
SECTION VIII - EXISTING LIFE INSURANCE FOR THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] YES [ ] NO With this policy, do you plan to replace (in whole or in part, now or in the future) any existing insurance or
annuity in force?
[ ] YES [ ] NO Do you plan to borrow or otherwise use values from an existing insurance policy or annuity to pay any initial
or subsequent premium(s) for this policy?
For all Yes answers above, please provide the following information.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY INSURED YEAR ISSUED POLICY NUMBER AMOUNT PERSONAL / BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
Describe all additional coverage in force for proposed insured. Include individual and group. If none, write none.
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY YEAR ISSUED POLICY NUMBER AMOUNT PERSONAL / BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
$ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
Total Accidental Death Benefit Amount $ ____________________
====================================================================================================================================
SECTION IX - ADDITIONAL INFORMATION REGARDING THE PROPOSED INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Insured's Earned Income Independent Income Net Worth
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
[ ] [ ] 1. Have you smoked any cigarettes in the past 12 months?
[ ] [ ] 2. Have you used tobacco or nicotine products in any form in the past 12 months?
[ ] [ ] 3. Have you used tobacco or nicotine products in any form in the past 15 years?
[ ] [ ] 4. Have you ever applied for life, accident, or health insurance and been declined, postponed, or been offered a policy
differing in plan, amount or premium rate from that applied for? (If "Yes", give date, company and reason).
[ ] [ ] 5. Are you negotiating for other insurance? (If "Yes", name companies and total amount to be placed in force.)
[ ] [ ] 6. Do you intend to live or travel outside the United States or Canada? (If "Yes", state where and for how long).
[ ] [ ] 7. Have you flown during the past three years as a pilot, student pilot or crew member? (If "Yes", complete Aviation
Questionnaire, form FN 7).
[ ] [ ] 8. Have you participated in the past 3 years or plan to engage in any hazardous activity such as motor vehicle,
motorcycle or motorboat racing, parachute jumping, skin or scuba diving or other underwater activity, hang gliding or
other hazardous avocation? (If "Yes", complete Avocation Questionnaire).
[ ] [ ] 9. Have you in the past three years been the driver of a motor vehicle involved in an accident, or charged with a moving
violation of any motor vehicle law, or had your driver's license suspended or revoked?
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GIVE FULL DETAILS FOR ALL "YES" ANSWERS.
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====================================================================================================================================
SECTION X - COMPLETE FOR INSURED IF TEMPORARY INSURANCE IS REQUESTED
- ------------------------------------------------------------------------------------------------------------------------------------
If either of the following questions are answered "Yes" or left blank, no agent or broker is authorized to accept money and a
Temporary Insurance Agreement MAY NOT be issued, and no coverage will take effect.
Have you:
[ ] Yes [ ] No a. Within the past two years been treated for heart disease, stroke, or cancer or had such treatment recommended?
[ ] Yes [ ] No b. Been advised within the past 60 days by a physician or other practioner to have any diagnostic test or surgery
not yet performed?
====================================================================================================================================
FOR HOME OFFICE OR ADMINISTRATIVE OFFICE USE ONLY
- ------------------------------------------------------------------------------------------------------------------------------------
Minor Correction. (No change will be made in amount, amount of premium, age at issue, class, plan or benefits unless agreed to in
writing.)
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3 of 5
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<S> <C>
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SECTION XI - MEDICAL HISTORY OF PROPOSED INSURED (If Proposed Insured Is Less Than Age 15, Questions Are To Be Answered By The
Parent)
- ------------------------------------------------------------------------------------------------------------------------------------
Height Weight Has Your Weight Decreased By 10 or More Pounds In The Past 2 Years? If "Yes", how
much? ____________________ lbs. [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(s) of Personal Physician(s) or Health Care Facility(s). [ ] None
____________________________________________________________________________________________________________________________________
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Date and Reason for Last Consultation:
- ------------------------------------------------------------------------------------------------------------------------------------
Did Your Mother, Father, or Any Sibling Die Prior To The Age Of 60?
[ ] Yes [ ] No If "yes", give cause.
- ------------------------------------------------------------------------------------------------------------------------------------
YES NO
Have you within the past 10 years been treated for or had any indication of:
[ ] [ ] 1. Heart disease, abnormal heart rhythm, heart murmur, chest pain, angina, high blood pressure, or other disorder
of the heart or blood vessels?
[ ] [ ] 2. Skin disease, cancer, tumor, anemia or blood or lymph gland disorder?
[ ] [ ] 3. Epilepsy, fainting spells, stroke, nervous or mental condition, paralysis or any other abnormality of the brain
or nervous system?
[ ] [ ] 4. Colitis or Crohn's disease, ulcer, hepatitis, liver, or digestive disorder?
[ ] [ ] 5. Asthma, shortness of breath, emphysema, or other lung disorder?
[ ] [ ] 6. Diabetes or elevated blood sugar, bladder, kidney or other urinary disorder?
[ ] [ ] 7. Arthritis, or any other disorder of the back, spine, neck or joints?
In the past 5 years, have you:
[ ] [ ] 8. Had an electrocardiogram, x-ray, or blood, urine or other medical tests?
[ ] [ ] 9. Been advised to have any diagnostic test, hospitalization or surgery that was not completed?
[ ] [ ] 10. Other than noted above, have you in the last 5 years seen a doctor, counselor, therapist or had any illness,
injury or surgery?
[ ] [ ] 11. Have you ever been diagnosed or treated by a medical professional for Acquired Immune Deficiency Syndrome
(AIDS) or AIDS Related Complex (ARC)?
[ ] [ ] 12. Are you currently taking any medication, treatment, therapy or under medical observation?
[ ] [ ] 13. During the past 10 years, have you used narcotics, amphetamines, cocaine or any prescription drug except in
accordance with a physician's instructions?
[ ] [ ] 14. During the past 10 years, have you been advised or has treatment been recommended to limit or stop your intake
of alcohol?
====================================================================================================================================
Give details to any "Yes" answers to questions. Use OL 1590 if additional space is necessary to record all details.
- ------------------------------------------------------------------------------------------------------------------------------------
QUESTION DATE OF EACH CURRENT NAME AND ADDRESSES OF
NUMBER DIAGNOSIS OCCURRENCE / DURATION / STATUS DOCTORS AND MEDICAL FACILITIES
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4 of 5
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<PAGE>
<TABLE>
<S> <C>
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$____________ has been paid by ___________________________________ to the producer named below for proposed insurance applied for in
this application. This sum is to be applied in accordance with and subject to the terms of the Temporary Insurance Receipt bearing
the same number as this application.
I understand that i) no statement made to, or information acquired by any producer who takes this application, shall bind the
Company unless stated in Part I and/or Part II of this application; ii) the producer has no authority to make, modify, alter or
discharge any contract hereby applied for and; iii) the insurance applied for shall not take effect until the issuance of a contract
and payment of the issue premium due.
I have reviewed this application, and I hereby verify that all information given here and any in Part II of this application is true
and complete to the best of my knowledge and belief, and has been fully and correctly recorded.
Under penalty of perjury, I certify that the number given is my correct social security or taxpayer identification number and that I
am not subject to backup withholding (strike this out and initial if not true).
Any person who, with intent to defraud or knowing that he/she is facilitating a fraud against an insurer, submits an application
or files a claim containing a false or deceptive statement is guilty of insurance fraud as determined by a court of competent
jurisdiction. This application should be carefully reviewed by the undersigned to verify that any and all information given to the
producer taking this application has been fully and correctly entered.
The right is reserved to the Company to call for a medical examination by an appointed medical examiner should further evidence of
insurability be deemed necessary. The producer taking this application certifies that he/she has truly and accurately recorded on
the application the information supplied by the proposed insured(s).
THE DEATH BENEFIT AND CASH VALUES UNDER ANY VARIABLE POLICY MAY INCREASE OR DECREASE IN AMOUNT OR DURATION BASED ON THE INVESTMENT
EXPERIENCE OF THE UNDERLYING SUB-ACCOUNTS.
If I have purchased a Variable Life Policy, I certify that I have received the prospectus for that policy and its underlying funds.
- ------------------------------------------------------------------------------------------------------------------------------------
AUTHORIZATION REQUEST FOR INTERVIEW
[ ] I do [ ] I do not (check one only) require that I be interviewed in connection with any investigative consumer report that
may be prepared.
AUTHORIZATION TO OBTAIN INSURANCE (NONMEDICAL) INFORMATION
I hereby authorize any insurance company to which I have applied for or inquired about insurance coverage or benefits to give to
the _____ or its reinsurers any information relating to or obtained in connection with such application or inquiry including the
dollar amounts and status of any policies or claims.
AUTHORIZATION TO OBTAIN HEALTH CARE (MEDICAL) INFORMATION
I hereby authorize any physician, hospital, clinic or other health care provider or any persons who have health care information
about me, including insurance companies and MIB, Inc., to give that information to the _____. If the record contains information
relating to alcohol or drug abuse or mental health care, enough of this information is also to be released to accomplish the
purposes for which the information is requested. This information may be used only for the purpose of risk evaluation, the
administration of claims and implementation of policy provisions and for insurance statistical studies.
_____ may then redisclose it to other persons, including MIB, Inc.; legal representatives, medical consultants, reinsurance
companies and consumer reporting agencies, only to the extent required to perform their services for the Company (MIB information
is not disclosed to consumer reporting agencies). They may disclose certain information to a person or organization for use in
risk evaluation, administration of claims or implementation of policy provisions. _____ may also be required to provide certain
information to a state insurance or health department. The information may also be redisclosed as otherwise required or permitted
by law, but no information will be given, sold or transferred to any other person not mentioned in this authorization.
This authorization or a true photocopy thereof shall continue to be valid for 30 months from the date signed below unless
otherwise required by law. It may be revoked in writing to the company at any time until the insurance coverage has been placed in
force. I may receive a copy of it on request.
I acknowledge that I have received a copy of the Pre-Notification to applicants regarding the Medical Information Bureau,
Investigative Consumer Reports and the Underwriting Process.
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Insured Parent (for minor insured)
X
- ------------------------------------------------------------------------------------------------------------------------------------
Owner (if other than proposed insured) Witness Date
- ------------------------------------------------------------------------------------------------------------------------------------
Signed At
X
- ------------------------------------------------------------------------------------------------------------------------------------
The Producer hereby certifies that the Applicant signed this application in his/her presence; that he/she has truly and accurately
recorded on the application the information supplied by the proposed insured(s); and that he/she is qualified and authorized to
discuss the contract herein applied for.
WILL THE APPLICANT UTILIZE VALUES FROM ANOTHER INSURANCE POLICY (THROUGH LOANS, SURRENDERS OR OTHERWISE) TO PAY FOR THE INITIAL OR
SUBSEQUENT PREMIUM(S) FOR THE POLICY APPLIED FOR? [ ] YES [ ] NO
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Producer's Signature Date Producer I.D. Number
X
- ------------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer Name and Address Broker/Dealer Number
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EXHIBIT 99.1.A(11)
MEMORANDUM
<PAGE>
Phoenix Life and Annuity Company's
Redemption and Transfer Procedures and Method
of Computing Adjustments in Payments and
Cash Values Upon Conversion to Fixed Benefit Policies
-----------------------------------------------------
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by Phoenix Life and Annuity
Company ("Phoenix") in connection with the issuance of the Policies described in
this Registration Statement, the transfer of assets held thereunder, and the
redemption by Policyowners of their interests in the Policies. This document
also describes, as required by Rule 6e-3(T)(b)(13)(v)(B), the method that
Phoenix will use in adjusting the payments and cash values when a Policy is
exchanged for a fixed benefit insurance policy.
- --------------------------------------------------------------------------------
1. "Public Offering Price":
(a) Purchase and Related Transactions
---------------------------------
Set out below is a summary of the principal Policy provisions and
administrative procedures that might be deemed to constitute, either directly or
indirectly, a "purchase" transaction. The summary shows that, because of the
insurance nature of the Policies, the procedures involved necessarily differ in
certain significant respects from the purchase procedures for mutual funds and
contractual plans.
The minimum Issue Premium for a Policy is generally 1/6 of the Planned
Annual Premium. The Planned Annual Premium is the premium amount that the
Policyowner agrees to pay each Policy Year. It must be at least equal to the
minimum premium for the face amount of insurance selected and must be no greater
than the maximum premium (described below) allowed for the face amount selected.
The Issue Premium is due on the Policy Date. The Insured must be alive when the
Issue Premium is paid. Thereafter, the amount and payment frequency of planned
premiums are as shown on the Schedule Page of the Policy. However, after the
Issue Premium is paid, the amount and timing of subsequent premiums is
completely flexible within the limitations of the maximum premium as described
below and a minimum premium of $25. All premiums are paid to the Variable
Products Operations ("VPO")
<PAGE>
of Phoenix, except that the Issue Premium may be paid to an authorized agent of
Phoenix for forwarding to VPO.
A Policyowner may increase or decrease the Planned Annual Premium or
payment frequency at any time by written notice to VPO. Phoenix reserves the
right to limit increases to such maximums as may be established from time to
time. Additional premium payments may be made at any time. Each premium payment
must be at least equal to $25 or, if made during a grace period, the payment
must equal the amount needed to prevent lapse of the Policy.
The Policy contains a total premium limit as shown on the Schedule Page.
This limit is applied to the sum of all premiums paid under the Policy and is
reduced by the sum of all partial surrender amounts paid out by Phoenix. If the
total premium limit is exceeded, the Policyowner will receive the excess,
together with any interest at an annual rate of not less than 4%, not later than
sixty days after the end of the Policy Year in which the limit was exceeded. The
Policy Value will then be adjusted to reflect the refund. The amount to be taken
from each subaccount or the GIA will be allocated in the same manner as provided
for monthly deductions unless the Policyowner requests otherwise in writing. The
total premium limit may be exceeded if additional premium is needed to prevent
lapse or if Phoenix determines that additional premium would be permitted by
federal laws or regulations.
Any premium payments will be reduced by a premium tax charge of 2.25% and a
federal tax charge of 1.50%.
Premium payments received during a grace period also will be reduced by the
amount needed to cover any monthly deductions during the grace period. The
remainder will be applied on the Payment Date to the various subaccounts of the
Phoenix Home Life Variable Universal Life Account (the "Account") or to the
Guaranteed Interest Account ("GIA"), based on the premium allocation schedule
elected in the application for the Policy or as later changed by the
Policyowner. The allocation schedule for premium payments may be changed by
calling or by written notice to VPO. Allocations to the Account subaccounts or
to the GIA must be expressed in terms of whole percentages.
The Policies will be offered and sold pursuant to established underwriting
standards and in accordance with state insurance laws. State insurance laws
generally prohibit unfair
2
<PAGE>
discrimination among Insureds but recognize that premiums may be based upon
factors such as age, sex and health.
(b) Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application, Phoenix will follow certain
insurance underwriting (i.e., evaluation of risks) procedures designed to
determine whether the applicant is insurable. This process may involve such
verification procedures as medical examinations and may require that further
information be provided by the proposed Insured before a determination can be
made. A Policy will not be issued until this underwriting procedure has been
completed.
Phoenix will generally, allocate the Issue Premium less applicable charges
to the Account or GIA upon receipt of a completed application, in accordance
with the allocation instructions in the application for the Policy. However,
Policies issued in certain states, and, if applicable, in certain states
pursuant to applications on which the Applicant notes that the Policy is
intended to replace existing insurance, are issued with a Temporary Money Market
Allocation Amendment. Under this Amendment, Phoenix temporarily allocates the
entire Issue Premium paid less applicable charges (along with any other premiums
paid during the Right to Cancel Period) to the Money Market Subaccount of the
Separate Account until the expiration of the Right to Cancel Period. At the end
of the Right to Cancel Period, the Policy Value of the Money Market Subaccount
is allocated among the subaccounts of the Account or to the GIA in accordance
with the applicant's allocation instructions as set forth in the application for
insurance.
A Policy may be returned by mailing or delivering it to VPO within ten days
after the Policyowner receives it (or longer in some states); within 10 days
after Phoenix mails or delivers a written notice of withdrawal right to the
Policyowner; or within 45 days after the applicant signs the application for a
Policy, whichever occurs latest (the "Right to Cancel Period"). The returned
Policy is treated as if Phoenix never issued the Policy and, except for Policies
issued with a Temporary Money Market Allocation (TMMA) Amendment, Phoenix will
return the sum of the following as of the date Phoenix receives the returned
Policy: (i) the then current Policy Value less any unpaid loans and loan
interest; plus (ii) any monthly deductions,
3
<PAGE>
partial surrender fees and other charges made under the Policy, including
investment advisory fees deducted. The amount returned for Policies issued with
the TMMA Amendment will equal the premium paid less any unrepaid loans and loan
interest, and less any partial surrender amounts paid.
Phoenix reserves the right to disapprove an application for processing
within seven days of receipt at the Investment Products Division of the
completed application for insurance, in which event Phoenix will return the
premium paid. Even after approval of the application for processing, Phoenix
reserves the right to decline issuance of the Policy, in which event Phoenix
will refund the applicant the same amount as would have been refunded under the
Policy had it been issued but returned for refund during the Right to Cancel
period.
During the first 10 Policy Years, there is a difference between the amount
of Policy Value and the amount of Cash Surrender Value of the Policy. This
difference is the surrender charge, consisting of a contingent deferred sales
charge designed to recover expenses for the distribution of Policies that are
terminated by surrender before distribution expenses have been recouped, and a
contingent deferred issue charge designed to recover expenses for the
administration of Policies that are terminated by surrender before
administrative expenses have been recouped. These are contingent charges because
they are paid only if the Policy is surrendered (or the face amount is reduced
or the Policy lapses) during this period. They are deferred charges because they
are not deducted from premiums. The contingent deferred issue charge is set at a
level designed to recover actual costs and is not designed to result in any
profit for Phoenix.
(c) Repayment of Indebtedness
-------------------------
Debt may be repaid at any time during the lifetime of the Insured while the
Policy is in force. Any Debt repayment received by Phoenix during a grace period
will be reduced to cover any overdue monthly deductions and the balance will be
applied to reduce the Debt. Such balance, in excess of any outstanding accrued
loan interest, will be applied to reduce the loaned portion of the GIA and will
be transferred to the unloaned portion of the GIA to the extent that loaned
amounts taken from such Account have not been previously repaid. Otherwise,
such balance will be transferred among the subaccounts as the Policyowner
4
<PAGE>
requests upon repayment and, if no allocation request is made, Phoenix will use
the most recent premium allocation schedule on file.
While there is outstanding Debt on the Policy, any payments received by
Phoenix for the Policy will be applied directly to reduce the Debt unless they
are specified as a premium payment by the Policyowner. Until the Debt is fully
repaid, additional Debt repayments may be made at any time during the lifetime
of the Insured while the Policy is in force.
(d) Correction of Misstatement of Age or Sex
----------------------------------------
If the age or sex of the Insured has been misstated, the death benefit will
be adjusted based on what the cost of insurance charge for the most recent
monthly deduction would have purchased based on the correct age and sex.
(e) Additional Insurance Options
----------------------------
While the Policy is in force and the Policyowner is insurable, the
Policyowner will have the option to purchase additional insurance on the same
Insured with the same guaranteed rates as the Policy without being assessed an
Issue Expense Charge. Phoenix will require evidence of insurability and charges
will be adjusted for the Insured's new attained age and any change in risk
classification. However, if elected on the application, the Policyowner may, at
predetermined future dates, purchase additional insurance protection on the same
Insured without evidence of insurability.
In addition, once each Policy Year, a Policyowner may request an increase
in face amount. This request should be made within 90 days prior to the Policy
Anniversary and is subject to an issue expense charge of $1.50 per $1,000 of
increase in face amount, up to a maximum of $600 and to Phoenix's receipt of
adequate evidence of insurability. A Right to Cancel Period applies to each
increase in face amount.
2. "Redemption Procedures":
Surrender and Related Transactions
----------------------------------
This section outlines those procedures which might be deemed to constitute
redemptions under the Policy. These procedures differ in certain significant
respects from the redemption procedures for mutual funds and contractual plans.
5
<PAGE>
(a) Cash Values
-----------
At any time during the lifetime of the Insured and while the Policy is in
force, the Policyowner may partially or fully surrender the Policy by sending a
written release and surrender in a form satisfactory to Phoenix to VPO, along
with the Policy if Phoenix so requires. The amount available for surrender is
the Cash Surrender Value at the end of the Valuation Period during which the
surrender request is received at VPO.
If the Policy is being fully surrendered, the Policy itself must be
returned to the VPO, along with the written release and surrender of all claims
in a form satisfactory to Phoenix. A Policyowner may elect to have the amount
paid in a lump sum or under a payment option.
If the Policy is being partially surrendered, the Policy Value will be
reduced by the sum of the following: (i) partial surrender amount paid; (ii) a
partial surrender fee equal to the lesser of $25 or 2% of the partial surrender
amount paid; and (iii) the applicable partial surrender charge. The partial
surrender charge is equal to a pro rata portion of the applicable surrender
charge that would apply to a full surrender, and is determined by multiplying
the applicable surrender charge by a fraction. This fraction is equal to the
partial surrender amount payable divided by the result of subtracting the
applicable surrender charge from the Policy Value. The partial surrender charge
is assessed against the subaccounts or the GIA in the same manner as provided
for the partial surrender amount paid.
Phoenix reserves the right not to allow partial surrenders of less than
$500. In addition, if the share of the Policy Value in any subaccount or in the
GIA that would be reduced as a result of a partial surrender would, immediately
after the partial surrender, be less than $500, Phoenix reserves the right to
require that as part of any partial surrender the entire remaining balance in
that subaccount or the GIA be surrendered.
After a partial surrender, the Cash Surrender Value will be reduced by the
partial surrender amount paid plus the partial surrender fee. The face amount of
the Policy also will be reduced by the same amount as the Policy Value is
reduced as described above.
(b) Benefit Claims
--------------
The death benefit (under Option 1) equals the Policy's face amount on the
date of the Insured's death or, if greater, the minimum death benefit on the
date of death. Under Option 2,
6
<PAGE>
the death benefit equals the Policy's face amount on the date of the Insured's
death plus the Policy Value. If no Option has been chosen, Option 1 will apply.
The minimum Death Benefit is the Policy Value on the date of death of the
Insured increased by the applicable percentage from the table contained in the
Policy, based on the Insured's attained age at the beginning of the Policy Year
in which the death occurs.
A Policyowner may request a decrease in Face Amount at any time after the
first Policy Year. Unless Phoenix agrees otherwise, the decrease must at least
equal $10,000 and the Face Amount remaining after the decrease must at least
equal $25,000. All Face Amount decrease requests must be in writing and will be
effective on the first Monthly Calculation Day following the date Phoenix
approves the request. A partial surrender charge will be deducted from the
Policy Value based on the amount of the decrease. The charge will equal the
applicable surrender charge that would apply to a full surrender multiplied by a
fraction, (the decrease in Face Amount divided by the Face Amount of the Policy
before the decrease).
A partial surrender or a decrease in Face Amount generally decreases the
Death Benefit.
(c) Payment of Proceeds
-------------------
Proceeds of full or partial surrenders and the death benefit proceeds will
usually be paid in one lump sum within seven days after Phoenix receives the
request for surrender or due proof of death, unless another payment option has
been elected. (1) Payment of the death proceeds, however, may be delayed if the
claim for payment of the death proceeds needs to be investigated to ensure
payment of the proper amount to the proper payee. Any such delay will not be
beyond that reasonably necessary to investigate such claims consistent with
insurance practices customary in the life insurance industry.
- ----------
(1) Payment from the Account may be postponed whenever: (i) the New York Stock
Exchange is closed other than for customary week-end and holiday closings,
or trading on the New York Stock Exchange is restricted as determined by
the SEC; (ii) the SEC by order permits postponement for the protection of
Policyowners; or (iii) an emergency exists, as determined by the SEC, as a
result of which disposal of securities is not reasonably practicable or it
is not reasonably practicable to determine the value of the Account's net
assets. (Payments under the Policy of any amount derived from premiums paid
by check may be postponed until such time as the check has cleared the
Policyowner's bank.)
7
<PAGE>
(d) Policy Loans
------------
While the Policy is in force, a loan may be obtained against the Policy up
to the available loan value. The loan value on any day is 90% of the result of
subtracting the then remaining surrender charge from the Policy Value. The
available loan value is the loan value on the current day less any outstanding
Debt.
The amount of any loan will be added to the loaned portion of the GIA and
subtracted from the Policy's share of the subaccounts or the unloaned portion of
the GIA, based on the allocation requested at the time of the loan. The total
reduction will equal the amount added to loaned portion of the GIA.
Allocations must generally be expressed in terms of whole percentages. If
no allocation request is made, the amount subtracted from the share of each
subaccount or the unloaned portion of the GIA will be determined in the same
manner as provided for monthly deductions. Interest will be credited and the
loaned portion of the GIA will increase at an effective annual rate of 2%,
compounded daily and payable in arrears. At the end of each Policy year and at
the time of any debt repayment interest credited to the loaned portion of the
GIA will be transferred to the unloaned portion of the GIA.
Failure to repay a policy loan or to pay loan interest will not terminate
the Policy except as otherwise provided under the terms of the Policy concerning
the grace period and lapse.
In the future, Phoenix may not allow Policy loans of less than $500, unless
such loan is used to pay a premium due on another Phoenix policy.
The Policyowner will pay interest on the loan at an effective annual rate,
compounded daily and payable in arrears. The loan interest rates in effect are:
4% for Policy years 1-10 (or the Insured's age 65, if earlier); 3% through
Policy year 15; and 2 1/2% for Policy years 16 and thereafter. At the end of
each Policy Year, any unpaid interest due on the Debt will be treated as a loan
and will be offset by a transfer from the Policyowner's values to the value of
the loaned portion of the GIA.
8
<PAGE>
(e) Policy Lapse
------------
Unlike conventional life insurance policies, the payment of the Issue
Premium no matter how large, or the payment of additional premiums will not
necessarily continue the Policy in force to its Maturity Date.
If on any Monthly Calculation Day during the first two Policy Years, the
Policy Value is insufficient to cover the monthly deduction, a grace period of
61 days will be allowed for the payment of an amount equal to three times the
required monthly deduction. If on any Monthly Calculation Day during any
subsequent Policy Year, the Cash Surrender is less than the required monthly
deduction, a grace period of 61 days will be allowed for the payment of an
amount equal to three times the required monthly deduction. However, until the
Cash Surrender Value becomes positive for the first time, the Policy will not
lapse as long as all premiums planned at issue have been paid.
The Policy will continue in force during any such grace period. Failure to
pay the additional amount within the grace period will result in lapse of the
Policy, but not before thirty days have elapsed since Phoenix mailed written
notice to the Policyowner. If a premium payment for the additional amount is
received by Phoenix during the grace period, the amount of any premium over what
is required to prevent lapse will be allocated among the subaccounts of the
Account or to the GIA in accordance with the then current premium allocation
schedule.
In determining the amount of "excess" premium to be applied to the
subaccounts or the GIA, Phoenix will deduct the premium tax and the amount
needed to cover any monthly deductions not made during the grace period. If the
Insured dies during the grace period, the Death Benefit will equal the amount of
the Death Benefit immediately prior to the commencement of the grace period.
3. Transfers of Policy Value
-------------------------
The Policyowner may transfer all or a portion of the Policy Value among
each subaccount of the Account and the unloaned portion of the GIA. Generally, a
Policyowner may make only one transfer per Policy Year from the unloaned portion
of the GIA and the amount transferred cannot exceed the greater of $1,000 or 25%
of the value of the Policy in the
9
<PAGE>
unloaned portion of the GIA at the time of transfer. Transfers from the unloaned
portion of the GIA will be effectuated upon receipt by VPO.
Phoenix reserves the right to permit transfers of less than $500 only if
the entire balance in the subaccount or the GIA is transferred.
Phoenix reserves the right to prohibit a transfer to any subaccount of the
Account where the resultant value of the Policy's share in that subaccount
immediately after the transfer would be less than $500. It further reserves the
right to require that the entire balance of a Subaccount or the GIA be
transferred if the share of the Policy in the value of that subaccount would,
immediately after the transfer, be less than $500.
For policies issued with the Temporary Money Market Allocation Amendment,
transfers may not be made until termination of the Right to Cancel Period.
4. Conversion Procedures
---------------------
The Policyowner may effectively exchange the Policy for a non-variable life
insurance policy offered by Phoenix ("Non-Variable Life Policy") on the life of
the Insured at any time, by transferring the Policy Value to the GIA. The
benefits under the GIA do not vary with the investment experience of subaccounts
in a separate account. Otherwise the Policy benefits are unchanged. No evidence
of the Insured's insurability is required for this transfer. The Policy will
have the same Death Benefit after the transfer. The Policy Date, issue age and
risk class will remain the same.
The transfer will be effective as outlined above under "Transfers of Policy
Value." Any Policy loans outstanding on the date of transfer will remain
outstanding.
10
