[VERSION A]
FLEX EDGE SUCCESS[registered trademark]
VARIABLE UNIVERSAL LIFE
INSURANCE POLICY
Issued by
PHOENIX LIFE
AND ANNUITY COMPANY
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT:
[envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS
PO Box 8027
Boston, MA 02266-8027
[telephone] Tel. 800/541-0171
PROSPECTUS MAY 1, 1999
AS SUPPLEMENTED JULY 15, 1999
AND DECEMBER 20, 1999
This prospectus describes a flexible premium variable universal life insurance
policy. The policy provides lifetime insurance protection.
THE PHOENIX EDGE SERIES FUND
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MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Capital Growth Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Balanced Series o
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Oakhurst Strategic Allocation Series
[diamond] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Phoenix-Seneca Strategic Theme Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
MANAGED BY PHOENIX VARIABLE ADVISORS, INC.
[diamond] Phoenix Research Enhanced Index Series
[diamond] Phoenix-Bankers Trust Dow 30 Series
[diamond] Phoenix-Federated U.S. Government Bond Series
[diamond] Phoenix-Janus Equity Income Series
[diamond] Phoenix-Janus Flexible Income Series
[diamond] Phoenix-Janus Growth Series
[diamond] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Phoenix-Schafer Mid-Cap Value Series
BT INSURANCE FUNDS TRUST
- ------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE[registered trademark] Equity Index Fund
FEDERATED INSURANCE SERIES
- --------------------------
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- ------------------------------------------------
MANAGED BY MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
[diamond] Technology Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ---------------------------------------
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Allocation Fund -- Class 2
[diamond] Templeton International Fund -- Class 2
[diamond] Templeton Stock Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Fund -- Class 2
MANAGED BY FRANKLIN MUTUAL ADVISERS, LLC
[diamond] Mutual Shares Investments Fund -- Class 2
WANGER ADVISORS TRUST
- ---------------------
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
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It may not be in your best interest to purchase a policy to replace an
existing life insurance policy or annuity contract. You must understand the
basic features of the proposed policy and your existing coverage before you
decide to replace your present coverage. You must also know if the replacement
will result in any taxes.
The policy is not a deposit or obligation of, underwritten or guaranteed by,
any financial institution or credit union. It is not federally insured or
endorsed by the Federal Deposit Insurance Corporation or any other state or
federal agency. Policy investments are subject to risk, including the
fluctuation of policy values and possible loss of principal invested or premiums
paid.
The Securities and Exchange Commission has not approved or disapproved these
securities, nor passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
This prospectus is valid only if accompanied or preceded by current
prospectuses for the funds. You should read and keep these prospectuses for
future reference.
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TABLE OF CONTENTS
Heading Page
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SPECIAL TERMS ......................................... 4
SUMMARY ............................................... 5
PERFORMANCE HISTORY.................................... 6
PHOENIX LIFE AND ANNUITY COMPANY AND
THE VUL ACCOUNT..................................... 6
PLAC ............................................... 6
The VUL Account .................................... 6
The GIA ............................................ 6
THE POLICY ............................................ 7
Introduction ....................................... 7
Eligible Purchasers ................................ 7
Flexible Premiums .................................. 7
Allocation of Issue Premium ........................ 8
Right to Cancel Period ............................. 8
Temporary Insurance Coverage ....................... 8
Transfer of Policy Value ........................... 8
Systematic Transfer Program....................... 8
Nonsystematic Transfers .......................... 9
Determination of Subaccount Values ................. 10
Death Benefit ...................................... 10
Surrenders ......................................... 11
Policy Loans ....................................... 12
Lapse .............................................. 12
Payment of Premiums During Period of Disability .... 13
Additional Insurance Options ....................... 13
Additional Rider Benefits .......................... 13
INVESTMENTS OF THE VUL ACCOUNT ........................ 14
Participating Investment Funds...................... 14
Investment Advisors................................. 17
Services of the Advisors ........................... 17
Reinvestment and Redemption ........................ 17
Substitution of Investments ........................ 17
CHARGES AND DEDUCTIONS ................................ 18
General............................................. 18
Charges Deducted Once .............................. 18
Premium Tax Charge................................ 18
Federal Tax Charge................................ 18
Periodic Charges.................................... 18
Conditional Charges................................. 19
Investment Management Charge........................ 20
Other Taxes ........................................ 20
GENERAL PROVISIONS .................................... 20
Postponement of Payments ........................... 20
Payment by Check ................................... 20
The Contract ....................................... 20
Suicide ............................................ 20
Incontestability ................................... 21
Change of Owner or Beneficiary ..................... 21
Assignment ......................................... 21
Misstatement of Age or Sex ......................... 21
Surplus............................................. 21
PAYMENT OF PROCEEDS ................................... 21
Surrender and Death Benefit Proceeds ............... 21
Payment Options .................................... 21
FEDERAL TAX CONSIDERATIONS ............................ 22
Introduction ....................................... 22
PLAC's Tax Status .................................. 22
Policy Benefits .................................... 22
Business-Owned Policies............................. 23
Modified Endowment Contracts ....................... 23
Limitations on Unreasonable Mortality
and Expense Charges .............................. 24
Qualified Plans .................................... 24
Diversification Standards .......................... 24
Change of Ownership or Insured or Assignment ....... 25
Other Taxes ........................................ 25
VOTING RIGHTS ......................................... 25
THE DIRECTORS AND EXECUTIVE OFFICERS OF PLAC........... 25
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS ............... 26
SALES OF POLICIES ..................................... 26
STATE REGULATION ...................................... 26
REPORTS ............................................... 26
LEGAL PROCEEDINGS ..................................... 26
LEGAL MATTERS ......................................... 26
REGISTRATION STATEMENT ................................ 26
YEAR 2000 ISSUE........................................ 27
FINANCIAL STATEMENTS .................................. 27
APPENDIX A ............................................ 43
APPENDIX B ............................................ 47
APPENDIX C............................................. 48
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.
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SPECIAL TERMS
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The following is a list of terms and their meanings when used in this
prospectus.
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.
FUNDS: The Phoenix Edge Series Fund, BT Insurance Funds Trust, Federated
Insurance Series, Morgan Stanley Dean Witter Universal Funds, Inc., Templeton
Variable Products Series Fund and Wanger Advisors Trust.
GENERAL ACCOUNT: The general asset account of PLAC.
GIA (GUARANTEED INTEREST ACCOUNT): An investment option under which amounts
deposited are guaranteed to earn a fixed rate of interest. Excess interest also
may be credited, at the sole discretion of PLAC.
IN FORCE: Conditions under which the coverage under a Policy is in effect and
the Insured's life remains insured.
IN WRITING (WRITTEN REQUEST): In a written form satisfactory to PLAC and
delivered to VPMO.
INSURED: The person upon whose life the Policy is issued.
ISSUE PREMIUM: The premium payment made in connection with issuing 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.
NET ASSET VALUE: The worth of one share of a Series of a Fund at the end of a
valuation period. Net Asset Value is computed by adding the value of a Series'
holdings plus other assets, minus liabilities and then dividing the result by
the number of shares outstanding.
PAYMENT DATE: The Valuation Date on which we receive a premium payment or loan
repayment, unless it is received after the close of the New York Stock Exchange
("NYSE"), in which case it will be the next Valuation Date.
PLAC (COMPANY, OUR, US, WE): Phoenix Life and Annuity Company, 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 for
the face amount of insurance selected but may 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 we measure Policy Years and
Policy Anniversaries.
POLICY MONTH: The period from one Monthly Calculation Day up to, but not
including, the next Monthly Calculation Day.
POLICYOWNER (OWNER, YOU, YOUR): The person(s) who purchase(s) 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 1-year period from the Policy Date up
to, but not including, the first Policy Anniversary. Each succeeding Policy Year
is the 1-year period from the Policy Anniversary up to, but not including, the
next Policy Anniversary.
PROPORTIONATE (PRO RATA): Amounts allocated to Subaccounts on a pro rata basis
are allocated by increasing or decreasing a Policy's share in the value of the
affected Subaccounts and GIA so that such shares maintain the same ratio to each
other before and after the allocation.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within the VUL Account to which nonloaned assets under a
Policy are allocated.
UNIT: A standard of measurement used to set 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 we calculate the net
asset value of a Fund.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
Valuation Date through the next.
VPMO: Variable Products Mail Operations division of Phoenix that receives and
processes incoming mail for Variable Products Operations.
VPO: Variable Products Operations.
VUL ACCOUNT (ACCOUNT): PLAC Variable Universal Life Account, a separate account
of the company.
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SUMMARY
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This is a summary of the Policy and does not contain all of the detailed
information that may be important to you. You should carefully read the entire
Prospectus before making any decision.
INVESTMENT FEATURES
FLEXIBLE PREMIUMS
The only premiums you have to pay are the Issue Premium and any payments
required to prevent the policy from lapse. See "Flexible Premiums" and "Lapse."
ALLOCATION OF PREMIUMS AND POLICY VALUE
After we deduct certain charges from your premium payment, we will invest
the balance in one or more of the Subaccounts of the VUL Account and/or the GIA
as you will have instructed us.
You may make transfers into the GIA and among the Subaccounts at anytime.
Transfers from the GIA are subject to the rules discussed in "Appendix B" and
under "Transfer of Policy Value."
The Policy Value varies with the investment performance of the Funds and is
not guaranteed.
The Policy Value allocated to the GIA will depend on deductions taken from
the GIA to pay expenses and will accumulate interest at rates we periodically
establish, but never less than 4%.
LOANS AND SURRENDERS
[diamond] Generally, you may take loans against 90% of the Policy's Cash
Surrender Value subject to certain conditions. See "Policy Loans."
[diamond] You may partially surrender any part of the policy anytime. A partial
surrender charge of the lesser of $25 or 2% of the partial surrender
amount will apply. A separate surrender charge also may be imposed.
See "Surrenders."
[diamond] You may fully surrender this Policy anytime for its Cash Surrender
Value. A surrender charge may be imposed. See "Surrenders."
INSURANCE PROTECTION FEATURES
DEATH BENEFITS
[diamond] Both a fixed and variable benefit is available under the Policy.
[bullet] The fixed benefit is equal to the Policy's Face Amount
(Option 1)
[bullet] The variable benefit equals the Face Amount plus the Policy
Value (Option 2)
[diamond] After the first year, you may reduce the Face Amount. Certain
restrictions apply, and generally, the minimum Face Amount is
$250,000.
[diamond] The death benefit is payable when the Insured dies. See "Death
Benefit."
DEATH BENEFIT GUARANTEE
You may elect a guaranteed death benefit. The guaranteed death benefit is
equal to the initial face amount or the face amount as later changed by
increases or decreases regardless of investment performance. The Death Benefit
Guarantee may not be available in some states.
ADDITIONAL BENEFITS
The following additional benefits are available by rider:
[diamond] Disability Waiver of Specified Premium
[diamond] Accidental Death Benefit
[diamond] Death Benefit Protection
[diamond] Whole Life Exchange Option
[diamond] Purchase Protection Plan
[diamond] Living Benefits
[diamond] Cash Value Accumulation
[diamond] Child Term
[diamond] Family Term
[diamond] Business Term
Availability of these Riders depends upon state approval and may involve an
extra cost.
DEDUCTIONS AND CHARGES
FROM PREMIUM PAYMENTS
[diamond] Taxes
[bullet] State Premium Tax Charge--2.25%
[bullet] Federal Tax Charge--1.50%
See "Deductions and Charges" for a detailed discussion.
FROM POLICY VALUE
[diamond] Issue Expense Charge--Deducted in the first Policy Year only and
payable in 12 monthly installments.
[diamond] Administrative Charge--The Administrative Charge is currently set at
$5 per month and is guaranteed not to exceed $10 per month. This
charge is to reimburse PLAC for daily administration, monthly
processing, updating daily values and for annual/quarterly statements.
[diamond] Cost of Insurance--Amount deducted monthly. Cost of insurance rates
apply to the Policy and certain riders. The rates vary and are based
on certain personal factors such as sex, attained age and risk class
of the Insured.
[diamond] Surrender Charge--Deducted if the Policy is surrendered within the
first 10 Policy Years. See "Surrender Charge."
[diamond] Partial Surrender Charge--may be deducted for partial surrenders.
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FROM THE VUL ACCOUNT
Mortality and Expense Risk Charge:
[diamond] Policy Years 1 through 15--.80% annually;
[diamond] Policy Years 16 and after--.25% annually.
FROM THE FUND
The assets of the VUL Account are used to purchase, at Net Asset Value, shares
of your selected underlying Funds. The Net Asset Value reflects investment
management fees and other direct expenses of the Fund. See "Investment
Management Charge."
See "Charges and Deductions" for a more detailed description of how each is
applied.
ADDITIONAL INFORMATION
CANCELLATION RIGHT
You have the right to review the Policy. If you are not satisfied with it,
you may cancel the Policy:
[diamond] within 10 days after you receive the Policy, or
[diamond] within 10 days after we mail or deliver a written notice telling you
about your right to cancel, or
[diamond] within 45 days of completing the application; whichever is latest.
See "Right to Cancel Period."
RISK OF LAPSE
The Policy will remain in force as long as the Cash Surrender Value is
enough to pay the necessary monthly charges incurred under the Policy. When the
Cash Surrender Value is no longer enough, the policy lapses, or ends. We will
let you know of an impending lapse situation. We will give you the opportunity
(a "grace period") to keep the Policy in force by paying a specified amount.
Please see "Lapse" for more detail.
TAX EFFECTS
Generally, under current federal income tax law, death benefits are not
subject to income tax. Earnings on the premiums invested in the VUL Account or
the GIA are not subject to income tax until there is a distribution from the
Policy. Loans, partial surrenders or Policy termination may result in
recognition of income for tax purposes.
VARIATIONS
The Policy is subject to laws and regulations in every state where the
Policy is sold. Therefore, the terms of the Policy may vary from state to state.
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
We may include the performance history of the VUL Account 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. See "Appendix A" for more information.
PHOENIX LIFE AND ANNUITY COMPANY AND
THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PLAC
We are an indirect subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix"). Our executive office is located at One American Row, Hartford,
Connecticut 06102-5056, and our main administrative office is located at 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. We are a Connecticut
stock company, formed to write life insurance and annuity contracts. Formerly,
Phoenix was Savers Life Insurance Company of America, chartered in Missouri in
1981. We redomesticated to Connecticut in April, 1997.
THE VUL ACCOUNT
The VUL Account is a separate account of PLAC, established on July 1, 1996
and governed under the laws of Connecticut. It is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended, and
meets the definition of a "separate account" under that Act. This registration
does not involve supervision of the management of the VUL Account or PLAC by the
SEC.
The VUL Account is divided into Subaccounts each of which is available for
allocation of Policy Value. Each Subaccount will invest solely in shares of a
specific series of a mutual fund. In the future, we may establish additional
Subaccounts which will be made available to existing Policyowners to the extent
and on a basis decided by us. See "Investments of the VUL Account--Participating
Investment Funds."
PLAC does not guarantee the investment performance of the VUL Account or any
of its Subaccounts. Contributions to the overall Policy Value allocated to the
VUL Account depend on the chosen Fund's investment performance. Thus, you bear
the full investment risk for all monies invested in the VUL Account.
The VUL Account is part of the general business of PLAC, but the gains or
losses of the VUL Account belong solely to the VUL Account. The gains or losses
of any other business we may conduct do not affect the VUL Account. Under
Connecticut law, the assets of the VUL Account may not be taken to pay
liabilities arising out of any other business we may conduct. Nevertheless, all
obligations arising under the Policy are general corporate obligations of PLAC.
THE GIA
The GIA is not part of the VUL Account. It is accounted for as part of the
General Account. PLAC reserves the right to limit total deposits, including
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transfers, to the GIA to no more than $250,000 during any one-week period. PLAC
will credit interest daily on the amounts allocated under the Policy to the GIA.
The credited rate will be the same for all monies deposited at the same time.
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%.
On the last business day of each calendar week, PLAC 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
the end 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 then being applied to new
deposits to the GIA. This rate will remain in effect for a guaranteed period of
one full year from the date the new rate is applied.
In general, you can make only one transfer per year from the GIA. The amount
that can be transferred out is limited to the greater of $1,000 or 25% of the
Policy Value in the GIA as of the date of the transfer. If you elect the
Systematic Transfer Program, approximately equal amounts may be transferred out
of the GIA. Also, the total Policy Value allocated to the GIA may be transferred
out of the GIA to one or more of the Subaccounts of the VUL Account over a
consecutive four-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the GIA and among the Subaccounts of the VUL Account may be
made at any time. Transfers from the GIA are subject to the rules discussed in
"Appendix B" and "Transfer of Policy Value--Systematic Transfer Program."
THE POLICY
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INTRODUCTION
The Policy is a flexible premium variable universal life insurance policy.
The Policy has a death benefit, Cash Surrender Value and loan privilege as does
a traditional fixed benefit whole life policy. The Policy differs from a fixed
benefit whole life policy, however, because you can allocate your premium into
one or more of several Subaccounts of the VUL Account or the GIA. Each
Subaccount of the VUL Account, in turn, invests its assets exclusively in a
portfolio of the Fund. The Policy Value varies according to the investment
performance of the Series to which premiums have been allocated.
ELIGIBLE PURCHASERS
Any person up to the age of 75 is eligible to be insured under a newly
purchased Policy after providing suitable evidence of insurability. You can
purchase a Policy to insure the life of another person provided that you have an
insurable interest in that life and the prospective Insured consents.
FLEXIBLE PREMIUMS
The Issue Premium required depends on a number of factors, such as:
[diamond] age;
[diamond] sex;
[diamond] rate class of proposed Insured;
[diamond] desired Face Amount;
[diamond] supplemental benefit; and
[diamond] planned premiums.
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.
The Issue Premium payment should be delivered to your registered representative
for forwarding to our Underwriting Department. Additional payments should be
sent to VPMO.
Premium payments received by us will be reduced by a 2.25% charge for state
premium tax and also by a federal tax charge of 1.50%. The Issue Premium also
will be reduced by the issue expense charge deducted in equal monthly
installments over a 12-month period. Any unpaid balance of the issue expense
charge will be paid to PLAC upon policy lapse or termination.
Premium payments received during a grace period, after deduction of state
and federal tax charges and any sales charge, will be first used to fund any
monthly deductions during the grace period. Any balance 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
by your most recent instructions. See "Nonsystematic Transfers."
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.
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You may increase or decrease the planned premium amount (within limits) or
payment frequency at any time by writing to VPMO. We reserve 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.
You 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 our 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 then
will be adjusted to reflect the refund. To pay such refund, amounts taken from
each Subaccount or the GIA will be done in the same manner as for monthly
deductions. You may write to us and give us different instructions. The total
premium limit may be exceeded if additional premium is needed to prevent lapse
or if we subsequently determine that additional premium would be permitted by
federal laws or regulations.
You may authorize your bank to draw $25 or more from your personal checking
account to be allocated among the available Subaccounts or the GIA. Your monthly
payment will be invested according to your most recent instructions on file at
VPO.
Policies sold to officers, directors and employees of PLAC (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 PLAC (and their spouses and children).
ALLOCATION OF ISSUE PREMIUM
We 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, we temporarily allocate the entire issue premium paid less
applicable charges (along with any other premiums paid during the right to
cancel period) to the Phoenix-Goodwin 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
You have the right to review the Policy. If you are not satisfied with it,
you may cancel the Policy:
[diamond] by mailing it to us within 10 days after you receive it (or longer in
some states); or
[diamond] within 10 days after we mail or deliver a written notice telling you
about your right to cancel; or
[diamond] within 45 days after completing the application,
whichever occurs latest (the "Right to Cancel Period").
We treat a returned Policy as if we never issued it and, except for Policies
issued with a Temporary Money Market Allocation Amendment, we will return the
sum of the following as of the date we receive the returned Policy: (1) the then
current Policy Value less any unpaid loans and loan interest; plus (2) any
monthly deductions, partial surrender fees and other charges made under the
Policy. For Policies issued with the Temporary Money Market Amendment the amount
returned will equal any premiums paid less any unrepaid loans and loan interest,
and less any partial surrender amounts paid.
We retain the right to decline to process an application within seven days
of our receipt of the completed application for insurance. If we decline to
process the application, we will return the premium paid. Even if we have
approved the application for processing, we retain the right to decline to issue
the Policy. If we decline to issue the Policy, we will refund to you 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, we issue a Temporary Insurance Receipt to you. Under the
Temporary Insurance Receipt, the insurance protection applied for (subject to
the limits of liability and subject to 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
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the GIA on a monthly, quarterly, semiannual or annual basis
under the Systematic Transfer Program for Dollar Cost Averaging ("Systematic
Transfer Program"). Under this Systematic Transfer Program, the minimum transfer
amounts are $25
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monthly, $75 quarterly, $150 semiannually or $300 annually. You
must have an initial value of $1,000 in the GIA or the Subaccount from which
funds will be transferred ("Sending Subaccount") and if the value in that
Subaccount or the GIA drops below the amount to be transferred, the entire
remaining balance will be transferred and all systematic transfers stop. Funds
may be transferred from only one Sending Subaccount or the GIA, but may be
allocated to more than one Subaccount ("Receiving Subaccounts"). Under the
Systematic Transfer Program, Policyowners may make more than one transfer per
Policy Year from the GIA. These transfers must be in approximately equal amounts
and made over a minimum 18-month period.
Only one Systematic Transfer Program can be active at any time. After the
completion of the Systematic Transfer Program, you can call VPO at 800/541-0171
to begin a new Systematic Transfer Program.
All transfers under the Systematic Transfer Program will be made on the
basis of the GIA and Subaccount on the first day of the month following our
receipt of the transfer request. If the first day of the month falls on a
holiday or weekend, then the transfer will be processed on the next business
day.
NONSYSTEMATIC TRANSFERS
Transfers among available Subaccounts or the GIA and changes in premium
payment allocations may be requested in writing or by calling 800/541-0171,
between the hours of 8:30 a.m. and 4:00 p.m. Eastern Time. Written requests for
transfers will be executed on the date the request is received at VPMO.
Telephone transfers will be effective on the date the request is made except as
noted below. Unless you elect in writing not to authorize telephone transfers or
premium allocation changes, telephone transfer orders and premium allocation
changes also will be accepted on your behalf from your registered
representative. PLAC and Phoenix Equity Planning Corporation ("PEPCO"), the
national distributor for PLAC, 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 you. To the extent that PLAC and PEPCO
fail to follow procedures reasonably designed to prevent unauthorized transfers,
PLAC and PEPCO may be liable for following telephone instructions for transfers
that prove to be fraudulent. However, you will bear the risk of loss resulting
from instructions entered by an unauthorized third party that PLAC and PEPCO
reasonably believe to be genuine. The telephone transfer and allocation change
privileges may be modified or terminated at any time. During times of extreme
market volatility, these privileges may be difficult to exercise. In such cases,
you should submit a written request.
Although currently there is no charge for transfers, in the future, we may
charge a fee of $10 for each transfer after the first two transfers in a Policy
Year.
We reserve the right to refuse to transfer amounts less than $500 unless:
[diamond] the entire balance in the Subaccount or the GIA is being transferred;
or
[diamond] the transfer is part of the Systematic Transfer Program.
We also reserve the right to prohibit a transfer to any Subaccount of the
VUL Account if the value of your investment in that Subaccount immediately after
the transfer would be less than $500. We further reserve the right to require
that the entire balance of a Subaccount or the GIA be transferred if the value
of your investment in that Subaccount would, immediately after the transfer, be
less than $500.
You may make only one transfer per Policy Year from the unloaned portion of
the GIA unless (1) the transfer(s) are made as part of a Systematic Transfer
Program, or (2) we agree to make an exception to this rule. The amount you may
transfer cannot exceed the greater of $1,000 or 25% of the value of the unloaned
portion of the GIA at the time of the transfer. In addition, you may transfer
the total value allocated to the unloaned portion of the GIA out of the GIA to
one or more of the Subaccounts over a consecutive four-year period according to
the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of the remaining value
[diamond] Year Three: 50% of the remaining value
[diamond] Year Four: 100% of the remaining value
A nonsystematic transfer from the unloaned portion of the GIA will be
processed on the day such request is received by VPMO.
Transfers into the GIA and among the Subaccounts may be made anytime. We
reserve the right to limit the number of Subaccounts you may invest in to a
total of 18 at any one time or over the life of the Policy. We may limit you to
less than 18 if we are required to do so by any federal or state law.
Because excessive exchanges between Subaccounts can hurt Fund performance,
we reserve the right to temporarily or even permanently terminate exchange
privileges or reject any specific exchange order from anyone whose transactions
appear to us to follow a timing pattern, including those who request more than
one exchange out of a Subaccount within any 30-day period. We will not accept
batched transfer instructions from registered representatives (acting under
powers of attorney for multiple Policy Owners), unless the registered
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representative's broker-dealer firm and PLAC have entered into a third-party
transfer service agreement.
If a policy has been issued with a Temporary Money Market Allocation
Amendment, no transfers may be made until the end of the Right to Cancel Period.
DETERMINATION OF SUBACCOUNT VALUES
We establish the unit value of each Subaccount of the VUL Account on the
first Valuation Date of that Subaccount. The unit value of a Subaccount 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 on a day other than a Valuation Date is the unit value on the next
Valuation Date. Unit values are carried to six decimal places. The unit value of
each Subaccount on a Valuation Date is determined at the end of that day.
The Net Investment Factor for each Subaccount 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 determined by the formula:
(A) + (B)
-------- - (D) where:
(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 amount of any
deposits and withdrawals made 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 death of the Insured 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 death of the Insured, plus the Policy Value or, if greater, the
minimum death benefit on that date.
Under either Option, the minimum death benefit is the Policy Value on the
date of death of the Insured increased by a percentage determined from a table
contained in the Policy. This percentage will be 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
A Guaranteed Death Benefit Rider is available. Under this Policy rider, if
you pay 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 decreases. To
keep this guaranteed death benefit in force, there may be limitations on the
amount of partial surrenders or decreases in Face Amount permitted.
After the first 10 Policy Years, there will be a monthly charge equal to
$0.01 per $1,000 of Face Amount for policies issued with a Guaranteed Death
Benefit Rider.
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, you 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 we require 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. We will deduct any charges associated
with the increase (the increases in cost of insurance charges), from the Policy
Value, whether or not you pay an additional premium in
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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. If the change is a decrease in Face Amount, the
death benefit under a Policy would be reduced on the next Monthly Calculation
Day. If the change is 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
You may request a decrease in Face Amount at any time after the first Policy
Year. Unless we agree otherwise, the decrease must be at least equal to $10,000
and the face amount remaining after the decrease must be at least $25,000. All
face amount decrease requests must be in writing and will be effective on the
first Monthly Calculation Day following the date we approve 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 (which is equal to
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, you may partially or fully surrender the Policy by sending to VPMO a
written release and surrender in a form satisfactory to us. We may also require
you to send the Policy to us. 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 VPMO.
Upon partial or full surrender, we generally will pay to you the amount
surrendered within seven days after we receive 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 VPMO, along with the written release and surrender of all claims in a form
satisfactory to us. You may elect to have the amount paid in a lump sum or under
a payment option. See "Conditional Charges--Surrender Charge" and "Payment
Options."
PARTIAL SURRENDERS
You may obtain a partial surrender of the Policy by requesting payment of
the Policy's Cash Surrender Value. It is possible to do this at any time during
the lifetime of the Insured, while the Policy is in force, with a written
request to VPMO. We may require the return of the Policy 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 by us. Surrender
proceeds may be applied under any of the payment options described under
"Payment of Proceeds--Payment Options."
We reserve 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 is
reduced as a result of a partial surrender and is less than $500, we reserve the
right to require surrender of the entire remaining balance in that Subaccount or
the GIA.
Upon a partial surrender, the Policy Value will be reduced by the sum of the
following:
(1) The Partial Surrender Amount Paid. This amount comes from a reduction in the
Policy's share in the value of each Subaccount or the GIA based on the
allocation requested at the time of the partial surrender. If no allocation
request is made, the withdrawals from each Subaccount will be made in the
same manner as that provided for monthly deductions.
(2) 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.
(3) 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 will be
reduced by the
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same amount as the Policy Value is reduced as described above.
POLICY LOANS
Generally, while the Policy is in force, a loan may be taken against the
Policy up to the available loan value. The loan value on any day is 90% of the
Policy Value reduced by an amount equal to the surrender charge. 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 us during a grace period will
be reduced to pay any overdue monthly deductions and only the balance will be
applied to reduce the Debt. Such balance will first be used to pay any
outstanding accrued loan interest, and then will be applied to reduce the loaned
portion of the GIA. The unloaned portion of the GIA will be increased by the
same amount the loaned portion is decreased. If the amount of a loan repayment
exceeds the remaining loan balance and accrued interest, the excess will be
allocated among the Subaccounts as you may request at the time of the repayment
and, if no allocation request is made, according to the most recent premium
allocation schedule on file.
Payments received by us for the Policy will be applied directly to reduce
outstanding Debt unless specified as a premium payment by you. 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 unless the Policy Value becomes insufficient to maintain the Policy
in force.
The proceeds of Policy loans may be subject to federal income tax. See
"Federal Tax Considerations."
In the future, PLAC may not allow Policy loans of less than $500, unless
such loan is used to pay a premium on another PLAC policy.
You 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:
Policy Years 1-10: 4%
Policy Years 11-15: 3%
Policy Years 16 and thereafter: 2 1/2%
At the end of each Policy Year, any interest due on the Debt will be treated
as a new loan and will be offset by a transfer from your Subaccounts and the
unloaned portion of the GIA to 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, the Policy Value
does not increase as rapidly as it would have had no loan been made. If the
Subaccounts or the GIA earn less than the annual interest rate for funds held in
the loaned portion of the GIA, the Policy Value is greater than it would have
been had no loan been made. A Policy loan, whether or not repaid, also has a
similar 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 3 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 should have 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, during the first five Policy Years or 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.
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During the grace period, the Policy will continue In Force but 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 after we have mailed written notice to you. If a
premium payment for the additional amount is received by us during the grace
period, any amount of premium over what is required to prevent lapse will be
allocated among the Subaccounts or to the GIA according to the current premium
allocation schedule. In determining the amount of "excess" premium to be applied
to the Subaccounts or the GIA, we 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
You may also 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 our 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. We 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 "Additional Rider Benefits--Purchase
Protection Plan Rider."
In addition, once each Policy Year you 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 our receipt of adequate
insurability evidence. A Right to Cancel Period as described in "The Policy"
section of this Prospectus applies to each increase in face amount.
ADDITIONAL RIDER BENEFITS
You may elect additional benefits under a Policy, and you may cancel these
benefits at anytime. 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 and additional riders may
be available as described in the Policy (if approved in your state).
[diamond] DISABILITY WAIVER OF SPECIFIED PREMIUM RIDER. We waive 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). If premiums have been waived continuously
during the entire five years prior to such date, the waiver will
continue beyond that date. The premium will be waived upon our receipt
of notice that the Insured is totally disabled and that the disability
occurred while the rider was in force.
[diamond] ACCIDENTAL DEATH BENEFIT RIDER. An additional death benefit will be
paid (1) if the Insured dies from bodily injury that results from an
accident; (2) if the Insured dies no later than 90 days after injury;
and (3) before the Policy Anniversary nearest the Insured's 75th
birthday.
[diamond] 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 you may increase or decrease provided that certain
minimum premiums are paid. Unless we agree 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 must be 20.
Three Death Benefit Guarantee periods are available. 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:
Expiry Date of Death Benefit Guaranteed, the
Level 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 you pay the new Minimum Required Premium.
[diamond] WHOLE LIFE EXCHANGE OPTION RIDER. This rider permits you to exchange
the 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.
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[diamond] PURCHASE PROTECTION PLAN RIDER. Under this rider you may, at
predetermined future dates, purchase additional insurance protection
without evidence of insurability.
[diamond] 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.
[diamond] CASH VALUE ACCUMULATION RIDER. This rider generally permits you 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.
[diamond] CHILD TERM RIDER. This rider provides annually renewable term coverage
on children of the Insured who are between 14 days old and age 18. The
term insurance is renewable to age 25. Each child will be insured
under a separate rider and the amount of insurance must be the same.
Coverage may be converted to a new whole life or variable insurance
policy at any time prior to the Policy Anniversary nearest insured
child's 25th birthday.
[diamond] FAMILY TERM RIDER. This rider provides annually renewable term
insurance coverage to age 70 on the Insured or members of the
Insured's immediate family who are at least 18 years of age. The rider
is fully convertible through age 65 for each Insured to either a fixed
benefit or variable policy.
[diamond] BUSINESS TERM RIDER. This rider provides annually renewable term
insurance coverage to age 95 on the life of the Insured under the base
Policy. The face amount of the term insurance may be level or
increasing. The initial rider death benefit cannot exceed 6 times the
initial base Policy. This rider is available only for Policies sold in
the corporate-owned life insurance market, employer-sponsored life
insurance market or other business-related life insurance market.
INVESTMENTS OF THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts invest in corresponding series of The Phoenix Edge
Series Fund. The following series are currently available:
PHOENIX RESEARCH ENHANCED INDEX SERIES: The investment objective of the
series is to seek high total return by investing in a broadly diversified
portfolio of equity securities of large and medium capitalization companies
within market sectors reflected in the S&P 500. The series invests in a
portfolio of undervalued common stocks and other equity securities which appear
to offer growth potential and an overall volatility of return similar to that of
the S&P 500.
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the
series is to seek a high total return consistent with reasonable risk. The
series invests 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
Phoenix-Aberdeen International Series provides a means for investors to invest a
portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the series is
to seek long-term capital appreciation. The series invests primarily in a
diversified portfolio of equity securities of issuers organized and principally
operating in Asia, excluding Japan.
PHOENIX-BANKERS TRUST DOW 30 SERIES: The series seeks to track the total
return of the Dow Jones Industrial Average(SM) (the "DJIA(SM)") before fund
expenses.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment
objective of the series is to seek capital appreciation and income with
approximately equal emphasis. Under normal circumstances, it invests 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.
PHOENIX-ENGEMANN CAPITAL GROWTH SERIES: The investment objective of the
series is to achieve intermediate and long-term growth of capital, with income
as a secondary consideration. The Phoenix-Engemann Capital Growth Series invests
principally in common stocks of corporations believed by management to offer
growth potential.
PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the series
is to seek long-term capital appreciation by investing in approximately 50
different securities which offer the best potential for long-term growth of
capital. At least 75% of the series' assets will be invested in common stocks of
high quality growth companies. The remaining portion will be invested in common
stocks of small corporations with rapidly growing earnings per share or common
stocks believed to be undervalued.
PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES:
The investment objective of the series is to maximize total return by investing
primarily in debt obligations of the U.S. Government, its agencies and
instrumentalities.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the series
is to provide maximum current income consistent with capital preservation and
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liquidity. The Phoenix-Goodwin Money Market Series invests exclusively in high
quality money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective
of the series is to seek long-term total return. The Phoenix-Goodwin
Multi-Sector Fixed Income Series seeks to achieve its investment objective by
investing in a diversified portfolio of high yield and high quality fixed income
securities.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of
the series is long-term capital appreciation, with a secondary investment
objective of current income. The Phoenix-Hollister Value Equity Series seeks to
achieve its objective by investing in a diversified portfolio of common stocks
that meet certain quantitative standards that indicate above average financial
soundness and intrinsic value relative to price.
PHOENIX-JANUS EQUITY INCOME SERIES: The investment objective of the series
is to seek current income and long-term growth of capital.
PHOENIX-JANUS FLEXIBLE INCOME SERIES: The investment objective of the series
is to seek to obtain maximum total return, consistent with preservation of
capital.
PHOENIX-JANUS GROWTH SERIES: The investment objective of the series is to
seek long-term growth of capital, in a manner consistent with the preservation
of capital.
PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES: The investment objective of the
series is to seek capital appreciation by investing primarily in equity
securities.
PHOENIX-OAKHURST BALANCED SERIES: The investment objective of the series is
to seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Oakhurst Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
series is to seek dividend growth, current income and capital appreciation by
investing in common stocks. The Phoenix-Oakhurst Growth and Income Series seeks
to achieve its objective by selecting securities primarily from equity
securities of the 1,000 largest companies traded in the United States, ranked by
market capitalization.
PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES: The investment objective of
the series is to realize as high a level of total return over an extended period
of time as is considered consistent with prudent investment risk. The
Phoenix-Oakhurst Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the Investment Advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-SCHAFER MID-CAP VALUE SERIES: The primary investment objective of
the series is to seek long-term capital appreciation, with current income as the
secondary investment objective. The Phoenix-Schafer Mid-Cap Value Series will
invest in common stocks of established companies having a strong financial
position and a low stock market valuation at the time of purchase which are
believed to offer the possibility of increase in value.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the series
is to seek capital appreciation primarily through investments in equity
securities of companies that have the potential for above average market
appreciation. The series seeks to outperform the Standard & Poor's Mid-Cap 400
Index.
PHOENIX-SENECA STRATEGIC THEME SERIES: The investment objective of the
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
Phoenix-Seneca Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
BT INSURANCE FUNDS TRUST
A certain Subaccount invests in a corresponding series of the BT Insurance
Funds Trust. The following series is currently available:
EAFE[registered Trademark] EQUITY INDEX FUND: The series seeks to match the
performance of the Morgan Stanley Capital International EAFE[registered
trademark] Index ("EAFE[registered Trademark] Index"), which emphasizes major
market stock performance of companies in Europe, Australia and the Far East. The
series invests in a statistically selected sample of the securities found in the
EAFE[registered Trademark] Index.
FEDERATED INSURANCE SERIES
Certain Subaccounts invest in corresponding series of the Federated
Insurance Series. The following series are currently available:
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the series is to seek current income by investing primarily in U.S.
government securities, including mortgage-backed securities issued by U.S.
government agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the series
is to seek high current income by investing primarily in a diversified portfolio
of high-yield, lower-rated corporate bonds.
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MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
A certain subaccount invests in a corresponding series of the Morgan Stanley
Dean Witter Universal Funds, Inc. The following series is currently available:
TECHNOLOGY PORTFOLIO: The investment objective of the series is to seek
long-term capital appreciation by investing primarily in equity securities of
companies that the investment advisor expects to benefit from their involvement
in technology and technology-related industries.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain Subaccounts invest in Class 2 Shares of a corresponding series of
the Templeton Variable Products Series Fund. The following series are currently
available:
MUTUAL SHARES INVESTMENT FUND: The primary investment objective of the
series is capital appreciation with income as a secondary objective. The Mutual
Shares Investments Fund invests in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET ALLOCATION FUND: The investment objective of the series is a
high level of total return. The Templeton Asset Allocation Fund invests in
stocks of companies of any nation, bonds of companies and governments of any
nation and in money market instruments. Changes in the asset mix will be made in
an attempt to capitalize on total return potential produced by changing economic
conditions throughout the world, including emerging market countries.
TEMPLETON DEVELOPING MARKETS FUND: The investment objective of the series is
long-term capital appreciation. The Templeton Developing Markets Fund invests
primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL FUND: The investment objective of the series is
long-term capital growth. The Templeton International Fund invests primarily in
stocks of companies located outside the United States, including emerging
markets.
TEMPLETON STOCK FUND: The investment objective of the series is long-term
capital growth. The Templeton Stock Fund invests primarily in common stocks
issued by companies in various nations throughout the world, including the U.S.
and emerging markets.
WANGER ADVISORS TRUST
Certain Subaccounts invest in corresponding series of the Wanger Advisors
Trust. The following series are currently available:
WANGER FOREIGN FORTY: The investment objective of the series is to seek
long-term capital growth. The Wanger Foreign Forty Series invests primarily in
equity securities of foreign companies with market capitalization of $1 billion
to $10 billion and focuses its investments in 40 to 60 companies in the
developed markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the series is to
seek long-term capital growth. The Wanger International Small Cap Series invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the series is to seek long-term
capital growth. The Wanger Twenty Series invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the series is to seek
long-term capital growth. The Wanger U.S. Small Cap Series invests primarily in
securities of U.S. companies with total common stock market capitalization of
less than $1 billion.
Each series will be subject to market fluctuations and the risks that come
with the ownership of any security, and there can be no assurance that any
series will achieve its stated investment objective.
In addition to being sold to the Account, shares of the funds also may be
sold to other separate accounts of Phoenix or its affiliates or to the separate
accounts of other insurance companies.
It is possible that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the fund(s) simultaneously. Although neither PLAC nor the fund(s)
trustees currently foresee 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 to such
conflicts. Material conflicts could, for example, result from:
[diamond] changes in state insurance laws;
[diamond] changes in federal income tax laws;
[diamond] changes in the investment management of any portfolio of the fund(s);
or
[diamond] differences in voting instructions between those given by variable
life insurance Policyowners and those given by variable annuity
Contract Owners.
We will, at our expense, remedy such material conflicts including, if
necessary, segregating the assets underlying the variable life insurance
policies and the variable annuity contracts and establishing a new registered
investment company.
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INVESTMENT ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is an investment advisor to the
following series in The Phoenix Edge Series Fund:
[bullet]Phoenix-Goodwin Money Market Series
[bullet]Phoenix-Goodwin Multi-Sector Fixed Income Series
[bullet]Phoenix-Hollister Value Equity Series
[bullet]Phoenix-Oakhurst Balanced Series
[bullet]Phoenix-Oakhurst Growth and Income Series
[bullet]Phoenix-Oakhurst Strategic Allocation Series
Based on subadvisory agreements with the fund, PIC as an investment advisor
delegates certain investment decisions and research functions to subadvisors for
the following series:
[diamond] Phoenix-Aberdeen International Advisors, LLC ("PAIA")
[bullet] Phoenix-Aberdeen International Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
[bullet] Phoenix-Engemann Capital Growth Series
[bullet] Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
[bullet] Phoenix-Seneca Mid-Cap Growth Series
[bullet] Phoenix-Seneca Strategic Theme Series
Phoenix Variable Advisors, Inc. ("PVA") is also an investment advisor to The
Phoenix Edge Series Fund. Based on subadvisory agreements with the fund, PVA
delegates certain investment decisions and research functions to the following
subadvisors for the series listed:
[diamond] Bankers Trust Company
[bullet] Phoenix-Bankers Trust Dow 30 Series
[diamond] Federated Investment Management Company
[bullet] Phoenix-Federated U.S. Government Bond Series
[diamond] J.P. Morgan Investment Management, Inc.
[bullet] Phoenix Research Enhanced Index Series
[diamond] Janus Capital Corporation
[bullet] Phoenix-Janus Equity Income Series
[bullet] Phoenix-Janus Flexible Income Series
[bullet] Phoenix-Janus Growth Series
[diamond] Morgan Stanley Asset Management Inc.
[bullet] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Schafer Capital Management, Inc.
[bullet] Phoenix-Schafer Mid-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is PAIA.
Pursuant to subadvisory agreements with the fund, PAIA delegates certain
investment decisions and research functions with respect to the Phoenix-Aberdeen
New Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect less than wholly owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix, and by Aberdeen Fund Managers, Inc. PVA is a wholly
owned subsidiary of PM Holdings, Inc.
The other investment advisors and their respective funds are:
[diamond] Bankers Trust Company
[bullet] EAFE[registered Trademark] Equity Index Fund
[diamond] Federated Investment Management Company
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated High Income Bond Fund II
[diamond] Franklin Mutual Advisers, LLC
[bullet] Mutual Shares Investments Fund
[diamond] Morgan Stanley Dean Witter Investment Management Inc.
[bullet] Technology Portfolio
[diamond] Templeton Asset Management, Ltd.
[bullet] Templeton Developing Markets Fund
[diamond] Templeton Investment Counsel, Inc.
[bullet] Templeton Asset Allocation Fund
[bullet] Templeton International Fund
[bullet] Templeton Stock Fund
[diamond] Wanger Asset Management, L.P.
[bullet] Wanger Foreign Forty
[bullet] Wanger International Small Cap
[bullet] Wanger Twenty
[bullet] Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The advisors continually furnish an investment program for each series and
manage the investment and reinvestment of the assets of each series subject at
all times to the authority and supervision of the Trustees. A detailed
discussion of the investment advisors and subadvisors, and the investment
advisory and subadvisory agreements, is contained in the accompanying prospectus
for the funds.
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.
Likewise, all capital gains distributions of the fund, if any, are reinvested at
the net asset value on the record date. We redeem fund shares at their net asset
value to the extent necessary to make payments under the policy.
SUBSTITUTION OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions
for the investments held by the VUL Account, subject to compliance with the law
as currently applicable or as subsequently changed. In the future, we may
establish additional Subaccounts within the VUL
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<PAGE>
Account, each of which will invest in shares of a designated portfolio of the
Fund with a specified investment objective. If and when marketing needs and
investment conditions warrant, and at our discretion, we may establish
additional portfolios. These will be made available under existing Policies to
the extent and on a basis determined by us.
If shares of any of the portfolios of the Fund should be no longer available
for investment or, if in the judgment of our management, further investment in
shares of any of the portfolios become inappropriate due to Policy objectives,
we may then substitute shares of another mutual fund for shares already
purchased, or to be purchased in the future. 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 you. In the event of a
change, you will be given the option of transferring the Policy Value of the
Subaccount in which the substitution is to occur to another Subaccount.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
GENERAL
Charges are deducted in connection with the Policy to compensate us for:
[diamond] our expenses in selling the Policy;
[diamond] underwriting and issuing the Policy;
[diamond] premium and federal taxes incurred on premiums received;
[diamond] providing the insurance benefits set forth in the Policy; and
[diamond] assuming certain risks in connection with the Policy.
The nature and amount of these charges are more fully described in sections
below.
When we issue Policies under group or sponsored arrangements, we may reduce
or eliminate the:
[diamond] issue expense charge; and/or
[diamond] surrender charge.
Sales to a group or through sponsored arrangement often result in lower per
policy costs and often involve a greater stability of premiums paid into the
policies. Under such circumstances, PLAC tries to pass these savings onto the
purchasers. The amount of reduction will be determined on a case-by-case basis
and will reflect the cost reduction we expect as a result of these group or
sponsored sales.
Certain charges are deducted only once, others are deducted periodically,
while certain others are deducted only if certain events occur.
CHARGES DEDUCTED ONCE
[diamond] PREMIUM TAX CHARGE. Various states (and countries and cities) impose a
tax on premiums received by insurance companies. Premium taxes vary
from state to state. Currently, these taxes range from 0.75% to 4% of
premiums paid. Moreover, certain municipalities in Louisiana, Kentucky
and South Carolina also impose taxes on premiums paid, in addition to
the state taxes imposed. The premium tax charge represents an amount
we consider necessary to pay all premium taxes imposed by these taxing
authorities, and we do not expect to derive a profit from this charge.
Policies will be assessed a tax charge equal to 2.25% of the premiums
paid. These charges are deducted from each premium payment.
[diamond] 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 us
of the federal income tax treatment of deferred acquisition costs.
PERIODIC CHARGES
MONTHLY
[diamond] ISSUE EXPENSE CHARGE. The issue expense charge is $1.50 per $1,000 of
face amount up to a maximum of $600. This charge is to reimburse PLAC
for underwriting and start-up expenses in connection with issuing a
Policy. Rather than deduct the full amount at once, the issue expense
charge is deducted in equal monthly installments over the first 12
months of the Policy.
[diamond] ADMINISTRATIVE CHARGE. The Administrative Charge is currently set at
$5 per month and is guaranteed not to exceed $10 per month. This
charge is to reimburse PLAC for daily administration, monthly
processing, updating daily values and for annual/quarterly statements.
[diamond] COST OF INSURANCE. To determine this expense, we multiply the
appropriate cost of insurance rate by the difference between your
Policy's death benefit and the Policy Value. Generally, cost of
insurance rates are based on the sex, Attained Age and risk class of
the Insured. 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 costs of insurance rates are
based on our 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 Commissioners Standard Ordinary ("CSO") Mortality
Table, with appropriate adjustment for the
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<PAGE>
Insureds' risk classification. Any change in the cost of insurance
rates will apply to all persons of the same sex, insurance age and
risk class whose Policies have been In Force for the same length of
time. Your risk class may affect your cost of insurance rate. We
currently place
Insureds into a standard risk class or a risk class involving a higher
mortality risk, depending upon the health of the Insureds as
determined by medical information that we request. For otherwise
identical Policies, Insureds in the 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.
Nonsmokers will generally incur a lower cost of insurance than
similarly situated Insureds who smoke.
[diamond] COST OF ANY RIDERS TO YOUR POLICY. Certain policy riders require the
payment of additional premiums to pay for the benefit provided by the
rider.
Monthly deductions are made on each Monthly Calculation Day. The amount
deducted is allocated among Subaccounts and the unloaned portion of the GIA
based on an allocation schedule specified by you.
You initially chose this schedule in your application, but can later change
it from time to time. If any Subaccount or the unloaned portion of the GIA is
insufficient to permit the full withdrawal of the monthly deduction, the
withdrawals from the other Subaccounts or GIA will be proportionally increased.
DAILY
[diamond] MORTALITY AND EXPENSE RISK CHARGE. A charge at an annual rate of 0.80%
is deducted daily from the VUL Account. After the 15th policy year,
the charge is reduced to an annual rate of 0.25%. No portion of this
charge is deducted from the GIA.
The mortality risk assumed by us is that collectively our Insureds may
live for a shorter time than projected because of inaccuracies in that
projecting process and, therefore, that the total amount of death
benefits that we will pay out will be greater than that we expected.
The expense risk assumed is that expenses incurred in issuing and
maintaining 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, we may profit from this charge. We also assume
risks with respect to other contingencies including the incidence of
Policy loans, which may cause us to incur greater costs than expected
when we designed the Policies. To the extent we profit from this
charge, we 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.
CONDITIONAL CHARGES
These are other charges that are imposed only if certain events occur.
[diamond] 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 the 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.
During the first 10 Policy Years, the full surrender charge described
below will apply if you either surrender the Policy for its cash
surrender value or let 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 you could pay while
you own the Policy is equal to either A plus B (as defined below) or
the amount shown in the
Policy's Surrender Charge Table, whichever is less. After the first
two Policy Years, the maximum surrender charge that you could pay is
based on the amount shown in the Policy's Surrender Charge Table.
A (the contingent deferred sales charge) is equal to:
[bullet] 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 SEC rule); plus
[bullet] 8.5% of all premiums paid in excess of this amount but not
greater than twice this amount; plus
[bullet] 7.5% of all premiums paid in excess of twice this amount.
B (the contingent deferred issue charge) is equal to:
[bullet] $5 per $1,000 of initial face amount.
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<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
PLAC may reduce the surrender charge 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.
[diamond] PARTIAL SURRENDER FEE. In the case of a partial surrender, but not a
decrease in Face Amount, an additional fee is imposed. The fee is
equal to 2% of the amount withdrawn but not more than $25. The fee is
intended to recover the actual costs of processing the partial
surrender request. The fee will be deducted from each Subaccount and
GIA in the same proportion as the withdrawal is allocated. If no
allocation is made at the time of the request for the partial
surrender, withdrawal allocation will be made in the same manner as
are monthly deductions.
[diamond] PARTIAL SURRENDER CHARGE. If less than all of the Policy is
surrendered, the amount withdrawn is a "partial surrender." A charge
as described below is deducted from the Policy Value upon a partial
surrender of the Policy. The charge is a fraction of the applicable
surrender charge that would apply to a full surrender, determined by
how much of the full Cash Surrender Value is being withdrawn. This
amount is assessed against the Subaccounts and the GIA in the same
proportion as the withdrawal is allocated.
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.
INVESTMENT MANAGEMENT CHARGE
As compensation for investment management services to the Funds, the
Advisors are entitled to fees, payable monthly and based on an annual percentage
of the average aggregate daily net asset values of each Series.
These Fund charges and other expenses are described more fully in the
accompanying Fund prospectuses.
OTHER TAXES
Currently no charge is made to the VUL Account for federal income taxes that
may be attributable to the VUL Account. We may, however, make such a charge in
the future for these or any other taxes attributable to the VUL Account.
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
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:
[diamond] for up to six months from the date of the request, for any
transactions dependent upon the value of the GIA;
[diamond] whenever the NYSE is closed other than for customary weekend and
holiday closings or trading on the NYSE is restricted as determined by
the SEC; or
[diamond] whenever an emergency exists, as decided 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 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 your bank.
THE CONTRACT
The Policy and attached copy of the application 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 PLAC 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, the Policy will stop and become void. We will pay you the Policy Value
adjusted by the addition of any monthly deductions and other fees and charges,
minus any debt owed to us under the Policy.
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<PAGE>
INCONTESTABILITY
We cannot contest this Policy or any attached rider after it has been in
force during the Insured's lifetime or 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 Insured, the death
benefit payable under the Policy will be paid to your estate.
As long as the Policy is in force, the Policyowner and the Beneficiary may
be changed in writing, satisfactory to us. A change in Beneficiary will take
effect as of the date the notice is signed, whether or not the Insured is living
when we receive the notice. We will not, however, be liable for any payment made
or action taken before receipt of the notice.
ASSIGNMENT
The Policy may be assigned. We will not be bound by the assignment until a
written copy has been received and we will not be liable with respect to any
payment made prior to receipt. We assume 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.
SURPLUS
You may share in the divisible surplus of PLAC to the extent decided
annually by the Board of Directors. However, it is not currently expected that
the Board will authorize these payments since you will be participating directly
in investment results.
PAYMENT OF PROCEEDS
- --------------------------------------------------------------------------------
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 we receive the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death proceeds usually will be made in one lump
sum within seven days, unless another payment option has been elected. Payment
of the death proceeds, however, may be delayed if the claim for payment of the
death 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.
You may elect a payment option for payment of the death proceeds to the
Beneficiary. You may revoke or change a prior election, unless such right has
been waived. The Beneficiary may make or change an election before payment of
the death proceeds, unless you have made an election that does not permit such
further election or changes by the Beneficiary.
A written request in a form satisfactory to us 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 payment option is $1,000.
If the Policy is assigned as collateral security, we 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 we 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 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:
[diamond] the death of the payee; or
[diamond] 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 you may choose from are as follows:
[diamond] ten years;
[diamond] twenty years; or
[diamond] until the installments paid refund the amount applied under this
option.
If the payee is not living when the final payment falls
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<PAGE>
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, we will consider
the longer period certain as having been elected.
Any life annuity provided under Option 4 is computed using an interest rate
guaranteed to be no less than 3-3/8% per year, but any life annuity providing a
period certain of 20 years or more is computed 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 computed 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 remaining
principal at a guaranteed rate of 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.
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal installments are
paid until the latest of:
[diamond] the end of the 10-year period certain;
[diamond] the death of the Insured; or
[diamond] the death of the other named annuitant.
The other annuitant must have attained age 40, must be named at the time
this option is elected and cannot later be changed. Any joint survivorship
annuity that may be provided under this option is computed using a guaranteed
interest rate to equal at least 3-3/8% per year.
For additional information concerning the above payment options, see the
Policy.
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to you or your Beneficiary depends on our 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 advisor
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 our understanding of federal income tax laws as they are currently
interpreted, we cannot guarantee the tax status of any Policy. The Internal
Revenue Service (the "IRS") makes no representation regarding the likelihood of
continuation of current federal income tax laws, Treasury regulations or of the
current interpretations. We reserve the right to make changes to the Policy to
assure that it will continue to qualify as a life insurance contract for federal
income tax purposes.
PLAC'S TAX STATUS
We are 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 PLAC and their operations form a
part of PLAC.
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 us. Due to our tax status under current
provisions of the Code, no charge currently will be made to the VUL Account for
our federal income taxes which may be attributable to the VUL Account. We
reserve the right to make a deduction for taxes if our federal tax treatment is
determined to be other than what we currently believe it to be, if changes are
made affecting the tax treatment to our variable life insurance contracts, or if
changes occur in our 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), 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, a Policyowner should not be considered to be in constructive
receipt of the cash value, including investment income. 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 Benefits Rider may be taxable as income in the year of receipt.
22
<PAGE>
Code Section 7702 imposes certain conditions with respect to premiums
received under a Policy. We monitor the premiums to assure compliance with such
conditions. However, if the premium limitation is exceeded during the year, we
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 value, the excess, if any, of
the cash 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 that 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. We suggest you consult
with your tax advisor 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 new
rules affecting modified endowment contracts. The benefit payment under the
Living Benefits Rider is not considered a partial surrender.
LOANS
We believe that any loan received under a Policy will be treated as your
indebtedness. 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. If the
Policy is not a modified endowment contract, we believe that no part of any loan
under a Policy will constitute income to you.
The deductibility by a Policyowner of loan interest under a Policy may be
limited under Code Section 264, depending on the circumstances. A Policyowner
intending to fund premium payments through borrowing should consult a tax
advisor 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 advisor for further
guidance.
BUSINESS-OWNED POLICIES
If a business or a corporation owns the Policy, 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 cash value over premiums paid).
Life insurance policies can be modified endowment contracts if they fail to meet
what is known as "the 7-pay test." The measuring stick for this test is a
hypothetical life insurance policy of equal face amount which requires 7 equal
annual premiums but which, after the seventh year is "fully paid-up," continuing
to provide a level death benefit without the need for any further premiums. A
Policy becomes a modified endowment contract, if, at any time during the first
seven years, the cumulative premium paid on the Policy exceeds the cumulative
premium that would have been paid under the hypothetical policy. Premiums paid
during a Policy Year but which are returned by us with interest within 60 days
after the end of the Policy Year will be excluded from the 7-pay test. A life
insurance policy received in exchange for a modified endowment contract will be
treated as a modified endowment contract.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS
If there is a reduction in death benefits during the first seven Policy
Years, the premiums are redetermined for purposes of the 7-pay test as if the
Policy originally had 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 test is
failed 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.
23
<PAGE>
PENALTY TAX
Any amounts taxable under the modified endowment contract rule will be
subject to an additional 10% excise tax, with certain exceptions. This
additional tax will not apply in the case of distributions that are:
[diamond] made on or after the taxpayer attains age 59 1/2;
[diamond] attributable to the taxpayer's disability (within the meaning of Code
Section 72(m)(7)); or
[diamond] part of a series of substantially equal periodic payments (not less
often 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.
[diamond] 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 or dividends with respect to these premiums, the "increase"
does not constitute a material change.
[diamond] 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:
[bullet] the cost-of-living determination period does not exceed the
remaining premium payment period under the Policy; and
[bullet] 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 depend upon 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 advisor 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
compute 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. We will comply with
the limitations for calculating the premium we are permitted to receive from
you.
QUALIFIED PLANS
A Policy may be used in conjunction with certain qualified plans. Since the
rules governing such use are complex, you should not use the Policy in
conjunction with a qualified plan until you have consulted a competent pension
consultant or tax advisor.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
("Diversification Regulations") each Series of the Fund is required to diversify
its investments. The Diversification Regulations generally require that on the
last day of each calendar quarter the Series assets be invested in no more than:
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
Series 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 Treasury
securities, and for purposes of determining whether assets other than Treasury
securities are
24
<PAGE>
adequately diversified, the generally applicable percentage limitations are
increased based on the value of the VUL Account's investment in Treasury
securities. Notwithstanding this modification of the general diversification
requirements, the portfolios of the Funds will be structured to comply with the
general diversification standards because they serve as an investment vehicle
for certain variable annuity contracts that 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 you may direct your 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, we reserve the right
to modify the Policy, as necessary, to prevent you from being considered the
owner of the assets of the VUL Account.
We intend 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. We recommend 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. We do not make any
representations or guarantees regarding the tax consequences of any Policy with
respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
We will vote the Funds' shares held by the Subaccounts at any regular and
special meetings of shareholders of the Funds. To the extent required by law,
such voting will be pursuant to instructions received from you. However, if the
1940 Act or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result, we decide that we are
permitted to vote the Funds' shares at our own discretion, we may elect to do
so.
The number of votes that you have the right to cast will be determined by
applying your 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.
Funds' shares held in a Subaccount for which no timely instructions are
received, and Funds' shares which are not otherwise attributable to
Policyowners, will be voted by PLAC in proportion to the voting instructions
that are received with respect to all Policies participating in that Subaccount.
Instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by PLAC.
You will receive proxy materials, reports and other materials related to the
Funds.
We 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 subclassification or investment objective of one or
more of the portfolios of the Funds or to approve or disapprove an investment
advisory contract for the Funds. In addition, PLAC itself may disregard voting
instructions in favor of changes initiated by a Policyowner in the investment
policies or the Investment Advisor of the Funds if PLAC 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 we decide
that the change would have an adverse effect on the General Account because the
proposed investment policy for a Series may result in overly speculative or
unsound investments. In the event PLAC 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.
THE DIRECTORS AND
EXECUTIVE OFFICERS OF PLAC
- --------------------------------------------------------------------------------
PLAC is managed by its Board of Directors. The following are the Directors
and Executive Officers of PLAC:
NAME AND TITLE PRINCIPAL OCCUPATION
Robert W. Fiondella, Chairman of the Board,
Chairman and President President and Chief
Executive Officer
Richard H. Booth, Executive Vice President,
Director and Executive Strategic Development;
Vice President formerly President, Traveler's
Insurance Company
Robert G. Chipkin Senior Vice President and
Director Corporate Actuary - Phoenix
25
<PAGE>
Philip R. McLoughlin, Executive Vice President and
Director and Executive Chief Investment Officer
Vice President
David W. Searfoss, Executive Vice President and
Director and Executive Chief Financial Officer
Vice President and CFO
Dona D. Young, Executive Vice President,
Director and Executive Individual Insurance and
Vice President General Counsel
Joseph E. Kelleher, Senior Vice President
Director and Senior
Vice President
Robert G. Lautensack, Senior Vice President
Director and Senior
Vice President
Simon Y. Tan, Senior Vice President,
Director and Senior Individual Market
Vice President Development
The above positions reflect the last held position in our parent company,
Phoenix Home Life Mutual Insurance Company, during the last five years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
We hold the assets of the VUL Account. The assets of the VUL Account are
kept physically segregated and held separate and apart from our General Account.
We maintain records of all purchases and redemptions of shares of the Funds.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("WSG"), a New York corporation incorporated on August 7, 1970,
licensed to sell Phoenix insurance policies as well as policies, annuity
contracts and funds of companies affiliated with Phoenix. WSG, an indirect
subsidiary of Phoenix, is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. PEPCO serves as national distributor of
the Policies. PEPCO is an indirect subsidiary of Phoenix Investment Partners,
Ltd. ("PXP"), in which Phoenix owns a majority interest.
Policies also may be purchased from other broker-dealers registered under
the 1934 Act 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 we receive under these
Policies. PLAC will pay a maximum total sales commission of 50% of premiums to
PEPCO. To the extent that the sales charge under the Policies is less than the
sales commissions paid with respect to the Policies, we will pay the shortfall
from our General Account assets, which will include any profits we may derive
under the Policies.
STATE REGULATION
- --------------------------------------------------------------------------------
We are subject to the provisions of the Connecticut insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Connecticut Superintendent of Insurance. We also are subject to the
applicable insurance laws of all the other states and jurisdictions in which we
do insurance business.
State regulation of PLAC includes certain limitations on the investments
which we may make, including investments for the VUL Account and the GIA. This
regulation does not include, however, any supervision over the investment
policies of the VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All Policyowners will be furnished with those reports required by the 1940
Act and related regulations or by any other applicable law or regulation.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The VUL Account is not engaged in any litigation. PLAC is not involved in
any litigation that would have a material adverse effect on our ability to meet
our obligations under the Policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
Edwin L. Kerr, Counsel of Phoenix Home Life Mutual Insurance Company, has
passed upon the organization of PLAC, its authority to issue variable life
insurance Policies and the validity of the Policy, and upon legal matters
relating to the federal securities and income tax laws for PLAC.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A Registration Statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") with respect to the securities offered. This Prospectus
is a summary of the contents of the Policy and other legal documents and does
not contain all the information set forth in the Registration Statement and its
exhibits. We refer you to the registration statement and its exhibits for
further information concerning the VUL Account, PLAC and the Policy.
26
<PAGE>
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only two digits to identify the year in
a date field. This is commonly referred to as the "Year 2000 Issue." Companies
must consider the impact of the upcoming change in the century on their computer
systems. The Year 2000 Issue, if not adequately addressed, could result in
computer system failures or miscalculations causing disruptions of operations
and the possible inability of companies to process transactions. We believe that
the Year 2000 Issue is an important business priority requiring careful analysis
of every business system in order to be assured that all information systems
applications are century compliant.
We have been addressing the Year 2000 Issue in earnest since 1995 when, with
consultants, a comprehensive inventory and assessment of all business systems,
including those of our subsidiaries, was conducted. We have identified and are
now actively pursuing a number of strategies to address the issue, including:
[diamond] upgrading systems with compliant versions;
[diamond] developing or acquiring new systems to replace those that are
obsolete;
[diamond] and remediating existing systems by converting code or hardware.
Based on current assessments, we expect to have our computer systems
remediated and tested by June 1999. In addition, PLAC is examining the status of
its third-party vendors, obtaining assurances that their software and hardware
products will be century compliant by 1999.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of PLAC contained herein should be considered only
as bearing upon PLAC'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 for the period ended December 31, 1998.
27
<PAGE>
PHOENIX LIFE AND
ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
FINANCIAL STATEMENTS DECEMBER 31, 1998
28
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants............................................30
Balance Sheet................................................................31
Statement of Income, Comprehensive Income and Equity.........................32
Statement of Cash Flows......................................................33
Notes to Financial Statements.............................................34-41
29
<PAGE>
[PriceWaterhouseCoopers Logo & Address]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholder of
Phoenix Life and Annuity Company
In our opinion, the accompanying balance sheet and the related statements of
income, comprehensive income and equity and of cash flows present fairly, in all
material respects, the financial position of Phoenix Life and Annuity Company at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years ended December 31, 1998 and 1997 and for the periods from March
30, 1996 to December 31, 1996 and from January 1, 1996 to March 29, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
[PriceWaterhouseCoopers Logo]
February 11, 1999
30
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET
- --------------------------------------------------------------------------------
DECEMBER 31,
1998 1997
(IN THOUSANDS)
ASSETS
Available-for-sale debt securities, at fair value $ 9,781 $ 7,209
Short-term investments 1,754 3,671
------- -------
Total investments 11,535 10,880
Cash and cash equivalents 99 48
Accrued investment income 169 152
Goodwill 701 798
Other assets 13
------- -------
Total assets $12,517 $11,878
======= =======
LIABILITIES
Deferred income taxes $ 151 $ 66
Other liabilities 2 3
------- -------
Total liabilities 153 69
EQUITY
Common stock, $100 par value, 40,000 shares
authorized, 25,000 shares issued and outstanding 2,500 2,500
Additional paid-in-capital 8,664 8,664
Retained earnings 867 514
Accumulated other comprehensive income 333 131
------- -------
Total equity 12,364 11,809
------- -------
Total liabilities and equity $12,517 $11,878
======= =======
The accompanying notes are an integral part of these statements.
31
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997 AND PERIODS FROM MARCH 30, 1996 TO
DECEMBER 31, 1996 (SUCCESSOR PERIOD) AND JANUARY 1, 1996 TO MARCH 29, 1996
(PREDECESSOR PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Net investment income $ 688 $ 624 $ 433 $ 95
Net realized investment losses (1)
------- ------- ------- -------
Total revenues 688 624 432 95
------- ------- ------- -------
EXPENSES
Amortization of goodwill 97 90 81
Other operating expenses 63 4 (3)
------- ------- ------- -------
Total expenses 160 94 81 (3)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 528 530 351 98
Income taxes 175 189 129
------- ------- ------- -------
NET INCOME 353 341 222 98
------- ------- ------- -------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized gains on securities arising during period 202 86 39
Reclassification adjustment for losses included
in net income 6
------- ------- ------- -------
Total other comprehensive income 202 86 45
------- ------- ------- -------
COMPREHENSIVE INCOME 555 427 267 98
Acquisition adjustment to record purchase price (107) 1,076
Capital contribution 49 4,000
------- ------- ------- -------
NET INCREASE IN EQUITY 555 369 5,343 98
EQUITY, BEGINNING OF PERIOD 11,809 11,440 6,097 5,999
------- ------- ------- -------
EQUITY, END OF PERIOD $12,364 $11,809 $11,440 $ 6,097
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
32
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997 AND PERIODS FROM MARCH 30, 1996 TO
DECEMBER 31, 1996 (SUCCESSOR PERIOD) AND JANUARY 1, 1996 TO MARCH 29, 1996
(PREDECESSOR PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 353 $ 341 $ 222 $ 98
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATIONS
Goodwill amortization 97 90 81
Deferred income taxes (24) (2) (2)
Increase in accrued investment income (17) (34) (104) (9)
Decrease in receivable from affiliate 899
Other, net (29) (60) (18)
------- ------- ------- -------
Net cash provided by operating activities 380 335 179 988
------- ------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of available-for-sale debt securities (2,246) (1,527) (5,167)
Change in short-term investments, net 1,917 1,036 (1,002)
------- ------- ------- -------
Net cash used for investing activities (329) (491) (6,169)
------- ------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution from parent 49 4,000
------- ------- ------- -------
Net cash provided by financing activities 49 4,000
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 51 (107) (1,990) 988
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48 155 2,145 1,157
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 99 $ 48 $ 155 $ 2,145
======= ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 213 $ 182 $ 113 $
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
33
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Phoenix Life and Annuity Company is a life insurance company domiciled in
the State of Connecticut and is licensed in 35 states. On March 29, 1996, PM
Holdings, Inc. acquired Savers Life Insurance Company of America from
Central United Life Insurance Company, renamed the acquired company Phoenix
Life and Annuity Company and redomiciled the company from Missouri to
Connecticut. PM Holdings accounted for the acquisition of Phoenix Life and
Annuity under the purchase method of accounting. The assets and liabilities
of Phoenix Life and Annuity were recorded at their fair value as of the date
of acquisition and intangible assets associated with the acquisition were
recorded in the accounts of the acquired company. PM Holdings is a
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with generally
accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
The financial statements for the period subsequent to the March 29, 1996
acquisition are sometimes referred to as the "successor period." The
financial statements for the period prior to the acquisition are sometimes
referred to as the "predecessor period."
VALUATION OF INVESTMENTS
Investments in debt securities include U.S. government and agency bonds.
Phoenix Life and Annuity classifies its debt security investments as
available-for-sale. These investments are presented at fair value with
unrealized gains or losses included as a separate component of equity. Debt
securities are considered impaired when a decline in value is considered to
be other than temporary.
Short-term investments are carried at amortized cost, which approximates
market value. Phoenix considers highly liquid investments purchased with a
maturity date of one year or less to be short-term investments.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand and money market
instruments.
GOODWILL
Goodwill represents the excess of the cost of the business acquired on March
29, 1996 over the fair value of its tangible net assets. During 1997,
Phoenix Life and Annuity recorded a $58 thousand dollar reduction in
goodwill, representing a refund and a subsequent adjustment of a portion of
the purchase price. Goodwill is amortized on a straight-line method over a
period of 10 years, the expected period of benefit from the acquisition.
Management periodically reevaluates the propriety of the carrying value of
long-lived assets including goodwill. Assets are considered impaired if
carrying value exceeds the expected future undiscounted cash flows. Such
analyses are performed at least annually or more frequently if warranted by
events or circumstances affecting Phoenix Life and Annuity's business. At
this time, management believes that no impairment of goodwill has occurred
and that no reduction of the carrying value is warranted.
34
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INCOME TAXES
Phoenix Life and Annuity is included in the life/nonlife consolidated
federal income tax return filed by Phoenix. In accordance with a tax sharing
agreement with Phoenix, the provision for federal income taxes is computed
as if Phoenix Life and Annuity were filing a separate federal income tax
return, except those benefits arising from income tax credits and net
operating and capital losses are allocated to those subsidiaries producing
such attributes to the extent they are utilized in Phoenix's consolidated
federal income tax return.
Deferred income taxes result from temporary differences between the tax
basis of assets and liabilities and their recorded amounts for financial
reporting purposes. These differences result primarily from unrealized gains
or losses on investments and goodwill.
RECENT ACCOUNTING PRONOUNCEMENTS
Phoenix Life and Annuity adopted Statement of Financial Accounting Standard
(SFAS) No. 130, "Reporting Comprehensive Income," as of January 1, 1998.
This statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of financial
statements. This statement defines the components of comprehensive income as
those items that were previously reported only as components of equity and
were excluded from net income.
3. INVESTMENTS
Information pertaining to Phoenix Life and Annuity's investments, net
investment income and unrealized investment gains and losses follows:
DEBT SECURITIES
The amortized cost and fair value of investments in debt securities as of
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(IN THOUSANDS)
<S> <C> <C> <C>
AVAILABLE-FOR-SALE:
U.S. government and agency bonds $5,127 $ 340 $5,467
Corporate securities 4,143 171 4,314
------ ------ ------
TOTAL DEBT SECURITIES $9,270 $ 511 $9,781
====== ====== ======
</TABLE>
The amortized cost and fair value of investments in debt securities as of
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(IN THOUSANDS)
AVAILABLE-FOR-SALE:
<S> <C> <C> <C>
U.S. government and agency bonds $6,008 $ 177 $6,185
Corporate securities 999 25 1,024
------ ------ ------
TOTAL DEBT SECURITIES $7,007 $ 202 $7,209
====== ====== ======
</TABLE>
35
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of these investments, by contractual
maturity, as of December 31, 1998 are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties, or
Phoenix Life and Annuity may have the right to put or sell the obligations
back to the issuers.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
(IN THOUSANDS)
<S> <C> <C>
Due after one year through five years $5,128 $5,468
Due after five years through ten years 1,057 1,058
Due after ten years 3,085 3,255
------ ------
Total $9,270 $9,781
====== ======
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the years ended December 31,
1998 and 1997 and from March 30, 1996 to December 31, 1996 (successor
period) and January 1, 1996 to March 29, 1996 (predecessor period) were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt security investments $583 $376 $226
Short-term investments 115 259 214 $ 95
---- ---- ---- ----
698 635 440 95
Less investment expenses 10 11 7
---- ---- ---- ----
Net investment income $688 $624 $433 $ 95
==== ==== ==== ====
</TABLE>
UNREALIZED INVESTMENT GAINS AND LOSSES
Unrealized gains on investments carried at fair value at December 31, were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized investment gains $311 $132 $ 60
Deferred income taxes 109 46 21
---- ---- ----
Net unrealized investment gains $202 $ 86 $ 39
==== ==== ====
</TABLE>
36
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. GOODWILL
Phoenix Life and Annuity, formerly Savers Life Insurance Company of America,
was acquired by way of a stock purchase agreement on March 29, 1996 and was
accounted for under the purchase method of accounting. The assets and
liabilities were recorded at fair value as of the date of acquisition and
goodwill of approximately $1.0 million was pushed-down to Phoenix Life and
Annuity from PM Holdings.
Goodwill was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Goodwill $969 $969
Accumulated amortization (268) (171)
---- ----
Total $701 $798
==== ====
</TABLE>
5. INCOME TAXES
A summary of income taxes in the Statement of Income, Comprehensive Income
and Equity for the years ended December 31, 1998 and 1997 and the period
from March 30, 1996 to December 31, 1996 (successor period) is presented
below. No income taxes were recorded for the period from January 1, 1996 to
March 29, 1996 (predecessor period).
<TABLE>
<CAPTION>
1998 1997 1996
SUCCESSOR SUCCESSOR SUCCESSOR
PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C>
Current income taxes $199 $191 $131
Deferred income taxes (24) (2) (2)
---- ---- ----
Total $175 $189 $129
==== ==== ====
</TABLE>
37
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The income taxes attributable to the successor and predecessor periods are
different than the amounts determined by multiplying income before taxes by
the statutory income tax rate. In the predecessor period, Savers Life was a
consolidated subsidiary of a thrift under the control of the Resolution
Trust Corporation. During the predecessor period, an interagency agreement
between the Resolution Trust Corporation and the Internal Revenue Service
stated that the Internal Revenue Service would not impose income taxes on
consolidated subsidiaries of thrifts under Resolution Trust Corporation
control. Accordingly, no provision for the predecessor period was recorded.
The sources and the tax effect of the differences between the provision and
the result of multiplying the income before taxes by the statutory federal
income tax rate for the years ended December 31, 1998 and 1997 and periods
from March 30, 1996 to December 31, 1996 (successor period) and January 1,
1996 to March 29, 1996 (predecessor period) were as follows:
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income tax expense
at statutory rate $185 35% $186 35% $123 35% $ 34 35%
Goodwill (10) (2%) 3 1% 7 2%
Other (1) 0% (34) (35%)
---- ---- ---- ----
Income taxes $175 33% $189 36% $129 37% $ 0%
==== ==== ==== ====
</TABLE>
The deferred income tax liability represents the tax effects of temporary
differences. The components were as follows:
<TABLE>
<CAPTION>
1998 1997
SUCCESSOR SUCCESSOR
PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C>
Net unrealized investment gains $179 $ 70
Investments 9 12
Goodwill (37) (16)
---- ----
Deferred tax liability, net $151 $ 66
==== ====
</TABLE>
38
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. COMPREHENSIVE INCOME
The components of, and related tax effects for, other comprehensive income
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
SUCCESSOR SUCCESSOR SUCCESSOR
PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C>
UNREALIZED GAINS ON SECURITIES
AVAILABLE-FOR-SALE ARISING DURING PERIOD:
Before-tax amount $311 $132 $ 60
Tax expense 109 46 21
---- ---- ----
Net-of-tax amount 202 86 39
---- ---- ----
RECLASSIFICATION ADJUSTMENT FOR GAINS OR
LOSSES REALIZED IN NET INCOME:
Before-tax amount 9
Tax expense 3
---- ---- ----
Net-of-tax amount 6
---- ---- ----
NET UNREALIZED GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount 311 132 69
Tax expense 109 46 24
---- ---- ----
Net-of-tax amount $202 $ 86 $ 45
==== ==== ====
</TABLE>
The following table summarizes accumulated other comprehensive income
balances:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
SUCCESSOR SUCCESSOR
PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C>
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year $131 $ 45
Change during period 202 86
---- ----
Balance, end of year $333 $131
==== ====
</TABLE>
7. RELATED PARTY TRANSACTIONS
Phoenix and its affiliates provide services and facilities to Phoenix Life
and Annuity and are reimbursed through a cost allocation process. Investment
related expenses are allocated to Phoenix Life and Annuity from PM Holdings.
Phoenix Investment Counsel, Inc., a wholly-owned subsidiary of Phoenix
Investment Partners entered into a contract to manage the general account
investments of Phoenix Life and Annuity. PM Holdings owns approximately 60%
of the outstanding common stock of Phoenix Investment Partners.
39
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts are excluded) are carried in the financial statements
at amounts that approximate fair value. The fair values presented for
certain financial instruments are estimates which, in many cases, may differ
significantly from the amounts which could be realized upon immediate
liquidation. In cases where market prices are not available, estimates of
fair value are based on discounted cash flow analyses which utilize current
interest rates for similar financial instruments which have comparable terms
and credit quality.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
SHORT-TERM INVESTMENTS, CASH AND CASH EQUIVALENTS
For these short-term investments, the carrying amount approximates fair
value.
DEBT SECURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
debt securities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
9. STATUTORY FINANCIAL INFORMATION
Phoenix's insurance subsidiaries are required to file annual statements with
state regulatory authorities prepared on an accounting basis prescribed or
permitted by such authorities. As of December 31, 1998, Phoenix Life and
Annuity had no material practices that were not prescribed by the Insurance
Department of the State of Connecticut. Statutory equity differs from equity
reported in accordance with generally accepted accounting principles for
life insurance companies primarily because investment reserves are based on
different assumptions and income tax expense reflects only taxes paid or
currently payable.
The following is a reconciliation of the statutory net income of Phoenix
Life and Annuity, as reported to regulatory authorities, to the net income
as reported in these financial statements:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $426 $428 $369
Amortization of goodwill (97) (90) (81)
Deferred income taxes 24 3
Other, net 32
---- ---- ----
Net income, as reported $353 $341 $320
==== ==== ====
</TABLE>
40
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following is a reconciliation of the statutory equity and asset
valuation reserve of Phoenix Life and Annuity, as reported to regulatory
authorities, to equity as reported in these financial statements at:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Statutory equity and asset valuation reserve $11,301 $10,875
Goodwill 701 798
Investment valuation allowances 513 202
Deferred income tax and other liabilities (151) (66)
------- -------
Equity, as reported $12,364 $11,809
======= =======
</TABLE>
The Connecticut Insurance Holding Act limits the maximum amount of annual
dividends or other distributions available to stockholders of Connecticut
insurance companies without prior approval of the Insurance Commissioner.
Under current law, the maximum dividend distribution which may be made by
Phoenix Life and Annuity during 1998 without prior approval is subject to
restrictions relating to statutory surplus.
10. INDEMNIFICATION
Prior to the acquisition, Savers Life had reinsurance contracts with three
unaffiliated reinsurers which it had assumed between 1986 and 1989 and which
it assigned to Winterthur Life Re Insurance Company in October 1995. Under
the terms of the stock purchase agreement, Central United Life has
indemnified Phoenix for any liability in excess of $15,000 resulting from
these reinsurance contracts. Phoenix considers any liability to Phoenix Life
and Annuity as a result of these contracts to be remote and has indemnified
Phoenix Life and Annuity.
41
<PAGE>
PHOENIX LIFE AND ANNUITY
VARIABLE UNIVERSAL LIFE ACCOUNT
As of December 31, 1998, there had been no sales of the product described in
this Prospectus and, therefore, no deposits were made to Phoenix Life and
Annuity Variable Universal Life Account. Accordingly, no financial statements
are available for the VUL Account.
42
<PAGE>
APPENDIX A
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
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 BECAUSE THEY DO NOT REFLECT COST OF INSURANCE, PREMIUM
TAX CHARGES, PREMIUM SALES CHARGES AND SURRENDER CHARGES, IF APPLICABLE. FOR
THIS INFORMATION SEE APPENDIX C "ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES
AND CASH SURRENDER VALUES." Performance information may be expressed as yield
and effective yield of the Phoenix-Goodwin Money Market Subaccount, as yield of
the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total return of
any Subaccount. Current yield for the Phoenix-Goodwin Money Market Subaccount
will be based on the income earned by the Subaccount over a given 7-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 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 Mortality and Expense Risk
charge on the VUL Account level.
Yield calculations of the Phoenix-Goodwin 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
7-day period, which period will end on the date of the most recent financial
statements. The yield for the Subaccount during this 7-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 Phoenix-Goodwin
Money Market Subaccount based on a 7-day period ending December 31, 1998.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:................ 1.501512
Value of the same account (excluding capital changes) at the
end of the 7-day period:............................ 1.50245
Calculation:
Ending account value ............................... 1.50245
Less beginning account value ....................... 1.501512
Net change in account value ........................ 0.000938
Base period return:
(adjusted change/beginning account value) .......... 0.000625
Current yield = return x (365/7) = ................... 3.26%
Effective yield = [(1 + return)(365/7)] - 1 = ........ 3.31%
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 VUL Account level.
For the Phoenix-Goodwin Multi-Sector Fixed Income 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 the Mortality and Expense Risk, Issue Expense and Monthly
Administrative Charges.
For those Subaccounts within the VUL Account that have not been available
for one of the quoted periods, the 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.
43
<PAGE>
The following performance tables display historical investment results of
the Subaccounts of the VUL Account. This information may be useful in helping
potential investors in deciding which Subaccounts to choose and in assessing the
competence of the investment advisors. The performance figures shown should be
considered in light of the investment objectives and policies, characteristics
and quality of the Subaccounts and market conditions during the periods of time
quoted. The performance figures should not be considered as estimates or
predictions of future performance. Investment return of the Subaccounts are not
guaranteed and will fluctuate. Below are quotations of average annual total
return calculated as described above for all Subaccounts with at least one year
of results. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES,
PREMIUM SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1998(1,4)
- -----------------------------------------------------------------------------------------------------------------------------------
SERIES INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series..................... 7/15/97 27.99% N/A N/A 22.48%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series...................... 5/1/90 24.38% 11.47% N/A 9.41%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series........................... 9/17/96 -7.25% N/A N/A -19.21%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Series........ 5/1/95 -23.54% N/A N/A 10.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series..................... 1/1/83 26.35% 16.84% 18.67% 17.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series........................ 3/2/98 N/A N/A N/A 22.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series........................ 10/10/82 2.09% 3.24% 3.93% 4.97%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Series........... 1/1/83 -6.92% 5.20% 7.78% 8.67%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series...................... 3/2/98 N/A N/A N/A 7.87%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series........................... 5/1/92 15.64% 11.41% N/A 11.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series.................. 3/2/98 N/A N/A N/A 17.31%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series............... 9/17/84 17.36% 11.33% 12.59% 12.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series....................... 3/2/98 N/A N/A N/A -13.78%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series....................... 3/2/98 N/A N/A N/A 18.57%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series...................... 1/29/96 40.62% N/A N/A 21.65%
- -----------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark]Equity Index Fund................ 8/22/97 18.18% N/A N/A 7.07%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II........... 3/28/94 4.58% N/A N/A 4.89%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II......................... 3/1/94 -0.25% N/A N/A 7.72%
- -----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund-- Class 2(2,3).............. 5/1/98 N/A N/A N/A 0.98%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund-- Class 2(2,3)............. 11/28/88 3.07% 9.64% 10.40% 10.24%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund-- Class 2(2,3)........... 9/15/96 -23.45% N/A N/A -24.14%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund-- Class 2(2,3)................ 5/1/92 5.95% 9.77% N/A 12.28%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund-- Class 2(2,3)........................ 11/4/88 -1.86% 9.18% 10.48% 10.18%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty....................................... 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap............................. 5/1/95 13.06% N/A N/A 19.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty.............................................. 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap...................................... 5/1/95 5.59% N/A N/A 25.06%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $10,000 for the time period indicated.
Returns are net of $150 Issue Expense Charge, $5 Monthly Administrative Fee,
Investment Management Fees and Mortality and Expense Risk Charges.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represents the historical results of Class 1 shares. Performance since
that date reflects Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) The manager is limiting fund expenses, which increases total returns.
(4) Performance data quoted represent the investment return of the appropriate
series adjusted for the PLAC Flex Edge Success charges had the Subaccount
started on the inception date of the appropriate series.
44
<PAGE>
Advertisements, sales literature and other communications may contain
information about any series' or advisor's current investment strategies and
management style. Current strategies and style may change to respond to a
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
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), Dow Jones
Industrial Average(SM), First Boston High Yield Index and Salomon Brothers
Corporate and Government Bond Indices.
Occasionally, The VUL Account may include in advertisements containing total
return, the ranking of those performance figures relating to such figures for
groups of Subaccounts having similar investment objectives as categorized by
ranking services such as:
Lipper Analytical Services, Inc. Morningstar, Inc.
CDA Investment Technologies, Inc. Weisenberger Financial Services, 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 Business 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 Personal Investor
The Funds may occasionally 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:
S&P 500 Dow Jones Industrial Average
Europe Australia Far East Index (EAFE) Consumers Price Index
Shearson Lehman Corporate Index 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 500 is composed almost entirely of common
stocks of companies listed on the NYSE, 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 500 represents about
70-80% of the market value of all issues traded on the NYSE.
The Funds' Annual Reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
45
<PAGE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN(1,4)
- --------------------------------------------------------------------------------------------------------------
Series 1983 1984 1985 1986 1987 1988 1989 1990
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A -8.63%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A N/A N/A N/A N/A
Securities Series
- --------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 31.84% 9.79% 33.85% 19.51% 6.08% 3.09% 34.53% 3.32%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 7.51% 9.34% 7.17% 5.66% 5.67% 6.60% 8.03% 7.51%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 5.16% 10.45% 19.65% 18.34% 0.28% 9.61% 6.92% 4.54%
Series
- --------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series N/A -1.31% 26.33% 14.77% 11.66% 1.53% 18.53% 5.15%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
EAFE[registered trademark]Equity Index Fund N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A N/A N/A N/A N/A N/A
Securities II
- --------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund-- Class 2(2,3) N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund-- Class 2(2,3) N/A N/A N/A N/A N/A 0.21% 12.13% -8.95%
- --------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund-- Class N/A N/A N/A N/A N/A N/A N/A N/A
2(2,3)
- --------------------------------------------------------------------------------------------------------------
Templeton International Fund-- Class 2(2,3) N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Templeton Stock Fund-- Class 2(2,3) N/A N/A N/A N/A N/A -0.99% 13.48% -11.99%
- --------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN(1,4) (continued)
- --------------------------------------------------------------------------------------------------------------
Series 1991 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A 5.46% 30.64%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series 18.79% -13.52% 37.33% -0.73% 8.72% 17.71% 11.16% 26.92%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A -0.06% -32.94% -5.21%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A 17.19% 32.10% 21.09% -21.83%
Securities Series
- --------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 41.60% 9.41% 18.75% 0.66% 29.85% 11.69% 20.12% 28.98%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A 25.45%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 5.14% 2.75% 2.06% 3.01% 4.86% 4.19% 4.35% 4.26%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 18.66% 9.23% 14.99% -6.21% 22.56% 11.52% 10.21% -4.91%
Series
- --------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A 10.07%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A 9.06% 7.75% -3.61% 22.37% 9.68% 17.00% 18.07%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A 19.67%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series 28.27% 9.79% 10.12% -2.19% 17.27% 8.18% 19.78% 19.84%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A -11.95%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A 20.97%
- --------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A 9.55% 16.25% 43.55%
- --------------------------------------------------------------------------------------------------------------
EAFE[registered trademark]Equity Index Fund N/A N/A N/A N/A N/A N/A -6.87% 20.64%
- --------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A 1.99% 7.90% 3.37% 7.71% 6.80%
Securities II
- --------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A -4.26% 19.42% 13.40% 12.92% 1.88%
- --------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund-- Class 2(2,3) N/A N/A N/A N/A N/A N/A N/A 2.62%
- --------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund-- Class 2(2,3) 26.42% 6.97% 24.86% -4.00% 21.29% 17.64% 14.37% 5.27%
- --------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund-- Class N/A N/A N/A N/A N/A 1.05% -29.95% -21.69%
2(2,3)
- --------------------------------------------------------------------------------------------------------------
Templeton International Fund-- Class 2(2,3) N/A -6.80% 45.85% -3.27% 14.56% 22.77% 12.76% 8.17%
- --------------------------------------------------------------------------------------------------------------
Templeton Stock Fund-- Class 2(2,3) 26.22% 6.02% 32.68% -3.25% 23.97% 21.17% 10.75% 0.24%
- --------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A 33.96% 31.15% -2.24% 15.41%
- --------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A 16.01% 45.64% 28.41% 7.83%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Rates are net of Mortality and Expense Risk Charges and Investment
Management fees for the Subaccounts.
(2) Because Class 2 shares were not offered until May 1, 1997 (November 10, 1998
for Mutual Shares Investments), performance shown for periods prior to that
date represents the historical results of Class 1 shares. Performance since
that date reflects Class 2's high annual fees and expenses resulting from
its Rule 12b-1 plan. Maximum annual plan expenses are 0.25%.
(3) The manager is limiting fund expenses, which increases total returns.
(4) Performance data quoted represent the investment return of the appropriate
series adjusted for the PLAC Flex Edge Success charges had the Subaccount
started on the inception date of the appropriate series.
These rates of return are not an estimate or guarantee of future performance.
46
<PAGE>
APPENDIX B
THE GUARANTEED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
Contributions to the GIA under the Policy and transfers to the GIA become
part of the PLAC 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 PLAC 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. PLAC 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 PLAC and the
contracts participating in the General Account, in accordance with the terms of
such contracts.
Investment income from the General Account allocated to PLAC 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 PLAC. However, PLAC 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%.
PLAC may credit interest at a rate in excess of 4% per year; however, it is not
obligated to credit interest in excess of 4% per year.
On the last business day of each calendar week, PLAC will set the excess
interest rate, if any, that will apply to premium payments made to the GIA. That
rate will remain in effect for such premium payments for an initial guarantee
period of one full year from the date of premium payment. Upon expiration of the
initial one-year guarantee period (and each subsequent one-year guarantee period
thereafter), the rate to be applied to any premium payments whose guaranteed
period has just ended will be the same rate as is applied to new premium
payments 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 PLAC based on information as
to expected investment yields. Some of the factors that PLAC 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 PLAC AND WITHOUT REGARD TO
ANY SPECIFIC FORMULA. THE POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED
TO GIA ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 4% FOR ANY GIVEN
YEAR.
PLAC 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 PLAC's exercise of discretion in this regard is the equitable
allocation of distributable earnings and surplus among its various
Policyholders, Contract Owners and shareholders.
Excess interest, if any, will be credited on the GIA Policy Value. PLAC
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 PLAC 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, YOU CAN MAKE ONLY ONE TRANSFER PER YEAR FROM THE GIA. THE AMOUNT
THAT CAN BE TRANSFERRED OUT IS LIMITED TO THE GREATER OF $1,000 OR 25% OF THE
POLICY VALUE IN THE GIA AT THE TIME OF THE TRANSFER. IF YOU ELECT THE SYSTEMATIC
TRANSFER PROGRAM, APPROXIMATELY EQUAL AMOUNTS MAY BE TRANSFERRED OUT OF THE GIA
OVER A MINIMUM 18-MONTH PERIOD. ALSO, THE TOTAL POLICY VALUE ALLOCATED TO THE
GIA MAY BE TRANSFERRED OUT OF THE GIA TO ONE OR MORE OF THE SUBACCOUNTS OF THE
VUL ACCOUNT OVER A CONSECUTIVE FOUR-YEAR PERIOD ACCORDING TO THE FOLLOWING
ANNUALLY RENEWABLE SCHEDULE:
YEAR ONE: 25% YEAR TWO: 33%
YEAR THREE: 50% YEAR FOUR: 100%
47
<PAGE>
APPENDIX C
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%, 6% 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%, 6% or 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%, 6% or 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.
The death benefit, account value and Cash Surrender Value amounts reflect
the following current charges:
1. Issue 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 (or .25% on an annual basis after the 15th
Policy Year), 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 .70%
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 .30%. All other Fund expenses, except capital items such as
brokerage commissions, are paid by the Advisor or PLAC. Management may decide to
limit the amount of expense reimbursement in the future. If expense
reimbursement had not been in place for the fiscal year ended December 31, 1998,
average total operating expenses for the Series would have been approximately
1.43% of the average net assets. 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%, 6%
and 12% on the Funds' assets are equivalent to net annual investment return
rates of approximately -1.79%, 4.16% and 10.12%, respectively (applicable for
the first 15 Policy Years and -1.25%, 4.66% and 10.72%, respectively, after the
15th Policy Year). For individual illustrations, interest rates ranging between
0% and 12% may be selected in place of the 0%, 6% and 12% rates.
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%, 6% and 12%, a sufficiently higher amount in excess of
the hypothetical interest rates would have to be earned. See "Charges and
Deductions--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.
48
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 575 0 100,000 620 0 100,000 665 0 100,000
2 1,000 2,153 1,281 396 100,000 1,412 527 100,000 1,549 664 100,000
3 1,000 3,310 1,965 658 100,000 2,228 921 100,000 2,513 1,206 100,000
4 1,000 4,526 2,627 1,320 100,000 3,068 1,761 100,000 3,565 2,258 100,000
5 1,000 5,802 3,265 1,958 100,000 3,931 2,624 100,000 4,711 3,404 100,000
6 1,000 7,142 3,880 2,718 100,000 4,818 3,656 100,000 5,962 4,800 100,000
7 1,000 8,549 4,468 3,450 100,000 5,726 4,709 100,000 7,324 6,307 100,000
8 1,000 10,027 5,030 4,157 100,000 6,658 5,786 100,000 8,812 7,939 100,000
9 1,000 11,578 5,564 5,129 100,000 7,612 7,176 100,000 10,434 9,998 100,000
10 1,000 13,207 6,071 6,071 100,000 8,589 8,589 100,000 12,206 12,206 100,000
11 1,000 14,917 6,556 6,556 100,000 9,594 9,594 100,000 14,148 14,148 100,000
12 1,000 16,713 7,018 7,018 100,000 10,629 10,629 100,000 16,279 16,279 100,000
13 1,000 18,599 7,456 7,456 100,000 11,695 11,695 100,000 18,618 18,618 100,000
14 1,000 20,579 7,873 7,873 100,000 12,794 12,794 100,000 21,188 21,188 100,000
15 1,000 22,657 8,265 8,265 100,000 13,924 13,924 100,000 24,011 24,011 100,000
16 1,000 24,840 8,683 8,683 100,000 15,174 15,174 100,000 27,269 27,269 100,000
17 1,000 27,132 9,077 9,077 100,000 16,469 16,469 100,000 30,873 30,873 100,000
18 1,000 29,539 9,442 9,442 100,000 17,807 17,807 100,000 34,861 34,861 100,000
19 1,000 32,066 9,780 9,780 100,000 19,192 19,192 100,000 39,279 39,279 100,000
20 1,000 34,719 10,085 10,085 100,000 20,622 20,622 100,000 44,174 44,174 100,000
@ 65 1,000 69,761 10,033 10,033 100,000 39,349 39,349 100,000 149,429 149,429 179,316
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
34.
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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
49
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 512 0 100,000 555 0 100,000 599 0 100,000
2 1,000 2,153 1,156 271 100,000 1,280 394 100,000 1,409 524 100,000
3 1,000 3,310 1,779 472 100,000 2,025 718 100,000 2,291 984 100,000
4 1,000 4,526 2,381 1,074 100,000 2,790 1,483 100,000 3,252 1,945 100,000
5 1,000 5,802 2,959 1,652 100,000 3,575 2,268 100,000 4,299 2,992 100,000
6 1,000 7,142 3,515 2,353 100,000 4,381 3,218 100,000 5,438 4,276 100,000
7 1,000 8,549 4,044 3,027 100,000 5,204 4,186 100,000 6,678 5,661 100,000
8 1,000 10,027 4,548 3,676 100,000 6,046 5,173 100,000 8,030 7,158 100,000
9 1,000 11,578 5,025 4,590 100,000 6,905 6,470 100,000 9,502 9,067 100,000
10 1,000 13,207 5,475 5,475 100,000 7,783 7,783 100,000 11,108 11,108 100,000
11 1,000 14,917 5,895 5,895 100,000 8,677 8,677 100,000 12,858 12,858 100,000
12 1,000 16,713 6,284 6,284 100,000 9,587 9,587 100,000 14,768 14,768 100,000
13 1,000 18,599 6,640 6,640 100,000 10,511 10,511 100,000 16,852 16,852 100,000
14 1,000 20,579 6,963 6,963 100,000 11,449 11,449 100,000 19,130 19,130 100,000
15 1,000 22,657 7,250 7,250 100,000 12,399 12,399 100,000 21,620 21,620 100,000
16 1,000 24,840 7,541 7,541 100,000 13,435 13,435 100,000 24,479 24,479 100,000
17 1,000 27,132 7,791 7,791 100,000 14,487 14,487 100,000 27,627 27,627 100,000
18 1,000 29,539 7,992 7,992 100,000 15,551 15,551 100,000 31,093 31,093 100,000
19 1,000 32,066 8,139 8,139 100,000 16,622 16,622 100,000 34,913 34,913 100,000
20 1,000 34,719 8,226 8,226 100,000 17,696 17,696 100,000 39,126 39,126 100,000
@ 65 1,000 69,761 2,779 2,779 100,000 27,921 27,921 100,000 129,447 129,447 155,337
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
34.
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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
50
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 601 0 100,000 648 0 100,000 694 0 100,000
2 1,000 2,153 1,333 480 100,000 1,468 614 100,000 1,609 755 100,000
3 1,000 3,310 2,043 848 100,000 2,314 1,119 100,000 2,607 1,412 100,000
4 1,000 4,526 2,731 1,536 100,000 3,185 1,990 100,000 3,697 2,501 100,000
5 1,000 5,802 3,395 2,199 100,000 4,081 2,886 100,000 4,885 3,690 100,000
6 1,000 7,142 4,034 2,971 100,000 5,002 3,938 100,000 6,182 5,118 100,000
7 1,000 8,549 4,648 3,715 100,000 5,948 5,015 100,000 7,597 6,664 100,000
8 1,000 10,027 5,236 4,435 100,000 6,918 6,117 100,000 9,141 8,340 100,000
9 1,000 11,578 5,799 5,399 100,000 7,916 7,516 100,000 10,830 10,430 100,000
10 1,000 13,207 6,337 6,337 100,000 8,941 8,941 100,000 12,679 12,679 100,000
11 1,000 14,917 6,858 6,858 100,000 10,002 10,002 100,000 14,710 14,710 100,000
12 1,000 16,713 7,360 7,360 100,000 11,101 11,101 100,000 16,943 16,943 100,000
13 1,000 18,599 7,845 7,845 100,000 12,238 12,238 100,000 19,399 19,399 100,000
14 1,000 20,579 8,311 8,311 100,000 13,415 13,415 100,000 22,101 22,101 100,000
15 1,000 22,657 8,759 8,759 100,000 14,634 14,634 100,000 25,077 25,077 100,000
16 1,000 24,840 9,240 9,240 100,000 15,985 15,985 100,000 28,511 28,511 100,000
17 1,000 27,132 9,703 9,703 100,000 17,393 17,393 100,000 32,315 32,315 100,000
18 1,000 29,539 10,149 10,149 100,000 18,859 18,859 100,000 36,531 36,531 100,000
19 1,000 32,066 10,574 10,574 100,000 20,386 20,386 100,000 41,205 41,205 100,000
20 1,000 34,719 10,980 10,980 100,000 21,976 21,976 100,000 46,389 46,389 100,000
@ 65 1,000 69,761 13,738 13,738 100,000 44,634 44,634 100,000 158,002 158,002 189,603
</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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
51
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 533 0 100,000 577 0 100,000 622 0 100,000
2 1,000 2,153 1,198 344 100,000 1,324 470 100,000 1,456 602 100,000
3 1,000 3,310 1,841 646 100,000 2,092 897 100,000 2,365 1,169 100,000
4 1,000 4,526 2,462 1,266 100,000 2,881 1,686 100,000 3,355 2,160 100,000
5 1,000 5,802 3,059 1,864 100,000 3,691 2,496 100,000 4,433 3,238 100,000
6 1,000 7,142 3,633 2,569 100,000 4,522 3,458 100,000 5,608 4,544 100,000
7 1,000 8,549 4,180 3,248 100,000 5,372 4,439 100,000 6,886 5,954 100,000
8 1,000 10,027 4,702 3,901 100,000 6,241 5,440 100,000 8,280 7,479 100,000
9 1,000 11,578 5,199 4,800 100,000 7,133 6,733 100,000 9,801 9,401 100,000
10 1,000 13,207 5,672 5,672 100,000 8,046 8,046 100,000 11,463 11,463 100,000
11 1,000 14,917 6,120 6,120 100,000 8,983 8,983 100,000 13,281 13,281 100,000
12 1,000 16,713 6,542 6,542 100,000 9,943 9,943 100,000 15,271 15,271 100,000
13 1,000 18,599 6,938 6,938 100,000 10,926 10,926 100,000 17,450 17,450 100,000
14 1,000 20,579 7,307 7,307 100,000 11,932 11,932 100,000 19,837 19,837 100,000
15 1,000 22,657 7,647 7,647 100,000 12,961 12,961 100,000 22,455 22,455 100,000
16 1,000 24,840 8,001 8,001 100,000 14,091 14,091 100,000 25,467 25,467 100,000
17 1,000 27,132 8,325 8,325 100,000 15,252 15,252 100,000 28,792 28,792 100,000
18 1,000 29,539 8,613 8,613 100,000 16,444 16,444 100,000 32,464 32,464 100,000
19 1,000 32,066 8,863 8,863 100,000 17,663 17,663 100,000 36,522 36,522 100,000
20 1,000 34,719 9,073 9,073 100,000 18,912 18,912 100,000 41,011 41,011 100,000
@ 65 1,000 69,761 8,000 8,000 100,000 34,760 34,760 100,000 137,914 137,914 165,497
</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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
52
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 573 0 100,574 619 0 100,619 664 0 100,664
2 1,000 2,153 1,277 392 101,278 1,408 523 101,409 1,545 660 101,545
3 1,000 3,310 1,958 651 101,958 2,220 913 102,220 2,504 1,197 102,504
4 1,000 4,526 2,615 1,308 102,615 3,053 1,746 103,053 3,547 2,240 103,548
5 1,000 5,802 3,246 1,939 103,246 3,907 2,600 103,907 4,681 3,374 104,682
6 1,000 7,142 3,852 2,689 103,852 4,781 3,619 104,782 5,915 4,753 105,916
7 1,000 8,549 4,429 3,412 104,429 5,674 4,657 105,675 7,255 6,238 107,256
8 1,000 10,027 4,978 4,106 104,979 6,586 5,714 106,587 8,712 7,840 108,712
9 1,000 11,578 5,498 5,062 105,498 7,515 7,080 107,516 10,295 9,859 110,295
10 1,000 13,207 5,987 5,987 105,988 8,462 8,462 108,462 12,016 12,016 112,016
11 1,000 14,917 6,452 6,452 106,452 9,431 9,431 109,431 13,893 13,893 113,894
12 1,000 16,713 6,891 6,891 106,892 10,423 10,423 110,424 15,943 15,943 115,944
13 1,000 18,599 7,306 7,306 107,306 11,439 11,439 111,439 18,182 18,182 118,182
14 1,000 20,579 7,695 7,695 107,695 12,479 12,479 112,479 20,628 20,628 120,629
15 1,000 22,657 8,058 8,058 108,058 13,541 13,541 113,542 23,302 23,302 123,302
16 1,000 24,840 8,442 8,442 108,443 14,710 14,710 114,711 26,371 26,371 126,371
17 1,000 27,132 8,798 8,798 108,799 15,911 15,911 115,911 29,744 29,744 129,744
18 1,000 29,539 9,123 9,123 109,124 17,140 17,140 117,141 33,450 33,450 133,451
19 1,000 32,066 9,415 9,415 109,416 18,398 18,398 118,399 37,524 37,524 137,524
20 1,000 34,719 9,671 9,671 109,672 19,683 19,683 119,683 42,000 42,000 142,000
@ 65 1,000 69,761 8,668 8,668 108,669 34,126 34,126 134,127 132,080 132,080 232,080
</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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
53
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
MALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 511 0 100,511 554 0 100,554 597 0 100,598
2 1,000 2,153 1,153 267 101,153 1,276 391 101,276 1,404 519 101,405
3 1,000 3,310 1,772 465 101,773 2,017 710 102,017 2,282 975 102,282
4 1,000 4,526 2,369 1,062 102,369 2,776 1,469 102,776 3,235 1,928 103,236
5 1,000 5,802 2,941 1,634 102,942 3,553 2,246 103,553 4,270 2,963 104,271
6 1,000 7,142 3,488 2,326 103,489 4,346 3,184 104,347 5,394 4,232 105,395
7 1,000 8,549 4,008 2,990 104,008 5,155 4,137 105,155 6,613 5,596 106,614
8 1,000 10,027 4,500 3,628 104,501 5,978 5,106 105,979 7,936 7,064 107,937
9 1,000 11,578 4,963 4,528 104,963 6,815 6,379 106,815 9,371 8,936 109,372
10 1,000 13,207 5,397 5,397 105,397 7,665 7,665 107,665 10,929 10,929 110,930
11 1,000 14,917 5,798 5,798 105,798 8,524 8,524 108,525 12,618 12,618 112,619
12 1,000 16,713 6,165 6,165 106,166 9,392 9,392 109,392 14,450 14,450 114,450
13 1,000 18,599 6,497 6,497 106,498 10,266 10,266 110,267 16,436 16,436 116,436
14 1,000 20,579 6,792 6,792 106,793 11,145 11,145 111,146 18,590 18,590 118,591
15 1,000 22,657 7,048 7,048 107,048 12,025 12,025 112,026 20,926 20,926 120,927
16 1,000 24,840 7,304 7,304 107,304 12,977 12,977 112,977 23,590 23,590 123,591
17 1,000 27,132 7,513 7,513 107,513 13,928 13,928 113,929 26,493 26,493 126,494
18 1,000 29,539 7,668 7,668 107,669 14,872 14,872 114,873 29,654 29,654 129,655
19 1,000 32,066 7,766 7,766 107,766 15,803 15,803 115,804 33,094 33,094 133,094
20 1,000 34,719 7,796 7,796 107,797 16,710 16,710 116,711 36,832 36,832 136,833
@ 65 1,000 69,761 1,487 1,487 101,487 21,851 21,851 121,852 106,404 106,404 206,404
</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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
54
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 600 0 100,601 647 0 100,647 693 0 100,693
2 1,000 2,153 1,330 476 101,331 1,465 611 101,465 1,605 751 101,605
3 1,000 3,310 2,037 842 102,037 2,307 1,111 102,307 2,599 1,403 102,599
4 1,000 4,526 2,720 1,525 102,720 3,172 1,977 103,172 3,681 2,486 103,681
5 1,000 5,802 3,377 2,182 103,378 4,060 2,864 104,060 4,859 3,663 104,859
6 1,000 7,142 4,009 2,945 104,010 4,970 3,906 104,971 6,141 5,077 106,141
7 1,000 8,549 4,613 3,681 104,614 5,901 4,969 105,902 7,535 6,602 107,535
8 1,000 10,027 5,189 4,388 105,190 6,854 6,053 106,854 9,052 8,251 109,052
9 1,000 11,578 5,739 5,339 105,739 7,828 7,429 107,829 10,705 10,305 110,705
10 1,000 13,207 6,261 6,261 106,262 8,827 8,827 108,827 12,507 12,507 112,507
11 1,000 14,917 6,764 6,764 106,764 9,855 9,855 109,856 14,480 14,480 114,480
12 1,000 16,713 7,247 7,247 107,247 10,915 10,915 110,916 16,641 16,641 116,642
13 1,000 18,599 7,709 7,709 107,710 12,008 12,008 112,009 19,009 19,009 119,009
14 1,000 20,579 8,151 8,151 108,152 13,134 13,134 113,134 21,603 21,603 121,603
15 1,000 22,657 8,574 8,574 108,574 14,294 14,294 114,294 24,447 24,447 124,447
16 1,000 24,840 9,026 9,026 109,026 15,575 15,575 115,575 27,717 27,717 127,718
17 1,000 27,132 9,457 9,457 109,458 16,902 16,902 116,902 31,323 31,323 131,324
18 1,000 29,539 9,868 9,868 109,869 18,275 18,275 118,276 35,299 35,299 135,300
19 1,000 32,066 10,256 10,256 110,256 19,695 19,695 119,696 39,682 39,682 139,683
20 1,000 34,719 10,621 10,621 110,622 21,165 21,165 121,165 44,517 44,517 144,518
@ 65 1,000 69,761 12,646 12,646 112,646 40,675 40,675 140,675 145,172 145,172 245,173
</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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
55
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FACE AMOUNT: $100,000
FEMALE 35 NEVERSMOKE INITIAL ANNUAL PREMIUM: $1,000
<TABLE>
<CAPTION>
THE FLEX EDGE SUCCESS -- A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @ 5.0% @ 0% @ 0% @ 0% @ 6% @ 6% @ 6% @ 12% @ 12% @ 12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 532 0 100,533 576 0 100,577 620 0 100,621
2 1,000 2,153 1,195 341 101,195 1,321 467 101,321 1,452 598 101,453
3 1,000 3,310 1,834 639 101,835 2,085 889 102,085 2,356 1,161 102,357
4 1,000 4,526 2,451 1,256 102,451 2,868 1,673 102,869 3,339 2,144 103,340
5 1,000 5,802 3,042 1,847 103,043 3,670 2,475 103,671 4,407 3,212 104,408
6 1,000 7,142 3,608 2,545 103,609 4,491 3,427 104,491 5,567 4,503 105,568
7 1,000 8,549 4,147 3,214 104,147 5,326 4,394 105,327 6,826 5,893 106,826
8 1,000 10,027 4,657 3,856 104,658 6,179 5,378 106,179 8,193 7,392 108,193
9 1,000 11,578 5,141 4,741 105,142 7,048 6,648 107,048 9,679 9,279 109,679
10 1,000 13,207 5,598 5,598 105,599 7,935 7,935 107,936 11,296 11,296 111,297
11 1,000 14,917 6,029 6,029 106,029 8,840 8,840 108,840 13,057 13,057 113,058
12 1,000 16,713 6,431 6,431 106,432 9,762 9,762 109,762 14,975 14,975 114,976
13 1,000 18,599 6,805 6,805 106,806 10,699 10,699 110,700 17,064 17,064 117,065
14 1,000 20,579 7,148 7,148 107,149 11,651 11,651 111,652 19,339 19,339 119,339
15 1,000 22,657 7,461 7,461 107,461 12,618 12,618 112,618 21,818 21,818 121,818
16 1,000 24,840 7,783 7,783 107,783 13,671 13,671 113,672 24,654 24,654 124,654
17 1,000 27,132 8,070 8,070 108,071 14,743 14,743 114,743 27,761 27,761 127,761
18 1,000 29,539 8,319 8,319 108,320 15,829 15,829 115,830 31,164 31,164 131,165
19 1,000 32,066 8,525 8,525 108,525 16,925 16,925 116,926 34,889 34,889 134,890
20 1,000 34,719 8,686 8,686 108,686 18,030 18,030 118,030 38,970 38,970 138,970
@ 65 1,000 69,761 6,767 6,767 106,768 29,852 29,852 129,852 120,545 120,545 220,545
</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 1.80%
for 15 years, then 1.25% thereafter (includes mortality and expense risk charge
of 0.8% for 15 years, then 0.25% and average fund operating expenses of 1.00%
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 GIA 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%.
56
<PAGE>
[VERSION B]
PHOENIX CORPORATE EDGE
VARIABLE UNIVERSAL LIFE
INSURANCE POLICY
Issued by
PHOENIX LIFE AND
ANNUITY COMPANY
FOR POLICYHOLDER SERVICE, PLEASE CONTACT US AT:
[envelope] ANDESA TPA, INC.
1605 N CEDAR CREST BLVD, SUITE 502
ALLENTOWN, PA 18104
[telephone] 610/439-5256
PROSPECTUS OCTOBER 29, 1999
AS SUPPLEMENTED DECEMBER 20, 1999
This prospectus describes an individual flexible premium variable universal
life insurance policy. The policy provides lifetime insurance protection for as
long as it remains in force.
You may allocate net premiums and cash value to one or more of the
Subaccounts of the VUL Account and the Guaranteed Interest Account. The assets
of each Subaccount will be used to purchase, at net asset value, shares of a
series in the following designated underlying Funds.
THE PHOENIX EDGE SERIES FUND
MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Capital Growth Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Balanced Series
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Oakhurst Strategic Allocation Series^
[diamond] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Phoenix-Seneca Strategic Theme Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
MANAGED BY PHOENIX VARIABLE ADVISORS, INC.
[diamond] Phoenix Research Enhanced Index Series
[diamond] Phoenix-Bankers Trust Dow 30 Series
[diamond] Phoenix-Federated U.S. Government Bond Series
[diamond] Phoenix-Janus Equity Income Series
[diamond] Phoenix-Janus Flexible Income Series
[diamond] Phoenix-Janus Growth Series
[diamond] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Phoenix-Schafer Mid-Cap Value Series
BT INSURANCE FUNDS TRUST
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE[registered trademark] Equity Index Fund
FEDERATED INSURANCE SERIES
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
MANAGED BY MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
[diamond] Technology Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Allocation Fund -- Class 2
[diamond] Templeton International Fund -- Class 2
[diamond] Templeton Stock Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Fund -- Class 2
MANAGED BY FRANKLIN MUTUAL ADVISERS, LLC
[diamond] Mutual Shares Investments Fund -- Class 2
WANGER ADVISORS TRUST
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
1
<PAGE>
It may not be in your best interest to purchase a policy to replace an
existing life insurance policy or annuity contract. You must understand the
basic features of the proposed policy and your existing coverage before you
decide to replace your present coverage. You must also know if the replacement
will result in any taxes.
The policy is not a deposit or obligation of, underwritten or guaranteed by,
any financial institution or credit union. It is not federally insured or
endorsed by the Federal Deposit Insurance Corporation or any other state or
federal agency. Policy investments are subject to risk, including the
fluctuation of policy values and possible loss of principal invested or premiums
paid.
The Securities and Exchange Commission has not approved or disapproved these
securities, nor passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
This prospectus is valid only if accompanied or preceded by current
prospectuses for the Funds. You should read and keep these prospectuses for
future reference.
2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Heading Page
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PART I--GENERAL POLICY PROVISIONS.......................................................................................... 6
SUMMARY ............................................................................................................... 6
Availability....................................................................................................... 6
Underwriting....................................................................................................... 6
Charges under the Policy........................................................................................... 6
Deductions from Premiums........................................................................................... 8
Sales Charge................................................................................................... 8
State Premium Tax Charge....................................................................................... 8
Deferred Acquisition Cost (DAC) Tax Charge..................................................................... 8
Policy Value Charges............................................................................................... 8
Administrative Charge.......................................................................................... 8
Cost of Insurance.............................................................................................. 8
Mortality and Expense Risk Fee................................................................................. 8
Rider Charge................................................................................................... 8
Charges for Federal Income Taxes............................................................................... 8
Fund Charges................................................................................................... 8
Other Charges...................................................................................................... 10
Partial Surrender Fee.......................................................................................... 10
Loan Interest Rate Expense Charge.............................................................................. 10
Reduction in Charges............................................................................................... 10
PHOENIX LIFE AND ANNUITY COMPANY AND THE VUL ACCOUNT................................................................... 11
PLAC............................................................................................................... 11
The VUL Account.................................................................................................... 11
PERFORMANCE HISTORY.................................................................................................... 11
INVESTMENTS OF THE VUL ACCOUNT......................................................................................... 11
Participating Investment Funds..................................................................................... 11
The Phoenix Edge Series Fund................................................................................... 11
BT Insurance Funds Trust....................................................................................... 12
Federated Insurance Series..................................................................................... 12
Morgan Stanley Dean Witter Universal Funds, Inc................................................................ 13
Templeton Variable Products Series Fund........................................................................ 13
Wanger Advisors Trust.......................................................................................... 13
Investment Advisors................................................................................................ 14
Services of the Advisors........................................................................................... 14
Reinvestment and Redemption........................................................................................ 14
Substitution of Investments........................................................................................ 15
The Guaranteed Interest Account.................................................................................... 15
PREMIUMS............................................................................................................... 15
Minimum Premiums................................................................................................... 15
Allocation of Issue Premium........................................................................................ 16
Free Look Period................................................................................................... 16
Account Value...................................................................................................... 16
Transfer of Policy Value....................................................................................... 16
Systematic Transfers for Dollar Cost Averaging................................................................. 16
Automatic Asset Rebalancing........................................................................................ 17
Determination of Subaccount Values................................................................................. 17
Death Benefit under the Policy..................................................................................... 17
Minimum Face Amount............................................................................................ 17
Death Benefit Options.......................................................................................... 18
Changes in Face Amount of Insurance................................................................................ 18
Requests for Increase in Face Amount........................................................................... 18
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Decreases in Face Amount and Partial Surrender: Effect on Death Benefit............................................ 18
Requests for Decrease in Face Amount........................................................................... 18
Surrenders......................................................................................................... 18
General........................................................................................................ 18
Full Surrenders................................................................................................ 19
Partial Surrenders............................................................................................. 19
Policy Loans....................................................................................................... 19
Source of Loan................................................................................................. 19
Interest....................................................................................................... 19
Interest Credited on Loaned Value.............................................................................. 19
Repayment...................................................................................................... 19
Effect of Loan................................................................................................. 20
Lapse.............................................................................................................. 20
Additional Insurance Option........................................................................................ 20
Additional Rider Benefits.......................................................................................... 20
PART II--ADDITIONAL POLICY PROVISIONS...................................................................................... 21
Postponement of Payments........................................................................................... 21
Payment by Check................................................................................................... 21
The Contract....................................................................................................... 21
Suicide............................................................................................................ 21
Incontestability................................................................................................... 21
Change of Owner or Beneficiary..................................................................................... 21
Assignment......................................................................................................... 21
Misstatement of Age or Sex......................................................................................... 21
Surplus............................................................................................................ 21
PAYMENT OF PROCEEDS.................................................................................................... 21
Surrender and Death Benefit Proceeds............................................................................... 21
Payment Options.................................................................................................... 22
Option 1--Lump sum.............................................................................................. 22
Option 2--Left to earn interest................................................................................. 22
Option 3--Payment for a specific period......................................................................... 22
Option 4--Life annuity with specified period certain............................................................ 22
Option 5--Life annuity.......................................................................................... 22
Option 6--Payments of a specified amount........................................................................ 22
Option 7--Joint survivorship annuity with 10-year period certain................................................ 22
PART III--OTHER IMPORTANT INFORMATION....................................................................................... 23
FEDERAL TAX CONSIDERATIONS............................................................................................. 23
Introduction....................................................................................................... 23
PLAC's Tax Status.................................................................................................. 23
Policy Benefits.................................................................................................... 23
Death Benefit Proceeds......................................................................................... 23
Full Surrender................................................................................................. 23
Partial Surrender.............................................................................................. 23
Loans.......................................................................................................... 23
Business-Owned Policies............................................................................................ 24
Modified Endowment Contracts....................................................................................... 24
General........................................................................................................ 24
Reduction in Benefits During the First 7 Years................................................................. 24
Distributions Affected......................................................................................... 24
Penalty Tax.................................................................................................... 24
Material Change Rules.......................................................................................... 24
Serial Purchase of Modified Endowment Contracts................................................................ 25
Limitations on Unreasonable Mortality and Expense Charges.......................................................... 25
Diversification Standards.......................................................................................... 25
Change of Ownership or Insured or Assignment....................................................................... 25
Other Taxes........................................................................................................ 25
VOTING RIGHTS ......................................................................................................... 25
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
THE DIRECTORS AND EXECUTIVE OFFICERS OF PLAC........................................................................... 26
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS ............................................................................... 26
SALES OF POLICIES ..................................................................................................... 26
STATE REGULATION ...................................................................................................... 27
REPORTS ............................................................................................................... 27
LEGAL PROCEEDINGS ..................................................................................................... 27
LEGAL MATTERS ......................................................................................................... 27
REGISTRATION STATEMENT ................................................................................................ 27
YEAR 2000 ISSUE........................................................................................................ 27
FINANCIAL STATEMENTS .................................................................................................. 27
APPENDIX A GLOSSARY OF SPECIAL TERMS................................................................................... 49
APPENDIX B PERFORMANCE HISTORY......................................................................................... 50
APPENDIX C ILLUSTRATIONS............................................................................................... 54
</TABLE>
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.
5
<PAGE>
PART I--GENERAL POLICY PROVISIONS
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This is a summary that describes the general provisions of the policy.
Certain provisions of the policy described in this prospectus may differ in
a particular state because of specific state requirements.
Throughout the prospectus, Phoenix Life and Annuity Company is referred to
as PLAC, we, us or our and the policyholder is referred to as you or your.
We define the following terms in the Glossary of Appendix A:
ATTAINED AGE POLICY ANNIVERSARY
BENEFICIARY POLICY DATE
DEBT POLICY VALUE
FUNDS POLICY YEAR
GENERAL ACCOUNT SERIES
ISSUE PREMIUM SUBACCOUNTS
MONTHLY CALCULATION DAY TARGET PREMIUM
NET ASSET VALUE VALUATION DATE
PAYMENT DATE VALUATION PERIOD
PLANNED ANNUAL PREMIUM VUL ACCOUNT (ACCOUNT)
If there is ever a difference between the provisions within this prospectus
and the provisions of the policy, the policy provisions will control.
AVAILABILITY
The policy is available on a "case" basis. We may consider one person as a
case. All policies within a case are aggregated for purposes of determining
policy dates, loan rates and underwriting requirements. If an individual owns
the policy as part of a case, he or she may exercise all rights under the policy
through his or her employer or sponsoring organization. After termination of
employment or other such relationship, the individual may exercise such rights
directly with us.
For fully underwritten policies, the age of the insured at the time of issue
generally must be between ages 18 through 85 as of his or her birthday nearest
the policy anniversary.
For policies that are underwritten using simplified or guaranteed issue
programs, generally the maximum age of the insured at the time of issue is age
70 for simplified and 64 for guaranteed issue.
The minimum face amount of insurance per policy issued is $50,000.
You can purchase a policy to insure the life of another person provided that
you have an insurable interest in that life and the prospective Insured
consents.
UNDERWRITING
Currently, we offer 3 types of underwriting:
[diamond] fully underwritten;
[diamond] simplified issue underwriting; and
[diamond] guaranteed issue underwriting.
Your cost of insurance charges will vary based on the type of underwriting
we use.
CHARGES UNDER THE POLICY
We deduct certain charges from your policy to compensate us for:
1. our expenses in selling the policy;
2. underwriting and issuing the policy;
3. premium and federal taxes incurred on premiums received;
4. providing insurance benefits under your policy; and
5. assuming certain risks in connection with the policy.
These charges are summarized in the following chart.
6
<PAGE>
<TABLE>
<CAPTION>
CHARGES UNDER THE POLICY
- ------------------------------------------------------------------------------------------------------------------------------------
CHARGES CURRENT RATE GUARANTEED RATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEDUCTIONS FROM SALES CHARGE Policy years 1 - 7:7.0% of premiums Policy years 1 - 7: 9.0% of premiums.
PREMIUMS up to the target premium and 0% on Policy year 8+: 3.0% of all premiums.
amounts in excess of the target
premium.
Policy year 8+: 0% of all premiums.
------------------------------------------------------------------------------------------------------------
STATE PREMIUM 0.75% to 4.0% of each premium This charge will always equal the
TAX depending on your state's applicable applicable state rate.
rate.
------------------------------------------------------------------------------------------------------------
DEFERRED ACQUISITION 1.5% of each premium. This charge will always equal the
COST TAX CHARGE actual cost to us for the DAC tax.
(DAC TAX)
------------------------------------------------------------------------------------------------------------
POLICY VALUE ADMINISTRATIVE CHARGE $5 per month ($60 annually) $10 per month ($120 annually) except
CHARGES New York, $7.50 per month ($90
annually)
------------------------------------------------------------------------------------------------------------
COST OF INSURANCE A per thousand rate multiplied by The maximum monthly cost of insurance
CHARGE the amount at risk each month. This charge for each $1,000 of insurance is
charge varies by the Insured's issue shown on your policy's schedule pages.
age, policy duration, gender and
underwriting class.
------------------------------------------------------------------------------------------------------------
MORTALITY AND EXPENSE 0.50% annually in policy years 1-10 0.90% annually in all policy years
RISK CHARGE 0.25% annually in policy years 11+
------------------------------------------------------------------------------------------------------------
FUND CHARGES SEE FUND CHARGE TABLE SEE FUND CHARGE TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER CHARGES PARTIAL SURRENDER FEE None 2.0% of the amount withdrawn, but not
greater than $25.
------------------------------------------------------------------------------------------------------------
TRANSFERS BETWEEN None $10 per transfer after the first 2
SUBACCOUNTS transfers in any given policy year,
(after 12 transfers in New York).
------------------------------------------------------------------------------------------------------------
LOAN INTEREST RATE The rates in effect before the 16th The guaranteed rates before the Insured
CHARGED policy year and before the Insured reaches age 65 in all states
reaches 65 for all states except Policy year 1 - 10: 4.75%
New York and New Jersey are Policy year 11 - 15: 4.50%
Policy year 1 - 10: 2.75% Policy year 16+: 4.25%
Policy year 11 - 15: 2.50%
Policy year 16+: 2.25%
The rates in effect before the 16th
policy year and before the Insured
reaches age 65 in New York and New
Jersey are:
Policy year 1 - 10: 4.75%
Policy year 11 - 15: 4.50%
Policy year 16+: 4.25%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
DEDUCTIONS FROM PREMIUMS
Before we allocate your premium to the Subaccounts or the Guaranteed
Interest Account, we deduct a sales charge, a state premium tax and a federal
tax to cover the estimated cost to us for deferred acquisition costs.
SALES CHARGE
We deduct a sales charge from your premium for the costs we incur in the
sales and distribution of the policies.
STATE PREMIUM TAX CHARGE
States assess premium taxes at various rates. We deduct the applicable state
rate from each premium to cover the cost of the premium taxes assessed against
us by the state.
We may increase or decrease this charge if there is a change in the tax or
change of residence.
DEFERRED ACQUISITION COST ("DAC") TAX CHARGE
This tax is associated with our federal tax liability under Internal Revenue
Code Section 848.
POLICY VALUE CHARGES
On each monthly calculation day, we deduct the following charges from your
policy value:
1. administrative charge
2. cost of insurance charge
3. mortality and expense risk fee
4. a charge for the cost of riders if applicable
The amount deducted is allocated among the Subaccounts and the unloaned
portion of the Guaranteed Interest Account based on an allocation schedule
specified by you. You initially select this schedule in your application.
1. ADMINISTRATIVE CHARGE
We assess a monthly charge for the expenses we incur in administering the
policy. This charge reimburses us for the cost of daily administration of
services such as billing and collections, monthly processing, updating daily
values and communicating with policyholders.
2. COST OF INSURANCE
We deduct a charge to cover the cost of insurance coverage on each monthly
calculation day. This charge is based on:
[diamond] Insured's gender;
[diamond] Insured's age at issue;
[diamond] policy year in which we make the deduction;
[diamond] Insured's tobacco use classification;
[diamond] rating class of the policy; and
[diamond] underwriting classification of the case.
To determine the monthly cost of insurance, we multiply the appropriate cost
of insurance rate by the difference between your policy's death benefit and the
policy value. Any change in the cost of insurance rates will apply to all
persons of the same sex, insurance age and risk class whose policies have been
in force for the same length of time.
3. MORTALITY AND EXPENSE RISK CHARGE
We charge the Subaccounts for the mortality and expense risks we assume.
This charge is deducted from the value of each Subaccount's assets attributable
to the policies.
The mortality risk we assume is that the group of lives we insure under our
policies may, on average, live for a shorter period of time than we estimated.
The expense risk we assume is that our cost of issuing and administering the
policies may be more than we estimated.
If all the money we collect from this charge is not required to cover the
cost of death benefits and other expenses, it will be a gain to us. If the money
we collect is not enough to cover our costs, we will still provide for death
benefits and expenses.
4. RIDER CHARGE
We will deduct any applicable monthly rider charges for the additional
benefit provided to you by the rider.
CHARGES FOR FEDERAL INCOME TAXES
We currently do not charge the VUL Account for federal income taxes
attributable to it. In the future, we may charge to cover these taxes or any
other tax liability of the VUL Account.
FUND CHARGES
Please refer to the following chart for a listing of fund charges.
8
<PAGE>
<TABLE>
ANNUAL FUND EXPENSES FOR THE YEAR ENDING DECEMBER 31, 1998 AFTER REIMBURSEMENT
<CAPTION>
INVESTMENT OTHER OPERATING TOTAL ANNUAL
SERIES MANAGEMENT FEE RULE 12B-1 FEES EXPENSES FUND EXPENSES(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Phoenix Research Enhanced Index .45% 0% .10% .55%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International .75% 0% .23% .98%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia 1.00% 0% .25% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Bankers Trust Dow 30 .35% 0% .15% .50%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities .75% 0% .25% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth .62% 0% .07% .69%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty .90% 0% .15% 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Federated U.S. Government Bond .60% 0% .15% .75%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market .40% 0% .15% .55%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income .50% 0% .14% .64%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity .70% 0% .15% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Janus Equity Income .85% 0% .15% 1.00%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Janus Flexible Income .80% 0% .15% .95%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Janus Growth .85% 0% .15% 1.00%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Morgan Stanley Focus Equity .85% 0% .15% 1.00%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced .55% 0% .13% .68%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income .70% 0% .15% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation .58% 0% .10% .68%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value 1.05% 0% .15% 1.20%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth .80% 0% .25% 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme .75% 0% .24% .99%
- --------------------------------------------------------------------------------------------------------------------------------
EAFE(R)Equity Index 0% 0% .65% .65%
- --------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond .60% 0% .18% .78%
- --------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities .52% 0% .33% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Technology Portfolio .80% 0% 1.15% 1.95%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments 0% .25% 1.00% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation .60% .25% .18% 1.03%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets 1.25% .25% .41% 1.91%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton International .69% .25% .17% 1.11%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Stock .70% .25% .19% 1.14%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty .95% 0% .50% 1.45%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap 1.27% 0% .28% 1.55%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty .90% 0% .45% 1.35%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap .96% 0% .06% 1.02%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(1) Each Series pays a portion or all of its total annual expenses other than
the management fee. The Phoenix Research Enhanced Index Series will pay up
to .10%; the Phoenix-Bankers Trust Dow 30, Phoenix-Federated U.S.
Government Bond, Phoenix-Janus Equity Income, Phoenix-Janus Flexible
Income, Phoenix-Janus Growth, Phoenix-Engemann Capital Growth,
Phoenix-Goodwin Multi-Sector Fixed Income, Phoenix-Oakhurst Strategic
Allocation, Phoenix-Goodwin Money Market, Phoenix-Oakhurst Balanced,
Phoenix-Engemann Nifty Fifty, Phoenix-Oakhurst Growth and Income,
Phoenix-Hollister Value Equity and Phoenix-Schafer Mid-Cap Value Series
will pay up to .15%; the Phoenix-Duff & Phelps Real Estate Securities,
Phoenix-Seneca Strategic Theme, Phoenix-Aberdeen New Asia and
Phoenix-Seneca Mid-Cap Growth Series will pay up to .25%; and the
Phoenix-Aberdeen International Series will pay up to .40% for the fiscal
year ending December 31, 1998. Absent expense reimbursement, total annual
expenses were:
Phoenix Research Enhanced Index .82% Phoenix-Hollister Value Equity 2.46%
Phoenix-Aberdeen International .98% Phoenix-Oakhurst Balanced .68%
Phoenix-Aberdeen New Asia 2.50% Phoenix-Oakhurst Growth and Income 1.46%
Phoenix-Duff & Phelps Real Estate Securities 1.01% Phoenix-Oakhurst Strategic Allocation .68%
Phoenix-Engemann Capital Growth .69% Phoenix-Schafer Mid-Cap Value 2.77%
Phoenix-Engemann Nifty Fifty 2.58% Phoenix-Seneca Mid-Cap Growth 2.81%
Phoenix-Goodwin Money Market .55% Phoenix-Seneca Strategic Theme .99%
Phoenix-Goodwin Multi-Sector Fixed Income .64%
The Wanger Foreign Forty will pay up to .45%, the Wanger U.S. Small Cap
Series will pay up to .50%, the Wanger International Small Cap will pay up
to .60%, and the Wanger Twenty will pay up to .40%. Absent expense
reimbursement, Total Annual Expenses are estimated to be approximately
1.45% for Wanger Foreign Forty, 1.55% for Wanger International Small Cap,
1.35% for Wanger Twenty and 1.02% for Wanger U.S. Small Cap for the fiscal
year ending December 31, 1999. Expenses may be higher or lower than those
shown but are subject to expense limitations as noted.
(2) These are new series and expenses are estimated. Absent Expense
reimbursement, the projected Total Annual Expenses for the year ended
December 31, 1999 are expected to be as follows:
Phoenix-Bankers Trust Dow 30 1.75% Phoenix-Janus Flexible Income 2.45%
Phoenix-Federated U.S. Government Bond 2.30% Phoenix-Janus Growth 1.90%
Phoenix-Janus Equity Income 2.25% Phoenix-Morgan Stanley Focus Equity 2.15%
</TABLE>
9
<PAGE>
OTHER CHARGES
PARTIAL SURRENDER FEE
We reserve the right to deduct a charge from each withdrawal.
LOAN INTEREST RATE EXPENSE CHARGE
We deduct a charge from the loan interest rate. This charge reimburses us
for expenses we incur in administering your loan. This rate varies by policy
year.
REDUCTION IN CHARGES
The policy is available for purchase by individuals, corporations and other
groups. For group or sponsored arrangements (including our employees and their
family members) and for special exchange programs that we may make available, we
reserve the right to reduce or eliminate the sales load, mortality and expense
risk charge, monthly administrative charge, monthly cost of insurance charges or
other charges normally assessed on certain multiple life cases where it is
expected that the size or nature of such cases will result in savings of sales,
underwriting, administrative or other costs.
Eligibility for the amount of these reductions will be determined by a
number of factors including:
[bullet] the number of insureds,
[bullet] the total premium expected to be paid,
[bullet] the total assets under management for the policyowner,
[bullet] the nature of the relationship among individual insureds,
[bullet] the purpose for which the policies are being purchased,
and other circumstances which in our opinion are rationally related to the
expected reduction in expenses. Any variations in the charge structure will be
determined in a uniform manner reflecting differences in costs of services and
not unfairly discriminatory to policyholders.
10
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY AND THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PLAC
We are an indirect subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix"). Our executive office is located at One American Row, Hartford,
Connecticut 06102-5056, and our main administrative office is located at 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. We are a Connecticut
stock company, formed to write life insurance and annuity contracts. Formerly,
PLAC was Savers Life Insurance Company of America, chartered in Missouri in
1981. We redomesticated to Connecticut in April, 1997.
THE VUL ACCOUNT
The VUL Account is a separate account of PLAC, established on July 1, 1996
and governed under the laws of Connecticut. It is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended, and
meets the definition of a "separate account" under that Act. This registration
does not involve supervision of the management of the VUL Account or PLAC by the
SEC.
The VUL Account is divided into Subaccounts, each of which is available for
allocation of policy value. Each Subaccount will invest solely in shares of a
specific series of a mutual fund. In the future, we may establish additional
Subaccounts which will be made available to existing policyowners to the extent
and on a basis decided by us. See "Investments of the VUL Account--Participating
Investment Funds."
PLAC does not guarantee the investment performance of the VUL Account or any
of its Subaccounts. Contributions to the overall policy value allocated to the
VUL Account depend on the chosen Fund's investment performance. Thus, you bear
the full investment risk for all monies invested in the VUL Account.
The VUL Account is part of the general business of PLAC, but the gains or
losses of the VUL Account belong solely to the VUL Account. The gains or losses
of any other business we may conduct do not affect the VUL Account. Under
Connecticut law, the assets of the VUL Account may not be taken to pay
liabilities arising out of any other business we may conduct. Nevertheless, all
obligations arising under the policy are general corporate obligations of PLAC.
PERFORMANCE HISTORY
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We may include the performance history of the VUL Account 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. See "Appendix B" for more information.
INVESTMENTS OF THE VUL ACCOUNT
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PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts invest in corresponding series of The Phoenix Edge
Series Fund. The following series are currently available:
PHOENIX RESEARCH ENHANCED INDEX SERIES: The investment objective of the
series is high total return. The Phoenix Research Enhanced Index Series invests
in a broadly diversified portfolio of equity securities of large and medium
capitalization companies within market sectors reflected in the S&P 500. It
invests in a portfolio of undervalued common stocks and other equity securities
which appear to offer growth potential and an overall volatility of return
similar to that of the S&P 500.
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the
series is a high total return consistent with reasonable risk. The
Phoenix-Aberdeen International Series invests 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 series provides a means for investors to
invest a portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the series is
long-term capital appreciation. The Phoenix-Aberdeen New Asia Series invests
primarily in a diversified portfolio of equity securities of issuers organized
and principally operating in Asia, excluding Japan.
PHOENIX-BANKERS TRUST DOW 30 SERIES: The series seeks to track the total
return of the Dow Jones Industrial AverageSM (the "DJIASM") before fund
expenses.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment
objective of the series is capital appreciation and income with approximately
equal emphasis. Under normal circumstances, the Phoenix-Duff & Phelps Real
Estate Securities Series invests 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.
PHOENIX-ENGEMANN CAPITAL GROWTH SERIES: The investment objective of the
series is to achieve intermediate and long-term growth of capital, with income
as a secondary consideration. The Phoenix-Engemann Capital Growth Series invests
principally in common stocks of corporations believed by management to offer
growth potential.
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PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the series
is long-term capital appreciation. The Phoenix-Engemann Nifty Fifty Series
invests in approximately 50 different securities which offer the best potential
for long-term growth of capital. At least 75% of the series' assets are invested
in common stocks of high quality growth companies. The remaining portion is
invested in common stocks of small corporations with rapidly growing earnings
per share or common stocks believed to be undervalued.
PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES: The investment objective of
the series is to maximize total return by investing primarily in debt
obligations of the U.S. Government, its agencies and instrumentalities.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the series
is maximum current income consistent with capital preservation and liquidity.
The Phoenix-Goodwin Money Market Series invests exclusively in high quality
money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective
of the series is long-term total return. The Phoenix-Goodwin Multi-Sector Fixed
Income Series seeks to achieve its investment objective by investing in a
diversified portfolio of high yield and high quality fixed income securities.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of
the series is long-term capital appreciation, with a secondary investment
objective of current income. The Phoenix-Hollister Value Equity Series seeks to
achieve its objective by investing in a diversified portfolio of common stocks
that meet certain quantitative standards that indicate above average financial
soundness and intrinsic value relative to price.
PHOENIX-JANUS EQUITY INCOME SERIES: The investment objective of the series
is to seek current income and long-term growth of capital.
PHOENIX-JANUS FLEXIBLE INCOME SERIES: The investment objective of the series
is to seek to obtain maximum total return, consistent with preservation of
capital.
PHOENIX-JANUS GROWTH SERIES: The investment objective of the series is to
seek long-term growth of capital, in a manner consistent with the preservation
of capital.
PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES: The investment objective of the
series is to seek capital appreciation by investing primarily in equity
securities.
PHOENIX-OAKHURST BALANCED SERIES: The investment objective of the series is
to seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Oakhurst Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
series is dividend growth, current income and capital appreciation by investing
in common stocks. The Phoenix-Oakhurst Growth and Income Series seeks to achieve
its objective by selecting securities primarily from equity securities of the
1,000 largest companies traded in the United States, ranked by market
capitalization.
PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES: The investment objective of
the series is to realize as high a level of total return over an extended period
of time as is considered consistent with prudent investment risk. The
Phoenix-Oakhurst Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the investment advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-SCHAFER MID-CAP VALUE SERIES: The primary investment objective of
the series is long-term capital appreciation, with current income as the
secondary investment objective. The Phoenix-Schafer Mid-Cap Value Series invests
in common stocks of established companies having a strong financial position and
a low stock market valuation at the time of purchase which are believed to offer
the possibility of increase in value.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the series
is capital appreciation primarily through investments in equity securities of
companies that have the potential for above average market appreciation. The
Phoenix-Seneca Mid-Cap Growth Series seeks to outperform the Standard & Poor's
Mid-Cap 400 Index.
PHOENIX-SENECA STRATEGIC THEME SERIES: The investment objective of the
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
Phoenix-Seneca Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
BT INSURANCE FUNDS TRUST
A certain Subaccount invests in a corresponding series of the BT Insurance
Funds Trust. The following series is currently available:
EAFE(R) EQUITY INDEX FUND: The series seeks to match the performance of the
Morgan Stanley Capital International EAFE(R) Index ("EAFE(R) Index"), which
emphasizes major stock market performance of companies in Europe, Australia and
the Far East. The series invests in a statistically selected sample of the
securities found in the EAFE(R) Index.
FEDERATED INSURANCE SERIES
Certain Subaccounts invest in corresponding series of the Federated
Insurance Series. The following series are currently available:
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FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the series is current income. The Federated Fund for U.S. Government
Securities II invests primarily in U.S. government securities, including
mortgage-backed securities issued by U.S. government agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the series
is high current income. The Federated High Income Bond Fund II invests primarily
in a diversified portfolio of high-yield, lower-rated corporate bonds.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
A certain subaccount invests in a corresponding series of the Morgan Stanley
Dean Witter Universal Funds, Inc. The following series is currently available:
TECHNOLOGY PORTFOLIO: The investment objective of the series is to seek
long-term capital appreciation by investing primarily in equity securities of
companies that the investment advisor expects to benefit from their involvement
in technology and technology-related industries.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain Subaccounts invest in Class 2 shares of a corresponding series of
the Templeton Variable Products Series Fund. The following series are currently
available:
MUTUAL SHARES INVESTMENT FUND: The primary investment objective of the
series is capital appreciation with income as a secondary objective. The Mutual
Shares Investments Fund invests in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET ALLOCATION FUND: The investment objective of the series is a
high level of total return. The Templeton Asset Allocation Fund invests in
stocks of companies of any nation, bonds of companies and governments of any
nation, and in money market instruments. Changes in the asset mix will be made
in an attempt to capitalize on total return potential produced by changing
economic conditions throughout the world, including emerging market countries.
TEMPLETON DEVELOPING MARKETS FUND: The investment objective of the series is
long-term capital growth. The Templeton Developing Markets Fund invests
primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL FUND: The investment objective of the series is
long-term capital growth. The Templeton International Fund invests primarily in
stocks of companies located outside the United States, including emerging
markets.
TEMPLETON STOCK FUND: The investment objective of the series is long-term
capital growth. The Templeton Stock Fund invests primarily in common stocks
issued by companies in various nations throughout the world, including the U.S.
and emerging markets.
WANGER ADVISORS TRUST
Certain Subaccounts invest in corresponding series of the Wanger Advisors
Trust. The following series are currently available:
WANGER FOREIGN FORTY: The investment objective of the series is long-term
capital growth. The Wanger Foreign Forty Series invests primarily in equity
securities of foreign companies with market capitalization of $1 billion to $10
billion and focuses its investments in 40 to 60 companies in the developed
markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the series is
long-term capital growth. The Wanger International Small Cap Series invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the series is long-term capital
growth. The Wanger Twenty Series invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the series is long-term
capital growth. The Wanger U.S. Small Cap Series invests primarily in securities
of U.S. companies with total common stock market capitalization of less than $1
billion.
Each series will be subject to market fluctuations and the risks that come
with the ownership of any security. There can be no assurance that any series
will achieve its stated investment objective.
In addition to being sold to the Account, shares of all of the funds may be
sold to other separate accounts of Phoenix or its affiliates. Shares of certain
funds may also be sold to the separate accounts of other insurance companies.
It is possible that in the future there may be no advantage for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the funds simultaneously. Although neither PLAC nor the funds'
trustees currently foresee any such disadvantages either to variable life
insurance policyowners or to variable annuity contractowners, the funds'
trustees intend to monitor events in order to identify any material conflicts
between variable life insurance policyowners and variable annuity contractowners
and to determine what action, if any, should be taken in response to such
conflicts. Material conflicts could, for example, result from:
[diamond] changes in state insurance laws;
[diamond] changes in federal income tax laws;
[diamond] changes in the investment management of any portfolio of the fund(s);
or
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[diamond] differences in voting instructions between those given by variable
life insurance policyowners and those given by variable annuity
contractowners.
We will remedy such material conflicts at our expense 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 ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is an investment advisor to the
following series in The Phoenix Edge Series Fund:
[bullet] Phoenix-Goodwin Money Market Series
[bullet] Phoenix-Goodwin Multi-Sector Fixed Income Series
[bullet] Phoenix-Hollister Value Equity Series
[bullet] Phoenix-Oakhurst Balanced Series
[bullet] Phoenix-Oakhurst Growth and Income Series
[bullet] Phoenix-Oakhurst Strategic Allocation Series
Based on subadvisory agreements with the fund, PIC as an investment advisor
delegates certain investment decisions and research functions to subadvisors for
the following series:
[diamond] Phoenix-Aberdeen International Advisors, LLC ("PAIA")
[bullet] Phoenix-Aberdeen International Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
[bullet] Phoenix-Engemann Capital Growth Series
[bullet] Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
[bullet] Phoenix-Seneca Mid-Cap Growth Series
[bullet] Phoenix-Seneca Strategic Theme Series
Phoenix Variable Advisors, Inc. ("PVA") is also an investment advisor to The
Phoenix Edge Series Fund. Based on subadvisory agreements with the fund, PVA
delegates certain investment decisions and research functions to the following
subadvisors for the series listed:
[diamond] Bankers Trust Company
[bullet] Phoenix-Bankers Trust Dow 30 Series
[diamond] Federated Investment Management Company
[bullet] Phoenix-Federated U.S. Government Bond Series
[diamond] J.P. Morgan Investment Management, Inc.
[bullet] Phoenix Research Enhanced Index Series
[diamond] Janus Capital Corporation
[bullet] Phoenix-Janus Equity Income Series
[bullet] Phoenix-Janus Flexible Income Series
[bullet] Phoenix-Janus Growth Series
[diamond] Morgan Stanley Asset Management Inc.
[bullet] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Schafer Capital Management, Inc.
[bullet] Phoenix-Schafer Mid-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is PAIA.
Pursuant to subadvisory agreements with the fund, PAIA delegates certain
investment decisions and research functions with respect to the Phoenix-Aberdeen
New Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect less than wholly owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by
PM Holdings, Inc., a subsidiary of Phoenix, and by Aberdeen Fund Managers, Inc.
PVA is a wholly-owned subsidiary of PM Holdings, Inc.
The other investment advisors and their respective funds are:
[diamond] Bankers Trust Company
[bullet] EAFE[registered trademark] Equity Index Fund
[diamond] Federated Investment Management Company
[bullet] Federated Fund for U.S. Government Securities II
[bullet] Federated High Income Bond Fund II
[diamond] Franklin Mutual Advisers, LLC
[bullet] Mutual Shares Investments Fund
[diamond] Morgan Stanley Dean Witter Investment Management Inc.
[bullet] Technology Portfolio
[diamond] Templeton Asset Management, Ltd.
[bullet] Templeton Developing Markets Fund
[diamond] Templeton Investment Counsel, Inc.
[bullet] Templeton Asset Allocation Fund
[bullet] Templeton International Fund
[bullet] Templeton Stock Fund
[diamond] Wanger Asset Management, L.P.
[bullet] Wanger Foreign Forty
[bullet] Wanger International Small Cap
[bullet] Wanger Twenty
[bullet] Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The advisors continually furnish an investment program for each series and
manage the investment and reinvestment of the assets of each series subject at
all times to the authority and supervision of the trustees of each fund. A
detailed discussion of the investment advisors and subadvisors, and the
investment advisory and subadvisory agreements, is contained in the accompanying
prospectus for the funds.
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.
Likewise, all capital gains
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distributions of the Fund, if any, are reinvested at the net asset value on the
record date. We redeem Fund shares at their net asset value to the extent
necessary to make payments under the policy.
SUBSTITUTION OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions
for the investments held by the VUL Account, subject to compliance with the law
as currently applicable or as subsequently changed. In the future, we 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. If and when marketing needs and investment conditions
warrant, and at our discretion, we may establish additional portfolios. These
will be made available under existing policies to the extent and on a basis
determined by us.
If shares of any of the portfolios of the Fund should no longer be available
for investment or, if in the judgment of our management, further investment in
shares of any of the portfolios become inappropriate due to policy objectives,
we may then substitute shares of another mutual fund for shares already
purchased, or to be purchased in the future. 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 you. In the event of a
change, you will be given the option of transferring the policy value of the
Subaccount in which the substitution is to occur to another Subaccount.
THE GUARANTEED INTEREST ACCOUNT
In addition to the VUL Account, you may allocate premium or transfer policy
value to the Guaranteed Interest Account. Amounts you allocate or transfer to
the Guaranteed Interest Account become part of Phoenix Life and Annuity's
general account assets. You do not share in the investment experience of those
assets. Rather, we guarantee a 3% rate of return on your allocated amount. For
amounts transferred to the Guaranteed Interest Account from a policy loan, the
guaranteed rate is 2% in all states except New York and New Jersey. In New York
and New Jersey the rate credited to the Guaranteed Interest Account due to a
policy loan is 4%. Although we are not obligated to credit interest at a higher
rate than the minimum, we will credit any excess interest as determined by us
based on expected investment yield information.
Because of exemptive and exclusionary provisions, we have not registered
interests in our general account under the Securities Act of 1933. Also, we have
not registered our general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
of its interests are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be subject to certain provisions of the federal securities law
regarding accuracy and completeness of statements made in this prospectus.
We reserve the right to limit total deposits to the Guaranteed Interest
Account, including transfers, to no more than $250,000 during any one-week
period per policy.
In general, you can make only one transfer per year from the Guaranteed
Interest Account. The amount that can be transferred out is limited to the
greater of $1,000 or 25% of the policy value in the Guaranteed Interest Account
as of the date of the transfer. If you elect the Systematic Transfer Program,
approximately equal amounts may be transferred out of the Guaranteed Interest
Account. Also, the total policy value allocated to the Guaranteed Interest
Account may be transferred out to one or more of the Subaccounts over a
consecutive 4-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts may
be made at any time. Transfers from the Guaranteed Interest Account are subject
to the rules discussed above and in "Transfer of Policy Value" and "Systematic
Transfer for Dollar Cost Averaging."
PREMIUMS
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MINIMUM PREMIUMS
The minimum premium is determined by case size as follows:
[diamond] 5 or more lives: $100,000 annually for the first 5 policy years
[diamond] Fewer than 5 lives: $250,000 annually for the first 5 policy years
The issue premium is due on the policy date. The Insured must be alive when
the issue premium is paid. After that, premiums may be paid at any time while
the policy is in force. Each premium payment must be at least $100. Additional
payments should be sent to the:
VUL COLI UNIT
PO BOX 22012
ALBANY, NY 12201-2012
The number of units credited to a Subaccount 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.
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Regardless of whether you choose the Guideline Premium Test or the Cash
Value Accumulation Test (see "Minimum Face Amount"), we reserve the right to
refund a premium paid in any year if it will exceed the maximum premium limit.
The maximum limit is established by law to qualify the policy as life insurance.
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 total premium limit may be exceeded
if additional premium is needed to prevent lapse or if we subsequently determine
that additional premium would be permitted by federal laws or regulations.
ALLOCATION OF ISSUE PREMIUM
We will allocate the issue premium less applicable charges to the VUL
Account or to the Guaranteed Interest Account upon receipt of a completed
application (in accordance with the allocation instructions in the application
for a policy
FREE LOOK PERIOD
You have the right to review the policy. If you are not satisfied with it,
you may cancel the policy:
[diamond] by mailing it to us within 10 days after you receive it (or longer in
some states);
[diamond] within 10 days after we mail or deliver a written notice telling you
about your Free Look Period; or
[diamond] within 45 days after completing the application, whichever occurs
latest.
We treat a returned policy as if we never issued it and will return the sum
of the following as of the date we receive the returned policy:
(1) the then current policy value less any unpaid loans and loan interest;
plus
(2) any monthly deductions, partial surrender fees and other charges made
under the policy.
We retain the right to decline to process an application within 7 days of
our receipt of the completed application for insurance. If we decline to process
the application, we will return the premium paid. Even if we have approved the
application for processing, we retain the right to decline to issue the policy.
If we decline to issue the policy, we will refund the same amount to you as
would have been refunded under the policy had it been issued but returned for
refund during the Free Look Period.
ACCOUNT VALUE
TRANSFER OF POLICY VALUE
Transfers among available Subaccounts or the Guaranteed Interest Account and
changes in premium payment allocations may be requested in writing. Requests for
transfers will be executed on the date the request is received at Andesa TPA,
Inc.
Although there currently is no charge for transfers, in the future we may
charge a fee of $10 for each transfer after the first 2 transfers in a policy
year (12 transfers in New York).
You may make only one transfer per policy year from the unloaned portion of
the Guaranteed Interest Account unless
(1) the transfer(s) are made as part of a Dollar Cost Averaging Program, or
(2) we agree to make an exception to this rule.
Unless you have elected a Dollar Cost Averaging Program, the amount you may
transfer cannot exceed the greater of $1,000 or 25% of the value of the unloaned
portion of the Guaranteed Interest Account at the time of the transfer. In
addition, you may transfer the total value allocated to the unloaned portion of
the Guaranteed Interest Account out to one or more of the Subaccounts over a
consecutive 4-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of the remaining value
[diamond] Year Three: 50% of the remaining value
[diamond] Year Four: 100% of the remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts may
be made anytime. We reserve the right to limit the number of Subaccounts you may
invest in at any one time or over the life of the policy, if we are required to
do so by any federal or state law.
Because excessive exchanges between Subaccounts can deteriorate Fund
performance, we reserve the right to temporarily or even permanently terminate
exchange privileges or reject any specific exchange order from anyone whose
transactions appear to us to follow a timing pattern, including those who
request more than one exchange out of a Subaccount within any 30-day period. We
will not accept batched transfer instructions from registered representatives
(acting under powers of attorney for multiple policyowners), unless the
registered representative's broker-dealer firm and PLAC have entered into a
third-party transfer service agreement.
SYSTEMATIC TRANSFERS FOR DOLLAR COST AVERAGING
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the Guaranteed Interest Account on a monthly, quarterly,
semiannual or annual basis under the Systematic Transfers for Dollar Cost
Averaging Program ("Dollar Cost Averaging Program"). Under the Dollar Cost
Averaging Program, the minimum transfer amounts are
[bullet] $25 monthly,
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[bullet] $75 quarterly,
[bullet] $150 semiannually, or
[bullet] $300 annually.
You must have an initial value of $1,000 in the Guaranteed Interest Account
or the Subaccount from which funds will be transferred ("Sending Subaccount").
If the value in that Subaccount or the Guaranteed Interest Account drops below
the amount to be transferred, the entire remaining balance will be transferred
and all systematic transfers stop. Funds may be transferred from only one
Sending Subaccount or the Guaranteed Interest Account, but may be allocated to
more than one Subaccount ("Receiving Subaccounts").
Under the Dollar Cost Averaging Program, Policyowners may make more than one
transfer per policy year from the Guaranteed Interest Account. These transfers
must be in approximately equal amounts and made over a minimum 18-month period.
Only one Dollar Cost Averaging Program can be active at any time. All
transfers under this program will be made on the basis of the Guaranteed
Interest Account and Subaccount on the first day of the month following our
receipt of the transfer request. If the first day of the month falls on a
holiday or weekend, then the transfer will be processed on the next business
day.
AUTOMATIC ASSET REBALANCING
Automated asset rebalancing permits you to maintain a specified whole number
percentage of your account value in any combination of Subaccounts and the
Guaranteed Interest Account. We must receive a written request in order to begin
your automated asset rebalancing program ("asset rebalancing"). Then, we will
make transfers at least quarterly to and from the Subaccounts and the Guaranteed
Interest Account to readjust your account value to your specified percentage.
Asset rebalancing allows you to maintain a specific fund allocation. Quarterly
rebalancing is based on your policy year. We will rebalance your account value
only on a monthly calculation day.
The effective date of the first asset rebalancing will be the first monthly
calculation day after we receive your request at Andesa TPA, Inc. If we receive
your request before the end of the Free Look Period, your first rebalancing will
occur at the end of the Free Look Period.
You may not participate in both the Dollar Cost Averaging Program and asset
rebalancing at the same time.
DETERMINATION OF SUBACCOUNT VALUES
We establish the unit value of each Subaccount on the first valuation date
of that Subaccount. The unit value of a Subaccount 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 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 on a
valuation date is determined at the end of that day.
The net investment factor for each Subaccount 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 determined by the formula:
(A) + (B) - (D) where:
--------
(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, any capital gain distribution, if
applicable) 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 amount of any
deposits and withdrawals made during the valuation period ending on that
date.
(D) The charge, if any, for taxes and reserves for taxes on investment income,
and realized and unrealized capital gains.
DEATH BENEFIT UNDER THE POLICY
The death benefit is the amount we pay to the designated beneficiary(ies)
when the Insured dies. Upon receiving due proof of death, we pay the beneficiary
the death benefit amount determined as of the date the Insured dies. The
beneficiary may direct us to pay all or part of the benefit in cash or to apply
it under one or more of our payment options.
MINIMUM FACE AMOUNT
To qualify as life insurance under current federal tax laws, the policy has
a minimum face amount of insurance. The minimum face amount is determined using
1 of 2 allowable definitions of life insurance:
(1) the Cash Value Accumulation Test or
(2) the Guideline Premium Test.
You chose which test to use on the application prior to the issuance of your
policy. You cannot change the way we determine your minimum face amount after
your policy is issued.
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The Cash Value Accumulation Test determines the minimum face amount by
multiplying the account value plus the refund of sales load, if applicable, by
the minimum face amount percentage. The percentages depend upon the Insured's
age, gender and underwriting classification.
Under the Guideline Premium Test, the minimum face amount is also equal to
an applicable percentage of the account value plus refund of sales load, if
applicable, but the percentage varies only by age of insured.
DEATH BENEFIT OPTIONS
In your application you select a face amount of insurance coverage and the
death benefit option. We offer 3 death benefit options:
[diamond] Option 1--The death benefit is the greater of:
(a) the policy's face amount on the date of death or
(b) the minimum face amount in effect on the date of death.
[diamond] Option 2--The death benefit is the greater of:
(a) the policy's face amount on the date of death plus the policy value on
the date of death or
(b) the minimum face amount in effect on the date of
death.
[diamond] Option 3--The death benefit is the greater of:
(a) the policy's face amount on the date of death plus the sum of all
premiums paid, less withdrawals, or
(b) the policy's face amount on the date of death, or
(c) the minimum face amount in effect on the date of death.
If the Insured dies while the policy is in force, we will pay the death
benefit based on the option in effect on the date of death with the following
adjustments:
[bullet] add back in any charges taken against the account value for the
period beyond the date of death;
[bullet] deduct any policy debt outstanding on the date of death; and
[bullet] deduct any charges accrued against the account value unpaid
as of the date of death.
You may change the Death Benefit Option from Option 1 to Option 2 or from
Option 2 to Option 1. You may not make a change either to or from Option 3.
Under death benefit Options 1 and 3, the death benefit is not affected by
your policy's investment experience. Under death benefit Option 2, the death
benefit amount may increase or decrease by the investment experience.
We pay interest on the death benefit from the date of death to the date the
death benefit is paid or a payment option becomes effective.
CHANGES IN FACE AMOUNT OF INSURANCE
REQUESTS FOR INCREASE IN FACE AMOUNT
Any time while this policy is in force, you 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 we require 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. We will deduct any charges associated with the increase (the
increases in cost of insurance charges), from the policy value whether or not
you pay an additional premium in connection with the increase. Also, a new Free
Look Period (see "Free Look 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."
DECREASES IN FACE AMOUNT AND PARTIAL SURRENDER: EFFECT ON DEATH BENEFIT
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in face amount at any time after the first policy
year. Unless we agree otherwise, the decrease must be at least equal to $10,000
and the face amount remaining after the decrease must be at least $25,000. All
face amount decrease requests must be in writing and will be effective on the
first monthly calculation day following the date we approve the request.
A partial surrender or a decrease in face amount generally decreases the
death benefit. If the change is a decrease in face amount, the death benefit
under a policy would be reduced on the next monthly calculation day. If the
change is 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."
SURRENDERS
GENERAL
At any time during the lifetime of the Insured and while the policy is in
force, you may partially or fully surrender the policy by sending a written
request to Andesa TPA, Inc. We may also require you to send the policy to us.
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 Andesa TPA,
Inc.
The cash surrender value is:
[bullet] policy value; less
[bullet] any outstanding debt.
There is no surrender charge.
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FULL SURRENDERS
If the policy is being fully surrendered, the policy itself must be returned
to Andesa TPA, Inc., along with the written release and surrender of all claims
in a form satisfactory to us. You may elect to have the amount paid in a lump
sum or under a payment option (see "Payment of Proceeds--Payment Options").
PARTIAL SURRENDERS
You may obtain a partial surrender of the policy by requesting payment of
the policy's cash surrender value. It is possible to do this at any time during
the lifetime of the Insured, while the policy is in force, with a written
request to Andesa TPA, Inc. We may require the return of the policy 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 by us.
Surrender proceeds may be applied under any of the payment options. (See
"Payment of Proceeds--Payment Options.")
We reserve the right to deny partial surrenders of less than $500. In
addition, if the share of the policy value in any Subaccount or in the
Guaranteed Interest Account is reduced as a result of a partial surrender and is
less than $500, we reserve the right to require surrender of the entire
remaining balance in that Subaccount or the Guaranteed Interest Account.
Upon a partial surrender, the policy value will be reduced by the sum of the
partial surrender amount paid. This amount comes from a reduction in the
policy's share in the value of each Subaccount or the Guaranteed Interest
Account based on the allocation requested at the time of the partial surrender.
If no allocation request is made, the withdrawals from each Subaccount will be
made in the same manner as that provided for monthly deductions.
The cash surrender value will be reduced by the partial surrender amount
paid. The face amount of the policy will be reduced by the same amount as the
policy value is reduced as described above.
Upon partial or full surrender, we will generally pay the amount surrendered
within 7 days after we receive the written request for the surrender. Under
certain circumstances, the surrender payment may be postponed (see "Additional
Policy Provisions--Postponement of Payments"). For the federal tax effects of
partial and full surrenders, see "Federal Tax Considerations."
POLICY LOANS
You can take a loan against your policy any time while the policy is in
force. The maximum loan is:
[bullet] 90% of your policy value at the time the loan is taken; less
[bullet] any outstanding policy debt before the loan is taken; less
[bullet] interest on the loan being made and on any outstanding policy debt
to the next policy anniversary date.
Your policy must be assigned to us as collateral for the loan.
SOURCE OF LOAN
We deduct your requested loan amount from the Subaccounts and the Guaranteed
Interest Account, based on the allocation requested at the time of the loan. We
liquidate shares taken from the Subaccounts and transfer the resulting dollars
to the Guaranteed Interest Account. These dollars become part of the loaned
portion of the Guaranteed Interest Account.
INTEREST
You will pay interest on the loan at the following noted effective annual
rates, compounded daily and payable in arrears:
In all states except New York and New Jersey, the loan interest rate in
effect following the policy anniversary nearest the Insured's 65th birthday is
2.25%. The rates in effect before the Insured reaches age 65 are:
[diamond] Policy years 1-10: 2.75%
[diamond] Policy years 11-15: 2.50%
[diamond] Policy years 16 and thereafter: 2.25%
In New York and New Jersey only, the loan interest rate in effect following
the policy anniversary nearest the Insured's 65th birthday is 4.25%. The rates
in effect before the Insured reaches age 65 are:
[diamond] Policy years 1-10: 4.75%
[diamond] Policy years 11-15: 4.50%
[diamond] Policy years 16 and thereafter: 4.25%
Interest accrues daily, becoming part of the policy debt. Interest is due
and payable on the policy anniversary. If you do not pay the interest when due,
we will add it to your loan. We treat any interest which has been capitalized
the same as if it were a new loan. We deduct this capitalized interest from the
Subaccounts and the Guaranteed Interest Account in proportion to the nonloaned
account value in each.
INTEREST CREDITED ON LOANED VALUE
The amount equal to any policy loan is held in the Guaranteed Interest
Account. This amount is credited with interest at a rate of 2% (4% in New York
and New Jersey).
REPAYMENT
You may repay all or part of your policy debt at anytime while the policy is
in force.
If you do not repay the loan, we deduct the loan amount due from the cash
surrender value or the death benefit.
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Failure to repay a policy loan or to pay loan interest will not terminate
the policy unless the policy value becomes insufficient to maintain the policy
in force.
In the future, PLAC may not allow policy loans of less than $500, unless
such loan is used to pay a premium on another PLAC policy.
EFFECT OF LOAN
Your policy loan reduces the death benefit and cash surrender value under
the policy by the amount of the loan. Your repayment of the loan increases the
death benefit and cash surrender value by the amount of the repayment.
As long as a loan is outstanding, a portion of your policy value equal to
the loan is held in the Guaranteed Interest Account. The Subaccount's investment
performance does not affect this amount. Also, you may be subject to tax
consequences if you surrender your policy while there is outstanding debt.
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, the policy value is less than the
required monthly deduction, a grace period of 61 days will be allowed for the
payment of an amount equal to 3 times the required monthly deduction.
During the grace period, the policy will continue in force but 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 after we have mailed written notice to you. If a
premium payment for the additional amount is received by us during the grace
period, any amount of premium over what is required to prevent lapse will be
allocated among the Subaccounts or to the Guaranteed Interest Account according
to the current premium allocation schedule.
In determining the amount of "excess" premium to be applied to the
Subaccounts or the Guaranteed Interest Account, we 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.
ADDITIONAL INSURANCE OPTION
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. We will require evidence of
insurability and charges will be adjusted for the Insured's new attained age and
any change in risk classification.
ADDITIONAL RIDER BENEFITS
You may elect additional benefits under a policy and you may cancel these
benefits at anytime. 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 are
chosen.
The following benefits are currently available and additional riders may be
available as described in the policy (if approved in your state).
[diamond] FLEXIBLE TERM INSURANCE RIDER. This rider provides annually renewable
term insurance coverage to age 100 on the Insured under the base
policy. The initial rider death benefit cannot exceed 10 times the
initial base policy. There is no charge for this rider.
[diamond] EXCHANGE OF INSURED RIDER. This rider allows the policyowner to
exchange the Insured on a given contract. Future charges against the
policy will be based on the life of the substitute Insured. There is
no charge for this rider.
The incontestability and suicide exclusion periods, as they apply to the
substitute Insured, run from the date of the exchange. Any assignments will
continue to apply.
The exchange is subject to the following adjustments:
1. If the policy value of the original policy is insufficient to produce a
positive cash surrender value for the new policy, the owner must pay an
exchange adjustment in an amount that, when applied as premium, will make
the policy value of the new policy greater than zero.
2. In some cases, the amount of policy value which may be applied to the new
policy may result in a death benefit which exceeds the limit for the new
policy. In that event, we will apply such excess policy value to reduce any
loan against the policy, and the residual amount will be returned to you in
cash.
3. The exchange will also be subject to our receipt of repayment of the amount
of any policy debt under the exchange policy in excess of the loan value of
the new policy on the date of exchange.
The Internal Revenue Service has ruled that an exchange of Insureds does not
qualify for tax deferral under Code Section 1035. Therefore, you must
include in current gross income all previously unrecognized gain in the
policy upon an exchange of the Insured.
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PART II--ADDITIONAL POLICY PROVISIONs
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POSTPONEMENT OF PAYMENTS
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:
[diamond] for up to 6 months from the date of the request, for any transactions
dependent upon the value of the Guaranteed Interest Account;
[diamond] whenever the NYSE is closed other than for customary weekend and
holiday closings or trading on the NYSE is restricted as determined by
the SEC; or
[diamond] whenever an emergency exists per the SEC, as a result of which
[bullet] disposal of securities is not reasonably practicable or
[bullet] it is not reasonably practicable to determine the value of
the VUL Account's net assets.
Transfers may also 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 your bank.
THE CONTRACT
The policy and attached copy of the application 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 PLAC can agree to change or waive any provisions of the policy.
SUICIDE
If the Insured commits suicide within 2 years after the policy's date of
issue, the policy will stop and become void. We will pay you the policy value
adjusted by the addition of any monthly deductions and other fees and charges,
minus any debt owed to us under the policy.
INCONTESTABILITY
We cannot contest this policy or any attached rider after it has been in
force during the Insured's lifetime or for 2 years from the policy date.
CHANGE OF OWNER OR BENEFICIARY
The beneficiary, as named in the policy application or as 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 Insured, the death
benefit payable under the policy will be paid to your estate.
As long as the policy is in force, the policyowner and the beneficiary may
be changed in writing, satisfactory to us. A change in beneficiary will take
effect as of the date the notice is signed, whether or not the Insured is living
when we receive the notice. We will not, however, be liable for any payment made
or action taken before receipt of the notice.
ASSIGNMENT
The policy may be assigned. We will not be bound by the assignment until a
written copy has been received and we will not be liable with respect to any
payment made prior to receipt. We assume 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.
SURPLUS
This policy is nonparticipating and does not pay dividends. Your policy will
not share in PLAC's profits or surplus earnings.
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 we receive the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death proceeds usually will be made in one lump
sum within 7 days, unless another payment option has been elected. Payment of
the death proceeds, however, may be delayed if the claim for payment of the
death 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.
You may elect a payment option for payment of the death proceeds to the
beneficiary. You may revoke or change a prior election, unless such right has
been waived. The beneficiary may make or change an election before payment of
the death proceeds, unless you have made an election that does not permit such
further election or changes by the beneficiary.
A written request in a form satisfactory to us is required to elect, change
or revoke a payment option.
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The minimum amount of surrender or death benefit proceeds that may be
applied under any payment option is $1,000.
If the policy is assigned as collateral security, we 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 we may choose to make available
in the future.
OPTION 1--LUMP SUM.
Payment is paid in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest is paid 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 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:
[diamond] the death of the payee; or
[diamond] 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 you may choose from are as follows:
[diamond] 10 years;
[diamond] 20 years; or
[diamond] 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 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 consider
the longer period certain as having been elected.
Any life annuity provided under Option 4 is computed using an interest rate
guaranteed to be no less than 3-3/8% per year, but any life annuity providing a
period certain of 20 years or more is computed 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 computed 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 remaining
principal at a guaranteed rate of 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.
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal installments are
paid until the latest of:
[diamond] the end of the 10-year period certain;
[diamond] the death of the Insured; or
[diamond] the death of the other named annuitant.
The other annuitant must have attained age 40, must be named at the time
this option is elected and cannot later be changed. Any joint survivorship
annuity that may be provided under this option is computed using a guaranteed
interest rate to equal at least 3-3/8% per year.
For additional information concerning the above payment options, see the
policy.
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PART III--OTHER IMPORTANT INFORMATIOn
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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 you or your beneficiary depends on our tax status
and upon the tax status of the individual concerned. This discussion is general
in nature and is not intended as tax advice. For complete information on federal
and state tax considerations, a qualified tax advisor should be consulted. No
attempt is made to consider any estate and inheritance taxes, or any state,
local or other tax laws. Because this discussion is based upon our understanding
of federal income tax laws as they are currently interpreted, we cannot
guarantee the tax status of any policy.
The Internal Revenue Service ("IRS") makes no representation regarding the
likelihood of continuation of current federal income tax laws, Treasury
regulations or of the current interpretations. We reserve the right to make
changes to the policy to assure that it will continue to qualify as a life
insurance contract for federal income tax purposes.
PLAC'S TAX STATUS
We are taxed as a life insurance company under the Internal Revenue Code of
1986, as amended ("Code"). For federal income tax purposes, neither the VUL
Account nor the Guaranteed Interest Account is a separate entity from PLAC and
their operations form a part of PLAC.
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 us. Due to our tax status under current
provisions of the Code, no charge is made for our federal income taxes which may
be attributable to the VUL Account.
We reserve the right to make a deduction for taxes if our federal tax
treatment is determined to be other than what we currently believe it to be, if
changes are made affecting the tax treatment to our variable life insurance
contracts, or if changes occur in our 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
"Modified Endowment Contracts"), 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, a
policyowner should not be considered to be in constructive receipt of the cash
value, including investment income. See, however, the sections below on possible
taxation of amounts received under the policy, via full surrender, partial
surrender or loan.
Code Section 7702 imposes certain conditions with respect to premiums
received under a policy. We monitor the premiums to assure compliance with such
conditions. However, if the premium limitation is exceeded during the year, we
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 value, the excess, if any, of
the cash 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 that 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.
We suggest you consult with your tax advisor 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 new rules affecting modified endowment contracts.
LOANS
We believe that any loan received under a policy will be treated as your
indebtedness. 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
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additional 10% tax. See the discussion on modified endowment contracts. If the
policy is not a modified endowment contract, we believe that no part of any loan
under a policy will constitute income to you.
The deductibility by a policyowner of loan interest under a policy may be
limited under Code Section 264, depending on the circumstances. A policyowner
intending to fund premium payments through borrowing should consult a tax
advisor with respect to tax consequences. 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 advisor for further guidance.
BUSINESS-OWNED POLICIES
If a business or a corporation owns the policy, 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 cash value over premiums paid).
Life insurance policies can be modified endowment contracts if they fail to meet
what is known as "the 7-pay test."
The measuring stick for this test is a hypothetical life insurance policy of
equal face amount which requires 7 equal annual premiums but which, after the
seventh year is "fully paid-up," continuing to provide a level death benefit
without the need for any further premiums. A policy becomes a modified endowment
contract, if, at any time during the first 7 years, the cumulative premium paid
on the policy exceeds the cumulative premium that would have been paid under the
hypothetical policy. Premiums paid during a policy year but which are returned
by us with interest within 60 days after the end of the policy year will be
excluded from the 7-pay test. A life insurance policy received in exchange for a
modified endowment contract will be treated as a modified endowment contract.
REDUCTION IN BENEFITS DURING THE FIRST 7 YEARS
If there is a reduction in death benefits during the first 7 policy years,
the premiums are redetermined for purposes of the 7-pay test as if the policy
originally had been issued at the reduced death benefit level and the new
limitation is applied to the cumulative amount paid for each of the first 7
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 test is
failed and all subsequent policy years. However, distributions made in
anticipation of such failure (there is a presumption that distributions made
within 2 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 7 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% excise tax, with certain exceptions. This
additional tax will not apply in the case of distributions that are:
[diamond] made on or after the taxpayer attains age 59 1/2;
[diamond] attributable to the taxpayer's disability (within the meaning of Code
Section 72(m)(7)); or
[diamond] part of a series of substantially equal periodic payments (not less
often 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.
[diamond] First, if an increase is attributable to premiums paid "necessary to
fund" the lowest death benefit and qualified additional benefits
payable in the first 7 policy years or to the crediting of interest or
dividends with respect to these premiums, the "increase" does not
constitute a material change.
[diamond] 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:
[bullet] the cost-of-living determination period does not exceed the
remaining premium payment period under the policy; and
[bullet] 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 7 years or thereafter), and future taxation of distributions
or loans would depend upon whether the policy satisfied the applicable 7-pay
test from
24
<PAGE>
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 advisor 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
compute 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. We will comply with
the limitations for calculating the premium we are permitted to receive from
you.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
each Series of the Fund is required to diversify its investments. The
Diversification Regulations generally require that on the last day of each
calendar quarter the Series assets be invested in no more than:
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
Series 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 Treasury
securities. For purposes of determining whether assets other than Treasury
securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the VUL Account's investment in
Treasury securities. Notwithstanding this modification of the general
diversification requirements, the portfolios of the Funds will be structured to
comply with the general diversification standards because they serve as an
investment vehicle for certain variable annuity contracts that 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 you may direct your 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
would provide. It is possible that the Policy may need to be modified to comply
with such future Treasury announcements. For these reasons, we reserve the right
to modify the policy, as necessary, to prevent you from being considered the
owner of the assets of the VUL Account.
We intend 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.
We recommend 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.
We do not make any representations or guarantees regarding the tax
consequences of any policy with respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
We will vote the Funds' shares held by the Subaccounts at any regular and
special meetings of shareholders of the
25
<PAGE>
Funds. To the extent required by law, such voting will be pursuant to
instructions received from you. However, if the 1940 Act or any regulation
thereunder should be amended or if the present interpretation thereof should
change, and as a result, we decide that we are permitted to vote the Funds'
shares at our own discretion, we may elect to do so.
The number of votes that you have the right to cast will be determined by
applying your 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.
Funds' shares held in a Subaccount for which no timely instructions are
received, and Funds' shares which are not otherwise attributable to
policyowners, will be voted by PLAC in proportion to the voting instructions
that are received with respect to all policies participating in that Subaccount.
Instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by PLAC.
You will receive proxy materials, reports and other materials related to the
Funds.
We 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 subclassification or investment objective of one or
more of the portfolios of the Funds or to approve or disapprove an investment
advisory contract for the Funds. In addition, PLAC itself may disregard voting
instructions in favor of changes initiated by a policyowner in the investment
policies or the investment advisor of the Funds if PLAC 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 we decide
that the change would have an adverse effect on the General Account because the
proposed investment policy for a Series may result in overly speculative or
unsound investments. In the event PLAC 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.
THE DIRECTORS AND EXECUTIVE OFFICERS OF PLAC
- --------------------------------------------------------------------------------
PLAC is managed by its Board of Directors. The following are the Directors
and Executive Officers of PLAC:
NAME AND TITLE PRINCIPAL OCCUPATION
Robert W. Fiondella, Chairman of the Board and
Director, Chairman President
and President
Richard H. Booth, Executive Vice President
Director and Executive
Vice President
Philip R. McLoughlin, Executive Vice President and
Director, Executive Chief Investment Officer
Vice President and CIO
David W. Searfoss, Executive Vice President and
Director and Executive Chief Financial Officer
Vice President and CFO
Dona D. Young, Executive Vice President,
Director and Executive Individual Insurance and
Vice President General Counsel
Joseph E. Kelleher, Senior Vice President
Director and Senior
Vice President
Robert G. Lautensack, Senior Vice President
Director and Senior
Vice President
Simon Y. Tan, Senior Vice President
Director and Senior
Vice President
Carl T. Chadburn, Executive Vice President
Director
The above positions reflect the last held position in our parent company,
Phoenix Home Life Mutual Insurance Company, during the last 5 years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
We hold the assets of the VUL Account. They are kept physically segregated
and held separate and apart from our General Account. We maintain records of all
purchases and redemptions of shares of the Funds.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("WSG"), a New York corporation incorporated on August 7, 1970,
licensed to sell Phoenix insurance policies as well as policies, annuity
contracts and funds of companies affiliated with Phoenix. WSG, an indirect
subsidiary of Phoenix, is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. Phoenix Equity Planning Corporation
("PEPCO") serves as national distributor of the policies. PEPCO is an indirect
subsidiary of Phoenix Investment Partners, Ltd. ("PXP") in which Phoenix owns a
majority interest.
Policies also may be purchased from other broker-dealers registered under
the 1934 Act 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 we receive under
26
<PAGE>
these policies. PLAC will pay a maximum total sales commission of 19% of
premiums to PEPCO. Additionally, agents or selling brokers may receive
asset-based compensation. The maximum asset-based compensation is 0.90% of the
policy value. To the extent that the sales charge under the policies is less
than the sales commissions paid with respect to the policies, we will pay the
shortfall from our General Account assets, which will include any profits we may
derive under the policies.
STATE REGULATION
- --------------------------------------------------------------------------------
We are subject to the provisions of the Connecticut insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Connecticut Superintendent of Insurance. We also are subject to the
applicable insurance laws of all the other states and jurisdictions in which we
do insurance business.
State regulation of PLAC includes certain limitations on the investments
which we may make, including investments for the VUL Account and the Guaranteed
Interest Account. This regulation does not include, however, any supervision
over the investment policies of the VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All policyowners will be furnished with those reports required by the 1940
Act and related regulations or by any other applicable law or regulation.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The VUL Account is not engaged in any litigation. PLAC is not involved in
any litigation that would have a material adverse effect on our ability to meet
our obligations under the policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
Edwin L. Kerr, Counsel of Phoenix Home Life Mutual Insurance Company, has
passed upon the organization of PLAC, its authority to issue variable life
insurance policies and the validity of the policy, and upon legal matters
relating to the federal securities and income tax laws for PLAC.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A registration statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") with respect to the securities offered. This prospectus
is a summary of the contents of the policy and other legal documents and does
not contain all the information set forth in the registration statement and its
exhibits. We refer you to the registration statement and its exhibits for
further information concerning the VUL Account, PLAC and the policy.
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only 2 digits to identify the year in a
date field. This is commonly referred to as the "Year 2000 Issue." Companies
must consider the impact of the upcoming change in the century on their computer
systems. The Year 2000 Issue, if not adequately addressed, could result in
computer system failures or miscalculations causing disruptions of operations
and the possible inability of companies to process transactions.
We believe that the Year 2000 Issue is an important business priority
requiring careful analysis of every business system in order to be assured that
all information systems applications are century compliant.
PLAC's ultimate parent, Phoenix, has been addressing the Year 2000 Issue in
earnest since 1995 when, with consultants, a comprehensive inventory and
assessment of all business systems, including those of our subsidiaries, was
conducted. Phoenix has identified and pursued a number of strategies to address
the issue, including:
[diamond] upgrading systems with compliant versions;
[diamond] developing or acquiring new systems to replace those that are
obsolete;
[diamond] repairing existing systems by converting code or hardware; and
[diamond] preparing contingency plans to address difficulties that may arise.
Based on current assessments, those computer systems deemed critical to
customer service and business continuity are compliant. Testing will continue
throughout 1999. Additionally Phoenix has obtained Year 2000 assurances from
business partners.
More details about our Year 2000 Program are available on our Web site:
www.phl.com.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of PLAC contained herein should be considered only
as bearing upon PLAC'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 Phoenix Life and Annuity Company are
available for the periods ended June 30, 1999 and December 31, 1998.
27
<PAGE>
PHOENIX LIFE AND
ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF
PM HOLDINGS, INC.)
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999
28
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Balance Sheets at June 30, 1999 and December 31, 1998 (unaudited) ............30
Statement of Income, Comprehensive Income and Equity for the Six
Months Ended June 30, 1999 and 1998 (unaudited)..............................31
Statement of Cash Flows for the Six Months Ended June 30, 1999
and 1998 (unaudited).........................................................32
Notes to Condensed Financial Statements (unaudited)...........................33
29
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Available-for-sale debt securities, at fair value $ 9,163 $ 9,781
Short-term investments 1,975 1,754
-------- --------
Total investments 11,138 11,535
Cash and cash equivalents 64 99
Accrued investment income 185 169
Due and uncollected premium 331
Receivable from parent Phoenix Home Life 1,060
Deferred income tax asset 84
Goodwill 653 701
Other assets 5 13
-------- --------
Total assets $ 13,520 $ 12,517
======== ========
LIABILITIES
Reserves for future policy benefits $ 1,071
Income taxes payable 117
Deferred income tax liability $ 151
Other liabilities 2
-------- --------
Total liabilities 1,188 153
EQUITY
Common stock, $100 par value, 40,000 shares
authorized, 25,000 shares issued and outstanding 2,500 2,500
Additional paid-in-capital 8,664 8,664
Retained earnings 1,238 867
Accumulated other comprehensive (loss) income (70) 333
-------- --------
Total equity 12,332 12,364
-------- --------
Total liabilities and equity $ 13,520 $ 12,517
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
30
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1999 1998
(IN THOUSANDS)
REVENUES
<S> <C> <C>
Premiums $ 636
Consideration received on reinsurance assumed 915
Net investment income 344 $ 339
-------- --------
Total revenues 1,895 339
-------- --------
BENEFITS, LOSSES AND EXPENSES
Policy benefits and payments 1,138
Commissions and reinsurance allowances 93
Amortization of goodwill 48 48
Other operating expenses 46
-------- --------
Total expenses 1,325 48
-------- --------
INCOME BEFORE INCOME TAXES 570 291
Income taxes 199 102
-------- --------
NET INCOME 371 189
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized (losses) gains on securities arising during period (403) 85
-------- --------
Total other comprehensive (loss) income (403) 85
-------- --------
COMPREHENSIVE (LOSS) INCOME (32) 274
EQUITY, BEGINNING OF PERIOD 2,364 11,809
-------- --------
EQUITY, END OF PERIOD $ 12,332 $ 12,083
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
31
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1999 1998
(IN THOUSANDS)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 371 $ 189
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATIONS
Goodwill amortization 48 48
Deferred income taxes (19) (4)
Increase in accrued investment income (16) (39)
Increase in due and uncollected premium (331)
Increase in receivable from parent (1,060)
Increase in policy liabilities and accruals 1,071
Other, net 122 3
------- -------
Net cash provided by operating activities $ 186 $ 197
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of available-for-sale debt securities (2,098)
Change in short-term investments, net (221) 1,874
------- -------
Net cash used for investing activities (221) (224)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution from parent ------- -------
Net cash provided by financing activities ------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (35) (27)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 99 48
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 64 $ 21
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 89 $ 106
------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
32
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
BASIS OF PRESENTATION
The condensed unaudited financial statements include the accounts of Phoenix
Life and Annuity Company (PLAC). These condensed unaudited financial statements
have been prepared in accordance with generally accepted accounting principles
(GAAP). The information furnished includes all adjustments and accruals
consisting only of normal, recurring accrual adjustments which are, in the
opinion of management, necessary for a fair presentation of results for the
interim periods.
The results of operations for any interim period are not necessarily indicative
of results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have
been condensed or omitted. Certain reclassifications have been made to prior
year amounts to conform with the current year presentation. The June 30, 1999
Condensed Financial Statements (Unaudited) should be read in conjunction with
the accompanying December 31, 1998 Financial Statements.
REINSURANCE
Effective January 1, 1999 PLAC entered into an Indemnity Reinsurance Agreement
with its indirect parent Phoenix Home Life Insurance Company (Phoenix). Under
the Agreement, PLAC assumed from Phoenix 100 percent of its net retained risk
for a block of yearly renewable rate term policies and incurred an initial
reinsurance allowance of $50 thousand that was recorded as an expense in 1999.
These policies constitute a closed block in a run-off stage and, as of June 30,
1999, reserves for future policy benefits totaled $1.1 million.
SUBSEQUENT EVENTS
In July, 1999, PLAC introduced a survivorship universal life policy and recorded
initial sales of this product during the third quarter of 1999.
33
<PAGE>
PHOENIX LIFE AND
ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
FINANCIAL STATEMENTS DECEMBER 31, 1998
34
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants............................................36
Balance Sheet................................................................37
Statement of Income, Comprehensive Income and Equity.........................38
Statement of Cash Flows......................................................39
Notes to Financial Statements.............................................40-47
35
<PAGE>
[PriceWaterhouseCoopers Logo & Address]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholder of
Phoenix Life and Annuity Company
In our opinion, the accompanying balance sheet and the related statements of
income, comprehensive income and equity and of cash flows present fairly, in all
material respects, the financial position of Phoenix Life and Annuity Company at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years ended December 31, 1998 and 1997 and for the periods from March
30, 1996 to December 31, 1996 and from January 1, 1996 to March 29, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
[PriceWaterhouseCoopers Logo]
February 11, 1999
36
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET
- --------------------------------------------------------------------------------
DECEMBER 31,
1998 1997
(IN THOUSANDS)
ASSETS
Available-for-sale debt securities, at fair value $ 9,781 $ 7,209
Short-term investments 1,754 3,671
------- -------
Total investments 11,535 10,880
Cash and cash equivalents 99 48
Accrued investment income 169 152
Goodwill 701 798
Other assets 13
------- -------
Total assets $12,517 $11,878
======= =======
LIABILITIES
Deferred income taxes $ 151 $ 66
Other liabilities 2 3
------- -------
Total liabilities 153 69
EQUITY
Common stock, $100 par value, 40,000 shares
authorized, 25,000 shares issued and outstanding 2,500 2,500
Additional paid-in-capital 8,664 8,664
Retained earnings 867 514
Accumulated other comprehensive income 333 131
------- -------
Total equity 12,364 11,809
------- -------
Total liabilities and equity $12,517 $11,878
======= =======
The accompanying notes are an integral part of these statements.
37
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997 AND PERIODS FROM MARCH 30, 1996 TO
DECEMBER 31, 1996 (SUCCESSOR PERIOD) AND JANUARY 1, 1996 TO MARCH 29, 1996
(PREDECESSOR PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Net investment income $ 688 $ 624 $ 433 $ 95
Net realized investment losses (1)
------- ------- ------- -------
Total revenues 688 624 432 95
------- ------- ------- -------
EXPENSES
Amortization of goodwill 97 90 81
Other operating expenses 63 4 (3)
------- ------- ------- -------
Total expenses 160 94 81 (3)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 528 530 351 98
Income taxes 175 189 129
------- ------- ------- -------
NET INCOME 353 341 222 98
------- ------- ------- -------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized gains on securities arising during period 202 86 39
Reclassification adjustment for losses included
in net income 6
------- ------- ------- -------
Total other comprehensive income 202 86 45
------- ------- ------- -------
COMPREHENSIVE INCOME 555 427 267 98
Acquisition adjustment to record purchase price (107) 1,076
Capital contribution 49 4,000
------- ------- ------- -------
NET INCREASE IN EQUITY 555 369 5,343 98
EQUITY, BEGINNING OF PERIOD 11,809 11,440 6,097 5,999
------- ------- ------- -------
EQUITY, END OF PERIOD $12,364 $11,809 $11,440 $ 6,097
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
38
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997 AND PERIODS FROM MARCH 30, 1996 TO
DECEMBER 31, 1996 (SUCCESSOR PERIOD) AND JANUARY 1, 1996 TO MARCH 29, 1996
(PREDECESSOR PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 353 $ 341 $ 222 $ 98
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATIONS
Goodwill amortization 97 90 81
Deferred income taxes (24) (2) (2)
Increase in accrued investment income (17) (34) (104) (9)
Decrease in receivable from affiliate 899
Other, net (29) (60) (18)
------- ------- ------- -------
Net cash provided by operating activities 380 335 179 988
------- ------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of available-for-sale debt securities (2,246) (1,527) (5,167)
Change in short-term investments, net 1,917 1,036 (1,002)
------- ------- ------- -------
Net cash used for investing activities (329) (491) (6,169)
------- ------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution from parent 49 4,000
------- ------- ------- -------
Net cash provided by financing activities 49 4,000
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 51 (107) (1,990) 988
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48 155 2,145 1,157
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 99 $ 48 $ 155 $ 2,145
======= ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 213 $ 182 $ 113 $
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
39
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Phoenix Life and Annuity Company is a life insurance company domiciled in
the State of Connecticut and is licensed in 35 states. On March 29, 1996, PM
Holdings, Inc. acquired Savers Life Insurance Company of America from
Central United Life Insurance Company, renamed the acquired company Phoenix
Life and Annuity Company and redomiciled the company from Missouri to
Connecticut. PM Holdings accounted for the acquisition of Phoenix Life and
Annuity under the purchase method of accounting. The assets and liabilities
of Phoenix Life and Annuity were recorded at their fair value as of the date
of acquisition and intangible assets associated with the acquisition were
recorded in the accounts of the acquired company. PM Holdings is a
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with generally
accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
The financial statements for the period subsequent to the March 29, 1996
acquisition are sometimes referred to as the "successor period." The
financial statements for the period prior to the acquisition are sometimes
referred to as the "predecessor period."
VALUATION OF INVESTMENTS
Investments in debt securities include U.S. government and agency bonds.
Phoenix Life and Annuity classifies its debt security investments as
available-for-sale. These investments are presented at fair value with
unrealized gains or losses included as a separate component of equity. Debt
securities are considered impaired when a decline in value is considered to
be other than temporary.
Short-term investments are carried at amortized cost, which approximates
market value. Phoenix considers highly liquid investments purchased with a
maturity date of one year or less to be short-term investments.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand and money market
instruments.
GOODWILL
Goodwill represents the excess of the cost of the business acquired on March
29, 1996 over the fair value of its tangible net assets. During 1997,
Phoenix Life and Annuity recorded a $58 thousand dollar reduction in
goodwill, representing a refund and a subsequent adjustment of a portion of
the purchase price. Goodwill is amortized on a straight-line method over a
period of 10 years, the expected period of benefit from the acquisition.
Management periodically reevaluates the propriety of the carrying value of
long-lived assets including goodwill. Assets are considered impaired if
carrying value exceeds the expected future undiscounted cash flows. Such
analyses are performed at least annually or more frequently if warranted by
events or circumstances affecting Phoenix Life and Annuity's business. At
this time, management believes that no impairment of goodwill has occurred
and that no reduction of the carrying value is warranted.
40
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INCOME TAXES
Phoenix Life and Annuity is included in the life/nonlife consolidated
federal income tax return filed by Phoenix. In accordance with a tax sharing
agreement with Phoenix, the provision for federal income taxes is computed
as if Phoenix Life and Annuity were filing a separate federal income tax
return, except those benefits arising from income tax credits and net
operating and capital losses are allocated to those subsidiaries producing
such attributes to the extent they are utilized in Phoenix's consolidated
federal income tax return.
Deferred income taxes result from temporary differences between the tax
basis of assets and liabilities and their recorded amounts for financial
reporting purposes. These differences result primarily from unrealized gains
or losses on investments and goodwill.
RECENT ACCOUNTING PRONOUNCEMENTS
Phoenix Life and Annuity adopted Statement of Financial Accounting Standard
(SFAS) No. 130, "Reporting Comprehensive Income," as of January 1, 1998.
This statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of financial
statements. This statement defines the components of comprehensive income as
those items that were previously reported only as components of equity and
were excluded from net income.
3. INVESTMENTS
Information pertaining to Phoenix Life and Annuity's investments, net
investment income and unrealized investment gains and losses follows:
DEBT SECURITIES
The amortized cost and fair value of investments in debt securities as of
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(IN THOUSANDS)
<S> <C> <C> <C>
AVAILABLE-FOR-SALE:
U.S. government and agency bonds $5,127 $ 340 $5,467
Corporate securities 4,143 171 4,314
------ ------ ------
TOTAL DEBT SECURITIES $9,270 $ 511 $9,781
====== ====== ======
</TABLE>
The amortized cost and fair value of investments in debt securities as of
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(IN THOUSANDS)
AVAILABLE-FOR-SALE:
<S> <C> <C> <C>
U.S. government and agency bonds $6,008 $ 177 $6,185
Corporate securities 999 25 1,024
------ ------ ------
TOTAL DEBT SECURITIES $7,007 $ 202 $7,209
====== ====== ======
</TABLE>
41
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of these investments, by contractual
maturity, as of December 31, 1998 are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties, or
Phoenix Life and Annuity may have the right to put or sell the obligations
back to the issuers.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
(IN THOUSANDS)
<S> <C> <C>
Due after one year through five years $5,128 $5,468
Due after five years through ten years 1,057 1,058
Due after ten years 3,085 3,255
------ ------
Total $9,270 $9,781
====== ======
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the years ended December 31,
1998 and 1997 and from March 30, 1996 to December 31, 1996 (successor
period) and January 1, 1996 to March 29, 1996 (predecessor period) were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt security investments $583 $376 $226
Short-term investments 115 259 214 $ 95
---- ---- ---- ----
698 635 440 95
Less investment expenses 10 11 7
---- ---- ---- ----
Net investment income $688 $624 $433 $ 95
==== ==== ==== ====
</TABLE>
UNREALIZED INVESTMENT GAINS AND LOSSES
Unrealized gains on investments carried at fair value at December 31, were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized investment gains $311 $132 $ 60
Deferred income taxes 109 46 21
---- ---- ----
Net unrealized investment gains $202 $ 86 $ 39
==== ==== ====
</TABLE>
42
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. GOODWILL
Phoenix Life and Annuity, formerly Savers Life Insurance Company of America,
was acquired by way of a stock purchase agreement on March 29, 1996 and was
accounted for under the purchase method of accounting. The assets and
liabilities were recorded at fair value as of the date of acquisition and
goodwill of approximately $1.0 million was pushed-down to Phoenix Life and
Annuity from PM Holdings.
Goodwill was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Goodwill $969 $969
Accumulated amortization (268) (171)
---- ----
Total $701 $798
==== ====
</TABLE>
5. INCOME TAXES
A summary of income taxes in the Statement of Income, Comprehensive Income
and Equity for the years ended December 31, 1998 and 1997 and the period
from March 30, 1996 to December 31, 1996 (successor period) is presented
below. No income taxes were recorded for the period from January 1, 1996 to
March 29, 1996 (predecessor period).
<TABLE>
<CAPTION>
1998 1997 1996
SUCCESSOR SUCCESSOR SUCCESSOR
PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C>
Current income taxes $199 $191 $131
Deferred income taxes (24) (2) (2)
---- ---- ----
Total $175 $189 $129
==== ==== ====
</TABLE>
43
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The income taxes attributable to the successor and predecessor periods are
different than the amounts determined by multiplying income before taxes by
the statutory income tax rate. In the predecessor period, Savers Life was a
consolidated subsidiary of a thrift under the control of the Resolution
Trust Corporation. During the predecessor period, an interagency agreement
between the Resolution Trust Corporation and the Internal Revenue Service
stated that the Internal Revenue Service would not impose income taxes on
consolidated subsidiaries of thrifts under Resolution Trust Corporation
control. Accordingly, no provision for the predecessor period was recorded.
The sources and the tax effect of the differences between the provision and
the result of multiplying the income before taxes by the statutory federal
income tax rate for the years ended December 31, 1998 and 1997 and periods
from March 30, 1996 to December 31, 1996 (successor period) and January 1,
1996 to March 29, 1996 (predecessor period) were as follows:
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income tax expense
at statutory rate $185 35% $186 35% $123 35% $ 34 35%
Goodwill (10) (2%) 3 1% 7 2%
Other (1) 0% (34) (35%)
---- ---- ---- ----
Income taxes $175 33% $189 36% $129 37% $ 0%
==== ==== ==== ====
</TABLE>
The deferred income tax liability represents the tax effects of temporary
differences. The components were as follows:
<TABLE>
<CAPTION>
1998 1997
SUCCESSOR SUCCESSOR
PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C>
Net unrealized investment gains $179 $ 70
Investments 9 12
Goodwill (37) (16)
---- ----
Deferred tax liability, net $151 $ 66
==== ====
</TABLE>
44
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. COMPREHENSIVE INCOME
The components of, and related tax effects for, other comprehensive income
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
SUCCESSOR SUCCESSOR SUCCESSOR
PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C>
UNREALIZED GAINS ON SECURITIES
AVAILABLE-FOR-SALE ARISING DURING PERIOD:
Before-tax amount $311 $132 $ 60
Tax expense 109 46 21
---- ---- ----
Net-of-tax amount 202 86 39
---- ---- ----
RECLASSIFICATION ADJUSTMENT FOR GAINS OR
LOSSES REALIZED IN NET INCOME:
Before-tax amount 9
Tax expense 3
---- ---- ----
Net-of-tax amount 6
---- ---- ----
NET UNREALIZED GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount 311 132 69
Tax expense 109 46 24
---- ---- ----
Net-of-tax amount $202 $ 86 $ 45
==== ==== ====
</TABLE>
The following table summarizes accumulated other comprehensive income
balances:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
SUCCESSOR SUCCESSOR
PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C>
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year $131 $ 45
Change during period 202 86
---- ----
Balance, end of year $333 $131
==== ====
</TABLE>
7. RELATED PARTY TRANSACTIONS
Phoenix and its affiliates provide services and facilities to Phoenix Life
and Annuity and are reimbursed through a cost allocation process. Investment
related expenses are allocated to Phoenix Life and Annuity from PM Holdings.
Phoenix Investment Counsel, Inc., a wholly-owned subsidiary of Phoenix
Investment Partners entered into a contract to manage the general account
investments of Phoenix Life and Annuity. PM Holdings owns approximately 60%
of the outstanding common stock of Phoenix Investment Partners.
45
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts are excluded) are carried in the financial statements
at amounts that approximate fair value. The fair values presented for
certain financial instruments are estimates which, in many cases, may differ
significantly from the amounts which could be realized upon immediate
liquidation. In cases where market prices are not available, estimates of
fair value are based on discounted cash flow analyses which utilize current
interest rates for similar financial instruments which have comparable terms
and credit quality.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
SHORT-TERM INVESTMENTS, CASH AND CASH EQUIVALENTS
For these short-term investments, the carrying amount approximates fair
value.
DEBT SECURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
debt securities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
9. STATUTORY FINANCIAL INFORMATION
Phoenix's insurance subsidiaries are required to file annual statements with
state regulatory authorities prepared on an accounting basis prescribed or
permitted by such authorities. As of December 31, 1998, Phoenix Life and
Annuity had no material practices that were not prescribed by the Insurance
Department of the State of Connecticut. Statutory equity differs from equity
reported in accordance with generally accepted accounting principles for
life insurance companies primarily because investment reserves are based on
different assumptions and income tax expense reflects only taxes paid or
currently payable.
The following is a reconciliation of the statutory net income of Phoenix
Life and Annuity, as reported to regulatory authorities, to the net income
as reported in these financial statements:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $426 $428 $369
Amortization of goodwill (97) (90) (81)
Deferred income taxes 24 3
Other, net 32
---- ---- ----
Net income, as reported $353 $341 $320
==== ==== ====
</TABLE>
46
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following is a reconciliation of the statutory equity and asset
valuation reserve of Phoenix Life and Annuity, as reported to regulatory
authorities, to equity as reported in these financial statements at:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Statutory equity and asset valuation reserve $11,301 $10,875
Goodwill 701 798
Investment valuation allowances 513 202
Deferred income tax and other liabilities (151) (66)
------- -------
Equity, as reported $12,364 $11,809
======= =======
</TABLE>
The Connecticut Insurance Holding Act limits the maximum amount of annual
dividends or other distributions available to stockholders of Connecticut
insurance companies without prior approval of the Insurance Commissioner.
Under current law, the maximum dividend distribution which may be made by
Phoenix Life and Annuity during 1998 without prior approval is subject to
restrictions relating to statutory surplus.
10. INDEMNIFICATION
Prior to the acquisition, Savers Life had reinsurance contracts with three
unaffiliated reinsurers which it had assumed between 1986 and 1989 and which
it assigned to Winterthur Life Re Insurance Company in October 1995. Under
the terms of the stock purchase agreement, Central United Life has
indemnified Phoenix for any liability in excess of $15,000 resulting from
these reinsurance contracts. Phoenix considers any liability to Phoenix Life
and Annuity as a result of these contracts to be remote and has indemnified
Phoenix Life and Annuity.
47
<PAGE>
PHOENIX LIFE AND ANNUITY
VARIABLE UNIVERSAL LIFE ACCOUNT
There have been no deposits made to Phoenix Life and Annuity Variable Universal
Life Account as of the date of this prospectus; therefore, no financial
statements are available for the VUL Account.
48
<PAGE>
APPENDIX A
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
The following is a list of terms and their meanings when used in this
prospectus.
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.
DEBT: Outstanding loans against a policy, plus accrued interest.
FUNDS: The Phoenix Edge Series Fund, BT Insurance Funds Trust, Federated
Insurance Series, Morgan Stanley Dean Witter Universal Funds, Inc., Templeton
Variable Products Series Fund and Wanger Advisors Trust.
GENERAL ACCOUNT: The general asset account of PLAC.
ISSUE PREMIUM: The premium payment made in connection with issuing the policy.
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.
NET ASSET VALUE: The worth of one share of a Series of a Fund at the end of a
valuation period. Net asset value is computed by adding the value of a Series'
holdings plus other assets, minus liabilities and then dividing the result by
the number of shares outstanding.
PAYMENT DATE: The valuation date on which we receive a premium payment or loan
repayment, unless it is received after the close of the New York Stock Exchange
("NYSE"), in which case it will be the next valuation date.
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 for
the face amount of insurance selected but may 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 we measure policy years and policy anniversaries.
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 Guaranteed Interest
Account.
POLICY YEAR: The first policy year is the 1-year period from the policy date up
to, but not including, the first policy anniversary. Each succeeding policy year
is the 1-year period from the policy anniversary up to, but not including, the
next policy anniversary.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within the VUL Account to which nonloaned assets under a
policy are allocated.
TARGET PREMIUM: The level annual premium at which the sales load is reduced on a
current basis.
VALUATION DATE: For any Subaccount, each date on which we calculate the net
asset value of a Fund.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
valuation date through the next.
VUL ACCOUNT (ACCOUNT): Phoenix Life and Annuity Variable Universal Life Account,
a separate account of the company.
49
<PAGE>
APPENDIX B
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
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 BECAUSE THEY DO NOT REFLECT COST OF INSURANCE, PREMIUM
TAX CHARGES, PREMIUM SALES CHARGES AND SURRENDER CHARGES, IF APPLICABLE. FOR
THIS INFORMATION SEE APPENDIX C "ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES
AND CASH SURRENDER VALUES." Performance information may be expressed as yield
and effective yield of the Phoenix-Goodwin Money Market Subaccount, as yield of
the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total return of
any Subaccount. Current yield for the Phoenix-Goodwin Money Market Subaccount
will be based on the income earned by the Subaccount over a given 7-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 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 mortality and expense risk
charge on the VUL Account level.
Yield calculations of the Phoenix-Goodwin 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
7-day period, which period will end on the date of the most recent financial
statements. The yield for the Subaccount during this 7-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 Phoenix-Goodwin
Money Market Subaccount based on a 7-day period ending December 31, 1998.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:................ 1.501512
Value of the same account (excluding capital changes) at the
end of the 7-day period:............................ 1.50245
Calculation:
Ending account value ............................... 1.50245
Less beginning account value ....................... 1.501512
Net change in account value ........................ 0.000938
Base period return:
(adjusted change/beginning account value) .......... 0.000625
Current yield = return x (365/7) = ................... 3.26%
Effective yield = [(1 + return)365/7] - 1 = .......... 3.31%
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 VUL Account level.
For the Phoenix-Goodwin Multi-Sector Fixed Income 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 the mortality and expense risk, issue expense and monthly
administrative charges.
For those Subaccounts within the VUL Account that have not been available
for one of the quoted periods, the 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.
50
<PAGE>
The following performance tables display historical investment results of
the Subaccounts of the VUL Account. This information may be useful in helping
potential investors in deciding which Subaccounts to choose and in assessing the
competence of the investment advisors. The performance figures shown should be
considered in light of the investment objectives and policies, characteristics
and quality of the Subaccounts and market conditions during the periods of time
quoted. The performance figures should not be considered as estimates or
predictions of future performance. Investment return of the Subaccounts are not
guaranteed and will fluctuate. Below are quotations of average annual total
return calculated as described above for all Subaccounts with at least one year
of results. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES,
PREMIUM SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1998(1,2)
- -----------------------------------------------------------------------------------------------------------------------------------
SERIES INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series..................... 7/15/97 30.18% N/A N/A 24.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series...................... 5/1/90 26.55% 12.14% N/A 9.94%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series........................... 9/17/96 -5.55% N/A N/A -18.42%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Series........ 5/1/95 -22.26% N/A N/A 10.79%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series..................... 12/31/82 27.80% 17.47% 19.24% 18.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series........................ 3/2/98 N/A N/A N/A 25.15%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series........................ 10/8/82 3.96% 3.87% 4.43% 5.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Series........... 12/31/82 -5.67% 5.77% 8.28% 9.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series...................... 3/2/98 N/A N/A N/A 9.64%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series........................... 5/1/92 17.58% 12.07% N/A 11.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series.................. 3/2/98 N/A N/A N/A 19.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series............... 9/17/84 19.07% 11.96% 13.11% 13.10%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series....................... 3/2/98 N/A N/A N/A -12.38%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series....................... 3/2/98 N/A N/A N/A 20.51%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series...................... 1/29/96 42.98% N/A N/A 22.60%
- -----------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund............... 8/22/97 20.35% N/A N/A 8.60%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II........... 3/28/94 6.50% N/A N/A 5.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II......................... 3/1/94 1.59% N/A N/A 8.40%
- -----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund-- Class 23.................. 11/2/98 N/A N/A N/A 2.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund-- Class 23................. 11/28/88 4.96% 10.31% 10.91% 11.10%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund-- Class 23............... 9/27/96 -22.03% N/A N/A -23.38%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund-- Class 23.................... 5/11/92 7.93% 10.17% N/A 12.57%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund-- Class 23............................ 11/3/88 -0.11% 9.83% 10.98% 10.95%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty....................................... 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap............................. 5/1/95 14.78% N/A N/A 20.27%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty.............................................. 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap...................................... 5/1/95 7.19% N/A N/A 25.69%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $10,000 for the time period indicated.
Returns are net of $5 monthly administrative fee, investment management fees
and mortality and expense risk charges
(2) Performance data quoted represent the investment return of the appropriate
series adjusted for the Phoenix Corporate Edge charges had the Subaccount
started on the inception date of the appropriate series.
(3) Standardized performance for Class 2 shares reflects a "blended" figure,
combining: (a) for periods prior to Class 2's inception on May 1, 1997
(November 16, 1998 for Mutual Shares Investments Fund), historical results
of Class 1 shares; and (b) for periods after May 1, 1997 (November 16,
1998), Class 2's results reflecting an additional 12b-1 fee expense which
also affects all future performance. Maximum annual plan expenses are 0.25%.
51
<PAGE>
Advertisements, sales literature and other communications may contain
information about any series' or advisor's current investment strategies and
management style. Current strategies and style may change to respond to a
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
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), Dow Jones
Industrial Average, First Boston High Yield Index and Salomon Brothers Corporate
and Government Bond Indices.
Occasionally, The VUL Account may include in advertisements containing total
return, the ranking of those performance figures relating to such figures for
groups of Subaccounts having similar investment objectives as categorized by
ranking services such as:
Lipper Analytical Services, Inc. Morningstar, Inc.
CDA Investment Technologies, Inc. Weisenberger Financial Services, 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 Business Daily The Stanger Register
Stanger's Investment Advisor 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 Personal Investor
The Funds may occasionally 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:
S&P 500 Dow Jones Industrial Average
Europe Australia Far East Index (EAFE) Consumers Price Index
Shearson Lehman Corporate Index 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 500 is composed almost entirely of common
stocks of companies listed on the NYSE, 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 500 represents about
70-80% of the market value of all issues traded on the NYSE.
The Funds' annual reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
52
<PAGE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN(1,2)
- ------------------------------------------------------------------------------------------------------------------------------------
SERIES 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A N/A 19.74% -12.83% 38.46%
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities Series
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 32.89% 10.67% 34.92% 20.47% 6.93% 3.92% 36.19% 4.05% 42.75% 10.30% 19.71%
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 8.37% 10.23% 8.03% 6.51% 6.51% 7.45% 9.20% 8.22% 5.98% 3.58% 2.88%
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income 6.00% 11.35% 20.61% 19.29% 1.08% 10.49% 8.24% 5.22% 19.59% 10.08% 15.92%
Series
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A N/A 9.63% 8.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series N/A N/A 27.34% 15.69% 12.56% 2.34% 19.90% 5.77% 29.32% 10.66% 11.01%
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
EAFE[registered tradmark] Equity Index Fund N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities II
- ------------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund-- Class 23 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund-- Class 23 N/A N/A N/A N/A N/A N/A 13.03% -8.21% 27.44% 7.83% 25.87%
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund-- Class 23 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund-- Class 23 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 46.47%
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund-- Class 23 N/A N/A N/A N/A N/A N/A 14.39% -11.28% 27.23% 6.87% 33.74%
- ------------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN(1,2)
- ---------------------------------------------------------------------------------------
SERIES 1994 1995 1996 1997 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A 31.69%
- ---------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series 0.06% 9.59% 18.66% 12.05% 27.94%
- --------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A -32.41% -4.45%
- --------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A 33.13% 22.07% -21.20%
Securities Series
- --------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 1.46% 30.89% 12.59% 21.09% 30.02%
- --------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 3.84% 5.70% 5.03% 5.19% 5.10%
- --------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income -5.49% 23.54% 12.43% 11.09% -4.15%
Series
- --------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series -2.84% 23.35% 10.57% 17.94% 19.02%
- --------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series -1.41% 18.20% 9.06% 20.74% 20.80%
- --------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A 17.17% 44.72%
- --------------------------------------------------------------------------------------
EAFE[registered tradmark] Equity Index Fund N/A N/A N/A N/A 21.60%
- --------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A 8.77% 4.20% 8.58% 7.66%
Securities II
- --------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A 20.38% 14.31% 13.83% 2.70%
- --------------------------------------------------------------------------------------
Mutual Shares Investments Fund-- Class 23 N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Templeton Asset Allocation Fund-- Class 23 -3.23% 22.26% 18.59% 15.27% 6.10%
- --------------------------------------------------------------------------------------
Templeton Developing Markets Fund-- Class 23 N/A N/A N/A -29.39% -21.04%
- --------------------------------------------------------------------------------------
Templeton International Fund-- Class 23 -2.86% 15.05% 23.30% 13.51% 9.08%
- --------------------------------------------------------------------------------------
Templeton Stock Fund-- Class 23 -2.47% 24.96% 22.15% 11.60% 0.98%
- --------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A 32.04% -1.46% 16.34%
- --------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A 46.63% 29.43% 8.69%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Performance data quoted represent the investment return of the appropriate
series adjusted for the Phoenix Corporate Edge charges had the Subaccount
started on the inception date of the appropriate series.
(2) Rates are net of investment management fees for the Phoenix Corporate Edge
Subaccounts. The actual inception date of Phoenix Corporate Edge was October
29, 1999.
(3) Standardized performance for Class 2 shares reflects a "blended" figure,
combining: (a) for periods prior to Class 2's inception on May 1, 1997
(November 16, 1998 for Mutual Shares Investments Fund), historical results
of Class 1 shares; and (b) for periods after May 1, 1997 (November 16,
1998), Class 2's results reflecting an additional 12b-1 fee expense which
also affects all future performance. Maximum annual plan expenses are 0.25%.
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
53
<PAGE>
APPENDIX C
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%, 6% 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%, 6% or 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%, 6% or 12%,
but went above or below those figures for the individual Subaccounts. The tables
are for standard risk males and females who are nonsmokers. 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 are nonsmokers. Account values
and cash surrender values may be lower for risk classes involving higher
mortality risk. Planned premium payments are assumed to be paid at the beginning
of each policy year.
The death benefit, account value and cash surrender value amounts reflect
the following current charges:
1. A sales charge of 7.0% of premiums up to the target premium and 0% on
amounts in excess of the target premium in policy years 1-7 and 0% of
all premiums in policy years 8+.
2. Monthly administrative charge of $5 per month ($10 per month guaranteed
maximum in all states except New York and New Jersey. In New York and
New Jersey guaranteed maximum is $7.50 per month.).
3. An average 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 under the Policy" table.
6. Mortality and expense risk charge, which is a monthly charge equivalent
to .50% on an annual basis (or .25% on an annual basis after the 10th
policy year) of your policy value. See "Charges under the Policy" table.
These illustrations also assume an average investment advisory fee of .70%
on an annual basis of the average daily net asset value of each of the Series of
the Funds. They also assume other ongoing average Fund expenses of .30%. All
other Fund expenses, except capital items such as brokerage commissions, are
paid by the advisor or PLAC. Management may decide to limit the amount of
expense reimbursement in the future. If expense reimbursement had not been in
place for the fiscal year ended December 31, 1998, average total operating
expenses for the Series would have been approximately 1.43% of the average net
assets. See "Annual Fund Expenses" table.
Taking into account the investment advisory fees and expenses, the gross
annual investment return rates of 0%, 6% and 12% on the Funds' assets are
equivalent to net annual investment return rates of approximately -1.00%, 5.00%
and 11.00%, respectively. For individual illustrations, interest rates ranging
between 0% and 12% may be selected in place of the 0%, 6% and 12% rates.
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%, 6% and 12%, a sufficiently higher amount in excess of
the hypothetical interest rates would have to be earned.
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.
54
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 739 739 100,000 788 788 100,000 837 837 100,000
2 1,000 2,153 1,464 1,464 100,000 1,608 1,608 100,000 1,758 1,758 100,000
3 1,000 3,310 2,175 2,175 100,000 2,461 2,461 100,000 2,772 2,772 100,000
4 1,000 4,526 2,871 2,871 100,000 3,348 3,348 100,000 3,887 3,887 100,000
5 1,000 5,802 3,550 3,550 100,000 4,269 4,269 100,000 5,113 5,113 100,000
6 1,000 7,142 4,213 4,213 100,000 5,226 5,226 100,000 6,461 6,461 100,000
7 1,000 8,549 4,858 4,858 100,000 6,216 6,216 100,000 7,943 7,943 100,000
8 1,000 10,027 5,551 5,551 100,000 7,314 7,314 100,000 9,647 9,647 100,000
9 1,000 11,578 6,222 6,222 100,000 8,449 8,449 100,000 11,518 11,518 100,000
10 1,000 13,207 6,869 6,869 100,000 9,622 9,622 100,000 13,572 13,572 100,000
11 1,000 14,917 7,544 7,544 100,000 10,894 10,894 100,000 15,902 15,902 100,000
12 1,000 16,713 8,196 8,196 100,000 12,213 12,213 100,000 18,471 18,471 100,000
13 1,000 18,599 8,823 8,823 100,000 13,580 13,580 100,000 21,303 21,303 100,000
14 1,000 20,579 9,426 9,426 100,000 14,996 14,996 100,000 24,429 24,429 100,000
15 1,000 22,657 10,002 10,002 100,000 16,463 16,463 100,000 27,879 27,879 100,000
16 1,000 24,840 10,551 10,551 100,000 17,983 17,983 100,000 31,689 31,689 100,000
17 1,000 27,132 11,072 11,072 100,000 19,557 19,557 100,000 35,901 35,901 100,000
18 1,000 29,539 11,562 11,562 100,000 21,187 21,187 100,000 40,558 40,558 100,000
19 1,000 32,066 12,021 12,021 100,000 22,875 22,875 100,000 45,709 45,709 104,407
20 1,000 34,719 12,447 12,447 100,000 24,623 24,623 100,000 51,384 51,384 114,089
@ 65 1,000 69,761 14,129 14,129 100,000 45,775 45,775 100,000 150,272 150,272 257,523
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
55
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 530 530 100,000 571 571 100,000 613 613 100,000
2 1,000 2,153 1,038 1,038 100,000 1,153 1,153 100,000 1,274 1,274 100,000
3 1,000 3,310 1,522 1,522 100,000 1,745 1,745 100,000 1,987 1,987 100,000
4 1,000 4,526 1,980 1,980 100,000 2,343 2,343 100,000 2,755 2,755 100,000
5 1,000 5,802 2,411 2,411 100,000 2,947 2,947 100,000 3,581 3,581 100,000
6 1,000 7,142 2,813 2,813 100,000 3,555 3,555 100,000 4,468 4,468 100,000
7 1,000 8,549 3,182 3,182 100,000 4,162 4,162 100,000 5,420 5,420 100,000
8 1,000 10,027 3,579 3,579 100,000 4,833 4,833 100,000 6,510 6,510 100,000
9 1,000 11,578 3,941 3,941 100,000 5,503 5,503 100,000 7,684 7,684 100,000
10 1,000 13,207 4,266 4,266 100,000 6,173 6,173 100,000 8,949 8,949 100,000
11 1,000 14,917 4,553 4,553 100,000 6,838 6,838 100,000 10,312 10,312 100,000
12 1,000 16,713 4,801 4,801 100,000 7,498 7,498 100,000 11,784 11,784 100,000
13 1,000 18,599 5,007 5,007 100,000 8,151 8,151 100,000 13,374 13,374 100,000
14 1,000 20,579 5,172 5,172 100,000 8,795 8,795 100,000 15,094 15,094 100,000
15 1,000 22,657 5,290 5,290 100,000 9,425 9,425 100,000 16,957 16,957 100,000
16 1,000 24,840 5,360 5,360 100,000 10,039 10,039 100,000 18,975 18,975 100,000
17 1,000 27,132 5,374 5,374 100,000 10,628 10,628 100,000 21,160 21,160 100,000
18 1,000 29,539 5,326 5,326 100,000 11,185 11,185 100,000 23,527 23,527 100,000
19 1,000 32,066 5,208 5,208 100,000 11,701 11,701 100,000 26,093 26,093 100,000
20 1,000 34,719 5,011 5,011 100,000 12,167 12,167 100,000 28,875 28,875 100,000
@ 65 1,000 69,761 -- -- -- 11,746 11,746 100,000 75,203 75,203 128,877
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
56
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 767 767 100,000 816 816 100,000 866 866 100,000
2 1,000 2,153 1,517 1,517 100,000 1,665 1,665 100,000 1,818 1,818 100,000
3 1,000 3,310 2,251 2,251 100,000 2,545 2,545 100,000 2,863 2,863 100,000
4 1,000 4,526 2,968 2,968 100,000 3,459 3,459 100,000 4,012 4,012 100,000
5 1,000 5,802 3,666 3,666 100,000 4,406 4,406 100,000 5,272 5,272 100,000
6 1,000 7,142 4,346 4,346 100,000 5,386 5,386 100,000 6,656 6,656 100,000
7 1,000 8,549 5,005 5,005 100,000 6,401 6,401 100,000 8,175 8,175 100,000
8 1,000 10,027 5,713 5,713 100,000 7,524 7,524 100,000 9,920 9,920 100,000
9 1,000 11,578 6,400 6,400 100,000 8,687 8,687 100,000 11,839 11,839 100,000
10 1,000 13,207 7,066 7,066 100,000 9,894 9,894 100,000 13,949 13,949 100,000
11 1,000 14,917 7,761 7,761 100,000 11,201 11,201 100,000 16,342 16,342 100,000
12 1,000 16,713 8,439 8,439 100,000 12,563 12,563 100,000 18,986 18,986 100,000
13 1,000 18,599 9,100 9,100 100,000 13,983 13,983 100,000 21,908 21,908 100,000
14 1,000 20,579 9,743 9,743 100,000 15,461 15,461 100,000 25,139 25,139 100,000
15 1,000 22,657 10,369 10,369 100,000 17,003 17,003 100,000 28,713 28,713 100,000
16 1,000 24,840 10,977 10,977 100,000 18,609 18,609 100,000 32,667 32,667 100,000
17 1,000 27,132 11,566 11,566 100,000 20,282 20,282 100,000 37,041 37,041 104,563
18 1,000 29,539 12,135 12,135 100,000 22,025 22,025 100,000 41,866 41,866 114,715
19 1,000 32,066 12,682 12,682 100,000 23,841 23,841 100,000 47,183 47,183 125,519
20 1,000 34,719 13,206 13,206 100,000 25,731 25,731 100,000 53,040 53,040 137,032
@ 65 1,000 69,761 16,912 16,912 100,000 49,592 49,592 100,000 156,229 156,229 303,794
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
57
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 575 575 100,000 618 618 100,000 661 661 100,000
2 1,000 2,153 1,129 1,129 100,000 1,251 1,251 100,000 1,377 1,377 100,000
3 1,000 3,310 1,661 1,661 100,000 1,897 1,897 100,000 2,154 2,154 100,000
4 1,000 4,526 2,170 2,170 100,000 2,556 2,556 100,000 2,994 2,994 100,000
5 1,000 5,802 2,653 2,653 100,000 3,226 3,226 100,000 3,902 3,902 100,000
6 1,000 7,142 3,108 3,108 100,000 3,905 3,905 100,000 4,883 4,883 100,000
7 1,000 8,549 3,535 3,535 100,000 4,591 4,591 100,000 5,942 5,942 100,000
8 1,000 10,027 3,992 3,992 100,000 5,348 5,348 100,000 7,155 7,155 100,000
9 1,000 11,578 4,421 4,421 100,000 6,116 6,116 100,000 8,471 8,471 100,000
10 1,000 13,207 4,822 4,822 100,000 6,896 6,896 100,000 9,902 9,902 100,000
11 1,000 14,917 5,193 5,193 100,000 7,688 7,688 100,000 11,458 11,458 100,000
12 1,000 16,713 5,537 5,537 100,000 8,492 8,492 100,000 13,154 13,154 100,000
13 1,000 18,599 5,852 5,852 100,000 9,309 9,309 100,000 15,004 15,004 100,000
14 1,000 20,579 6,136 6,136 100,000 10,136 10,136 100,000 17,023 17,023 100,000
15 1,000 22,657 6,389 6,389 100,000 10,974 10,974 100,000 19,227 19,227 100,000
16 1,000 24,840 6,607 6,607 100,000 11,820 11,820 100,000 21,636 21,636 100,000
17 1,000 27,132 6,790 6,790 100,000 12,673 12,673 100,000 24,271 24,271 100,000
18 1,000 29,539 6,935 6,935 100,000 13,531 13,531 100,000 27,154 27,154 100,000
19 1,000 32,066 7,036 7,036 100,000 14,389 14,389 100,000 30,309 30,309 100,000
20 1,000 34,719 7,094 7,094 100,000 15,248 15,248 100,000 33,770 33,770 100,000
@ 65 1,000 69,761 4,952 4,952 100,000 23,676 23,676 100,000 91,373 91,373 177,679
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
58
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 738 738 100,739 787 787 100,788 836 836 100,836
2 1,000 2,153 1,462 1,462 101,463 1,606 1,606 101,606 1,755 1,755 101,756
3 1,000 3,310 2,171 2,171 102,172 2,457 2,457 102,457 2,766 2,766 102,767
4 1,000 4,526 2,864 2,864 102,864 3,340 3,340 103,341 3,877 3,877 103,878
5 1,000 5,802 3,540 3,540 103,540 4,257 4,257 104,257 5,097 5,097 105,098
6 1,000 7,142 4,198 4,198 104,199 5,207 5,207 105,207 6,437 6,437 106,437
7 1,000 8,549 4,837 4,837 104,838 6,189 6,189 106,189 7,906 7,906 107,906
8 1,000 10,027 5,524 5,524 105,524 7,276 7,276 107,276 9,593 9,593 109,594
9 1,000 11,578 6,186 6,186 106,186 8,397 8,397 108,397 11,442 11,442 111,443
10 1,000 13,207 6,821 6,821 106,822 9,551 9,551 109,552 13,466 13,466 113,467
11 1,000 14,917 7,486 7,486 107,487 10,805 10,805 110,805 15,762 15,762 115,763
12 1,000 16,713 8,126 8,126 108,126 12,100 12,100 112,101 18,287 18,287 118,287
13 1,000 18,599 8,738 8,738 108,739 13,437 13,437 113,438 21,061 21,061 121,062
14 1,000 20,579 9,323 9,323 109,323 14,817 14,817 114,817 24,112 24,112 124,112
15 1,000 22,657 9,878 9,878 109,878 16,238 16,238 116,239 27,466 27,466 127,466
16 1,000 24,840 10,402 10,402 110,403 17,703 17,703 117,704 31,154 31,154 131,155
17 1,000 27,132 10,895 10,895 110,895 19,211 19,211 119,212 35,211 35,211 135,212
18 1,000 29,539 11,353 11,353 111,353 20,761 20,761 120,761 39,673 39,673 139,673
19 1,000 32,066 11,774 11,774 111,775 22,353 22,353 122,353 44,580 44,580 144,581
20 1,000 34,719 12,157 12,157 112,157 23,985 23,985 123,986 49,978 49,978 149,979
@ 65 1,000 69,761 12,990 12,990 112,990 41,902 41,902 141,902 144,518 144,518 247,661
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
59
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 528 528 100,529 570 570 100,570 611 611 100,611
2 1,000 2,153 1,034 1,034 101,034 1,149 1,149 101,149 1,269 1,269 101,270
3 1,000 3,310 1,514 1,514 101,514 1,735 1,735 101,736 1,977 1,977 101,977
4 1,000 4,526 1,967 1,967 101,967 2,327 2,327 102,328 2,736 2,736 102,736
5 1,000 5,802 2,391 2,391 102,391 2,922 2,922 102,922 3,549 3,549 103,549
6 1,000 7,142 2,784 2,784 102,784 3,517 3,517 103,517 4,419 4,419 104,419
7 1,000 8,549 3,142 3,142 103,143 4,108 4,108 104,109 5,347 5,347 105,348
8 1,000 10,027 3,527 3,527 103,527 4,759 4,759 104,759 6,407 6,407 106,407
9 1,000 11,578 3,873 3,873 103,873 5,404 5,404 105,404 7,539 7,539 107,539
10 1,000 13,207 4,181 4,181 104,181 6,042 6,042 106,043 8,751 8,751 108,751
11 1,000 14,917 4,447 4,447 104,448 6,670 6,670 106,670 10,046 10,046 110,046
12 1,000 16,713 4,672 4,672 104,673 7,285 7,285 107,286 11,432 11,432 111,432
13 1,000 18,599 4,853 4,853 104,854 7,885 7,885 107,885 12,914 12,914 112,915
14 1,000 20,579 4,989 4,989 104,990 8,465 8,465 108,466 14,501 14,501 114,501
15 1,000 22,657 5,076 5,076 105,077 9,022 9,022 109,022 16,196 16,196 116,197
16 1,000 24,840 5,112 5,112 105,112 9,549 9,549 109,550 18,009 18,009 118,009
17 1,000 27,132 5,088 5,088 105,089 10,038 10,038 110,039 19,940 19,940 119,941
18 1,000 29,539 5,000 5,000 105,001 10,480 10,480 110,480 21,995 21,995 121,996
19 1,000 32,066 4,839 4,839 104,840 10,862 10,862 110,862 24,177 24,177 124,178
20 1,000 34,719 4,597 4,597 104,598 11,173 11,173 111,173 26,488 26,488 126,488
@ 65 1,000 69,761 -- -- -- 7,719 7,719 107,720 57,991 57,991 157,991
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
60
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 766 766 100,767 816 816 100,816 865 865 100,866
2 1,000 2,153 1,516 1,516 101,517 1,663 1,663 101,664 1,816 1,816 101,817
3 1,000 3,310 2,248 2,248 102,249 2,542 2,542 102,542 2,859 2,859 102,860
4 1,000 4,526 2,963 2,963 102,963 3,453 3,453 103,453 4,004 4,004 104,005
5 1,000 5,802 3,658 3,658 103,659 4,396 4,396 104,396 5,260 5,260 105,260
6 1,000 7,142 4,334 4,334 104,334 5,371 5,371 105,371 6,636 6,636 106,637
7 1,000 8,549 4,988 4,988 104,988 6,378 6,378 106,379 8,145 8,145 108,145
8 1,000 10,027 5,689 5,689 105,690 7,492 7,492 107,492 9,876 9,876 109,876
9 1,000 11,578 6,369 6,369 106,369 8,643 8,643 108,643 11,775 11,775 111,775
10 1,000 13,207 7,026 7,026 107,027 9,833 9,833 109,834 13,859 13,859 113,860
11 1,000 14,917 7,712 7,712 107,713 11,125 11,125 111,126 16,223 16,223 116,224
12 1,000 16,713 8,380 8,380 108,380 12,467 12,467 112,468 18,830 18,830 118,830
13 1,000 18,599 9,029 9,029 109,029 13,862 13,862 113,863 21,704 21,704 121,705
14 1,000 20,579 9,658 9,658 109,659 15,312 15,312 115,313 24,876 24,876 124,876
15 1,000 22,657 10,269 10,269 110,269 16,819 16,819 116,820 28,375 28,375 128,376
16 1,000 24,840 10,858 10,858 110,859 18,384 18,384 118,384 32,236 32,236 132,236
17 1,000 27,132 11,426 11,426 111,427 20,008 20,008 120,008 36,495 36,495 136,496
18 1,000 29,539 11,972 11,972 111,972 21,693 21,693 121,694 41,195 41,195 141,195
19 1,000 32,066 12,493 12,493 112,493 23,439 23,439 123,440 46,380 46,380 146,380
20 1,000 34,719 12,987 12,987 112,988 25,248 25,248 125,249 52,099 52,099 152,100
@ 65 1,000 69,761 16,113 16,113 116,113 46,962 46,962 146,963 153,525 153,525 298,535
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
35.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
61
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 574 574 100,574 617 617 100,617 659 659 100,617
2 1,000 2,153 1,126 1,126 101,126 1,247 1,247 101,247 1,373 1,373 101,247
3 1,000 3,310 1,655 1,655 101,655 1,890 1,890 101,890 2,145 2,145 101,890
4 1,000 4,526 2,159 2,159 102,159 2,543 2,543 102,543 2,978 2,978 102,543
5 1,000 5,802 2,635 2,635 102,636 3,204 3,204 103,205 3,875 3,875 103,205
6 1,000 7,142 3,083 3,083 103,084 3,872 3,872 103,873 4,841 4,841 103,873
7 1,000 8,549 3,501 3,501 103,501 4,545 4,545 104,545 5,880 5,880 104,545
8 1,000 10,027 3,946 3,946 103,947 5,283 5,283 105,284 7,065 7,065 105,284
9 1,000 11,578 4,362 4,362 104,363 6,030 6,030 106,030 8,346 8,346 106,030
10 1,000 13,207 4,747 4,747 104,747 6,782 6,782 106,783 9,730 9,730 106,783
11 1,000 14,917 5,101 5,101 105,101 7,541 7,541 107,542 11,228 11,228 107,542
12 1,000 16,713 5,424 5,424 105,425 8,307 8,307 108,307 12,850 12,850 108,307
13 1,000 18,599 5,717 5,717 105,717 9,077 9,077 109,078 14,608 14,608 109,078
14 1,000 20,579 5,976 5,976 105,977 9,851 9,851 109,851 16,513 16,513 109,851
15 1,000 22,657 6,201 6,201 106,202 10,625 10,625 110,625 18,576 18,576 110,625
16 1,000 24,840 6,389 6,389 106,389 11,397 11,397 111,397 20,811 20,811 111,397
17 1,000 27,132 6,539 6,539 106,539 12,164 12,164 112,164 23,233 23,233 112,164
18 1,000 29,539 6,647 6,647 106,647 12,922 12,922 112,923 25,856 25,856 112,923
19 1,000 32,066 6,708 6,708 106,709 13,666 13,666 113,666 28,694 28,694 113,666
20 1,000 34,719 6,723 6,723 106,724 14,392 14,392 114,393 31,768 31,768 114,393
@ 65 1,000 69,761 4,048 4,048 104,048 20,079 20,079 120,079 81,475 81,475 181,476
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
35.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
62
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 738 738 101,000 787 787 101,000 836 836 101,000
2 1,000 2,153 1,462 1,462 102,000 1,605 1,605 102,000 1,755 1,755 102,000
3 1,000 3,310 2,170 2,170 103,000 2,456 2,456 103,000 2,766 2,766 103,000
4 1,000 4,526 2,862 2,862 104,000 3,339 3,339 104,000 3,876 3,876 104,000
5 1,000 5,802 3,536 3,536 105,000 4,254 4,254 105,000 5,096 5,096 105,000
6 1,000 7,142 4,193 4,193 106,000 5,203 5,203 106,000 6,436 6,436 106,000
7 1,000 8,549 4,830 4,830 107,000 6,184 6,184 107,000 7,905 7,905 107,000
8 1,000 10,027 5,513 5,513 108,000 7,270 7,270 108,000 9,594 9,594 108,000
9 1,000 11,578 6,172 6,172 109,000 8,389 8,389 109,000 11,446 11,446 109,000
10 1,000 13,207 6,803 6,803 110,000 9,542 9,542 110,000 13,476 13,476 110,000
11 1,000 14,917 7,463 7,463 111,000 10,795 10,795 111,000 15,779 15,779 111,000
12 1,000 16,713 8,097 8,097 112,000 12,090 12,090 112,000 18,314 18,314 112,000
13 1,000 18,599 8,703 8,703 113,000 13,427 13,427 113,000 21,105 21,105 113,000
14 1,000 20,579 9,279 9,279 114,000 14,807 14,807 114,000 24,179 24,179 114,000
15 1,000 22,657 9,823 9,823 115,000 16,230 16,230 115,000 27,566 27,566 115,00
16 1,000 24,840 10,335 10,335 116,000 17,698 17,698 116,000 31,301 31,301 116,000
17 1,000 27,132 10,813 10,813 117,000 19,211 19,211 117,000 35,421 35,421 117,000
18 1,000 29,539 11,252 11,252 118,000 20,769 20,769 118,000 39,969 39,969 118,000
19 1,000 32,066 11,652 11,652 119,000 22,371 22,371 119,000 44,990 44,990 119,000
20 1,000 34,719 12,008 12,008 120,000 24,018 24,018 120,000 50,540 50,540 120,000
@ 65 1,000 69,761 12,045 12,045 130,000 42,618 42,618 130,000 148,021 148,021 253,665
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
63
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 528 528 101,000 569 569 101,000 610 610 101,000
2 1,000 2,153 1,031 1,031 102,000 1,147 1,147 102,000 1,267 1,267 102,000
3 1,000 3,310 1,508 1,508 103,000 1,730 1,730 103,000 1,972 1,972 103,000
4 1,000 4,526 1,957 1,957 104,000 2,318 2,318 104,000 2,727 2,727 104,000
5 1,000 5,802 2,374 2,374 105,000 2,906 2,906 105,000 3,535 3,535 105,000
6 1,000 7,142 2,759 2,759 106,000 3,494 3,494 106,000 4,399 4,399 106,000
7 1,000 8,549 3,106 3,106 107,000 4,075 4,075 107,000 5,320 5,320 107,000
8 1,000 10,027 3,476 3,476 108,000 4,712 4,712 108,000 6,370 6,370 108,000
9 1,000 11,578 3,805 3,805 109,000 5,342 5,342 109,000 7,492 7,492 109,000
10 1,000 13,207 4,091 4,091 110,000 5,961 5,961 110,000 8,692 8,692 110,000
11 1,000 14,917 4,331 4,331 111,000 6,566 6,566 111,000 9,976 9,976 111,000
12 1,000 16,713 4,523 4,523 112,000 7,153 7,153 112,000 11,350 11,350 112,000
13 1,000 18,599 4,665 4,665 113,000 7,720 7,720 113,000 12,821 12,821 113,000
14 1,000 20,579 4,755 4,755 114,000 8,261 8,261 114,000 14,398 14,398 114,000
15 1,000 22,657 4,786 4,786 115,000 8,771 8,771 115,000 16,088 16,088 115,000
16 1,000 24,840 4,756 4,756 116,000 9,244 9,244 116,000 17,899 17,899 116,000
17 1,000 27,132 4,654 4,654 117,000 9,667 9,667 117,000 19,837 19,837 117,000
18 1,000 29,539 4,472 4,472 118,000 10,031 10,031 118,000 21,910 21,910 118,000
19 1,000 32,066 4,199 4,199 119,000 10,321 10,321 119,000 24,123 24,123 119,000
20 1,000 34,719 3,822 3,822 120,000 10,521 10,521 120,000 26,485 26,485 120,000
@ 65 1,000 69,761 -- -- -- 3,532 3,532 130,000 62,189 62,189 130,000
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
64
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 766 766 101,000 816 816 101,000 865 865 101,000
2 1,000 2,153 1,516 1,516 102,000 1,663 1,663 102,000 1,816 1,816 102,000
3 1,000 3,310 2,248 2,248 103,000 2,541 2,541 103,000 2,859 2,859 103,000
4 1,000 4,526 2,961 2,961 104,000 3,452 3,452 104,000 4,004 4,004 104,000
5 1,000 5,802 3,656 3,656 105,000 4,394 4,394 105,000 5,259 5,259 105,000
6 1,000 7,142 4,330 4,330 106,000 5,369 5,369 106,000 6,636 6,636 106,000
7 1,000 8,549 4,982 4,982 107,000 6,375 6,375 107,000 8,145 8,145 107,000
8 1,000 10,027 5,681 5,681 108,000 7,488 7,488 108,000 9,878 9,878 108,000
9 1,000 11,578 6,358 6,358 109,000 8,638 8,638 109,000 11,780 11,780 109,000
10 1,000 13,207 7,011 7,011 110,000 9,828 9,828 110,000 13,870 13,870 110,000
11 1,000 14,917 7,694 7,694 111,000 11,119 11,119 111,000 16,241 16,241 111,000
12 1,000 16,713 8,357 8,357 112,000 12,462 12,462 112,000 18,857 18,857 112,000
13 1,000 18,599 9,001 9,001 113,000 13,857 13,857 113,000 21,746 21,746 113,000
14 1,000 20,579 9,625 9,625 114,000 15,309 15,309 114,000 24,937 24,937 114,000
15 1,000 22,657 10,228 10,228 115,000 16,818 16,818 115,000 28,463 28,463 115,000
16 1,000 24,840 10,810 10,810 116,000 18,386 18,386 116,000 32,360 32,360 116,000
17 1,000 27,132 11,368 11,368 117,000 20,015 20,015 117,000 36,669 36,669 117,000
18 1,000 29,539 11,903 11,903 118,000 21,708 21,708 118,000 41,433 41,433 118,000
19 1,000 32,066 12,410 12,410 119,000 23,464 23,464 119,000 46,700 46,700 124,236
20 1,000 34,719 12,890 12,890 120,000 25,286 25,286 120,000 52,509 52,509 135,658
@ 65 1,000 69,761 15,614 15,614 130,000 47,565 47,565 130,000 154,826 154,826 301,066
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
32.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
65
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX CORPORATE EDGE--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
-------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 573 573 101,000 616 616 101,000 659 659 101,000
2 1,000 2,153 1,124 1,124 102,000 1,245 1,245 102,000 1,372 1,372 102,000
3 1,000 3,310 1,651 1,651 103,000 1,886 1,886 103,000 2,142 2,142 103,000
4 1,000 4,526 2,152 2,152 104,000 2,536 2,536 104,000 2,972 2,972 104,000
5 1,000 5,802 2,624 2,624 105,000 3,194 3,194 105,000 3,866 3,866 105,000
6 1,000 7,142 3,065 3,065 106,000 3,856 3,856 106,000 4,828 4,828 106,000
7 1,000 8,549 3,474 3,474 107,000 4,522 4,522 107,000 5,863 5,863 107,000
8 1,000 10,027 3,910 3,910 108,000 5,252 5,252 108,000 7,043 7,043 108,000
9 1,000 11,578 4,313 4,313 109,000 5,987 5,987 109,000 8,318 8,318 109,000
10 1,000 13,207 4,682 4,682 110,000 6,728 6,728 110,000 9,698 9,698 110,000
11 1,000 14,917 5,017 5,017 111,000 7,472 7,472 111,000 11,191 11,191 111,000
12 1,000 16,713 5,318 5,318 112,000 8,220 8,220 112,000 12,811 12,811 112,000
13 1,000 18,599 5,584 5,584 113,000 8,971 8,971 113,000 14,570 14,570 113,000
14 1,000 20,579 5,813 5,813 114,000 9,721 9,721 114,000 16,480 16,480 114,000
15 1,000 22,657 6,001 6,001 115,000 10,469 10,469 115,000 18,554 18,554 115,000
16 1,000 24,840 6,146 6,146 116,000 11,211 11,211 116,000 20,808 20,808 116,000
17 1,000 27,132 6,246 6,246 117,000 11,943 11,943 117,000 23,260 23,260 117,000
18 1,000 29,539 6,296 6,296 118,000 12,662 12,662 118,000 25,927 25,927 118,000
19 1,000 32,066 6,290 6,290 119,000 13,360 13,360 119,000 28,828 28,828 119,000
20 1,000 34,719 6,226 6,226 120,000 14,035 14,035 120,000 31,990 31,990 120,000
@ 65 1,000 69,761 1,753 1,753 130,000 18,579 18,579 130,000 85,541 85,541 166,337
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
32.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
66
<PAGE>
[VERSION C]
PHOENIX EXECUTIVE
BENEFIT VUL
DEVELOPED FOR CLARK BARDES
VARIABLE UNIVERSAL LIFE
INSURANCE POLICY
Issued by
PHOENIX LIFE AND
ANNUITY COMPANY
FOR POLICYHOLDER SERVICE, PLEASE CONTACT US AT:
[envelope] ANDESA TPA, INC.
1605 N CEDAR CREST BLVD, SUITE 502
ALLENTOWN, PA 18104
[telephone] 610/439-5256
PROSPECTUS OCTOBER 29, 1999
AS SUPPLEMENTED DECEMBER 20, 1999
This prospectus describes an individual flexible premium variable universal life
insurance policy. The policy provides lifetime insurance protection for as long
as it remains in force.
You may allocate net premiums and cash value to one or more of the Subaccounts
of the VUL Account and the Guaranteed Interest Account. The assets of each
Subaccount will be used to purchase, at net asset value, shares of a series in
the following designated underlying funds.
THE PHOENIX EDGE SERIES FUND
- ----------------------------
MANAGED BY PHOENIX INVESTMENT COUNSEL, INC.
[diamond] Phoenix-Aberdeen International Series
[diamond] Phoenix-Engemann Capital Growth Series
[diamond] Phoenix-Engemann Nifty Fifty Series
[diamond] Phoenix-Goodwin Money Market Series
[diamond] Phoenix-Goodwin Multi-Sector Fixed Income Series
[diamond] Phoenix-Hollister Value Equity Series
[diamond] Phoenix-Oakhurst Balanced Series
[diamond] Phoenix-Oakhurst Growth and Income Series
[diamond] Phoenix-Oakhurst Strategic Allocation Series
[diamond] Phoenix-Seneca Mid-Cap Growth Series
[diamond] Phoenix-Seneca Strategic Theme Series
MANAGED BY PHOENIX-ABERDEEN INTERNATIONAL ADVISORS, LLC
[diamond] Phoenix-Aberdeen New Asia Series
MANAGED BY DUFF & PHELPS INVESTMENT MANAGEMENT CO.
[diamond] Phoenix-Duff & Phelps Real Estate Securities Series
MANAGED BY PHOENIX VARIABLE ADVISORS, INC.
[diamond] Phoenix Research Enhanced Index Series
[diamond] Phoenix-Bankers Trust Dow 30 Series
[diamond] Phoenix-Federated U.S Government Bond Series
[diamond] Phoenix-Janus Equity Income Series
[diamond] Phoenix-Janus Flexible Income Series
[diamond] Phoenix-Janus Growth Series
[diamond] Phoenix-Morgan Stanley Focus Equity Series
[diamond] Phoenix-Schafer Mid-Cap Value Series
BT INSURANCE FUNDS TRUST
- ------------------------
MANAGED BY BANKERS TRUST COMPANY
[diamond] EAFE[registered trademark] Equity Index Fund
FEDERATED INSURANCE SERIES
- --------------------------
MANAGED BY FEDERATED INVESTMENT MANAGEMENT COMPANY
[diamond] Federated Fund for U.S. Government Securities II
[diamond] Federated High Income Bond Fund II
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- ------------------------------------------------
MANAGED BY MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
[diamond] Technology Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ---------------------------------------
MANAGED BY TEMPLETON INVESTMENT COUNSEL, INC.
[diamond] Templeton Asset Allocation Fund -- Class 2
[diamond] Templeton International Fund -- Class 2
[diamond] Templeton Stock Fund -- Class 2
MANAGED BY TEMPLETON ASSET MANAGEMENT, LTD.
[diamond] Templeton Developing Markets Fund -- Class 2
MANAGED BY FRANKLIN MUTUAL ADVISERS, LLC
[diamond] Mutual Shares Investments Fund -- Class 2
WANGER ADVISORS TRUST
- ---------------------
MANAGED BY WANGER ASSET MANAGEMENT, L.P.
[diamond] Wanger Foreign Forty
[diamond] Wanger International Small Cap
[diamond] Wanger Twenty
[diamond] Wanger U.S. Small Cap
1
<PAGE>
It may not be in your best interest to purchase a policy to replace an
existing life insurance policy or annuity contract. You must understand the
basic features of the proposed policy and your existing coverage before you
decide to replace your present coverage. You must also know if the replacement
will result in any taxes.
The policy is not a deposit or obligation of, underwritten or guaranteed by,
any financial institution or credit union. It is not federally insured or
endorsed by the Federal Deposit Insurance Corporation or any other state or
federal agency. Policy investments are subject to risk, including the
fluctuation of policy values and possible loss of principal invested or premiums
paid.
The Securities and Exchange Commission has not approved or disapproved these
securities, nor passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
This prospectus is valid only if accompanied or preceded by current
prospectuses for the funds. You should read and keep these prospectuses for
future reference.
2
<PAGE>
TABLE OF CONTENTS
Heading Page
- --------------------------------------------------------------------------------
PART I--GENERAL POLICY PROVISIONS........................................... 6
SUMMARY ............................................................... 6
Availability....................................................... 6
Underwriting....................................................... 6
Charges under the Policy........................................... 6
Deductions from Premiums........................................... 8
Sales Charge................................................... 8
State Premium Tax Charge....................................... 8
Deferred Acquisition Cost (DAC) Tax Charge..................... 8
Policy Value Charges............................................... 8
Administrative Charge.......................................... 8
Cost of Insurance.............................................. 8
Mortality and Expense Risk Fee................................. 8
Rider Charge................................................... 8
Charges for Federal Income Taxes............................... 8
Fund Charges................................................... 8
Other Charges...................................................... 10
Partial Surrender Fee.......................................... 10
Loan Interest Rate Expense Charge.............................. 10
Reduction in Charges............................................... 10
PHOENIX LIFE AND ANNUITY COMPANY AND THE VUL ACCOUNT................... 11
PLAC............................................................... 11
The VUL Account.................................................... 11
PERFORMANCE HISTORY.................................................... 11
INVESTMENTS OF THE VUL ACCOUNT......................................... 11
Participating Investment Funds..................................... 11
The Phoenix Edge Series Fund................................... 11
BT Insurance Funds Trust....................................... 12
Federated Insurance Series..................................... 12
Morgan Stanley Dean Witter Universal Funds, Inc................ 13
Templeton Variable Products Series Fund........................ 13
Wanger Advisors Trust.......................................... 13
Investment Advisors................................................ 14
Services of the Advisors........................................... 14
Reinvestment and Redemption........................................ 15
Substitution of Investments........................................ 15
The Guaranteed Interest Account.................................... 15
PREMIUMS............................................................... 15
Minimum Premiums................................................... 15
Allocation of Issue Premium........................................ 16
Free Look Period................................................... 16
Account Value...................................................... 16
Transfer of Policy Value....................................... 16
Systematic Transfers for Dollar Cost Averaging................. 17
Automatic Asset Rebalancing........................................ 17
Determination of Subaccount Values................................. 17
Death Benefit under the Policy..................................... 17
Minimum Face Amount............................................ 18
Death Benefit Options.......................................... 18
Changes in Face Amount of Insurance................................ 18
Requests for Increase in Face Amount........................... 18
3
<PAGE>
Decreases in Face Amount and Partial Surrender: Effect on
Death Benefit...................................................... 18
Requests for Decrease in Face Amount........................... 18
Surrenders......................................................... 18
General........................................................ 18
Full Surrenders................................................ 19
Partial Surrenders............................................. 19
Policy Loans....................................................... 19
Source of Loan................................................. 19
Interest....................................................... 19
Interest Credited on Loaned Value.............................. 20
Repayment...................................................... 20
Effect of Loan................................................. 20
Lapse.............................................................. 20
Additional Insurance Option........................................ 20
Additional Rider Benefits.......................................... 20
PART II--ADDITIONAL POLICY PROVISIONS...................................... 21
Postponement of Payments........................................... 21
Payment by Check................................................... 21
The Contract....................................................... 21
Suicide............................................................ 21
Incontestability................................................... 21
Change of Owner or Beneficiary..................................... 21
Assignment......................................................... 21
Misstatement of Age or Sex......................................... 21
Surplus............................................................ 22
PAYMENT OF PROCEEDS.................................................... 22
Surrender and Death Benefit Proceeds............................... 22
Payment Options.................................................... 22
Option 1--Lump sum............................................. 22
Option 2--Left to earn interest................................ 22
Option 3--Payment for a specific period........................ 22
Option 4--Life annuity with specified period certain........... 22
Option 5--Life annuity......................................... 22
Option 6--Payments of a specified amount....................... 22
Option 7--Joint survivorship annuity with 10-year
period certain................................................. 23
PART III--OTHER IMPORTANT INFORMATION...................................... 23
FEDERAL TAX CONSIDERATIONS............................................. 23
Introduction....................................................... 23
PLAC's Tax Status.................................................. 23
Policy Benefits.................................................... 23
Death Benefit Proceeds......................................... 23
Full Surrender................................................. 23
Partial Surrender.............................................. 23
Loans.......................................................... 24
Business-Owned Policies............................................ 24
Modified Endowment Contracts....................................... 24
General........................................................ 24
Reduction in Benefits During the First 7 Years................. 24
Distributions Affected......................................... 24
Penalty Tax.................................................... 24
Material Change Rules.......................................... 24
Serial Purchase of Modified Endowment Contracts................ 25
Limitations on Unreasonable Mortality and Expense Charges.......... 25
Diversification Standards.......................................... 25
Change of Ownership or Insured or Assignment....................... 25
Other Taxes........................................................ 26
VOTING RIGHTS ......................................................... 26
4
<PAGE>
THE DIRECTORS AND EXECUTIVE OFFICERS OF PLAC........................... 26
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS ............................... 26
SALES OF POLICIES ..................................................... 27
STATE REGULATION ...................................................... 27
REPORTS ............................................................... 27
LEGAL PROCEEDINGS ..................................................... 27
LEGAL MATTERS ......................................................... 27
REGISTRATION STATEMENT ................................................ 27
YEAR 2000 ISSUE........................................................ 27
FINANCIAL STATEMENTS .................................................. 28
APPENDIX A GLOSSARY OF SPECIAL TERMS................................... 50
APPENDIX B PERFORMANCE HISTORY......................................... 51
APPENDIX C ILLUSTRATIONS............................................... 55
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.
5
<PAGE>
PART I--GENERAL POLICY PROVISIONs
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This is a summary that describes the general provisions of the policy.
Certain provisions of the policy described in this prospectus may differ in
a particular state because of specific state requirements.
Throughout the prospectus, Phoenix Life and Annuity Company is referred to
as PLAC, we, us or our and the policyholder is referred to as you or your.
We define the following terms in the Glossary of Appendix A:
ATTAINED AGE POLICY ANNIVERSARY
BENEFICIARY POLICY DATE
DEBT POLICY VALUE
FUNDS POLICY YEAR
GENERAL ACCOUNT SERIES
ISSUE PREMIUM SUBACCOUNTS
MONTHLY CALCULATION DAY TARGET PREMIUM
NET ASSET VALUE VALUATION DATE
PAYMENT DATE VALUATION PERIOD
PLANNED ANNUAL PREMIUM VUL ACCOUNT (ACCOUNT)
If there is ever a difference between the provisions within this prospectus
and the provisions of the policy, the policy provisions will control.
AVAILABILITY
The policy is available on a "case" basis. We may consider one person as a
case. All policies within a case are aggregated for purposes of determining
policy dates, loan rates and underwriting requirements. If an individual owns
the policy as part of a case, he or she may exercise all rights under the policy
through his or her employer or sponsoring organization. After termination of
employment or other such relationship, the individual may exercise such rights
directly with us.
For fully underwritten policies, the age of the insured at the time of issue
generally must be between ages 18 through 85 as of his or her birthday nearest
policy anniversary.
For policies that are underwritten using simplified or guaranteed issue
programs, generally the maximum age of the Insured at the time of issue is age
70 for simplified and 64 for guaranteed issue.
The minimum face amount of insurance per policy issued is $50,000.
You can purchase a policy to insure the life of another person provided that
you have an insurable interest in that life and the prospective Insured
consents.
UNDERWRITING
Currently, we offer 3 types of underwriting:
[diamond] fully underwritten;
[diamond] simplified issue underwriting; and
[diamond] guaranteed issue underwriting.
Your cost of insurance charges will vary based on the type of underwriting
we use.
CHARGES UNDER THE POLICY
We deduct certain charges from your policy to compensate us for:
1. our expenses in selling the policy;
2. underwriting and issuing the policy;
3. premium and federal taxes incurred on premiums received;
4. providing insurance benefits under your policy; and
5. assuming certain risks in connection with the policy.
These charges are summarized in the following chart.
6
<PAGE>
<TABLE>
<CAPTION>
CHARGES UNDER THE POLICY
- ------------------------------------------------------------------------------------------------------------------------------------
CHARGES CURRENT RATE GUARANTEED RATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEDUCTIONS FROM SALES CHARGE Policy years 1 - 7: 5.0% of premiums Policy years 1 - 7: 5.0% of premiums.
PREMIUMS up to the target premium and 0% on
amounts in excess of the target Policy year 8+: 2.0% of all premiums.
premium.
Policy year 8+: 0% of all premiums.
------------------------------------------------------------------------------------------------------------
STATE PREMIUM 0.75% to 4.0% of each premium up to This charge will always equal the
TAX the target premium depending on applicable state rate.
your state's applicable rate.
------------------------------------------------------------------------------------------------------------
DEFERRED ACQUISITION 1.5% of each premium up to the target This charge will always equal the
COST TAX CHARGE premium. actual cost to us for the DAC tax.
(DAC TAX)
- ------------------------------------------------------------------------------------------------------------------------------------
POLICY VALUE CHARGES ADMINISTRATIVE $5 per month ($60 annually) $10 per month ($120 annually) except
CHARGE New York, $7.50 per month ($90
annually)
------------------------------------------------------------------------------------------------------------
COST OF INSURANCE CHARGE A per thousand rate multiplied by the The maximum monthly cost of
amount at risk each month. This insurance charge for each $1,000 of
charge varies by the Insured's issue insurance is shown on your policy's
age, policy duration, gender and schedule pages.
underwriting class.
------------------------------------------------------------------------------------------------------------
MORTALITY AND 0.40% annually in policy years 1-10 0.90% annually in all policy years
EXPENSE RISK 0.25% annually in policy years 11+
FEE
------------------------------------------------------------------------------------------------------------
FUND CHARGES SEE FUND CHARGE TABLE SEE FUND CHARGE TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER CHARGES PARTIAL SURRENDER None 2.0% of the amount withdrawn, but not
FEE greater than $25.
------------------------------------------------------------------------------------------------------------
TRANSFERS BETWEEN None $10 per transfer after the first 2
SUBACCOUNTS transfers in any given policy year,
(after 12 transfers in New York).
------------------------------------------------------------------------------------------------------------
LOAN INTEREST RATE The rates in effect before the 16th The guaranteed rates before the
CHARGED policy year and before the Insured Insured reaches 65 for all states are:
reaches age 65 in all states except Policy year 1 - 10: 4.75%
New York and New Jersey are: Policy year 11 - 15: 4.50%
Policy year 1 - 10: 2.75% Policy year 16+: 4.25%
Policy year 11 - 15: 2.50%
Policy year 16+: 2.25%
The rates in effect before the 16th
policy year and before the Insured
reaches age 65 in New York and
New Jersey are:
Policy year 1 - 10: 4.75%
Policy year 11 - 15: 4.50%
Policy year 16+: 4.25%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
DEDUCTIONS FROM PREMIUMS
Before we allocate your premium to the Subaccounts or the Guaranteed
Interest Account, we deduct a sales charge, a state premium tax and a federal
tax to cover the estimated cost to us for deferred acquisition costs.
SALES CHARGE
We deduct a sales charge from your premium for the costs we incur in the
sales and distribution of the policies. We will refund a portion of the sales
charge to you as part of the cash surrender value if you surrender your policy
within the first 3 policy years according to the following schedule:
Policy Year 1: 100.00%
Policy Year 2: 66.67%
Policy Year 3: 33.33%
STATE PREMIUM TAX CHARGE
States assess premium taxes at various rates. We deduct the applicable state
rate from each premium to cover the cost of the premium taxes assessed against
us by the state.
We may increase or decrease this charge if there is a change in the tax or
change of residence.
DEFERRED ACQUISITION COST ("DAC") TAX CHARGE
This tax is associated with our federal tax liability under Internal Revenue
Code Section 848.
POLICY VALUE CHARGES
On each monthly calculation day, we deduct the following charges from your
policy value:
1. administrative charge
2. cost of insurance charge
3. mortality and expense risk fee
4. a charge for the cost of riders if applicable
The amount deducted is allocated among the Subaccounts and the unloaned
portion of the Guaranteed Interest Account based on an allocation schedule
specified by you. You initially select this schedule in your application.
1. ADMINISTRATIVE CHARGE
We assess a monthly charge for the expenses we incur in administering the
policy. This charge reimburses us for the cost of daily administration of
services such as billing and collections, monthly processing, updating daily
values and communicating with policyholders.
2. COST OF INSURANCE
We deduct a charge to cover the cost of insurance coverage on each monthly
calculation day. This charge is based on:
[diamond] Insured's gender;
[diamond] Insured's age at issue;
[diamond] policy year in which we make the deduction;
[diamond] Insured's tobacco use classification;
[diamond] rating class of the policy; and
[diamond] underwriting classification of the case.
To determine the monthly cost of insurance, we multiply the appropriate cost
of insurance rate by the difference between your policy's death benefit and the
policy value. Any change in the cost of insurance rates will apply to all
persons of the same sex, insurance age and risk class whose policies have been
in force for the same length of time.
3. MORTALITY AND EXPENSE RISK FEE
We charge the Subaccounts for the mortality and expense risks we assume.
This charge is deducted from the value of each Subaccount's assets attributable
to the policies.
The mortality risk we assume is that the group of lives we insure under our
policies may, on average, live for a shorter period of time than we estimated.
The expense risk we assume is that our cost of issuing and administering the
policies may be more than we estimated.
If all the money we collect from this charge is not required to cover the
cost of death benefits and other expenses, it will be a gain to us. If the money
we collect is not enough to cover our costs, we will still provide for death
benefits and expenses.
4. RIDER CHARGE
We will deduct any applicable monthly rider charges for the additional
benefit provided to you by the rider.
CHARGES FOR FEDERAL INCOME TAXES
We currently do not charge the VUL Account for federal income taxes
attributable to it. In the future, we may charge to cover these taxes or any
other tax liability of the VUL Account.
FUND CHARGES
Please refer to the following chart for a listing of fund charges.
8
<PAGE>
<TABLE>
ANNUAL FUND EXPENSES FOR THE YEAR ENDING DECEMBER 31, 1998 AFTER REIMBURSEMENT
<CAPTION>
INVESTMENT OTHER OPERATING TOTAL ANNUAL
SERIES MANAGEMENT FEE RULE 12B-1 FEES EXPENSES FUND EXPENSES(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Phoenix Research Enhanced Index .45% 0% .10% .55%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International .75% 0% .23% .98%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia 1.00% 0% .25% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Bankers Trust Dow 30 .35% 0% .15% .50%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities .75% 0% .25% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth .62% 0% .07% .69%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty .90% 0% .15% 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Federated U.S. Government Bond .60% 0% .15% .75%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market .40% 0% .15% .55%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income .50% 0% .14% .64%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity .70% 0% .15% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Janus Equity Income .85% 0% .15% 1.00%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Janus Flexible Income .80% 0% .15% .95%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Janus Growth .85% 0% .15% 1.00%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Morgan Stanley Focus Equity .85% 0% .15% 1.00%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced .55% 0% .13% .68%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income .70% 0% .15% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation .58% 0% .10% .68%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value 1.05% 0% .15% 1.20%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth .80% 0% .25% 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme .75% 0% .24% .99%
- --------------------------------------------------------------------------------------------------------------------------------
EAFE(R)Equity Index 0% 0% .65% .65%
- --------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities .52% 0% .33% .85%
- --------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond .60% 0% .18% .78%
- --------------------------------------------------------------------------------------------------------------------------------
Technology Portfolio .80% 0% 1.15% 1.95%(2)
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments 0% .25% 1.00% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation .60% .25% .18% 1.03%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets 1.25% .25% .41% 1.91%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton International .69% .25% .17% 1.11%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Stock .70% .25% .19% 1.14%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty .95% 0% .50% 1.45%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap 1.27% 0% .28% 1.55%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty .90% 0% .45% 1.35%
- --------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap .96% 0% .06% 1.02%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(1) Each Series pays a portion or all of its total annual expenses other than
the management fee. The Phoenix Research Enhanced Index Series will pay up
to .10%; the Phoenix-Bankers Trust Dow 30, Phoenix-Federated U.S.
Government Bond, Phoenix-Janus Equity Income, Phoenix-Janus Flexible
Income, Phoenix-Janus Growth, Phoenix-Engemann Capital Growth,
Phoenix-Goodwin Multi-Sector Fixed Income, Phoenix-Oakhurst Strategic
Allocation, Phoenix-Goodwin Money Market, Phoenix-Oakhurst Balanced,
Phoenix-Engemann Nifty Fifty, Phoenix-Oakhurst Growth and Income,
Phoenix-Hollister Value Equity and Phoenix-Schafer Mid-Cap Value Series
will pay up to .15%; the Phoenix-Duff & Phelps Real Estate Securities,
Phoenix-Seneca Strategic Theme, Phoenix-Aberdeen New Asia and
Phoenix-Seneca Mid-Cap Growth Series will pay up to .25%; and the
Phoenix-Aberdeen International Series will pay up to .40% for the fiscal
year ending December 31, 1998. Absent expense reimbursement, total annual
expenses were:
Phoenix Research Enhanced Index .82% Phoenix-Hollister Value Equity 2.46%
Phoenix-Aberdeen International .98% Phoenix-Oakhurst Balanced .68%
Phoenix-Aberdeen New Asia 2.50% Phoenix-Oakhurst Growth and Income 1.46%
Phoenix-Duff & Phelps Real Estate Securities 1.01% Phoenix-Oakhurst Strategic Allocation .68%
Phoenix-Engemann Capital Growth .69% Phoenix-Schafer Mid-Cap Value 2.77%
Phoenix-Engemann Nifty Fifty 2.58% Phoenix-Seneca Mid-Cap Growth 2.81%
Phoenix-Goodwin Money Market .55% Phoenix-Seneca Strategic Theme .99%
Phoenix-Goodwin Multi-Sector Fixed Income .64%
The Wanger Foreign Forty will pay up to .45%, the Wanger U.S. Small Cap
Series will pay up to .50%, the Wanger International Small Cap will pay up
to .60%, and the Wanger Twenty will pay up to .40%. Absent expense
reimbursement, Total Annual Expenses are estimated to be approximately
1.45% for Wanger Foreign Forty, 1.55% for Wanger International Small Cap,
1.35% for Wanger Twenty and 1.02% for Wanger U.S. Small Cap for the fiscal
year ending December 31, 1999. Expenses may be higher or lower than those
shown but are subject to expense limitations as noted.
(2) These are new series and expenses are estimated. Absent Expense
reimbursement, the projected Total Annual Expenses for the year ended
December 31, 1999 are expected to be as follows:
Phoenix-Bankers Trust Dow 30 1.75% Phoenix-Janus Flexible Income 2.45%
Phoenix-Federated U.S. Government Bond 2.30% Phoenix-Janus Growth 1.90%
Phoenix-Janus Equity Income 2.25% Phoenix-Morgan Stanley Focus Equity 2.15%
</TABLE>
9
<PAGE>
OTHER CHARGES
PARTIAL SURRENDER FEE
We reserve the right to deduct a charge from each withdrawal.
LOAN INTEREST RATE EXPENSE CHARGE
We deduct a charge from the loan interest rate. This charge reimburses us
for expenses we incur in administering your loan. This rate varies by policy
year.
REDUCTION IN CHARGES
The policy is available for purchase by individuals, corporations and other
groups. For group or sponsored arrangements (including our employees and their
family members) and for special exchange programs that we may make available, we
reserve the right to reduce or eliminate the sales load, mortality and expense
risk charge, monthly administrative charge, monthly cost of insurance charges or
other charges normally assessed on certain multiple life cases where it is
expected that the size or nature of such cases will result in savings of sales,
underwriting, administrative or other costs.
Eligibility for the amount of these reductions will be determined by a
number of factors including:
o the number of insureds,
o the total premium expected to be paid,
o the total assets under management for the policyowner,
o the nature of the relationship among individual insureds,
o the purpose for which the policies are being purchased,
and other circumstances which in our opinion are rationally related to the
expected reduction in expenses. Any variations in the charge structure will be
determined in a uniform manner reflecting differences in costs of services and
not unfairly discriminatory to policyholders.
10
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY AND
THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PLAC
We are an indirect subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix"). Our executive office is located at One American Row, Hartford,
Connecticut 06102-5056, and our main administrative office is located at 100
Bright Meadow Boulevard, Enfield, Connecticut 06083-1900. We are a Connecticut
stock company, formed to write life insurance and annuity contracts. Formerly,
PLAC was Savers Life Insurance Company of America, chartered in Missouri in
1981. We redomesticated to Connecticut in April, 1997.
THE VUL ACCOUNT
The VUL Account is a separate account of PLAC, established on July 1, 1996
and governed under the laws of Connecticut. It is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940, as amended, and
meets the definition of a "separate account" under that Act. This registration
does not involve supervision of the management of the VUL Account or PLAC by the
SEC.
The VUL Account is divided into Subaccounts, each of which is available for
allocation of policy value. Each Subaccount will invest solely in shares of a
specific series of a mutual fund. In the future, we may establish additional
Subaccounts which will be made available to existing policyowners to the extent
and on a basis decided by us. See "Investments of the VUL Account--Participating
Investment Funds."
PLAC does not guarantee the investment performance of the VUL Account or any
of its Subaccounts. Contributions to the overall policy value allocated to the
VUL Account depend on the chosen Fund's investment performance. Thus, you bear
the full investment risk for all monies invested in the VUL Account.
The VUL Account is part of the general business of PLAC, but the gains or
losses of the VUL Account belong solely to the VUL Account. The gains or losses
of any other business we may conduct do not affect the VUL Account. Under
Connecticut law, the assets of the VUL Account may not be taken to pay
liabilities arising out of any other business we may conduct. Nevertheless, all
obligations arising under the policy are general corporate obligations of PLAC.
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
We may include the performance history of the VUL Account 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. See "Appendix B" for more information.
INVESTMENTS OF THE VUL ACCOUNT
- --------------------------------------------------------------------------------
PARTICIPATING INVESTMENT FUNDS
THE PHOENIX EDGE SERIES FUND
Certain Subaccounts invest in corresponding series of The Phoenix Edge
Series Fund. The following series are currently available:
PHOENIX RESEARCH ENHANCED INDEX SERIES: The investment objective of the
series is high total return. The Phoenix Research Enhanced Index Series invests
in a broadly diversified portfolio of equity securities of large and medium
capitalization companies within market sectors reflected in the S&P 500. It
invests in a portfolio of undervalued common stocks and other equity securities
which appear to offer growth potential and an overall volatility of return
similar to that of the S&P 500.
PHOENIX-ABERDEEN INTERNATIONAL SERIES: The investment objective of the
series is a high total return consistent with reasonable risk. The
Phoenix-Aberdeen International Series invests 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 series provides a means for investors to
invest a portion of their assets outside the United States.
PHOENIX-ABERDEEN NEW ASIA SERIES: The investment objective of the series is
long-term capital appreciation. The Phoenix-Aberdeen New Asia Series invests
primarily in a diversified portfolio of equity securities of issuers organized
and principally operating in Asia, excluding Japan.
PHOENIX-BANKERS TRUST DOW 30 SERIES: The series seeks to track the total
return of the Dow Jones Industrial Average(SM) (the "DJIA(SM)") before fund
expenses.
PHOENIX-DUFF & PHELPS REAL ESTATE SECURITIES SERIES: The investment
objective of the series is capital appreciation and income with approximately
equal emphasis. Under normal circumstances, the Phoenix-Duff & Phelps Real
Estate Securities Series invests 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.
PHOENIX-ENGEMANN CAPITAL GROWTH SERIES: The investment objective of the
series is to achieve intermediate and long-term growth of capital, with income
as a secondary consideration. The Phoenix-Engemann Capital Growth Series invests
principally in common stocks of corporations believed by management to offer
growth potential.
11
<PAGE>
PHOENIX-ENGEMANN NIFTY FIFTY SERIES: The investment objective of the series
is long-term capital appreciation. The Phoenix-Engemann Nifty Fifty Series
invests in approximately 50 different securities which offer the best potential
for long-term growth of capital. At least 75% of the series' assets are invested
in common stocks of high quality growth companies. The remaining portion is
invested in common stocks of small corporations with rapidly growing earnings
per share or common stocks believed to be undervalued.
PHOENIX-FEDERATED U.S. GOVERNMENT BOND SERIES: The investment objective of
the series is to maximize total return by investing primarily in debt
obligations of the U.S. Government, its agencies and instrumentalities.
PHOENIX-GOODWIN MONEY MARKET SERIES: The investment objective of the series
is maximum current income consistent with capital preservation and liquidity.
The Phoenix-Goodwin Money Market Series invests exclusively in high quality
money market instruments.
PHOENIX-GOODWIN MULTI-SECTOR FIXED INCOME SERIES: The investment objective
of the series is long-term total return. The Phoenix-Goodwin Multi-Sector Fixed
Income Series seeks to achieve its investment objective by investing in a
diversified portfolio of high yield and high quality fixed income securities.
PHOENIX-HOLLISTER VALUE EQUITY SERIES: The primary investment objective of
the series is long-term capital appreciation, with a secondary investment
objective of current income. The Phoenix-Hollister Value Equity Series seeks to
achieve its objective by investing in a diversified portfolio of common stocks
that meet certain quantitative standards that indicate above average financial
soundness and intrinsic value relative to price.
PHOENIX-JANUS EQUITY INCOME SERIES: The investment objective of the series
is to seek current income and long-term growth of capital.
PHOENIX-JANUS FLEXIBLE INCOME SERIES: The investment objective of the series
is to seek to obtain maximum total return, consistent with preservation of
capital.
PHOENIX-JANUS GROWTH SERIES: The investment objective of the series is to
seek long-term growth of capital, in a manner consistent with the preservation
of capital.
PHOENIX-MORGAN STANLEY FOCUS EQUITY SERIES: The investment objective of the
series is to seek capital appreciation by investing primarily in equity
securities.
PHOENIX-OAKHURST BALANCED SERIES: The investment objective of the series is
to seek reasonable income, long-term capital growth and conservation of capital.
The Phoenix-Oakhurst Balanced Series invests based on combined considerations of
risk, income, capital enhancement and protection of capital value.
PHOENIX-OAKHURST GROWTH AND INCOME SERIES: The investment objective of the
series is dividend growth, current income and capital appreciation by investing
in common stocks. The Phoenix-Oakhurst Growth and Income Series seeks to achieve
its objective by selecting securities primarily from equity securities of the
1,000 largest companies traded in the United States, ranked by market
capitalization.
PHOENIX-OAKHURST STRATEGIC ALLOCATION SERIES: The investment objective of
the series is to realize as high a level of total return over an extended period
of time as is considered consistent with prudent investment risk. The
Phoenix-Oakhurst Strategic Allocation Series invests in stocks, bonds and money
market instruments in accordance with the Investment Advisor's appraisal of
investments most likely to achieve the highest total return.
PHOENIX-SCHAFER MID-CAP VALUE SERIES: The primary investment objective of
the series is long-term capital appreciation, with current income as the
secondary investment objective. The Phoenix-Schafer Mid-Cap Value Series invests
in common stocks of established companies having a strong financial position and
a low stock market valuation at the time of purchase which are believed to offer
the possibility of increase in value.
PHOENIX-SENECA MID-CAP GROWTH SERIES: The investment objective of the series
is capital appreciation primarily through investments in equity securities of
companies that have the potential for above average market appreciation. The
Phoenix-Seneca Mid-Cap Growth Series seeks to outperform the Standard & Poor's
Mid-Cap 400 Index.
PHOENIX-SENECA STRATEGIC THEME SERIES: The investment objective of the
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
Phoenix-Seneca Strategic Theme Series invests primarily in common stocks
believed to have substantial potential for capital growth.
BT INSURANCE FUNDS TRUST
A certain Subaccount invests in a corresponding series of the BT Insurance
Funds Trust. The following series is currently available:
EAFE[registered trademark] EQUITY INDEX FUND: The series seeks to match the
performance of the Morgan Stanley Capital International EAFE[registered
trademark] Index ("EAFE[registered trademark] Index"), which emphasizes major
stock market performance of companies in Europe, Australia and the Far East. The
series invests in a statistically selected sample of the securities found in the
EAFE[registered trademark] Index.
FEDERATED INSURANCE SERIES
Certain Subaccounts invest in corresponding Series of the Federated
Insurance Series. The following Series are currently available:
12
<PAGE>
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II: The investment objective
of the series is current income. The Federated Fund for U.S. Government
Securities II invests primarily in U.S. government securities, including
mortgage-backed securities issued by U.S. government agencies.
FEDERATED HIGH INCOME BOND FUND II: The investment objective of the series
is high current income. The Federated High Income Bond Fund II invests primarily
in a diversified portfolio of high-yield, lower-rated corporate bonds.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC. A certain subaccount
invests in a corresponding series of the Morgan Stanley Dean Witter Universal
Funds, Inc. The following series is currently available:
TECHNOLOGY PORTFOLIO: The investment objective of the series is to seek
long-term capital appreciation by investing primarily in equity securities of
companies that the investment advisor expects to benefit from their involvement
in technology and technology-related industries.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Certain Subaccounts invest in Class 2 shares of a corresponding series of
the Templeton Variable Products series Fund. The following series are currently
available:
MUTUAL SHARES INVESTMENT FUND: The primary investment objective of the
series is capital appreciation with income as a secondary objective. The Mutual
Shares Investments Fund invests in domestic equity securities that the manager
believes are significantly undervalued.
TEMPLETON ASSET ALLOCATION FUND: The investment objective of the series is a
high level of total return. The Templeton Asset Allocation Fund invests in
stocks of companies of any nation, bonds of companies and governments of any
nation, and in money market instruments. Changes in the asset mix will be made
in an attempt to capitalize on total return potential produced by changing
economic conditions throughout the world, including emerging market countries.
TEMPLETON DEVELOPING MARKETS FUND: The investment objective of the series is
long-term capital appreciation. The Templeton Developing Markets Fund invests
primarily in emerging market equity securities.
TEMPLETON INTERNATIONAL FUND: The investment objective of the series is
long-term capital growth. The Templeton International Fund invests primarily in
stocks of companies located outside the United States, including emerging
markets.
TEMPLETON STOCK FUND: The investment objective of the series is long-term
capital growth. The Templeton Stock Fund invests primarily in common stocks
issued by companies in various nations throughout the world, including the U.S.
and emerging markets.
WANGER ADVISORS TRUST
Certain Subaccounts invest in corresponding series of the Wanger Advisors
Trust. The following series are currently available:
WANGER FOREIGN FORTY: The investment objective of the series is long-term
capital growth. The Wanger Foreign Forty Series invests primarily in equity
securities of foreign companies with market capitalization of $1 billion to $10
billion and focuses its investments in 40 to 60 companies in the developed
markets.
WANGER INTERNATIONAL SMALL CAP: The investment objective of the series is
long-term capital growth. The Wanger International Small Cap Series invests
primarily in securities of non-U.S. companies with total common stock market
capitalization of less than $1 billion.
WANGER TWENTY: The investment objective of the series is long-term capital
growth. The Wanger Twenty Series invests primarily in the stocks of U.S.
companies with market capitalization of $1 billion to $10 billion and ordinarily
focuses its investments in 20 to 25 U.S. companies.
WANGER U.S. SMALL CAP: The investment objective of the series is long-term
capital growth. The Wanger U.S. Small Cap Series invests primarily in securities
of U.S. companies with total common stock market capitalization of less than $1
billion.
Each series will be subject to market fluctuations and the risks that come
with the ownership of any security. There can be no assurance that any series
will achieve its stated investment objective.
In addition to being sold to the Account, shares of all of the funds may be
sold to other separate accounts of Phoenix or its affiliates. Shares of certain
funds may also be sold to the separate accounts of other insurance companies.
It is possible that in the future there may be no advantage for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Funds simultaneously. Although neither PLAC nor the Funds'
trustees currently foresee any such disadvantages either to variable life
insurance policyowners or to variable annuity contractowners, the Funds'
trustees intend to monitor events in order to identify any material conflicts
between variable life insurance policyowners and variable annuity contractowners
and to determine what action, if any, should be taken in response to such
conflicts. Material conflicts could, for example, result from:
[diamond] changes in state insurance laws;
[diamond] changes in federal income tax laws;
13
<PAGE>
[diamond] changes in the investment management of any portfolio of the Fund(s);
or
[diamond] differences in voting instructions between those given by variable
life insurance policyowners and those given by variable annuity
contractowners.
We will remedy such material conflicts at our expense, 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 ADVISORS
Phoenix Investment Counsel, Inc. ("PIC") is an investment advisor to the
following series in The Phoenix Edge Series Fund:
o Phoenix-Goodwin Money Market Series
o Phoenix-Goodwin Multi-Sector Fixed Income Series
o Phoenix-Hollister Value Equity Series
o Phoenix-Oakhurst Balanced Series
o Phoenix-Oakhurst Growth and Income Series
o Phoenix-Oakhurst Strategic Allocation Series
Based on subadvisory agreements with the fund, PIC as an investment advisor
delegates certain investment decisions and research functions to subadvisors for
the following series:
[diamond] Phoenix-Aberdeen International Advisors, LLC ("PAIA")
o Phoenix-Aberdeen International Series
[diamond] Roger Engemann & Associates, Inc. ("Engemann")
o Phoenix-Engemann Capital Growth Series
o Phoenix-Engemann Nifty Fifty Series
[diamond] Seneca Capital Management, LLC ("Seneca")
o Phoenix-Seneca Mid-Cap Growth Series
o Phoenix-Seneca Strategic Theme Series
Phoenix Variable Advisors, Inc. ("PVA") is also an investment advisor to The
Phoenix Edge Series Fund. Based on subadvisory agreements with the fund, PVA
delegates certain investment decisions and research functions to the following
subadvisors for the series listed:
[diamond] Bankers Trust Company
o Phoenix-Bankers Trust Dow 30 Series
[diamond] Federated Investment Management Company
o Phoenix-Federated U.S. Government Bond Series
[diamond] J.P. Morgan Investment Management, Inc.
o Phoenix Research Enhanced Index Series
[diamond] Janus Capital Corporation
o Phoenix-Janus Equity Income Series
o Phoenix-Janus Flexible Income Series
o Phoenix-Janus Growth Series
[diamond] Morgan Stanley Asset Management Inc.
o Phoenix-Morgan Stanley Focus Equity Series
[diamond] Schafer Capital Management, Inc.
o Phoenix-Schafer Mid-Cap Value Series
The investment advisor to the Phoenix-Duff & Phelps Real Estate Securities
Series is Duff & Phelps Investment Management Co. ("DPIM").
The investment advisor to the Phoenix-Aberdeen New Asia Series is PAIA.
Pursuant to subadvisory agreements with the fund, PAIA delegates certain
investment decisions and research functions with respect to the Phoenix-Aberdeen
New Asia Series to PIC and Aberdeen Fund Managers, Inc.
PIC, DPIM, Engemann and Seneca are indirect less than wholly owned
subsidiaries of Phoenix. PAIA is jointly owned and managed by PM Holdings, Inc.,
a subsidiary of Phoenix, and by Aberdeen Fund Managers, Inc. PVA is a wholly
owned subsidiary of PM Holdings, Inc.
The other investment advisors and their respective funds are:
[diamond] Bankers Trust Company
o EAFE[registered trademark] Equity Index Fund
[diamond] Federated Investment Management Company
o Federated Fund for U.S. Government Securities II
o Federated High Income Bond Fund II
[diamond] Franklin Mutual Advisers, LLC
o Mutual Shares Investments Fund
[diamond] Morgan Stanley Dean Witter Investment Management Inc.
o Technology Portfolio
[diamond] Templeton Asset Management, Ltd.
o Templeton Developing Markets Fund
[diamond] Templeton Investment Counsel, Inc.
o Templeton Asset Allocation Fund
o Templeton International Fund
o Templeton Stock Fund
[diamond] Wanger Asset Management, L.P.
o Wanger Foreign Forty
o Wanger International Small Cap
o Wanger Twenty
o Wanger U.S. Small Cap
SERVICES OF THE ADVISORS
The advisors continually furnish an investment program for each series and
manage the investment and reinvestment of the assets of each series subject at
all times to the authority and supervision of the trustees of each fund. A
detailed discussion of the investment advisors and subadvisors, and the
investment advisory and subadvisory agreements, is contained in the accompanying
prospectus for the funds.
14
<PAGE>
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.
Likewise, all capital gains distributions of the Fund, if any, are reinvested at
the net asset value on the record date. We redeem Fund shares at their net asset
value to the extent necessary to make payments under the policy.
SUBSTITUTION OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions
for the investments held by the VUL Account, subject to compliance with the law
as currently applicable or as subsequently changed. In the future, we 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. If and when marketing needs and investment conditions
warrant, and at our discretion, we may establish additional portfolios. These
will be made available under existing policies to the extent and on a basis
determined by us.
If shares of any of the portfolios of the Fund should no longer be available
for investment or, if in the judgment of our management, further investment in
shares of any of the portfolios become inappropriate due to policy objectives,
we may then substitute shares of another mutual fund for shares already
purchased, or to be purchased in the future. 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 you. In the event of a
change, you will be given the option of transferring the policy value of the
Subaccount in which the substitution is to occur to another Subaccount.
THE GUARANTEED INTEREST ACCOUNT
In addition to the VUL Account, you may allocate premium or transfer policy
value to the Guaranteed Interest Account. Amounts you allocate or transfer to
the Guaranteed Interest Account become part of Phoenix Life and Annuity's
general account assets. You do not share in the investment experience of those
assets. Rather, we guarantee a 3% rate of return on your allocated amount. For
amounts transferred to the Guaranteed Interest Account from a policy loan, the
guaranteed rate is 2% in all states except New York and New Jersey. In New York
and New Jersey the rate credited to the Guaranteed Interest Account due to a
policy loan is 4%. Although we are not obligated to credit interest at a higher
rate than the minimum, we will credit any excess interest as determined by us
based on expected investment yield information.
Because of exemptive and exclusionary provisions, we have not registered
interests in our general account under the Securities Act of 1933. Also, we have
not registered our general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
of its interests are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be subject to certain provisions of the federal securities law
regarding accuracy and completeness of statements made in this prospectus.
We reserve the right to limit total deposits to the Guaranteed Interest
Account, including transfers, to no more than $250,000 during any one-week
period per policy.
In general, you can make only one transfer per year from the Guaranteed
Interest Account. The amount that can be transferred out is limited to the
greater of $1,000 or 25% of the policy value in the Guaranteed Interest Account
as of the date of the transfer. If you elect the Systematic Transfer Program,
approximately equal amounts may be transferred out of the Guaranteed Interest
Account. Also, the total policy value allocated to the Guaranteed Interest
Account may be transferred out to one or more of the Subaccounts over a
consecutive 4-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of remaining value
[diamond] Year Three: 50% of remaining value
[diamond] Year Four: 100% of remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts may
be made at any time. Transfers from the Guaranteed Interest Account are subject
to the rules discussed above and in "Transfer of Policy Value" and "Systematic
Transfer for Dollar Cost Averaging."
PREMIUMS
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MINIMUM PREMIUMS
The minimum premium is determined by case size as follows:
[diamond] 5 or more lives: $100,000 annually for the first 5 policy years
[diamond] Fewer than 5 lives: $250,000 annually for the first 5 policy years
The issue premium is due on the policy date. The Insured must be alive when
the issue premium is paid. After that, premiums may be paid at any time while
the policy is in force. Each premium payment must be at least $100. Additional
payments should be sent to the:
VUL COLI UNIT
PO BOX 22012
ALBANY, NY 12201-2012
The number of units credited to a Subaccount will be determined by dividing
the portion of the net premium
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applied to that Subaccount by the unit value of the Subaccount on the payment
date.
Regardless of whether you choose the Guideline Premium Test or the Cash
Value Accumulation Test (see "Minimum Face Amount"), we reserve the right to
refund a premium paid in any year if it will exceed the maximum premium limit.
The maximum limit is established by law to qualify the policy as life insurance.
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 total premium limit may be exceeded
if additional premium is needed to prevent lapse or if we subsequently determine
that additional premium would be permitted by federal laws or regulations.
ALLOCATION OF ISSUE PREMIUM
We will allocate the issue premium less applicable charges to the VUL
Account or to the Guaranteed Interest Account upon receipt of a completed
application (in accordance with the allocation instructions in the application
for a policy).
FREE LOOK PERIOD
You have the right to review the policy. If you are not satisfied with it,
you may cancel the policy:
[diamond] by mailing it to us within 10 days after you receive it (or longer in
some states);
[diamond] within 10 days after we mail or deliver a written notice telling you
about your Free Look Period; or
[diamond] within 45 days after completing the application, whichever occurs
latest.
We treat a returned policy as if we never issued it and will return the sum
of the following as of the date we receive the returned policy:
(1) the then current policy value less any unpaid loans and loan interest; plus
(2) any monthly deductions, partial surrender fees and other charges made under
the policy.
We retain the right to decline to process an application within 7 days of
our receipt of the completed application for insurance. If we decline to process
the application, we will return the premium paid. Even if we have approved the
application for processing, we retain the right to decline to issue the policy.
If we decline to issue the policy, we will refund the same amount to you as
would have been refunded under the policy had it been issued but returned for
refund during the Free Look Period.
ACCOUNT VALUE
TRANSFER OF POLICY VALUE
Transfers among available Subaccounts or the Guaranteed Interest Account and
changes in premium payment allocations may be requested in writing. Requests for
transfers will be executed on the date the request is received at Andesa TPA
Inc.
Although there currently is no charge for transfers, in the future we may
charge a fee of $10 for each transfer after the first 2 transfers in a policy
year (12 transfers in New York).
You may make only one transfer per policy year from the unloaned portion of
the Guaranteed Interest Account unless
(1) the transfer(s) are made as part of a Dollar Cost Averaging Program, or
(2) we agree to make an exception to this rule.
Unless you have elected a Dollar Cost Averaging Program, the amount you may
transfer cannot exceed the greater of $1,000 or 25% of the value of the unloaned
portion of the Guaranteed Interest Account at the time of the transfer. In
addition, you may transfer the total value allocated to the unloaned portion of
the Guaranteed Interest Account out to one or more of the Subaccounts over a
consecutive 4-year period according to the following schedule:
[diamond] Year One: 25% of the total value
[diamond] Year Two: 33% of the remaining value
[diamond] Year Three: 50% of the remaining value
[diamond] Year Four: 100% of the remaining value
Transfers into the Guaranteed Interest Account and among the Subaccounts may
be made anytime. We reserve the right to limit the number of Subaccounts you may
invest in at any one time or over the life of the policy, if we are required to
do so by any federal or state law.
Because excessive exchanges between Subaccounts can deteriorate Fund
performance, we reserve the right to temporarily or even permanently terminate
exchange privileges or reject any specific exchange order from anyone whose
transactions appear to us to follow a timing pattern, including those who
request more than one exchange out of a Subaccount within any 30-day period. We
will not accept batched transfer instructions from registered representatives
(acting under powers of attorney for multiple policyowners), unless the
registered representative's broker-dealer firm and PLAC have entered into a
third-party transfer service agreement.
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SYSTEMATIC TRANSFERS FOR DOLLAR COST AVERAGING
You may elect to transfer funds automatically among the Subaccounts or the
unloaned portion of the Guaranteed Interest Account on a monthly, quarterly,
semiannual or annual basis under the Systematic Transfers for Dollar Cost
Averaging Program ("Dollar Cost Averaging Program"). Under the Dollar Cost
Averaging Program, the minimum transfer amounts are:
o $25 monthly,
o $75 quarterly,
o $150 semiannually, or
o $300 annually.
You must have an initial value of $1,000 in the Guaranteed Interest Account
or the Subaccount from which funds will be transferred ("Sending Subaccount").
If the value in that Subaccount or the Guaranteed Interest Account drops below
the amount to be transferred, the entire remaining balance will be transferred
and all systematic transfers stop. Funds may be transferred from only one
Sending Subaccount or the Guaranteed Interest Account, but may be allocated to
more than one Subaccount ("Receiving Subaccounts").
Under the Dollar Cost Averaging Program, policyowners may make more than one
transfer per policy year from the Guaranteed Interest Account. These transfers
must be in approximately equal amounts and made over a minimum 18-month period.
Only one Dollar Cost Averaging Program can be active at any time. All
transfers under this program will be made on the basis of the Guaranteed
Interest Account and Subaccount on the first day of the month following our
receipt of the transfer request. If the first day of the month falls on a
holiday or weekend, then the transfer will be processed on the next business
day.
AUTOMATIC ASSET REBALANCING
Automated asset rebalancing permits you to maintain a specified whole number
percentage of your account value in any combination of Subaccounts and the
Guaranteed Interest Account. We must receive a written request in order to begin
your automated asset rebalancing program ("asset rebalancing"). Then, we will
make transfers at least quarterly to and from the Subaccounts and the Guaranteed
Interest Account to readjust your account value to your specified percentage.
Asset rebalancing allows you to maintain a specific fund allocation. Quarterly
rebalancing is based on your policy year. We will rebalance your account value
only on a monthly calculation day.
The effective date of the first asset rebalancing will be the first monthly
calculation day after we receive your request at Andesa TPA, Inc. If we receive
your request before the end of the Free Look Period, your first rebalancing will
occur at the end of the Free Look Period.
You may not participate in both the Dollar Cost Averaging Program and the
asset rebalancing at the same time.
DETERMINATION OF SUBACCOUNT VALUES
We establish the unit value of each Subaccount on the first valuation date
of that Subaccount. The unit value of a Subaccount 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 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 on a
valuation date is determined at the end of that day.
The net investment factor for each Subaccount 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 determined by the formula:
(A) + (B)
--------- - (D) where:
(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 any capital gain distribution, if
applicable) 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 amount of any
deposits and withdrawals made during the valuation period ending on that
date.
(D) The charge, if any, for taxes and reserves for taxes on investment income,
and realized and unrealized capital gains.
DEATH BENEFIT UNDER THE POLICY
The death benefit is the amount we pay to the designated beneficiary(ies)
when the Insured dies. Upon receiving due proof of death, we pay the beneficiary
the death benefit amount determined as of the date the Insured dies. The
beneficiary may direct us to pay all or part of the benefit in cash or to apply
it under one or more of our payment options.
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MINIMUM FACE AMOUNT
To qualify as life insurance under current federal tax laws, the policy has
a minimum face amount of insurance. The minimum face amount is determined using
1 of 2 allowable definitions of life insurance:
(1) the Cash Value Accumulation Test or
(2) the Guideline Premium Test.
You chose which test to use on the application prior to the issuance of your
policy. You cannot change the way we determine your minimum face amount after
your policy is issued.
The Cash Value Accumulation Test determines the minimum face amount by
multiplying the account value plus the refund of sales load, if applicable, by
the minimum face amount percentage. The percentages depend upon the Insured's
age, gender and underwriting classification.
Under the Guideline Premium Test, the minimum face amount is also equal to
an applicable percentage of the account value plus refund of sales load, if
applicable, but the percentage varies only by age of insured.
DEATH BENEFIT OPTIONS
In your application you select a face amount of insurance coverage and the
death benefit option. We offer 3 death benefit options:
[diamond] Option 1 -- The death benefit is the greater of:
(a) the policy's face amount on the date of death or
(b) the minimum face amount in effect on the date of death.
[diamond] Option 2 -- The death benefit is the greater of:
(a) the policy's face amount on the date of death plus the policy value on
the date of death or
(b) the minimum face amount in effect on the date of death.
[diamond] Option 3 -- The death benefit is the greater of:
(a) the policy's face amount on the date of death plus the sum of all
premiums paid, less withdrawals, or
(b) the policy's face amount on the date of death or
(c) the minimum face amount in effect on the date of death.
If the Insured dies while the policy is in force, we will pay the death
benefit based on the option in effect on the date of death with the following
adjustments:
o add back in any charges taken against the account value for the period
beyond the date of death;
o deduct any policy debt outstanding on the date of death; and
o deduct any charges accrued against the account value unpaid as of the
date of death.
You may change the Death Benefit Option from Option 1 to Option 2 or from
Option 2 to Option 1. You may not make a change either to or from Option 3.
Under death benefit Options 1 and 3, the death benefit is not affected by
your policy's investment experience. Under death benefit Option 2, the death
benefit amount may increase or decrease by the investment experience.
We pay interest on the death benefit from the date of death to the date the
death benefit is paid or a payment option becomes effective.
CHANGES IN FACE AMOUNT OF INSURANCE
REQUESTS FOR INCREASE IN FACE AMOUNT
Any time while this policy is in force, you 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 we require 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. We will deduct any charges associated with the increase (the
increases in cost of insurance charges), from the policy value whether or not
you pay an additional premium in connection with the increase. Also, a new Free
Look Period (see "Free Look 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."
DECREASES IN FACE AMOUNT AND PARTIAL SURRENDER: EFFECT ON DEATH BENEFIT
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in face amount at any time after the first policy
year. Unless we agree otherwise, the decrease must be at least equal to $10,000
and the face amount remaining after the decrease must be at least $25,000. All
face amount decrease requests must be in writing and will be effective on the
first monthly calculation day following the date we approve the request.
A partial surrender or a decrease in face amount generally decreases the
death benefit. If the change is a decrease in face amount, the death benefit
under a policy would be reduced on the next monthly calculation day. If the
change is 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."
SURRENDERS
GENERAL
At any time during the lifetime of the Insured and while the policy is in
force, you may partially or fully surrender the policy by sending a written
request to Andesa TPA,
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Inc. We may also require you to send the policy to us. 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 Andesa TPA, Inc.
The cash surrender value is:
o policy value; less
o any outstanding debt; plus
o the refund of sales charge, if applicable.
There is no surrender charge.
If the policy is surrendered within the first 3 policy years, you will
receive a refund of sales charge as part of your cash surrender value. A portion
of the first year sales charge will be returned to you according to the
following schedule:
[diamond] Full surrender in policy year 1: 100.00%
[diamond] Full surrender in policy year 2: 66.67%
[diamond] Full surrender in policy year 3: 33.33%
FULL SURRENDERS
If the policy is being fully surrendered, the policy itself must be returned
to Andesa TPA, Inc., along with the written release and surrender of all claims
in a form satisfactory to us. You may elect to have the amount paid in a lump
sum or under a payment option. See "Payment Options."
PARTIAL SURRENDERS
You may obtain a partial surrender of the policy by requesting payment of
the policy's cash surrender value. It is possible to do this at any time during
the lifetime of the Insured, while the policy is in force, with a written
request to Andesa TPA, Inc. We may require the return of the policy 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 by us.
Surrender proceeds may be applied under any of the payment options. See "Payment
of Proceeds--Payment Options."
We reserve the right to deny partial surrenders of less than $500. In
addition, if the share of the policy value in any Subaccount or in the
Guaranteed Interest Account is reduced as a result of a partial surrender and is
less than $500, we reserve the right to require surrender of the entire
remaining balance in that Subaccount or the Guaranteed Interest Account.
Upon a partial surrender, the policy value will be reduced by the sum of the
partial surrender amount paid. This amount comes from a reduction in the
policy's share in the value of each Subaccount or the Guaranteed Interest
Account based on the allocation requested at the time of the partial surrender.
If no allocation request is made, the withdrawals from each Subaccount will be
made in the same manner as that provided for monthly deductions.
The cash surrender value will be reduced by the partial surrender amount
paid plus the partial surrender fee. The face amount of the policy will be
reduced by the same amount as the policy value is reduced as described above.
Upon partial or full surrender, we will generally pay the amount surrendered
within 7 days after we receive the written request for the surrender. Under
certain circumstances, the surrender payment may be postponed. See "Additional
Policy Provisions--Postponement of Payments." For the federal tax effects of
partial and full surrenders, see "Federal Tax Considerations."
POLICY LOANS
You can take a loan against your policy any time while the policy is in
force. The maximum loan is:
o 90% of your policy value at the time the loan is taken; less
o any outstanding policy debt before the loan is taken; less
o interest on the loan being made and on any outstanding policy debt to
the next policy anniversary date.
Your policy must be assigned to us as collateral for the loan.
SOURCE OF LOAN
We deduct your requested loan amount from the Subaccounts and the Guaranteed
Interest Account, based on the allocation requested at the time of the loan. We
liquidate shares taken from the Subaccounts and transfer the resulting dollars
to the Guaranteed Interest Account. These dollars become part of the loaned
portion of the Guaranteed Interest Account.
INTEREST
You will pay interest on the loan at the following noted effective annual
rates, compounded daily and payable in arrears:
In all states except New York and New Jersey, the loan interest rate in
effect following the policy anniversary nearest the Insured's 65th birthday is
2.25%. The rates in effect before the Insured reaches age 65 are:
[diamond] Policy years 1-10: 2.75%
[diamond] Policy years 11-15: 2.50%
[diamond] Policy years 16 and thereafter: 2.25%
In New York and New Jersey only, the loan interest rate in effect following
the policy anniversary nearest the Insured's 65th birthday is 4.25%. The rates
in effect before the Insured reaches age 65 are:
[diamond] Policy years 1-10: 4.75%
[diamond] Policy years 11-15: 4.50%
[diamond] Policy years 16 and thereafter: 4.25%
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Interest accrues daily, becoming part of the policy debt. Interest is due
and payable on the policy anniversary. If you do not pay the interest when due,
we will add it to your loan. We treat any interest which has been capitalized
the same as if it were a new loan. We deduct this capitalized interest from the
Subaccounts and the Guaranteed Interest Account in proportion to the nonloaned
account value in each.
INTEREST CREDITED ON LOANED VALUE
The amount equal to any policy loan is held in the Guaranteed Interest
Account. This amount is credited with interest at a rate of 2% (4% in New York
and New Jersey).
REPAYMENT
You may repay all or part of your policy debt at anytime while the policy is
in force.
If you do not repay the loan, we deduct the loan amount due from the cash
surrender value or the death benefit.
Failure to repay a policy loan or to pay loan interest will not terminate
the policy unless the policy value becomes insufficient to maintain the policy
in force.
In the future, PLAC may not allow policy loans of less than $500, unless
such loan is used to pay a premium on another PLAC policy.
EFFECT OF LOAN
Your policy loan reduces the death benefit and cash surrender value under
the policy by the amount of the loan. Your repayment of the loan increases the
death benefit and cash surrender value by the amount of the repayment.
As long as a loan is outstanding, a portion of your policy value equal to
the loan is held in the Guaranteed Interest Account. The Subaccount's investment
performance does not affect this amount. Also, you may be subject to tax
consequences if you surrender your policy while there is outstanding debt.
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 3 policy years, the
policy value plus the refund of any applicable sales charge is insufficient to
cover the monthly deduction, a grace period of 61 days will be allowed for the
payment of an amount equal to 3 times the required monthly deduction. If on any
monthly calculation day during any subsequent policy year, the policy value is
less than the required monthly deduction, a grace period of 61 days will be
allowed for the payment of an amount equal to 3 times the required monthly
deduction.
During the grace period, the policy will continue in force but 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 after we have mailed written notice to you. If a
premium payment for the additional amount is received by us during the grace
period, any amount of premium over what is required to prevent lapse will be
allocated among the Subaccounts or to the Guaranteed Interest Account according
to the current premium allocation schedule.
In determining the amount of "excess" premium to be applied to the
Subaccounts or the Guaranteed Interest Account, we 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.
ADDITIONAL INSURANCE OPTION
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. We will require evidence of
insurability and charges will be adjusted for the Insured's new attained age and
any change in risk classification.
ADDITIONAL RIDER BENEFITS
You may elect additional benefits under a policy and you may cancel these
benefits at anytime. 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 are
chosen.
The following benefits are currently available and additional riders may be
available as described in the policy (if approved in your state).
[diamond] FLEXIBLE TERM INSURANCE RIDER. This rider provides annually renewable
term insurance coverage to age 100 on the Insured under the base
policy. The initial rider death benefit cannot exceed 10 times the
initial base policy. There is no charge for this rider.
[diamond] EXCHANGE OF INSURED RIDER. This rider allows the policyowner to
exchange the Insured on a given contract. Future charges against the
policy will be based on the life of the substitute Insured. There is
no charge for this rider.
The incontestability and suicide exclusion periods, as they apply to
the substitute Insured, run from the date of the exchange. Any
assignments will continue to apply.
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The exchange is subject to the following adjustments:
1. If the policy value of the original policy is insufficient to produce a
positive cash surrender value for the new policy, the owner must pay an
exchange adjustment in an amount that, when applied as premium, will make
the policy value of the new policy greater than zero.
2. In some cases, the amount of policy value which may be applied to the new
policy may result in a death benefit which exceeds the limit for the new
policy. In that event, we will apply such excess policy value to reduce any
loan against the policy, and the residual amount will be returned to you in
cash.
3. The exchange will also be subject to our receipt of repayment of the amount
of any policy debt under the exchange policy in excess of the loan value of
the new policy on the date of exchange.
The Internal Revenue Service has ruled that an exchange of Insureds does not
qualify for tax deferral under Code Section 1035. Therefore, you must
include in current gross income all previously unrecognized gain in the
policy upon an exchange of the Insured.
PART II--ADDITIONAL POLICY PROVISIONs
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POSTPONEMENT OF PAYMENTS
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:
[diamond] for up to 6 months from the date of the request, for any transactions
dependent upon the value of the Guaranteed Interest Account;
[diamond] whenever the NYSE is closed other than for customary weekend and
holiday closings or trading on the NYSE is restricted as determined by
the SEC; or
[diamond] whenever an emergency exists, per the SEC, as a result of which
o disposal of securities is not reasonably practicable or
o it is not reasonably practicable to determine the value of the
VUL Account's net assets.
Transfers may also 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 your bank.
THE CONTRACT
The policy and attached copy of the application 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 PLAC can agree to change or waive any provisions of the policy.
SUICIDE
If the Insured commits suicide within 2 years after the policy's date of
issue, the policy will stop and become void. We will pay you the policy value
adjusted by the addition of any monthly deductions and other fees and charges,
minus any debt owed to us under the policy.
INCONTESTABILITY
We cannot contest this policy or any attached rider after it has been in
force during the Insured's lifetime or for 2 years from the policy date.
CHANGE OF OWNER OR BENEFICIARY
The beneficiary, as named in the policy application or as 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 Insured, the death
benefit payable under the policy will be paid to your estate.
As long as the policy is in force, the policyowner and the beneficiary may
be changed in writing, satisfactory to us. A change in beneficiary will take
effect as of the date the notice is signed, whether or not the Insured is living
when we receive the notice. We will not, however, be liable for any payment made
or action taken before receipt of the notice.
ASSIGNMENT
The policy may be assigned. We will not be bound by the assignment until a
written copy has been received and we will not be liable with respect to any
payment made prior to receipt. We assume 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.
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SURPLUS
This policy is nonparticipating and does not pay dividends. Your policy will
not share in PLAC's profits or surplus earnings.
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 we receive the request for
surrender or due proof of death, provided such request is complete and in good
order. Payment of surrender or death proceeds usually will be made in one lump
sum within 7 days, unless another payment option has been elected. Payment of
the death proceeds, however, may be delayed if the claim for payment of the
death 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.
You may elect a payment option for payment of the death proceeds to the
beneficiary. You may revoke or change a prior election, unless such right has
been waived. The beneficiary may make or change an election before payment of
the death proceeds, unless you have made an election that does not permit such
further election or changes by the beneficiary.
A written request in a form satisfactory to us 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 payment option is $1,000.
If the policy is assigned as collateral security, we 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 we may choose to make available
in the future.
OPTION 1--LUMP SUM.
Payment is paid in one lump sum.
OPTION 2--LEFT TO EARN INTEREST.
A payment of interest is paid 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 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:
[diamond] the death of the payee; or
[diamond] 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 you may choose from are as follows:
[diamond] 10 years;
[diamond] 20 years; or
[diamond] 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 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 consider
the longer period certain as having been elected.
Any life annuity provided under Option 4 is computed using an interest rate
guaranteed to be no less than 3-3/8% per year, but any life annuity providing a
period certain of 20 years or more is computed 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 computed 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 remaining
principal at a guaranteed rate of 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.
22
<PAGE>
OPTION 7--JOINT SURVIVORSHIP ANNUITY WITH 10-YEAR PERIOD CERTAIN.
The first payment will be on the date of settlement. Equal installments are
paid until the latest of:
[diamond] the end of the 10-year period certain;
[diamond] the death of the Insured; or
[diamond] the death of the other named annuitant.
The other annuitant must have attained age 40, must be named at the time
this option is elected and cannot later be changed. Any joint survivorship
annuity that may be provided under this option is computed using a guaranteed
interest rate to equal at least 3-3/8% per year.
For additional information concerning the above payment options, see the
policy.
PART III--OTHER IMPORTANT INFORMATION
- --------------------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
INTRODUCTION
The ultimate effect of federal income taxes on values under the VUL Account
and on the economic benefit to you or your beneficiary depends on our tax status
and upon the tax status of the individual concerned. This discussion is general
in nature and is not intended as tax advice. For complete information on federal
and state tax considerations, a qualified tax advisor should be consulted. No
attempt is made to consider any estate and inheritance taxes, or any state,
local or other tax laws. Because this discussion is based upon our understanding
of federal income tax laws as they are currently interpreted, we cannot
guarantee the tax status of any policy.
The Internal Revenue Service ("IRS") makes no representation regarding the
likelihood of continuation of current federal income tax laws, Treasury
regulations or of the current interpretations. We reserve the right to make
changes to the policy to assure that it will continue to qualify as a life
insurance contract for federal income tax purposes.
PLAC'S TAX STATUS
We are taxed as a life insurance company under the Internal Revenue Code of
1986, as amended ("Code"). For federal income tax purposes, neither the VUL
Account nor the Guaranteed Interest Account is a separate entity from PLAC and
their operations form a part of PLAC.
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 us. Due to our tax status under current
provisions of the Code, no charge is made for our federal income taxes which may
be attributable to the VUL Account.
We reserve the right to make a deduction for taxes if our federal tax
treatment is determined to be other than what we currently believe it to be, if
changes are made affecting the tax treatment to our variable life insurance
contracts, or if changes occur in our 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
"Modified Endowment Contracts"), 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, a
policyowner should not be considered to be in constructive receipt of the cash
value, including investment income. See, however, the sections below on possible
taxation of amounts received under the policy, via full surrender, partial
surrender or loan.
Code Section 7702 imposes certain conditions with respect to premiums
received under a policy. We monitor the premiums to assure compliance with such
conditions. However, if the premium limitation is exceeded during the year, we
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 value, the excess, if any, of
the cash 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 that 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
23
<PAGE>
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.
We suggest you consult with your tax advisor 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 new rules affecting modified endowment contracts.
LOANS
We believe that any loan received under a policy will be treated as your
indebtedness. 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. If the
policy is not a modified endowment contract, we believe that no part of any loan
under a policy will constitute income to you.
The deductibility by a policyowner of loan interest under a policy may be
limited under Code Section 264, depending on the circumstances. A policyowner
intending to fund premium payments through borrowing should consult a tax
advisor with respect to tax consequences. 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 advisor for further guidance.
BUSINESS-OWNED POLICIES
If a business or a corporation owns the policy, 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 cash value over premiums paid).
Life insurance policies can be modified endowment contracts if they fail to meet
what is known as "the 7-pay test."
The measuring stick for this test is a hypothetical life insurance policy of
equal face amount which requires 7 equal annual premiums but which, after the
seventh year is "fully paid-up," continuing to provide a level death benefit
without the need for any further premiums. A policy becomes a modified endowment
contract, if, at any time during the first 7 years, the cumulative premium paid
on the policy exceeds the cumulative premium that would have been paid under the
hypothetical policy. Premiums paid during a policy year but which are returned
by us with interest within 60 days after the end of the policy year will be
excluded from the 7-pay test. A life insurance policy received in exchange for a
modified endowment contract will be treated as a modified endowment contract.
REDUCTION IN BENEFITS DURING THE FIRST 7 YEARS
If there is a reduction in death benefits during the first 7 policy years,
the premiums are redetermined for purposes of the 7-pay test as if the policy
originally had been issued at the reduced death benefit level and the new
limitation is applied to the cumulative amount paid for each of the first 7
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 test is
failed and all subsequent policy years. However, distributions made in
anticipation of such failure (there is a presumption that distributions made
within 2 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 7 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% excise tax, with certain exceptions. This
additional tax will not apply in the case of distributions that are:
[diamond] made on or after the taxpayer attains age 59-1/2;
[diamond] attributable to the taxpayer's disability (within the meaning of Code
Section 72(m)(7)); or
[diamond] part of a series of substantially equal periodic payments (not less
often 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.
[diamond] First, if an increase is attributable to premiums paid "necessary to
fund" the lowest death benefit and qualified additional benefits
payable in the first 7 policy years or to the crediting of interest or
dividends with
24
<PAGE>
respect to these premiums, the "increase" does not constitute a
material change.
[diamond] 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:
o the cost-of-living determination period does not exceed the
remaining premium payment period under the policy; and
o 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 7 years or thereafter), and future taxation of distributions
or loans would depend upon 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 advisor 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
compute 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. We will comply with
the limitations for calculating the premium we are permitted to receive from
you.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
each Series of the Fund is required to diversify its investments. The
Diversification Regulations generally require that on the last day of each
calendar quarter the Series assets be invested in no more than:
[diamond] 55% in any 1 investment
[diamond] 70% in any 2 investments
[diamond] 80% in any 3 investments
[diamond] 90% in any 4 investments
A "look-through" rule applies to treat a pro rata portion of each asset of a
Series 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 Treasury
securities. For purposes of determining whether assets other than Treasury
securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the VUL Account's investment in
Treasury securities. Notwithstanding this modification of the general
diversification requirements, the portfolios of the Funds will be structured to
comply with the general diversification standards because they serve as an
investment vehicle for certain variable annuity contracts that 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 you may direct your 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
would provide. It is possible that the policy may need to be modified to comply
with such future Treasury announcements. For these reasons, we reserve the right
to modify the policy, as necessary, to prevent you from being considered the
owner of the assets of the VUL Account.
We intend 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
25
<PAGE>
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.
We recommend 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.
We do not make any representations or guarantees regarding the tax
consequences of any policy with respect to these types of taxes.
VOTING RIGHTS
- --------------------------------------------------------------------------------
We will vote the Funds' shares held by the Subaccounts at any regular and
special meetings of shareholders of the Funds. To the extent required by law,
such voting will be pursuant to instructions received from you. However, if the
1940 Act or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result, we decide that we are
permitted to vote the Funds' shares at our own discretion, we may elect to do
so.
The number of votes that you have the right to cast will be determined by
applying your 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.
Funds' shares held in a Subaccount for which no timely instructions are
received, and Funds' shares which are not otherwise attributable to
policyowners, will be voted by PLAC in proportion to the voting instructions
that are received with respect to all policies participating in that Subaccount.
Instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by PLAC.
You will receive proxy materials, reports and other materials related to the
Funds.
We 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 subclassification or investment objective of one or
more of the portfolios of the Funds or to approve or disapprove an investment
advisory contract for the Funds. In addition, PLAC itself may disregard voting
instructions in favor of changes initiated by a policyowner in the investment
policies or the investment advisor of the Funds if PLAC 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 we decide
that the change would have an adverse effect on the General Account because the
proposed investment policy for a Series may result in overly speculative or
unsound investments. In the event PLAC 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.
THE DIRECTORS AND
EXECUTIVE OFFICERS OF PLAC
- --------------------------------------------------------------------------------
PLAC is managed by its Board of Directors. The following are the Directors
and Executive Officers of PLAC:
NAME AND TITLE PRINCIPAL OCCUPATION
Robert W. Fiondella, Chairman of the Board
Director, Chairman and President
and President
Richard H. Booth, Executive Vice President
Director and Executive
Vice President
Philip R. McLoughlin, Executive Vice President and
Director, Executive Chief Investment Officer
Vice President and CIO
David W. Searfoss, Executive Vice President and
Director, Executive Chief Financial Officer
Vice President and CFO
Dona D. Young, Executive Vice President,
Director and Executive Individual Insurance and
Vice President General Counsel
Joseph E. Kelleher, Senior Vice President
Director and Senior
Vice President
Robert G. Lautensack, Senior Vice President
Director and Senior
Vice President
Simon Y. Tan, Senior Vice President
Director and Senior
Vice President
Carl T. Chadburn, Executive Vice President
Director
The above positions reflect the last held position in our parent company,
Phoenix Home Life Mutual Insurance Company, during the last five years.
SAFEKEEPING OF THE VUL ACCOUNT'S ASSETS
- --------------------------------------------------------------------------------
We hold the assets of the VUL Account. They are kept physically segregated
and held separate and apart from our
26
<PAGE>
General Account. We maintain records of all purchases and redemptions of shares
of the Funds.
SALES OF POLICIES
- --------------------------------------------------------------------------------
Policies may be purchased from registered representatives of W.S. Griffith &
Co., Inc. ("WSG"), a New York corporation incorporated on August 7, 1970,
licensed to sell Phoenix insurance policies as well as policies, annuity
contracts and funds of companies affiliated with Phoenix. WSG, an indirect
subsidiary of Phoenix, is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. Phoenix Equity Planning Corporation
("PEPCO") serves as national distributor of the policies. PEPCO is an indirect
subsidiary of Phoenix Investment Partners, Ltd. ("PXP") in which Phoenix owns a
majority interest.
Policies also may be purchased from other broker-dealers registered under
the 1934 Act 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 we receive under these policies. PLAC will pay a maximum total sales
commission of 15% of premiums to PEPCO. Additionally, agents or selling brokers
may receive asset-based compensation. The maximum asset-based compensation is
0.90% of the policy value. To the extent that the sales charge under the
policies is less than the sales commissions paid with respect to the policies,
we will pay the shortfall from our General Account assets, which will include
any profits we may derive under the policies.
STATE REGULATION
- --------------------------------------------------------------------------------
We are subject to the provisions of the Connecticut insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Connecticut Superintendent of Insurance. We also are subject to the
applicable insurance laws of all the other states and jurisdictions in which we
do insurance business. State regulation of PLAC includes certain limitations on
the investments which we may make, including investments for the VUL Account and
the Guaranteed Interest Account. This regulation does not include, however, any
supervision over the investment policies of the VUL Account.
REPORTS
- --------------------------------------------------------------------------------
All policyowners will be furnished with those reports required by the 1940
Act and related regulations or by any other applicable law or regulation.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The VUL Account is not engaged in any litigation. PLAC is not involved in
any litigation that would have a material adverse effect on our ability to meet
our obligations under the policies.
LEGAL MATTERS
- --------------------------------------------------------------------------------
Edwin L. Kerr, Counsel of Phoenix Home Life Mutual Insurance Company, has
passed upon the organization of PLAC, its authority to issue variable life
insurance policies and the validity of the policy, and upon legal matters
relating to the federal securities and income tax laws for PLAC.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
A registration statement has been filed with the SEC, under the Securities
Act of 1933 ("1933 Act") with respect to the securities offered. This prospectus
is a summary of the contents of the policy and other legal documents and does
not contain all the information set forth in the registration statement and its
exhibits. We refer you to the registration statement and its exhibits for
further information concerning the VUL Account, PLAC and the policy.
YEAR 2000 ISSUE
- --------------------------------------------------------------------------------
Many existing computer programs use only 2 digits to identify the year in a
date field. This is commonly referred to as the "Year 2000 Issue." Companies
must consider the impact of the upcoming change in the century on their computer
systems. The Year 2000 Issue, if not adequately addressed, could result in
computer system failures or miscalculations causing disruptions of operations
and the possible inability of companies to process transactions.
We believe that the Year 2000 Issue is an important business priority
requiring careful analysis of every business system in order to be assured that
all information systems applications are century compliant.
PLAC's ultimate parent, Phoenix, has been addressing the Year 2000 Issue in
earnest since 1995 when, with consultants, a comprehensive inventory and
assessment of all business systems, including those of our subsidiaries, was
conducted. Phoenix has identified and pursued a number of strategies to address
the issue, including:
[diamond] upgrading systems with compliant versions;
[diamond] developing or acquiring new systems to replace those that are
obsolete;
[diamond] repairing existing systems by converting code or hardware; and
[diamond] preparing contingency plans to address difficulties that may arise.
27
<PAGE>
Based on current assessments, those computer systems deemed critical to
customer service and business continuity are compliant. Testing will continue
throughout 1999. Additionally Phoenix has obtained Year 2000 assurances from
business partners.
More details about our Year 2000 Program are available on our Web site:
www.phl.com.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of PLAC contained herein should be considered only
as bearing upon PLAC'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 Phoenix Life and Annuity Company are
available for the periods ended June 30, 1999 and December 31, 1998.
28
<PAGE>
PHOENIX LIFE AND
ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF
PM HOLDINGS, INC.)
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999
29
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Balance Sheets at June 30, 1999 and December 31, 1998 (unaudited) ............31
Statement of Income, Comprehensive Income and Equity for the Six
Months Ended June 30, 1999 and 1998 (unaudited)..............................32
Statement of Cash Flows for the Six Months Ended June 30, 1999
and 1998 (unaudited).........................................................33
Notes to Condensed Financial Statements (unaudited)...........................34
30
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Available-for-sale debt securities, at fair value $ 9,163 $ 9,781
Short-term investments 1,975 1,754
-------- --------
Total investments 11,138 11,535
Cash and cash equivalents 64 99
Accrued investment income 185 169
Due and uncollected premium 331
Receivable from parent Phoenix Home Life 1,060
Deferred income tax asset 84
Goodwill 653 701
Other assets 5 13
-------- --------
Total assets $ 13,520 $ 12,517
======== ========
LIABILITIES
Reserves for future policy benefits $ 1,071
Income taxes payable 117
Deferred income tax liability $ 151
Other liabilities 2
-------- --------
Total liabilities 1,188 153
EQUITY
Common stock, $100 par value, 40,000 shares
authorized, 25,000 shares issued and outstanding 2,500 2,500
Additional paid-in-capital 8,664 8,664
Retained earnings 1,238 867
Accumulated other comprehensive (loss) income (70) 333
-------- --------
Total equity 12,332 12,364
-------- --------
Total liabilities and equity $ 13,520 $ 12,517
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
31
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1999 1998
(IN THOUSANDS)
REVENUES
<S> <C> <C>
Premiums $ 636
Consideration received on reinsurance assumed 915
Net investment income 344 $ 339
-------- --------
Total revenues 1,895 339
-------- --------
BENEFITS, LOSSES AND EXPENSES
Policy benefits and payments 1,138
Commissions and reinsurance allowances 93
Amortization of goodwill 48 48
Other operating expenses 46
-------- --------
Total expenses 1,325 48
-------- --------
INCOME BEFORE INCOME TAXES 570 291
Income taxes 199 102
-------- --------
NET INCOME 371 189
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized (losses) gains on securities arising during period (403) 85
-------- --------
Total other comprehensive (loss) income (403) 85
-------- --------
COMPREHENSIVE (LOSS) INCOME (32) 274
EQUITY, BEGINNING OF PERIOD 2,364 11,809
-------- --------
EQUITY, END OF PERIOD $ 12,332 $ 12,083
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
32
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1999 1998
(IN THOUSANDS)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 371 $ 189
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATIONS
Goodwill amortization 48 48
Deferred income taxes (19) (4)
Increase in accrued investment income (16) (39)
Increase in due and uncollected premium (331)
Increase in receivable from parent (1,060)
Increase in policy liabilities and accruals 1,071
Other, net 122 3
------- -------
Net cash provided by operating activities $ 186 $ 197
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of available-for-sale debt securities (2,098)
Change in short-term investments, net (221) 1,874
------- -------
Net cash used for investing activities (221) (224)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution from parent ------- -------
Net cash provided by financing activities ------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (35) (27)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 99 48
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 64 $ 21
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 89 $ 106
------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
33
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
BASIS OF PRESENTATION
The condensed unaudited financial statements include the accounts of Phoenix
Life and Annuity Company (PLAC). These condensed unaudited financial statements
have been prepared in accordance with generally accepted accounting principles
(GAAP). The information furnished includes all adjustments and accruals
consisting only of normal, recurring accrual adjustments which are, in the
opinion of management, necessary for a fair presentation of results for the
interim periods.
The results of operations for any interim period are not necessarily indicative
of results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have
been condensed or omitted. Certain reclassifications have been made to prior
year amounts to conform with the current year presentation. The June 30, 1999
Condensed Financial Statements (Unaudited) should be read in conjunction with
the accompanying December 31, 1998 Financial Statements.
REINSURANCE
Effective January 1, 1999 PLAC entered into an Indemnity Reinsurance Agreement
with its indirect parent Phoenix Home Life Insurance Company (Phoenix). Under
the Agreement, PLAC assumed from Phoenix 100 percent of its net retained risk
for a block of yearly renewable rate term policies and incurred an initial
reinsurance allowance of $50 thousand that was recorded as an expense in 1999.
These policies constitute a closed block in a run-off stage and, as of June 30,
1999, reserves for future policy benefits totaled $1.1 million.
SUBSEQUENT EVENTS
In July, 1999, PLAC introduced a survivorship universal life policy and recorded
initial sales of this product during the third quarter of 1999.
34
<PAGE>
PHOENIX LIFE AND
ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
FINANCIAL STATEMENTS DECEMBER 31, 1998
35
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants............................................37
Balance Sheet................................................................38
Statement of Income, Comprehensive Income and Equity.........................39
Statement of Cash Flows......................................................40
Notes to Financial Statements.............................................41-48
36
<PAGE>
[PriceWaterhouseCoopers Logo & Address]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholder of
Phoenix Life and Annuity Company
In our opinion, the accompanying balance sheet and the related statements of
income, comprehensive income and equity and of cash flows present fairly, in all
material respects, the financial position of Phoenix Life and Annuity Company at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years ended December 31, 1998 and 1997 and for the periods from March
30, 1996 to December 31, 1996 and from January 1, 1996 to March 29, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
[PriceWaterhouseCoopers Logo]
February 11, 1999
37
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET
- --------------------------------------------------------------------------------
DECEMBER 31,
1998 1997
(IN THOUSANDS)
ASSETS
Available-for-sale debt securities, at fair value $ 9,781 $ 7,209
Short-term investments 1,754 3,671
------- -------
Total investments 11,535 10,880
Cash and cash equivalents 99 48
Accrued investment income 169 152
Goodwill 701 798
Other assets 13
------- -------
Total assets $12,517 $11,878
======= =======
LIABILITIES
Deferred income taxes $ 151 $ 66
Other liabilities 2 3
------- -------
Total liabilities 153 69
EQUITY
Common stock, $100 par value, 40,000 shares
authorized, 25,000 shares issued and outstanding 2,500 2,500
Additional paid-in-capital 8,664 8,664
Retained earnings 867 514
Accumulated other comprehensive income 333 131
------- -------
Total equity 12,364 11,809
------- -------
Total liabilities and equity $12,517 $11,878
======= =======
The accompanying notes are an integral part of these statements.
38
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME, COMPREHENSIVE INCOME AND EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997 AND PERIODS FROM MARCH 30, 1996 TO
DECEMBER 31, 1996 (SUCCESSOR PERIOD) AND JANUARY 1, 1996 TO MARCH 29, 1996
(PREDECESSOR PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Net investment income $ 688 $ 624 $ 433 $ 95
Net realized investment losses (1)
------- ------- ------- -------
Total revenues 688 624 432 95
------- ------- ------- -------
EXPENSES
Amortization of goodwill 97 90 81
Other operating expenses 63 4 (3)
------- ------- ------- -------
Total expenses 160 94 81 (3)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 528 530 351 98
Income taxes 175 189 129
------- ------- ------- -------
NET INCOME 353 341 222 98
------- ------- ------- -------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized gains on securities arising during period 202 86 39
Reclassification adjustment for losses included
in net income 6
------- ------- ------- -------
Total other comprehensive income 202 86 45
------- ------- ------- -------
COMPREHENSIVE INCOME 555 427 267 98
Acquisition adjustment to record purchase price (107) 1,076
Capital contribution 49 4,000
------- ------- ------- -------
NET INCREASE IN EQUITY 555 369 5,343 98
EQUITY, BEGINNING OF PERIOD 11,809 11,440 6,097 5,999
------- ------- ------- -------
EQUITY, END OF PERIOD $12,364 $11,809 $11,440 $ 6,097
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
39
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997 AND PERIODS FROM MARCH 30, 1996 TO
DECEMBER 31, 1996 (SUCCESSOR PERIOD) AND JANUARY 1, 1996 TO MARCH 29, 1996
(PREDECESSOR PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 353 $ 341 $ 222 $ 98
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATIONS
Goodwill amortization 97 90 81
Deferred income taxes (24) (2) (2)
Increase in accrued investment income (17) (34) (104) (9)
Decrease in receivable from affiliate 899
Other, net (29) (60) (18)
------- ------- ------- -------
Net cash provided by operating activities 380 335 179 988
------- ------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of available-for-sale debt securities (2,246) (1,527) (5,167)
Change in short-term investments, net 1,917 1,036 (1,002)
------- ------- ------- -------
Net cash used for investing activities (329) (491) (6,169)
------- ------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution from parent 49 4,000
------- ------- ------- -------
Net cash provided by financing activities 49 4,000
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 51 (107) (1,990) 988
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48 155 2,145 1,157
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 99 $ 48 $ 155 $ 2,145
======= ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 213 $ 182 $ 113 $
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
40
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Phoenix Life and Annuity Company is a life insurance company domiciled in
the State of Connecticut and is licensed in 35 states. On March 29, 1996, PM
Holdings, Inc. acquired Savers Life Insurance Company of America from
Central United Life Insurance Company, renamed the acquired company Phoenix
Life and Annuity Company and redomiciled the company from Missouri to
Connecticut. PM Holdings accounted for the acquisition of Phoenix Life and
Annuity under the purchase method of accounting. The assets and liabilities
of Phoenix Life and Annuity were recorded at their fair value as of the date
of acquisition and intangible assets associated with the acquisition were
recorded in the accounts of the acquired company. PM Holdings is a
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with generally
accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
The financial statements for the period subsequent to the March 29, 1996
acquisition are sometimes referred to as the "successor period." The
financial statements for the period prior to the acquisition are sometimes
referred to as the "predecessor period."
VALUATION OF INVESTMENTS
Investments in debt securities include U.S. government and agency bonds.
Phoenix Life and Annuity classifies its debt security investments as
available-for-sale. These investments are presented at fair value with
unrealized gains or losses included as a separate component of equity. Debt
securities are considered impaired when a decline in value is considered to
be other than temporary.
Short-term investments are carried at amortized cost, which approximates
market value. Phoenix considers highly liquid investments purchased with a
maturity date of one year or less to be short-term investments.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand and money market
instruments.
GOODWILL
Goodwill represents the excess of the cost of the business acquired on March
29, 1996 over the fair value of its tangible net assets. During 1997,
Phoenix Life and Annuity recorded a $58 thousand dollar reduction in
goodwill, representing a refund and a subsequent adjustment of a portion of
the purchase price. Goodwill is amortized on a straight-line method over a
period of 10 years, the expected period of benefit from the acquisition.
Management periodically reevaluates the propriety of the carrying value of
long-lived assets including goodwill. Assets are considered impaired if
carrying value exceeds the expected future undiscounted cash flows. Such
analyses are performed at least annually or more frequently if warranted by
events or circumstances affecting Phoenix Life and Annuity's business. At
this time, management believes that no impairment of goodwill has occurred
and that no reduction of the carrying value is warranted.
41
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INCOME TAXES
Phoenix Life and Annuity is included in the life/nonlife consolidated
federal income tax return filed by Phoenix. In accordance with a tax sharing
agreement with Phoenix, the provision for federal income taxes is computed
as if Phoenix Life and Annuity were filing a separate federal income tax
return, except those benefits arising from income tax credits and net
operating and capital losses are allocated to those subsidiaries producing
such attributes to the extent they are utilized in Phoenix's consolidated
federal income tax return.
Deferred income taxes result from temporary differences between the tax
basis of assets and liabilities and their recorded amounts for financial
reporting purposes. These differences result primarily from unrealized gains
or losses on investments and goodwill.
RECENT ACCOUNTING PRONOUNCEMENTS
Phoenix Life and Annuity adopted Statement of Financial Accounting Standard
(SFAS) No. 130, "Reporting Comprehensive Income," as of January 1, 1998.
This statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of financial
statements. This statement defines the components of comprehensive income as
those items that were previously reported only as components of equity and
were excluded from net income.
3. INVESTMENTS
Information pertaining to Phoenix Life and Annuity's investments, net
investment income and unrealized investment gains and losses follows:
DEBT SECURITIES
The amortized cost and fair value of investments in debt securities as of
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(IN THOUSANDS)
<S> <C> <C> <C>
AVAILABLE-FOR-SALE:
U.S. government and agency bonds $5,127 $ 340 $5,467
Corporate securities 4,143 171 4,314
------ ------ ------
TOTAL DEBT SECURITIES $9,270 $ 511 $9,781
====== ====== ======
</TABLE>
The amortized cost and fair value of investments in debt securities as of
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
GROSS
AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(IN THOUSANDS)
AVAILABLE-FOR-SALE:
<S> <C> <C> <C>
U.S. government and agency bonds $6,008 $ 177 $6,185
Corporate securities 999 25 1,024
------ ------ ------
TOTAL DEBT SECURITIES $7,007 $ 202 $7,209
====== ====== ======
</TABLE>
42
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of these investments, by contractual
maturity, as of December 31, 1998 are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties, or
Phoenix Life and Annuity may have the right to put or sell the obligations
back to the issuers.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
(IN THOUSANDS)
<S> <C> <C>
Due after one year through five years $5,128 $5,468
Due after five years through ten years 1,057 1,058
Due after ten years 3,085 3,255
------ ------
Total $9,270 $9,781
====== ======
</TABLE>
NET INVESTMENT INCOME
The components of net investment income for the years ended December 31,
1998 and 1997 and from March 30, 1996 to December 31, 1996 (successor
period) and January 1, 1996 to March 29, 1996 (predecessor period) were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt security investments $583 $376 $226
Short-term investments 115 259 214 $ 95
---- ---- ---- ----
698 635 440 95
Less investment expenses 10 11 7
---- ---- ---- ----
Net investment income $688 $624 $433 $ 95
==== ==== ==== ====
</TABLE>
UNREALIZED INVESTMENT GAINS AND LOSSES
Unrealized gains on investments carried at fair value at December 31, were
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized investment gains $311 $132 $ 60
Deferred income taxes 109 46 21
---- ---- ----
Net unrealized investment gains $202 $ 86 $ 39
==== ==== ====
</TABLE>
43
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. GOODWILL
Phoenix Life and Annuity, formerly Savers Life Insurance Company of America,
was acquired by way of a stock purchase agreement on March 29, 1996 and was
accounted for under the purchase method of accounting. The assets and
liabilities were recorded at fair value as of the date of acquisition and
goodwill of approximately $1.0 million was pushed-down to Phoenix Life and
Annuity from PM Holdings.
Goodwill was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Goodwill $969 $969
Accumulated amortization (268) (171)
---- ----
Total $701 $798
==== ====
</TABLE>
5. INCOME TAXES
A summary of income taxes in the Statement of Income, Comprehensive Income
and Equity for the years ended December 31, 1998 and 1997 and the period
from March 30, 1996 to December 31, 1996 (successor period) is presented
below. No income taxes were recorded for the period from January 1, 1996 to
March 29, 1996 (predecessor period).
<TABLE>
<CAPTION>
1998 1997 1996
SUCCESSOR SUCCESSOR SUCCESSOR
PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C>
Current income taxes $199 $191 $131
Deferred income taxes (24) (2) (2)
---- ---- ----
Total $175 $189 $129
==== ==== ====
</TABLE>
44
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The income taxes attributable to the successor and predecessor periods are
different than the amounts determined by multiplying income before taxes by
the statutory income tax rate. In the predecessor period, Savers Life was a
consolidated subsidiary of a thrift under the control of the Resolution
Trust Corporation. During the predecessor period, an interagency agreement
between the Resolution Trust Corporation and the Internal Revenue Service
stated that the Internal Revenue Service would not impose income taxes on
consolidated subsidiaries of thrifts under Resolution Trust Corporation
control. Accordingly, no provision for the predecessor period was recorded.
The sources and the tax effect of the differences between the provision and
the result of multiplying the income before taxes by the statutory federal
income tax rate for the years ended December 31, 1998 and 1997 and periods
from March 30, 1996 to December 31, 1996 (successor period) and January 1,
1996 to March 29, 1996 (predecessor period) were as follows:
<TABLE>
<CAPTION>
1998 1997 1996 1996
SUCCESSOR SUCCESSOR SUCCESSOR PREDECESSOR
PERIOD PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income tax expense
at statutory rate $185 35% $186 35% $123 35% $ 34 35%
Goodwill (10) (2%) 3 1% 7 2%
Other (1) 0% (34) (35%)
---- ---- ---- ----
Income taxes $175 33% $189 36% $129 37% $ 0%
==== ==== ==== ====
</TABLE>
The deferred income tax liability represents the tax effects of temporary
differences. The components were as follows:
<TABLE>
<CAPTION>
1998 1997
SUCCESSOR SUCCESSOR
PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C>
Net unrealized investment gains $179 $ 70
Investments 9 12
Goodwill (37) (16)
---- ----
Deferred tax liability, net $151 $ 66
==== ====
</TABLE>
45
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. COMPREHENSIVE INCOME
The components of, and related tax effects for, other comprehensive income
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
SUCCESSOR SUCCESSOR SUCCESSOR
PERIOD PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C> <C>
UNREALIZED GAINS ON SECURITIES
AVAILABLE-FOR-SALE ARISING DURING PERIOD:
Before-tax amount $311 $132 $ 60
Tax expense 109 46 21
---- ---- ----
Net-of-tax amount 202 86 39
---- ---- ----
RECLASSIFICATION ADJUSTMENT FOR GAINS OR
LOSSES REALIZED IN NET INCOME:
Before-tax amount 9
Tax expense 3
---- ---- ----
Net-of-tax amount 6
---- ---- ----
NET UNREALIZED GAINS ON SECURITIES
AVAILABLE-FOR-SALE:
Before-tax amount 311 132 69
Tax expense 109 46 24
---- ---- ----
Net-of-tax amount $202 $ 86 $ 45
==== ==== ====
</TABLE>
The following table summarizes accumulated other comprehensive income
balances:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
SUCCESSOR SUCCESSOR
PERIOD PERIOD
(IN THOUSANDS)
<S> <C> <C>
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year $131 $ 45
Change during period 202 86
---- ----
Balance, end of year $333 $131
==== ====
</TABLE>
7. RELATED PARTY TRANSACTIONS
Phoenix and its affiliates provide services and facilities to Phoenix Life
and Annuity and are reimbursed through a cost allocation process. Investment
related expenses are allocated to Phoenix Life and Annuity from PM Holdings.
Phoenix Investment Counsel, Inc., a wholly-owned subsidiary of Phoenix
Investment Partners entered into a contract to manage the general account
investments of Phoenix Life and Annuity. PM Holdings owns approximately 60%
of the outstanding common stock of Phoenix Investment Partners.
46
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts are excluded) are carried in the financial statements
at amounts that approximate fair value. The fair values presented for
certain financial instruments are estimates which, in many cases, may differ
significantly from the amounts which could be realized upon immediate
liquidation. In cases where market prices are not available, estimates of
fair value are based on discounted cash flow analyses which utilize current
interest rates for similar financial instruments which have comparable terms
and credit quality.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
SHORT-TERM INVESTMENTS, CASH AND CASH EQUIVALENTS
For these short-term investments, the carrying amount approximates fair
value.
DEBT SECURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
debt securities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
9. STATUTORY FINANCIAL INFORMATION
Phoenix's insurance subsidiaries are required to file annual statements with
state regulatory authorities prepared on an accounting basis prescribed or
permitted by such authorities. As of December 31, 1998, Phoenix Life and
Annuity had no material practices that were not prescribed by the Insurance
Department of the State of Connecticut. Statutory equity differs from equity
reported in accordance with generally accepted accounting principles for
life insurance companies primarily because investment reserves are based on
different assumptions and income tax expense reflects only taxes paid or
currently payable.
The following is a reconciliation of the statutory net income of Phoenix
Life and Annuity, as reported to regulatory authorities, to the net income
as reported in these financial statements:
<TABLE>
<CAPTION>
1998 1997 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $426 $428 $369
Amortization of goodwill (97) (90) (81)
Deferred income taxes 24 3
Other, net 32
---- ---- ----
Net income, as reported $353 $341 $320
==== ==== ====
</TABLE>
47
<PAGE>
PHOENIX LIFE AND ANNUITY COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following is a reconciliation of the statutory equity and asset
valuation reserve of Phoenix Life and Annuity, as reported to regulatory
authorities, to equity as reported in these financial statements at:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Statutory equity and asset valuation reserve $11,301 $10,875
Goodwill 701 798
Investment valuation allowances 513 202
Deferred income tax and other liabilities (151) (66)
------- -------
Equity, as reported $12,364 $11,809
======= =======
</TABLE>
The Connecticut Insurance Holding Act limits the maximum amount of annual
dividends or other distributions available to stockholders of Connecticut
insurance companies without prior approval of the Insurance Commissioner.
Under current law, the maximum dividend distribution which may be made by
Phoenix Life and Annuity during 1998 without prior approval is subject to
restrictions relating to statutory surplus.
10. INDEMNIFICATION
Prior to the acquisition, Savers Life had reinsurance contracts with three
unaffiliated reinsurers which it had assumed between 1986 and 1989 and which
it assigned to Winterthur Life Re Insurance Company in October 1995. Under
the terms of the stock purchase agreement, Central United Life has
indemnified Phoenix for any liability in excess of $15,000 resulting from
these reinsurance contracts. Phoenix considers any liability to Phoenix Life
and Annuity as a result of these contracts to be remote and has indemnified
Phoenix Life and Annuity.
48
<PAGE>
PHOENIX LIFE AND ANNUITY
VARIABLE UNIVERSAL LIFE ACCOUNT
There have been no deposits made to Phoenix Life and Annuity
Variable Universal Life Account as of the date of this prospectus;
therefore, no financial statements are available for the VUL Account.
49
<PAGE>
APPENDIX A
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
The following is a list of terms and their meanings when used in this
prospectus.
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.
DEBT: Outstanding loans against a policy, plus accrued interest.
FUNDS: The Phoenix Edge Series Fund, BT Insurance Funds Trust, Federated
Insurance Series, Morgan Stanley Dean Witter Universal Funds, Inc., Templeton
Variable Products Series Fund and Wanger Advisors Trust.
GENERAL ACCOUNT: The general asset account of PLAC.
ISSUE PREMIUM: The premium payment made in connection with issuing the policy.
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.
NET ASSET VALUE: The worth of one share of a Series of a Fund at the end of a
valuation period. net asset value is computed by adding the value of a Series'
holdings plus other assets, minus liabilities and then dividing the result by
the number of shares outstanding.
PAYMENT DATE: The valuation date on which we receive a premium payment or loan
repayment, unless it is received after the close of the New York Stock Exchange
("NYSE"), in which case it will be the next valuation date.
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 for
the face amount of insurance selected but may 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 we measure policy years and policy anniversaries.
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 Guaranteed Interest
Account.
POLICY YEAR: The first policy year is the 1-year period from the policy date up
to, but not including, the first policy anniversary. Each succeeding policy year
is the 1-year period from the policy anniversary up to, but not including, the
next policy anniversary.
SERIES: A separate investment portfolio of the Fund.
SUBACCOUNTS: Accounts within the VUL Account to which nonloaned assets under a
policy are allocated.
TARGET PREMIUM: The level annual premium at which the sales load is reduced on a
current basis.
VALUATION DATE: For any Subaccount, each date on which we calculate the net
asset value of a Fund.
VALUATION PERIOD: For any Subaccount, the period in days from the end of one
valuation date through the next.
VUL ACCOUNT (ACCOUNT): Phoenix Life and Annuity Variable Universal Life Account,
a separate account of the company.
50
<PAGE>
APPENDIX B
PERFORMANCE HISTORY
- --------------------------------------------------------------------------------
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 BECAUSE THEY DO NOT REFLECT COST OF INSURANCE, PREMIUM
TAX CHARGES, PREMIUM SALES CHARGES AND SURRENDER CHARGES, IF APPLICABLE. FOR
THIS INFORMATION SEE APPENDIX C "ILLUSTRATIONS OF DEATH BENEFITS, POLICY VALUES
AND CASH SURRENDER VALUES." Performance information may be expressed as yield
and effective yield of the Phoenix-Goodwin Money Market Subaccount, as yield of
the Phoenix-Goodwin Multi-Sector Fixed Income Subaccount and as total return of
any Subaccount. Current yield for the Phoenix-Goodwin Money Market Subaccount
will be based on the income earned by the Subaccount over a given 7-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 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 mortality and expense risk
charge on the VUL Account level.
Yield calculations of the Phoenix-Goodwin 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
7-day period, which period will end on the date of the most recent financial
statements. The yield for the Subaccount during this 7-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 Phoenix-Goodwin
Money Market Subaccount based on a 7-day period ending December 31, 1998.
Example:
Assumptions:
Value of hypothetical pre-existing account with exactly one
unit at the beginning of the period:........................... 1.501512
Value of the same account (excluding capital changes) at the
end of the 7-day period:....................................... 1.50245
Calculation:
Ending account value .......................................... 1.50245
Less beginning account value .................................. 1.501512
Net change in account value ................................... 0.000938
Base period return:
(adjusted change/beginning account value) ..................... 0.000625
Current yield = return x (365/7) = .............................. 3.26%
Effective yield = [(1 + return)(365/7)] - 1 = ................... 3.31%
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 VUL Account level.
For the Phoenix-Goodwin Multi-Sector Fixed Income 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 the mortality and expense risk, issue expense and monthly
administrative charges.
For those Subaccounts within the VUL Account that have not been available
for one of the quoted periods, the 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.
51
<PAGE>
The following performance tables display historical investment results of
the Subaccounts of the VUL Account. This information may be useful in helping
potential investors in deciding which Subaccounts to choose and in assessing the
competence of the investment advisors. The performance figures shown should be
considered in light of the investment objectives and policies, characteristics
and quality of the Subaccounts and market conditions during the periods of time
quoted. The performance figures should not be considered as estimates or
predictions of future performance. Investment return of the Subaccounts are not
guaranteed and will fluctuate. Below are quotations of average annual total
return calculated as described above for all Subaccounts with at least one year
of results. POLICY CHARGES (INCLUDING COST OF INSURANCE, PREMIUM TAX CHARGES,
PREMIUM SALES CHARGES AND SURRENDER CHARGES) ARE NOT REFLECTED.
<TABLE>
<CAPTION>
===================================================================================================================================
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1998(1,2)
===================================================================================================================================
SERIES INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series..................... 7/14/97 30.31% N/A N/A 24.15%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series...................... 5/1/90 26.68% 12.26% N/A 10.05%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series........................... 9/17/96 -5.45% N/A N/A -18.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Series........ 5/1/95 -22.19% N/A N/A 10.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series..................... 12/31/82 27.93% 17.59% 19.36% 18.70%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series........................ 3/2/98 N/A N/A N/A 25.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series........................ 10/8/82 4.06% 3.98% 4.54% 5.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income Series........... 12/31/82 -5.57% 5.88% 8.39% 9.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series...................... 3/2/98 N/A N/A N/A 9.73%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series........................... 5/1/92 17.70% 12.19% N/A 11.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series.................. 3/2/98 N/A N/A N/A 19.35%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series............... 9/17/84 19.19% 12.07% 13.23% 13.10%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series....................... 3/2/98 N/A N/A N/A -12.31%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series....................... 3/2/98 N/A N/A N/A 20.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series...................... 1/29/96 43.12% N/A N/A 22.73%
- -----------------------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund.............. 8/22/97 20.47% N/A N/A 8.71%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Securities II........... 3/28/94 6.61% N/A N/A 5.66%
- -----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II......................... 3/1/94 1.69% N/A N/A 8.51%
- -----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(3)............... 11/2/98 N/A N/A N/A 2.41%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(3).............. 11/28/88 5.07% 10.42% 11.02% 11.10%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(3)............ 9/27/96 -21.95% N/A N/A -23.30%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(3)................. 5/11/92 8.04% 10.29% N/A 12.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(3)......................... 11/3/88 -0.01% 9.94% 11.09% 10.95%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty....................................... 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap............................. 5/1/95 14.90% N/A N/A 20.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger Twenty.............................................. 2/1/99 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Small Cap...................................... 5/1/95 7.30% N/A N/A 25.81%
===================================================================================================================================
</TABLE>
(1) The average annual total return is the annual compound return that results
from holding an initial investment of $10,000 for the time period indicated.
Returns are net of $5 monthly administrative fee, investment management fees
and the mortality and expense risk charges.
(2) Performance data quoted represents the investment return of the appropriate
series adjusted for the Phoenix Executive Benefit VUL charges had the
Subaccount started on the inception date of the appropriate series.
(3) Standardized performance for Class 2 shares reflects a "blend" figure,
combining: (a) for periods prior to Class 2's inception on May 1, 1997
(November 16, 1998), for Mutual Shares Investments Fund), historical results
of Class 1 shares; and (b) for periods after May 1, 1997 (November 16,
1998), Class 2's results reflecting and additional 12b-1 fee expense which
also affects all future performance. Maximum annual plan expenses are 0.25%.
52
<PAGE>
Advertisements, sales literature and other communications may contain
information about any series' or advisor's current investment strategies and
management style. Current strategies and style may change to respond to a
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
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), Dow Jones
Industrial Average(SM), First Boston High Yield Index and Salomon Brothers
Corporate and Government Bond Indices.
Occasionally, The VUL Account may include in advertisements containing total
return, the ranking of those performance figures relating to such figures for
groups of Subaccounts having similar investment objectives as categorized by
ranking services such as:
Lipper Analytical Services, Inc. Morningstar, Inc.
CDA Investment Technologies, Inc. Weisenberger Financial Services, 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 Business Daily The Stanger Register
Stanger's Investment Advisor 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 Personal Investor
The Funds may occasionally 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:
S&P 500 Dow Jones Industrial Average
Europe Australia Far East Index (EAFE) Consumers Price Index
Shearson Lehman Corporate Index 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 500 is composed almost entirely of common
stocks of companies listed on the NYSE, 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 500 represents about
70-80% of the market value of all issues traded on the NYSE.
The Funds' annual reports, available upon request and without charge,
contain a discussion of the performance of the Funds and a comparison of that
performance to a securities market index.
53
<PAGE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN(1,2)
=====================================================================================================================
SERIES 1983 1984 1985 1986 1987 1988 1989 1990 1991
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series N/A N/A N/A N/A N/A N/A N/A N/A 19.74%
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities Series
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 32.89% 10.67% 34.92% 20.47% 6.93% 3.92% 36.19% 4.05% 42.75%
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 8.37% 10.23% 8.03% 6.51% 6.51% 7.45% 9.20% 8.22% 5.98%
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income
Series 6.00% 11.35% 20.51% 19.29% 1.08% 10.49% 8.24% 5.22% 19.59%
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series N/A N/A 27.34% 15.69% 12.56% 2.34% 19.90% 5.77% 29.32%
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A N/A N/A N/A N/A N/A N/A
Securities II
- ---------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(3) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(3) N/A N/A N/A N/A N/A N/A 13.03% -8.21% 27.44%
- ---------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(3) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(3) N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(3) N/A N/A N/A N/A N/A N/A 14.39% -11.28% 27.23%
- ---------------------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A N/A N/A N/A N/A N/A
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN(1,2) (continued)
========================================================================================================
SERIES 1992 1993 1994 1995 1996 1997 1998
========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Phoenix Research Enhanced Index Series N/A N/A N/A N/A N/A N/A 31.69%
- --------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series -12.83% 38.46% 0.06% 9.59% 18.66% 12.05% 27.94%
- --------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen New Asia Series N/A N/A N/A N/A N/A -32.41% -4.45%
- --------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate N/A N/A N/A N/A 33.13% 22.07% -21.20%
Securities Series
- --------------------------------------------------------------------------------------------------------
Phoenix-Engemann Capital Growth Series 10.30% 19.71% 1.46% 30.89% 12.59% 21.06% 30.02%
- --------------------------------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Series N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Money Market Series 3.58% 2.88% 3.84% 5.70% 5.03% 5.19% 5.10%
- --------------------------------------------------------------------------------------------------------
Phoenix-Goodwin Multi-Sector Fixed Income
Series 10.08% 15.92% -5.49% 23.54% 12.43% 11.09% -4.15%
- --------------------------------------------------------------------------------------------------------
Phoenix-Hollister Value Equity Series N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Balanced Series 9.63% 8.61% -2.84% 23.35% 10.57% 17.94% 19.02%
- --------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Growth and Income Series N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Phoenix-Oakhurst Strategic Allocation Series 10.66% 11.01% -1.41% 18.20% 9.06% 20.74% 20.80%
- --------------------------------------------------------------------------------------------------------
Phoenix-Schafer Mid-Cap Value Series N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Phoenix-Seneca Mid-Cap Growth Series N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Phoenix-Seneca Strategic Theme Series N/A N/A N/A N/A N/A 17.17% 44.72%
- --------------------------------------------------------------------------------------------------------
EAFE[registered trademark] Equity Index Fund N/A N/A N/A N/A N/A N/A 21.60%
- --------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government N/A N/A N/A 8.77% 4.20% 8.58% 7.66%
Securities II
- --------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II N/A N/A N/A 20.38% 14.31% 13.83% 2.70%
- --------------------------------------------------------------------------------------------------------
Mutual Shares Investments Fund -- Class 2(3) N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2(3) 7.83% 25.87% -3.23% 22.26% 18.59% 15.27% 6.10%
- --------------------------------------------------------------------------------------------------------
Templeton Developing Markets Fund -- Class 2(3) N/A N/A N/A N/A N/A -29.39% -21.04%
- --------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2(3) N/A 46.47% -2.86% 15.05% 23.30% 13.51% 9.08%
- --------------------------------------------------------------------------------------------------------
Templeton Stock Fund -- Class 2(3) 6.87% 33.74% -2.47% 24.96% 22.15% 11.60% 0.98%
- --------------------------------------------------------------------------------------------------------
Wanger Foreign Forty N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Wanger International Small Cap N/A N/A N/A N/A 32.04% -1.46% 16.34%
- --------------------------------------------------------------------------------------------------------
Wanger Twenty N/A N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
Wanger US Small Cap N/A N/A N/A N/A 46.63% 29.43% 8.69%
========================================================================================================
</TABLE>
(1) Performance data quoted represents the investment return of the appropriate
series adjusted for the Phoenix Executive Benefit VUL charges had the
Subaccount started on the inception date of the appropriate series.
(2) Rates are net of investment management fees for the Phoenix Executive
Benefit VUL Subaccounts. The actual inception date of Phoenix Executive
Benefit VUL was October 29, 1999.
(3) Standardized performance for Class 2 shares reflects a "blend" figure,
combining: (a) for periods prior to Class 2's inception on May 1, 1997
(November 16, 1998), for Mutual Shares Investments Fund), historical
results of Class 1 shares; and (b) for periods after May 1, 1997 (November
16, 1998), Class 2's results reflecting and additional 12b-1 fee expense
which also affects all future performance. Maximum annual plan expenses
are 0.25%.
THESE RATES OF RETURN ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
54
<PAGE>
APPENDIX C
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%, 6% 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%, 6% or 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%, 6% or 12%,
but went above or below those figures for the individual Subaccounts. The tables
are for standard risk males and females who are nonsmokers. 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 are nonsmokers. Account values
and cash surrender values may be lower for risk classes involving higher
mortality risk. Planned premium payments are assumed to be paid at the beginning
of each policy year.
The death benefit, account value and cash surrender value amounts reflect
the following current charges:
1. A sales charge of 5.0% of premiums up to the target premium and 0% on
amounts in excess of the target premium in policy years 1-7 and 0% of
all premiums in policy years 8+.
2. Monthly administrative charge of $5 per month ($10 per month guaranteed
maximum in all states except New York and New Jersey. In New York and
New Jersey guaranteed maximum is $7.50 per month.).
3. An average 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 under the Policy" table.
6. Mortality and expense risk charge, which is a monthly charge equivalent
to .40% on an annual basis (or .25% on an annual basis after the 10th
policy year) of your policy value. See "Charges under the Policy" table.
These illustrations also assume an average investment advisory fee of .70%
on an annual basis of the average daily net asset value of each of the Series of
the Funds. They also assume other ongoing average Fund expenses of .30%. All
other Fund expenses, except capital items such as brokerage commissions, are
paid by the advisor or PLAC. Management may decide to limit the amount of
expense reimbursement in the future. If expense reimbursement had not been in
place for the fiscal year ended December 31, 1998, average total operating
expenses for the Series would have been approximately 1.43% of the average net
assets. See "Annual Fund Expenses" table.
Taking into account the investment advisory fees and expenses, the gross
annual investment return rates of 0%, 6% and 12% on the Funds' assets are
equivalent to net annual investment return rates of approximately -1.00%, 5.00%
and 11.00%, respectively. For individual illustrations, interest rates ranging
between 0% and 12% may be selected in place of the 0%, 6% and 12% rates.
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%, 6% and 12%, a sufficiently higher amount in excess of
the hypothetical interest rates would have to be earned.
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.
55
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 760 810 100,000 810 860 100,000 860 910 100,000
2 1,000 2,153 1,506 1,539 100,000 1,653 1,687 100,000 1,807 1,840 100,000
3 1,000 3,310 2,238 2,255 100,000 2,532 2,549 100,000 2,851 2,868 100,000
4 1,000 4,526 2,955 2,955 100,000 3,447 3,447 100,000 4,001 4,001 100,000
5 1,000 5,802 3,657 3,657 100,000 4,398 4,398 100,000 5,267 5,267 100,000
6 1,000 7,142 4,343 4,343 100,000 5,387 5,387 100,000 6,661 6,661 100,000
7 1,000 8,549 5,011 5,011 100,000 6,412 6,412 100,000 8,193 8,193 100,000
8 1,000 10,027 5,708 5,708 100,000 7,526 7,526 100,000 9,934 9,934 100,000
9 1,000 11,578 6,383 6,383 100,000 8,680 8,680 100,000 11,847 11,847 100,000
10 1,000 13,207 7,034 7,034 100,000 9,873 9,873 100,000 13,950 13,950 100,000
11 1,000 14,917 7,708 7,708 100,000 11,158 11,158 100,000 16,322 16,322 100,000
12 1,000 16,713 8,358 8,358 100,000 12,490 12,490 100,000 18,936 18,936 100,000
13 1,000 18,599 8,984 8,984 100,000 13,871 13,871 100,000 21,820 21,820 100,000
14 1,000 20,579 9,585 9,585 100,000 15,301 15,301 100,000 25,002 25,002 100,000
15 1,000 22,657 10,159 10,159 100,000 16,783 16,783 100,000 28,514 28,514 100,000
16 1,000 24,840 10,706 10,706 100,000 18,319 18,319 100,000 32,395 32,395 100,000
17 1,000 27,132 11,226 11,226 100,000 19,910 19,910 100,000 36,684 36,684 100,000
18 1,000 29,539 11,715 11,715 100,000 21,558 21,558 100,000 41,428 41,428 100,000
19 1,000 32,066 12,173 12,173 100,000 23,265 23,265 100,000 46,671 46,671 106,606
20 1,000 34,719 12,597 12,597 100,000 25,033 25,033 100,000 52,445 52,445 116,446
@ 65 1,000 69,761 14,271 14,271 100,000 46,470 46,470 100,000 153,047 153,047 262,278
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
29.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
56
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 569 619 100,000 613 663 100,000 657 707 100,000
2 1,000 2,153 1,116 1,149 100,000 1,239 1,272 100,000 1,367 1,400 100,000
3 1,000 3,310 1,638 1,655 100,000 1,875 1,892 100,000 2,134 2,150 100,000
4 1,000 4,526 2,134 2,134 100,000 2,521 2,521 100,000 2,961 2,961 100,000
5 1,000 5,802 2,601 2,601 100,000 3,175 3,175 100,000 3,852 3,852 100,000
6 1,000 7,142 3,040 3,040 100,000 3,834 3,834 100,000 4,811 4,811 100,000
7 1,000 8,549 3,445 3,445 100,000 4,495 4,495 100,000 5,843 5,843 100,000
8 1,000 10,027 3,848 3,848 100,000 5,191 5,191 100,000 6,988 6,988 100,000
9 1,000 11,578 4,215 4,215 100,000 5,888 5,888 100,000 8,222 8,222 100,000
10 1,000 13,207 4,546 4,546 100,000 6,585 6,585 100,000 9,555 9,555 100,000
11 1,000 14,917 4,839 4,839 100,000 7,279 7,279 100,000 10,993 10,993 100,000
12 1,000 16,713 5,092 5,092 100,000 7,970 7,970 100,000 12,547 12,547 100,000
13 1,000 18,599 5,305 5,305 100,000 8,656 8,656 100,000 14,229 14,229 100,000
14 1,000 20,579 5,475 5,475 100,000 9,333 9,333 100,000 16,052 16,052 100,000
15 1,000 22,657 5,600 5,600 100,000 9,999 9,999 100,000 18,027 18,027 100,000
16 1,000 24,840 5,676 5,676 100,000 10,651 10,651 100,000 20,172 20,172 100,000
17 1,000 27,132 5,696 5,696 100,000 11,280 11,280 100,000 22,497 22,497 100,000
18 1,000 29,539 5,654 5,654 100,000 11,879 11,879 100,000 25,021 25,021 100,000
19 1,000 32,066 5,542 5,542 100,000 12,441 12,441 100,000 27,762 27,762 100,000
20 1,000 34,719 5,352 5,352 100,000 12,954 12,954 100,000 30,739 30,739 100,000
@ 65 1,000 69,761 -- -- -- 13,261 13,261 100,000 80,284 80,284 137,584
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
29.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
57
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 787 837 100,000 838 888 100,000 889 939 100,000
2 1,000 2,153 1,559 1,592 100,000 1,710 1,743 100,000 1,867 1,901 100,000
3 1,000 3,310 2,314 2,331 100,000 2,616 2,633 100,000 2,943 2,960 100,000
4 1,000 4,526 3,053 3,053 100,000 3,558 3,558 100,000 4,126 4,126 100,000
5 1,000 5,802 3,774 3,774 100,000 4,534 4,534 100,000 5,426 5,426 100,000
6 1,000 7,142 4,476 4,476 100,000 5,547 5,547 100,000 6,855 6,855 100,000
7 1,000 8,549 5,158 5,158 100,000 6,597 6,597 100,000 8,426 8,426 100,000
8 1,000 10,027 5,870 5,870 100,000 7,737 7,737 100,000 10,208 10,208 100,000
9 1,000 11,578 6,561 6,561 100,000 8,919 8,919 100,000 12,169 12,169 100,000
10 1,000 13,207 7,233 7,233 100,000 10,147 10,147 100,000 14,330 14,330 100,000
11 1,000 14,917 7,926 7,926 100,000 11,467 11,467 100,000 16,764 16,764 100,000
12 1,000 16,713 8,602 8,602 100,000 12,842 12,842 100,000 19,453 19,453 100,000
13 1,000 18,599 9,261 9,261 100,000 14,274 14,274 100,000 22,426 22,426 100,000
14 1,000 20,579 9,903 9,903 100,000 15,767 15,767 100,000 25,713 25,713 100,000
15 1,000 22,657 10,527 10,527 100,000 17,324 17,324 100,000 29,350 29,350 100,000
16 1,000 24,840 11,133 11,133 100,000 18,946 18,946 100,000 33,373 33,373 100,000
17 1,000 27,132 11,720 11,720 100,000 20,635 20,635 100,000 37,822 37,822 106,770
18 1,000 29,539 12,287 12,287 100,000 22,396 22,396 100,000 42,728 42,728 117,079
19 1,000 32,066 12,833 12,833 100,000 24,230 24,230 100,000 48,134 48,134 128,050
20 1,000 34,719 13,356 13,356 100,000 26,140 26,140 100,000 54,090 54,090 139,743
@ 65 1,000 69,761 17,049 17,049 100,000 50,268 50,268 100,000 159,003 159,003 309,188
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
58
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 1
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 614 664 100,000 659 709 100,000 705 755 100,000
2 1,000 2,153 1,207 1,241 100,000 1,336 1,369 100,000 1,470 1,503 100,000
3 1,000 3,310 1,777 1,794 100,000 2,028 2,044 100,000 2,300 2,317 100,000
4 1,000 4,526 2,323 2,323 100,000 2,734 2,734 100,000 3,199 3,199 100,000
5 1,000 5,802 2,843 2,843 100,000 3,453 3,453 100,000 4,172 4,172 100,000
6 1,000 7,142 3,334 3,334 100,000 4,183 4,183 100,000 5,225 5,225 100,000
7 1,000 8,549 3,797 3,797 100,000 4,923 4,923 100,000 6,364 6,364 100,000
8 1,000 10,027 4,260 4,260 100,000 5,705 5,705 100,000 7,631 7,631 100,000
9 1,000 11,578 4,694 4,694 100,000 6,499 6,499 100,000 9,008 9,008 100,000
10 1,000 13,207 5,100 5,100 100,000 7,306 7,306 100,000 10,505 10,505 100,000
11 1,000 14,917 5,478 5,478 100,000 8,127 8,127 100,000 12,135 12,135 100,000
12 1,000 16,713 5,827 5,827 100,000 8,961 8,961 100,000 13,913 13,913 100,000
13 1,000 18,599 6,147 6,147 100,000 9,809 9,809 100,000 15,853 15,853 100,000
14 1,000 20,579 6,437 6,437 100,000 10,670 10,670 100,000 17,972 17,972 100,000
15 1,000 22,657 6,695 6,695 100,000 11,542 11,542 100,000 20,287 20,287 100,000
16 1,000 24,840 6,919 6,919 100,000 12,425 12,425 100,000 22,819 22,819 100,000
17 1,000 27,132 7,108 7,108 100,000 13,316 13,316 100,000 25,590 25,590 100,000
18 1,000 29,539 7,258 7,258 100,000 14,215 14,215 100,000 28,624 28,624 100,000
19 1,000 32,066 7,365 7,365 100,000 15,116 15,116 100,000 31,948 31,948 100,000
20 1,000 34,719 7,429 7,429 100,000 16,019 16,019 100,000 35,595 35,595 100,000
@ 65 1,000 69,761 5,352 5,352 100,000 25,073 25,073 100,000 95,884 95,884 186,451
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
36.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
59
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 759 809 100,759 809 859 100,809 859 909 100,859
2 1,000 2,153 1,504 1,537 101,504 1,651 1,684 101,652 1,805 1,838 101,805
3 1,000 3,310 2,234 2,251 102,234 2,528 2,544 102,528 2,846 2,863 102,846
4 1,000 4,526 2,949 2,949 102,949 3,439 3,439 103,439 3,991 3,991 103,992
5 1,000 5,802 3,647 3,647 103,647 4,385 4,385 104,386 5,251 5,251 105,251
6 1,000 7,142 4,328 4,328 104,328 5,367 5,367 105,367 6,635 6,635 106,636
7 1,000 8,549 4,989 4,989 104,990 6,384 6,384 106,384 8,155 8,155 108,156
8 1,000 10,027 5,679 5,679 105,680 7,487 7,487 107,487 9,879 9,879 109,879
9 1,000 11,578 6,346 6,346 106,346 8,626 8,626 108,627 11,769 11,769 111,770
10 1,000 13,207 6,986 6,986 106,987 9,801 9,801 109,801 13,841 13,841 113,842
11 1,000 14,917 7,649 7,649 107,649 11,066 11,066 111,067 16,178 16,178 116,178
12 1,000 16,713 8,286 8,286 108,287 12,374 12,374 112,374 18,747 18,747 118,747
13 1,000 18,599 8,897 8,897 108,897 13,724 13,724 113,724 21,571 21,571 121,571
14 1,000 20,579 9,480 9,480 109,480 15,117 15,117 115,118 24,676 24,676 124,676
15 1,000 22,657 10,033 10,033 110,033 16,553 16,553 116,553 28,090 28,090 128,091
16 1,000 24,840 10,555 10,555 110,556 18,033 18,033 118,033 31,846 31,846 131,846
17 1,000 27,132 11,046 11,046 111,046 19,556 19,556 119,557 35,977 35,977 135,977
18 1,000 29,539 11,502 11,502 111,502 21,122 21,122 121,123 40,520 40,520 140,521
19 1,000 32,066 11,921 11,921 111,922 22,731 22,731 122,732 45,519 45,519 145,519
20 1,000 34,719 12,302 12,302 112,303 24,382 24,382 124,382 51,017 51,017 151,018
@ 65 1,000 69,761 13,118 13,118 113,118 42,531 42,531 142,532 147,388 147,388 252,580
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
60
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 568 618 100,568 611 661 100,612 655 705 100,655
2 1,000 2,153 1,111 1,145 101,112 1,234 1,267 101,234 1,362 1,395 101,362
3 1,000 3,310 1,629 1,646 101,630 1,865 1,882 101,866 2,122 2,139 102,123
4 1,000 4,526 2,119 2,119 102,120 2,504 2,504 102,505 2,940 2,940 102,941
5 1,000 5,802 2,580 2,580 102,580 3,147 3,147 103,148 3,818 3,818 103,818
6 1,000 7,142 3,008 3,008 103,009 3,793 3,793 103,794 4,759 4,759 104,759
7 1,000 8,549 3,402 3,402 103,403 4,438 4,438 104,438 5,765 5,765 105,766
8 1,000 10,027 3,791 3,791 103,792 5,112 5,112 105,112 6,877 6,877 106,877
9 1,000 11,578 4,142 4,142 104,143 5,782 5,782 105,782 8,067 8,067 108,068
10 1,000 13,207 4,455 4,455 104,455 6,446 6,446 106,446 9,343 9,343 109,344
11 1,000 14,917 4,726 4,726 104,727 7,100 7,100 107,101 10,709 10,709 110,709
12 1,000 16,713 4,956 4,956 104,956 7,744 7,744 107,744 12,172 12,172 112,172
13 1,000 18,599 5,141 5,141 105,142 8,372 8,372 108,372 13,739 13,739 113,740
14 1,000 20,579 5,281 5,281 105,282 8,983 8,983 108,983 15,419 15,419 115,420
15 1,000 22,657 5,373 5,373 105,373 9,571 9,571 109,571 17,218 17,218 117,218
16 1,000 24,840 5,412 5,412 105,413 10,131 10,131 110,132 19,143 19,143 119,144
17 1,000 27,132 5,393 5,393 105,394 10,654 10,654 110,654 21,200 21,200 121,200
18 1,000 29,539 5,309 5,309 105,309 11,130 11,130 111,131 23,392 23,392 123,392
19 1,000 32,066 5,152 5,152 105,153 11,550 11,550 111,550 25,725 25,725 125,725
20 1,000 34,719 4,914 4,914 104,914 11,899 11,899 111,899 28,201 28,201 128,201
@ 65 1,000 69,761 -- -- -- 8,925 8,925 108,926 62,611 62,611 162,612
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
28.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
61
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 787 837 100,787 838 888 100,838 889 939 100,889
2 1,000 2,153 1,558 1,591 101,558 1,709 1,742 101,709 1,866 1,899 101,866
3 1,000 3,310 2,311 2,328 102,312 2,613 2,629 102,613 2,939 2,956 102,940
4 1,000 4,526 3,048 3,048 103,048 3,551 3,551 103,552 4,119 4,119 104,119
5 1,000 5,802 3,766 3,766 103,766 4,524 4,524 104,525 5,414 5,414 105,414
6 1,000 7,142 4,464 4,464 104,464 5,532 5,532 105,532 6,835 6,835 106,836
7 1,000 8,549 5,141 5,141 105,141 6,574 6,574 106,574 8,395 8,395 108,396
8 1,000 10,027 5,846 5,846 105,846 7,704 7,704 107,705 10,162 10,162 110,163
9 1,000 11,578 6,530 6,530 106,530 8,874 8,874 108,874 12,103 12,103 112,104
10 1,000 13,207 7,192 7,192 107,192 10,085 10,085 110,085 14,237 14,237 114,237
11 1,000 14,917 7,876 7,876 107,877 11,388 11,388 111,389 16,641 16,641 116,642
12 1,000 16,713 8,541 8,541 108,542 12,743 12,743 112,743 19,293 19,293 119,293
13 1,000 18,599 9,188 9,188 109,189 14,151 14,151 114,152 22,217 22,217 122,218
14 1,000 20,579 9,816 9,816 109,816 15,615 15,615 115,615 25,443 25,443 125,444
15 1,000 22,657 10,424 10,424 110,425 17,136 17,136 117,136 29,003 29,003 129,004
16 1,000 24,840 11,012 11,012 111,012 18,715 18,715 118,716 32,931 32,931 132,932
17 1,000 27,132 11,578 11,578 111,578 20,355 20,355 120,356 37,265 37,265 137,266
18 1,000 29,539 12,122 12,122 112,122 22,057 22,057 122,057 42,048 42,048 142,048
19 1,000 32,066 12,641 12,641 112,641 23,820 23,820 123,821 47,324 47,324 147,324
20 1,000 34,719 13,134 13,134 113,134 25,647 25,647 125,648 53,145 53,145 153,145
@ 65 1,000 69,761 16,242 16,242 116,242 47,596 47,596 147,596 156,326 156,326 303,982
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
35.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
62
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 2
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 613 663 100,614 658 708 100,659 703 753 100,704
2 1,000 2,153 1,204 1,237 101,204 1,332 1,365 101,332 1,466 1,499 101,466
3 1,000 3,310 1,770 1,787 101,771 2,019 2,036 102,020 2,290 2,307 102,291
4 1,000 4,526 2,311 2,311 102,312 2,720 2,720 102,720 3,182 3,182 103,182
5 1,000 5,802 2,824 2,824 102,825 3,430 3,430 103,430 4,144 4,144 104,144
6 1,000 7,142 3,308 3,308 103,308 4,149 4,149 104,149 5,180 5,180 105,181
7 1,000 8,549 3,760 3,760 103,761 4,874 4,874 104,874 6,298 6,298 106,298
8 1,000 10,027 4,211 4,211 104,211 5,636 5,636 105,637 7,536 7,536 107,536
9 1,000 11,578 4,631 4,631 104,632 6,407 6,407 106,408 8,874 8,874 108,875
10 1,000 13,207 5,021 5,021 105,022 7,186 7,186 107,187 10,323 10,323 110,323
11 1,000 14,917 5,380 5,380 105,380 7,972 7,972 107,972 11,890 11,890 111,891
12 1,000 16,713 5,708 5,708 105,708 8,765 8,765 108,765 13,590 13,590 113,590
13 1,000 18,599 6,005 6,005 106,005 9,565 9,565 109,565 15,433 15,433 115,433
14 1,000 20,579 6,268 6,268 106,269 10,368 10,368 110,369 17,431 17,431 117,431
15 1,000 22,657 6,497 6,497 106,498 11,174 11,174 111,174 19,597 19,597 119,598
16 1,000 24,840 6,689 6,689 106,690 11,978 11,978 111,979 21,946 21,946 121,946
17 1,000 27,132 6,843 6,843 106,844 12,779 12,779 112,780 24,492 24,492 124,492
18 1,000 29,539 6,955 6,955 106,956 13,573 13,573 113,574 27,252 27,252 127,252
19 1,000 32,066 7,021 7,021 107,021 14,354 14,354 114,354 30,240 30,240 130,241
20 1,000 34,719 7,040 7,040 107,040 15,118 15,118 115,119 33,480 33,480 133,480
@ 65 1,000 69,761 4,400 4,400 104,400 21,285 21,285 121,286 86,093 86,093 186,094
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
35.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
63
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 759 809 101,000 809 859 101,000 859 909 101,000
2 1,000 2,153 1,503 1,537 102,000 1,651 1,684 102,000 1,804 1,838 102,000
3 1,000 3,310 2,233 2,250 103,000 2,527 2,544 103,000 2,845 2,862 103,000
4 1,000 4,526 2,947 2,947 104,000 3,437 3,437 104,000 3,990 3,990 104,000
5 1,000 5,802 3,644 3,644 105,000 4,383 4,383 105,000 5,250 5,250 105,000
6 1,000 7,142 4,323 4,323 106,000 5,364 5,364 106,000 6,635 6,635 106,000
7 1,000 8,549 4,982 4,982 107,000 6,380 6,380 107,000 8,156 8,156 107,000
8 1,000 10,027 5,670 5,670 108,000 7,482 7,482 108,000 9,881 9,881 108,000
9 1,000 11,578 6,333 6,333 109,000 8,621 8,621 109,000 11,775 11,775 109,000
10 1,000 13,207 6,968 6,968 110,000 9,794 9,794 110,000 13,854 13,854 110,000
11 1,000 14,917 7,627 7,627 111,000 11,059 11,059 111,000 16,198 16,198 111,000
12 1,000 16,713 8,259 8,259 112,000 12,367 12,367 112,000 18,779 18,779 112,000
13 1,000 18,599 8,863 8,863 113,000 13,717 13,717 113,000 21,621 21,621 113,000
14 1,000 20,579 9,437 9,437 114,000 15,112 15,112 114,000 24,751 24,751 114,000
15 1,000 22,657 9,980 9,980 115,000 16,550 16,550 115,000 28,201 28,201 115,000
16 1,000 24,840 10,491 10,491 116,000 18,034 18,034 116,000 32,006 32,006 116,000
17 1,000 27,132 10,966 10,966 117,000 19,564 19,564 117,000 36,204 36,204 117,000
18 1,000 29,539 11,405 11,405 118,000 21,139 21,139 118,000 40,837 40,837 118,000
19 1,000 32,066 11,803 11,803 119,000 22,760 22,760 119,000 45,956 45,956 119,000
20 1,000 34,719 12,158 12,158 120,000 24,428 24,428 120,000 51,613 51,613 120,000
@ 65 1,000 69,761 12,186 12,186 130,000 43,312 43,312 130,000 150,846 150,846 258,507
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
64
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
MALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 567 617 101,000 611 661 101,000 654 704 101,000
2 1,000 2,153 1,109 1,143 102,000 1,232 1,265 102,000 1,360 1,393 102,000
3 1,000 3,310 1,624 1,641 103,000 1,861 1,878 103,000 2,118 2,135 103,000
4 1,000 4,526 2,110 2,110 104,000 2,496 2,496 104,000 2,933 2,933 104,000
5 1,000 5,802 2,565 2,565 105,000 3,134 3,134 105,000 3,806 3,806 105,000
6 1,000 7,142 2,985 2,985 106,000 3,773 3,773 106,000 4,742 4,742 106,000
7 1,000 8,549 3,369 3,369 107,000 4,408 4,408 107,000 5,742 5,742 107,000
8 1,000 10,027 3,744 3,744 108,000 5,071 5,071 108,000 6,847 6,847 108,000
9 1,000 11,578 4,079 4,079 109,000 5,727 5,727 109,000 8,030 8,030 109,000
10 1,000 13,207 4,371 4,371 110,000 6,374 6,374 110,000 9,298 9,298 110,000
11 1,000 14,917 4,616 4,616 111,000 7,008 7,008 111,000 10,656 10,656 111,000
12 1,000 16,713 4,815 4,815 112,000 7,626 7,626 112,000 12,113 12,113 112,000
13 1,000 18,599 4,963 4,963 113,000 8,224 8,224 113,000 13,677 13,677 113,000
14 1,000 20,579 5,058 5,058 114,000 8,800 8,800 114,000 15,356 15,356 114,000
15 1,000 22,657 5,096 5,096 115,000 9,346 9,346 115,000 17,159 17,159 115,000
16 1,000 24,840 5,071 5,071 116,000 9,856 9,856 116,000 19,096 19,096 116,000
17 1,000 27,132 4,976 4,976 117,000 10,320 10,320 117,000 21,175 21,175 117,000
18 1,000 29,539 4,800 4,800 118,000 10,726 10,726 118,000 23,404 23,404 118,000
19 1,000 32,066 4,533 4,533 119,000 11,061 11,061 119,000 25,792 25,792 119,000
20 1,000 34,719 4,163 4,163 120,000 11,309 11,309 120,000 28,350 28,350 120,000
@ 65 1,000 69,761 -- -- -- 5,047 5,047 130,000 68,061 68,061 130,000
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
26.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
65
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 1 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING CURRENT CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 787 837 101,000 838 888 101,000 888 938 101,000
2 1,000 2,153 1,557 1,591 102,000 1,708 1,742 102,000 1,865 1,899 102,000
3 1,000 3,310 2,311 2,327 103,000 2,612 2,629 103,000 2,939 2,956 103,000
4 1,000 4,526 3,047 3,047 104,000 3,551 3,551 104,000 4,118 4,118 104,000
5 1,000 5,802 3,763 3,763 105,000 4,523 4,523 105,000 5,414 5,414 105,000
6 1,000 7,142 4,460 4,460 106,000 5,530 5,530 106,000 6,836 6,836 106,000
7 1,000 8,549 5,136 5,136 107,000 6,572 6,572 107,000 8,397 8,397 107,000
8 1,000 10,027 5,839 5,839 108,000 7,701 7,701 108,000 10,166 10,166 108,000
9 1,000 11,578 6,519 6,519 109,000 8,870 8,870 109,000 12,111 12,111 109,000
10 1,000 13,207 7,178 7,178 110,000 10,081 10,081 110,000 14,250 14,250 110,000
11 1,000 14,917 7,859 7,859 111,000 11,385 11,385 111,000 16,662 16,662 111,000
12 1,000 16,713 8,520 8,520 112,000 12,740 12,740 112,000 19,324 19,324 112,000
13 1,000 18,599 9,162 9,162 113,000 14,149 14,149 113,000 22,264 22,264 113,000
14 1,000 20,579 9,784 9,784 114,000 15,614 15,614 114,000 25,512 25,512 114,000
15 1,000 22,657 10,386 10,386 115,000 17,139 17,139 115,000 29,101 29,101 115,000
16 1,000 24,840 10,966 10,966 116,000 18,722 18,722 116,000 33,067 33,067 116,000
17 1,000 27,132 11,523 11,523 117,000 20,368 20,368 117,000 37,453 37,453 117,000
18 1,000 29,539 12,056 12,056 118,000 22,078 22,078 118,000 42,303 42,303 118,000
19 1,000 32,066 12,562 12,562 119,000 23,853 23,853 119,000 47,663 47,663 126,798
20 1,000 34,719 13,039 13,039 120,000 25,694 25,694 120,000 53,570 53,570 138,402
@ 65 1,000 69,761 15,751 15,751 130,000 48,240 48,240 130,000 157,633 157,633 306,524
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
32.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
66
<PAGE>
<TABLE>
<CAPTION>
PHOENIX LIFE AND ANNUITY COMPANY PAGE 2 OF 2
FEMALE 35 ADVANTAGE--GUARANTEED ISSUE FACE AMOUNT: $100,000
INITIAL ANNUAL PREMIUM: $1,000
PHOENIX EXECUTIVE BENEFIT VUL--A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY OPTION 3
ASSUMING GUARANTEED CHARGES
CASH CASH CASH
ASSUMED PREMIUM ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
PREMIUM ACCUM. VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR PAYMENTS @5.0% @0% @0% @0% @6% @6% @6% @12% @12% @12%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,000 1,050 613 663 101,000 658 708 101,000 703 753 101,000
2 1,000 2,153 1,202 1,236 102,000 1,330 1,364 102,000 1,464 1,498 102,000
3 1,000 3,310 1,767 1,784 103,000 2,016 2,033 103,000 2,288 2,304 103,000
4 1,000 4,526 2,305 2,305 104,000 2,714 2,714 104,000 3,177 3,177 104,000
5 1,000 5,802 2,814 2,814 105,000 3,421 3,421 105,000 4,136 4,136 105,000
6 1,000 7,142 3,291 3,291 106,000 4,135 4,135 106,000 5,170 5,170 106,000
7 1,000 8,549 3,736 3,736 107,000 4,854 4,854 107,000 6,284 6,284 107,000
8 1,000 10,027 4,177 4,177 108,000 5,609 5,609 108,000 7,519 7,519 108,000
9 1,000 11,578 4,586 4,586 109,000 6,371 6,371 109,000 8,854 8,854 109,000
10 1,000 13,207 4,961 4,961 110,000 7,138 7,138 110,000 10,301 10,301 110,000
11 1,000 14,917 5,302 5,302 111,000 7,911 7,911 111,000 11,868 11,868 111,000
12 1,000 16,713 5,608 5,608 112,000 8,689 8,689 112,000 13,570 13,570 112,000
13 1,000 18,599 5,880 5,880 113,000 9,472 9,472 113,000 15,419 15,419 113,000
14 1,000 20,579 6,114 6,114 114,000 10,255 10,255 114,000 17,429 17,429 114,000
15 1,000 22,657 6,308 6,308 115,000 11,038 11,038 115,000 19,614 19,614 115,000
16 1,000 24,840 6,458 6,458 116,000 11,816 11,816 116,000 21,991 21,991 116,000
17 1,000 27,132 6,564 6,564 117,000 12,587 12,587 117,000 24,579 24,579 117,000
18 1,000 29,539 6,620 6,620 118,000 13,346 13,346 118,000 27,397 27,397 118,000
19 1,000 32,066 6,619 6,619 119,000 14,087 14,087 119,000 30,467 30,467 119,000
20 1,000 34,719 6,561 6,561 120,000 14,806 14,806 120,000 33,815 33,815 120,000
@ 65 1,000 69,761 2,154 2,154 130,000 19,976 19,976 130,000 90,423 90,423 175,832
</TABLE>
Based on 0% interest rate and guaranteed charges, the Policy will lapse in year
32.
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 1.00%
(includes average fund operating expenses of 0.30% 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 3% also is
available under this product through the General Account.
This illustration assumes a premium tax of 2.25%.
67
