<PAGE> 1
NY SPINNAKER PLUS File Nos.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [ ]
Post-Effective Amendment No._ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No.___ [X]
(Check appropriate box or boxes.)
First SAFECO SEPARATE ACCOUNT S
-------------------------------
(Exact Name of Registrant)
First SAFECO National Life Insurance Company of New York
--------------------------------------------------------
(Name of Depositor)
6700 Old Collamer Road, East Syracuse, NY 13057
-------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (315) 463-2041
Name and Address of Agent for Service
-------------------------------------
WILLIAM E. CRAWFORD
15411 N.E. 51st Street
Redmond, Washington 98052
(206) 867-8257
Approximate date of Proposed Public Offering . . . . . . . . . . As Soon as
Practicable after Effective Date
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b) of Rule 485
____ on pursuant to paragraph (b) of Rule 485
____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
____ on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has declared that it has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940.
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FIRST SAFECO SEPARATE ACCOUNT S
Registration Statement on Form N-4
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item No. Location
- - -------- --------
PART A
<S> <C> <C>
Item 1. Cover Page ...................................... Cover Page
Item 2. Definitions...................................... Definitions
Item 3. Synopsis or Highlights........................... Expense Table;
................................................. Highlights
Item 4. Condensed Financial Information.................. Schedule of Accumulation
................................................. Unit Values & Accumulation
................................................. Units Outstanding;
................................................. Performance Information
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies............... First SAFECO; The
................................................. Separate Account;
................................................. SAFECO Resource
................................................. Series Trust; Federated
Insurance Series;
................................................. Lexington Emerging
................................................. Markets Fund, Inc.;
................................................. Lexington Natural
................................................. Resources Trust;
Item 6. Deductions and Expenses.......................... Charges and
................................................. Deductions; Expense
................................................. Table
Item 7. General Description of Variable
Annuity Contracts................................ Cover Page; Rights
................................................. under the Contract;
................................................. Purchasing a Contract
Item 8. Annuity Period................................... Annuity and Death Benefit
................................................. Provisions
Item 9. Distribution Requirements........................ Annuity and Death Benefit
................................................. Provisions
Item 10. Purchases and Contract Value..................... Purchasing a Contract
Item 11. Redemptions...................................... Withdrawals and Transfers
Item 12. Taxes............................................ Tax Status
Item 13. Legal Proceedings................................ Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information........................... Table of Contents
................................................. of the Statement of
................................................. Additional Information
</TABLE>
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<TABLE>
<CAPTION>
Item No. Location
- - -------- --------
PART B
<S> <C> <C>
Item 15. Cover Page....................................... Cover Page
Item 16. Table of Contents................................ Table of Contents
Item 17. General Information and History.................. General Information
Item 18. Services......................................... Not Applicable
Item 19. Purchase of Securities Being Offered............. Not Applicable
Item 20. Underwriters..................................... General Information/
................................................. Distributor
Item 21. Calculation of Performance Data.................. Additional Performance
................................................. Information
Item 22. Annuity Payments................................. Annuity Provisions
Item 23. Financial Statements............................. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE> 4
PART A
PROSPECTUS
<PAGE> 5
_________, 1996 FIRST SAFECO NATIONAL LIFE INSURANCE COMPANY OF NEW YORK
- - --------------------------------------------------------------------------------
INDIVIDUAL SINGLE PURCHASE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACTS
issued by
FIRST SAFECO SEPARATE ACCOUNT S
and
FIRST SAFECO NATIONAL LIFE INSURANCE COMPANY OF NEW YORK
Home Office: Annuity Service Office:
First SAFECO National Life Insurance First SAFECO National Life Insurance
Company of New York Company of New York
6700 Old Collamer Road 6700 Old Collamer Road
East Syracuse, NY 13057 EastSyracuse, NY 13057
Telephone: 1-800-878-2041 Fax: (315) 463-2128
The Individual Single Purchase Payment Deferred Variable Annuity Contracts (the
Contracts) described in this Prospectus provide for accumulation of Contract
Values and payment of monthly annuity payments on a fixed and variable basis.
The Contracts are designed for use by individuals in conjunction with retirement
plans on a Qualified or Non-Qualified basis.
At the Owner's direction, Purchase Payments for the Contracts will be allocated
to a segregated investment account of First SAFECO National Life Insurance
Company of New York (First SAFECO) which has been designated First SAFECO
Separate Account S (the Separate Account) or to First SAFECO's Fixed Account.
Under certain circumstances, however, Purchase Payments may initially be
allocated to the SAFECO Resource Money Market Sub-Account of the Separate
Account. (See "Highlights.") The Separate Account invests in shares of SAFECO
Resource Series Trust (see "SAFECO Resource Series Trust"), Federated Insurance
Series (see "Federated Insurance Series"), Lexington Emerging Markets Fund, Inc.
(see "Lexington Emerging Markets Fund, Inc.")and Lexington Natural Resources
Trust (see "Lexington Natural Resources Trust").,SAFECO Resource Series Trust
currently consists of the SAFECO Resource Equity, Growth, Northwest, Bond and
Money Market Portfolios. Federated Insurance Series consists of seven
Portfolios, three of which are offered hereunder; the Federated High Income Bond
Fund II ("Federated High Income Bond Portfolio"), the Federated International
Equity Fund II ("Federated International Equity Portfolio") and the Federated
Utility Fund II("Federated Utility Portfolio"). Lexington Emerging Markets Fund,
Inc. ("Lexington Emerging Markets Fund") and Lexington Natural Resources Trust
each currently consist of only one Portfolio which are offered hereunder; the
Lexington Emerging Markets Portfolio and the Lexington Natural Resources
Portfolio, respectively. See "Highlights" and "Tax Status - Diversification" for
a discussion of owner control of the underlying investments in a variable
annuity contract.
This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts is
contained in the Statement of Additional Information which is available at no
charge. The Table of Contents of the Statement of Additional Information can be
found on page __ of this Prospectus. Some of the discussions contained in this
Prospectus will refer to the more detailed description contained in the
Statement of Additional Information which is incorporated by reference in this
Prospectus. For the Statement of Additional Information, call l-800-878-2041 or
write to the Annuity Service Office address above.
- - --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SPINNAKER PLUS IS NOT INSURED BY THE FDIC. IT IS NOT A DEPOSIT OR OTHER
OBLIGATION OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION THROUGH WHICH IT
<PAGE> 6
MAY BE SOLD. SPINNAKER PLUS IS SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- - --------------------------------------------------------------------------------
THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
This prospectus and the Statement of Additional Information are
dated__________________, 1996.
INQUIRIES: Any inquiries should be made by telephone to the number
listed on the cover page of the Prospectus or the representative from
whom this Prospectus was obtained. All other questions should be
directed to the annuity Service Office, 1-800-878-2041 listed on the
cover page of this Prospectus.
- - --------------------------------------------------------------------------------
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions .........................................................................
Highlights ..........................................................................
Expense Table .......................................................................
Schedule of Accumulation Unit Values and
Accumulation Units Outstanding ..................................................
Financial Statements ................................................................
Performance Information .............................................................
All Sub-Accounts (Other than SAFECO Resource Money Market Sub-Account)...........
SAFECO Resource Money Market Sub-Account.........................................
Rankings.........................................................................
First SAFECO ........................................................................
The Separate Account ................................................................
SAFECO Resource Equity Sub-Account ..............................................
SAFECO Resource Growth Sub-Account ..............................................
SAFECO Resource Northwest Sub-Account ...........................................
SAFECO Resource Bond Sub-Account ................................................
SAFECO Resource Money Market Sub-Account ........................................
Federated High Income Bond II Sub-Account .......................................
Federated International Equity II Sub-Account ...................................
Federated Utility II Sub-Account ................................................
Lexington Emerging Markets Sub-Account ..........................................
Lexington Natural Resources Sub-Account .........................................
SAFECO Resource Series Trust ........................................................
Federated Insurance Series ..........................................................
Lexington Emerging Markets Fund, Inc. ...............................................
Lexington Natural Resources Trust ...................................................
Voting Rights .......................................................................
Substitution of Securities ..........................................................
Purchasing a Contract ...............................................................
Purchase Payments ...............................................................
Allocation of Purchase Payments .................................................
Accumulation Unit ...............................................................
Principal Underwriter ...........................................................
Charges and Deductions ..............................................................
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Deduction for Premium and Other Taxes ...........................................
Deduction for Mortality and Expense Risk Charge .................................
Deduction for Contingent Deferred Sales Charge ..................................
Reduction or Elimination of the Contingent Deferred Sales Charge ................
Deduction for Withdrawal Charge .................................................
Deduction for Transfer Charge ...................................................
Other Expenses ..................................................................
Rights Under the Contract ...........................................................
Owner, Annuitant and Beneficiary ................................................
Misstatement of Age .............................................................
Evidence of Survival ............................................................
Contract Settlement .............................................................
Substitute Payee ................................................................
Assignment ......................................................................
Modification of the Contracts ...................................................
Termination of Contract .........................................................
Annuity and Death Benefit Provisions ................................................
Selection and Change of Settlement Options ......................................
Payment of Benefits .............................................................
Frequency and Amount of Annuity Payments ........................................
Death of Owner Prior to Annuity Date ............................................
Death of Annuitant ..............................................................
Death of Owner After Annuity Date ...............................................
Settlement Options ..............................................................
Mortality and Expense Guarantee .................................................
Withdrawals and Transfers ...........................................................
Withdrawals .....................................................................
Transfers .......................................................................
Transfers by Written Request .................................................
Suspension of Payments or Transfers .............................................
Other Services ......................................................................
The Programs ....................................................................
Dollar Cost Averaging Program ...................................................
Automatic Transfer Program ......................................................
Appreciation or Interest Sweep Program ..........................................
Sub-Account Rebalancing Program .................................................
Periodic Withdrawal Program .....................................................
Tax Status ..........................................................................
Note ............................................................................
General .........................................................................
Diversification .................................................................
Multiple Contracts ..............................................................
Tax Treatment of Assignments ....................................................
Income Tax Withholding ..........................................................
Tax Treatment of Withdrawals - Non-Qualified Contracts ..........................
Qualified Plans .................................................................
Tax Treatment of Withdrawals - Qualified Contracts ..............................
Tax-Sheltered Annuities - Withdrawal Limitations ................................
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Contracts Owned by Other than Natural Persons ...................................
Legal Proceedings ...................................................................
Table of Contents of the Statement of Additional Information ........................
</TABLE>
<PAGE> 10
DEFINITIONS
ACCUMULATION UNIT - An accounting unit of measure used to calculate the value of
a Sub-Account prior to the Annuity Date.
ANNUITANT - The natural person on whose life Annuity payments are payable. The
Contract will not be issued if the Annuitant is 76 years of age or older on the
Contract Date.
ANNUITY - Any series of payments starting on the Annuity Date.
ANNUITY DATE - The date selected by the Owner for commencing Annuity payments
under the Contract. The day of the month on which the payments will be made will
be determined by First SAFECO. The Annuity Date cannot be later than the date
the Annuitant attains age 85.
ANNUITY UNIT - An accounting unit of measure used to calculate Annuity payments
after the Annuity Date.
BENEFICIARY - The person or persons entitled to receive benefits under the
Contract upon the death of the Owner.
CONTRACT ANNIVERSARY - Any anniversary of the Contract Date.
CONTRACT DATE - The earlier of the date on which the initial Purchase Payment is
allocated to the Separate Account or the Fixed Account.
CONTRACT VALUE - The sum of the Owner's interest in the Sub-Accounts of the
Separate Account and the Fixed Account.
CONTRACT YEAR - The twelve month period which commences on the Contract Date and
each succeeding twelve month period thereafter.
ELIGIBLE INVESTMENT(S) - An investment entity in which a Sub-Account invests as
an underlying investment of the Contract.
First SAFECO - First SAFECO National Life Insurance Company of New York it its
Annuity Service Office shown on the cover page of this Prospectus.
FIXED ACCOUNT - First SAFECO's General Account, referred to in the Contract as
the "Fixed Account," consists of the total Purchase Payments received by First
SAFECO under a fixed annuity rider to the Contract and not previously withdrawn,
plus interest on each such Purchase Payment, less any applicable charges and
deductions. Purchase Payments allocated to the Fixed Account will become part of
the general corporate fund of First SAFECO to be so used and invested consistent
with state insurance laws and will not be segregated from First SAFECO's other
assets.
FUNDS - The funding vehicles for the Separate Account, other than the Trust:
Certain portfolios of Federated Insurance Series; Lexington Emerging Markets
Fund, Inc.and Lexington Natural Resources Trust.
NET PURCHASE PAYMENT - Purchase Payment less premium taxes.
NON-QUALIFIED CONTRACTS - Contracts issued under Non-Qualified Plans which do
not receive favorable tax treatment under Sections 403(b) or 408 of the Internal
Revenue Code.
OWNER - The person(s) or entity named in the Application who/which has all
rights under the Contract. Joint Owners are allowed only if the joint Owners are
spouses. Each joint Owner shall have equal
<PAGE> 11
ownership rights and must jointly exercise those rights. On the date the
Application is signed, the Owner must not be older than age 75 (if joint Owners,
neither may be older than 75).
PORTFOLIO - A segment of an Eligible Investment which constitutes a separate and
distinct class of shares.
PURCHASE PAYMENTS - Payments made to purchase Accumulation Units or which are
allocated to the Fixed Account.
QUALIFIED CONTRACTS - Contracts issued under Qualified Plans which receive
favorable tax treatment under Sections 403(b) or 408 of the Internal Revenue
Code.
SEPARATE ACCOUNT - A separate investment account of First SAFECO, designated as
First SAFECO Separate Account S, into which Purchase Payments or Contract Values
may be allocated. The Separate Account is divided into Sub-Accounts.
TRUST - SAFECO Resource Series Trust, one of the Eligible Investments for the
Separate Account.
VALUATION DATE - Each day that the New York Stock Exchange is open for business,
which is Monday through Friday, except for New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
VALUATION PERIOD - The period commencing at the close of business on each
Valuation Date and ending at the close of business for the next succeeding
Valuation Date.
WITHDRAWAL - Any payment, including Contract charges and deductions, from the
Contracts.
HIGHLIGHTS
The Contracts described in this Prospectus provide for accumulation of Contract
Values and payment of monthly annuity payments on a fixed and variable basis.
At the Owner's direction, Purchase Payments for the Contracts are allocated to a
segregated investment account of First SAFECO, which account has been designated
First SAFECO Separate Account S, or to the Fixed Account. (See "Definitions -
Fixed Account.") Under certain circumstances, however, Purchase Payments may
initially be allocated to the SAFECO Resource Money Market Sub-Account of the
Separate Account (see below). The assets of the Separate Account are the
property of First SAFECO and obligations arising under the Contracts are First
SAFECO's general corporate obligations.
The Separate Account is divided into Sub-Accounts, with the assets of each
Sub-Account invested in one Portfolio of the Trust or the Funds. The Trust and
the Funds are open-end management investment companies. There are currently five
Portfolios available to the Separate Account under the Trust: the SAFECO
Resource Equity, Growth, Northwest, Bond and Money Market Portfolios. There are
currently three Portfolios available to the Separate Account under the Federated
Insurance Series: the Federated High Income Bond Portfolio, the Federated
International Equity Portfolio and the Federated Utility Portfolio. The
Lexington Emerging Markets Portfolio is currently the only Portfolio of the
Emerging Markets Fund available to the Separate Account. The Lexington Natural
Resources Portfolio is currently the only Portfolio of the Lexington Natural
Resources Trust available to the Separate Account. Each Portfolio of the Trust
and the Funds has different investment objectives. Owners bear the investment
risk for all amounts allocated to the Separate Account. For more information on
the Trust and each of the Funds and their respective Portfolios, please see
"SAFECO Resource Series Trust," "Federated Insurance Series," "Lexington
Emerging Markets Fund, Inc.," and "Lexington Natural Resources Trust," and the
Prospectuses for the Trust and the Funds which accompany and should be read with
this Prospectus.
<PAGE> 12
Within ten (10) days of the date of receipt of the Contract by the Owner, or a
longer period as may be required by the state of issuance, it may be returned by
delivering or mailing it to First SAFECO at its Annuity Service Office or to the
agent through whom it was purchased. When the Contract is received by First
SAFECO, it will be voided as if it had never been in force and First SAFECO will
refund the greater of the Purchase Payments or the Contract Value computed at
the end of the Valuation Period during which the Contract is received by First
SAFECO. Initial Purchase Payments are allocated to the appropriate
Sub-Account(s) in accordance with the election made by the Owner in the
Application. First SAFECO reserves the right, however, to allocate all initial
Purchase Payments to the SAFECO Resource Money Market Sub-Account until the
expiration of fifteen (15) days from the date the first Purchase Payment is
received (except for any Purchase Payment to be allocated to the Fixed Account
as elected by the Owner). If First SAFECO chooses to automatically allocate
Purchase Payments to the SAFECO Resource Money Market Sub-Account, First SAFECO
will refund the greater of Purchase Payments or the Contract Value. Upon the
expiration of the fifteen day period, the Sub-Account Value of the SAFECO
Resource Money Market Sub-Account will be allocated to the appropriate
Sub-Account(s) in accordance with the election made by the Owner in the
Application. Various charges and deductions from Purchase Payments and the
Separate Account are described below.
A Contingent Deferred Sales Charge (sales load) may be deducted in the event of
a Withdrawal of all or a portion of the Contract Value. The Contingent Deferred
Sales Charge is imposed on Withdrawals made in the first eight (8) Contract
Years and is assessed as a percentage of the amount withdrawn. The maximum
Contingent Deferred Sales Charge is 8% of the amount withdrawn. An Owner may
make Withdrawals in any Contract Year of up to 10% of the Contract Value free
from the Contingent Deferred Sales Charge. There are certain other additional
instances (for example, like that described in the preceeding paragraph) in
which this Charge is not applied. (See "Charges and Deductions - Deduction for
Contingent Deferred Sales Charge.") First SAFECO deducts a Withdrawal Charge
which is equal to the lesser of $25 or 2% of the amount withdrawn for each
Withdrawal after the first in any Contract Year. (See "Charges and Deductions -
Deduction for Withdrawal Charge.")
There is a deduction made for the Mortality and Expense Risk Charge computed on
a daily basis which is equal, on an annual basis, to 1.25% of the average daily
net asset value of the Separate Account. This Charge compensates First SAFECO
for assuming the mortality and expense risks under the Contracts. (See "Charges
and Deductions - Deduction for Mortality and Expense Risk Charge.")
Under certain circumstances, a Transfer Charge may be assessed when an Owner
transfers Contract Values from one Sub-Account to another Sub-Account or to or
from the Fixed Account. (See "Charges and Deductions - Deduction for Transfer
Charge.")
Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values with respect to Non-Qualified
Contracts. First SAFECO reserves the right to deduct these taxes from Contract
Values with respect to Qualified Contracts. (See "Charges and Deductions -
Deduction for Premium and Other Taxes.")
There are deductions from and expenses paid out of the assets of the Trust and
the Funds. See the accompanying Trust and Funds Prospectuses.
There is a ten percent (10%) federal income tax penalty applied to the income
portion of any premature distribution from Non-Qualified Contracts. However, the
penalty is not imposed on amounts received: (a) after the taxpayer reaches age
59 1/2; (b) after the death of the Owner; (c) if the taxpayer is totally
disabled (for this purpose disability is as defined in Section 72(m)(7) of the
Internal Revenue Code of 1986, as amended (the "Code")); (d) in a series of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the taxpayer or for the joint lives (or joint
life expectancies) of the taxpayer and his or her Beneficiary; (e) under an
immediate annuity; or (f) which are allocable to purchase payments made prior to
August 14, 1982. For federal income tax purposes, withdrawals are deemed to be
on a last-in, first-out basis. Separate tax withdrawal penalties and
restrictions apply to
<PAGE> 13
Qualified Contracts. (See "Tax Status - Tax Treatment of Withdrawals - Qualified
Contracts.") For a further discussion of the taxation of the Contracts see "Tax
Status."
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) are limited
to circumstances only when the Owner attains age 59 1/2, separates from service,
dies, becomes disabled (within the meaning of Section 72(m)(7) of the Code) or
in the case of hardship. Withdrawals for hardship are restricted to the portion
of the Owner's Contract Value which represents contributions made by the Owner
and does not include any investment results. The limitations on withdrawals
became effective on January 1, 1989, and apply only to: (1) salary reduction
contributions made after December 31, 1988; (2) income attributable to such
contributions; and (3) income attributable to amounts held as of December 31,
1988. The limitations on withdrawals do not affect rollovers or transfers
between certain Qualified Plans. Tax penalties may also apply. (See "Tax Status
- - - Tax Treatment of Withdrawals - Qualified Contracts.") Owners should consult
their own tax counsel or other tax adviser regarding any distributions. (See
"Tax Status - Tax-Sheltered Annuities - Withdrawal Limitations.")
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable annuity contract will not be treated as an annuity contract for
tax purposes if the owner of the contract has excessive control over the
investments underlying the contract. The issuance of such guidelines may require
First SAFECO to impose limitations on an Owner's right to control the
investment. It is not known whether any such guidelines would have a retroactive
effect (See "Tax Status - Diversification").
Because of certain exemptive and exclusionary provisions, interests in the Fixed
Account are not registered under the Securities Act of 1933 and the Fixed
Account is not registered as an investment company under the Investment Company
Act of 1940, as amended. Accordingly, neither the Fixed Account nor any
interests therein are subject to the provisions of these Acts, and First SAFECO
has been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosures in the Prospectus relating to the Fixed Account.
Disclosures regarding the Fixed Account may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
<PAGE> 14
EXPENSE TABLE
FIRST SAFECO SEPARATE ACCOUNT S
The non- SAFECO Fund information in this Expense Table set forth below with
respect to the Portfolios was provided to the Separate Account by the Portfolios
and such information was not independently verified by the Separate Account.
CONTRACT OWNER TRANSACTION EXPENSES:
DEFERRED SALES LOAD: Contingent Deferred Sales Charge (as a percentage of amount
withdrawn)*: This charge applies to Withdrawals in any Contract Year which
exceed 10% of the Owner's Contract Value:
<TABLE>
<CAPTION>
<S> <C>
Contract Year 1 8% of amount withdrawn
Contract Year 2 7% of amount withdrawn
Contract Year 3 6% of amount withdrawn
Contract Year 4 5% of amount withdrawn
Contract Year 5 4% of amount withdrawn
Contract Year 6 3% of amount withdrawn
Contract Year 7 2% of amount withdrawn
Contract Year 8 1% of amount withdrawn
After Contract Year 8 0% of amount withdrawn
</TABLE>
* While the Contingent Deferred Sales Charge assesses a percentage of the amount
withdrawn according to the stated schedule, total Contingent Deferred Sales
Charges collected by First SAFECO will not exceed 8.5% of the Purchase Payments
made under the Contract.
WITHDRAWAL CHARGE: Equal to the lesser of $25 or 2% of the amount withdrawn for
each Withdrawal after the first in any Contract Year. Not deducted where the
Owner is participating in the Systematic Withdrawal program or is exercising a
Settlement Option.
TRANSFER CHARGE: First 12 Transfers in a Contract Year are free. Thereafter,
First SAFECO reserves the right to assess a Transfer Charge which will be equal
to the lesser of $10 or 2% of the amount transferred. The charge is not imposed
under the Programs, subject to certain requirements. (See "The Programs".)
SEPARATE ACCOUNT ANNUAL EXPENSES:
(AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
<TABLE>
<CAPTION>
<S> <C>
Mortality and Expense Risk Fees 1.25%
----
Total Separate Account Annual Expenses 1.25%
----
</TABLE>
SAFECO RESOURCE SERIES TRUST ANNUAL EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
Management Fees
SAFECO Resource Equity Portfolio .72%
SAFECO Resource Growth Portfolio .72%
SAFECO Resource Northwest Portfolio .71%
SAFECO Resource Bond Portfolio .72%
SAFECO Resource Money Market Portfolio .62%
Other Expenses
SAFECO Resource Equity Portfolio .03%
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
<S> <C>
SAFECO Resource Growth Portfolio* .07%
SAFECO Resource Northwest Portfolio* .00%
SAFECO Resource Bond Portfolio* .00%
SAFECO Resource Money Market Portfolio* .00%
Total Trust Annual Expenses (After Reimbursement, if applicable)
SAFECO Resource Equity Portfolio .75%
SAFECO Resource Growth Portfolio .79%
SAFECO Resource Northwest Portfolio .71%
SAFECO Resource Bond Portfolio .72%
SAFECO Resource Money Market Portfolio .62%
</TABLE>
FEDERATED INSURANCE SERIES ANNUAL EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
Management Fees
Federated High Income Bond Portfolio .00%
Federated International Equity Portfolio .00%
Federated Utility Portfolio .00%
Other Expenses**
Federated High Income Bond Portfolio .80%
Federated International Equity Portfolio 1.25%
Federated Utility Portfolio .85%
Total Fund Annual Expenses**(After Reimbursement, if applicable)
Federated High Income Bond II Portfolio .80%
Federated International Equity II Portfolio 1.25%
Federated Utility II Portfolio .85%
</TABLE>
LEXINGTON EMERGING MARKETS FUND, INC. ANNUAL EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
Management Fees .85%
Other Expenses*** .47%
Total Fund Annual Expenses***(After Reimbursement, if applicable) 1.32%
</TABLE>
<PAGE> 16
LEXINGTON NATURAL RESOURCES TRUST ANNUAL EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
Management Fees 1.00%
Other Expenses**** .47%
Total Fund Annual Expenses****(After Reimbursement, if applicable) 1.47%
</TABLE>
* SAFECO pays all Other Expenses of each Portfolio until a Portfolio's assets
reach $20 million. Once a Portfolio's assets exceed $20 million, the Other
Expenses of the Portfolio will be paid by such Portfolio.
The Growth Portfolio began paying Other Expenses in August 1995. During
the year ended December 31, 1995, SAFECO paid for or reimbursed a portion of the
Other Expenses of the Growth Portfolio and all of the Other Expenses of the
Northwest, Bond and Money Market Portfolios. Expenses before such reimbursement
as a percentage of net assets were as follows:
<TABLE>
<CAPTION>
<S> <C>
SAFECO Resource Growth Portfolio .84%
SAFECO Resource Northwest Portfolio 1.18%
SAFECO Resource Bond Portfolio .94%
SAFECO Resource Money Market Portfolio .87%
</TABLE>
** First SAFECO has entered into a Participation Agreement with the Federated
Insurance Series in connection with the Separate Account's investment in the
shares of the Federated Insurance Series. Other Participating Insurance
Companies have entered into similar Participation Agreements with the Federated
Insurance Series.
*** First SAFECO has entered into a Participation Agreement with the Lexington
Emerging Markets Fund in connection with the Separate Account's investment in
the shares of the Lexington Emerging Markets Fund. Other Participating Insurance
Companies have entered into similar Participation Agreements with the Lexington
Emerging Markets Fund. For 1995 the adviser voluntarily waived management and
operating expenses in excess of 1.30%. In 1996 these expenses will be waived to
the extent they exceed 1.75%.
**** First SAFECO has entered into a Participation Agreement with the Lexington
Natural Resources Trust in connection with the Separate Account's investment in
the shares of the Lexington Natural Resources Trust. Other Participating
Insurance Companies have entered into similar Participation Agreements with the
Lexington Natural Resources Trust.
<PAGE> 17
<TABLE>
<CAPTION>
Examples for SAFECO Resource
- - ----------------------------
Equity Sub-Account Year 1 Year 3 Year 5 Year 10
- - ------------------ ------ ------ ------ -------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $l,000 investment:
Assuming withdrawal at end of period ................ $ 94 $122 $150 $233
Assuming annuitization at end of period ............. $ 20 $ 63 $108 $233
Assuming no withdrawal .............................. $ 20 $ 63 $108 $233
</TABLE>
<TABLE>
<CAPTION>
Examples for SAFECO Resource Bond Sub-Account Year 1 Year 3 Year 5 Year 10
- - --------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $l,000 investment:
Assuming withdrawal at end of period ................ $ 94 $121 $148 $230
Assuming annuitization at end of period ............. $ 20 $ 62 $106 $230
Assuming no withdrawal .............................. $ 20 $ 62 $106 $230
</TABLE>
<TABLE>
<CAPTION>
Examples for SAFECO Resource
- - ----------------------------
Money Market Sub-Account Year 1 Year 3 Year 5 Year 10
- - ------------------------ ------ ------ ------ -------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $ 93 $118 $143 $219
Assuming annuitization at end of period ............. $ 19 $ 59 $101 $219
Assuming no withdrawal .............................. $ 19 $ 59 $101 $219
</TABLE>
<TABLE>
<CAPTION>
Examples for SAFECO Resource
Growth Sub-Account Year 1 Year 3 Year 5 Year 10
- - ------------------ ------ ------ ------ -------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $ 95 $123 $151 $237
Assuming annuitization at end of period ............. $ 21 $ 64 $110 $237
Assuming no withdrawal .............................. $ 21 $ 64 $110 $237
</TABLE>
<TABLE>
<CAPTION>
Examples for SAFECO Resource Year 1 Year 3 Year 5 Year 10
- - ---------------------------- ------ ------ ------ -------
Northwest Sub-Account
- - ---------------------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $ 94 $121 $148 $229
Assuming annuitization at end of period ............. $ 20 $ 62 $106 $229
Assuming no withdrawal .............................. $ 20 $ 62 $106 $229
</TABLE>
<TABLE>
<CAPTION>
Examples for Year 1 Year 3 Year 5 Year 10
- - ------------- ------ ------ ------ -------
Federated High Income Bond II Sub-Account
- - -----------------------------------------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $ 95 $123 $152 $238
Assuming annuitization at end of period ............. $ 21 $ 64 $110 $238
Assuming no withdrawal .............................. $ 21 $ 64 $110 $238
</TABLE>
<TABLE>
<CAPTION>
Examples for Year 1 Year 3 Year 5 Year 10
- - ------------ ------ ------ ------ -------
Federated International Equity II Sub-Account
- - ---------------------------------------------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $ 99 $136 $174 $284
Assuming annuitization at end of period ............. $ 25 $ 78 $133 $284
Assuming no withdrawal .............................. $ 25 $ 78 $133 $284
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
Examples for Federated Utility II Sub-Account Year 1 Year 3 Year 5 Year 10
- - --------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $ 95 $125 $154 $243
Assuming annuitization at end of period ............. $ 21 $ 66 $113 $243
Assuming no withdrawal .............................. $ 21 $ 66 $113 $243
</TABLE>
<TABLE>
<CAPTION>
Examples for Year 1 Year 3 Year 5 Year 10
- - ------------ ------ ------ ------ -------
Lexington Emerging Markets Sub-Account
- - --------------------------------------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ................ $100 $138 $177 $290
Assuming annuitization at end of period ............. $ 26 $ 80 $137 $290
Assuming no withdrawal .............................. $ 26 $ 80 $137 $290
</TABLE>
<TABLE>
<CAPTION>
Examples for Year 1 Year 3 Year 5 Year 10
- - ------------- ------ ------ ------ -------
Lexington Natural Resources Sub-Account
- - ---------------------------------------
<S> <C> <C> <C> <C>
Assuming a 5% return on assets, you would pay
the following expenses on a $1,000 investment:
Assuming withdrawal at end of period ............... $101 $142 $184 $305
Assuming annuitization at end of period ............ $ 28 $ 84 $144 $305
Assuming no withdrawal ............................. $ 28 $ 84 $144 $305
</TABLE>
The information in the "Examples" is estimated and provided to assist the
potential Owner in understanding the various costs and expenses charged to an
Owner's Contract Value either directly or indirectly and reflects expenses of
the Separate Account, the Trust and the Fund. The Examples do not reflect
premium taxes which may be applicable. Contingent Deferred Sales Charges may be
waived in certain circumstances. For additional information, see "Charges and
Deductions" in this Prospectus for the Separate Account, "Management of the
Trust" in the Prospectus for the Trust, "Federated Insurance Series Information"
in the Prospectus for the Federated Insurance Series, "Management of the Fund"
in the Prospectus for the Lexington Emerging Markets Fund, and "Investment
Adviser, Sub-Adviser and Distributor" in the Prospectus for the Lexington
Natural Resources Trust.
THE INFORMATION ABOVE IS NOT INTENDED TO BE REPRESENTATIVE OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE> 19
SCHEDULE OF ACCUMULATION UNIT VALUES
FIRST SAFECO SEPARATE ACCOUNT S
First SAFECO Separate Account S has not, as yet, issued any contracts. Therefor,
there is no schedule of accumulation unit values at this time.
<PAGE> 20
FINANCIAL STATEMENTS
The financial statements for the Separate Account and First SAFECO are contained
in the Statement of Additional Information which is available at no charge by
calling 1-800-878-2041 or writing to the Annuity Service Office address on the
cover.
PERFORMANCE INFORMATION
In advertisements, the "yield," "effective yield," "total return" and "average
annual total return" of the Sub-Accounts may be quoted.
ALL SUB-ACCOUNTS (OTHER THAN SAFECO RESOURCE MONEY MARKET SUB-ACCOUNT)
"Yield" is the annualization on a 360-day basis of net income per unit over a
30-day period divided by the accumulation unit value on the last day of the
period. Yield figures are calculated by determining the income generated by an
investment in the Sub-Account over a 30-day period. The income is then
annualized by assuming that the income generated during the 30-day period
continues to be generated each month for a 12-month period and is shown as a
percentage of the investment. Yield figures will not include any applicable
Contingent Deferred Sales Charge.
"Total return" is the total percentage change in the unit value of an investment
over a stated period of time. "Average annual total return" is the annual
percentage change in the unit value of an investment over a stated period of
time. Both total return and average annual total return assume the reinvestment
of dividend and capital gains distributions.
Standardized total return figures which appear in advertisements or sales
literature will be calculated for required time periods based on a set initial
investment amount and include the Contingent Deferred Sales Charge. From time to
time, non-standardized total return figures may accompany the standardized
figures. Although certain Sub-Accounts may be new and therefore have no
investment performance history in the Separate Account, hypothetical performance
may be calculated based on the respective portfolios' historical performance
prior to its availability in the Separate Account. Nonstandardized total return
figures may be calculated in a variety of ways including but not necessarily
limited to different time periods, different initial investment amounts,
additions of periodic payments, use of time weighted average annual returns
which take into consideration the length of time each investment has been on
deposit, and with or without the Contingent Deferred Sales Charge.
Non-standardized figures may cause the performance of the Sub-Accounts to appear
higher than performance calculated using standard parameters.
SAFECO RESOURCE MONEY MARKET SUB-ACCOUNT
"Yield" is the annualization on a 365-day basis of the SAFECO Resource Money
Market Sub-Account's net income over a 7-day period. Yield figures are
calculated by determining the income generated by an investment in the
Sub-Account over a 7-day period. The income is then annualized by assuming that
the income generated during the 7-day period continues to be generated each week
for a 52-week period and is shown as a percentage of the investment.
"Effective yield" is the annualization, on a 365-day basis, of the Sub-Account's
net income over a 7-day period with dividends reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
As explained above, yield figures will not include any applicable Contingent
Deferred Sales Charge.
<PAGE> 21
For the SAFECO Resource Money Market Portfolio, total return and average annual
total return are non-standardized performance figures which may accompany the
standardized yield and effective yield. "Total return" is the total percentage
change in the unit value of an investment over a stated period of time and
"average annual total return" is the annual percentage change in the unit value
of an investment over a stated period of time. Non-standardized total return and
average annual total return figures for the SAFECO Resource Money Market
Portfolio may be calculated in a variety of ways, as described above.
RANKINGS
In addition to these performance figures, the Sub-Accounts may advertise
rankings as provided by the Lipper Variable Insurance Products Performance
Analysis Service published by Lipper Analytical Services, Inc. which monitors
separate account performance for variable annuity products such as the
Contracts, the VARDS Report which is a monthly variable annuity industry
analysis compiled by Variable Annuity Research & Data Service of Roswell,
Georgia and published by Financial Planning Resources, Inc. or the Variable
Annuity Performance Report published by Morningstar, Inc. which is also a
monthly analysis of variable annuity performance. Rankings provided by these
sources may or may not include all applicable charges.
Performance figures and quoted rankings are indicative only of past performance
and are not intended to represent future investment results.
FIRST SAFECO
First SAFECO is a stock life insurance company which was organized under the
laws of the state of New York on April 23, 1987. First SAFECO writes individual
and group life, accident and health insurance and annuities. First SAFECO is
licensed to do business in the state of New York. First SAFECO is a wholly-owned
subsidiary of SAFECO Life Insurance Company which is a part of SAFECO
Corporation, a holding company whose subsidiaries are engaged primarily in
insurance and financial service businesses. The home office of First SAFECO is
located at 6700 Old Collamer Road, East Syracuse, New York 13057.
THE SEPARATE ACCOUNT
The Board of Directors of First SAFECO adopted a resolution to establish a
segregated asset account pursuant to New York insurance law on February 2, 1995.
This segregated asset account has been designated First SAFECO Separate Account
S. First SAFECO has caused the Separate Account to be registered with the
Securities and Exchange Commission as a unit investment trust pursuant to the
provisions of the Investment Company Act of 1940. The Separate Account meets the
definition of a "separate account" under the federal securities laws.
The assets of the Separate Account are the property of First SAFECO. However,
the assets of the Separate Account, equal to the reserves and other contract
liabilities with respect to the Separate Account, are not chargeable with
liabilities arising out of any other business First SAFECO may conduct. Income,
gains and losses, whether or not realized, are in accordance with the Contracts
credited to or charged against the Separate Account without regard to other
income, gains or losses of First SAFECO. First SAFECO's obligations arising
under the Contracts are general corporate obligations. The investments of the
Separate Account will be valued at their fair market value in accordance with
the procedures approved by the Board of Directors of First SAFECO and the
Separate Account committee.
The Separate Account is divided into Sub-Accounts, with the assets of each
Sub-Account invested in one of the Portfolio(s) of the Trust or the Funds.
Currently there are five SAFECO Resource Portfolios available under the Trust:
the SAFECO Resource Equity Portfolio, SAFECO Resource Growth Portfolio, SAFECO
Resource Northwest Portfolio, SAFECO Resource Bond Portfolio and SAFECO Resource
Money Market Portfolio. Currently there are three Portfolios available under the
Federated Insurance Series: the Federated High Income Bond Portfolio, the
Federated International Equity Portfolio and the Federated Utility Portfolio.
The Lexington Emerging Markets Portfolio is currently the only Portfolio of the
Emerging Markets Fund available to the Separate Account. The
<PAGE> 22
Lexington Natural Resources Portfolio is currently the only Portfolio of the
Lexington Natural Resources Trust available to the Separate Account. There is no
assurance that the investment objective of any of the Portfolios will be met.
Owners bear the complete investment risk for Purchase Payments allocated to a
Sub-Account. Contract Values will fluctuate in accordance with the investment
performance of the Sub-Account(s) to which Purchase Payments are allocated, and
in accordance with the imposition of the fees and charges assessed under the
Contracts.
SAFECO RESOURCE EQUITY SUB-ACCOUNT
The investment objective of the SAFECO Resource Equity Sub-Account is to seek
long-term growth of capital and reasonable current income.
The SAFECO Resource Equity Sub-Account invests in the SAFECO Resource Equity
Portfolio. To pursue its investment objective, the SAFECO Resource Equity
Portfolio ordinarily invests principally in common stocks or securities
convertible into common stocks. Fixed-Income securities may be purchased in
accordance with business and financial conditions.
SAFECO RESOURCE GROWTH SUB-ACCOUNT
The investment objective of the SAFECO Resource Growth Sub-Account is to seek
growth of capital and the increased income that ordinarily follows from such
growth.
The SAFECO Resource Growth Sub-Account invests in the SAFECO Resource Growth
Portfolio. To pursue its investment objective, the SAFECO Resource Growth
Portfolio will ordinarily invest a preponderance of its assets in common stocks
selected primarily for potential appreciation. To determine those common stocks
which have the potential for long-term growth, SAFECO Asset Management Company,
the Trust's investment adviser, will evaluate the issuer's financial strength,
quality of management and earnings power.
SAFECO RESOURCE NORTHWEST SUB-ACCOUNT
The investment objective of the SAFECO Resource Northwest Sub-Account is to seek
long-term growth of capital through investing primarily in Northwest companies.
The SAFECO Resource Northwest Sub-Account invests in the SAFECO Resource
Northwest Portfolio. To pursue its investment objective, the SAFECO Resource
Northwest Portfolio will invest at least 65% of its total assets in securities
issued by companies with their principal executive offices located in
Washington, Alaska, Idaho, Oregon or Montana.
The SAFECO Resource Northwest Portfolio will ordinarily invest its assets in
shares of common stock selected primarily for potential long-term appreciation.
The SAFECO Resource Northwest Portfolio may also occasionally invest in
securities convertible into common stock.
SAFECO RESOURCE BOND SUB-ACCOUNT
The investment objective of the SAFECO Resource Bond Sub-Account is to seek as
high a level of current income as is consistent with the relative stability of
capital.
The SAFECO Resource Bond Sub-Account invests in the SAFECO Resource Bond
Portfolio. To pursue its investment objective, the SAFECO Resource Bond
Portfolio invests primarily in medium-term debt securities. Although the SAFECO
Resource Bond Portfolio does not intend to purchase below investment grade bonds
during the coming year, it may hold up to 20% of total assets in bonds which are
downgraded after purchase to below investment grade quality by Standard & Poor's
Corporation or Moody's Investors Service, Inc. Below investment grade bonds are
commonly referred to as high-yield or "junk" bonds and have special risks
associated with them. See the Trust's Prospectus and Statement of Additional
Information for more information.
<PAGE> 23
SAFECO RESOURCE MONEY MARKET SUB-ACCOUNT
The investment objective of the SAFECO Resource Money Market Sub-Account is to
seek as high a level of current income as is consistent with the preservation of
capital and liquidity through investments in high-quality money market
investments maturing in thirteen months or less.
The SAFECO Resource Money Market Sub-Account invests in the SAFECO Resource
Money Market Portfolio which seeks to maintain a net asset value per share of
$1.00. SHARES OF THE SAFECO RESOURCE MONEY MARKET PORTFOLIO ARE NEITHER INSURED,
NOR GUARANTEED, BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THE SAFECO
RESOURCE MONEY MARKET PORTFOLIO WILL MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
FEDERATED HIGH INCOME BOND II SUB-ACCOUNT
The investment objective of the Federated High Income Bond II Sub-Account is to
seek high current income.
The Federated High Income Bond II Sub-Account invests in the Federated High
Income Bond Portfolio. To pursue its investment objective, the Federated High
Income Bond Portfolio invests primarily in a diversified portfolio of
professionally managed fixed-income securities. The fixed-income securities in
which the Federated High Income Bond Portfolio intends to invest are lower-rated
corporate debt obligations, which are commonly referred to as "junk bonds." Some
of these fixed-income securities may involve equity features. Capital growth
will be considered, but only when consistent with the investment objective of
high current income.
FEDERATED INTERNATIONAL EQUITY II SUB-ACCOUNT
The investment objective of the Federated International Equity II Sub-Account is
to seek to obtain a total return on its assets.
The Federated International Equity II Sub-Account invests in the Federated
International Equity Portfolio. To pursue its investment objective, the
Federated International Equity Portfolio invests in a diversified portfolio of
equity securities issued by non-U.S. issuers. The Federated International Equity
Portfolio will invest at least 65% of its total assets, and under normal market
conditions substantially all of its assets, in equity securities of issuers
located in at least three different countries outside of the United States. The
equity securities will be selected primarily for superior growth potential and
to reduce portfolio volatility. The Federated International Equity Portfolio may
purchase sponsored or unsponsored American Depository Receipts, Global
Depository Receipts, and European Depository Receipts; corporate and government
fixed income securities of issuers outside of the United States; convertible
securities; and options and financial futures contracts. While the Federated
International Equity Portfolio primarily invests in dividend-paying equity
securities of established companies that appear to have growth potential, it may
as a temporary defensive position, shift its emphasis to such other securities
if such investments appear to offer potential higher return.
FEDERATED UTILITY II SUB-ACCOUNT
The investment objective of the Federated Utility II Sub-Account is to seek high
current income and moderate capital appreciation.
The Federated Utility II Sub-Account invests in the Federated Utility Portfolio.
To pursue its investment objective, the Federated Utility Portfolio invests
primarily in a professionally managed and diversified portfolio of equity and
debt securities of utility companies that produce, transmit, or distribute gas
and electric energy as well as those companies that provide communications
facilities, such as telephone and telegraph companies. Under normal market
conditions, the Federated Utility Portfolio invests at least 65% of its total
assets in securities of utility companies.
<PAGE> 24
LEXINGTON EMERGING MARKETS SUB-ACCOUNT
The investment objective of the Lexington Emerging Markets Sub-Account is to
seek long-term growth of capital primarily through investment in equity
securities and equivalents of companies domiciled in, or doing business in,
emerging countries and emerging markets.
The Lexington Emerging Markets Sub-Account invests in the Lexington Emerging
Markets Portfolio. To pursue its investment objective, the Lexington Emerging
Markets Portfolio invests primarily in emerging country and emerging market
equity securities of all types of common stocks and equivalents (the following
constitute equivalents: convertible debt securities and warrants), although the
Portfolio also may invest in preferred stocks, bonds, and money market
instruments of foreign and domestic companies, the U.S. government, and its
agencies. The Lexington Emerging Markets Portfolio, under normal conditions,
will invest at least 65% of its total assets in emerging country and emerging
market equity securities in at least three countries outside of the U.S. and at
all times will invest in a minimum of three countries outside of the U.S.
Investments in emerging country equity securities are not subject to a maximum
limit, and it is the intention of the Lexington Emerging Markets Portfolio's
adviser to invest substantially all of the Portfolio's assets in such
securities. For purposes of its investment objective, the Lexington Emerging
Markets Portfolio considers emerging country equity securities to be any country
whose economy and market the World Bank or United Nations considers to be
emerging or developing, and the Portfolio also may invest in equity securities
and equivalents, traded in any market, of companies that derive 50% or more of
their total revenue from either goods or services produced in such emerging
countries and emerging markets or sales made in such countries.
LEXINGTON NATURAL RESOURCES SUB-ACCOUNT
The investment objective of the Lexington Natural Resources Sub-Account is to
seek long-term growth of capital through investing primarily in common stocks of
companies that own or develop natural resources and other basic commodities, or
supply goods and services to such companies.
The Lexington Natural Resources Sub-Account invests in the Lexington Natural
Resources Portfolio. To pursue its investment objective, the Lexington Natural
Resources Portfolio seeks to identify securities of companies that, in its
management's opinion, are undervalued relative to the value of natural resource
holdings of such companies in light of current and anticipated economic or
financial conditions. The Lexington Natural Resources Portfolio will consider a
company to have substantial natural resource assets when, in its management's
opinion, the company's holdings of the assets are of such magnitude, when
compared to the capitalization, revenues or operating profits of the company,
that changes in the economic value of the assets will affect the market price of
the equity securities of such company, which, generally, is when at least 50% of
the non-current assets, capitalization, gross revenues or operating profits of
the company in the most recent or current fiscal year are involved in or result
from, directly or indirectly through subsidiaries, exploring, mining, refining,
processing, fabricating, dealing in or owning natural resource assets. Up to 25%
of the Lexington Natural Resources Portfolio's total assets may be invested in
securities principally traded in markets outside the U.S.
SAFECO RESOURCE SERIES TRUST
The Trust has been established to act as one of the funding vehicles for the
Contracts offered. The investment adviser to the Trust is SAFECO Asset
Management Company, SAFECO Plaza, Seattle, Washington. The Trust is an open-end,
diversified, management investment company.
FEDERATED INSURANCE SERIES
The Federated Insurance Series is one of the funding vehicles for the Contracts
offered. The investment adviser to the Federated Insurance Series is Federated
Advisers, Federated Investors Tower, Pittsburgh, Pennsylvania. The Federated
Insurance Series is an open-end, diversified management investment company.
<PAGE> 25
LEXINGTON EMERGING MARKETS FUND, INC.
The Lexington Emerging Markets Fund is one of the funding vehicles for the
Contracts offered. The investment adviser to the Lexington Emerging Markets Fund
is Lexington Management Corporation, P.O. Box 1515/Park 80 West Plaza Two,
Saddle Brook, New Jersey. The Lexington Emerging Markets Fund is an open-end,
diversified management investment company.
LEXINGTON NATURAL RESOURCES TRUST
The Lexington Natural Resources Trust is one of the funding vehicles for the
Contracts offered. The investment adviser to the Lexington Natural Resources
Trust is Lexington Management Corporation, P.O. Box 1515/Park 80 West Plaza Two,
Saddle Brook, New Jersey. The Lexington Natural Resources Trust is an open-end,
non-diversified management investment company.
WHILE A BRIEF SUMMARY OF THE INVESTMENT OBJECTIVES OF EACH PORTFOLIO IS
SET FORTH ABOVE, MORE COMPREHENSIVE INFORMATION IS FOUND IN THE CURRENT
RESPECTIVE TRUST OR FUND PROSPECTUS. THE TRUST AND FUNDS' PROSPECTUSES ARE
ATTACHED AND ACCOMPANY THIS PROSPECTUS. ALL DOCUMENTS SHOULD BE READ TOGETHER
AND CAREFULLY BEFORE INVESTING. AN ADDITIONAL PROSPECTUS AND THE STATEMENT OF
ADDITIONAL INFORMATION FOR THE TRUST AND ANY OF THE FUNDS CAN BE OBTAINED BY
CALLING THE NUMBER ON THE COVER PAGE OF THIS PROSPECTUS OR WRITING TO THE
ADDRESS OF THE ANNUITY SERVICE OFFICE LISTED THERE. ADDITIONAL PORTFOLIOS MAY BE
ESTABLISHED BY THE TRUST AND THE FUNDS FROM TIME TO TIME AND MAY BE MADE
AVAILABLE TO OWNERS. IN ADDITION, CERTAIN EXISTING PORTFOLIOS OF THE FUNDS,
WHICH ARE NOT CURRENTLY BEING MADE AVAILABLE, MAY BE MADE AVAILABLE TO OWNERS IN
THE FUTURE.
VOTING RIGHTS
In accordance with its view of present applicable law, First SAFECO will vote
the shares of the Trust and the Funds held in the Separate Account at special
meetings of the shareholders in accordance with instructions received from
persons having the voting interest in the Separate Account. First SAFECO will
vote shares it owns for which it has not received instructions, as well as
shares attributable to it, in the same proportion as it votes shares for which
it has received instructions. Neither the Trust nor the Funds hold regular
meetings of shareholders. The number of shares which a person has a right to
vote will be determined as of a date to be chosen by First SAFECO not more than
sixty (60) days prior to the meeting of the Trust or the Funds. Voting
instructions will be solicited by written communication at least fourteen (14)
days prior to such meeting with respect to the Trust and at least ten (10) days
prior to such meeting with respect to the Funds.
The Funds are intended to be the funding vehicle for variable annuity contracts
and variable life insurance policies to be offered by the separate accounts of
certain life insurance companies which may or may not be affiliated and in
compliance with certain regulatory requirements. The Funds currently do not
foresee any disadvantages to the Owners arising from the fact that the interests
of the holders of the variable annuity contracts and the variable life insurance
policies may differ. Nevertheless, the Funds' Directors and Trustees intend to
monitor events in order to identify any material irreconcilable conflicts which
may possibly arise and to determine what action, if any, should be taken in
response thereto.
<PAGE> 26
SUBSTITUTION OF SECURITIES
If the shares of the Trust or the Funds (or any Portfolio within the Trust or
the Funds) should no longer be available for investment by the Separate Account
or, if in the judgment of First SAFECO, further investment in such shares should
become inappropriate in view of the purpose of the Contracts, First SAFECO may
substitute shares of another mutual fund (or Portfolio within the Trust or the
Funds) for fund shares already purchased or to be purchased in the future by
Purchase Payments under the Contracts. No substitution of securities may take
place without prior approval of the Securities and Exchange Commission and under
such requirements as it may impose.
PURCHASING A CONTRACT
PURCHASE PAYMENTS
The Contracts are purchased under a single purchase payment plan. The initial
Purchase Payment is due on the Contract Date. Subsequent Purchase Payments may
only be made within the first six (6) months after the Contract Date. The
minimum initial Purchase Payment is $50,000 and the minimum subsequent Purchase
Payment is $250. Subject to these minimums, the Owner may increase or decrease
or change the frequency of subsequent Purchase Payments. First SAFECO reserves
the right to reject any Application or Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS
The allocation of the initial Purchase Payment is elected by the Owner in the
Application. Unless the Owner elects otherwise, subsequent Purchase Payments are
allocated in the same manner as the initial Purchase Payment. Allocation of the
Purchase Payments is subject to the terms and conditions imposed by First
SAFECO. Under certain circumstances, Purchase Payments which have been
designated by prospective purchasers to be allocated to Sub-Accounts other than
the SAFECO Resource Money Market Sub-Account, may be initially allocated to the
SAFECO Resource Money Market Sub-Account. (See "Highlights.") For each
Sub-Account, Purchase Payments are converted into Accumulation Units. The number
of Accumulation Units in a Sub-Account credited to the Contract is determined by
dividing each Net Purchase Payment by the value of an Accumulation Unit for that
Sub-Account. Purchase Payments allocated to the Fixed Account are credited in
dollars.
If the Application for a Contract is in good order, First SAFECO will apply the
Purchase Payment to the Separate Account and credit the Contract with
Accumulation Units and/or to the Fixed Account and credit the Contract with
dollars within two business days of receipt. If the Application for a Contract
is not in good order, First SAFECO will attempt to get it in good order or First
SAFECO will return the Application and the Purchase Payment within five (5)
business days. First SAFECO will not retain a Purchase Payment for more than
five (5) business days while processing an incomplete Application unless it has
been so authorized by the purchaser. For subsequent Purchase Payments in good
order, First SAFECO will apply the Net Purchase Payment to the Separate Account
and credit the Owner's Contract with Accumulation Units during the next
Valuation Period after the Purchase Payment was received.
ACCUMULATION UNIT
Purchase Payments allocated to the Separate Account and amounts transferred to
or within the Separate Account are converted into Accumulation Units. This is
done by dividing each Net Purchase Payment by the value of an Accumulation Unit
for the Valuation Period during which the Purchase Payment is allocated to the
Sub-Account or the transfer is made. Accumulation Units for each Sub-Account are
valued separately.. The Accumulation Unit value is determined by multiplying the
Accumulation Unit value for the Sub-Account, as of the immediately preceding
Valuation Period, by the Net Investment Factor for the current Valuation Period.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result, where:
(a) is the net result of:
<PAGE> 27
(i) The net asset value per share of the Portfolio,
determined as of the current Valuation Period, plus
(ii) The per share amount of any dividend or capital-gain
distribution made by the Portfolio if the "ex-dividend" date occurs during the
current Valuation Period, plus or minus
(iii) A per share credit or charge, which is determined by
First SAFECO, for changes in tax reserves resulting from investment operations
of the Sub-Account.
(b) is the net result of:
(i) The net asset value per share of the Portfolio
determined as of the immediately preceding Valuation Period, plus or minus
(ii) The per share credit or charge for any changes in tax
reserves for the immediately preceding Valuation Period.
(c) is the percentage factor equal to the Mortality and Expense
Risk Charge. Such factor is equal on an annual basis to a percentage of the
average daily net asset value of the Sub-Account.
The Net Investment Factor may be greater or less than one. Therefore, the
Accumulation Unit value may increase or decrease.
PRINCIPAL UNDERWRITER
Currently, SAFECO Securities, Inc. (SSI) acts as the principal underwriter of
the Contracts. SSI has its business address at SAFECO Plaza, Seattle, Washington
98185. Prior to April 29, 1994, PNMR Securities, Inc. (PNMR), SAFECO Plaza,
Seattle, Washington 98185, acted as the principal underwriter of the Contracts.
SSI and PNMR are wholly-owned subsidiaries of SAFECO Corporation and therefore
are affiliates of First SAFECO. The Contracts are offered on a continuous basis.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from Purchase Payments, Contract Values,
the Separate Account and the Fixed Account. These charges and deductions are:
<PAGE> 28
DEDUCTION FOR PREMIUM AND OTHER TAXES
Any premium taxes or other taxes levied by any governmental entity which First
SAFECO, in its sole discretion, determines have resulted from the establishment
or maintenance of the Contract or any portion of the Contract, or from the
investment experience of the Separate Account, or from the receipt by First
SAFECO of Purchase Payments or from the commencement of annuity payments will be
deducted from the Contract Value with respect to Non-Qualified Contracts. First
SAFECO reserves the right to deduct these taxes from Contract Values with
respect to Qualified Contracts. Premium taxes currently imposed by certain
states on the type of Contracts offered hereby range from 0% to 4%. Some states
assess their premium taxes at the time Purchase Payments are made; others assess
their premium taxes at the time annuity payments commence. Premium taxes are
subject to change or amendment by state legislatures, administrative
interpretations or judicial acts. Such premium taxes will depend on, among other
things, the classification of the Contract by the states, the status of First
SAFECO within such state and the insurance tax laws of such state. These taxes
are deducted first from the SAFECO Resource Money Market Sub-Account. In the
event there are no Accumulation Units in the SAFECO Resource Money Market
Sub-Account or not enough in value to pay for these taxes, the balance of
deductions necessary is then taken from the SAFECO Resource Bond Sub-Account,
the Federated Utility II Sub-Account, the Federated High Income Bond II
Sub-Account, the Lexington Natural Resources Sub-Account, the Federated
International Equity II Sub-Account, the Lexington Emerging Markets Sub-Account,
the SAFECO Resource Equity Sub-Account, the SAFECO Resource Northwest
Sub-Account, the SAFECO Resource Growth Sub-Account, and finally from the Fixed
Account.
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
First SAFECO deducts on each Valuation Date a Mortality and Expense Risk Charge
which is equal on an annual basis to 1.25% of the average daily net asset value
of the Separate Account. The mortality risks assumed by First SAFECO arise from
its contractual obligation to make annuity payments after the Annuity Date for
the life of the Owner, to waive Contingent Deferred Sales Charges in the event
of the death of the Owner and to guarantee the payment of the greater of the
Guaranteed Minimum Death Benefit or the Contract Value upon death of the Owner.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by First SAFECO. Conversely, if the amount
deducted proves more than sufficient, the excess will be profit to First SAFECO.
First SAFECO expects a profit from this charge.
The Mortality and Expense Risk Charge is guaranteed by First SAFECO and cannot
be increased.
DEDUCTION FOR CONTINGENT DEFERRED SALES CHARGE
In certain situations that an Owner withdraws all or a portion of his or her
Contract Value, a Contingent Deferred Sales Charge (sales load) is deducted from
the Withdrawal. This charge reimburses First SAFECO for expenses incurred in
connection with the promotion, sale and distribution of the Contracts. The
Contingent Deferred Sales Charge is imposed on Withdrawals made in the first
eight (8) Contract Years. The Contract describes the situations where the
Contingent Deferred Sales Charge does not apply. Some of these situations are:
(i) on Transfers between Sub-Accounts, (ii) on the sum of Withdrawals taken in
any Contact Year which does not exceed 10% of the Contract Value, (iii) on
Withdrawals made under a Settlement Option, (iv) on Systematic Withdrawals over
the life expectancy of the Owner or the joint life expectancy of the Owner and
Beneficiary, (v) on Withdrawals made pursuant to the death of the Owner, or (v)
on Transfers from a Sub-Account to the Fixed Account or on certain Transfers
from the Fixed Account to a Sub-Account. (See "Withdrawals and Transfers" and
"The Programs.")
<PAGE> 29
The amount of the Contingent Deferred Sales Charge will be based on the
following:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
Contract Year as a Percentage of Amount Withdrawn
------------- -----------------------------------
<S> <C>
1 8% of amount withdrawn
2 7% of amount withdrawn
3 6% of amount withdrawn
4 5% of amount withdrawn
5 4% of amount withdrawn
6 3% of amount withdrawn
7 2% of amount withdrawn
8 1% of amount withdrawn
After Contract Year 8 0% of amount withdrawn
</TABLE>
The Contingent Deferred Sales Charge assesses a percentage of the amount
withdrawn according to the stated schedule. However, total Contingent Deferred
Sales Charges collected by First SAFECO will not exceed 8.5% of the Purchase
Payments made under a Contract.
The commissions paid to registered representatives on the sale of Contracts are
not more than 5.8% of the Purchase Payments. Noncash compensation may include
accrual of conference travel credits and prizes. To the extent that the
Contingent Deferred Sales Charge is insufficient to cover the actual cost of
distribution, First SAFECO may use any of its corporate assets, including
potential profit which may arise from the Mortality and Expense Risk Premium, to
make up any difference.
REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals in a
manner that results in savings of sales expenses. The entitlement to reduction
of the Contingent Deferred Sales Charge will be determined by First SAFECO after
examination of all the relevant factors such as:
1. The total amount of Purchase Payments to be received. Per Contract
sales expenses are likely to be less on larger Purchase Payments than on smaller
ones.
2. Any prior or existing relationship with First SAFECO. Per Contract
sales expenses are likely to be less when there is a prior existing relationship
because of the likelihood of implementing the Contract with fewer sales
contacts.
3. There may be other circumstances, of which First SAFECO is not
presently aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, First SAFECO determines that
there will be a reduction in sales expenses, First SAFECO may provide for a
reduction or elimination of the Contingent Deferred Sales Charge.
The Contingent Deferred Sales Charge may be eliminated when the Contracts are
issued to an officer, director or employee of First SAFECO or any of its
affiliates. In no event will reductions or elimination of the Contingent
Deferred Sales Charge be permitted where reductions or elimination will be
unfairly discriminatory to any person.
DEDUCTION FOR WITHDRAWAL CHARGE
First SAFECO deducts a Withdrawal Charge which is equal to the lesser of $25 or
2% of the amount withdrawn for each Withdrawal (whether it be a partial
Withdrawal or a complete Withdrawal) after the first in any Contract Year. No
Withdrawal Charge is deducted where the Owner is participating in the Periodic
Withdrawal Program subject to certain limitations (see "The Programs") or is
exercising a Settlement Option.
<PAGE> 30
DEDUCTION FOR TRANSFER CHARGE
An Owner may make up to twelve (12) Transfers annually without the imposition of
any fee or charge. If more than twelve (12) Transfers have been made in a
Contract Year, First SAFECO reserves the right to assess a Transfer Charge which
will be equal to the lesser of $10 or 2% of the amount transferred. Specific
requirements may apply to transfers under the Programs. (See "The Programs.")
OTHER EXPENSES
There are other deductions from and expenses paid out of the assets of the Trust
and the Funds which are described in the accompanying Trust and Funds
Prospectuses. First SAFECO may receive compensation from the investment advisers
or administrators of the Available Funds consistent with the administrative
services rendered to such entities.
RIGHTS UNDER THE CONTRACT
OWNER, ANNUITANT AND BENEFICIARY
The Owner has all rights and may receive all benefits under the Contract. Prior
to the Annuity Date, the Owner is the person designated in the Application,
unless changed. On and after the Annuity Date, the Annuitant is the Owner. The
Annuitant is the person on whose life Annuity payments are based and is the
person designated in the Application, unless changed.
The Owner may designate a Beneficiary in the Application to receive any proceeds
payable due to the death of the Owner. Unless the Owner provides otherwise, the
death benefit will be paid in equal shares to all surviving primary
Beneficiaries. If the Owner has not provided otherwise and there are no
surviving primary Beneficiaries, the death benefit will be paid in equal shares
to all surviving contingent Beneficiaries. If the Owner has not provided
otherwise and there are no surviving primary or contingent Beneficiaries, the
death benefit will be paid to the estate of the Owner.
If the Owner has made an irrevocable Beneficiary designation, no change of
Beneficiary is permitted. If the Owner has not made an irrevocable Beneficiary
designation, the Owner may file a signed request with First SAFECO to change the
Beneficiary designation. The change of Beneficiary will be effective upon
recording by First SAFECO at its Home Office. First SAFECO shall not be liable
for any payments made or other action taken by First SAFECO before the change in
Beneficiary was recorded by First SAFECO at its Home Office. A recorded change
of Beneficiary will revoke any prior Beneficiary designations. First SAFECO will
pay any death proceeds to the most recently recorded Beneficiary.
MISSTATEMENT OF AGE
First SAFECO may require proof of the age of the Annuitant before making any
Life Annuity payment provided for by the Contract. If the age of the Annuitant
has been misstated, the amount payable will be the amount that the Contract
Value would have provided at the correct age. Once Annuity payments have begun,
any underpayments will be made up in one sum with the next Annuity payment. Any
overpayment will be deducted from future Annuity payments until the total is
repaid.
EVIDENCE OF SURVIVAL
If any benefits under the Contracts are contingent upon the Annuitant being
alive on a given date, First SAFECO may require evidence satisfactory to First
SAFECO that such condition continues to be met.
<PAGE> 31
CONTRACT SETTLEMENT
Unless otherwise designated in writing by First SAFECO, all sums payable under
the Contracts are payable at First SAFECO's Home Office. The Contract must be
returned to First SAFECO upon any settlement.
SUBSTITUTE PAYEE
If First SAFECO determines that any person is incapable of personally receiving
and giving a valid receipt for any payment due under the Contracts and no claim
has been made by a duly appointed guardian, First SAFECO may make such payment
to any person or institution that First SAFECO determines has assumed the care
and support of such person. Such payment shall completely discharge the
liability of First SAFECO with respect to the amount so paid.
ASSIGNMENT
To the extent permitted by law, the Contracts and the benefits or payments under
the Contracts are assignable or otherwise transferable.
MODIFICATION OF THE CONTRACTS
The terms and conditions of the Contracts may be amended by written agreement
between First SAFECO and the Owner by written endorsement or amendment. All
agreements made by First SAFECO will be signed by the President or one of the
Vice Presidents. No other person has power on behalf of First SAFECO to amend or
modify the Contract, extend any due date, or waive any proof required by the
Contract. First SAFECO may unilaterally amend the provisions of the Contract as
required to conform to any state or federal law which affects the Contract.
TERMINATION OF CONTRACT
All benefit provisions under the Contract continue in force until the Contract
Value is completely Withdrawn. Discontinuance of Purchase Payments will not
result in termination of the Contract.
ANNUITY AND DEATH BENEFIT PROVISIONS
SELECTION AND CHANGE OF SETTLEMENT OPTIONS
The Owner may select or change the Settlement Option or Annuity Date by written
notification to First SAFECO at its Home Office. In order to be effective, the
written notification must be received by First SAFECO prior to any Annuity Date
previously selected.
PAYMENT OF BENEFITS
First SAFECO will, upon the written direction of the Owner, issue an Annuity or
make a cash distribution to any person who is entitled to such benefits. First
SAFECO may rely on the written direction of the Owner and shall not be liable
because of any failure to question or challenge such direction regarding the
issuance of an Annuity or payment of a cash distribution.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments, except as described
below. If the net amount available to apply under any Settlement Option is less
than $2,000, First SAFECO shall have the right to pay such amount in a lump sum
cash distribution. If Annuity payments would be or become less than $250, First
SAFECO shall have the right to change the frequency of payments to such
intervals as will result in payments of at least $250.
<PAGE> 32
DEATH OF OWNER PRIOR TO ANNUITY DATE
The Contract provides for a minimum guaranteed death benefit, provided that
First SAFECO receives due proof of death in a satisfactory form and election of
a Settlement Option prior to six months from the date of the Owner's death. If
the due proof of death or the election of a Settlement Option is received later
than six months after the date of death of the Owner, First SAFECO provides a
death benefit that is subject to change based upon investment experience, as
discussed below.
On the Valuation Date following receipt at the Home Office of the due proof of
death and election of a Settlement Option before the Annuity Date and while the
Contract was in force, First SAFECO generally will pay to the designated
Beneficiary a minimum guaranteed death benefit that is the greater of: (i) the
Contract Value on the later of the date of receipt of due proof of death or the
election of a Settlement Option; or (ii) the last determined minimum guaranteed
death benefit.
The initial minimum guaranteed death benefit is equal to the initial Net
Purchase Payment. The minimum guaranteed death benefit is reset at each eighth
Contract Anniversary ("Eight Year Contract Anniversary") to equal the greater of
(i) the then current Contract Value or (ii) the current minimum guaranteed death
benefit. The greater of the two values becomes the new minimum guaranteed death
benefit. The minimum guaranteed death benefit is fixed for the remaining
duration of the Contract as of the last Eight Year Contract Anniversary
preceding the Owner's 72nd birthday.
If the Contract is owned by joint Owners, the minimum guaranteed death benefit,
or any other applicable death benefit, is payable only on the death of the elder
Owner. Moreover, following the death of the elder Owner, if the joint Owner
elects to continue the Contract, there is no further minimum guaranteed death
benefit. The death benefit will be the Contract Value, which reflects Net
Purchase Payments and withdrawals. Contract Value is subject to change as a
result of investment experience.
Each form of minimum guaranteed death benefit is adjusted to reflect Net
Purchase Payments and withdrawals. If an Owner makes withdrawals, the minimum
guaranteed death benefit is reset to equal the previous minimum guaranteed death
benefit multiplied by the ratio of the Contract Value after the withdrawal to
the Contract Value before the withdrawal. The recomputed minimum guaranteed
death benefit will be used in determining the new minimum guaranteed death
benefit at the next Eight Year Contract Anniversary. After the Owner's death,
the minimum guaranteed death benefit will be reduced dollar for dollar by any
withdrawals by the Beneficiary. The Beneficiary may only make withdrawals at the
time of or prior to the election of a Settlement Option.
If due proof of death or the election of a payment option (a Settlement Option
or lump sum payment) are made later than six months following the date of the
Owner's death, the value as of the six month anniversary of the date of death
will apply. Thus, for example, if notification of death is not received until
nine (9) months after the date of death, the death benefit under (i) will be
calculated as follows:
Upon notification of death, First SAFECO will determine what the Contract Value
was on the six-month anniversary of the date of death. Assuming that Contract
Value was $90,000 on that date and the last determined minimum guaranteed death
benefit was $100,000, First SAFECO will contribute $10,000 to Contract Value as
of that date and will guarantee the portion of the Contract Value attributable
to First SAFECO's contribution and pay interest thereon at the then prevailing
money market rate until the date of election of a payment option. First SAFECO
will then calculate the effects of investment experience on the portion of the
Contract Value existing on the six-month anniversary of the date of death, and
hence, the death benefit will consist of the combined value of the guaranteed
and nonguaranteed portions of the Contract Value from that six-month anniversary
date to the date of election of a payment option. If on the six-month
anniversary of the date of death the Contract Value exceeds the last determined
minimum guaranteed death benefit, the entire Contract Value will be subject to
market risk from that date to the date of election of a payment option and no
portion of the Contract Value will be guaranteed. Any withdrawals made by the
Beneficiary prior to electing a payment option will be deducted from the death
benefit. The Beneficiary bears the risk and enjoys the rewards of negative or
positive investment experience on any nonguaranteed portion of the Contract
Value during the period from the six-month anniversary of the date of death and
the date of election of a payment option. Beneficiaries should be encouraged to
promptly notify First SAFECO of the Owner's death.
<PAGE> 33
In all cases, First SAFECO will pay the Beneficiary a lump sum payment of the
death benefit if the election of the Settlement Option is not made within sixty
(60) days of the receipt of due proof of death.
With respect to non-qualified Contracts, if the Owner dies on or after the
Annuity Date and before the entire value of the Contract has been distributed,
any remaining value must be distributed at least as rapidly as the method of
distribution in effect at the time of the Owner's death. If the Owner dies
before the Annuity Date, generally the entire value under the Contract must be
distributed within five years after the date of the Owner's death or must be
distributed over the designated Beneficiary's life or over a period not
extending beyond the Beneficiary's life expectancy, in equal or substantially
equal payments, with payments beginning within one year of the Owner's death.
DEATH OF ANNUITANT
In the event of the Annuitant's death prior to the Annuity Date, the Owner must
designate a new Annuitant. If no designation is made within thirty (30) days of
notification to First SAFECO of the death of the Annuitant, the Owner will
become the Annuitant. The election of a Settlement Option must be made by the
Beneficiary during the sixty (60) day period commencing with the date of First
SAFECO's receipt of notice of the Owner's death. If no election is made within
the sixty (60) day period, then a single lump sum payment will be made to the
Beneficiary. In the event that the Beneficiary is a surviving spouse, the
Contract can be continued. Upon the death of a co-Owner, the surviving Owner
becomes the designated Beneficiary. Any other named Beneficiary will be a
contingent Beneficiary. If the Contract is owned by a non-natural person, the
death of the Annuitant will be treated as the death of the Owner.
DEATH OF OWNER AFTER ANNUITY DATE
If the Owner dies on or after a Settlement Option has commenced, payments must
continue at least as rapidly as under the method of distribution in effect prior
to the Owner's death.
SETTLEMENT OPTIONS
An Annuity may be issued in any of the forms described below, or such other
forms which First SAFECO agrees to issue under the Contract. Options (a), (b),
and (c) are irrevocable once they have begun. Option (d) is irrevocable for the
first eight Contract Years, and then may be changed.
(a) Variable Life Annuity: Monthly payments are made to the Annuitant
commencing on the Annuity Date, if he or she is then living, and the last
payment is that payment due immediately on or before the Annuitant's death. No
death benefit is payable under this option.
(b) Variable Life Annuity with 120 or 240 Monthly Payments Guaranteed:
Monthly payments are made to the Annuitant commencing on the Annuity Date. If at
the death of the Annuitant the guaranteed number of payments has not been
received by the Annuitant, payments will be made to the Beneficiary for the
remainder of the guarantee period. The Beneficiary may elect to have the present
value of the guaranteed Annuity remaining as of the date the notice of death is
received by First SAFECO commuted at the assumed investment rate of 4% and paid
in a single payment.
(c) Variable Joint and Survivor Life Annuity: Monthly payments are made
to the Annuitant commencing on the Annuity Date. After the death of the
Annuitant, payments will be continued to the co-annuitant for as long as he or
she lives. The written request for this option must specify the percentage value
of monthly payments to continue to the co-annuitant.
(d) Systematic Payment Annuity : A specified number of whole or partial
Accumulation Units are liquidated for payment to the Annuitant on a monthly,
quarterly, or annual basis. The number to be liquidated during a given year
shall be a sufficient number so as to be expected to deplete the Contract over
the life expectancy of the Annuitant or the joint life expectancy of the
Annuitant and the Beneficiary, with at least 50% of the payments expected to be
made during the Annuitant's life. This Option will remain in effect unless the
Annuitant subsequently
<PAGE> 34
elects to receive payments under another Settlement Option or elects to
surrender the Contract after the eighth Contract Year..
If, as of the Annuity Date, a Settlement Option has not been selected, First
SAFECO will make payments under Option (b) with 120 monthly payments guaranteed.
Similar fixed annuity Settlement Options are available with respect to the
monies held in the Fixed Account.
MORTALITY AND EXPENSE GUARANTEE
First SAFECO guarantees that the dollar amount of each Variable Annuity payment
made after the first payment will not be affected by variations in mortality
experience or expenses.
WITHDRAWALS AND TRANSFERS
WITHDRAWALS
First SAFECO, upon written request to it by the Owner, will allow the Withdrawal
of all or a portion of the Contract Value. Withdrawals will result in the
cancellation of Accumulation Units from each applicable Sub-Account of the
Separate Account or a reduction in the Fixed Account Value in the ratio that the
Sub-Account Value and/or the Fixed Account Value bears to the total Contract
Value. The Owner must specify in writing in advance which units are to be
canceled or values are to be reduced if other than the above-mentioned method of
cancellation is desired. First SAFECO will pay the amount of any Withdrawal from
the Separate Account within seven (7) days of receipt of a request, unless the
"Suspension of Payments or Transfers" provision is in effect (see "Suspension of
Payments or Transfers" below). First SAFECO retains the right to defer the
payment of Withdrawals from the Fixed Account for a period of six (6) months
after receiving a Withdrawal request. (See also "The Programs.")
The minimum Withdrawal allowed is the lesser of $250 or the Contract Value. If
any Withdrawal reduces the remaining balance in a Sub-Account or the Fixed
Account to less than $500 the remaining balance will also be withdrawn.
Upon a Withdrawal, the number of Accumulation Units remaining under the Contract
will be reduced by the number of such units equal to the total of the
Withdrawal, including applicable charges and taxes, including income taxes
withheld.
Certain tax withdrawal penalties and restrictions may apply to withdrawals from
the Contracts. (See "Tax Status.") For Contracts purchased in connection with
403(b) plans, the Code limits the withdrawal of amounts attributable to
contributions made pursuant to a salary reduction agreement (as defined in
Section 403(b)(11) of the Code) to circumstances only when the Owner: (1)
attains age 59 1/2; (2) separates from service; (3) dies; (4) becomes disabled
(within the meaning of Section 72(m)(7) of the Code); or (5) in the case of
hardship.
However, withdrawals for hardship are restricted to the portion of the Owner's
Contract Value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers or transfers between certain Qualified
Plans. Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
<PAGE> 35
TRANSFERS
An Owner may transfer Contract Values among Sub-Accounts up to twelve (12) times
annually without the imposition of any fee or charge. If more than twelve (12)
Transfers have been made in a Contract Year, First SAFECO reserves the right to
assess a Transfer Charge which will be equal to the lesser of $10 or 2% of the
amount transferred. The minimum Transfer from a Sub-Account must be at least
$500, except in the case of Automatic Transfers (described below). If the
Sub-Account from which the Transfer is being made contains less than $500, or is
reduced to less than $500 after a Transfer, the Owner's entire interest in the
Sub-Account will be transferred. The minimum Transfer into a Sub-Account must be
at least $50.
Upon a Transfer from a Sub-Account, the number of Accumulation Units remaining
under that Sub-Account will be reduced by the number of such units equal to the
total of the requested Transfer, including applicable charges and taxes.
Transfers will be effected during the Valuation Period next following receipt by
First SAFECO of a written transfer request containing all required information.
(See "Transfers by Written Request" and "Transfers by Telephone," below.)
Transfers also may be effected under certain of the Programs and certain
specific limitations on transfers may apply under the Programs.
TRANSFERS BY WRITTEN REQUEST
Contract Values may be transferred by writing First SAFECO at the address on the
cover page of this Prospectus and specifying the Contract number, the amount to
be transferred, and the Sub-Accounts to be effected. The request must be signed
by the Owner or a third party to whom the Owner has given appropriate authority.
First SAFECO must have a copy of the document granting such authority. Transfers
will be effected during the Valuation Period next following receipt by First
SAFECO of the written transfer request.
SUSPENSION OF PAYMENTS OR TRANSFERS
First SAFECO reserves the right to suspend or postpone payments for a Withdrawal
or Transfer for any period when:
(i) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(ii) Trading on the New York Stock Exchange is restricted, as
determined by the rules and regulations of the Securities and
Exchange Commission;
(iii) An emergency exists as a result of which disposal of
securities held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine
the value of the Separate Account's net assets, as determined
by the rules and regulations of the Securities and Exchange
Commission; or
(iv) During any other period when the Securities and Exchange
Commission, by order, so permits for the protection of Owners
provided that applicable rules and regulations of the
Securities and Exchange Commission will govern as to whether
the conditions described in (ii) and (iii) exist.
OTHER SERVICES
THE PROGRAMS
First SAFECO offers several investment related programs which are available only
prior to the Annuity Date: Dollar Cost Averaging; Automatic Transfers;
Appreciation or Interest Sweeps; Sub-Account Rebalancing; and Periodic
Withdrawal Programs. Certain of the Programs are alternatives with respect to
any one Sub-Account; other Programs may be combined. Thus, the Dollar Cost
Averaging Program, the Automatic Transfer Program and the
<PAGE> 36
Appreciation or Interest Sweep Program are alternatives with respect to the
selected Sub-Account, and in all cases with respect to the Fixed Account.
However, the Sub-Account Rebalancing Program may be combined with each of the
other Programs, but it is not available with respect to the Fixed Account. Under
each Program, the related transfers between and among Sub-Accounts and the Fixed
Account are not counted as one of the twelve free transfers. However, if an
Owner executes an unrelated voluntary transfer from the Sub-Account
participating in a Program, other than the Sub-Account Rebalancing Program, the
Program will be terminated for the remainder of the Contract Year. In addition,
if a Program is terminated before six Program transfers have occurred, the six
Program transfers are counted as part of the twelve free transfers. If the
balance in a Sub-Account would be less than $500 as a result of a transfer
pursuant to one of these Programs, other than the Appreciation or Interest Sweep
and Sub-Account Rebalancing Programs, then the entire balance in that
Sub-Account will also be transferred. Each of the Programs has its own
requirements, as discussed below.
DOLLAR COST AVERAGING PROGRAM
First SAFECO offers a Dollar Cost Averaging Program during the Accumulation
Period whereby an Owner may predesignate a portion of any Sub-Account's Contract
Value or the Fixed Account's Contract Value to be automatically transferred on a
monthly or quarterly basis to one or more of the other Sub-Accounts or to the
Fixed Account. The amount to be transferred may be expressed as a set dollar
amount or as a percentage of the Contract Value in the selected Sub-Account or
the Fixed Account. Transfers from the Fixed Account are subject to a maximum of
1.33% monthly or 4% quarterly of the Contract Value in the Fixed Account at the
time of the initial transfer. Upon election of the Dollar Cost Averaging Program
the limitations on transfers from the Fixed Account will be calculated. The
resultant limitations will apply for the entire duration of participation in
this Program. Each Dollar Cost Averaging transfer is subject to a minimum
transfer of fifty dollars ($50).
The Dollar Cost Averaging Program is available for Purchase Payments and for
Contract Value transferred into any Sub-Account. An Owner may enroll in this
Program at the time the Contract is issued or anytime thereafter by properly
completing the Dollar Cost Averaging enrollment form and returning it to First
SAFECO at its Home Office at least ten (10) business days prior to the first
business day of the month, which is the date that all Program transfers will be
made ("Transfer Date"). This Program must be elected for at least a six (6)
month period.
If the Contract Value in the participating Sub-Account or the Fixed Account does
not equal or exceed the amount designated to be transferred on each Transfer
Date, Dollar Cost Averaging will cease automatically and the remaining amount
will be transferred.
Dollar Cost Averaging will terminate when (i) the designated monthly or
quarterly amounts of transfers have been completed, (ii) the Owner requests
termination in writing and such writing is received at the Home Office at least
ten (10) business days prior to the next Transfer Date in order to cancel the
transfer scheduled to take effect on such date, (iii) the Owner effects any
other transfer from the participating Sub-Account or the Fixed Account while the
Dollar Cost Averaging Program is in effect, or (iv) the Contract is surrendered.
In addition, if any transfer or withdrawal has been made from the Fixed Account
during the Contract Year, the Dollar Cost Averaging Program may not be
established through the Fixed Account for that Contract Year.
An Owner may initiate, reinstate or change the Dollar Cost Averaging terms by
properly completing a new enrollment form and returning it to the Home Office at
least ten (10) business days prior to the next Transfer Date such transfer is to
be made.
When utilizing Dollar Cost Averaging an Owner may be invested in either a
Sub-Account or the Fixed Account and may be invested in any other Sub-Accounts
or the Fixed Account at any given time.
AUTOMATIC TRANSFER PROGRAM
The Automatic Transfer Program is identical to the Dollar Cost Averaging Program
in all respects other than with regard to the limitations on transfers from the
Fixed Account. The limitations on transfers from the Fixed Account are
recalculated annually. Transfers from the Fixed Account are limited to 1.5%
monthly and 4.5% quarterly.
<PAGE> 37
APPRECIATION OR INTEREST SWEEP PROGRAM
An Owner may enroll in the Appreciation or Interest Sweep Program through either
or both the SAFECO Resource Money Market Sub-Account or the Fixed Account.
Enrollment is limited to Owners whose total Contract Value is greater than
$10,000. Under the Program, if appreciation of Contract Value in the SAFECO
Resource Money Market Sub-Account or credited interest earned on Contract Value
in the Fixed Account ("Earnings") is greater than 10%, the Earnings up to 10% of
the Contract Value in the Fixed Account or the SAFECO Resource Money Market
Sub-Account, respectively, will be transferred to any of the Sub-Accounts, other
than the SAFECO Resource Money Market Sub-Account. Earnings in the SAFECO
Resource Money Market Sub-Account may not be transferred to the Fixed Account.
In no event may the total Contract Value transferred from the Fixed Account in
each Contract Year exceed a total of 10% of the Contract Value for each such
Contract Year in the Fixed Account computed at the time of the transfer.
Moreover, the Program may not be instituted for the Fixed Account in any
Contract Year during which transfers or withdrawals have been made from the
Fixed Account. Transfers under this Program will be processed monthly, quarterly
or annually on the Transfer Date.
SUB-ACCOUNT REBALANCING PROGRAM
In accordance with the Owner's election of the relative purchase payments
percentage allocations, First SAFECO will automatically rebalance the Contract
Value of each variable Sub-Account either quarterly, semi-annually, or annually.
First SAFECO will automatically rebalance the Contract Value in each of the
Sub-Accounts to match the current purchase payments percentage allocations as of
the first Transfer Date during the period selected. Enrollment is limited to
Owners whose total Contract Value is greater than $10,000 at the time the
Program is selected. The Program may be terminated at any time and the
percentages may be altered by written authorization. The requested change must
be received at the Home Office ten (10) days prior to the Transfer Date. If the
Owner terminates the Program, a new Program may not be instituted until the next
Contract Year.
PERIODIC WITHDRAWAL PROGRAM
First SAFECO will make monthly, quarterly or annual distributions of a
predetermined dollar amount to an Owner that has enrolled in the Periodic
Withdrawal Program. The Periodic Withdrawal Program is to be distinguished from
the Systematic Payment Annuity. (See "Settlement Options.") Under the Program,
all distributions will be made directly to the Owner and will be treated for
federal tax purposes as any other withdrawal or distribution of Contract Value.
(See "Tax Status.") An Owner may specify the amount of each withdrawal, subject
to a minimum of $250. In each Contract Year, up to 10% of Contract Value may be
withdrawn without the imposition of any Contingent Deferred Sales Charge. If
withdrawals pursuant to the Program are greater than 10% of Contract Value in
any Contract Year, the amount of the withdrawals greater than 10% will be
subject to the applicable Contingent Deferred Sales Charge. Any ad hoc
withdrawals an Owner makes during a Contract Year will be aggregated with
withdrawals pursuant to the Program to determine the applicability of any
Contingent Deferred Sales Charge. If the frequency of withdrawals under the
Program is greater than annually, First SAFECO will charge an annual fee of $25
to compensate it for the added administrative costs.
Unless the Owner specifies the Sub-Account or Sub-Accounts or the Fixed Account
from which withdrawals of Contract Value shall be made or if the amount in a
specified Sub-Account is less than the predetermined amount, First SAFECO will
make withdrawals under the Program from the Sub-Accounts and the Fixed Account
in amounts proportionate to the amounts in the Sub-Accounts and the Fixed
Account. Withdrawals are subject to the applicable minimum Sub-Account balances.
All withdrawals under the Program will be effected by canceling the number of
Accumulation Units equal in value to the amount to be distributed to the Owner
and any applicable Contingent Deferred Sales Charge.
The Program may be combined with all other Programs except those entailing
transfers or withdrawals from the Fixed Account. However, the Owner may
terminate such other program and may begin participation in the Program on the
first day of the next Contract Year.
<PAGE> 38
It may not be advisable to participate in the Program and incur a Contingent
Deferred Sales Charge when making additional Purchase Payments under the
Contract.
TAX STATUS
NOTE: The following description is based upon First SAFECO's understanding of
current federal income tax law applicable to annuities in general. First SAFECO
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. First SAFECO does not guarantee the tax status of the
Contracts. Purchasers bear the complete risk that the Contracts may not be
treated as "annuity contracts" under federal income tax laws. It should be
further understood that the following discussion is not exhaustive and that
special rules not described in this Prospectus may be applicable in certain
situations. Moreover, no attempt has been made to consider any applicable state
or other tax laws.
GENERAL
Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment, a withdrawal or as annuity payments under the
Settlement Option elected. For a lump sum payment received as a total surrender
(total redemption), the recipient is taxed at ordinary income tax rates on the
portion of the payment that exceeds the cost basis of the Contract. For
Non-Qualified Contracts, this cost basis is generally the Purchase Payments,
while for Qualified Contracts there may be no cost basis.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includable in taxable income. The exclusion amount for payments based on a
fixed annuity is determined by multiplying the payment by the ratio that the
cost basis of the Contract (adjusted for any period certain or refund feature)
bears to the expected return under the Contract. The exclusion amount for
payments based on a variable annuity is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amounts equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code resulting in the annuity payments being fully includable
in taxable income. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions.
First SAFECO is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from First
SAFECO and its operations form a part of First SAFECO.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in imposition of federal income tax
to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be
<PAGE> 39
deemed adequately diversified if: (1) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (2) no more than
70% of the value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
First SAFECO intends that all Portfolios of the Trust and the Funds underlying
the Contracts will be managed in such a manner as to comply with these
diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of separate account. It is unknown whether
these differences, such as the Owner's ability to transfer among investment
choices or the number and type of investment choices available, would cause the
Owner to be considered as the owner of the assets of the Separate Account
resulting in the imposition of federal income tax to the Owner with respect to
earnings allocable to the Contract prior to receipt of payments under the
Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, First SAFECO reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or any portion(s) thereof which are includable in the gross
income of the Owner are subject to Federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Owner, in most cases, may
elect not to have taxes withheld or to have withholding done at a different
rate.
<PAGE> 40
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
Federal income tax. The 20% withholding requirement does not apply to: a)
distributions for the life or life expectancy of the participant or joint and
last survivor expectancy of the participant and a designated beneficiary; or b)
distributions for a specified period of 10 years or more; or c) distributions
which are required minimum distributions. Participants should consult their own
tax counsel or other tax advisor regarding withholding.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includable in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Owners, Annuitants and Beneficiaries are cautioned that benefits
under a Qualified Plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into the Company's administrative procedures. Contract
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of the
types of Qualified Plans with which the Contracts may be used. Such descriptions
are not exhaustive and are for general informational purposes only. The tax
rules regarding Qualified Plans are very complex and will have differing
applications depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts", below.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by First SAFECO in connection
with Qualified Plans will utilize annuity tables which do not differentiate on
the basis of sex. Such annuity tables will also be available for use in
connection with certain non-qualified deferred compensation plans.
<PAGE> 41
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includable in the
gross income of the employees until the employees receive distributions
from the Contracts. The amount of contributions to the tax-sheltered
annuity is limited to certain maximums imposed by the Code. Furthermore,
the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See
"Tax Treatment of Withdrawals - Qualified Contracts" below.) Any employee
should obtain competent tax advice as to the tax treatment and suitability
of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to
an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's gross
income. These IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. (See "Tax Treatment of
Withdrawals - Qualified Contracts" below.) Under certain conditions,
distributions from other IRAs and other Qualified Plans may be rolled over
or transferred on a tax-deferred basis into an IRA. Sales of Contracts for
use with IRAs are subject to special requirements imposed by the Code,
including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as Individual Retirement Annuities should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including Contracts issued and
qualified under Code Sections 403(b) (Tax-Sheltered Annuities) and 408(b)
(Individual Retirement Annuities). To the extent amounts are not includable in
gross income because they have been rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax penalty will not apply
to the following distributions: (a) if distribution is made on or after the date
on which the Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Owner or Annuitant (as
applicable) (for this purpose disability is as defined in Section 72(m)(7) of
the Code); (c) after separation from service, distributions that are part of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the Owner or Annuitant (as applicable) or the
joint lives (or joint life expectancies) of such Owner or Annuitant (as
applicable) and his or her designated Beneficiary; (d) distributions to an Owner
or Annuitant (as applicable) who has separated from service after he has
attained age 55; (e) distributions made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the amount allowable
as a deduction under Code Section 213 to the Owner or Annuitant (as applicable)
for amounts paid during the taxable year for medical care; and (f) distributions
made to an alternate payee pursuant to a qualified domestic relations order. The
exceptions stated in (d), (e) and (f) above do not apply in the case of an
Individual Retirement Annuity. The exception stated in (c) above applies to an
Individual Retirement Annuity without the requirement that there be a separation
from service.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year, following the year in which the employee attains age 70
1/2. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required maximum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed. In addition, distributions in excess of $150,000 per year in the
case of periodic distributions and in excess of $750,000 in the case of lump sum
distributions may be subject to an additional 15% excise tax unless an exemption
applies.
<PAGE> 42
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or transfers between certain Qualified Plans. Owners should
consult their own tax counsel or other tax adviser regarding any distributions.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Generally, any gain in the Contract will be taxed currently to the Owner if the
Contract is not held for the benefit of a natural person. Such Contracts
generally will not be treated as annuities for federal income tax purposes.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account, SSI or PNMR is a
party. First SAFECO is engaged in various kinds of litigation which, in the
opinion of First SAFECO, is not of material importance in relation to the total
capital and surplus of First SAFECO.
<PAGE> 43
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
Page
----
ANNUITY PROVISIONS .........................................................
General.................................................................
Annuity Unit............................................................
Assumed Investment Factor...............................................
Variable Annuity Payment Calculation....................................
ADDITIONAL PERFORMANCE INFORMATION .........................................
Performance Comparisons.................................................
Performance Information.................................................
Yields...............................................................
Total Returns........................................................
EXPERTS ....................................................................
FINANCIAL STATEMENTS .......................................................
First SAFECO Separate Account S.........................................
First SAFECO National Life Insurance Company of New York ...............
<PAGE> 44
PART B
<PAGE> 45
STATEMENT OF ADDITIONAL INFORMATION
FIRST SAFECO LIFE INSURANCE COMPANY
GENERAL INFORMATION
FIRST SAFECO
First SAFECO National Life Insurance Company of New York (First SAFECO) is a
wholly-owned subsidiary of SAFECO Life Insurance Company ("SAFECO"), which is a
wholly-owned subsidiary of SAFECO Corporation which is a holding company whose
subsidiaries are engaged primarily in insurance and financial services
businesses.
At March 31, 1996, SAFECO Life Insurance Company owned 68% of the outstanding
shares of the Resource Series Trust ("RST") Northwest Portfolio and 100% of the
outstanding shares of each of the RST Equity, Growth, Bond and Money Market
Portfolios. At March 31, 1996, SAFECO Asset Management ("SAM"), which is the RST
investment advisor, owned 32% of the outstanding shares of the RST Northwest
Portfolio. SAFECO Life Insurance Company and SAM are wholly-owned subsidiaries
of SAFECO Corporation.
SAFEKEEPING OF THE ASSETS OF THE SEPARATE ACCOUNT
First SAFECO holds the assets of the Separate Account. The assets are kept
segregated and held separate and apart from the general account assets of First
SAFECO. First SAFECO maintains records of all Separate Account purchases and
redemptions of the shares of each Portfolio of SAFECO Resource Series Trust
(Trust), Federated Insurance Series, Lexington Emerging Markets Fund, Inc., and
Lexington Natural Resources Trust.
INDEPENDENT AUDITORS
Ernst & Young LLP, 999 Third Avenue, Suite 3500, Seattle, Washington 98104, is
the independent auditor of the financial statements of First SAFECO and First
SAFECO Separate Account S.
DISTRIBUTOR
SAFECO Securities, Inc. (SSI), acts as the principal underwriter for the
Contracts. The offering is on a continuous basis. As this is the initial
registration no contracts have been distributed and no commissions for
distributions have been paid or retained. It is not anticipated that PNMR will
retain any portion of commission payments made in conjunction with the
distribution of the Contracts.
- - --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus
- - --------------------------------------------------------------------------------
The Prospectus concisely sets forth information that a prospective investor
should know before investing. For a copy of the Prospectus, call 1-800-878-2041
or write to First SAFECO National Life Insurance Company, Annuity Service
Office, 6700 Collamer Road, East Syracuse, New York 13057.
This Statement of Additional Information and the Prospectus are both dated
(pending registration effective date)
- - --------------------------------------------------------------------------------
<PAGE> 46
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ANNUITY PROVISIONS
General.................................................................................................
Annuity Unit............................................................................................
Assumed Investment Factor...............................................................................
Variable Annuity Payment Calculation....................................................................
ADDITIONAL PERFORMANCE INFORMATION
Performance Comparisons.................................................................................
Performance Information.................................................................................
Yields...............................................................................................
Total Returns........................................................................................
EXPERTS
FINANCIAL STATEMENTS
First SAFECO Separate Account S(not applicable for initial registration)................................
First SAFECO National Life Insurance Company of New York................................................
</TABLE>
<PAGE> 47
ANNUITY PROVISIONS
GENERAL
The Settlement Options and related provisions are described in the Prospectus.
ANNUITY UNIT
The value of the Annuity Unit is determined by multiplying the value of the
Annuity Unit for the immediately preceding Valuation Period by the Net
Investment Factor for the Valuation Period for which the value is being
calculated, and dividing the result by the Assumed Investment Factor for such
Valuation Period.
ASSUMED INVESTMENT FACTOR
The Assumed Investment Factor for a one day Valuation Period is 1.00010746. This
factor neutralizes the assumed investment return of 4% in the Variable Annuity
purchase rate table in the Contract.
VARIABLE ANNUITY PAYMENT CALCULATION
A Variable Annuity is an Annuity with payments which are not predetermined as to
dollar amount. Payments will vary in accordance with the net investment results
of the Separate Account. The dollar amount of the first monthly Variable Annuity
payment under Settlement Options (a), (b) or (c), will be determined by applying
the Contract Value (after deduction for premium taxes, if applicable), as of the
15th day of the preceding month, to the Variable Annuity purchase rate table in
the Contract. The number of Annuity Units to be credited to the Annuitant will
be determined by dividing the first monthly payment by the Annuity Unit value
calculated as of the 15th day of the preceding month. This number of Annuity
Units remains fixed during the Annuity payment period. The dollar amount of each
Variable Annuity payment after the first shall be determined by multiplying the
number of Annuity Units credited to the Annuitant by the Annuity Unit value as
of the 15th day of the preceding month.
ADDITIONAL PERFORMANCE INFORMATION
STANDARDIZED COMPUTATION OF PERFORMANCE
PERFORMANCE COMPARISONS. Performance Information for a Sub-Account may be
compared, in reports and advertising, to: (i) Standard & Poor's Stock Index, Dow
Jones Industrial Averages, Donahue Money Market Institutional Averages, or other
unmanaged indices generally regarded as representative of the securities
markets; (ii) other Variable Annuity separate accounts or other investment
products traced by Lipper Analytical Services, Inc., the Variable Annuity
Research and Data Service, or Morningstar, Inc., which are widely used
independent research firms that rank mutual funds and other investment companies
by overall performance, investment objectives and assets; and (iii) the Consumer
Price Index (a measure of inflation) to assess the real rate of return from an
investment in a Contract. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for annuity charges,
investment management costs, brokerage costs and other transaction costs that
are normally paid when directly investing in securities.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising also may contain other information, including the ranking of any
Sub-Account derived from rankings of Variable Annuity separate accounts or other
investment products traced by Lipper Analytical Services, Inc. or by rating
services, companies, publications, or other persons which rank separate accounts
or other investment products on overall performance or other criteria.
<PAGE> 48
PERFORMANCE INFORMATION
YIELDS. Some Sub-Accounts may advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the Sub-Account over
a stated period of time, not taking in to account capital gains or losses or the
imposition of any Contingent Deferred Sales Charge. Yields are annualized and
stated as a percentage.
Current yield and effective yield are calculated for the SAFECO Resource Money
Market Sub-Account. Current Yield is based on the change in the value of a
hypothetical investment (exclusive of capital changes) over a particular seven
(7) day period, less a hypothetical charge reflecting deductions from values
during the period (the base period), and stated as a percentage of the
investment at the start of the base period (the base period return). The base
period return is then annualized by multiplying by 365/7, with the resulting
yield figure carried to at least the nearest hundredth of one percent. Effective
yield assumes that all dividends received during an annual period have been
reinvested. This compounding effect causes effective yield to be higher than
current yield. Calculation of effective yield begins with the same base period
return used in the calculation of current yield, which is then annualized to
reflect weekly compounding pursuant to the following formula:
Effective Yield = [(Base Period Return + 1)(365/7)] - 1
Yield for the SAFECO Resource Bond Sub-Account and Federated High Income Bond II
Sub-Account is based on all investment income (including dividends and interest)
per accumulation unit earned during a particular thirty (30) day period, less
expenses accrued during the period (net investment income). Yield is computed by
dividing net investment income by the value of an accumulation unit on the last
day of the period, according to the following formula:
Yield = 2[((a-b)/cd + 1)(6) - 1]
where a = net investment income earned during the period by the corresponding
Available Fund portfolio, b = expenses accrued for the period (net of any
reimbursements), c = the average daily number of accumulation units outstanding
during the period, and d = the value (maximum offering price) per accumulation
unit on the last day of the period.
TOTAL RETURNS. Total return reflects all aspects of a Sub-Account's return,
including the automatic reinvestment by the Sub-Account of all distributions and
the deduction of all applicable charges to the Sub-Account on an annual basis,
including mortality and expense risk charges, the Annual Administration
Maintenance Charge, the Asset Related Administration Charge, and any other
charges against Contract Value. Quotations also will assume a termination
(surrender) at the end of the particular period and reflect the deduction of the
Contingent Deferred Sales Charge, if applicable. Additional quotations may be
given that do not assume a termination (surrender) and do not take into account
deduction of the Contingent Deferred Sales Charge, since the Contracts are
intended as long-term products.
From time to time, non-standardized total return figures may accompany the
standardized figures. Non-standardized total return figures may be calculated in
a variety of ways including but not necessarily limited to different time
periods, different initial investment amounts, additions of periodic payments,
use of time weighted average annual returns which take into consideration the
length of time each investment has been on deposit, and without the
Administration Charge and/or with or without the Contingent Deferred Sales
Charge. Non-standardized figures may cause the performance of the Sub-Accounts
to appear higher than performance calculated using standard parameters.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical investment in the Sub-Account over certain periods,
including 1, 5, and 10 years (up to the life of the Sub-Account), and then
calculating the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. Investors should realize that the Sub-Account's experience is not
constant over time, but changes from year to year, and that the average annual
returns represent averaged figures as opposed to the year-to-year performance of
a Sub-Account. Average annual returns are calculated pursuant to the following
formula: P(1 + T)(n) = ERV, where P is a hypothetical initial payment of $1,000,
T is the average annual total return, n is the number of years, and ERV is the
withdrawal value at the end of the period.
<PAGE> 49
Cumulative total returns are unaveraged and reflect the simple change in value
of a hypothetical investment in the Sub- Account over a stated period of time.
EXPERTS
The financial statements of First SAFECO National Life Insurance Company
appearing in the Statement of Additional Information have been audited by Ernst
& Young LLP, independent auditors, as set forth to the extent indicated in their
reports thereon will be added by pre-effective amendment and will also appear in
the Statement of Additional Information. Such financial statements have been
included therein in reliance on their reports given on their authority as
experts in accounting and auditing.
FINANCIAL STATEMENTS
The consolidated financial statements of First SAFECO National Life Insurance
Company and First SAFECO Separate Account S will be included herein by
pre-effective amendment and should be considered only as bearing upon the
ability of First SAFECO to meet its obligations under the Contracts.
<PAGE> 50
FINANCIAL STATEMENTS
To Be Added by Pre-Effective Amendment
FIRST SAFECO SEPARATE ACCOUNT S
To Be Added By Pre-Effective Amendment
TABLE OF CONTENTS
Page
Report of Ernst & Young LLP, Independent Auditors
Statement of Assets and Liabilities as of__________________
Statement of Operations for the year ended_________________
Statements of Changes in Net Assets for the years ended
December 31, 199_ and 199_
Notes to Financial Statements (including accumulation unit data)
<PAGE> 51
FIRST SAFECO SEPARATE ACCOUNT S
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. FINANCIAL STATEMENTS The audited financial statements of First SAFECO
National Life Insurance Company will be included in the Statement of
Additional Information of this Registration Statement by pre-effective
amendment:
REGISTRANT:
Not Applicable
FIRST SAFECO NATIONAL LIFE INSURANCE COMPANY:
Consolidated Balance Sheets as of December 31, 1995 and 1994.
Statement of Consolidated Income for the years ended December 31, 1995
and 1994.
Statement of Changes in Stockholder's Equity for the years ended
December 31, 1995 and 1994.
Statement of Consolidated Cash Flows for the years ended December 31,
1995 and 1994.
Notes to Consolidated Financial Statements.
b. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Document
- - -------------- -----------------------
<S> <C>
1. Resolution of Board of Directors of First SAFECO *
authorizing the establishment of the Separate Account.
2. Not Applicable
3. (i) Form of Principal Underwriter's Agreement **
(ii) Selling Agreement **
4. (i) Individual Single Purchase Payment Deferred
Variable Annuity Contract
(ii) Riders and Endorsements
5. Application for Annuity Contract *
6. (i) Copy of Articles of Incorporation of First SAFECO **
(ii) Copy of the Bylaws of First SAFECO **
7. Not Applicable
8. a. Participation Agreement by and among First SAFECO National Life *
Insurance Company, Federated Insurance Series, on behalf of the
Federated High Income Bond Fund II, Federated International
Equity Fund II, Federated Utility Fund II, Federated Securities
Corp. and Federated Advisers.
</TABLE>
<PAGE> 52
<TABLE>
<S> <C> <C>
8.d.
8.b. Participation Agreement by and among First SAFECO National *
Life Insurance Company, Lexington Emerging Markets Fund,
Inc., Lexington Natural Resources Trust, and Lexington
Management Corporation.
9. Opinion and Consent of Counsel
10. Consent of Independent Auditors **
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Information *
14. Power of Attorney **
15. Representation of Counsel
</TABLE>
* Incorporated by reference to the Initial Registration of
First SAFECO Separate Account S, File number
33-17095,filed with the SEC on November 29, 1996.
** To be filed by pre-effective amendment.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Set forth below is a list of each director and officer of First SAFECO National
Life Insurance Company ("First SAFECO") who is engaged in activities relating to
First SAFECO Separate Account S or the variable annuity contracts offered
through First SAFECO Separate Account S. Unless otherwise indicated the
principal business address of all officers or directors listed is 15411 N. E.
51st Street, Redmond, Washington 98052.
<TABLE>
<CAPTION>
Name Position with First SAFECO
- - ---- --------------------------
<S> <C>
Richard E. Zunker Director and President
John P. Fenlason Senior Vice President
*Rod A. Pierson Director, Senior Vice President and Secretary
James T. Flynn Director, Vice President, Controller and Assistant Secretary
Clyde Goldberg Vice President#
Michael J. Kinzer Vice President and Actuary
Michael C. Knebel Vice President and Treasurer*
Stephen D. Collier Assistant Secretary*
H. Paul Lowber Assistant Secretary*
George C. Pagos Assistant Secretary
</TABLE>
<PAGE> 53
<TABLE>
<S> <C>
Bradford K. Young Assistant Secretary*
Kenneth N. Berk Director*
Ronald L. Spaulding Director*
Boh A. Dickey Director*
</TABLE>
* Mssrs. Dickey, Spaulding, Berk, Young, Lowber, Collier, Knebel and Pierson
maintain their principle business address at SAFECO Plaza, Seattle, WA 98185.
# Messr. Goldberg maintains his principle business address at 6700 Old Collamer
Road, East Syracuse, NY 13057.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
First SAFECO Life Insurance Company ("First SAFECO") established First SAFECO
Separate Account S ("Registrant") by resolution of its Board of Directors
pursuant to New York law. First SAFECO is a wholly-owned subsidiary of SAFECO
LIFE INSURANCE COMPANY which in turn is a wholly-owned subsidiary of SAFECO
Corporation. SAFECO Corporation is a publicly-owned company. Both SAFECO AND
SAFECO CORPORATION were organized under Washington law. SAFECO Corporation, a
Washington corporation, owns 100% of the following Washington corporations:
SAFECO Insurance Company of America, General Insurance Company of America, First
National Insurance Company of America, SAFECO Life Insurance Company of America,
SAFECO Assigned Benefits Service Company, SAFECO Administrative Services, Inc.,
SAFECO Properties Inc., SAFECO Credit Company, Inc., SAFECO Asset Management
Company, SAFECO Securities, Inc., SAFECO Services Corporation, SAFECO Trust
Company and General America Corporation. SAFECO Corporation owns 100% of SAFECO
National Insurance Company, a Missouri corporation, and SAFECO Insurance Company
of Illinois, an Illinois corporation. SAFECO Corporation owns 20% of Agena,
Inc., a Washington corporation. SAFECO Insurance Company of America owns 100% of
SAFECO Management Corp., a New York corporation, and SAFECO Surplus Lines
Insurance Company, a Washington corporation. SAFECO Life Insurance Company owns
100% of SAFECO National Life Insurance Company, a Washington corporation, and
First SAFECO National Life Insurance Company of New York, a New York
corporation. SAFECO Administrative Services, Inc. owns 100% of Employee Benefit
Claims of Wisconsin, Inc. and Wisconsin Pension and Group Services, Inc., each a
Wisconsin corporation. General America Corporation owns 100% of COMAV Managers,
Inc., an Illinois corporation, F.B. Beattie & Co., Inc., a Washington
corporation, General America Corp. of Texas, a Texas corporation, Talbot
Financial Corporation, a Washington corporation and SAFECO Select Insurance
Services, Inc.., a California corporation. F.B. Beattie & Co., Inc. owns 100% of
F.B. Beattie Insurance Services, Inc., a California corporation. General America
Corp. of Texas is Attorney-in-fact for SAFECO Lloyds Insurance Company, a Texas
corporation. Talbot Financial Corporation owns 100% of Talbot Agency, Inc., a
New Mexico corporation. Talbot Agency, Inc. owns 100% of PNMR Securities, Inc.,
a Washington corporation. SAFECO Properties Inc. owns 100% of the following,
each a Washington corporation: RIA Development, Inc., SAFECARE Company, Inc. and
Winmar Company, Inc. SAFECARE Company, Inc. owns 100% of the following, each a
Washington corporation: S.C. Bellevue, Inc., S.C. Everett, Inc., S.C.
Marysville, Inc., S.C. Simi Valley, Inc. and S.C. Vancouver, Inc. SAFECARE
Company, Inc. owns 50% of Lifeguard Ventures, Inc., a California corporation.
S.C. Simi Valley, Inc. owns 100% of Simi Valley Hospital, Inc., a Washington
corporation. Winmar Company, Inc. owns 50% of C-W Properties, Inc., a Washington
corporation. Winmar Company, Inc. owns 100% of the following: Barton Street
Corp., Gem State Investors, Inc., Kitsap Mall, Inc. WNY Development, Inc.,
Winmar Cascade, Inc., Winmar Metro, Inc., Winmar Northwest, Inc., Winmar
Redmond, Inc. and Winmar of Kitsap, Inc., each a Washington corporation, and
Capitol Court Corp., a Wisconsin corporation, SAFECO Properties of Boise, Inc.,
an Idaho corporation, SCIT, Inc., a Massachusetts corporation, Valley Fair
Shopping Centers, Inc., a Delaware corporation, WDI Golf Club, Inc., a
California corporation, Winmar Oregon, Inc., an Oregon corporation, Winmar of
Texas, Inc., a Texas corporation, Winmar of Wisconsin, Inc., a Wisconsin
corporation, and Winmar of the Desert, Inc., a California corporation. Winmar
Oregon, Inc. owns 100% of the following, each an Oregon corporation: North Coast
Management, Inc., Pacific Surfside Corp., Winmar of Jantzen Beach, Inc. and W-P
Development, Inc., and 100% of the following, each a Washington corporation:
Washington Square, Inc. and Winmar Pacific, Inc.
No person is directly or indirectly controlled by Registrant.
<PAGE> 54
ITEM 27. NUMBER OF CONTRACT OWNERS
As this is the initial registration there are no contracholders as of yet.
ITEM 28. INDEMNIFICATION
Under its Bylaws, First SAFECO, to the full extent permitted by New York Law,
shall indemnify any person who was or is a party to any proceeding (whether
brought by or in the right of First SAFECO or otherwise) by reason of the fact
that he or she is or was a director of First SAFECO, or, while a director of
First SAFECO, is or was serving at the request of First SAFECO as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise, or employee
benefit plan, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by him or her in connection with such proceeding.
First SAFECO shall extend such indemnification as is provided to directors above
to any person, not a director of First SAFECO, who is or was an officer of First
SAFECO or is or was serving at the request of First SAFECO as a director,
officer, partner, trustee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan.
In addition, the Board of Directors of First SAFECO may, by resolution, extend
such further indemnification to an officer or such other person as may to it
seem fair and reasonable in view of all relevant circumstances.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of First
SAFECO pursuant to such provisions of the bylaws or statutes or otherwise, First
SAFECO has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in said
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by First SAFECO
of expenses incurred or paid by a director, officer or controlling person of
First SAFECO in the successful defense of any such action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the Contracts issued by the Separate Account, First SAFECO will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in said Act and will
be governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
a. SAFECO Securities, Inc., the principal underwriter for the Contracts,
also acts as the principal underwriter for SAFECO's Group Variable
Annuity Contracts.
b. The following information is provided for each principal officer and
director of the principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* with Underwriter
------------------ ---------------------
<S> <C>
Rod A. Pierson Director
Ronald Spaulding Director
David F. Hill Director, President and Secretary
Neal A. Fuller Vice President, Controller, Treasurer,
Financial Principal and Assistant Secretary
</TABLE>
*The business address for all individuals listed is SAFECO Plaza, Seattle,
Washington 98185.
c. During the fiscal year ended December 31, 1996, PNMR Securities, Inc.,
through SAFECO Securities, Inc., does not expect to receiv commissions
for the distribution of certain annuity contracts sold in connection
with Registrant of which no payments were retained. PNMR has not
received any other compensation in connection with the sale of
Registrant's contracts.
<PAGE> 55
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
First SAFECO National Life Insurance Company of New York at 6700 Collamer Road,
East Syracuse New York 13057, and/or SAFECO Asset Management Company at SAFECO
Plaza, Seattle, Washington 98185, maintain physical possession of the accounts,
books or documents of the Separate Account required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
Registrant hereby represents that it is relying upon a No-Action Letter issued
to the American Council of Life Insurance dated November 28, 1988 (Commission
ref. IP-6-88) and that the following provisions have been complied with:
a. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the contract;
b. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
c. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
d. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2) other
investment alternatives available under the employer's Section 403(b)
arrangement to which the participant may elect to transfer his contract
value.
<PAGE> 56
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(a) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Seattle, and
State of Washington on this 13th day of, December, 1996.
<TABLE>
<S> <C>
First SAFECO Separate Account S
--------------------------------
Registrant
By: First SAFECO National Life Insurance Company of New York
--------------------------------------------------------
By: /S/ RICHARD E. ZUNKER
---------------------
Richard E. Zunker, President
First SAFECO National Life Insurance Company of New York
--------------------------------------------------------
Depositor
By: /S/ RICHARD E. ZUNKER
---------------------
Richard E. Zunker, President
</TABLE>
<PAGE> 57
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
Name Title Date
/S/ RICHARD E. ZUNKER Director and President
- - ----------------------
Richard E. Zunker
ROD A. PIERSON* Director, Senior Vice
- - ----------------------- President and Secretary
Rod Pierson
JAMES T. FLYNN* Director, Vice President, Controller and
- - ----------------------- Assistant Secretary
James T. Flynn
KENNETH N. BERK* Director
- - -----------------------
Kenneth N. Berk
RONALD L. SPAULDING* Director
- - -----------------------
Ronald L. Spaulding
/S/ BOH A. DICKEY Director
- - -----------------------
Boh A. Dickey
*By:/S/ BOH A. DICKEY
----------------------------
Boh A. Dickey
Attorney-in-Fact
*By:/S/ RICHARD E. ZUNKER
---------------------------
Richard E. Zunker
Attorney-in-Fact
<PAGE> 58
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4(i) Individual Single Purchase Payment Deferred Variable Annuity Contracts
4(ii) Riders and Endorsements
9 Opinion and Consent of Counsel
15
Representation of Counsel
<PAGE> 1
EXHIBIT 4(i)
[LOGO] FIRST SAFECO NATIONAL LIFE
INSURANCE COMPANY OF NEW YORK
6700 OLD COLLAMER ROAD EAST
SYRACUSE, NEW YORK 13057
INDIVIDUAL VARIABLE ANNUITY CONTRACT
First SAFECO National Life Insurance Company of New York, a stock company with
its Home Office in East Syracuse, New York, (hereafter called First SAFECO), in
consideration of the payment of the Purchase Payments as provided herein, agrees
to provide an Annuity and other benefits in accordance with the Contract
provisions.
10-DAY RIGHT TO EXAMINE CONTRACT
Within ten days of the date of receipt of this Contract by the Owner, it may be
returned by delivering or mailing it to First SAFECO or to the agent through
whom it was purchased. When this Contract is received by First SAFECO, it will
be voided as if it had never been in force, and First SAFECO will refund the
greater of Purchase Payments or the Contract Value. First SAFECO also reserves
the right to allocate all payments to the Money Market Sub-Account until the
expiration of 15 days from the date the first Purchase Payment is received.
Signed for the Company
/s/ R.A. Pierson Sr. /s/ R.E. Zunker
R.A. Pierson Sr. R.E. Zunker
Vice President and Secretary President
BRIEF DESCRIPTION
Individual Variable Annuity, Modified Single Premium Deferred Annuity,
Non-Participating, Monthly Income at Annuity Date, Cash Value Payable at Death
of Owner before Annuity Date.
VALUES PROVIDED BY THIS CONTRACT THAT ARE HELD IN THE SEPARATE ACCOUNT ARE BASED
ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT AND ARE, THEREFORE, VARIABLE
AND NOT GUARANTEED AS TO DOLLAR AMOUNT. SEE SECTION D OF YOUR CONTRACT FOR
DETAILS REGARDING THE SEPARATE ACCOUNT PROVISIONS.
The smallest annual rate of investment return which would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable Annuity
payments will not decrease is 4%.
LPC-617/NY 6/96 (R) Registered Trademark
of SAFECO Corporation
<PAGE> 2
INDEX
<TABLE>
<S> <C>
SECTION A: DEFINITIONS ................................................... 1
Annuitant ......................................................... 1
Annuity Date ...................................................... 1
Owner ............................................................. 1
SECTION B: GENERAL PROVISIONS ............................................ 2
Contract .......................................................... 2
Contract Amendments ............................................... 2
Communications .................................................... 2
Annual Report ..................................................... 2
Misstatement of Age or Sex ........................................ 2
Evidence of Survival .............................................. 2
Beneficiary Designation ........................................... 3
Change of Beneficiary ............................................. 3
Assignment ........................................................ 3
Termination of Contract ........................................... 3
SECTION C: PURCHASE ...................................................... 3
Place and Form of Payment ......................................... 3
Purchase Payments ................................................. 3
Change in Purchase Payments ....................................... 3
Allocation of Purchase Payments ................................... 3
Application of Purchase Payments to Eligible Investments .......... 3
SECTION D: SEPARATE ACCOUNT PROVISIONS ................................... 4
The Separate Account .............................................. 4
Non-Participation in Surplus ...................................... 4
Value of Accumulation Units ....................................... 4
Net Investment Factor ............................................. 4
SECTION E: ANNUITY OPTIONS AND DEATH BENEFITS ............................ 5
Selection and Change of Settlement Option ......................... 5
Payment of Benefits ............................................... 5
State Required Minimum Benefits ................................... 5
Frequency and Amount of Annuity Payments .......................... 5
Death of Annuitant ................................................ 5
Death of Owner Prior to Annuity Date .............................. 6
Death of Owner After Annuity Date ................................. 7
Annuity Options from the Separate Account ......................... 7
Automatic Option from the Separate Account ........................ 8
Annuity Unit ...................................................... 8
Variable Annuity Payment Calculation .............................. 8
Mortality and Expense Risk Premium Guarantee ...................... 8
SECTION F: WITHDRAWALS AND TRANSFERS ..................................... 8
Minimum Withdrawal ................................................ 8
Minimum Transfer .................................................. 8
Systematic Withdrawal ............................................. 8
Deferral of Withdrawal Payment .................................... 9
Investment Related Transfer Programs .............................. 9
SECTION G: CHARGES AND DEDUCTIONS ........................................ 10
Deduction for Contingent Deferred Sales Charge .................... 10
Deduction for Withdrawal Charge ................................... 10
Deduction for Transfer Charge ..................................... 10
Deduction for Mortality and Expense Risk Premium .................. 11
Taxes ............................................................. 11
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
SECTION H: ANNUITY PURCHASE RATE TABLE .................................. 11
Mortality Tables Used ............................................ 11
Variable Annuity Purchase Rate Table ............................. 11
SECTION I: FIXED ACCOUNT PROVISIONS ..................................... 12
Fixed Account Allocations ........................................ 12
Interest Crediting ............................................... 13
Guaranteed Interest Rate ......................................... 13
Annuity Options .................................................. 13
Mortality Tables Used ............................................ 14
Minimum Balance After Withdrawal ................................. 17
Minimum Transfer ................................................. 17
Transfers ........................................................ 17
Deferral of Withdrawal Payment ................................... 17
</TABLE>
- ii -
<PAGE> 4
SECTION A: DEFINITIONS
A1 Accumulation Unit: An accounting unit of measure used to calculate the
value of a Sub-Account prior to the Annuity Date.
A2 Annuitant: The natural person on whose life Annuity payments are payable in
accordance with this Contract. This Contract will not be issued if the
Annuitant is 76 years of age or older on the Contract Date.
A3 Annuity: Any series of payments starting on the Annuity Date, payable in
accordance with this Contract.
A4 Annuity Date: The date selected by the Owner for commencing Annuity
payments under this Contract. Separate dates may be selected by the Owner
for commencing variable Annuity payments and fixed Annuity payments. The
day of the month on which the payments will be made will be determined by
First SAFECO. The Annuity Date cannot be later than the date the Annuitant
attains age 85.
A5 Annuity Unit: An accounting unit of measure used to calculate Annuity
payments after the Annuity Date.
A6 Beneficiary: The person or persons entitled to receive benefits under this
Contract upon the death of the Owner.
A7 Co-Annuitant is the individual specified by the Owner to receive annuity
payments after the death of the Annuitant under the Joint and Survivor
Annuity Option as described in Section E8(c) and Section I5(c).
A8 Contract: This Individual Variable Annuity Contract by and between First
SAFECO and the Owner.
A9 Contract Anniversary: Any anniversary of the Contract Date.
A10 Contract Date: The earlier of the date on which the initial Net Purchase
Payment is allocated to the Separate Account or the initial Net Purchase
Payment is allocated to the Fixed Account, as shown on the Contract Data
Page.
A11 Contract Value: The sum of the Owner's interest in the Sub-Accounts of the
Separate Account and the Fixed Account. Fixed Account Contract Value refers
to that portion of the Contract Value held in the Fixed Account.
A12 Contract Year: The twelve-month period which commences on the Contract Date
and each succeeding twelve-month period thereafter.
A13 Eight-Year Contract Anniversary: Each eighth Contract Year.
A14 Eligible Investments: An investment entity shown on the Contract Data Page,
including the Fixed Account.
A15 First SAFECO: First SAFECO National Life Insurance Company of New York. A16
Net Purchase Payment: Purchase Payment less premium taxes.
A16 Net Purchase Payment: Purchase Payment less premium taxes.
A17 Net Surrender Value: The value of the Owner's interest after deduction of
applicable Contingent Deferred Sales Charge from the Contract Value.
A18 Owner: The person or persons named in the Application who has all rights
under this Contract. Joint Owners are allowed only if the joint Owners are
spouses. Each joint Owner shall have equal ownership rights and must
jointly exercise those rights. On the date the Application is signed, the
Owner must not be older than age 75 (if joint Owners, neither may be older
than 75).
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A19 Programs: Programs are features whereby an Owner may elect to have Purchase
Payments, Contract Value or appreciation under the Contract allocated,
transferred, withdrawn or otherwise designated pursuant to requirements and
procedures described in the then current prospectus or registration
statement for the Contract under the Securities Act of 1933, as amended.
A20 Purchase Payments: Payments made to purchase Accumulation Units or payments
allocated to the Fixed Account as provided in Section I1.
A21 Separate Account: The separate investment account of First SAFECO, as shown
on the Contract Data Page.
A22 Sub-Account: A segment of the Separate Account, as shown on the Contract
Data Page.
A23 Transfer: The redemption of units from a Sub-Account(s) and the purchase of
units of another Sub-Account(s), and the transfer of Contract Value to or
from the Fixed Account from or to the Sub-Account(s).
A24 Withdrawal: Withdrawal is any removal of funds from the Contract, including
Contract charges and deductions.
SECTION B: GENERAL PROVISIONS
B1 Contract: The entire contract between First SAFECO and the Owner consists
of this Contract, any Riders or Endorsements, and the Application, a copy
of which is attached to the Contract.
B2 Contract Amendments: The terms and conditions of this Contract may be
amended by written agreement between First SAFECO and the Owner by written
endorsement or amendment. All agreements made by First SAFECO will be
signed by the President or one of the Vice Presidents. No other person has
power on behalf of First SAFECO to amend or modify this Contract, extend
any due date, or waive any proof required by this Contract.
First SAFECO may unilaterally amend the provisions of this Contract as
required to conform to any state or Federal law which affects this
Contract. Such amendment will be subject to the approval of the
Insurance Department of the state where the Contract is delivered.
B3 Communications: All communications to First SAFECO shall be made to the
office of First SAFECO shown on the Contract Data Page.
B4 Essential Data: The Owner shall furnish to First SAFECO any information
necessary for the administration of this Contract.
B5 Annual Report: First SAFECO will provide the Owner with an annual calendar
year report showing the Contract Value and Net Surrender Value, and any
other information required by law. Reports will be sent to the last known
address of the Owner.
B6 Misstatement of Age or Sex: First SAFECO may require proof of the age of
the Annuitant before making any Life Annuity payment provided for by this
Contract. If the age or sex of the Annuitant has been misstated, the amount
payable will be the amount that the Contract Value would have provided at
the correct age or sex.
Once Annuity payments have begun, any underpayment will be made up in one
sum with the next Annuity payment, with interest of 6%. Any overpayment
will be deducted from future Annuity payments until the total is repaid,
with interest of 6%.
B7 Evidence of Survival: If any benefits under this Contract are contingent
upon the Annuitant being alive on a given date, First SAFECO may require
evidence satisfactory to First SAFECO that such condition continues to be
met.
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B8 Beneficiary Designation: The Owner may designate a Beneficiary in the
Application to receive any proceeds payable due to the death of the Owner.
Unless the Owner provides otherwise, the death benefit will be paid in
equal shares to all surviving primary Beneficiaries. If the Owner has not
provided otherwise and there are no surviving primary Beneficiaries, the
death benefit will be paid in equal shares to all surviving contingent
Beneficiaries. If the Owner has not provided otherwise and there are no
surviving primary or contingent Beneficiaries, the death benefit will be
paid to the estate of the Owner.
B9 Change of Beneficiary: If the Owner has made an irrevocable Beneficiary
designation, no change of Beneficiary is permitted. If the Owner has not
made an irrevocable Beneficiary designation, the Owner may file a signed
request with First SAFECO to change the Beneficiary designation. The change
of Beneficiary, upon recording by First SAFECO at its Home Office, will be
effective as of the date the Owner signs the Beneficiary designation change
request. First SAFECO shall not be liable for any payments made or other
action taken by First SAFECO before the change in Beneficiary was recorded
by First SAFECO at its Home Office. A recorded change of Beneficiary will
revoke any prior Beneficiary designations. First SAFECO will pay any death
proceeds to the most recently recorded Beneficiary.
B10 Contract Settlement: Unless otherwise designated in writing by First
SAFECO, all sums payable under this Contract are payable at First SAFECO's
Home Office. This contract must be returned to First SAFECO upon any
settlement.
B11 Assignment: To the extent permitted by law, this Contract and the benefits
or payments under this Contract are assignable or otherwise transferrable.
This Contract may be assigned for purposes of an Internal Revenue Code
Section 1035 exchange.
B12 Termination of Contract: All benefit provisions under this Contract
continue in force until the Contract Value is completely Withdrawn.
Discontinuance of Purchase Payments will not result in termination of the
Contract.
This Contract will terminate and cease to be of any further force or
effect at the close of the first day upon which First SAFECO has
completed all of the duties and obligations which have arisen under this
Contract.
SECTION C: PURCHASE PAYMENTS
C1 Place and Form of Payment: All payments to First SAFECO under this Contract
shall be payable at the office of First SAFECO as shown on the Contract
Data Page.
All amounts to be paid under this Contract, whether payable to First
SAFECO or by First SAFECO, shall be paid in lawful money of the United
States of America.
C2 Purchase Payments: The initial Purchase Payment is due on the Contract
Date. The minimum initial and subsequent Purchase Payments are shown on the
Contract Data Page. Purchase Payments may only be made within six months of
the Contract Date. First SAFECO reserves the right to reject any
Application, Purchase Payment that does not meet the minimum payment shown
on the Contract Data Page, any Applications by an Owner or Annuitant who is
ineligible for this Contract, and any incomplete Applications.
C3 Change in Purchase Payments: Subject to the minimum shown on the Contract
Data Page, the Owner may increase or decrease or change the frequency of
subsequent Purchase Payments.
C4 Allocation of Purchase Payments: The allocation of the initial Purchase
Payment is elected by the Owner on the Application. Unless the Owner elects
otherwise, subsequent Purchase Payments are allocated in the same manner as
the initial Purchase Payment. Allocation of the Purchase Payments is
subject to the terms and conditions imposed by First SAFECO.
C5 Application of Purchase Payments to Eligible Investments: Purchase Payments
applied to the Separate Account are allocated to a Sub-Account of the
Separate Account.
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SECTION D: SEPARATE ACCOUNT PROVISIONS
D1 The Separate Account: First SAFECO has established a Separate Account,
subject to the laws of the State of New York, for this and other similar
Contracts. A portion of First SAFECO's assets has been allocated to the
Separate Account for this and other similar Contracts. The assets of the
Separate Account are the property of First SAFECO and are not chargeable
with liabilities arising out of any other business First SAFECO may
conduct. The investments of the Separate Account will be valued at their
fair market value in accordance with the procedures approved by the Board
of Directors of First SAFECO and the Separate Account Committee.
The Separate Account is divided into Sub-Accounts with the assets of each
Sub-Account invested as set forth on the Contract Data Page.
The assets of the Sub-Accounts are allocated to the Eligible Investments
and the portfolios, if any, within Eligible Investments shown on the
Contract Data Page. First SAFECO may, from time to time, add Eligible
Investments or portfolios, or remove Eligible Investments or portfolios.
If the shares of any Eligible Investment or portfolio within an Eligible
Investment become unavailable for investment by the Separate Account, or
First SAFECO's Board of Directors deems further investment in these shares
inappropriate, First SAFECO may substitute shares of another Eligible
Investment or portfolio for shares already purchased under this Contract.
Any material change requiring a change to the plan of operation of the
Separate Account or to this Contract is subject to appropriate regulatory
approval.
D2 Non-Participation in Surplus: The Variable Annuity portion of this Contract
will not share in any distribution of profits, losses, or surplus of First
SAFECO.
D3 Valuation Dates and Periods: A Valuation Date is each day the New York
Stock Exchange is open for business. A Valuation Period is the period
commencing at the close of business on each Valuation Date and ending at
the close of business for the next succeeding Valuation Date.
D4 Value of Accumulation Units: Each Purchase Payment is allocated to a
Sub-Account and is converted into Accumulation Units. The number of
Accumulation Units in a Sub-Account credited to this Contract is determined
by dividing each Net Purchase Payment by the value of an Accumulation Unit
for that Sub-Account. Accumulation Units for each Sub-Account are valued
separately. The Accumulation Unit value for each Sub-Account was
arbitrarily set at $10 when the Sub-Account was established. The
Accumulation Unit value for any later Valuation Period is determined by
multiplying the Accumulation Unit value for the Sub-Account, as of the
immediately preceding Valuation Period, by the Net Investment Factor for
the current Valuation Period.
D5 Net Investment Factor: The Net Investment Factor for any Sub-Account for
any Valuation Period is determined by dividing (a) by (b) and subtracting
(c) from the result, where:
(a) is the net result of:
(i) The net asset value per share of the portfolio set out on
the Contract Data Page as the investment of the Sub-Account,
determined as of the current Valuation Period, plus
(ii) The per share amount of any dividend or capital-gain
distribution made by the portfolio if the "ex-dividend" date
occurs during the current Valuation Period, plus or minus
(iii) A per share credit or charge, which is determined by First
SAFECO, for changes in tax reserves resulting from investment
operations of the Sub-Account.
(b) is the net result of:
(i) The netasset value per share of the portfolio determined as of
the immediately preceding Valuation Period, plus or minus
(ii) The per share credit or charge for any changes in tax reserves
for the immediately preceding Valuation Period.
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<PAGE> 8
(c) is the percentage factor equal to the Mortality and Expense Risk
Premium. Such factor is equal on an annual basis to a percentage of
the daily net asset value of the Sub-Account, as shown on the Contract
Data Page.
The Net Investment Factor may be greater or less than one. Therefore, the
Accumulation Unit value may increase or decrease.
SECTION E: ANNUITY OPTIONS AND DEATH BENEFITS
E1 Selection and Change of Settlement Option: The Owner may select or change
the Settlement Option or Annuity Date by written notification to First
SAFECO at its Home Office. In order to be effective, the written
notification must be received by First SAFECO prior to any Annuity Date
previously selected.
E2 Payment of Benefits: Subject to the provisions of this Contract, First
SAFECO will, upon the written direction of the Owner, issue an Annuity or
make a cash distribution to any person who is entitled to such benefits.
First SAFECO shall not be obligated to issue an Annuity or to make a cash
distribution until it receives written direction from the Owner containing
the terms and conditions of the Annuity or cash distribution.
First SAFECO may rely on the written direction of the Owner and shall not
be liable, except where First SAFECO has acted in a negligent manner or has
failed to exercise reasonable or prudent care, for any failure to question
or challenge such direction regarding the issuance of an Annuity or payment
of a cash distribution.
E3 State Required Minimum Benefits: The death benefit, the surrender value,
and the Annuity Options under this Contract will not be less than the
minimum benefits required by any statute of the state in which this
Contract is delivered.
E4 Frequency and Amount of Annuity Payments: Except as described below,
Annuity payments will be paid monthly. If the net amount available to apply
under any Annuity Option is less than $2,000, First SAFECO shall have the
right to pay such amount in a lump-sum cash distribution.
(a) (i) If monthly Annuity payments described in Section E8(a), E8(b),
E8(c), I5(a), I5(b), or I5(c) would be or become less than $50,
First SAFECO shall have the right to change the frequency of
payments to such intervals as will result in payments of at
least $50.
(ii) If monthly Annuity payments described in Section E8(d) or I5(d)
would be or become less than $250, First SAFECO shall have the
right to change the frequency of payments to such intervals as
will result in payments of at least $250.
(b) If any Annuity payment reduces the Contract Value to an amount less
than $500 on the effective date of such payment, the Contract shall be
surrendered and shall be subject to any applicable Contingent Deferred
Sales Charge.
E5 Death of Annuitant:
(a) If the Annuitant dies before an Annuity Option has commenced, the Owner
must designate a new Annuitant. If no designation is made within 30
days of notification to First SAFECO of the death of the Annuitant, the
Owner will become the Annuitant.
(b) If the Contract is owned by a non-natural person, the death of the
Annuitant will be treated as the death of the Owner.
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E6 Death of Owner Prior to Annuity Date:
(a) The Minimum Guaranteed Death Benefit: The initial Minimum Guaranteed
Death Benefit shall be equal to the initial Net Purchase Payment.
Additional Net Purchase Payments are added to the Minimum Guaranteed
Death Benefit. The Minimum Guaranteed Death Benefit will be adjusted
after any Withdrawal by multiplying it by the ratio of the Contract
Value after the Withdrawal to the Contract Value before the Withdrawal.
The Minimum Guaranteed Death Benefit shall be redetermined on each
Eight Year Contract Anniversary by taking the greater of the Contract
Value on that Eight Year Contract Anniversary or the previous Minimum
Guaranteed Death Benefit. The Minimum Guaranteed Death Benefit shall
subsequently be increased for additional Net Purchase Payments and
adjusted after any Withdrawals in the same manner as the initial
Minimum Guaranteed Death Benefit is adjusted. After the Owner's death,
the Minimum Guaranteed Death Benefit will be reduced dollar for dollar
by any Withdrawals.
(b) Death Benefit Options: Upon the death of the Owner prior to the
Annuity Date, the Beneficiary may elect an Annuity Option or to
receive a single lump sum payment.
(c) Death Benefit (prior to age 72)
If the Owner dies prior to age 72 and before an Annuity Option has
commenced, and provided that the Beneficiary provides due proof of
death in a form satisfactory to First SAFECO and has elected a Death
Benefit Option within six (6) months of the date of death, the amount
of the Death Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit.
(d) Death Benefit (on or after age 72)
If the Owner dies on or after age 72 and before a Settlement Option has
commenced, and provided that the Beneficiary provides due proof of
death in a form satisfactory to First SAFECO and has elected a Death
Benefit Option within six (6) months of the date of death, the amount
of the Death Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit established on the last
Eight Year Contract Anniversary preceding the Owner's 72nd
birthday, adjusted for any Net Purchase Payments received or
Withdrawals taken since that Eight Year Contract Anniversary.
(e) Death Benefit (Death notification or Death Benefit Option election
more than Six Months after Date of Death)
If notification of death or election of a Death Benefit Option occurs
after the six month anniversary of the date of death, the death benefit
will be the Contract Value on the date of election of a Death Benefit
Option determined as follows: the Contract Value calculated as of the
six month anniversary of the date of death will be compared with the
Minimum Guaranteed Death Benefit calculated immediately prior to the
six month anniversary of the date of death to determine if additional
funds are required to be added by First SAFECO to equal such Minimum
Guaranteed Death Benefit. First SAFECO will supplement any deficiency
in Contract Value, such that Contract Value will equal the Minimum
Guaranteed Death Benefit. Thereafter, until the date of election of a
Death Benefit Option, the Contract Value attributable to First SAFECO's
contribution will be guaranteed and interest paid thereon at prevailing
money market rates; the portion of Contract Value existing on the six
month anniversary of the date of death will be subject to adjustment
reflecting the investment experience for the period from the six-month
anniversary to the date of election of a Death Benefit Option. In
addition, the amount of the death benefit will be reduced dollar for
dollar by any Withdrawal after the Owner's death.
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<PAGE> 10
(f) Election Period: The election of an Annuity Option or other form of payment
must be made by the Beneficiary during the 60-day period commencing with
the date of receipt by First SAFECO of notification of the Owner's death.
If no election is made within the 60-day period, then a single sum payment
will be made to the Beneficiary.
(g) The Death Benefit must be distributed:
(i) By the fifth anniversary of the Owner's death; or
(ii) Over a designated Beneficiary's life or over a period not extending
beyond the Beneficiary's life expectancy, in equal or substantially
equal payments, with payments beginning within one year of the death
of the Owner.
(h) If the Beneficiary is the spouse of the Owner, the Contract may be
continued by the spouse, and the spouse will become the Owner.
(i) Joint Owners:
(i) The Minimum Guaranteed Death Benefit will only be payable on the
death of the older joint Owner. Upon the death of the older joint
Owner, if the Contract is continued, no Minimum Guaranteed Death
Benefit applies for the remaining duration of the Contract.
(ii) Upon the death of a joint Owner, the surviving Owner shall be the
designated Beneficiary. Any other named Beneficiary shall be a
contingent Beneficiary.
(iii) Upon the death of a joint Owner, the surviving Owner may elect an
Annuity Option or a lump sum payment, or may elect to continue the
Contract.
E7 Death of Owner After Annuity Date: If the Owner dies on or after an Annuity
Option has commenced and if applicable, any remaining payments must
continue at least as rapidly as under the method of distribution in effect
prior to the Owner's death.
E8 Annuity Options from the Separate Account: An Annuity may be issued in any
of the forms described below, or such other forms which First SAFECO agrees
to issue under this Contract. The Annuitant will become the Owner on
commencement of an Annuity Option.
(a) Variable Life Annuity: Monthly payments are made to the Annuitant
commencing on the Annuity Date, if he or she is then living, and the
last payment is that payment due immediately on or before the
Annuitant's death. No death benefit is payable under this option.
(b) Variable Life Annuity with 120 or 240 Monthly Payments Guaranteed:
Monthly payments are made to the Annuitant commencing on the Annuity
Date. If at the death of the Annuitant the guaranteed number of
payments has not been received by the Annuitant, payments will be made
to the Beneficiary for the remainder of the guarantee period. The
Beneficiary may elect to have the present value of the guaranteed
Annuity remaining as of the date the notice of death is received by
First SAFECO commuted at the assumed investment rate of 4% and paid in
a single payment.
(c) Variable Joint and Survivor Life Annuity: Monthly payments are made to
the Annuitant commencing on the Annuity Date. After the death of the
Annuitant, payments will be continued to the Co-Annuitant for as long
as he or she lives. The written request for this option must specify
the percentage value of monthly payments to continue to the
Co-Annuitant.
(d) Systematic Payment Annuity: A specified number of whole or partial
Accumulation Units are liquidated for payment to the Annuitant on a
monthly, quarterly, or annual basis. The number to be liquidated during
a given year shall be a sufficient number so as to be expected to
deplete the Contract over the life expectancy of the Annuitant or the
joint life expectancy of the Annuitant and Beneficiary, with at least
50% of the payments expected to be made during the Annuitant's life.
This Option will remain in effect unless the Annuitant subsequently
elects to receive payments under Section E8(a), (b), or (c), or elects
to surrender the Contract after the eighth Contract Year.
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E9 Automatic Option from the Separate Account: If, as of the Annuity Date, an
Annuity Option has not been selected, First SAFECO will make payments under
the Variable Life Annuity with 120 Monthly Payments option of Section
E8(b).
E10 Annuity Unit: The value of an Annuity Unit was arbitrarily set at $10 when
each Sub-Account was established. The value of the Annuity Unit for any
subsequent Valuation Period is determined by multiplying the value of the
Annuity Unit for the immediately preceding Valuation Period by the Net
Investment Factor for the Valuation Period for which the value is being
calculated (as described in Section D5), and dividing the result by the
Assumed Investment Factor for such Valuation Period (as described in
Section E11).
E11 Assumed Investment Factor: The Assumed Investment Factor for a one-day
Valuation Period is 1.00010746. This factor neutralizes the assumed
investment return of 4% in the Variable Annuity Purchase Rate Table in
Section H2.
E12 Variable Annuity Payment Calculation: A Variable Annuity is an Annuity with
payments which are not predetermined as to dollar amount. Payments will
vary in accordance with the net investment results of the Separate Account.
The dollar amount of the first monthly Variable Annuity payment under
Section E8(a), E8(b), or E8(c) will be determined by applying the Contract
Value (after deduction for premium taxes, if applicable), as of the 15th
day of the preceding month, to the Variable Annuity Purchase Rate Table in
Section H2. The number of Annuity Units to be credited to the Annuitant
will be determined by dividing the first monthly payment by the Annuity
Unit value calculated as of the 15th day of the preceding month. This
number of Annuity Units remains fixed during the Annuity payment period.
The dollar amount of each Variable Annuity payment after the first shall be
determined by multiplying the number of Annuity Units credited to the
Annuitant by the Annuity Unit value as of the 15th day of the preceding
month.
E13 Mortality and Expense Risk Premium Guarantee: First SAFECO guarantees that
the dollar amount of each Variable Annuity payment made after the first
payment will not be affected by variations in mortality experience or
expenses.
SECTION F: WITHDRAWALS AND TRANSFERS
F1 Minimum Withdrawal: The minimum Withdrawal is as shown on the Contract Data
Page, or the Contract Value, if less. Except as otherwise provided in this
Contract, the Owner may, at or prior to the Annuity Date, withdraw all or
part of the Contract Value.
F2 Minimum Balance After Withdrawal: If any Withdrawal reduces the remaining
balance in a Sub-Account to less than $500, the remaining balance will also
be Withdrawn.
F3 Minimum Transfer: The minimum Transfer from a Sub-Account must be at least
$500, except for Transfers pursuant to certain Programs. If the Sub-Account
from which the Transfer is being made is less than $500 the entire
Sub-Account will be transferred, including a Transfer pursuant to certain
Programs.
The minimum Transfer into a Sub-Account must be at least $50.
F4 Withdrawal of Accumulation Units: Upon a Withdrawal from a Sub-Account, the
number of Accumulation Units remaining under this Contract will be reduced
by the number of such units equal to the total of the Withdrawal, including
applicable charges and taxes, including income taxes withheld, if
applicable.
F5 Systematic Withdrawal: The Owner may elect periodic withdrawals to receive
cash distributions from this Contract in a predetermined amount on a
predetermined frequency. Payments under this election will be made directly
to the Owner by First SAFECO, and will not be made more often than monthly.
A specified number of whole or partial Accumulation Units are liquidated
pro-rata from the Sub-Accounts for payment to the Owner monthly,
quarterly, or annually. Enough units will be liquidated each year so as to
expect to deplete the Contract over the life expectancy of the Owner or the
joint life expectancy of the Annuitant and Beneficiary. The systematic
withdrawals will remain in effect until the Annuity Date unless the Owner
elects, prior to the Annuity Date, an Annuity Option under Section E8
and/or I5, or to surrender the Contract after the eighth Contract Year.
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F6 Transfer of Accumulation Units: Upon a Transfer from a Sub-Account, the
number of Accumulation Units remaining under that Sub-Account will be
reduced by the number of such units equal to the total of the requested
Transfer, including applicable charges, and taxes.
F7 Minimum Balance After Transfer: If any Transfer, including a Transfer
pursuant to certain Programs, reduces the remaining balance in a
Sub-Account to less than $500, the remaining balance will also be
transferred.
F8 Deferral of Withdrawal Payment:
(a) Except as provided in Section F9(b), payments by First SAFECO from the
Contract will be made within seven days after receiving a Withdrawal
request.
(b) First SAFECO reserves the right to suspend or postpone payments for a
Withdrawal or Transfer for any period when:
(i) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(ii) Trading on the New York Stock Exchange is restricted, as
determined by the rules and regulations of the Securities and
Exchange Commission;
(iii) An emergency exists as a result of which disposal of securities
held in the Separate Account is not reasonably practicable or it
is not reasonably practicable to determine the value of the
Separate Account's net assets, as determined by the rules and
regulations of the Securities and Exchange Commission; or
(iv) During any other period when the Securities and Exchange
Commission, by order, so permits for the protection of Owners.
F9 Investment Related Transfer Programs: Prior to the Annuity Date, First
SAFECO offers several Investment Related Transfer Programs. First SAFECO
retains the right to discontinue any Investment Related Transfer Program.
Transfers under an Investment Related Transfer Program between and among
Sub-Accounts and the Fixed Account are not counted as one of the twelve
free transfers. However, if an Owner executes an unrelated voluntary
transfer from the Sub-Account participating in a Program, other than the
Sub-Account Rebalancing Program, the Program will be terminated for the
remainder of the Contract Year. In addition, if a Program is terminated
before six Program transfers have occurred, the Program transfers that have
taken place are counted as part of the twelve free transfers. If the
balance in a Sub-Account would be less than $500 as a result of a transfer
pursuant to the Dollar Cost Averaging or Automatic Transfer Programs, then
the entire balance in that Sub-Account will also be transferred.
Dollar Cost Averaging Program: The Owner may elect a pre-established
automatic monthly or quarterly transfer from any Sub-Account or the Fixed
Account to any one or more of the Sub-Accounts or the Fixed Account, if
the amount transferred will be at least $50. However, for the duration of
this Program, transfers from the Fixed Account are limited to an amount
calculated by First SAFECO at the time of initial transfer, not to exceed
1.33% per month or 4% per quarter. To qualify for this Program, it must
continue for at least 6 months.
Automatic Transfer Program: The Automatic Transfer Program is identical to
the Dollar Cost Averaging Program except that the limits on transfers from
the Fixed Account will be recalculated annually and will not exceed 1.5%
per month or 4.5% per quarter. This Program will continue until the Owner
requests discontinuance, the transfer amount falls below $50, or there are
no funds left in the Sub-Account to Transfer.
Appreciation or Interest Sweep Program: This Program is available after the
total Contract Value exceeds $10,000; it applies only to transfers from the
First SAFECO Resource Money Market Sub-Account or the Fixed Account. If the
appreciation on the Money Market Sub-Account or the interest credited to
the Fixed Account exceeds 10%, then appreciation or earnings equal to 10%
will be transferred to the Sub-Account(s) specified by the Owner. Under
this Program, however, amounts may not be transferred between the Fixed
Account and the Money Market Sub-Account. This Program is not available in
any Contract Year in which transfers or withdrawals have already been made
from the Fixed Account.
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Sub-Account Rebalancing Program: This Program is available after the total
Contract Value exceeds $10,000. If elected, First SAFECO will rebalance the
Contract Value of each Sub-Account quarterly, semi-annually or annually in
accordance with the Owner's Purchase Payment allocation percentages in
effect when the Program starts. At any time, the Owner may elect in writing
to change the allocation percentages. This Program may also be stopped at
any time, but may not be restarted until the next Contract Year.
The Dollar Cost Averaging, Automatic Transfer and the Appreciation or
Interest Sweep Programs may not be combined with each other or any other
Program. The Sub-Account Rebalancing Program may be combined with any one
of the other Programs, but it is not available with respect to the Fixed
Account.
SECTION G: CHARGES AND DEDUCTIONS
G1 Deduction for Contingent Deferred Sales Charge:
(a) A Contingent Deferred Sales Charge will be assessed against any
Withdrawal or Transfer, based upon the following schedule:
<TABLE>
<CAPTION>
Contract Year Charge
<S> <C>
1 8% of amount Withdrawn
2 7% of amount Withdrawn
3 6% of amount Withdrawn
4 5% of amount Withdrawn
5 4% of amount Withdrawn
6 3% of amount Withdrawn
7 2% of amount Withdrawn
8 1% of amount Withdrawn
After 8 0% of amount Withdrawn
</TABLE>
Total Contingent Deferred Sales Charges will not exceed 8.5% of the
Purchase Payments made under this Contract.
(b) A Contingent Deferred Sales Charge will not be deducted:
(i) On Transfers between Sub-Accounts;
(ii) On Transfers from a Sub-Account to the Fixed Account;
(iii) On Transfers from the Fixed Account under Section I11;
(iv) On Withdrawals made under an Annuity Option;
(v) On Systematic Withdrawals over the life expectancy of the Owner
or the joint life expectancy of the Owner and Beneficiary;
(vi) On Withdrawals made pursuant to the death of the Owner; or
(vii) On the sum of Withdrawals taken in any Contract Year which does
not exceed 10% of the Contract Value. The determination of
whether more than 10% of the Contract Value has been Withdrawn
is made at the time of Withdrawal. If more than one Withdrawal is
made in a Contract Year, the previous Withdrawals in the Contract
Year are added to the current Contract Value to determine whether
more than 10% of the Contract Value has been Withdrawn in a
Contract Year.
G2 Deduction for Withdrawal Charge: The first Withdrawal each Contract Year
will have no Withdrawal Charge assessed. All further Withdrawals each
Contract Year will be subject to a Withdrawal Charge as shown on the
Contract Data Page, which will be deducted from the amount being Withdrawn.
Settlement Options and Systematic Withdrawal will have no Withdrawal Charge
assessed.
G3 Deduction for Transfer Charge: First SAFECO reserves the right to assess a
Transfer Charge for each Transfer in excess of twelve Transfers per
calendar year, as shown on the Contract Data Page. Transfers pursuant to
any Program offered by First SAFECO may or may not be subject to the
Transfer Charge, subject to First SAFECO's administrative procedures under
the Programs.
- 10 -
<PAGE> 14
G4 Deduction for Mortality and Expense Risk Premium: First SAFECO deducts an
amount computed on a daily basis as copmensation for assuming the mortality
and expense risk. The Mortality and Expense Risk Premium shall be a
percentage of the average daily net asset value of the Separate Account on
an annual basis, as shown on the Contract Data Page.
G5 Taxes: Any premium taxes or other taxes levied by any governmental entity
which First SAFECO, in its sole discretion, determines have resulted from
the establishment or maintenance of this Contract or any portion of this
Contract, the receipt by First SAFECO of Purchase Payments, or the
commencement of Annuity payments, will be deducted from the Contract. The
Sub-Accountfrom which the taxes are deducted is determined by the
hierarchical order of the Sub-Accounts as shown on the Contract Data Page.
SECTION H: ANNUITY PURCHASE RATE TABLE
H1 Mortality Tables Used: The rates in the Variable Annuity Purchase Rate
Table are based upon the 1983a Mortality Table Projected 20 Years with
Projection Scale G, separate male and female tables. An age setback of one
year will be used if the Annuity payment begins in the year 2000-2009, two
years if the Annuity payment begins in the year 2010-2019, and an
additional one-year setback for each additional ten years. The effective
interest rate assumed in the Variable Annuity Purchase Rate Table is 4.00%.
H2 Variable Annuity Purchase Rate Table:
TABLE A - MALE
Consideration Required to Purchase $1 of Monthly Annuity*
<TABLE>
<CAPTION>
Qualified Joint and
Survivor Annuity.
Straight Life Annuity Survivor Annuitant
Age of Life With 10 Years is of Same age.
Annuitant Annuity Certain 100% 50%
- - --------- -------- ------------- ---- ---
<S> <C> <C> <C> <C>
55 $199.57 $201.96 $232.98 $216.28
56 196.14 198.72 230.18 213.16
57 192.62 195.42 227.28 209.95
58 189.05 192.07 224.29 206.67
59 185.38 188.65 221.19 203.29
60 181.61 185.17 217.99 199.80
61 177.74 181.63 214.69 196.21
62 173.78 178.05 211.27 192.53
63 169.74 174.42 207.75 188.74
64 165.61 170.78 204.12 184.86
65 161.41 167.13 200.38 180.90
66 157.15 163.48 196.54 176.85
67 152.84 159.85 192.59 172.71
68 148.49 156.24 188.53 168.51
69 144.09 152.66 184.36 164.23
70 139.66 149.14 180.09 159.88
71 135.21 145.67 175.71 155.46
72 130.74 142.28 171.24 150.99
73 126.39 139.01 166.70 146.54
74 122.05 135.83 162.07 142.06
75 117.72 132.75 157.36 137.54
</TABLE>
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
* NOTE: The Consideration shown refers to the net value used to purchase an
annuity, after premium taxes or other applicable charges are deducted.
- 11 -
<PAGE> 15
TABLE B - FEMALE
Consideration Required to Purchase $1 of Monthly Annuity*
<TABLE>
<CAPTION>
Qualified Joint and
Survivor Annuity.
Straight Life Annuity Survivor Annuitant
Age of Life With 10 Years is of Same age.
Annuitant Annuity Certain 100% 50%
- - --------- -------- ------------- ---- ---
<S> <C> <C> <C> <C>
55 $216.52 $217.89 $232.98 $224.75
56 213.34 214.64 230.18 221.76
57 210.07 211.50 227.28 218.68
58 206.72 208.29 224.29 215.51
59 203.28 205.01 221.19 212.24
60 199.74 201.64 217.99 208.87
61 196.10 198.20 214.69 205.39
62 192.37 194.68 211.27 201.82
63 188.54 191.08 207.75 198.15
64 184.62 187.42 204.12 194.37
65 180.62 183.69 200.38 190.50
66 176.52 179.90 196.54 186.53
67 172.33 176.05 192.59 182.46
68 168.05 172.16 188.53 178.29
69 163.67 168.23 184.36 174.01
70 159.19 164.27 180.09 169.64
71 154.61 160.29 175.71 165.16
72 149.94 156.32 171.24 160.59
73 145.20 152.36 166.70 155.95
74 140.38 148.44 162.07 151.22
75 135.51 144.58 157.36 146.48
</TABLE>
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
* NOTE: The Consideration shown refers to the net value used to purchase an
annuity, after premium taxes or other applicable charges are deducted.
SECTION I: FIXED ACCOUNT PROVISIONS
I1 Fixed Account Allocations: The Owner may make payments into the Fixed
Account, subject to acceptance and approval by First SAFECO. The Fixed
Account consists of the total Fixed Account Allocations received by First
SAFECO and not previously withdrawn, plus interest on each such Fixed
Account Allocation, less any applicable charges and deductions. Fixed
Account Allocations will become part of the general account of First SAFECO
to be so used and invested and will not be segregated from First SAFECO's
other assets.
- 12 -
<PAGE> 16
I2 Interest Crediting:
(a) After receipt of each Fixed Account Allocation, and in accordance with
paragraph (b) below, First SAFECO will credit interest to the Fixed
Account Allocation at a rate determined according to First SAFECO's
investment year method of assigning interest credits. Under this
method the interest credits will be based on the original period of
receipt of such funds.
(b) Each Fixed Account Allocation will be credited with the Guaranteed
Interest Rate determined for such Fixed Account Allocation commencing
on the date the Fixed Account Allocation is received by First SAFECO.
(c) For purposes of crediting interest, the last-in, first-out accounting
method will apply to Withdrawals.
I3 Establishment of Interest Rates: Guaranteed Interest Rates for each Fixed
Account Allocation will be determined by First SAFECO as soon as
practicable prior to each Initial or Subsequent Interest Guarantee Period.
I4 Guaranteed Interest Rate:
(a) First SAFECO's Guaranteed Interest Rate on any Fixed Account
Allocation will be effective for the Initial Interest Guarantee Period
applicable to such Fixed Account Allocation. The Initial Interest
Guarantee Period shall be no less than the twelve (12) month period
commencing on the date a Fixed Account Allocation is received by First
SAFECO.
(b) Upon the expiration of the Initial Interest Guarantee Period
applicable to any Fixed Account Allocation, the Guaranteed Interest
Rate applicable to such a Fixed Account Allocation plus credited
interest will be that rate determined by First SAFECO to be effective
for each successive Subsequent Interest Guarantee Period and may or
may not be the same as any interest rate applicable to new Fixed
Account Allocations. The Subsequent Interest Guarantee Period shall be
the period commencing on the expiration of the Initial Guarantee
Period and shall be no less than twelve (12) months. Each successive
Subsequent Interest Guarantee Period shall be the period commencing on
the expiration of the prior Subsequent Interest Guarantee Period and
shall be no less than twelve (12) months.
(c) First SAFECO's Guaranteed Interest Rate on any subsequent Fixed
Account Allocation will be that rate in effect at the time of such
Fixed Account Allocation, and may or may not be the same as any
interest rate previously applicable to Fixed Account Allocations or
any interest rate for Subsequent Interest Rate Guarantee Periods.
(d) The Guaranteed Interest Rate credited to monies allocated to the Fixed
Account will never be less than an annual effective interest rate of
3% for any Contract Year.
I5 Annuity Options: On the date upon which First SAFECO is to issue an
Annuity, First SAFECO shall charge the premium for such Annuity against the
Fixed Account. The entire present value of the Fixed Account is available
to pay the Annuity and any premium taxes that may be required by state law;
the Annuity premium is calculated in accordance with the Fixed Annuity
Purchase Rate Table in Section I8, or current annuity rates if more
favorable. An Annuity may be issued only in one of the forms described
below, or such other forms which First SAFECO agrees to issue.
(a) Fixed Life Annuity: Monthly payments are made to the Annuitant
commencing on the Annuity Date, if he or she is then living, and the
last payment is that payment due immediately on or before his or her
death. No death benefit is payable under this option.
(b) Fixed Life Annuity with Guaranteed Period: Monthly payments are made
to the Annuitant commencing on the Annuity Date, if he or she is then
living. If at the death of the Annuitant the guaranteed number of
payments has not been received by the Annuitant, then payments will be
made to the Beneficiary for the remainder of the guaranteed period.
- 13 -
<PAGE> 17
(c) Fixed Joint and Survivor Life Annuity: Monthly payments are made to
the Annuitant commencing on the Annuity Date. After the death of the
Annuitant, payments will be continued to the Co-Annuitant for as long
as he or she lives. The written request for this option must specify
the percentage value of monthly payments to continue to the
Co-Annuitant.
(d) Systematic Payment Annuity: A specified amount is Withdrawn for
payment to the Annuitant on a monthly, quarterly, or annual basis. The
amount Withdrawn shall be the amount calculated to deplete the Fixed
Account over the life expectancy of the Annuitant or the joint life
expectancy of the Annuitant and Beneficiary, with at least 50% of the
payments expected to be made during the Annuitant's life. The balance
remaining in the Fixed Account after any such payment will continue to
earn interest in the same manner as prior to the Withdrawal. This
Option will remain in effect unless the Annuitant subsequently elects
to receive payments under Section I5(a), (b), and (c) or surrender the
Contract after the eighth Contract Year.
I6 Automatic Option: If, as of the Annuity Date, an Annuity Option has not
been selected, First SAFECO will make payments under the Fixed Life Annuity
with Guaranteed Period option of Section I5(b) with 120 monthly payments
guaranteed.
I7 Commencement of Annuity Payments: Subject to the limitations of Sections
A4, E8, and I5, an Owner may elect:
(a) to have variable Annuity payments commence on the Annuity Date,
pursuant to one of the Settlement Options described in Section E8,
and:
(i) continue to have Net Purchase Payments credited to the Fixed
Account; and
(ii) choose a "second Annuity Date" for the commencement of fixed
Annuity payments; or
(b) to have fixed Annuity payments commence on the Annuity Date, pursuant
to one of the Annuity Options described in Section I5, and:
(i) continue to have Net Purchase Payments credited to a
Sub-Account(s); and
(ii) choose a "second Annuity Date" for the commencement of variable
Annuity payments.
First SAFECO must receive any such election and the selected "second
Annuity Date" prior to any Annuity Date. If no such election is made, First
SAFECO will commence both variable and fixed Annuity payments on the
Annuity Date pursuant to the applicable Annuity Options. Any Annuity Date
selected, including the "second Annuity Date," cannot be later than the
date the Annuitant attains age 85.
I8 Mortality Tables Used: The rates in the Fixed Annuity Purchase Rate Table
are based upon the 1983a Mortality Table Projected 20 Years with Projection
Scale G, separate male and female tables. The effective interest rate
assumed in the Fixed Annuity Purchase Rate Table is 3%.
- 14 -
<PAGE> 18
Fixed Annuity Purchase Rate Table
TABLE A - MALE
Consideration Required to Purchase $1 of Monthly Annuity*
<TABLE>
<CAPTION>
Qualified Joint and
Survivor Annuity.
Straight Life Annuity Survivor Annuitant
Age of Life With 10 Years is of Same age.
Annuitant Annuity Certain 100% 50%
- - --------- -------- ------------- ---- ---
<S> <C> <C> <C> <C>
55 $226.04 $228.59 $259.78 $242.91
56 221.58 224.34 255.67 238.63
57 217.03 220.02 251.46 234.25
58 212.45 215.68 247.17 229.81
59 207.78 211.27 242.77 225.27
60 203.02 206.82 238.27 220.64
61 198.17 202.32 233.67 215.92
62 193.24 197.79 228.96 211.10
63 188.23 193.24 224.16 206.20
64 183.17 188.70 219.27 201.22
65 178.05 184.16 214.29 196.17
66 172.89 179.65 209.22 191.06
67 167.70 175.19 204.08 185.89
68 162.49 170.77 198.87 180.68
69 157.26 166.42 193.60 175.43
70 152.03 162.15 188.27 170.15
71 146.80 157.97 182.90 164.85
72 141.58 153.89 177.48 159.53
73 136.52 149.98 172.10 154.31
74 131.49 146.20 166.69 149.09
75 126.51 142.55 161.28 143.89
76 121.57 139.05 155.86 138.71
77 116.69 135.71 150.45 133.57
78 111.89 132.53 145.05 128.47
79 107.16 129.53 139.69 123.43
80 102.53 126.70 134.37 118.45
81 98.00 124.05 129.11 113.56
82 93.58 121.57 123.92 108.75
83 89.28 119.26 118.80 104.04
84 85.12 117.14 113.77 99.44
</TABLE>
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
* NOTE: The Consideration shown refers to the net value used to purchase an
annuity, after premium taxes or other applicable charges are deducted. By way of
example, it would cost $178,050 for a male Annuitant age 65 to receive a
Straight Life Annuity which provides a monthly income of $1,000.
- 15 -
<PAGE> 19
TABLE B - FEMALE
Consideration Required to Purchase $1 of Monthly Annuity*
<TABLE>
<CAPTION>
Qualified Joint and
Survivor Annuity.
Straight Life Annuity Survivor Annuitant
Age of Life With 10 Years is of Same age.
Annuitant Annuity Certain 100% 50%
- - --------- -------- ------------- ---- ---
<S> <C> <C> <C> <C>
55 $247.90 $249.16 $275.98 $261.94
56 243.63 245.01 272.17 257.90
57 239.26 240.79 268.26 253.76
58 234.82 236.50 264.26 249.54
59 230.29 232.13 260.15 245.22
60 225.66 227.70 255.94 240.80
61 220.95 223.19 251.61 236.28
62 216.15 218.61 247.18 231.67
63 211.26 213.97 242.65 226.95
64 206.29 209.28 238.00 222.15
65 201.25 204.54 233.25 217.25
66 196.13 199.75 228.39 212.26
67 190.94 194.92 223.42 207.18
68 185.67 190.06 218.34 202.00
69 180.31 185.18 213.15 196.73
70 174.87 180.31 207.85 191.36
71 169.36 175.44 202.45 185.90
72 163.78 170.60 196.94 180.36
73 158.15 165.81 191.33 174.74
74 152.47 161.08 185.64 169.05
75 146.77 156.45 179.86 163.31
76 141.05 151.93 174.02 157.53
77 135.32 147.55 168.11 151.72
78 129.74 143.35 162.22 145.98
79 124.19 139.32 156.30 140.25
80 118.69 135.48 150.36 134.52
81 113.25 131.85 144.42 128.83
82 107.88 128.42 138.49 123.18
83 102.61 125.23 132.58 117.59
84 97.44 122.29 126.72 112.08
</TABLE>
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
* NOTE: The Consideration shown refers to the net value used to purchase an
annuity, after premium taxes or other applicable charges are deducted. By way of
example, it would cost $201,250 for a female Annuitant age 65 to receive a
Straight Life Annuity which provides a monthly income of $1,000.
- 16 -
<PAGE> 20
I9 Minimum Balance After Withdrawal: If any Withdrawal reduces the remaining
balance in the Fixed Account to less than $500, the remaining balance will
also be Withdrawn.
I10 Minimum Transfer: All Transfers from the Fixed Account, other than pursuant
to a Program, are subject to a $500 minimum.
The minimum Transfer into the Fixed Account must be at least $50.
I11 Transfers: The Owner may elect to participate in only one of the Programs
relating to transfers from the Fixed Account in any Contract Year or elect
to transfer up to a total of 10% of the value of the Fixed Account Contract
Value at the time of the Transfer, in a Contract Year. First SAFECO may
waive this limitation upon written notice to the Owner.
I12 Deferral of Withdrawal Payment: First SAFECO retains the right to defer the
payment of Withdrawals from the Fixed Account for a period of six months
after receiving a Withdrawal request. If First SAFECO defers payment of
Withdrawals under this Section , First SAFECO will pay interest on the
deferred payments at the rate specified by state law at the time of the
Withdrawal request.
- 17 -
<PAGE> 1
Exhibit 4(ii)
ENDORSEMENT
Tax Sheltered Annuity Endorsement
This Endorsement forms a part of the Contract to which it is attached. This
Endorsement applies to a Contract issued under Section 403(b) of the Internal
Revenue Code. In the case of a conflict with any provision in the Contract, the
terms of this Endorsement will control. This Endorsement is effective upon
issuance to the Owner.
Section A18, Owner, is amended to read as follows:
Owner: The person named in the Application who has all rights under this
Contract. The Annuitant shall be the Owner of this Contract.
Section B6, Misstatement of Age or Sex, is amended to read as follows:
Misstatement of Age: First SAFECO may require proof of the age of the
Annuitant before making any Life Annuity payment provided for by this
Contract. If the age of the Annuitant has been misstated, the amount
payable will be the amount that the Contract Value would have provided at
the correct age.
Once Annuity payments have begun, any underpayment will be made up in one
sum with the next Annuity payment, with interest of 6%. Any overpayment
will be deducted from future Annuity payments until the total is repaid,
with interest of 6%.
Section B11, Assignment, is amended to read:
Non-Assignment: To the extent permitted by law, this Contract and the
benefits or payments under this Contract are not assignable or otherwise
transferable.
Section B13, Exclusive Benefit, is added to the Contract:
Exclusive Benefit: This Contract is established for the exclusive benefit
of the Annuitant and Beneficiaries.
Section B14, Nonforfeitable, is added to the Contract:
Nonforfeitable: The interest of the Annuitant in this Contract is
nonforfeitable.
Section B15, Nontransferable, is added to the Contract:
Nontransferable: This Contract is nontransferable by the Annuitant, except
to the issuer of this Contract.
Section C6, Contribution Limit, is added to the Contract:
Contribution Limit: If contributions to this Contract are made under a
salary reduction agreement, the maximum contribution when combined with all
other plans, contracts, or arrangements may not exceed the lesser of the
limits provided for in Section 403(b)(2), 402(g) and 415(c) of the Internal
Revenue Code.
Section C7, Plan, is added to the Contract:
Plan: The terms of this Contract are subject to the provisions of any plan
under which this Contract is issued.
Section E5, Death of Annuitant, is deleted.
Section E5, Minimum Distribution Rules, is added to the Contract:
Minimum Distribution Rules: All Settlement Options and Systematic
Withdrawal shall distribute the Contract Value pursuant to the Minimum
Distribution Rules in Section 401(a)(9) of the Internal Revenue Code.
-- 1 --
LPC-613/NY 11/95
<PAGE> 2
(a) Minimum Distribution Rules:
(i) Required Beginning Date: Minimum Distributions must begin by the
Annuitant's Required Beginning Date, defined as April 1 following
the year the Annuitant reaches age 70 1/2, with the following
exceptions:
(I) For an Annuitant who was born prior to July 1, 1917, the
Required Beginning Date is April 1 following the calendar
year in which the Annuitant retires.
(II) For an Annuitant who is a participant in a governmental or
church plan, the Required Beginning Date is April 1
following the later of the calendar year in which the
Annuitant reaches age 70 1/2 or retires.
If the Annuitant has reached the Required Beginning Date as of
the Contract Date, distributions must begin no later than the
close of the taxable year following the taxable year during which
the Contract is issued.
(ii) Minimum Distribution Requirements: The Minimum Distributions must
be in equal or substantially equal amounts, over:
(I) The life of the Annuitant, or the lives of the Annuitant and
the designated Beneficiary; or
(II) A period not extending beyond the life expectancy of the
Annuitant, or the joint and last survivor expectancy of the
Annuitant and the designated Beneficiary.
(b) Life Expectancy: The Annuitant and a designated Beneficiary who is the
spouse of a deceased Annuitant may elect whether or not to recalculate
life expectancy. Life expectancy may be recalculated no more
frequently than annually. This election is irrevocable and shall apply
to all subsequent years. It must be made by written notice to First
SAFECO at its Home Office no later than the Required Beginning Date.
If an election is not made, life expectancy for the Annuitant and a
designated Beneficiary who is a spouse will be recalculated. Under the
non-recalculation method benefits are provided for a specific number
of years and may terminate prior to the Annuitant's or Beneficiary's
death.
The life expectancy of a non-spouse Beneficiary may not be
recalculated. Life expectancy will be calculated using the attained
age of such Beneficiary during the calendar year in which
distributions are required to begin, and payments for subsequent years
shall be calculated based on such life expectancy reduced by one for
each calendar year which has elapsed since the calendar year life
expectancy was first calculated.
Life expectancy and joint and last survivor expectancy are computed by
use of the expected return multiples contained in Tables V and VI,
Section 1.72-9 of the Income Tax Regulations.
(c) Annuitant's Death Prior to Required Beginning Date: If the Annuitant
dies before distributions are considered to have commenced, the
Contract Value must be distributed according to one of the following
options:
(i) The entire Contract Value remaining must be distributed by
December 31 of the year which contains the fifth anniversary of
the Annuitant's death; or
(ii) Unless the Annuitant or Beneficiary has elected (i), the entire
Contract Value must be distributed over a period not extending
beyond a designated Beneficiary's life or life expectancy in
substantially equal installments.
Under this option a non-spouse Beneficiary must begin
distributions no later than December 31 of the calendar year
immediately following the calendar year of the Annuitant's death.
The Beneficiary may elect at any time to receive greater
payments.
A surviving spouse may elect, no later than the earlier of
December 31 of the calendar year containing the fifth anniversary
of the Annuitant's death or the date distributions are required
to begin, to receive equal or substantially equal payments over
the life or life expectancy of the surviving spouse commencing at
any date prior to the later of (1) December 31 of the calendar
year immediately following the calendar year in which the
Annuitant died and (2) December 31 of the calendar year in which
the Annuitant would have attained age 70 1/2. The surviving
spouse may increase the frequency or amount of such payments at
any time.
-- 2 --
<PAGE> 3
(d) Annuitant's Death On or After Required Beginning Date: If the
Annuitant dies on or after the date distributions are considered to
have commenced, payment to the designated Beneficiary must continue at
least as rapidly as the method in effect prior to the Annuitant's
death.
SECTION E6, Death of Owner Prior to Annuity Date, is deleted.
SECTION E6, Minimum Guaranteed Death Benefit on Death of Annuitant Prior to
Annuity Date, is added to the Contract:
(a) The Minimum Guaranteed Death Benefit: The initial Minimum Guaranteed
Death Benefit shall be equal to the initial Net Purchase Payment.
Additional Net Purchase Payments are added to the Minimum Guaranteed
Death Benefit. The Minimum Guaranteed Death Benefit will be adjusted
after any Withdrawal by multiplying it by the ratio of the Contract
Value after the Withdrawal to the Contract Value before the
Withdrawal. The Minimum Guaranteed Death Benefit shall be redetermined
on each Eight Year Contract Anniversary by taking the greater of the
Contract Value on that Eight Year Contract Anniversary or the previous
Minimum Guaranteed Death Benefit. The Minimum Guaranteed Death Benefit
shall subsequently be increased for additional Net Purchase Payments
and adjusted after any Withdrawals in the same manner as the initial
Minimum Guaranteed Death Benefit is adjusted. After the Annuitant's
death, the Minimum Guaranteed Death Benefit will be reduced dollar for
dollar by any Withdrawals.
(b) Death Benefit Options: Upon the death of the Annuitant prior to the
Annuity Date, the Beneficiary may elect a Settlement Option or to
receive a single lump sum payment.
(c) Death Benefit (Prior to age 72)
If the Annuitant dies prior to age 72 and before the Annuity Date, and
provided that the Beneficiary provides due proof of death in a form
satisfactory to First SAFECO and has elected a Death Benefit Option
within six (6) months of the date of death, the amount of the Death
Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit.
(d) Death Benefit (On or After Age 72)
If the Annuitant dies on or after age 72 and before the Annuity Date,
and provided that the Beneficiary provides due proof of death in a
form satisfactory to First SAFECO and has elected a Death Benefit
Option within six (6) months of the date of death, the amount of the
Death Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit established on the last
Eight Year Contract Anniversary preceding the Annuitant's 72nd
birthday, adjusted for any Net Purchase Payments received or
Withdrawals taken since that Eight Year Contract Anniversary.
(e) Death Benefit (Death Notification or Death Benefit Option election
more than Six Months after Date of Death).
If notification of death or election of a Death Benefit Option occurs
after the six month anniversary of the date of death, the death
benefit will be the Contract Value on the date of election of a Death
Benefit Option determined as follows: the Contract Value calculated as
of the six month anniversary of the date of death will be compared
with the Minimum Guaranteed Death Benefit calculated immediately prior
to the six month anniversary of the date of death to determine if
additional funds are required to be added by First SAFECO to equal
such Minimum Guaranteed Death Benefit. First SAFECO will supplement
any deficiency in Contract Value, such that Contract Value will equal
the Minimum Guaranteed Death Benefit. Thereafter, until the date of
election of a Death Benefit Option, the Contract Value attributable to
First SAFECO's contribution will be guaranteed and interest paid
thereon at prevailing money market rates; the portion of Contract
Value existing on the six-month anniversary of the date of death will
be subject to adjustment reflecting the investment experience for the
period from the six-month anniversary to the election of a Death
Benefit Option. In addition, the amount of the death benefit will be
reduced dollar for dollar by any Withdrawal after the Annuitant's
death.
-- 3 --
<PAGE> 4
SECTION E7, Death of Owner After Annuity Date, is deleted.
SECTION E14, Commencement of Minimum Distributions, is added to the Contract:
Commencement of Minimum Distributions:
(a) Minimum Distributions will commence no later than April 1 following
the year in which the Annuitant attains age 70 1/2, unless the
Annuitant sends written notice to First SAFECO:
(i) Requesting that distributions not commence; or
(ii) Notifying First SAFECO that the Annuitant meets one of the
criteria for a later Required Beginning Date.
(b) If First SAFECO has not received written notice prior to March 1
following the year in which the Annuitant attains age 70 1/2:
(i) If designated Beneficiary information has been provided to First
SAFECO, First SAFECO will make the Required Minimum Distributions
based on joint life expectancy with recalculation of life
expectancy under a Systematic Withdrawal program and in
accordance with the Minimum Distribution Rules in Section
401(a)(9) of the Internal Revenue Code.
(ii) If designated Beneficiary information has not been provided to
First SAFECO, First SAFECO will make the Required Minimum
Distributions based on single life expectancy with recalculation
of life expectancy under a Systematic Withdrawal program and in
accordance with the Minimum Distribution Rules in Section
401(a)(9) of the Internal Revenue Code.
(c) The calculation of the Required Minimum Distribution will be based on
the entire Contract Value as of the end of the calendar year preceding
the distribution year.
SECTION F10, Withdrawal Restrictions, is added to the Contract:
Withdrawal Restrictions:
(a) Withdrawals are restricted under Section 403(b) of the Internal
Revenue Code for:
(i) Salary reduction contributions made after December 31, 1988;
(ii) Income attributable to salary reduction contributions made after
December 31, 1988;
(iii) Income attributable to amounts held as of December 31, 1988; and
(iv) Contracts that contain a full or partial transfer of funds from a
previous Section 403(b)(7) account.
(b) The Withdrawal restrictions under Section 403(b) of the Internal
Revenue Code allow Withdrawals only when the Annuitant:
(i) Attains age 59 1/2;
(ii) Separates from service;
(iii) Dies;
(iv) Becomes disabled (as defined in Section 72(m)(7) of the Internal
Revenue Code); or
(v) In the case of hardship. Withdrawals for hardship are restricted
to the portion of the Contract Value which represents
contributions made by the Annuitant and does not include any
income attributable to salary reduction contributions made after
December 31, 1988, or income attributable to amounts held as of
December 31, 1988.
(c) Withdrawal of restricted funds may result in disqualification of the
Contract as a tax qualified plan and subject the Withdrawal to Federal
income tax penalties.
SECTION F11, Direct Rollovers, is added to the Contract:
Direct Rollovers: The Annuitant or Beneficiary may elect to have any
eligible rollover distribution, or any portion of an eligible rollover
distribution, paid directly to an eligible retirement plan.
SECTION G5, Taxes, is amended to read as follows:
Taxes: First SAFECO reserves the right to deduct premium taxes or other
taxes levied by any governmental entity which First SAFECO, in its sole
discretion, determines have resulted from the establishment or maintenance
of this Contract or any portion of this Contract, the receipt by First
SAFECO of Purchase Payments or Annuity premium payments, or the
commencement of Annuity payments. If First SAFECO exercises this right, the
Sub-Account from which the taxes will be deducted will be determined by the
hierarchical order of the Sub-Accounts as listed on the Contract Data Page.
-- 4 --
<PAGE> 5
SECTION H: ANNUITY PURCHASE RATE TABLE, is amended to read as follows:
H1 Mortality Tables Used: The rates in the Variable Annuity Purchase Rate
Table are based upon the 1983a Mortality Table Projected 20 Years with
Projection Scale G; 50% Male and 50% Female. An age setback of one
year will be used if the Annuity payment begins in the year 2000-
2009, two years if the Annuity payment begins in the year 2010-2019,
and an additional one year setback for each additional ten years. The
effective interest rate assumed in the Variable Annuity Purchase Rate
Table is 4%.
H2 Variable Annuity Purchase Rate Table:
CONSIDERATION REQUIRED TO PURCHASE $1 OF MONTHLY ANNUITY*
UNISEX RATES
<TABLE>
<CAPTION>
Life Joint & Survivor Annuity**
Anuity
Age of Life 120-Months 100% 50%
Annuitant Annuity Certain Annuity Annuity
- - --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C>
55 $208.85 $210.55 $233.18 $221.02
56 205.59 207.42 230.40 218.00
57 202.23 204.22 227.53 214.88
58 198.76 200.94 224.55 211.66
59 195.20 197.58 221.47 208.34
60 191.54 194.16 218.29 204.91
61 187.79 190.67 215.00 201.39
62 183.95 187.12 211.61 197.78
63 180.01 183.53 208.11 194.06
64 176.00 179.88 204.51 190.25
65 171.91 176.20 200.80 186.36
66 167.75 172.50 197.00 182.38
67 163.53 168.77 193.09 178.31
68 159.25 165.04 189.08 174.16
69 154.90 161.31 184.98 169.94
70 150.50 157.59 180.77 165.64
71 146.05 153.89 176.48 161.26
72 141.55 150.23 172.10 156.82
73 137.02 146.62 167.63 152.32
74 132.46 143.09 163.09 147.78
75 127.90 139.63 158.49 143.19
</TABLE>
* The consideration shown refers to the net value used to purchase an
Annuity, after premium taxes or other applicable charges are deducted.
** Annuitant and Co-Annuitant are assumed to be the same age.
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
-- 5 --
<PAGE> 6
SECTION I8, Mortality Tables Used, is amended to read as follows:
Mortality Tables Used: The rates in the Fixed Annuity Purchase Rate Table
are based upon the 1983a Mortality Table Projected 20 Years with Projection
Scale G; 50% Male and 50% Female. The effective interest rate assumed in
the Fixed Annuity Purchase Rate Table is 3%.
SECTION I8, Fixed Annuity Purchase Rate Table, is amended to read as follows:
Fixed Annuity Purchase Rate Table
CONSIDERATION REQUIRED TO PURCHASE $1 OF MONTHLY ANNUITY*
UNISEX RATES
<TABLE>
<CAPTION>
Life Joint & Survivor Annuity**
Anuity
Age of Life 10-Years 100% 50%
Annuitant Annuity Certain Annuity Annuity
- - --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C>
55 $236.33 $238.26 $267.87 $252.10
56 231.98 234.07 263.96 247.97
57 227.55 229.82 259.98 243.77
58 223.04 225.49 255.83 239.44
59 218.43 221.11 251.58 235.01
60 213.73 216.66 247.23 230.48
61 208.95 212.15 242.77 225.86
62 204.08 207.60 238.20 221.14
63 199.13 203.02 233.54 216.33
64 194.11 198.41 228.77 211.44
65 189.04 193.78 223.91 206.47
66 183.90 189.14 218.95 201.43
67 178.71 184.51 213.91 196.31
68 173.48 179.90 208.77 191.12
69 168.20 175.32 203.55 185.87
70 162.88 170.77 198.24 180.56
71 157.59 166.32 192.99 175.29
72 152.29 161.93 187.69 169.99
73 146.98 157.62 182.22 164.60
74 141.67 153.42 176.70 159.19
75 136.38 149.34 171.13 153.75
</TABLE>
* The consideration shown refers to the net value used to purchase an
Annuity, after premium taxes or other applicable charges are deducted. For
example, it would cost $189,040 for an Annuitant age 65 to receive a Fixed
Life Annuity which provides a monthly income of $1,000.
** Annuitant and Co-Annuitant are assumed to be the same age.
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
-- 6 --
<PAGE> 7
SECTION I13, Loans, is added to the Contract:
(a) Prior to the Annuity Date and upon approval of application to First
SAFECO, an Annuitant may borrow funds from First SAFECO using the
Annuitant's interest in the Contract as security for the loan. Any
loan is subject to the terms of this Contract, the Plan and Section
72(p) of the Internal Revenue Code.
(b) The minimum loan available is $1,000. First SAFECO reserves the right
to limit the maximum loan available to 50% of the Contract Value,
subject to the Annuitant's acceptance of First SAFECO's loan
agreement. In no event will the amount of the loan exceed $50,000.
(c) The Annuitant may apply for only one loan per Contract Year and no
more than one loan may be outstanding at any time.
(d) A loan is made from a collateral loan account into which the loan
amount is transferred, on a LIFO basis, from the Fixed Account. The
loan annual interest rate will be 8%. The interest rate credited to
the collateral loan account will be 6%. Interest on the outstanding
loan and on the collateral loan account balance will accrue and
compound daily.
(e) Loan repayments must be made at least quarterly and identified as such
or they will be treated as Purchase Payments. A loan must be repaid
within 5 years unless the loan is for the purchase of the principal
residence of the Annuitant. In any event, the term of a loan will not
exceed 20 years and will not extend beyond the date the Annuitant
reaches age 70 1/2.
If the Annuitant does not make loan repayments when due, the
outstanding loan balance will be in default and treated as a
distribution, as permitted by law. The outstanding loan balance and
the collateral loan account will continue to accrue interest until the
Annuitant repays the loan or First SAFECO forecloses on the collateral
interest. If the Annuitant defaults and does not repay the loan, First
SAFECO may foreclose on the Annuitant's tax sheltered annuity account
value subject to its security interest once a distributable event
within the meaning of Section 403(b)(11) of the Internal Revenue Code
occurs. A distributable event occurs when the Annuitant becomes age
59 1/2, separates from service with the Annuitant's employer, becomes
disabled, dies or suffers a financial hardship.
When a loan in default is repaid, a Contingent Deferred Sales Charge,
if any, will be paid at the rate applicable under the Contract when
the Annuitant received the loan.
Until the Annuitant repays the loan, First SAFECO reserves the right
to restrict the transfer of the Contract that would otherwise qualify
as a Revenue Ruling 90-24 transfer or an Internal Revenue Code Section
1035 exchange. If the Annuitant requests a transfer of the Contract to
another company and no distributable event has occurred, First SAFECO
will keep that portion of the tax sheltered annuity account value
still subject to its security interest, whether or not the outstanding
loan balance is in default. The Annuitant will continue to make
scheduled payments to First SAFECO to repay the loan or the loan will
default.
If a loan is outstanding when Annuity payments begin, the Contract
Value will first be reduced by such outstanding loan balance plus
accrued interest.
All other terms and conditions of the Contract remain unchanged.
FIRST SAFECO NATIONAL LIFE INSURANCE
COMPANY
OF NEW YORK
/s/ R.E. ZUNKER
----------------
R.E. Zunker
President
-- 7 --
<PAGE> 8
ENDORSEMENT
Individual Retirement Annuity Endorsement
This Endorsement forms a part of the Contract to which it is attached. This
Endorsement applies to a Contract issued under Section 408 of the Internal
Revenue Code. In the case of a conflict with any provision in the Contract or
Rider, the terms of this Endorsement will control. This Endorsement is effective
upon issuance to the Owner.
SECTION A18, Owner, is amended to read as follows:
Owner: The person named in the Application who has all rights under this
Contract. The Annuitant shall be the Owner of this Contract.
SECTION B11, Assignment, is amended to read:
Non-Assignment: To the extent permitted by law, this Contract and the
benefits or payments under this Contract are not assignable or otherwise
transferable. This Contract may be assigned for purposes of an Internal
Revenue Code Section 1035 exchange.
SECTION B13, Exclusive Benefit, is added to the Contract:
Exclusive Benefit: This Contract is established for the exclusive benefit
of the Annuitant and Beneficiaries.
SECTION B14, Nonforfeitable, is added to the Contract:
Nonforfeitable: The interest of the Annuitant in this Contract is
nonforfeitable.
SECTION B15, Nontransferable, is added to the Contract:
Nontransferable: This Contract is nontransferable by the Annuitant.
SECTION B16, Life Insurance Contracts, is added to the Contract:
Life Insurance Contracts: No part of the Contract Value will be invested in
life insurance contracts.
SECTION C6, Transfer or Rollover Contributions, is added to the Contract:
Transfer or Rollover Contributions: This Contract shall be used as a
funding medium for an Individual Retirement Annuity. All Purchase Payments
must be in cash and must be transfers from other Contracts or rollover
contributions under Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of
the Internal Revenue Code.
SECTION E5, Death of Annuitant, is deleted.
SECTION E5, Minimum Distribution Rules, is added to the Contract:
Minimum Distribution Rules: All Settlement Options and Systematic
Withdrawal shall distribute the Contract Value pursuant to the Minimum
Distribution Rules in Section 408(a)(6) or Section 408(b)(3) and Section
401(a)(9) of the Internal Revenue Code, including the minimum distribution
incidental benefit requirement of Section 401(a)(9)(G) of the Internal
Revenue Code and Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
(a) Minimum Distribution Rules:
(i) Required Beginning Date: Minimum Distributions must begin by the
Annuitant's Required Beginning Date, defined as April 1 following
the year the Annuitant reaches age 70 1/2. If the Annuitant has
reached age 70 1/2 as of the Contract Date, the Required
Beginning Date is no later than the close of the taxable
-- 1 --
LPC-611/NY 11/95
<PAGE> 9
year following the taxable year during which the Contract is
issued.
(ii) Minimum Distribution Requirements: The Minimum Distributions must
be in equal or substantially equal amounts, over:
(I) The life of the Annuitant, or the lives of the Annuitant and
the designated Beneficiary; or
(II) A period not extending beyond the life expectancy of the
Annuitant, or the joint and last survivor expectancy of the
Annuitant and the designated Beneficiary.
(iii) Minimum Amounts to be Distributed: If the Annuitant's entire
Contract Value is to be distributed in other than a lump sum,
then the amount to be distributed each year (commencing with the
first calendar year for which distributions are required to begin
and for each calendar year thereafter) must be at least an amount
equal to the quotient obtained by dividing the Contract Value by
the lesser of (1) the applicable life expectancy of the Annuitant
or (2) if the Annuitant's spouse is not the designated
Beneficiary, the applicable divisor determined from the table set
forth in Question and Answer 4 or Question and Answer 5, as
applicable, of Proposed Income Tax Regulation 1.401(a)(9)-2.
Payments must be made in periodic payments of intervals no longer
than one year. In addition, payments must be either
non-increasing or they may increase only as provided in Question
and Answer F-3 of Proposed Income Tax Regulation 1.401(a)(9)-1.
Distributions after the death of the Annuitant shall be
calculated using the applicable life expectancy as the relevant
divisor without regard to Proposed Regulation 1.401(a)(9)-2.
(b) Life Expectancy: The Annuitant and a designated Beneficiary who is the
spouse of a deceased Annuitant may elect whether or not to recalculate
life expectancy. Life expectancy may be recalculated no more
frequently than annually. This election is irrevocable and shall apply
to all subsequent years. It must be made by written notice to First
SAFECO at its Home Office no later than the Required Beginning Date.
If an election is not made, life expectancy for the Annuitant and a
designated Beneficiary who is a spouse will be recalculated. Under the
non-recalculation method, benefits are provided for a specific number
of years and may terminate prior to the Annuitant's or Beneficiary's
death.
The life expectancy of a non-spouse Beneficiary may not be
recalculated. Life expectancy will be calculated using the attained
age of such Beneficiary during the calendar year in which
distributions are required to begin, and payments for subsequent years
shall be calculated based on such life expectancy reduced by one for
each calendar year which has elapsed since the calendar year life
expectancy was first calculated.
Life expectancy and joint and last survivor expectancy are computed by
use of the expected return multiples contained in Tables V and VI,
Section 1.72-9 of the Income Tax Regulations.
(c) Annuitant's Death Prior to Required Beginning Date: If the Annuitant
dies before distributions are considered to have commenced, the
Contract Value must be distributed according to one of the following
options:
(i) The entire Contract Value remaining must be distributed by
December 31 of the year which contains the fifth anniversary of
the Annuitant's death; or
(ii) Unless the Annuitant or Beneficiary has elected (i), the entire
Contract Value must be distributed over a period not extending
beyond a designated Beneficiary's life or life expectancy in
substantially equal installments.
Under this option a non-spouse Beneficiary must begin
distributions no later than December 31 of the calendar year
immediately following the calendar year of the Annuitant's death.
The Beneficiary may elect at any time to receive greater
payments.
A surviving spouse may elect, no later than the earlier of
December 31 of the calendar year containing the fifth anniversary
of the Annuitant's death or the date distributions are required
to begin, to receive equal or substantially equal payments over
the life or life expectancy of the surviving spouse commencing at
any date prior to the later of (1) December 31 of the calendar
year immediately following the calendar year in which the
Annuitant died and (2) December 31 of the calendar year in which
the Annuitant would have attained age 70 1/2. The surviving
spouse may increase the frequency or amount of such payments at
any time.
A surviving spouse may also elect to treat the Contract as the
spouse's own, and then delay distributions until the 1st of April
following the calendar year in which the spouse reaches age
70 1/2 if that date is later than the Annuitant's death or the
date the Annuitant would have reached age 70 1/2. Such election
is considered made if:
-- 2 --
<PAGE> 10
(I) Amounts required to be distributed on the Annuitant's death
have not been distributed from the Contract;
(II) A regular IRA contribution or rollover contribution is made
to the Contract;
(III) A rollover is made from the Contract; or
(IV) The spouse fails to make another election.
(d) Annuitant's Death On or After Required Beginning Date: If the
Annuitant dies on or after the date distributions are considered to
have commenced, payment to the designated Beneficiary must continue at
least as rapidly as the method in effect prior to the Annuitant's
death.
SECTION E6, Death of Owner Prior to Annuity Date, is deleted.
SECTION E6, Minimum Guaranteed Death Benefit on Death of Annuitant Prior to
Annuity Date, is added to the Contract:
(a) The Minimum Guaranteed Death Benefit: The initial Minimum Guaranteed
Death Benefit shall be equal to the initial Net Purchase Payment.
Additional Net Purchase Payments are added to the Minimum Guaranteed
Death Benefit. The Minimum Guaranteed Death Benefit will be adjusted
after any Withdrawal by multiplying it by the ratio of the Contract
Value after the Withdrawal to the Contract Value before the
Withdrawal. The Minimum Guaranteed Death Benefit shall be redetermined
on each Eight Year Contract Anniversary by taking the greater of the
Contract Value on that Eight Year Contract Anniversary or the previous
Minimum Guaranteed Death Benefit. The Minimum Guaranteed Death Benefit
shall subsequently be increased for additional Net Purchase Payments
and adjusted after any Withdrawals in the same manner as the initial
Minimum Guaranteed Death Benefit is adjusted. After the Annuitant's
death, the Minimum Guaranteed Death Benefit will be reduced dollar for
dollar by any Withdrawals.
(b) Death Benefit Options: Upon the death of the Annuitant prior to the
Annuity Date, the Beneficiary may elect a Settlement Option or to
receive a single lump sum payment.
(c) Death Benefit (Prior to age 72)
If the Annuitant dies prior to age 72 and before the Annuity Date, and
provided that the Beneficiary provides due proof of death in a form
satisfactory to First SAFECO and has elected a Death Benefit Option
within six (6) months of the date of death, the amount of the Death
Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit.
(d) Death Benefit (On or After age 72)
If the Owner dies on or after age 72 and before a Settlement Option
has commenced, and provided that the Beneficiary provides due proof of
death in a form satisfactory to First SAFECO and has elected a Death
Benefit Option within six (6) months of the date of death, the amount
of the Death Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit established on the last
Eight Year Contract Anniversary preceding the Annuitant's 72nd
birthday, adjusted for any Net Purchase Payments received or
Withdrawals taken since that Eight Year Contract Anniversary.
(e) Death Benefit (Death Notification or Death Benefit Option election
more than Six Months after Date of Death).
If notification of death or election of a Death Benefit Option occurs
after the six-month anniversary of the date of death, the death
benefit will be the Contract Value on the date of election of a Death
Benefit Option determined as follows: The Contract Value calculated as
of the six-month anniversary of the date of death will be compared
with the last calculated Minimum Guaranteed Death Benefit to determine
if additional funds are required to be added by First SAFECO to equal
such Minimum Guaranteed Death Benefit. First SAFECO will supplement
any deficiency in Contract Value, such that Contract Value will equal
the Minimum
-- 3 --
<PAGE> 11
Guaranteed Death Benefit. Thereafter, until the date of election of a
Death Benefit Option, the Contract Value attributable to First
SAFECO's contribution will be guaranteed and interest paid thereon at
prevailing money market rates; the portion of Contract Value existing
on the six-month anniversary of the date of death will be subject to
adjustment reflecting the investment experience for the period from
the six-month anniversary to the election of a Death Benefit Option.
In addition, the amount of the death benefit will be reduced dollar
for dollar by any Withdrawal after the Annuitant's death.
SECTION E7, Death of Owner After Annuity Date, is deleted.
SECTION E14, Commencement of Minimum Distributions, is added to the Contract:
Commencement of Minimum Distributions:
(a) Minimum Distributions will commence no later than April 1 following
the year in which the Annuitant attains age 70 1/2, unless the
Annuitant sends written notice to First SAFECO that the minimum
distributions for this Contract will be taken from another IRA and
requests that distributions not be taken from this Contract.
An individual may satisfy the minimum distribution requirements under
Section 408(a)(6) and 408(b)(3) of the Internal Revenue Code by
receiving a distribution from one IRA that is equal to the amount
required to satisfy the minimum distribution requirements for two or
more IRAs. For this purpose, the owner of two or more IRAs may use the
'alternative method' described in Notice 88-38, 1988-1 C.B. 524, to
satisfy the minimum distribution requirements described above.
(b) If First SAFECO has not received written notice prior to March 1
following the year in which the Annuitant attains age 70 1 /2 :
(i) If designated Beneficiary information has been provided to First
SAFECO, First SAFECO will make the Required Minimum Distributions
based on joint life expectancy with recalculation of life
expectancy under a Systematic Withdrawal program and in
accordance with the Minimum Distribution Rules in Section
401(a)(9) of the Internal Revenue Code.
(ii) If designated Beneficiary information has not been provided to
First SAFECO, First SAFECO will make the Required Minimum
Distributions based on single life expectancy with recalculation
of life expectancy under a Systematic Withdrawal program and in
accordance with the Minimum Distribution Rules in Section
401(a)(9) of the Internal Revenue Code.
SECTION G5, Taxes, is amended to read as follows:
Taxes: First SAFECO reserves the right to deduct premium taxes or other
taxes levied by any governmental entity which First SAFECO, in its sole
discretion, determines have resulted from the establishment or maintenance
of this Contract or any portion of this Contract, the receipt by First
SAFECO of Purchase Payments or Annuity premium payments, or the
commencement of Annuity payments. If First SAFECO exercises this right, the
Sub-Account from which the taxes will be deducted will be determined by the
hierarchical order of the Sub-Accounts as listed on the Contract Data Page.
All other terms and conditions of the Contract remain unchanged.
FIRST SAFECO NATIONAL LIFE INSURANCE COMPANY
OF NEW YORK
/s/ R.E. ZUNKER
----------------
R.E. Zunker
President
-- 4 --
<PAGE> 12
ENDORSEMENT
Individual Retirement Annuity Endorsement
This Endorsement forms a part of the Contract to which it is attached. This
Endorsement applies to a Contract issued under Section 408(k) of the Internal
Revenue Code. In the case of a conflict with any provision in the Contract or
Rider, the terms of this Endorsement will control. This Endorsement is effective
upon issuance to the Owner.
SECTION A18, Owner, is amended to read as follows:
Owner: The person named in the Application who has all rights under this
Contract. The Annuitant shall be the Owner of this Contract.
SECTION B6, Misstatement of Age or Sex, is amended to read as follows:
Misstatement of Age: First SAFECO may require proof of the age of the
Annuitant before making any Life Annuity payment provided for by this
Contract. If the age of the Annuitant has been misstated, the amount
payable will be the amount that the Contract Value would have provided at
the correct age.
Once Annuity payments have begun, any underpayment will be made up in one
sum with the next Annuity payment, with interest of 6%. Any overpayment
will be deducted from future Annuity payments until the total is repaid,
with interest of 6%.
SECTION B11, Assignment, is amended to read:
Non-Assignment: To the extent permitted by law, this Contract and the
benefits or payments under this Contract are not assignable or otherwise
transferable. This Contract may be assigned for purposes of an Internal
Revenue Code Section 1035 exchange.
SECTION B13, Exclusive Benefit, is added to the Contract:
Exclusive Benefit: This Contract is established for the exclusive benefit
of the Annuitant and Beneficiaries.
SECTION B14, Nonforfeitable, is added to the Contract:
Nonforfeitable: The interest of the Annuitant in this Contract is
nonforfeitable.
SECTION B15, Nontransferable, is added to the Contract:
Nontransferable: This Contract is nontransferable by the Annuitant.
SECTION B16, Life Insurance Contracts, is added to the Contract:
Life Insurance Contracts: No part of the Contract Value will be invested in
life insurance contracts.
SECTION C6, Contributions, is added to the Contract:
Contributions: This Contract shall be used as a funding medium for an
Individual Retirement Annuity, under Section 408(k) of the Internal Revenue
Code. All Purchase Payments must be in cash and must be transfers from a
Simplified Employee Pension plan.
SECTION E5, Death of Annuitant, is deleted.
-- 1 --
LPC-618/NY 11/95
<PAGE> 13
SECTION E5, Minimum Distribution Rules, is added to the Contract:
Minimum Distribution Rules: All Settlement Options and Systematic
Withdrawal shall distribute the Contract Value pursuant to the Minimum
Distribution Rules in Section 408(a)(6) or Section 408(b)(3) and Section
401(a)(9) of the Internal Revenue Code, including the minimum distribution
incidental benefit requirement of Section 401(a)(9)(G) of the Internal
Revenue Code and Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
(a) Minimum Distribution Rules:
(i) Required Beginning Date: Minimum Distributions must begin by the
Annuitant's Required Beginning Date, defined as April 1 following
the year the Annuitant reaches age 70 1/2. If the Annuitant has
reached age 70 1/2 as of the Contract Date, the Required
Beginning Date is no later than the close of the taxable year
following the taxable year during which the Contract is issued.
(ii) Minimum Distribution Requirements: The Minimum Distributions must
be in equal or substantially equal amounts, over:
(I) The life of the Annuitant, or the lives of the Annuitant and
the designated Beneficiary; or
(II) A period not extending beyond the life expectancy of the
Annuitant, or the joint and last survivor expectancy of the
Annuitant and the designated Beneficiary.
(iii) Minimum Amounts to be Distributed: If the Annuitant's entire
Contract Value is to be distributed in other than a lump sum,
then the amount to be distributed each year (commencing with the
first calendar year for which distributions are required to begin
and for each calendar year thereafter) must be at least an amount
equal to the quotient obtained by dividing the Contract Value by
the lesser of (1) the applicable life expectancy of the Annuitant
or (2) if the Annuitant's spouse is not the designated
Beneficiary, the applicable divisor determined from the table set
forth in Question and Answer 4 or Question and Answer 5, as
applicable, of Proposed Income Tax Regulation 1.401(a)(9)-2.
Payments must be made in periodic payments of intervals no longer
than one year. In addition, payments must be either
non-increasing or they may increase only as provided in Question
and Answer F-3 of Proposed Income Tax Regulation 1.401(a)(9)-1.
Distributions after the death of the Annuitant shall be
calculated using the applicable life expectancy as the relevant
divisor without regard to Proposed Regulation 1.401(a)(9)-2.
(b) Life Expectancy: The Annuitant and a designated Beneficiary who is the
spouse of a deceased Annuitant may elect whether or not to recalculate
life expectancy. Life expectancy may be recalculated no more
frequently than annually. This election is irrevocable and shall apply
to all subsequent years. It must be made by written notice to First
SAFECO at its Home Office no later than the Required Beginning Date.
If an election is not made, life expectancy for the Annuitant and a
designated Beneficiary who is a spouse will be recalculated. Under the
non-recalculation method benefits are provided for a specific number
of years and may terminate prior to the Annuitant's or Beneficiary's
death.
The life expectancy of a non-spouse Beneficiary may not be
recalculated. Life expectancy will be calculated using the attained
age of such Beneficiary during the calendar year in which
distributions are required to begin, and payments for subsequent years
shall be calculated based on such life expectancy reduced by one for
each calendar year which has elapsed since the calendar year life
expectancy was first calculated.
Life expectancy and joint and last survivor expectancy are computed by
use of the expected return multiples contained in Tables V and VI,
Section 1.72-9 of the Income Tax Regulations.
(c) Annuitant's Death Prior to Required Beginning Date: If the Annuitant
dies before distributions are considered to have commenced, the
Contract Value must be distributed according to one of the following
options:
(i) The entire Contract Value remaining must be distributed by
December 31 of the year which contains the fifth anniversary of
the Annuitant's death; or
(ii) Unless the Annuitant or Beneficiary has elected (i), the entire
Contract Value must be distributed over a period not extending
beyond a designated Beneficiary's life or life expectancy in
substantially equal installments.
Under this option a non-spouse Beneficiary must begin
distributions no later than December 31 of the calendar year
immediately following the calendar year of the Annuitant's death.
The Beneficiary may elect at any time to receive greater
payments.
-- 2 --
<PAGE> 14
A surviving spouse may elect, no later than the earlier of
December 31 of the calendar year containing the fifth anniversary
of the Annuitant's death or the date distributions are required
to begin, to receive equal or substantially equal payments over
the life or life expectancy of the surviving spouse commencing at
any date prior to the later of (1) December 31 of the calendar
year immediately following the calendar year in which the
Annuitant died and (2) December 31 of the calendar year in which
the Annuitant would have attained age 70 1/2 . The surviving
spouse may increase the frequency or amount of such payments at
any time.
A surviving spouse may also elect to treat the Contract as the
spouse's own, and then delay distributions until the 1st of April
following the calendar year in which the spouse reaches
age 70 1/2 if that date is later than the Annuitant's death or
the date the Annuitant would have reached age 70 1/2. Such
election is considered made if:
(I) Amounts required to be distributed on the Annuitant's death
have not been distributed from the Contract;
(II) A regular IRA contribution or rollover contribution is made
to the Contract;
(III) A rollover is made from the Contract; or
(IV) The spouse fails to make another election.
(d) Annuitant's Death On or After Required Beginning Date: If the
Annuitant dies on or after the date distributions are considered to
have commenced, payment to the designated Beneficiary must continue at
least as rapidly as the method in effect prior to the Annuitant's
death.
SECTION E6, Death of Owner Prior to Annuity Date, is deleted.
SECTION E6, Minimum Guaranteed Death Benefit on Death of Annuitant Prior to
Annuity Date, is added to the Contract:
(a) The Minimum Guaranteed Death Benefit: The initial Minimum Guaranteed
Death Benefit shall be equal to the initial Net Purchase Payment.
Additional Net Purchase Payments are added to the Minimum Guaranteed
Death Benefit. The Minimum Guaranteed Death Benefit will be adjusted
after any Withdrawal by multiplying it by the ratio of the Contract
Value after the Withdrawal to the Contract Value before the
Withdrawal. The Minimum Guaranteed Death Benefit shall be redetermined
on each Eight Year Contract Anniversary by taking the greater of the
Contract Value on that Eight Year Contract Anniversary or the previous
Minimum Guaranteed Death Benefit. The Minimum Guaranteed Death Benefit
shall subsequently be increased for additional Net Purchase Payments
and adjusted after any Withdrawals in the same manner as the initial
Minimum Guaranteed Death Benefit is adjusted. After the Annuitant's
death, the Minimum Guaranteed Death Benefit will be reduced dollar for
dollar by any Withdrawals.
(b) Death Benefit Options: Upon the death of the Annuitant prior to the
Annuity Date, the Beneficiary may elect a Settlement Option or to
receive a single lump sum payment.
(c) Death Benefit (Prior to age 72)
If the Annuitant dies prior to age 72 and before the Annuity Date, and
provided that the Beneficiary provides due proof of death in a form
satisfactory to First SAFECO and has elected a Death Benefit Option
within six (6) months of the date of death, the amount of the Death
Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit.
(d) Death Benefit (On or After age 72)
If the Owner dies on or after age 72 and before a Settlement Option
has commenced, and provided that the Beneficiary provides due proof of
death in a form satisfactory to First SAFECO and has elected a Death
Benefit Option within six (6) months of the date of death, the amount
of the Death Benefit will be the greater of:
(i) the Contract Value on the date of election of a Death Benefit
Option by the Beneficiary; or
(ii) the Minimum Guaranteed Death Benefit established on the last
Eight Year Contract Anniversary preceding the Annuitant's 72nd
birthday, adjusted for any Net Purchase Payments received or
Withdrawals taken since that Eight Year Contract Anniversary.
-- 3 --
<PAGE> 15
(e) Death Benefit (Death Notification or Death Benefit Option election
more than Six Months after Date of Death).
If notification of death or election of a Death Benefit Option occurs
after the six-month anniversary of the date of death, the death
benefit will be the Contract Value on the date of election of a Death
Benefit Option determined as follows: the Contract Value calculated as
of the six-month anniversary of the date of death will be compared
with the last calculated Minimum Guaranteed Death Benefit to determine
if additional funds are required to be added by First SAFECO to equal
such Minimum Guaranteed Death Benefit. First SAFECO will supplement
any deficiency in Contract Value, such that Contract Value will equal
the Minimum Guaranteed Death Benefit. Thereafter, until the date of
election of a Death Benefit Option, the Contract Value attributable to
First SAFECO's contribution will be guaranteed and interest paid
thereon at prevailing money market rates; the portion of Contract
Value existing on the six-month anniversary of the date of death will
be subject to adjustment reflecting the investment experience for the
period from the six-month anniversary to the election of a Death
Benefit Option. In addition, the amount of the death benefit will be
reduced dollar for dollar by any Withdrawal after the Annuitant's
death.
SECTION E7, Death of Owner After Annuity Date, is deleted.
SECTION E14, Commencement of Minimum Distributions, is added to the Contract:
Commencement of Minimum Distributions:
(a) Minimum Distributions will commence no later than April 1 following
the year in which the Annuitant attains age 70 1/2 , unless the
Annuitant sends written notice to First SAFECO that the minimum
distributions for this Contract will be taken from another IRA and
requests that distributions not be taken from this Contract.
An individual may satisfy the minimum distribution requirements under
Sections 408(a)(6) and 408(b)(3) of the Internal Revenue Code by
receiving a distribution from one IRA that is equal to the amount
required to satisfy the minimum distribution requirements for two or
more IRAs. For this purpose, the owner of two or more IRAs may use the
'alternative method' described in Notice 88-38, 1988-1 C.B. 524, to
satisfy the minimum distribution requirements described above.
(b) If First SAFECO has not received written notice prior to March 1
following the year in which the Annuitant attains age 70 1/2:
(i) If designated Beneficiary information has been provided to First
SAFECO, First SAFECO will make the Required Minimum Distributions
based on joint life expectancy with recalculation of life
expectancy under a Systematic Withdrawal program and in
accordance with the Minimum Distribution Rules in Section
401(a)(9) of the Internal Revenue Code.
(ii) If designated Beneficiary information has not been provided to
First SAFECO, First SAFECO will make the Required Minimum
Distributions based on single life expectancy with recalculation
of life expectancy under a Systematic Withdrawal program and in
accordance with the Minimum Distribution Rules in Section
401(a)(9) of the Internal Revenue Code.
SECTION G5, Taxes, is amended to read as follows:
Taxes: First SAFECO reserves the right to deduct premium taxes or other
taxes levied by any governmental entity which First SAFECO, in its sole
discretion, determines have resulted from the establishment or maintenance
of this Contract or any portion of this Contract, the receipt by First
SAFECO of Purchase Payments or Annuity premium payments, or the
commencement of Annuity payments. If First SAFECO exercises this right the
Sub-Account from which the taxes will be deducted will be determined by the
hierarchical order of the Sub-Accounts as listed on the Contract Data Page.
-- 4 --
<PAGE> 16
SECTION H, Annuity Purchase Rate Table, is amended to read as follows:
H1 Mortality Tables Used: The rates in the Variable Annuity Purchase
Rate Table are based upon the 1983a Mortality Table Projected 20
Years with Projection Scale G; 50% Male and 50% Female. An age
setback of one year will be used if the Annuity payment begins in
the year 2000-2009, two years if the Annuity payment begins in the
year 2010-2019, and an additional one year setback for each
additional ten years. The effective interest rate assumed in the
Variable Annuity Purchase Rate Table is 4%.
H2 Variable Annuity Purchase Rate Table:
CONSIDERATION REQUIRED TO PURCHASE $1 OF MONTHLY ANNUITY*
UNISEX RATES
<TABLE>
<CAPTION>
Life Joint & Survivor Annuity**
Anuity
Age of Life 120-Months 100% 50%
Annuitant Annuity Certain Annuity Annuity
- - --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C>
55 $208.85 $210.55 $233.18 $221.02
56 205.59 207.42 230.40 218.00
57 202.23 204.22 227.53 214.88
58 198.76 200.94 224.55 211.66
59 195.20 197.58 221.47 208.34
60 191.54 194.16 218.29 204.91
61 187.79 190.67 215.00 201.39
62 183.95 187.12 211.61 197.78
63 180.01 183.53 208.11 194.06
64 176.00 179.88 204.51 190.25
65 171.91 176.20 200.80 186.36
66 167.75 172.50 197.00 182.38
67 163.53 168.77 193.09 178.31
68 159.25 165.04 189.08 174.16
69 154.90 161.31 184.98 169.94
70 150.50 157.59 180.77 165.64
71 146.05 153.89 176.48 161.26
72 141.55 150.23 172.10 156.82
73 137.02 146.62 167.63 152.32
74 132.46 143.09 163.09 147.78
75 127.90 139.63 158.49 143.19
</TABLE>
* The consideration shown refers to the net value used to purchase an
Annuity, after premium taxes or other applicable charges are deducted.
** Annuitant and Co-Annuitant are assumed to be the same age.
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
-- 5 --
<PAGE> 17
SECTION 18, Mortality Tables Used, is amended to read as follows:
Mortality Tables Used: The rates in the Fixed Annuity Purchase Rate Table
are based upon the 1983a Mortality Table Projected 20 Years with Projection
Scale G; 50% Male and 50% Female. The effective interest rate assumed in
the Fixed Annuity Purchase Rate Table is 3%.
SECTION I8, Fixed Annuity Purchase Rate Table, is amended to read as follows:
Fixed Annuity Purchase Rate Table
CONSIDERATION REQUIRED TO PURCHASE $1 OF MONTHLY ANNUITY*
UNISEX RATES
<TABLE>
<CAPTION>
Life Joint & Survivor Annuity**
Anuity
Age of Life 10-Years 100% 50%
Annuitant Annuity Certain Annuity Annuity
- - --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C>
55 $236.33 $238.26 $267.87 $252.10
56 231.98 234.07 263.96 247.97
57 227.55 229.82 259.98 243.77
58 223.04 225.49 255.83 239.44
59 218.43 221.11 251.58 235.01
60 213.73 216.66 247.23 230.48
61 208.95 212.15 242.77 225.86
62 204.08 207.60 238.20 221.14
63 199.13 203.02 233.54 216.33
64 194.11 198.41 228.77 211.44
65 189.04 193.78 223.91 206.47
66 183.90 189.14 218.95 201.43
67 178.71 184.51 213.91 196.31
68 173.48 179.90 208.77 191.12
69 168.20 175.32 203.55 185.87
70 162.88 170.77 198.24 180.56
71 157.59 166.32 192.99 175.29
72 152.29 161.93 187.69 169.99
73 146.98 157.62 182.22 164.60
74 141.67 153.42 176.70 159.19
75 136.38 149.34 171.13 153.75
</TABLE>
* The consideration shown refers to the net value used to purchase an
Annuity, after premium taxes or other applicable charges are deducted. For
example, it would cost $189,040 for an Annuitant age 65 to receive a Fixed
Life Annuity which provides a monthly income of $1,000.
** Annuitant and Co-Annuitant are assumed to be the same age.
Age is to be taken for the exact number of years and completed months. Values
for fractional ages are obtained by simple interpolation.
Consideration for ages or combination of lives not shown will be furnished by
First SAFECO upon request.
All other terms and conditions of the Contract remain unchanged.
FIRST SAFECO NATIONAL LIFE INSURANCE COMPANY
OF NEW YORK
/s/ R.E. ZUNKER
---------------
R.E. Zunker
President
-- 6 --
<PAGE> 1
EXHIBIT 9
December 13, 1996
Board of Directors
First SAFECO National Life Insurance Company of New York
6700 Collamer RoadEast Syracuse, New York 13057
Gentlemen:
I have acted as counsel to the Company in connection with the filing with the
Securities and Exchange Commission of the Registration Statement on Form N-4 for
the Individual Single Purchase Payment Deferred Variable Annuity Contracts (the
"Contracts") to be issued by the Company and its separate account, First SAFECO
Separate Account S. I have made such examination of the law and have examined
such records and documents as in my judgment are necessary or appropriate to
enable me to render the following opinion:
1. First SAFECO National Life Insurance Company of New York is a validly
existing stock life insurance company of the state of New York.
2. First SAFECO Separate Account S is a separate investment account of First
SAFECO National Life Insurance Company of New York created and validly
existing pursuant to the New York insurance laws and regulations
thereunder.
3. All of the prescribed corporate procedures for the issuance of the
Contracts have been followed, and, when such Contracts are issued in
accordance with the prospectus contained in the Registration Statement, all
state requirements relating to such Contracts will have been complied with.
4. Upon the acceptance of the purchase payments made by a prospective Contract
Owner pursuant to a Contract issued in accordance with the Prospectus
contained in the Registration Statement and upon compliance with applicable
law, such Owner will have a legally-issued, fully paid, non-assessable
contractual interest in such Contract.
You may use this letter, or a copy hereof, as an exhibit to the Registration
Statement.
Very truly yours,
/s/ William E. Crawford
William E. Crawford
Counsel
<PAGE> 1
EXHIBIT 15
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: REPRESENTATION OF COUNSEL FOR FIRST SAFECO NATIONAL LIFE INSURANCE COMPANY
OF NEW YORK ("FIRST SAFECO") AND ITS FIRST SAFECO SEPARATE ACCOUNT S ("SEPARATE
ACCOUNT") INITIAL REGISTRATION ON FORM N-4
FILE NO. 33-17095 AND ________
Commissioners:
First SAFECO and its Separate Account believe that the filing of pre-effective
amendmant No. 1 is consistent with the purposes and requirements for filing
under Rule 485(a) under the Securities Act of 1933 ("1933 Act"). This
representation is based on the fact that the changes included in this
registration, are consistent with the purposes and requirements described in the
adopting release for the changes to Rule 485 (IC-Rel. 20486).
Based on the above, the filing of Pre-Effective Amendment No. 1, is made
pursuant to Rule 485(a) of the 1933 Act to become effective as soon as is
practicable. The undersigned has prepared and reviewed registration, and it is
his opinion that this registration does not contain disclosures which would
render it ineligible to become effective pursuant to paragraph (a) of Rule 485.
Sincerely,
/s/ William E. Crawford
William E. Crawford
Counsel
