<PAGE>
As Filed with the Securities and Exchange Commission on May 5, 1997
Registration No. 333- ______
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
UNITED INVESTORS UNIVERSAL LIFE VARIABLE ACCOUNT
(Exact name of trust)
UNITED INVESTORS LIFE INSURANCE COMPANY
(Name of depositor)
2001 Third Avenue South
Birmingham, Alabama 35233
(Complete address of depositor's principal executive offices)
(Name and complete address
of agent for service) Copy to:
James L. Sedgwick, Esq. Frederick R. Bellamy, Esq.
United Investors Life Insurance Company Sutherland, Asbill & Brennan, L.L.P.
2001 Third Avenue South 1275 Pennsylvania Avenue, N.W.
Birmingham, Alabama 35233 Washington, DC 20004-2404
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration Statement
Securities Being Offered: Flexible Premium Variable Life Insurance Policies
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the
Registrant has elected to register an indefinite amount of the securities being
offered.
The Registrant hereby amends this Registration Statement on such dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
UNITED INVESTORS UNIVERSAL LIFE VARIABLE ACCOUNT
UNITED INVESTORS LIFE INSURANCE COMPANY
Cross Reference to Items Required by form N-8B-2
<TABLE>
<CAPTION>
N-8B-2 Item Caption in Prospectus
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<S> <C>
1 Cover Page
2 Cover Page
3 Not applicable
4 Sale of the Policies
5 The Variable Account
6 The Variable Account
7 Not applicable
8 The Variable Account
9 Litigation
10 Summary and Diagram of the Policy; Premiums; Net Premium
Allocations; Death Benefits; Other Policy Provisions; Surrender
of the Policy; Loan Benefits; The Variable Account and
TMK/United; Voting of Portfolio Shares
11 The Variable Account and TMK/United; Net Premium Allocations
12 The Variable Account and TMK/United; Net Premium Allocations
13 Charges and Deductions; Assignment and Change of Owner; Other
Policy Provisions
14 Facts About the Policy
15 Premiums; Planned Premiums; Net Premium Allocations
16 Net Premium Allocations
17 Free Look Right to Cancel Policy; Surrender of the Policy;
Partial Surrenders; Loan Benefits; Requesting Payments; Other
Policy Provisions
18 The Variable Account and TMK/United; Other Policy Provisions
19 Reports to Owners
20 Not applicable
21 Loan Benefits
22 Other Policy Provisions
23 Not applicable
24 Not applicable
25 United Investors
26 Not applicable
27 United Investors
28 Directors and Officers of United Investors
29 United Investors
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
</TABLE>
<PAGE>
<TABLE>
<S> <C>
34 Not applicable
35 United Investors
36 Not applicable
37 Not applicable
38 Sale of the Policies
39 Sale of the Policies
40 Not Applicable
41 Sale of the Policies
42 Not applicable
43 Not applicable
44 Policy Account Values
45 Not applicable
46 Policy Account Values
47 Net Premium Allocations
48 United Investors
49 Not applicable
50 The Variable Account and TMK/United
51 Premiums; Net Premium Allocations; Charges and Deductions;
Surrender of the Policy
52 The Variable Account and TMK/United
53 Tax Considerations
54 Not applicable
55 Hypothetical Illustrations
56 Not applicable
57 Not applicable
58 Not applicable
59 Financial Statements
</TABLE>
<PAGE>
UNITED INVESTORS UNIVERSAL LIFE VARIABLE ACCOUNT
Flexible Premium Variable Life Insurance Policy
Prospectus Date __________, 1997
United Investors Life Insurance Company
Administrative Office
2323 Bryan Street, Suite 1100
Dallas, Texas 75221
(800) 453-1271
This prospectus describes a flexible premium variable life insurance policy
("Policy") offered by United Investors Life Insurance Company ("United
Investors," "we," "us," or "our"). The Policy provides life insurance protection
on the insured (the "Insured") up to the Maturity Date. It also provides
flexibility to vary the amount and timing of premiums and to change the amount
of Death Benefits payable under the Policy. This flexibility allows the
purchaser of a Policy ("you," "your," or the "Owner,") to provide for changing
insurance needs under a single insurance policy.
You may allocate net premiums and Policy Value to the United Investors Universal
Life Variable Account (the "Variable Account"), to United Investors' general
account (the "Fixed Account"), or to a combination of both within certain
limits. The Variable Account is divided into 11 investment divisions (each, an
"Investment Division"). Assets of each Investment Division are invested in a
corresponding investment portfolio (each, a "Portfolio") of TMK/United Funds,
Inc. ("TMK/United"). The Portfolios currently available include:
Asset Strategy Portfolio High Income Portfolio Limited-Term Bond
Portfolio
Balanced Portfolio Income Portfolio Money Market Portfolio
Bond Portfolio International Portfolio Science and Technology
Portfolio
Growth Portfolio Small Cap Portfolio
The accompanying prospectus for TMK/United describes each of the Portfolios,
including the risks of investing in each Portfolio, and provides other
information about TMK/United. You bear the entire investment risk for all
amounts allocated or transferred to the Investment Divisions because the Policy
Value will vary with the investment performance of the Investment Divisions you
select. United Investors guarantees that amounts allocated to the Fixed Account
will earn a guaranteed minimum interest rate of at least 4% per year.
<PAGE>
You can select from two Death Benefit options available under the Policy: Option
A (greater of Face Amount or a multiple of Policy Value); and Option B (greater
of Face Amount plus Policy Value, or a multiple of Policy Value).
The Policy provides for a Cash Surrender Value. Because this value is based on
the performance of the Investment Divisions, there is no guaranteed minimum Cash
Surrender Value for amounts allocated to the Variable Account. The Net Cash
Surrender Value is the Cash Surrender Value reduced by any Loan Balance. If the
Net Cash Surrender Value is insufficient to cover the charges due under the
Policy, the Policy will terminate without value. However, the Policy will not
terminate during the Death Benefit Guarantee Period, regardless of the
sufficiency of the Net Cash Surrender Value, so long as the minimum premiums for
the Death Benefit Guarantee have been paid. The Policy also provides for
transfers among Investment Divisions, Policy Loans and permits Partial
Surrenders (withdrawals) within limits.
This prospectus should be read carefully and retained for future reference. A
prospectus for TMK/United Funds, Inc. must accompany this prospectus and should
be read in conjunction with this prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SUMMARY AND DIAGRAM OF THE POLICY..................................... - 5 -
DEFINITIONS........................................................... - 10 -
UNITED INVESTORS...................................................... - 11 -
THE VARIABLE ACCOUNT AND TMK/UNITED................................... - 11 -
FACTS ABOUT THE POLICY...................................................... -15 -
Applying for a Policy................................................. - 15 -
Free Look Right to Cancel Policy...................................... - 16 -
Premiums.............................................................. - 16 -
Planned Premiums...................................................... - 16 -
Premiums to Prevent Termination....................................... - 17 -
Death Benefit Guarantee............................................... - 18 -
Crediting Premiums to the Policy...................................... - 18 -
Net Premium Allocations............................................... - 18 -
Fixed Account Option.................................................. - 19 -
Transfers............................................................. - 19 -
Dollar-Cost Averaging................................................. - 20 -
Surrender of the Policy............................................... - 21 -
Partial Surrenders.................................................... - 21 -
Loan Benefits......................................................... - 22 -
Requesting Payments................................................... - 24 -
Other Changes......................................................... - 25 -
Reports to Owners..................................................... - 25 -
Other Policy Provisions............................................... - 25 -
Assignment and Change of Owner........................................ - 27 -
Supplemental Benefits................................................. - 27 -
CHARGES AND DEDUCTIONS...................................................... - 28 -
POLICY VALUES............................................................... - 33 -
Policy Value.......................................................... - 33 -
Cash Surrender Value.................................................. - 33 -
Net Cash Surrender Value.............................................. - 33 -
Variable Account Value................................................ - 34 -
Fixed Account Value................................................... - 37 -
DEATH BENEFITS.............................................................. - 38 -
Amount of Death Benefit Payable....................................... - 38 -
Death Benefit Options................................................. - 38 -
Changing the Death Benefit Option..................................... - 39 -
Changing the Face Amount.............................................. - 40 -
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Effect of Partial Surrenders on the Death Benefit .................... - 42 -
Changing the Beneficiary ............................................. - 42 -
HYPOTHETICAL ILLUSTRATIONS.................................................. - 42 -
TAX CONSIDERATIONS.......................................................... - 52 -
ADDITIONAL INFORMATION...................................................... - 59 -
Directors and Officers of United Investors............................ - 59 -
Sale of the Policies.................................................. - 60 -
Voting of Portfolio Shares............................................ - 61 -
Other Information..................................................... - 62 -
Litigation............................................................ - 62 -
Legal Matters......................................................... - 62 -
Experts............................................................... - 62 -
Financial Statements.................................................. - 63 -
</TABLE>
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not be lawfully made.
-4-
<PAGE>
SUMMARY AND DIAGRAM OF THE POLICY
The following summary of prospectus information and diagram of the important
features of the Policy should be read in conjunction with the more detailed
information appearing elsewhere in this prospectus. Unless otherwise indicated,
the description of the Policy in this prospectus assumes that the Policy is in
force and there is no outstanding Loan Balance. Definitions of certain terms
used in this prospectus may be found by referring to the "Definitions" section
immediately following the diagram.
The Policy. The Policy is designed to provide life insurance coverage on a
named Insured up to the Maturity Date, cash values, surrender rights, loan
privileges, and other features associated with conventional life insurance. You
should consider the Policy in conjunction with other insurance you own. It may
not be advantageous to replace existing insurance with the Policy.
The Cash Surrender Value may be substantially lower than the premiums paid. The
Policy Value may decrease if the investment performance of the Investment
Divisions to which Policy Value is allocated is sufficiently adverse or not
sufficiently positive to cover the charges under the Policy. If the Net Cash
Surrender Value becomes insufficient to cover charges when due and the Death
Benefit Guarantee is not in effect, the Policy will terminate without value
after a grace period. See "Premiums to Prevent Termination."
Tax Considerations. United Investors intends for the Policy to satisfy the
definition of a life insurance contract under Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"). Under certain circumstances, a
Policy could be treated as a "modified endowment contract." We will monitor
Policies and will attempt to notify you on a timely basis if your Policy is in
jeopardy of becoming a modified endowment contract. For further discussion of
the tax status of a Policy and the tax consequences of being treated as a life
insurance
-5-
<PAGE>
contract or a modified endowment contract, see "Tax Considerations."
Free Look Right to Cancel. For a limited time after the Policy is issued, you
have the right to cancel your Policy and receive a full refund of all premiums
paid. See "Free Look Right to Cancel Policy."
Owner Inquiries. If you have any questions, you may write or call our
Administrative Office at 2323 Bryan Street - Suite 1100, P.O. Box 219065,
Dallas, TX 75221-9065, (800) 453-1271.
-6-
<PAGE>
DIAGRAM OF POLICY
- --------------------------------------------------------------------------------
PREMIUMS
* You select a payment plan but are not required to pay premiums according
to the plan. You can vary the frequency and amount, within limits, and can skip
planned premiums. See "Planned Premiums." Under certain circumstances, extra
premiums may be required to prevent termination. See "Premiums to Prevent
Termination."
* Minimum initial premium and planned premium depend on the Insured's age,
sex, risk class, Face Amount selected, and any supplemental benefit riders.
See "Premiums."
* Unplanned premiums may be made, within limits. See "Premiums."
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ALLOCATIONS OF NET PREMIUMS
* A 3.5% premium expense charge is deducted from each premium before
allocation resulting in a Net Premium.
* No sales load is deducted from premiums.
* You direct the allocation of Net Premiums among the Investment Divisions
and the Fixed Account. See "Net Premium Allocations" for rules and limits.
* Interest is credited on amounts allocated to the Fixed Account at a rate
determined by United Investors, but not less than an annual effective rate
of 4%. See "Transfers" for rules and limits on Fixed Account allocations.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
PORTFOLIOS AVAILABLE THROUGH INVESTMENT DIVISIONS
* The Investment Divisions invest in corresponding Portfolios of TMK/United
Funds, Inc. See "TMK/United."
* The Policy Value in the Investment Divisions is not guaranteed and may
decrease or increase. Principal is not guaranteed.
* The Portfolios currently available and their management fees and other
expenses (expressed as a percentage of net assets of each Portfolio) are as
follows. The figures are for 1996 (except for Science and Technology which are
estimates for 1997 because it commenced operations on April 4, 1997). Future
fees and expenses may be higher or lower.
<TABLE>
<CAPTION>
Asset Balanced Bond Growth High Income
Strategy
<S> <C> <C> <C> <C> <C>
Fees .80% .60% .53% .70% .65%
Expenses .13% .10% .06% .03% .06%
------ ------ ------ ------ ------
Total .93% .70% .59% .73% .71%
</TABLE>
<TABLE>
<CAPTION>
Income International Limited-Term Money Science and Small Cap
Bond Market Technology
<S> <C> <C> <C> <C> <C> <C>
Fees .70 % .80% .55% .50% .70% .85%
Expenses .03 % .20% .21% .11% .03% .06%
------ ------ ------ ------ ------ ------
Total .73 % 1.00% .76% .61% .73% .91%
</TABLE>
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-7-
<PAGE>
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DEDUCTIONS FROM ASSETS
* A monthly deduction is made for: (1) cost of insurance; (2) a monthly
administrative charge (currently $5.00; maximum is $7.50); (3) a Guaranteed
Death Benefit Charge of $0.01 per $1,000 of Face Amount as long as the Death
Benefit Guarantee remains in effect; and (4) any supplemental benefit charges.
See "Charges and Deductions -- Monthly Deduction."
* A daily charge for mortality and expense risks at a current effective
annual rate of 0.90% during the first 10 years of the Policy (0.70% thereafter)
is deducted from assets in the Investment Divisions. The maximum mortality and
expense risk charge is 0.90% for all Policy Years. See "Charges Deducted From
the Investment Divisions." This charge is not deducted from Fixed Account Value.
* Management fees and other expenses are deducted from the assets of each
Portfolio. See "Portfolios Available Through Investment Divisions."
* See "Allocations of Net Premiums" and "Cash Benefits" for other charges
and deductions.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
POLICY VALUE
* The Policy Value is the sum of the amounts in the Investment Divisions and
in the Fixed Account credited to your Policy. See "Policy Value," "Fixed Account
Value," and "Variable Account Value."
* Policy Value varies from day to day to reflect Investment Division
investment experience, interest credited on Fixed Account allocations, charges
deducted and other Policy transactions (such as Policy Loans, transfers and
Partial Surrenders.)
* Policy Value can be transferred ($100 minimum) among the Investment
Divisions and the Fixed Account up to 12 times in a Policy Year. See "Transfers"
for rules and limits. Policy Loans reduce the amount available for allocations
and transfers.
* Policy Value serves as the starting point for calculating certain values
under a Policy, such as the Cash Surrender Value and the Death Benefit
(under Option B).
* There is no minimum guaranteed Policy Value. The Policy may terminate on
a Monthly Anniversary if the Net Cash Surrender Value is insufficient to
cover the Monthly Deduction then due and the Death Benefit Guarantee is not
in effect.
- -----------------------------------------------------------------------------
-8-
<PAGE>
- --------------------------------------------------------------------------------
CASH BENEFITS
* Loans may be taken for amounts up to 90% of Cash Surrender Value. See "Policy
Loans" and "Tax Considerations."
* Partial Surrenders generally can be made at any time during the Insured's life
before the Policy is terminated provided there is sufficient remaining Net Cash
Surrender Value. A Partial Surrender charge equal to the lesser of $25 or 2% of
the Partial Surrender amount requested, plus a portion of the surrender charge,
will be charged for each Partial Surrender. See "Partial Surrenders" for rules
and limits.
* The Policy can be surrendered at any time for its Net Cash Surrender Value
(Policy Value minus any applicable surrender charge minus any Loan Balance). See
"Full Surrenders."
* A surrender charge will be deducted from the Policy Value upon a full
surrender of the Policy prior to the end of the 16th Policy Year or the end of
the 16th year after an increase in Face Amount. The surrender charge varies
based on the Insured's age on the Policy Date or Attained Age at the time of an
increase and is a stated amount per $1,000 of Face Amount. For each age, the
surrender charge is imposed on full surrenders during the first five Policy
Years (or first five years after an increase in Face Amount). For each age, the
surrender charge then decreases annually beginning in the sixth Policy Year
until it reaches zero at the end of the 16th Policy Year. See "Surrender
Charge."
* A variety of payment options are available.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
DEATH BENEFITS
* Death Benefits are available as lump sum or under a variety of payment
options.
* The minimum Face Amount available varies based on the age and risk class of
the Insured.
* Death Benefits are available in two Death Benefit Options: Option A (greater
of Face Amount or a multiple of Policy Value); or Option B (greater of Face
Amount plus the Policy Value, or a multiple of Policy Value). See "Death
----
Benefits."
* There is flexibility to change the Face Amount and to change the Death Benefit
Option. See "Changing the Face Amount" and "Changing the Death Benefit Option"
for rules and limits.
* The Death Benefit Guarantee keeps the Policy in force regardless of
sufficiency of Net Cash Surrender Value as long as cumulative premiums paid on
the Policy, less any Partial Surrenders and any Loan Balance, are at least equal
to (a) the Minimum Monthly Premium multiplied by (b) the number of months the
Policy has been in force. See "Death Benefit Guarantee."
* The Death Benefit generally should be excludable from the gross income of the
Beneficiary. See "Tax Considerations."
- --------------------------------------------------------------------------------
-9-
<PAGE>
DEFINITIONS
Administrative Office - 2323 Bryan Street - Suite 1100, P.O. Box 219065,
Dallas, TX 75221-9065, (800) 453-1271.
Attained Age - The age of the Insured on his or her last birthday at the
beginning of each Policy Year.
Cash Surrender Value - Policy Value less any applicable surrender charges.
Death Benefit - The amount of insurance payable to the Beneficiary on the death
of the insured.
Death Benefit Guarantee Period -- The period in which the Death Benefit is
guaranteed to remain in effect as long as the sum of the premiums paid minus any
Partial Surrenders and any Loan Balance equals or exceeds the Minimum Monthly
Premium multiplied by the number of months the Policy is in force.
Death Benefit Option - One of two options under the Policy that is used to
determine the amount of the Death Benefit.
Fixed Account - All assets of United Investors Life Insurance Company other than
those in any separate account.
Fixed Account Value - The Policy Value in the Fixed Account.
Loan Balance - The sum of all outstanding loans including principal and
interest.
Maturity Date - Policy Anniversary on or next following the Insured's 100th
Birthday.
Minimum Monthly Premium - For any Policy Month during the Death Benefit
Guarantee Period, the minimum amount of premium required to keep the Death
Benefit Guarantee in effect.
Monthly Anniversary - The same day each month as the Policy Date. If the
Monthly Anniversary falls on a date other than a Valuation Date, the next
following Valuation Date will be deemed the Monthly Anniversary.
Net Cash Surrender Value - Cash Surrender Value less any Loan Balance.
Net Premium - The premium received less the premium expense charge.
Partial Surrender - A request to withdraw a portion of the Net Cash Surrender
Value. A Partial Surrender will be subject to a surrender charge.
Policy Anniversary - The same day and month as the Policy Date each year that
the Policy remains in force. If the Policy Anniversary falls on a date other
than a Valuation Date, the next following Valuation Date will be deemed the
Policy Anniversary.
Policy Date - The date from which Policy Anniversaries and Policy Years are
determined. Your Policy Date is shown in your Policy.
Policy Loan - A request to borrow a portion of the Net Cash Surrender Value.
Policy Month - The first Policy Month starts on the Policy Date. Subsequent
Policy Months start on the Monthly Anniversary.
Policy Value - The sum of the Variable Account Value and the Fixed Account
Value.
Valuation Date - Each day that the New York Stock Exchange is open for trading.
Valuation Period - The period of time beginning at the close of the New York
Stock Exchange on one Valuation Date and ending at the close of the New York
Stock Exchange on the next Valuation Date.
Variable Account Value - The sum of the values of the Investment Divisions under
the Policy.
We, Us, or United Investors - United Investors Life Insurance Company.
You and Your - The Owner of the Policy.
-10-
<PAGE>
UNITED INVESTORS
United Investors Life Insurance Company. United Investors is a Missouri Stock
life insurance company that was incorporated on August 17, 1981 as the successor
to a company of the same name established in Missouri on September 27, 1961.
United Investors is indirectly owned by Torchmark Corporation. United Investors
is principally engaged in offering life insurance and annuity contracts and is
authorized to do business in the District of Columbia and all states except New
York. United Investors also serves as the depositor to United Investors Life
Variable Account, an investment company supporting other variable life insurance
policies issued by United Investors. United Investors' address is 2001 Third
Avenue South, Birmingham, Alabama 35233. See "Directors and Officers of United
Investors" for information on the directors and officers of United Investors.
THE VARIABLE ACCOUNT AND TMK/UNITED
The Variable Account. United Investors established United Investors Universal
Life Variable Account (the "Variable Account") as a separate investment account
under Missouri law on April 18, 1997. United Investors owns the assets in the
Variable Account and is obligated to pay benefits under the Policies. The
Variable Account is used to support the Policies as well as for other purposes
permitted by law. The Variable Account is registered with the Securities and
Exchange Commission ("SEC") as a unit investment trust under the Investment
Company Act of 1940, as amended (the "1940 Act") and qualifies as a "separate
account" within the meaning of the federal securities laws. Such registration
does not involve any supervision by the SEC of the management of the Variable
Account or United Investors.
-11-
<PAGE>
The Variable Account is divided into Investment Divisions, each of which
currently invests in shares of a specific Portfolio of TMK/United Funds, Inc.
See "TMK/United." These Investment Divisions buy and redeem Portfolio shares at
net asset value. Any dividends and distributions from security transactions of a
Portfolio are reinvested at net asset value in shares of the same Portfolio.
Income, gains and losses, realized or unrealized, of an Investment Division are
credited to or charged against that Investment Division without regard to any
other income, gains or losses of United Investors. Assets equal to the reserves
and other contract liabilities with respect to each Investment Division are not
chargeable with liabilities arising out of any other business or account of
United Investors. If the assets exceed the required reserves and other
liabilities, United Investors may transfer the excess to its general account.
The Variable Account may include other Investment Divisions that are not
available under the Policy and are not otherwise discussed in this prospectus.
United Investors may substitute another Investment Division or insurance company
separate account under the Policy if, in United Investors' judgment, investment
in an Investment Division should no longer be possible or becomes inappropriate
to the purposes of the Policies, or if investment in another Investment Division
or insurance company separate account is in the best interest of Owners. No
substitution may take place without notice to Owners and prior approval of the
SEC and insurance regulatory authorities, to the extent required by the 1940 Act
and applicable law.
United Investors may make changes to the Variable Account to the extent
permitted by applicable law and regulations. These changes may include: (1)
operating the Variable Account as a management company under the 1940 Act, or in
any other form permitted by law, if we deem it to be in the best interest of
Owners; (2) deregistering the Variable Account under the 1940 Act if such
registration is no longer required; or (3) combining the Variable Account with
other separate investment accounts.
-12-
<PAGE>
TMK/United. The Variable Account has eleven Investment Divisions, each investing
in a specific Portfolio of TMK/United. TMK/United is a series-type fund
registered with the SEC as a diversified open-end management investment company
under the 1940 Act. Waddell & Reed Investment Management Company ("Waddell &
Reed"), an affiliate of United Investors, is the manager of TMK/United and
provides investment advisory services to TMK/United. Waddell & Reed maintains a
large staff of experienced investment personnel and provides investment advice
to and supervises investments of a number of mutual funds. Each Portfolio pays
Waddell & Reed a management fee for managing that Portfolio's investments. See
"Summary and Diagram of the Policy" and the accompanying prospectus for
TMK/United. The investment objective(s) of each of the Portfolios in which
Investment Divisions invest are summarized below. There is no assurance that
these objectives will be met. Further information about the Portfolios is
contained in the accompanying prospectus for TMK/United, which you should read
in conjunction with this prospectus.
Asset Strategy Portfolio seeks high total return with reduced risk over the
long term. It diversifies among stocks, bonds, and short-term instruments,
both in the United States and abroad.
Balanced Portfolio primarily seeks current income with a secondary goal of
long-term appreciation of capital by investing in a variety of securities,
including debt securities, common stocks and preferred stocks.
Bond Portfolio seeks to provide current income with an emphasis on
preservation of capital. It invests primarily in debt securities of
varying yields, quality and maturities.
-13-
<PAGE>
Growth Portfolio primarily seeks capital growth. As a secondary goal it
seeks current income. It invests primarily in common stocks or securities
convertible into common stocks.
High Income Portfolio primarily seeks high current income. As a secondary
goal it seeks capital growth when consistent with the primary goal. It
invests primarily in high-yield, high-risk fixed-income securities,
commonly known as "junk bonds," but may have up to 20% of its assets in
common stocks.
Income Portfolio seeks to maintain current income, subject to market
conditions. It invests primarily in common stocks or securities
convertible into common stocks.
International Portfolio primarily seeks long-term appreciation of capital
with a secondary goal of current income by investing primarily in
securities issued by companies or governments of any nation.
Limited-Term Bond Portfolio seeks a high level of current income consistent
with preservation of capital by investing primarily in debt securities of
investment grade, including debt securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. The Portfolio seeks
to maintain a dollar-weighted average maturity of its portfolio of two to
five years.
Money Market Portfolio seeks to maximize current income consistent with
stability of principal. It may invest in money market securities such as
bank obligations and instruments
-14-
<PAGE>
secured by bank obligations, commercial paper and corporate debt
obligations and obligations of the U.S. and Canadian Governments or their
respective agencies and instrumentalities.
Science and Technology Portfolio seeks long-term capital growth through
investments primarily in science and technology securities.
Small Cap Portfolio seeks capital growth through a diversified holding of
securities, primarily in the common stocks of, or securities convertible
into the common stocks of, relatively new or unseasoned companies,
companies which are in their early stages of development or smaller
companies positioned in new and emerging industries where the opportunity
for rapid growth is above average.
FACTS ABOUT THE POLICY
Applying for a Policy. To purchase a Policy, you must complete an application
and submit it to United Investors' Administrative Office at the address listed
on the front of this prospectus. You also must pay an initial premium which
varies by age, sex and risk class. See "Premiums," below. Your initial premium
can be submitted with your application, subject to our underwriting rules, or at
a later date. Coverage becomes effective as of the Policy Date. If an individual
dies before the Policy Date, United Investors' sole liability will be to return
the premiums paid plus any interest earned on it unless a Temporary Insurance
Agreement is in effect.
Generally, United Investors will issue a Policy covering an Insured up to age 75
if evidence of insurability satisfies our underwriting rules. Evidence of
insurability may include, among other things, a medical
-15-
<PAGE>
examination of the Insured. United Investors may, in its sole discretion, issue
a Policy covering an Insured over age 75. We reserve the right not to accept an
application for any lawful reason.
Free Look Right to Cancel Policy. During your "free look" period, you may cancel
your Policy and receive a refund of all premiums paid. The free look period
expires the later of: (a) 20 days after you receive your Policy; or (b) 45 days
after you sign the application for the Policy. Some states may require a longer
period. If you decide to cancel the Policy, you must return it by mail or other
delivery to United Investors or to the agent who sold it to you prior to the end
of the free look period.
Premiums. The premium amounts sufficient to fund a Policy depend on a number of
factors, such as the age, sex and risk class of the proposed Insured, the
desired Face Amount, and any supplemental benefits. After the initial premium is
paid, additional premiums may be paid in any amount (of at least $25) and at any
time. We may increase the minimum amount of additional premiums upon 90 days
advance written notice to you. However, total premiums paid in a Policy Year may
not exceed guideline premium limitations for life insurance set forth in the
Code. We reserve the right to reject any premium that would result in the Policy
being disqualified as life insurance under the Code and will refund any rejected
premium. In addition, we will monitor Policies and will attempt to notify the
Owner on a timely basis if his or her Policy is in jeopardy of becoming a
modified endowment contract under the Code. See "Tax Considerations."
Planned Premiums. When you apply for a Policy, you select a quarterly, semi-
annual or annual premium payment plan. You may also arrange for premiums to be
paid monthly via automatic deduction from your checking account. You are not
required to pay premiums in accordance with this premium plan; rather, you can
pay more or less than planned (subject to the $25 minimum), or skip a planned
premium entirely. You can change the amount of planned premiums and payment
arrangements, or switch payment frequencies, whenever
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you want by providing satisfactory written instructions to the Administrative
Office. Such changes will be effective upon our receipt of the instructions.
Depending on the Policy Value at the time of any increase in the Face Amount and
the amount of the increase requested, a change in the amount of planned premiums
may be advisable. See "Changing the Face Amount."
Premiums to Prevent Termination. If you do not pay planned premiums or if the
investment performance of the Policy is not sufficient, your Policy may
terminate without value; however it will not necessarily terminate. A Policy
terminates depending on whether (a) its Net Cash Surrender Value is sufficient
to cover the Monthly Deduction when due, and (b) the Death Benefit Guarantee is
in effect. If the Death Benefit Guarantee is not in effect on a Monthly
Anniversary and either: (a) the Net Cash Surrender Value is less than the
Monthly Deduction; or (b) the Loan Balance exceeds the Cash Surrender Value less
surrender charges, the Policy will terminate without value unless additional
premiums are paid. See "Monthly Deduction," and "Death Benefit Guarantee."
You will have a 61-day grace period to pay a premium sufficient to cover the
Monthly Deductions. United Investors will send notice of the amount required to
be paid during the grace period to your last known address and to any assignee
of record. The grace period will begin when the notice is sent and your Policy
will remain in effect during the grace period. See "Amount of Death Benefit
Payable" and "Effect of Policy Loan." The grace period premium required to be
paid will be sufficient to keep the Policy in force for three months regardless
of investment performance. The payment required will not exceed: (a) the amount
by which the Loan Balance exceeds the Cash Surrender Value; plus (b) any accrued
and unpaid Monthly Deductions as of the date of the notice; plus (c) an amount
sufficient to cover the next two Monthly Deductions. If the grace period premium
has not been paid before the grace period ends, your Policy will terminate. It
will have no value and no benefits will be payable. See "Other Policy
Provisions" for a discussion of your reinstatement
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rights. If the Insured should die during the grace period before the grace
period premium is paid, the Death Benefit will still be payable to the
Beneficiary, although the amount paid will reflect a reduction for the Monthly
Deduction(s) due on or before the date of the Insured's death and any Loan
Balance.
Death Benefit Guarantee. During the Death Benefit Guarantee Period (see
"Definitions"), your Death Benefit is guaranteed to remain in effect as long as
cumulative premiums paid, less any Partial Surrenders and any Loan Balance, are
at least equal to (a) the Minimum Monthly Premium, multiplied by (b) the number
of months the Policy has been in force. If this requirement is met, the Policy
will remain in force, regardless of the sufficiency of Net Cash Surrender Value
to cover Monthly Deductions. If the Minimum Monthly Premium has changed since
the Policy Date, the total premium amount required will be based on the
different Minimum Monthly Premiums required and the number of months for which
each applied. If the Death Benefit Guarantee ends due to insufficient premium
payments, it may not be restored by payment of additional premiums.
Crediting Premiums to the Policy. Between the date your initial premium is
received and the Policy Date, we will credit interest on the initial premium as
if it had been invested in the Investment Division investing in the Money Market
Portfolio. On the Policy Date, the initial Net Premium, plus any accrued
interest on that amount will be credited to the Policy. Any additional premium
received (see "Net Premium Allocations," below) will be credited to the Policy
on the date we receive it, or the next Valuation Date thereafter.
Net Premium Allocations. When you apply for a Policy, you specify the percentage
(from 0% to 100%) of Net Premium to be allocated to each Investment Division and
the Fixed Account. You can change the allocation percentages at any time by
sending satisfactory written instructions to our Administrative Office. The
change will apply to all premiums received after we receive your instructions,
unless you instruct
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otherwise. Net Premium allocations must be in percentages totaling 100%, and
each allocation percentage must be a whole number. See "TMK/United" for a
description of the Portfolios in which the Investment Divisions invest.
Fixed Account Option. The Fixed Account is part of United Investors' general
account assets. It is not a separate account. Amounts allocated to the Fixed
Account are credited with interest at rates determined in our sole discretion,
but in no event will interest credited on these amounts be less than an
effective annual rate of 4%. The current interest rate is the guaranteed minimum
interest rate plus any excess interest rate. The current interest rate is
determined periodically. The current interest rate will be guaranteed for at
least a one year period. You assume the risk that interest credited may not
exceed the guaranteed minimum rate of 4% per year. United Investors's general
account assets are used to support our insurance and annuity obligations other
than those funded by separate accounts. Subject to applicable law, United
Investors has sole discretion over the investment of the assets of the Fixed
Account. There are significant limits on your right to transfer Policy Value
from the Fixed Account. See "Transfers," below.
Because of exemptive and exclusionary provisions, interests in the Fixed Account
have not been registered under the Securities Act of 1933 nor has the Fixed
Account been registered as an investment company under the 1940 Act.
Accordingly, neither the Fixed Account nor any interests therein are subject to
the provisions of these Acts and, as a result, the staff of the Securities and
Exchange Commission has not reviewed the disclosure in this prospectus relating
to the Fixed Account.
Transfers. At any time after the end of the free-look period, you may transfer
all or part of the Variable Account Value to one or more of the variable
Investment Divisions or to the Fixed Account up to 12 times in a Policy Year.
There is no charge for making transfers. You may transfer all or part of the
Fixed Account
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Value to a variable Investment Division or Investment Divisions only once each
Policy Year and the maximum amount you can transfer out of the Fixed Account is
the greater of: (1) 25% of the prior Policy Anniversary's unloaned Fixed Account
Value; or (2) the amount of the prior Policy Year's transfer. If a transfer is
made from the Fixed Account to a variable Investment Division, no transfer from
that variable Investment Division to the Fixed Account may be made for six
months after the transfer date. The minimum amount that may be transferred out
of a variable Investment Division or the Fixed Account is $100, or, if less, the
Policy Value held in the Investment Division or in the Fixed Account. The amount
remaining must be at least $100, or we will transfer the total value.
Transfer requests may be made by satisfactory written or telephone request (if
we have your written authorization for telephone requests on file). A transfer
will take effect on the date we receive the request at the Administrative Office
if it is received by 4:00 p.m. Eastern time; otherwise it will take effect on
the following business day. United Investors may, however, defer transfers under
the same conditions that we may delay paying proceeds. See "Requesting
Payments." United Investors reserves the right to modify, restrict, suspend or
eliminate the transfer privileges, including telephone transfer privileges, at
any time, for any reason.
Dollar-Cost Averaging. Prior to the Maturity Date, the dollar-cost averaging
program permits you to systematically transfer on a monthly basis a set dollar
amount from the Money Market Investment Division to the other Investment
Divisions. The minimum automatic transfer amount from the Money Market
Investment Division is $100. If the transfer is to be made to more than one
Investment Division, a minimum of $25 must be transferred to each Investment
Division selected. The dollar-cost averaging method of investment is designed to
reduce the risk of making purchases only when the price of units is high, but
you should carefully consider your financial ability to continue the program
over a long enough
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period of time to purchase units when their value is low as well as when it is
high. Dollar-cost averaging does not assure a profit or protect against a loss.
You may elect to participate in the dollar-cost averaging program at any time by
sending us a written request. Once elected, dollar-cost averaging remains in
effect from the date we receive your request until the value of the Money Market
Investment Division is depleted, or until you cancel the program by written
request or by telephone. There is no additional charge for dollar-cost
averaging. A transfer under this program is not considered a transfer for
purposes of calculating the number of transfers. We reserve the right to
discontinue offering the dollar-cost averaging program at any time and for any
reason. A second method of dollar-cost averaging is to directly allocate monthly
premiums to the Investment Divisions you desire.
Surrender of the Policy. You may surrender your Policy at any time for its Net
Cash Surrender Value. See "Requesting Payments." The Net Cash Surrender Value is
the Policy Value minus any surrender charge and minus any Loan Balance. A
surrender charge may apply. See "Surrender Charge." Your Policy will terminate
and cease to be in force if it is surrendered. It cannot later be reinstated.
Surrendering the Policy may have tax consequences. See "Tax Considerations."
Partial Surrenders. You may make Partial Surrenders under your Policy at any
time during the Insured's life and before the Policy has terminated. See
"Requesting Payments." Requests for Partial Surrenders must be made in writing.
The minimum Partial Surrender amount is $100. A Partial Surrender may not exceed
the Net Cash Surrender Value minus $300. A Partial Surrender charge equal to the
lesser of $25 or 2% of the Partial Surrender amount plus a portion of the
surrender charge equal to: (1) the percentage of the Net Cash Surrender Value
requested; multiplied by
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(2) the surrender charge then in effect. This charge will be deducted from
your Policy Value along with the Partial Surrender amount requested. When
you request a Partial Surrender, you can direct how the amount will be
deducted from your Policy Value. If you provide no directions, the Partial
Surrender will be deducted from your Policy Value in the Investment
Divisions and Fixed Account on a pro-rata basis. If Death Benefit Option A
is in effect, a Partial Surrender may reduce the Face Amount. See "Effect
of Partial Surrenders on the Death Benefit." Partial Surrenders may have
tax consequences.
Loan Benefits. You may borrow up to 90% of your Cash Surrender Value at any
time by submitting a written request to us. Outstanding loans, including
accrued interest, reduce the amount available for new loans. A loan must be
for at least $200. Your Policy may terminate if the Loan Balance is greater
than the Cash Surrender Value. See "Premiums to Prevent Termination."
Policy Loans may have Federal income tax consequences. See "Tax
Considerations."
When a loan is made, an amount equal to the loan and any loan interest is
transferred from the Variable Account Value to the Fixed Account. We will
allocate the amount transferred in the proportion that the value of each
Investment Division bears to the Variable Account Value unless you specify
an Investment Division(s) from which the loan is to be made. Your loan
will be divided into two parts: the Preferred Loan Amount; and the Non-
Preferred Loan Amount. The Preferred Loan Amount is equal to the amount of
the Loan Balance that does not exceed the Policy Value minus the total
premiums paid, excluding any premiums paid during a grace period. The Non-
Preferred Loan Amount is equal to any portion of the Loan Balance that
exceeds the Preferred Loan Amount.
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Interest. We will charge interest daily on any outstanding loan at an
--------
effective annual rate of 6.0%. Interest is due and payable at the end of
each Policy Year while a loan is outstanding. Interest paid on a Policy
Loan generally is not tax deductible. If, on any Policy Anniversary,
interest accrued since the last Policy Anniversary has not been paid, the
amount of the interest is added to the loan and becomes part of the
outstanding Loan Balance. Interest will be taken from the Investment
Divisions in the proportion that the value of each Investment Division
bears to the Variable Account Value. On each Monthly Anniversary, the
loaned amount will be credited with interest at a minimum guaranteed annual
effective rate of 4.0%. We may also credit additional interest (currently
up to an effective annual rate 2%) on the Preferred Loan Amount.
Loan Repayment. You may repay all or part of your Loan Balance at any time
--------------
while the Insured is living and the Policy is in force. Loan repayments
must be at least $200 each (or the outstanding Loan Balance if less). Upon
repayment of the Loan Balance, the portion of the repayment allocated to an
Investment Division will be transferred from the Fixed Account and increase
the value in the Investment Division. The repayment will be allocated among
the Investment Divisions and the Fixed Account based on the instructions
for Net Premium allocations then in effect unless you instruct us
otherwise. Any payment received when a loan is outstanding will be treated
as a premium unless you instruct otherwise.
Effect of Policy Loan. A Policy Loan, whether or not repaid, will affect
---------------------
Policy Values over time because the investment results of the Investment
Divisions may be less than or greater than the net interest rate credited
on the amount transferred to the Fixed Account securing the loan. By
comparison to a Policy under which no loan was made, the Policy Value will
be lower if the net interest rate credited to the amount in the Fixed
Account securing a loan is less than the investment return of the
Investment Divisions and greater if the Fixed Account net interest rate is
higher than the investment return of the Investment Divisions. If the
Death Benefit becomes payable while a Policy Loan is outstanding, the Loan
Balance will be deducted in calculating the
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<PAGE>
Death Benefit. If the Loan Balance exceeds the Cash Surrender Value on any
Monthly Anniversary and the Death Benefit Guarantee is not in effect, the
Policy will terminate. We will send you, and any assignee of record, notice
of the termination. You will have a 61-day grace period to submit a
sufficient payment to avoid termination.
Requesting Payments. Written requests for payment (except where
telephone requests are authorized by us) must be sent to our Administrative
Office or given to an authorized United Investors agent for forwarding to
our office. We will ordinarily pay any Death Benefit, loan amount, Net Cash
Surrender Value or Partial Surrender amounts within seven days after
receipt at our Administrative Office of all the documents required for such
a payment. Other than the Death Benefit, which is determined as of the date
of the Insured's death, the amount will be determined as of the date our
Administrative Office receives all required documents.
We may delay making a payment of any amount from the Investment Divisions
or processing a transfer request if: (1) the disposal or valuation of the
Variable Account's assets is not reasonably practicable because the New
York Stock Exchange is closed for other than a regular holiday or weekend,
trading is restricted by the SEC, or the SEC declares that an emergency
exists; or (2) the SEC by order permits postponement of payment to protect
United Investors's Policy Owners. We also may defer making payments
attributable to a check that has not cleared, and we may defer payment of
proceeds from the Fixed Account for up to six months from the date we
receive the request. If we defer payment for more than 30 days, we will pay
interest on the amount deferred at an annual rate of at least 4%. However,
we will not defer payment of a withdrawal or Policy Loan requested to pay a
premium due on a United Investors policy.
The Policy offers a wide variety of optional ways of receiving proceeds
payable under the Policy other than in a lump sum. An authorized United
Investors agent can explain these options upon request. None of these
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<PAGE>
options vary with the investment performance of a Variable Account because
they are all forms of fixed-benefit annuities.
Other Changes. At any time we may make such changes in the Policy as are
necessary: to assure compliance at all times with the definition of life
insurance prescribed by the Code; to make the Policy, our operations, or
the operation of the Variable Account conform with any law or regulation
issued by any government agency to which they are subject; or to reflect a
change in the operation of the Variable Account, if allowed by the Policy.
Only an officer of United Investors has the right to change the Policy. No
agent has the authority to change the Policy or waive any of its terms.
All endorsements, amendments, or riders must be signed by an officer to be
valid.
Reports to Owners. United Investors maintains records and accounts of
all transactions involving the Policy, the Variable Account, the Fixed
Account and Policy Loans. Each year, or more often if required by law, you
will be sent a report showing information about your Policy for the period
covered by the report. You will also be sent an annual and a semi-annual
report for each Portfolio underlying an Investment Division to which you
have allocated Net Premiums, as required by the 1940 Act. In addition you
will receive a written confirmation of each transaction when you pay
premiums, make a PARTIAL SURRENDER, make transfers or take out a Policy
Loan.
Other Policy Provisions. The Policy contains provisions addressing the
following matters:
. Dividends. The Policy is non-participating. This means that no
dividends will be paid on the Policy. The Policy will not share
in our profits or surplus earnings.
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. Incontestability. The Policy limits our right to contest the
Policy as issued, as reinstated or as increased, except for
material misstatements contained in the application (including
any application upon reinstatement), after it has been in force
during the Insured's lifetime for a period of two years from the
Policy Date, the reinstatement date or effective date of the
increase.
. Suicide Exclusion. The Policy limits the Death Benefit if the
Insured dies by suicide generally within two years after the
Policy Date or effective date of the increase. In this instance,
our liability will be limited to the total premiums paid less any
PARTIAL SURRENDERS and any Loan Balance.
. Reinstatement. The Policy may be reinstated at any time within
five years after the Policy has terminated at the end of the
grace period. To reinstate the Policy, the Owner must: (1) submit
an application for reinstatement; (2) provide evidence of
insurability satisfactory to us; (3) pay or agree to
reinstatement of any Loan Balance; and (4) pay the premium
required to reinstate the Policy. The reinstatement date for the
Policy will be the Monthly Anniversary on or following the day we
approve the application for reinstatement. See the Policy for
additional information.
. Misstatement of Age or Sex. The Death Benefit will be adjusted if
the Insured's age or sex has been misstated in the application.
The benefits paid will be those which the last monthly cost of
insurance charge would have provided at the correct age and sex.
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<PAGE>
. Paid-Up Insurance Option. If premium payments cease, insurance
under the Policy and any supplemental benefits provided by rider
will continue as provided under the grace period provisions
described under "Premiums to Prevent Termination." The Policy
will not continue beyond the Maturity Date. Any supplemental
benefits added by rider will not continue beyond the termination
date described in the rider.
Assignment and Change of Owner. You may assign the Policy subject to its terms.
We will not be deemed to know of an assignment unless we receive a written copy
of it at our Administrative Office. We assume no responsibility for the
validity or effect of any assignment. In certain circumstances, an assignment
may be a taxable event. See "Tax Considerations" below. You may change the
Owner of the Policy by sending a written request to us while the Insured is
alive and the Policy is in force. The change will take effect the date you sign
the request, but the change will not affect any action we have taken before we
receive the request. A change of Owner may have tax consequences. See "Tax
Considerations." A change of Owner does not change the Beneficiary designation.
See "Changing the Beneficiary." Any such assignment or change must be in a
written form acceptable to us.
Supplemental Benefits. Your Policy may have supplemental benefits which are
attached to your Policy by rider. A charge will be deducted monthly from your
Policy Value for certain supplemental benefits. Each supplemental benefit is
subject to its own requirements as to eligibility and cost. You may cancel
supplemental benefits at any time. More details will be included in your Policy
if you choose any of these benefits. From time to time, we may make available
supplemental benefits other than those listed below. Contact your agent or the
Administrative Office for a complete list of the supplemental benefits
available.
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<PAGE>
. Accelerated Death Benefit Rider. This benefit allows
-------------------------------
acceleration of up to 75% of the Death Benefit (in a lump sum
only) if the Insured is diagnosed as having a terminal illness
expected to cause death within 12 months (unless a shorter
period is required by state law). There is no charge for this
Rider prior to the time the accelerated benefits are paid.
. Accidental Death Benefit Rider. This benefit will be paid if
------------------------------
the Insured dies as a result of an accident before age 70.
. Children's Term Insurance Rider. This benefit allows you to add
-------------------------------
Death Benefit coverage for your children.
. Additional Insured Term Insurance Rider. This benefit allows
---------------------------------------
you to provide for Death Benefits upon the death of your spouse
and/or business associates.
. Disability Waiver of Monthly Deduction Rider. The benefit
--------------------------------------------
provides for waiver of Monthly Deductions after the Insured has
been totally disabled for six months if disability commences
prior to age 60.
CHARGES AND DEDUCTIONS
United Investors deducts the charges described below. Certain of the charges
depend on a number of variables, and are illustrated in the hypothetical
illustrations depicted in this prospectus. The charges are for the services and
benefits provided, costs and expenses incurred and risks assumed by United
Investors under or in connection with the Policies. Services and benefits
provided by United Investors include:
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(1) the death benefits, cash and loan benefits provided by the Policy;
(2) investment options, including Net Premium allocations, dollar-cost
averaging programs;
(3) administration of various elective options under the Policy; and
(4) the distribution of various reports to Owners.
Costs and expenses incurred by United Investors include:
(1) those associated with underwriting applications and changes in Face
Amount and riders;
(2) various overhead and other expenses associated with providing the
services and benefits provided by the Policy;
(3) sales and marketing expenses; and
(4) other costs of doing business, such as federal, state and local
premium and other taxes and fees.
Risks assumed by United Investors include the risks that Insureds may live for a
shorter period of time than estimated resulting in the payment of greater Death
Benefits than expected, and that the costs of providing the services and
benefits under the Policies will exceed the charges deducted.
Premium Expense Charge. United Investors deducts a 3.5% charge from each
premium before allocating the resulting Net Premium to the Policy Value.
This charge is deducted for state premium taxes and federal income tax
treatment of deferred acquisition costs.
Mortality and Expense Risk Charge. United Investors currently deducts a
daily charge from assets in the Investment Divisions attributable to the
Policies at an effective annual rate of 0.90% of Variable
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Account assets during the first 10 Policy Years, and at an effective annual
rate of 0.70% thereafter. The maximum mortality and expense risk charge is
0.90% of Variable Account assets for all Policy Years. The mortality and
expense risk charge does not apply to Fixed Account assets.
Monthly Deduction. United Investors deducts the Monthly Deduction on the
Policy Date and on each Monthly Anniversary from Policy Value in the
Variable Account and the Fixed Account on a pro rata basis. The Monthly
Deduction for each Policy consists of:
(1) the cost of insurance charge discussed below;
(2) a current monthly administrative charge of $5.00 (which may
increase to a maximum charge of $7.50 per month);
(3) the Guaranteed Death Benefit Charge ($0.01 per $1,000 of Face
Amount) as long as the Death Benefit Guarantee remains in effect;
and
(4) charges for any supplemental benefits added by riders to the
Policy (see "Supplemental Benefits").
Surrender Charge. If the Policy is surrendered prior to the end of the 16th
Policy Year or the end of the 16th year following an increase in Face
Amount, United Investors will deduct a surrender charge based on the Face
Amount at issue, or increase, as applicable. The surrender charge will be
deducted before any surrender proceeds are paid. A pro rata portion of the
Surrender Charge will also be deducted for any Face Amount decreases. The
surrender charge varies based on the Insured's age on the Policy Date and
is calculated as an amount per $1,000 of the Face Amount. For each age the
surrender charge remains level for the first five Policy Years (or the
first five years after a Face
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Amount increase) and declines each year thereafter until it reaches zero at
the end of the 16th Policy Year (or at the end of the 16th year after an
increase in Face Amount).
During the first five Policy Years (or first five years after a Face Amount
increase) the surrender charge per $1,000 of Face Amount is as follows for
the selected ages below:
<TABLE>
<CAPTION>
Issue Age Charge per $1,000 of Face Amount
--------- --------------------------------
<S> <C>
25 $ 6.00
35 $ 7.00
45 $ 8.75
50 $10.00
55 $11.50
65 $16.75
75 $26.00
</TABLE>
For example, if a 50-year old purchases a Policy with a $100,000 Face
Amount and completely surrenders it within five years, the surrender charge
would be $1,000. See Appendix A for a complete list of applicable surrender
charges.
Although the surrender charges increase with the Insured's issue age, the
surrender charge as a percentage of premiums could actually decrease as the
Insured's issue age increases. This occurs because the premiums required
for a specified Face Amount are higher for Insureds with older issue ages
than for Insureds with younger issue ages, so for the same premium an older
Insured is likely to have a lower Face Amount. Therefore the surrender
charge for Insureds with older issue ages could actually represent a lower
portion of the premiums than it does for Insureds with younger issue ages.
Partial Surrender Charge. A Partial Surrender charge equal to the lesser of $25
or 2% of the Partial Surrender amount, plus a portion of the surrender charge
will apply to each Partial Surrender.
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Other Charges. See the prospectus for the TMK/United for a description of the
investment advisory fees and other expenses incurred by the Portfolios.
Cost of Insurance. The cost of insurance is the primary charge for the Death
Benefit provided by your Policy. The cost of insurance charge depends on a
number of variables that cause the charge to vary from Policy to Policy and from
Monthly Anniversary to Monthly Anniversary. The cost of insurance charge is
equal to (a) multiplied by the result of (b) minus (c) where:
(a) is the cost of insurance rate divided by 1,000;
(b) is the Death Benefit at the beginning of the Policy Month divided by
1.003274; and
(c) is the Policy Value at the beginning of the Policy Month.
The Policy Value used in this calculation is the Policy Value before deduction
of the Monthly Cost of Insurance Charge and Cost of Insurance for any Disability
Waiver of Monthly Deductions Rider, but after deductions for any other riders
and charges.
The cost of insurance rate is the rate applied to the insurance under the Policy
to determine the monthly cost of insurance charge. The cost of insurance rate
is based on the Insured's Attained Age, sex and applicable risk class.
We currently place Insureds in the following risk classes (available for male or
female) when we issue the Policy, based on our underwriting: Preferred, Standard
Non-tobacco, Standard Tobacco, Substandard Non-tobacco, and Substandard Tobacco.
The original risk class applies to the initial Face Amount. If an increase in
Face Amount is approved, a different risk class may apply to the increase, based
on the Insured's circumstances at the time of the increase. If you have
selected Death Benefit Option A, and if there have been any increases in the
Face Amount, the Policy Value will be considered a part of the initial Face
Amount. If the
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Policy Value exceeds the initial Face Amount, the excess will be considered part
of the increases in Face Amount in the order of the increases.
We guarantee that the cost of insurance rates used to calculate the monthly cost
of insurance charge will not exceed the maximum cost of insurance rates set
forth in the Policy. The maximum cost of insurance rates are based on the 1980
Commissioners Standard Ordinary Mortality Tables, Male or Female, Smoker or Non-
Smoker, Age Last Birthday, or a multiple thereof for substandard classes. See
"Hypothetical Illustrations" for examples showing the effects of the cost of
insurance charge.
POLICY VALUES
Policy Value. The Policy Value serves as a starting point for calculating
certain values under a Policy. It is the sum of the Variable Account Value and
the Fixed Account Value credited to the Policy. The Policy Value is determined
first on the Policy Date and thereafter on each Valuation Date. On the Maturity
Date, the proceeds payable under a Policy are equal to the Policy Value less any
Loan Balance. The Policy Value will vary to reflect the performance of the
Investment Divisions to which amounts have been allocated, interest credited on
amounts allocated to the Fixed Account and Loan Balance, charges, transfers,
Partial Surrenders, and Policy Loans (including loan repayments). It may be
more or less than premiums paid.
Cash Surrender Value. The Cash Surrender Value is the Policy Value reduced by
any surrender charge.
Net Cash Surrender Value. The Net Cash Surrender Value is the Cash Surrender
Value reduced by any Loan Balance. You will receive only the Net Cash Surrender
Value if you surrender your Policy.
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<PAGE>
Variable Account Value. The Variable Account Value is the sum of the values of
the Investment Divisions under the Policy. On the Policy Date, the value of the
Investment Divisions is equal to the initial Net Premium Payment allocated to
the Investment Divisions of the Variable Account plus any accrued interest from
the date of receipt of the payment to the Policy Date minus the portion of the
first month's Monthly Deduction allocated to the Investment Division.
On any Valuation Date thereafter, the value of each Investment Division is equal
to:
1. The value of the Investment Division on the preceding Valuation Date,
multiplied by the appropriate Net Investment Factor (described below)
since the previous Valuation Date; plus
2. The sum of all Net Premium Payments allocated to the Investment
Division since the previous Valuation Date; plus
3. The sum of all loan repayments allocated to the Investment Division
since the previous Valuation Date; plus
4. The amount of any transfers from other Investment Divisions or from
the Fixed Account to the Investment Division since the previous
Valuation Date; minus
5. The amount of any transfers to other Investment Divisions or to the
Fixed Account, including amounts transferred to secure a Policy Loan,
from the Investment Division since the previous Valuation Date; minus
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<PAGE>
6. The portion of any Partial Surrenders (including surrender charges) or
charges for any Face Amount decreases allocated to the Investment
Division since the previous Valuation Date; minus
7. The portion of the Monthly Deduction allocated to the Investment
Division since the previous Valuation Date.
Unit Values. When you allocate an amount to an Investment Division, either by
Net Premium allocation, transfer of Policy Value or repayment of a Policy Loan,
your Policy is credited with units in that Investment Division. The number of
units is determined by dividing the amount allocated, transferred or repaid to
the Investment Division by the Investment Division's unit value for the
Valuation Date when the allocation, transfer or repayment is effected. The
number of Investment Division units credited to a Policy will decrease when the
allocated portion of the Monthly Deduction is taken from the Investment
Division, a Policy Loan is taken from the Investment Division or an amount is
transferred from the Investment Division. The number of Investment Division
units may also decrease when a partial or full surrender occurs or if the Face
Amount is decreased. An Investment Division's unit value is an index United
Investors uses to measure the changes in investment results. The unit value for
each Investment Division varies to reflect the investment experience of the
underlying Portfolio, and may increase or decrease from one Valuation Date to
the next. The unit value for each Investment Division was arbitrarily set at
$1.00 when the Investment Division was established. For each Valuation Period
after the date of establishment, the unit value is determined by multiplying the
unit value for an Investment Division for the prior Valuation Period by the net
investment factor for the Investment Division for the current valuation period.
-35-
<PAGE>
Net Investment Factor. The net investment factor is an index used to measure
the investment performance of an Investment Division from one Valuation Period
to the next. The net investment factor for any Investment Division for any
Valuation Period is determined by dividing (a) by (b) and subtracting (c) from
the result, where:
(a) is the result of:
(1) the net asset value per share of the Portfolio shares held in the
Investment Division determined at the end of the current
Valuation Period; plus
(2) the per share amount of any dividend or capital gain
distributions on the Portfolio shares held in the Investment
Division, if the "ex-dividend" date occurs during the current
Valuation Period; plus or minus
(3) a charge or credit for any taxes reserved for the current
Valuation Period which we determine to have resulted from the
investment operations of the Investment Division;
(b) is the result of:
(1) the net asset value per share of the Portfolio shares held in the
Investment Division, determined at the end of the last prior
Valuation Period; plus or minus
(2) the charge or credit for any taxes reserved for the last prior
Valuation Period; and
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<PAGE>
(c) is a deduction for the current mortality and expense risk charge.
Fixed Account Value. On the Policy Date, the Fixed Account Value is equal to
the initial Net Premium allocated to the Fixed Account plus any accrued interest
from the date of receipt of the payment to the Policy Date minus the portion of
the first month's Monthly Deduction Allocated to the Fixed Account. On any
Monthly Anniversary thereafter, the Fixed Account Value is equal to:
1. The Fixed Account Value on the preceding Monthly Anniversary; plus
2. The sum of all Net Premium Payments allocated to the Fixed Account
since the previous Monthly Anniversary; plus
3. The sum of all Policy Loan repayments allocated to the Fixed Account
since the previous Monthly Anniversary; plus
4. Total interest credited to the Fixed Account since the previous
Monthly Anniversary; plus
5. The amount of any transfers from the Variable Account to the Fixed
Account, including amounts transferred to secure Policy Loans, since
the previous Monthly Anniversary; minus
6. The amount of any transfers from the Fixed Account to the Variable
Account since the previous Monthly Anniversary; minus
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<PAGE>
7. The portion of any Partial Surrenders (including surrender charges) or
charges for any Face Amount decreases allocated to the Fixed Account
since the previous Monthly Anniversary; minus
8. The portion of the Monthly Deduction allocated to the Fixed Account
since the previous Monthly Anniversary.
DEATH BENEFITS
If the Insured dies while the Policy is in force and prior to the Maturity Date,
we will pay the Death Benefit upon receipt at our Administrative Office of
satisfactory proof of the Insured's death. See "Requesting Payment." The Death
Benefit will be paid to the Beneficiary.
Amount of Death Benefit Payable. The amount of Death Benefit payable is the
amount of insurance determined under the Death Benefit Option in effect on the
date of the Insured's death, plus any supplemental benefits provided by riders,
minus any Loan Balance on that date and, if the date of death occurred during a
grace period, minus the past due Monthly Deductions. Under certain
circumstances, the amount of the Death Benefit may be further adjusted. See
"Incontestability" and "Misstatement of Age or Sex."
Death Benefit Options. Under Option A, the Death Benefit is the greater of (1)
the Face Amount at the beginning of the Policy Month when the death occurs, or
(2) the Policy Value on the date of death multiplied by the applicable factor
from the table of Death Benefit Factors below. Under Option B, the Death Benefit
is the greater of (1) the Face Amount at the beginning of the Policy Month when
the death occurs plus the Policy Value on the date of death, or (2) the Policy
Value on the date of death multiplied by the applicable factor
-38-
<PAGE>
from the table of Death Benefit Factors below. The factor is 2.50 up to Attained
Age 40 and declines thereafter as the Insured's Attained Age increases. The
Death Benefit Factors are based on current requirements under the Internal
Revenue Code. We reserve the right to change the table if the Death Benefit
Factors currently in effect become inconsistent with any federal income tax laws
and/or regulations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Death Benefit Factors
- ------------------------------------------------------------------
Attained Age Factor Attained Age Factor Attained Age Factor
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0 - 40 2.50 54 1.57 68 1.17
41 2.43 55 1.50 69 1.16
42 2.36 56 1.46 70 1.15
43 2.29 57 1.42 71 1.13
44 2.22 58 1.38 72 1.11
45 2.15 59 1.34 73 1.09
46 2.09 60 1.30 74 1.07
47 2.03 61 1.28 75 - 90 1.05
48 1.97 62 1.26 91 1.04
49 1.91 63 1.24 92 1.03
50 1.85 64 1.22 93 1.02
51 1.78 65 1.20 94 1.01
52 1.71 66 1.19 95 + 1.00
53 1.64 67 1.18
- ------------------------------------------------------------------
</TABLE>
Under Option A, the Death Benefit ordinarily will not change. Under Option B,
the Death Benefit will vary directly with the investment performance of the
Policy Value. To see how and when investment performance may begin to affect
the Death Benefit, please see the hypothetical illustrations.
Changing the Death Benefit Option. You select the Death Benefit Option when you
apply for the Policy. After the Policy has been in force at least one year, you
may change the Death Benefit Option on your Policy subject to the following
rules:
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<PAGE>
(1) each change must be submitted by written request received by our
Administrative Office;
(2) once the Death Benefit Option has been changed, it cannot be changed
again for one year;
(3) if Death Benefit Option A is changed to Option B, the total Death
Benefit will remain the same, and the Face Amount will be decreased
by an amount equal to the Policy Value on the date of the change;
(4) if Death Benefit Option B is changed to Option A, the total Death
Benefit will remain the same, and the Face Amount will be increased
by an amount equal to the Policy Value on the date of the change. The
risk class for the last Face Amount portion to go into effect which
is still in force will apply to the Face Amount increase.
The effective date of the change will be the Monthly Anniversary on or following
the date when we approve the request for the change. We will send you revised
Policy Data pages reflecting the new Death Benefit Option and the effective date
of the change.
Changing the Face Amount. You select the Face Amount when you apply for the
Policy. The minimum Face Amount for the Policy is $50,000. You may change the
Face Amount on any Monthly Anniversary after the Policy has been in force at
least one year, subject to the following requirements. Once the Face Amount has
been changed, it cannot be changed again for the next 12 months. No change will
be permitted that may result in your Policy being disqualified as a life
insurance contract under Section 7702 of the Code. Changing the Face Amount of
the Policy may have tax consequences. See "Tax Considerations" below.
To increase the Face Amount, you must: submit an application for the increase;
submit proof satisfactory to us that the insured is an insurable risk; and pay
any additional premium that is required. The Face Amount cannot be increased
after the Insured reaches age 75. Each Face Amount increase must be at least
$25,000. A
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<PAGE>
Face Amount increase will take effect on the Monthly Anniversary on or following
the day we approve the application for the increase.
The risk class that applies for any Face Amount increase may be different from
the risk class that applies for the initial Face Amount. Upon an increase in
Face Amount, the minimum monthly premium will be increased, and additional
surrender charges equal to the Face Amount increase (in $1,000s) multiplied by
the surrender charge factors listed above under "Surrender Charge" will apply
through the end of the 16th year following the increase.
You may decrease the Face Amount by submitting a written request. The Face
Amount may not be decreased below the Policy's minimum Face Amount. The Minimum
Monthly Premium for your Policy will be reduced to reflect the decrease. Any
decrease will take effect on the later of: (1) the Monthly Anniversary on or
following the day we receive the request; or (2) the Monthly Anniversary one
year after the date of the last change in Face Amount. A Face Amount decrease
will be used to reduce any previous Face Amount increases then in effect
starting with the latest increase and continuing in the reverse order in which
the increases were made. If any portion of the decrease is left after all Face
Amount increases have been reduced, it will be used to reduce the initial Face
Amount.
We will deduct a charge from the Policy Value each time the Face Amount is
decreased. The amount of this charge is the lesser of: (1) the Reduction
Percentage multiplied by the surrender charge for each Face Amount portion
reduced; or (2) the Policy Value when the decrease is made. The Reduction
Percentage for each Face Amount portion reduced is the amount of the Face Amount
decrease divided by the Face Amount in effect before the decrease. The charge
will be deducted for each Face Amount portion reduced.
-41-
<PAGE>
After the Face Amount is decreased, future surrender charges for each Face
Amount portion for which a charge is deducted will be reduced by the surrender
charges shown for that Face Amount portion, multiplied by the Reduction
Percentage.
Effect of Partial Surrenders on the Death Benefit. A PARTIAL SURRENDER will
affect your Death Benefit in the following respects. If Death Benefit Option A
is in effect, the Face Amount will be reduced by the PARTIAL SURRENDER amount.
If the Face Amount reflects increases in the initial Face Amount, any PARTIAL
SURRENDER will reduce first the most recent increase, and then the next most
recent increase, if any, in reverse order, and finally the initial Face Amount.
If Death Benefit Option B is in effect, total Death Benefit is also reduced by
the PARTIAL SURRENDER amount, but the Face Amount is not affected.
Changing the Beneficiary. You designate the Beneficiary(ies) when you apply for
the Policy. You may change the designated Beneficiary by submitting a
satisfactory written request to us. The change will take effect on the date the
request was signed, but it will not apply to payments we make before we accept
the written request. If the Insured dies and there is no surviving Beneficiary,
the Insured's estate will be the Beneficiary.
HYPOTHETICAL ILLUSTRATIONS
The following illustrations show how certain values under a sample Policy change
with assumed investment performance over an extended period of time. In
particular, they illustrate how Policy Values, Net Cash Surrender Values and
Death Benefits under a Policy covering an Insured of a given Attained Age on the
Policy Date, would vary over time if planned premiums were paid annually and the
return on the assets in the Investment Divisions were a uniform gross annual
rate of 0%, 6% or 12%, before deduction of any fees and charges, including
Portfolio fees and charges. The tables also show planned premiums accumulated
at 5%
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<PAGE>
interest. The values under a Policy would be different from those shown if the
returns averaged 0%, 6% or 12% but fluctuated over and under those averages
throughout the years shown. The hypothetical investment rates of return are
illustrative only and should not be deemed a representation of past or future
investment rates of return. Actual rates of return for a particular Policy may
be more or less than the hypothetical investment rates of return used in the
illustrations.
The illustrations assume an average annual expense ratio of 0.76% of the average
daily net assets of the Portfolios available under the Policies, based on the
expense ratios of each of the Portfolios for the last fiscal year of operations
(other than Science and Technology which is based on an estimated expense
ratio). For information on Portfolio expenses, see the prospectus for the
Portfolios accompanying this prospectus. The current illustrations also reflect
the 0.90% mortality and expense risk charge to the Variable Account during the
first 10 Policy Years, and 0.70% thereafter. The guaranteed illustrations
reflect the 0.90% maximum mortality and expense risk charge and the $7.50
maximum monthly administrative charge for all Policy Years. After deduction of
estimated Portfolio expenses and the current mortality and expense risk charge,
the illustrated gross annual investment rates of return of 0%, 6% and 12% would
correspond to approximate net annual rates of return for the Investment
Divisions of -1.66%, 4.34% and 10.34%, respectively in Policy Years 1 through 10
and -1.46%, 4.54%, and 10.54%, respectively thereafter.
The illustrations also reflect the Monthly Deduction for the hypothetical
Insured. Our current charges and the higher guaranteed charges we have the
contractual right to charge are reflected in separate illustrations on each of
the following pages. All the illustrations reflect the fact that no charges for
Federal or state income taxes are currently made against the Variable Account
and assume no Loan Balance or charges for supplemental benefits.
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<PAGE>
Upon request, we will furnish a comparable illustration based upon the proposed
Insured's individual circumstances. Such illustrations may assume different
hypothetical rates of return than those illustrated in the following tables.
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
CURRENT CHARGES
<TABLE>
<CAPTION>
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 100,000 100,000 708 758 808 8 58 108
2 2,153 100,000 100,000 100,000 1,397 1,541 1,690 697 841 990
3 3,310 100,000 100,000 100,000 2,064 2,346 2,653 1,364 1,646 1,953
4 4,526 100,000 100,000 100,000 2,709 3,176 3,703 2,009 2,476 3,003
5 5,802 100,000 100,000 100,000 3,333 4,030 4,850 2,633 3,330 4,150
6 7,142 100,000 100,000 100,000 3,931 4,906 6,100 3,295 4,270 5,464
7 8,549 100,000 100,000 100,000 4,509 5,810 7,469 3,936 5,237 6,896
8 10,027 100,000 100,000 100,000 5,068 6,744 8,972 4,559 6,235 8,463
9 11,578 100,000 100,000 100,000 5,615 7,717 10,628 5,169 7,271 10,182
10 13,207 100,000 100,000 100,000 6,149 8,729 12,454 5,767 8,347 12,072
11 14,917 100,000 100,000 100,000 6,678 9,794 14,489 6,359 9,476 14,171
12 16,713 100,000 100,000 100,000 7,186 10,897 16,730 6,931 10,643 16,475
13 18,599 100,000 100,000 100,000 7,673 12,039 19,199 7,482 11,848 19,008
14 20,579 100,000 100,000 100,000 8,143 13,224 21,924 8,016 13,096 21,796
15 22,657 100,000 100,000 100,000 8,602 14,461 24,939 8,538 14,397 24,875
16 24,840 100,000 100,000 100,000 9,040 15,743 28,267 9,040 15,743 28,267
17 27,132 100,000 100,000 100,000 9,441 17,057 31,930 9,441 17,057 31,930
18 29,539 100,000 100,000 100,000 9,807 18,406 35,968 9,807 18,406 35,968
19 32,066 100,000 100,000 100,000 10,129 19,785 40,419 10,129 19,785 40,419
20 34,719 100,000 100,000 100,000 10,408 21,196 45,331 10,408 21,196 45,331
21 37,505 100,000 100,000 100,000 10,637 22,637 50,756 10,637 22,637 50,756
22 40,430 100,000 100,000 100,000 10,814 24,105 56,755 10,814 24,105 56,755
23 43,502 100,000 100,000 100,000 10,925 25,595 63,393 10,925 25,595 63,393
24 46,727 100,000 100,000 100,000 10,973 27,108 70,752 10,973 27,108 70,752
25 50,113 100,000 100,000 105,734 10,939 28,635 78,906 10,939 28,635 78,906
26 53,669 100,000 100,000 114,271 10,825 30,178 87,901 10,825 30,178 87,901
27 57,403 100,000 100,000 125,179 10,610 31,725 97,796 10,610 31,725 97,796
28 61,323 100,000 100,000 136,943 10,297 33,282 108,685 10,297 33,282 108,685
29 65,439 100,000 100,000 149,625 9,863 34,837 120,665 9,863 34,837 120,665
30 69,761 100,000 100,000 163,295 9,295 36,385 133,848 9,295 36,385 133,848
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-44-
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
CURRENT CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 100,000 100,000 100,000 1,844 1,971 2,098 844 971 1,098
2 5,381 100,000 100,000 100,000 3,622 3,990 4,374 2,622 2,990 3,374
3 8,275 100,000 100,000 100,000 5,360 6,087 6,876 4,360 5,087 5,876
4 11,314 100,000 100,000 100,000 7,045 8,252 9,615 6,045 7,252 8,615
5 14,505 100,000 100,000 100,000 8,658 10,468 12,596 7,658 9,468 11,596
6 17,855 100,000 100,000 100,000 10,216 12,756 15,865 9,307 11,847 14,956
7 21,373 100,000 100,000 100,000 11,704 15,103 19,439 10,886 14,285 18,621
8 25,066 100,000 100,000 100,000 13,111 17,502 23,345 12,383 16,775 22,617
9 28,945 100,000 100,000 100,000 14,437 19,959 27,623 13,801 19,323 26,987
10 33,017 100,000 100,000 100,000 15,676 22,471 32,315 15,131 21,926 31,769
11 37,293 100,000 100,000 100,000 16,840 25,073 37,530 16,386 24,618 37,075
12 41,782 100,000 100,000 100,000 17,913 27,741 43,289 17,549 27,377 42,925
13 46,497 100,000 100,000 100,000 18,939 30,526 49,699 18,666 30,253 49,426
14 51,446 100,000 100,000 100,000 19,945 33,457 56,860 19,763 33,275 56,678
15 56,644 100,000 100,000 100,000 20,917 36,533 64,858 20,826 36,442 64,767
16 62,101 100,000 100,000 100,000 21,695 39,639 73,741 21,695 39,639 73,741
17 67,831 100,000 100,000 100,000 22,333 42,828 83,675 22,333 42,828 83,675
18 73,848 100,000 100,000 111,738 22,834 46,119 94,693 22,834 46,119 94,693
19 80,165 100,000 100,000 124,962 23,186 49,521 106,805 23,186 49,521 106,805
20 86,798 100,000 100,000 139,332 23,354 53,034 120,114 23,354 53,034 120,114
21 93,763 100,000 100,000 154,953 23,340 56,685 134,742 23,340 56,685 134,742
22 101,076 100,000 100,000 170,466 23,089 60,475 150,855 23,089 60,475 150,855
23 108,755 100,000 100,000 187,178 22,601 64,440 168,629 22,601 64,440 168,629
24 116,818 100,000 100,000 205,202 21,846 68,611 188,259 21,846 68,611 188,259
25 125,284 100,000 100,000 224,660 20,749 73,009 209,963 20,749 73,009 209,963
26 134,173 100,000 100,000 245,711 19,290 77,693 234,010 19,290 77,693 234,010
27 143,506 100,000 100,000 273,470 17,365 82,712 260,447 17,365 82,712 260,447
28 153,307 100,000 100,000 303,977 14,935 88,152 289,502 14,935 88,152 289,502
29 163,597 100,000 100,000 337,475 11,850 94,108 321,405 11,850 94,108 321,405
30 174,402 100,000 105,490 374,247 8,048 100,467 356,425 8,048 100,467 356,425
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
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<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
GUARANTEED CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 100,000 100,000 678 727 776 0 27 76
2 2,153 100,000 100,000 100,000 1,338 1,478 1,623 638 778 923
3 3,310 100,000 100,000 100,000 1,976 2,250 2,547 1,276 1,550 1,847
4 4,526 100,000 100,000 100,000 2,592 3,044 3,554 1,892 2,344 2,854
5 5,802 100,000 100,000 100,000 3,187 3,860 4,652 2,487 3,160 3,952
6 7,142 100,000 100,000 100,000 3,756 4,697 5,849 3,120 4,060 5,213
7 8,549 100,000 100,000 100,000 4,300 5,554 7,154 3,727 4,981 6,581
8 10,027 100,000 100,000 100,000 4,819 6,432 8,578 4,310 5,923 8,069
9 11,578 100,000 100,000 100,000 5,311 7,330 10,132 4,865 6,885 9,686
10 13,207 100,000 100,000 100,000 5,775 8,249 11,828 5,393 7,867 11,447
11 14,917 100,000 100,000 100,000 6,208 9,185 13,681 5,890 8,867 13,363
12 16,713 100,000 100,000 100,000 6,610 10,140 15,705 6,356 9,885 15,451
13 18,599 100,000 100,000 100,000 6,979 11,111 17,919 6,788 10,920 17,728
14 20,579 100,000 100,000 100,000 7,314 12,099 20,342 7,186 11,972 20,215
15 22,657 100,000 100,000 100,000 7,611 13,102 22,994 7,547 13,038 22,931
16 24,840 100,000 100,000 100,000 7,867 14,117 25,900 7,867 14,117 25,900
17 27,132 100,000 100,000 100,000 8,078 15,139 29,084 8,078 15,139 29,084
18 29,539 100,000 100,000 100,000 8,237 16,165 32,575 8,237 16,165 32,575
19 32,066 100,000 100,000 100,000 8,338 17,189 36,403 8,338 17,189 36,403
20 34,719 100,000 100,000 100,000 8,375 18,206 40,609 8,375 18,206 40,609
21 37,505 100,000 100,000 100,000 8,342 19,210 45,233 8,342 19,210 45,233
22 40,430 100,000 100,000 100,000 8,232 20,198 50,327 8,232 20,198 50,327
23 43,502 100,000 100,000 100,000 8,042 21,164 55,950 8,042 21,164 55,950
24 46,727 100,000 100,000 100,000 7,762 22,102 62,168 7,762 22,102 62,168
25 50,113 100,000 100,000 100,000 7,381 23,003 69,059 7,381 23,003 69,059
26 53,669 100,000 100,000 100,000 6,887 23,855 76,712 6,887 23,855 76,712
27 57,403 100,000 100,000 109,021 6,265 24,649 85,173 6,265 24,649 85,173
28 61,323 100,000 100,000 119,007 5,493 25,365 94,450 5,493 25,365 94,450
29 65,439 100,000 100,000 129,732 4,550 25,985 104,623 4,550 25,985 104,623
30 69,761 100,000 100,000 141,250 3,410 26,491 115,778 3,410 26,491 115,778
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-46-
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION A
GUARANTEED CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 100,000 100,000 100,000 1,774 1,899 2,023 774 899 1,023
2 5,381 100,000 100,000 100,000 3,483 3,843 4,218 2,483 2,843 3,218
3 8,275 100,000 100,000 100,000 5,123 5,830 6,597 4,123 4,830 5,597
4 11,314 100,000 100,000 100,000 6,687 7,856 9,177 5,687 6,856 8,177
5 14,505 100,000 100,000 100,000 8,174 9,920 11,975 7,174 8,920 10,975
6 17,855 100,000 100,000 100,000 9,578 12,019 15,014 8,669 11,110 14,105
7 21,373 100,000 100,000 100,000 10,896 14,152 18,318 10,077 13,333 17,500
8 25,066 100,000 100,000 100,000 12,126 16,320 21,919 11,398 15,592 21,192
9 28,945 100,000 100,000 100,000 13,262 18,520 25,850 12,626 17,884 25,213
10 33,017 100,000 100,000 100,000 14,298 20,750 30,147 13,752 20,204 29,601
11 37,293 100,000 100,000 100,000 15,223 23,004 34,854 14,769 22,549 34,399
12 41,782 100,000 100,000 100,000 16,031 25,280 40,022 15,667 24,916 39,658
13 46,497 100,000 100,000 100,000 16,704 27,569 45,708 16,431 27,296 45,435
14 51,446 100,000 100,000 100,000 17,228 29,863 51,983 17,046 29,681 51,802
15 56,644 100,000 100,000 100,000 17,588 32,159 58,935 17,497 32,068 58,844
16 62,101 100,000 100,000 100,000 17,780 34,463 66,682 17,780 34,463 66,682
17 67,831 100,000 100,000 100,000 17,776 36,763 75,345 17,776 36,763 75,345
18 73,848 100,000 100,000 100,400 17,562 39,059 85,085 17,562 39,059 85,085
19 80,165 100,000 100,000 112,166 17,114 41,348 95,868 17,114 41,348 95,868
20 86,798 100,000 100,000 124,901 16,399 43,626 107,673 16,399 43,626 107,673
21 93,763 100,000 100,000 138,682 15,375 45,881 120,593 15,375 45,881 120,593
22 101,076 100,000 100,000 152,307 13,981 48,102 134,785 13,981 48,102 134,785
23 108,755 100,000 100,000 166,936 12,142 50,270 150,393 12,142 50,270 150,393
24 116,818 100,000 100,000 182,667 9,767 52,369 167,584 9,767 52,369 167,584
25 125,284 100,000 100,000 199,623 6,759 54,390 186,563 6,759 54,390 186,563
26 134,173 100,000 100,000 217,953 3,012 56,330 207,574 3,012 56,330 207,574
27 143,506 *** 100,000 242,113 *** 58,187 230,584 *** 58,187 230,584
28 153,307 *** 100,000 268,556 *** 59,964 255,768 *** 59,964 255,768
29 163,597 *** 100,000 297,480 *** 61,662 283,315 *** 61,662 283,315
30 174,402 *** 100,000 329,094 *** 63,272 313,423 *** 63,272 313,423
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-47-
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION B
CURRENT CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,707 100,756 100,806 707 756 806 7 56 106
2 2,153 101,393 101,536 101,685 1,393 1,536 1,685 693 836 985
3 3,310 102,056 102,337 102,641 2,056 2,337 2,641 1,356 1,637 1,941
4 4,526 102,695 103,159 103,682 2,695 3,159 3,682 1,995 2,459 2,982
5 5,802 103,312 104,003 104,817 3,312 4,003 4,817 2,612 3,303 4,117
6 7,142 103,900 104,866 106,048 3,900 4,866 6,048 3,264 4,230 5,412
7 8,549 104,467 105,753 107,393 4,467 5,753 7,393 3,894 5,180 6,821
8 10,027 105,013 106,667 108,864 5,013 6,667 8,864 4,504 6,158 8,355
9 11,578 105,545 107,615 110,481 5,545 7,615 10,481 5,100 7,170 10,035
10 13,207 106,064 108,599 112,257 6,064 8,599 12,257 5,682 8,217 11,875
11 14,917 106,574 109,630 114,230 6,574 9,630 14,230 6,256 9,312 13,912
12 16,713 107,061 110,692 116,393 7,061 10,692 16,393 6,807 10,438 16,139
13 18,599 107,526 111,786 118,766 7,526 11,786 18,766 7,335 11,595 18,575
14 20,579 107,970 112,915 121,372 7,970 12,915 21,372 7,843 12,788 21,245
15 22,657 108,402 114,089 124,245 8,402 14,089 24,245 8,338 14,025 24,182
16 24,840 108,811 115,299 127,401 8,811 15,299 27,401 8,811 15,299 27,401
17 27,132 109,178 116,525 130,849 9,178 16,525 30,849 9,178 16,525 30,849
18 29,539 109,504 117,771 134,620 9,504 17,771 34,620 9,504 17,771 34,620
19 32,066 109,782 119,028 138,739 9,782 19,028 38,739 9,782 19,028 38,739
20 34,719 110,011 120,294 143,240 10,011 20,294 43,240 10,011 20,294 43,240
21 37,505 110,184 121,564 148,158 10,184 21,564 48,158 10,184 21,564 48,158
22 40,430 110,297 122,832 153,529 10,297 22,832 53,529 10,297 22,832 53,529
23 43,502 110,338 124,083 159,386 10,338 24,083 59,386 10,338 24,083 59,386
24 46,727 110,306 125,317 165,779 10,306 25,317 65,779 10,306 25,317 65,779
25 50,113 110,184 126,513 172,746 10,184 26,513 72,746 10,184 26,513 72,746
26 53,669 109,972 127,669 180,344 9,972 27,669 80,344 9,972 27,669 80,344
27 57,403 109,651 128,759 188,616 9,651 28,759 88,616 9,651 28,759 88,616
28 61,323 109,223 129,784 197,637 9,223 29,784 97,637 9,223 29,784 97,637
29 65,439 108,666 130,717 207,457 8,666 30,717 107,457 8,666 30,717 107,457
30 69,761 107,968 131,536 218,146 7,968 31,536 118,146 7,968 31,536 118,146
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-48-
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION B
CURRENT CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 101,834 101,960 102,086 1,834 1,960 2,086 834 960 1,086
2 5,381 103,591 103,956 104,337 3,591 3,956 4,337 2,591 2,956 3,337
3 8,275 105,299 106,018 106,797 5,299 6,018 6,797 4,299 5,018 5,797
4 11,314 106,943 108,130 109,470 6,943 8,130 9,470 5,943 7,130 8,470
5 14,505 108,500 110,272 112,354 8,500 10,272 12,354 7,500 9,272 11,354
6 17,855 109,989 112,462 115,488 9,989 12,462 15,488 9,080 11,553 14,579
7 21,373 111,391 114,681 118,876 11,391 14,681 18,876 10,573 13,863 18,058
8 25,066 112,691 116,915 122,528 12,691 16,915 22,528 11,964 16,188 21,801
9 28,945 113,890 119,163 126,469 13,890 19,163 26,469 13,254 18,526 25,833
10 33,017 114,977 121,412 130,716 14,977 21,412 30,716 14,432 20,866 30,171
11 37,293 115,957 123,678 135,338 15,957 23,678 35,338 15,502 23,224 34,884
12 41,782 116,814 125,936 140,330 16,814 25,936 40,330 16,450 25,572 39,966
13 46,497 117,605 128,240 145,786 17,605 28,240 45,786 17,333 27,967 45,513
14 51,446 118,362 130,624 151,789 18,362 30,624 51,789 18,180 30,442 51,607
15 56,644 119,066 133,072 158,375 19,066 33,072 58,375 18,975 32,982 58,285
16 62,101 119,509 135,372 165,384 19,509 35,372 65,384 19,509 35,372 65,384
17 67,831 119,762 137,586 172,931 19,762 37,586 72,931 19,762 37,586 72,931
18 73,848 119,831 139,713 181,076 19,831 39,713 81,076 19,831 39,713 81,076
19 80,165 119,700 141,731 189,860 19,700 41,731 89,860 19,700 41,731 89,860
20 86,798 119,324 143,585 199,303 19,324 43,585 99,303 19,324 43,585 99,303
21 93,763 118,714 145,275 209,477 18,714 45,275 109,477 18,714 45,275 109,477
22 101,076 117,802 146,721 220,387 17,802 46,721 120,387 17,802 46,721 120,387
23 108,755 116,600 147,919 232,114 16,600 47,919 132,114 16,600 47,919 132,114
24 116,818 115,082 148,826 244,714 15,082 48,826 144,714 15,082 48,826 144,714
25 125,284 113,172 149,346 258,191 13,172 49,346 158,191 13,172 49,346 158,191
26 134,173 110,874 149,461 272,637 10,874 49,461 172,637 10,874 49,461 172,637
27 143,506 108,093 149,048 288,045 8,093 49,048 188,045 8,093 49,048 188,045
28 153,307 104,836 148,084 304,515 4,836 48,084 204,515 4,836 48,084 204,515
29 163,597 100,991 146,420 322,033 991 46,420 222,033 991 46,420 222,033
30 174,402 *** 144,035 340,718 *** 44,035 240,718 *** 44,035 240,718
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-49-
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 35, STANDARD NON-TOBACCO
$1,000 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION B
GUARANTEED CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,677 100,726 100,774 677 726 774 0 26 74
2 2,153 101,334 101,473 101,618 1,334 1,473 1,618 634 773 918
3 3,310 101,968 102,240 102,536 1,968 2,240 2,536 1,268 1,540 1,836
4 4,526 102,579 103,027 103,534 2,579 3,027 3,534 1,879 2,327 2,834
5 5,802 103,166 103,834 104,620 3,166 3,834 4,620 2,466 3,134 3,920
6 7,142 103,726 104,658 105,799 3,726 4,658 5,799 3,090 4,021 5,163
7 8,549 104,259 105,499 107,080 4,259 5,499 7,080 3,687 4,926 6,507
8 10,027 104,765 106,356 108,472 4,765 6,356 8,472 4,256 5,847 7,963
9 11,578 105,241 107,229 109,985 5,241 7,229 9,985 4,796 6,784 9,539
10 13,207 105,687 108,116 111,628 5,687 8,116 11,628 5,305 7,734 11,246
11 14,917 106,100 109,014 113,412 6,100 9,014 13,412 5,782 8,696 13,094
12 16,713 106,478 109,923 115,349 6,478 9,923 15,349 6,224 9,668 15,095
13 18,599 106,820 110,839 117,453 6,820 10,839 17,453 6,629 10,648 17,263
14 20,579 107,124 111,761 119,738 7,124 11,761 19,738 6,997 11,634 19,611
15 22,657 107,387 112,686 122,219 7,387 12,686 22,219 7,323 12,623 22,155
16 24,840 107,605 113,609 124,911 7,605 13,609 24,911 7,605 13,609 24,911
17 27,132 107,773 114,523 127,828 7,773 14,523 27,828 7,773 14,523 27,828
18 29,539 107,884 115,421 130,988 7,884 15,421 30,988 7,884 15,421 30,988
19 32,066 107,932 116,294 134,405 7,932 16,294 34,405 7,932 16,294 34,405
20 34,719 107,910 117,133 138,100 7,910 17,133 38,100 7,910 17,133 38,100
21 37,505 107,812 117,929 142,091 7,812 17,929 42,091 7,812 17,929 42,091
22 40,430 107,631 118,673 146,402 7,631 18,673 46,402 7,631 18,673 46,402
23 43,502 107,365 119,358 151,060 7,365 19,358 51,060 7,365 19,358 51,060
24 46,727 107,005 119,969 156,090 7,005 19,969 56,090 7,005 19,969 56,090
25 50,113 106,539 120,493 161,517 6,539 20,493 61,517 6,539 20,493 61,517
26 53,669 105,957 120,910 167,368 5,957 20,910 67,368 5,957 20,910 67,368
27 57,403 105,246 121,203 173,670 5,246 21,203 73,670 5,246 21,203 73,670
28 61,323 104,387 121,343 180,449 4,387 21,343 80,449 4,387 21,343 80,449
29 65,439 103,361 121,302 187,729 3,361 21,302 87,729 3,361 21,302 87,729
30 69,761 102,150 121,051 195,540 2,150 21,051 95,540 2,150 21,051 95,540
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-50-
<PAGE>
<TABLE>
<CAPTION>
MALE ISSUE AGE 50, STANDARD NON-TOBACCO
$2,500 ANNUAL PREMIUM
$100,000 FACE AMOUNT, OPTION B
GUARANTEED CHARGES
PREMIUMS --------DEATH BENEFITS---- --------POLICY VALUES---- ------SURRENDER VALUES---
YR+INT @ 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
-- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 101,763 101,887 102,011 1,763 1,887 2,011 763 887 1,011
2 5,381 103,451 103,807 104,179 3,451 3,807 4,179 2,451 2,807 3,179
3 8,275 105,057 105,754 106,511 5,057 5,754 6,511 4,057 4,754 5,511
4 11,314 106,575 107,722 109,017 6,575 7,722 9,017 5,575 6,722 8,017
5 14,505 107,999 109,702 111,707 7,999 9,702 11,707 6,999 8,702 10,707
6 17,855 109,323 111,689 114,590 9,323 11,689 14,590 8,414 10,780 13,681
7 21,373 110,542 113,675 117,680 10,542 13,675 17,680 9,724 12,856 16,861
8 25,066 111,651 115,654 120,991 11,651 15,654 20,991 10,924 14,927 20,264
9 28,945 112,644 117,616 124,537 12,644 17,616 24,537 12,007 16,980 23,900
10 33,017 113,508 119,548 128,327 13,508 19,548 28,327 12,963 19,002 27,782
11 37,293 114,235 121,435 132,374 14,235 21,435 32,374 13,780 20,980 31,919
12 41,782 114,811 123,259 136,688 14,811 23,259 36,688 14,447 22,896 36,324
13 46,497 115,217 124,998 141,274 15,217 24,998 41,274 14,945 24,725 41,001
14 51,446 115,436 126,624 146,136 15,436 26,624 46,136 15,255 26,442 45,955
15 56,644 115,450 128,111 151,283 15,450 28,111 51,283 15,359 28,020 51,192
16 62,101 115,254 129,446 156,733 15,254 29,446 56,733 15,254 29,446 56,733
17 67,831 114,821 130,591 162,487 14,821 30,591 62,487 14,821 30,591 62,487
18 73,848 114,136 131,518 168,554 14,136 31,518 68,554 14,136 31,518 68,554
19 80,165 113,182 132,195 174,945 13,182 32,195 74,945 13,182 32,195 74,945
20 86,798 111,931 132,578 181,656 11,931 32,578 81,656 11,931 32,578 81,656
21 93,763 110,345 132,610 188,678 10,345 32,610 88,678 10,345 32,610 88,678
22 101,076 108,378 132,224 195,985 8,378 32,224 95,985 8,378 32,224 95,985
23 108,755 105,972 131,334 203,538 5,972 31,334 103,538 5,972 31,334 103,538
24 116,818 103,068 129,850 211,294 3,068 29,850 111,294 3,068 29,850 111,294
25 125,284 *** 127,690 219,211 *** 27,690 119,211 *** 27,690 119,211
26 134,173 *** 124,777 227,260 *** 24,777 127,260 *** 24,777 127,260
27 143,506 *** 121,036 235,409 *** 21,036 135,409 *** 21,036 135,409
28 153,307 *** 116,396 243,631 *** 16,396 143,631 *** 16,396 143,631
29 163,597 *** 110,774 251,889 *** 10,774 151,889 *** 10,774 151,889
30 174,402 *** 104,059 260,116 *** 4,059 160,116 *** 4,059 160,116
</TABLE>
The hypothetical investment rates of return shown above are illustrative only
and should not be deemed a representation of past or future investment rates of
return. Actual rate of return may be more or less than those shown and will
depend on a number of factors, including the investment allocations made by an
Owner and the investment experience of the Portfolios. The Death Benefit,
Policy Value and Surrender Value for a Policy would be different from those
shown if the actual gross annual rates of return averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also be different if any Policy Loans or
Partial Surrenders were made. No representations can be made by United Investors
Life Insurance Company or the Variable Account or the Portfolios that these
hypothectical rates of return can be achieved for any one year or sustained over
a period of time.
-51-
<PAGE>
TAX CONSIDERATIONS
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE
Introduction. The following summary provides a general description of the
- ------------
federal income tax considerations relating to the Policy. This summary is based
upon United Investors' understanding of the present federal income tax laws as
they are currently interpreted by the Internal Revenue Service ("IRS"). Because
of the complexity of such laws and the fact that tax results will vary according
to the factual status of the specific policy involved, tax advice from a
qualified tax advisor may be needed by a person contemplating the purchase of a
Policy or the exercise of elections under the Policy. It should therefore be
understood that these comments concerning federal income tax consequences are
not an exhaustive discussion of all tax questions that might arise under the
Policy. Further, these comments do not take into account any federal estate tax
and gift, state, or local tax considerations which may be involved in the
purchase of a Policy or the exercise of elections under the Policy. For complete
information on such federal and state tax considerations, a qualified tax
advisor should be consulted. United Investors does not make any guarantee
regarding the tax status of any policy and the following summary is not intended
as tax advice.
Tax Status of the Policy
Section 7702 of the Code sets forth a definition of a life insurance contract
for federal tax purposes. In addition, the Technical and Miscellaneous Revenue
Act of 1988 ("TAMRA") established certain new requirements with respect to the
mortality (i.e., cost of insurance) and other expense charges that are to be
used in determining compliance with Section 7702. The Secretary of the Treasury
has issued proposed regulations that would specify what will be considered
reasonable mortality charges for Policies subject to TAMRA. However, these
proposed regulations do not address other expense charges. If a Policy were
determined not to be a life insurance contract for purposes of Section 7702,
such Policy would not provide most of the tax advantages normally provided by a
life insurance policy. (See "Tax Treatment of Policy Benefits.")
With respect to a Policy that is issued on the basis of a standard rate class or
a rate class involving a lower mortality risk (i.e., a preferred basis), while
there is some uncertainty due to the lack of guidance on other expense charges,
United Investors nonetheless believes that such a Policy should meet the Section
7702 definition of a life insurance contract. However, with respect to a Policy
that is issued on a substandard basis (i.e., a rate class involving higher than
standard mortality risk), it remains unclear whether or not such a Policy would
satisfy Section 7702, particularly if the Owner pays the full amount of premiums
permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
United Investors will take all steps possible in order to attempt to cause such
a Policy to comply with Section 7702, including possibly refunding any premiums
paid that exceed the limitations allowable under Section 7702 (together with
interest or other earnings on any such premiums refunded as required by law).
For these reasons, United Investors reserves the right to modify the Policy as
necessary to qualify it as a life insurance contract under Section 7702.
-52-
<PAGE>
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Variable Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for federal tax purposes. The Variable Account, through the
Fund, intends to comply with the diversification requirements prescribed by the
Treasury in Treas. Reg. Section 1.817-5, which affect how the Fund's assets may
be invested. Although the Fund's investment adviser and United Investors are
both indirectly owned by Torchmark Corporation, United Investors does not
control the Fund or its investments. United Investors, however, believes that
the Fund will be operated in compliance with the requirements prescribed by the
Treasury.
In certain circumstances, owners of variable contracts may be considered the
owners, for federal income tax purposes, of the assets of the separate account
used to support their contracts. In those circumstances, income and gains from
the separate account assets would be includible in the variable contract owner's
gross income. The IRS has stated in published rulings that a variable contract
owner will be considered the owner of separate account assets if the contract
owner possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. The Treasury Department also
announced, in connection with the issuance of regulations concerning
diversifications, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the Owner), rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of regulations or
rulings on the "extent to which policyowners may direct their investments to
particular subaccounts without being treated as owners of the underlying
assets."
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policy owners were not owners of separate account assets.
-53-
<PAGE>
For example, the Owner has additional flexibility in allocating premium payments
and Policy values. These differences could result in an Owner being treated as
the owner of a pro rata portion of the assets of the Variable Account. In
addition, United Investors does not know what standards will be set forth, if
any, in the regulations or rulings which the Treasury Department has stated it
expects to issue. United Investors therefore reserves the right to modify the
Policy as necessary to attempt to prevent an Owner from being considered the
owner of a pro rata share of the assets of the Variable Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes.
Tax Treatment of Policy Benefits
1. In general. United Investors believes that the proceeds and cash value
----------
increases of a Policy should be treated in a manner consistent with a fixed-
benefit life insurance policy for federal income tax purposes. Thus, the death
benefit under the Policy should be excludable from the gross income of the
Beneficiary under Section 101 (a)(1) of the Code.
The exchange of the Policy, a change of the Policy's Minimum Death Benefit, a
Policy loan, an additional premium payment, a Policy lapse with an outstanding
loan, a change of Owners, or a surrender may have tax consequences depending on
the circumstances. In addition, federal estate and state and local estate,
inheritance, and other tax consequences of ownership or receipt of Policy
proceeds depend upon the circumstances of each Owner or Beneficiary. A competent
tax adviser should be consulted for further information.
-54-
<PAGE>
Generally, the Owner will not be deemed to be in constructive receipt of the
cash value, including increments thereof, under the Policy until there is a
distribution. The tax consequences of distributions from, and loans taken from,
or secured by, a Policy depend on whether the Policy is classified as a
"modified endowment contract" under Section 7702A. Whether a Policy is or is not
a Modified Endowment Contract, upon a complete surrender or lapse of a Policy or
when benefits are paid at the Maturity Date, if the amount receives plus the
amount of any indebtedness exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to tax.
2. Modified endowment contracts. A Policy may be treated as a modified
----------------------------
endowment contract depending upon the amount of premiums paid in relation to the
death benefit provided under such Policy. The premium limitation rules for
determining whether such a Policy is a modified endowment contract are extremely
complex. In general, however, a Policy will be a modified endowment contract if
the accumulated premiums paid at any time during the first seven Policy Years
exceed the sum of the net level premiums which would have been paid on or before
such time if the Policy provided for paid-up future benefits after the payment
of seven level annual premiums. In addition, if a Policy is "materially
changed," it may cause such Policy to be treated as a modified endowment
contract. The material change rules for determining whether a Policy is a
modified endowment contract are also extremely complex. In general, however, the
determination whether a Policy will be a modified endowment contract after a
material change depends upon the relationship of the death benefit at the time
of change to the Cash Value at the time of such change and the additional
premiums paid in the seven Policy Years starting with the date on which the
material change occurs.
The manner in which the premium limitation and material change rules should be
applied to certain features of the Policy and its riders is unclear.
Nonetheless, under our current procedures, the Owner will be notified at the
time a Policy is issued whether, according to our calculations, the Policy is or
is not classified as a
-55-
<PAGE>
modified endowment contract based on the premium then received. The Owner will
also be notified of the amount of the maximum annual premium which, according to
our calculations, can be paid without causing a Policy to be classified as a
modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a modified
endowment contract will depend upon the circumstances of each Policy.
Accordingly, a prospective Owner should contact a qualified tax adviser before
purchasing a Policy to determine the circumstances under which the Policy would
be a modified endowment contract. In addition, an Owner should contact a
competent tax adviser before making any change to, including an exchange of or
reduction in benefits of, a Policy to determine whether such change would cause
the Policy (or the new policy in the case of an exchange) to be treated as a
modified endowment contract.
If a Policy becomes a modified endowment contract, distributions such as Partial
Surrenders and Policy Loans that occur during the Policy Year it becomes a
modified endowment contract and any subsequent Policy Year will be taxed as
distributions from a modified endowment contract. In addition, distributions
from a Policy within two years before it becomes a modified endowment contract
will be taxed in this manner. This means that a distribution made from a Policy
that is not a modified endowment contract could later become taxable as a
distribution from a modified endowment contract.
Whether a Policy is or is not a Modified Endowment Contract, upon a complete
surrender or lapse of a Policy or when benefits are paid at the Maturity Date,
if the amount received plus the amount of any indebtedness exceeds the total
investment in the Policy, the excess will generally be treated as ordinary
income subject to tax.
-56-
<PAGE>
3. Distributions from Policies Classified as Modified Endowment Contracts.
----------------------------------------------------------------------
Policies classified as modified endowment contracts will be subject to the
following tax rules: First, all distributions, including distributions upon
surrender and benefits paid at maturity, from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess (if any) of
the cash value immediately before the distribution over the investment in the
Policy (described below) at such time. Second, loans taken from, or secured by,
such a Policy (including unpaid loan interest that is added to the principal of
a loan) are treated as distributions from such a Policy and taxed accordingly.
Third, a 10 percent additional tax is imposed on the portion of any distribution
from, or loan taken from or secured by, such a Policy that is included in income
except where the distribution or loan is made on or after the Owner attains age
59 1/2, is attributable to the Owner's becoming disabled, or is part of a series
of substantially equal periodic payments for the life (or life expectancy) of
the Owner or the joint lives (or joint life expectancies) of the Owner and the
Owner's Beneficiary.
4. Distributions from Policies not Classified as Modified Endowment Contracts.
--------------------------------------------------------------------------
Distributions (such as Partial Surrenders or Policy Loans) from a Policy that is
not classified as a modified endowment contract are generally treated as first
recovering the investment in the Policy (described below) and then, only after
the return of all such investment in the Policy, as distributing taxable income.
An exception to this general rule occurs in the case of a decrease in the
Policy's death benefit or any other change that reduces benefits under the
Policy in the first 15 years after the Policy is issued and that results in a
cash distribution to the Owner in order for the Policy to continue complying
with the Section 7702 definitional limits. Such a cash distribution will be
taxed in whole or in part as ordinary income (to the extent of any gain in the
Policy) under rules prescribed in Section 7702. Loans from, or secured by, a
Policy that is not a modified endowment contract may be treated as indebtedness
of the Owner, not as a distribution. Finally, neither distributions (including
distributions upon surrender or lapse) nor loans from, or secured by, a Policy
that is not a modified endowment contract are subject to the 10% additional
income tax.
-57-
<PAGE>
5. Policy Loan Interest. Interest paid on a Policy Loan generally is not tax
--------------------
deductible. The Owner should consult a competent tax adviser if the
deductibility of interest paid on a policy loan is an important issue.
6. Investment in the Policy. Investment in the Policy means (i) the aggregate
------------------------
amount of any premiums or other consideration paid for a Policy, minus (ii) the
aggregate amount received under the Policy which is excluded from the gross
income of the Owner (except that the amount of any loan from, or secured by, a
Policy that is a modified endowment contract, to the extent such amount is
excluded from gross income, will be disregarded), plus (iii) the amount of any
loan from, or secured by, a Policy that is a modified endowment contract to the
extent that such amount is included in the gross income of the Owner.
7. Multiple Policies. All modified endowment contracts that are issued by
-----------------
United Investors (or its affiliates) to the same Owner during any calendar year
are treated as one modified endowment contract for purposes of determining the
amount includable in gross income under Section 72(e) of the Code.
8. Other Tax Consequences. The Policy may be used in various arrangements,
----------------------
including nonqualified deferred compensation or salary continuance plans, split
dollar insurance plans, executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary depending on the particular
facts and circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Policy in any arrangement the value of which depends
in part on its tax consequences, you should be sure to consult a qualified tax
advisor regarding the tax attributes of the particular arrangement.
-58-
<PAGE>
Taxation of United Investors
United Investors incurs state and local premium taxes. The amount of the charge
for such taxes is discussed above under "Charges and Deductions." At the present
time, the United Investors makes no charge to the Variable Account for any
federal, state or local taxes (other than state premium taxes) that it incurs
which may be attributable to such Account or to the Policies. United Investors,
however, reserves the right in the future to make a charge for any such tax or
other economic burden resulting from the application of the tax laws that it
determines to be properly attributable to the Variable Account or to the
Policies.
Employment-Related Benefit Plans
On July 6, 1983, the Supreme Court held 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 on the basis of sex. The Policies described in this
Prospectus contain guaranteed purchase rates for certain payment options that
generally distinguish between men and women. Accordingly, employers and employee
organizations should consider, in consultation with their legal counsel, the
impact of Norris, and Title VII generally, on any employment-related insurance
or benefit program for which a Policy may be purchased.
ADDITIONAL INFORMATION
Directors and Officers of United Investors. United Investors is managed by a
board of directors. The following table sets forth the name and principal
occupations during the past five years of each of United Investors's directors
and senior officers. Unless otherwise noted, the address for each person is
United Investors Life Insurance Company, 2001 Third Avenue South, Birmingham,
Alabama 35233.
-59-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name and Position with
United Investors Principal Occupation During the Past Five Years
- --------------------------------------------------------------------------------
<S> <C>
W. Thomas Aycock Vice President and Chief Actuary of United
Vice President and Chief Investors since November 1992. Senior Vice
Actuary, Director President and Actuary of Associated Doctors Health
& Life Insurance Co., December 1990 - November
1992.
- --------------------------------------------------------------------------------
Charles T. Clayton, Jr. Vice President-Agency Division since January 1987.
Vice President
- --------------------------------------------------------------------------------
Michael J. Klyce Vice President of Torchmark Corporation since
Vice President and January 1984.
Treasurer
- --------------------------------------------------------------------------------
John H. Livingston Counsel of United Investors since May 1996.
Director, Secretary and Secretary of United Investors since December 1994.
Counsel Associate Counsel of United Investors, July 1990 -
April 1996. Associate Counsel of Liberty National
Life Insurance Company since October 1986.
- --------------------------------------------------------------------------------
James. L. Mayton, Jr. Vice President & Controller of Liberty National
Vice President and Life Insurance Company since January 1985.
Controller
- --------------------------------------------------------------------------------
Carol A. McCoy Assistant Secretary of Torchmark Corporation since
Director April 1987. Associate Counsel of Torchmark
Corporation since January 1985.
- --------------------------------------------------------------------------------
Anthony L. McWhorter President of Liberty National Life Insurance
Director Company since December 1994. Executive Vice
President and Chief Actuary of Liberty National,
November 1993 - December 1994. Senior Vice
President & Chief Actuary of Liberty National,
September 1991 -November 1993.
- --------------------------------------------------------------------------------
Ronald K. Richey Chairman of Torchmark Corporation since August
Chairman of the Board and 1986 and Chief Executive Officer since December
Chief Executive Officer 1984. Chairman of United Investors Management
Company since October 1986.
- --------------------------------------------------------------------------------
James L. Sedgwick President of United Investors since September
President and Director 1991. General Counsel, Vice President and
Secretary of United Investors, July 1979 -
September 1991.
- --------------------------------------------------------------------------------
Ross W. Stagner Vice President of United Investors since January
Vice President and Director 1992. Assistant Vice President of United
Investors, March 1988 - January 1992.
- --------------------------------------------------------------------------------
William L. Surber Vice President of United Investors since April
Vice President and Director 1992. Assistant Vice President of United
Investors, January 1982 - April 1992.
- --------------------------------------------------------------------------------
Keith A. Tucker Vice Chairman of Torchmark Corporation since May
Director 1991.
- --------------------------------------------------------------------------------
</TABLE>
Sale of the Policies. Waddell & Reed, Inc., an affiliate of United Investors,
acts as the principal underwriter of the Policies. Waddell & Reed, Inc. also
acts as principal underwriter for United Investors Life Variable Account, a
separate account also established by United Investors, and may act as principal
underwriter for
-60-
<PAGE>
other separate accounts established by affiliates of United Investors. Waddell &
Reed, Inc. is the principal underwriter of the funds in the United Group of
Mutual Funds and Waddell & Reed Funds, Inc. Waddell & Reed, Inc. is a
corporation organized under the laws of the state of Delaware in 1981, is
registered as a broker-dealer under the Securities Exchange Act of 1934, and is
a member of the National Association of Securities Dealers, Inc. (the "NASD").
The Policies may not be available in all states. Waddell & Reed, Inc. may enter
into written sales agreements with various broker-dealers to aid in the sale of
the Policies. A commission plus bonus compensation may be paid to broker-dealers
or agents in connection with sales of the Policies.
Voting of Portfolio Shares. United Investors is the legal owner of shares held
by the Investment Divisions and as such has the right to vote on all matters
submitted to shareholders of the Portfolios. However, as required by law,
United Investors will vote shares held in the Investment Divisions at meetings
of the shareholders of the Portfolios in accordance with instructions received
from Owners with Policy Value in the Investment Divisions. TMK/United does not
hold regular annual shareholder meetings. To obtain voting instructions from
Owners, before a meeting of shareholders of the Portfolios, United Investors
will send Owners voting instruction material, a voting instruction form and any
other related material. Shares held by an Investment Division for which no
timely instructions are received will be voted by United Investors in the same
proportion as those shares for which voting instructions are received. Should
the applicable federal securities laws, regulations or interpretations thereof
change so as to permit United Investors to vote shares of the Portfolios in its
own right, United Investors may elect to do so. United Investors may, if
required by state insurance officials, disregard Owner voting instructions if
such instructions would require shares to be voted so as to cause a change in
sub-classification or investment objectives of one or more of the Portfolios, or
to approve or disapprove an investment advisory agreement. In addition, United
Investors may under certain circumstances disregard voting instructions that
would require changes in the investment policy or investment adviser of one or
more of the Portfolios, provided that United Investors reasonably disapproves of
such changes in accordance with applicable federal regulations. If United
Investors ever disregards voting
-61-
<PAGE>
instructions, Owners will be advised of that action and of the reasons for such
action in the next report to Owners.
Other Information. A registration statement under the Securities Act of 1933
has been filed with the SEC relating to the offering described in this
prospectus. This prospectus does not include all the information set forth in
the registration statement. The omitted information may be obtained at the
SEC's principal office in Washington, D.C. by paying the SEC's prescribed fees.
Litigation. No legal or administrative proceeding is pending that would have a
material effect upon the Variable Account.
Legal Matters. All matters of Missouri law pertaining to the Policy, including
the validity of the Policy and United Investors' right to issue the Policy under
Missouri insurance law and any other applicable state insurance or securities
laws, have been passed upon by James L. Sedgwick, Esq., President of United
Investors. Legal advice regarding certain matters relating to federal
securities laws applicable to the issuance of the Policy described in this
prospectus has been provided by Sutherland, Asbill & Brennan, L.L.P. of
Washington, D.C.
Experts. The financial statements of United Investors included in this
prospectus have been audited by___________________________________________
independent accountants, whose report thereon is set forth elsewhere herein.
Actuarial matters included in this prospectus have been examined by W. Thomas
Aycock, Vice President and Chief Actuary of United Investors, whose opinion is
filed as an exhibit to the registration statement.
-62-
<PAGE>
Financial Statements. The financial statements of United Investors appear on
the following pages. No financial statements are presented for the Variable
Account because it has yet to commence operations. The financial statements of
United Investors should be distinguished from financial statements of the
Variable Account (once the Variable Account's financial statements are
presented) and should be considered only as bearing upon United Investors's
ability to meet its obligations under the Policies.
-63-
<PAGE>
APPENDIX A
Surrender Charges Per $1,000 of Face Amount
<TABLE>
<CAPTION>
Issue
-----
Age Year 1-6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17+
--- -------- ------ ------ ------ ------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0-25 $6.00 5.45 4.91 4.36 3.82 3.27 2.73 2.18 1.64 1.09 0.55 0.00
26-30 $6.50 5.91 5.32 4.73 4.14 3.55 2.95 2.36 1.77 1.18 0.59 0.00
31-35 $7.00 6.36 5.73 5.09 4.45 3.82 3.18 2.55 1.91 1.27 0.64 0.00
36-40 $7.75 7.05 6.34 5.64 4.93 4.23 3.52 2.82 2.11 1.41 0.70 0.00
41-45 $8.75 7.95 7.16 6.36 5.57 4.77 3.98 3.18 2.39 1.59 0.80 0.00
46-50 $10.00 9.09 8.18 7.27 6.36 5.45 4.55 3.64 2.73 1.82 0.91 0.00
51-55 $11.50 10.45 9.41 8.36 7.32 6.27 5.23 4.18 3.14 2.09 1.05 0.00
56-60 $13.75 12.50 11.25 10.00 8.75 7.50 6.25 5.00 3.75 2.50 1.25 0.00
61-65 $16.75 15.23 13.70 12.18 10.66 9.14 7.61 6.09 4.57 3.05 1.52 0.00
66-70 $20.75 18.86 16.98 15.09 13.20 11.32 9.43 7.55 5.66 3.77 1.89 0.00
71-75 $26.00 23.64 21.27 18.91 16.55 14.18 11.82 9.45 7.09 4.73 2.36 0.00
</TABLE>
NOTE: These rates are interpolated during each year. The charge shown is for
the beginning of each year. For example, for a 35-year old at issue, during
year 6 the charge declines from $7.00 per $1,000 of Face Amount at the beginning
of the year to $6.36 per $1,000 of Face Amount at the end of the year.
-64-
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Article XII of United Investors' By-Laws provides as follows:
Each Director or officer, or former Director or officer, of this
Corporation, and his legal representatives, shall be indemnified by the
Corporation against liabilities, expenses, counsel fees and costs,
reasonably incurred by him or his estate in connection with, or arising out
of, any action, suit, proceeding or claim in which he is made a party by
reason of his being, or having been, such Director or officer; and any
person who, at the request of this Corporation, serves as Director or
officer of another corporation in which this Corporation owns corporate
stock, and his legal representatives, shall in like manner be indemnified
by this Corporation; provided that, in either case shall the Corporation
indemnify such Director or officer with respect to any matters as to which
he shall be finally adjudged in any such action, suit or proceeding to have
been liable for misconduct in the performance of his duties as such
Director or officer. The indemnification herein provided for shall apply
also in respect of any amount paid in compromise of any such action, suit,
proceeding or claim asserted against such Director or officer (including
expenses, counsel fees, and costs reasonably incurred in connection
therewith), provided that the Board of Directors shall have first approved
such proposed compromise settlement and determined that the officer or
Director involved is not guilty of misconduct, but in taking such action
any Director involved shall not be qualified to vote thereof, and if for
this reason a quorum of the Board cannot be obtained to vote on such
matters, it shall be determined by a committee of three (3) persons
appointed by the shareholders at a duly called special meeting or at a
regular meeting. In determining whether or not a Director or officer is
guilty of misconduct in relation to any such matter, the Board of Directors
or committee appointed by the shareholders, as the case shall be, may rely
conclusively upon an opinion of independent legal counsel selected by such
Board or committee. The rights to indemnification herein provided shall
not be exclusive of any other rights to which such Director or officer may
be lawfully entitled.
<PAGE>
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
United Investors Life Insurance Company hereby represents that the
fees and charges deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by United Investors Life Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of ___ pages.
Undertaking to file reports.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons: _______________________________.
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
1. A.
(1) Resolution of the Board of Directors of United Investors Life
Insurance Company establishing United Investors Universal Life
Variable Account.
(2) Not Applicable
(3) (a) Form of Underwriting Agreement /1/
(b) Form of Distribution Agreement /1/
(c) Schedule of Sales Commissions /1/
(4) Not applicable
(5) (a) Specimen Flexible Premium Variable Life Insurance Policy
(b) Accelerated Death Benefit Rider
(c) Disability Waiver of Monthly Deduction Rider
(d) Additional Insured Term Insurance Rider
(e) Children's Term Insurance Rider
(f) Accidental Death Benefit Rider
(6) (a) Articles of Incorporation of United Investors Life
Insurance Company. /2/
(b) By-laws of United Investors Life Insurance Company. /2/
(7) Not applicable
(8) Form of Participation Agreement /1/
(9) Not applicable
(10) Application form /1/
(11) Description of issuance, transfer and redemption procedures. /1/
B. Not applicable
C. Not applicable
-2-
<PAGE>
2. Opinion and consent of James L. Sedgwick as to the legality of the
securities being registered. /1/
3. Not applicable
4. Not applicable
5. Not applicable
6. Opinion and consent of W. Thomas Aycock as to actuarial matters
pertaining to the securities being registered. /1/
7. (a) Consent of independent accountants /1/
(b) Consent of Sutherland, Asbill & Brennan, L.L.P. /1/
8. Powers of Attorney
- -----------------------------
/1/ To be filed by amendment.
/2/ Incorporated herein by reference to the registration statement on Form S-6
(File No. 33-11465), filed on behalf of United Investors Life Variable
Account on January 22, 1987.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
United Investors Universal Life Variable Account, has duly caused this
registration statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, all in the
City of Birmingham and the State of Alabama, on this 25th day of April, 1997.
United Investors Universal Life Variable Account
(SEAL) (Registrant)
By: United Investors Life Insurance Company
(Depositor)
Attest: /s/ Ross W. Stagner By: /s/ James L. Sedgwick
----------------------- ----------------------
Vice President James L. Sedgwick
President
United Investors Life Insurance Company
Pursuant to the requirements of the Securities Act of 1933, United Investors
Life Insurance Company has duly caused this registration statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Birmingham and the State of
Alabama, on the 25th day of April, 1997.
United Investors Life Insurance Company
(SEAL)
Attest: /s/ Ross W. Stagner By: /s/ James L. Sedgwick
----------------------- ----------------------
Vice President James L. Sedgwick
President
United Investors Life Insurance Company
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the date(s) set forth below.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Ronald K. Richey Chairman of the Board of Directors April 25, 1997
- ------------------------ and Chief Executive Officer
Ronald K. Richey
/s/ W. Thomas Aycock Vice President and Chief Actuary, April 25, 1997
- ------------------------ Director
W. Thomas Aycock
/s/ James L. Sedgwick President April 25, 1997
- ------------------------
James L. Sedgwick
/s/ Michael J. Klyce Vice President and Treasurer April 25, 1997
- ------------------------
Michael J. Klyce
/s/ John H. Livingston Director, Secretary and Counsel April 25, 1997
- ------------------------
John H. Livingston
/s/ James L. Mayton, Jr. Vice President and Controller April 25, 1997
- ------------------------
James L. Mayton, Jr.
/s/ Anthony L. McWhorter Director April 25, 1997
- ------------------------
Anthony L. McWhorter
/s/ Carol A. McCoy Director April 25, 1997
- ------------------------
Carol A. McCoy
/s/ Ross W. Stagner Vice President and Director April 25, 1997
- ------------------------
Ross W. Stagner
/s/ William L. Surber Vice President and Director April 25, 1997
- ------------------------
William L. Surber
/s/ Keith A. Tucker Director April 25, 1997
- ------------------------
Keith A. Tucker
</TABLE>
<PAGE>
CERTIFIED RESOLUTION
The undersigned, John H. Livingston, Secretary of United Investors Life
Insurance Company (the "Company"), a Missouri Corporation, hereby certifies that
the following is a true and correct copy of a resolution adopted by the Board of
Directors of the Company:
BE IT RESOLVED by the Board of Directors of United Investors Life
Insurance Company (the "Company") that the Company, pursuant to the
provisions of Section 376.309 of the Missouri Insurance Statutes, hereby
establishes a separate account designated, "United Investors Universal Life
Variable Account" (hereinafter "Variable Account") for the following use
and purposes, and subject to such conditions as hereinafter set forth:
FURTHER RESOLVED, that Variable Account shall be established for the
purpose of providing for the issuance by the Company of such variable
annuity or such other contracts ("Contracts") as the Board of Directors may
designate for such purpose and shall constitute a separate account into
which are allocated amounts paid to or held by the Company under such
Contracts; and
FURTHER RESOLVED, that the income, gains and losses, whether or not
realized, from assets allocated to Variable Account shall, in accordance
with the Contracts, be credited to or charged against such account without
regard to other income, gains, or losses of the Company; and
FURTHER RESOLVED, that the fundamental investment policy of Variable
Account shall be to invest or reinvest the assets of Variable Account in
securities issued by investment companies registered under the Investment
Company Act of 1940 as may be specified in the respective Contracts; and
FURTHER RESOLVED, that eleven investment divisions be, and hereby are
established within Variable Account, to which net payments under the
Contracts will be allocated in accordance with instructions received from
contract-holders, and that the Board of Directors be, and hereby is,
authorized to increase or decrease the number of investment divisions in
Variable Account as it deems necessary or appropriate; and
FURTHER RESOLVED, that each such investment division shall invest only
in the shares of a single mutual fund or a single mutual fund portfolio of
an investment company organized as a series fund pursuant to the Investment
Company Act of 1940; and
FURTHER RESOLVED, that each investment division may be comprised of
two subdivisions, one to hold the amounts contributed under Contracts
issued to retirement plans qualifying for favorable tax treatment under the
provisions of the Internal Revenue Code, as amended, and the other to hold
amounts contributed under Contracts not issued to such qualified plans; and
<PAGE>
Page 2
FURTHER RESOLVED, that the President and the Treasurer be, and they
hereby are, authorized to deposit such amount in variable Account or in
each investment division thereof as may be necessary or appropriate to
facilitate the commencement of the Amount's operation; and
FURTHER RESOLVED, that the President and the Treasurer be, and they
hereby are, authorized to transfer funds from time to time between United
Investors' general account and Variable Account as deemed necessary or
appropriate and consistent with the terms of the Contracts; and
FURTHER RESOLVED, that the appropriate officers of the Company, with
such assistance from the Company's auditors, legal counsel and independent
consultants or other as they may require, be, and they hereby are,
authorized and directed to take all action necessary to: (a) Register
Variable Account as a unit investment trust under the Investment Company
Act of 1940, as amended; (b) Register the Contracts in such amounts, which
may be an indefinite amount, as the Officers of the Company shall from time
to time deem appropriate under the Securities Act of 1933; and (c) Take all
other actions which are necessary in connection with the offering of said
Contracts for sale and the operation of Variable Account in order to comply
with the Investment Company Act of 1940, the Securities Exchange Act of
1934, the Securities Act of 1933, and other applicable Federal laws,
including the filing of any amendments to register statement, any
undertakings, and any applications for exemptions from the Investment
Company Act of 1940 or other applicable federal laws as the Officers of the
Company shall deem necessary or appropriate; and
FURTHER RESOLVED, that the President, the Treasurer and the Vice
President and Chief Actuary, and each of them with full power to act
without the others, hereby are severally authorized and empowered to
prepare, execute and cause to be filed with the Securities and Exchange
Commission on behalf of Variable Account, and by the Company as sponsor and
depositor a Form of Notification of Registration Statement under the
Securities Act of 1933 registering the Contracts, and any and all
amendments to the foregoing on behalf of Variable Account and the Company
and on behalf of and as attorneys of the principal executive officer and/or
the principal financial officer and/or the principal accounting officer
and/or any other officer of the Company; and
FURTHER RESOLVED, that James L. Sedgwick and Frederick R. Bellamy are
hereby appointed as agents for service under any such registration
statement duly authorized to receive communications and notices from the
Securities and Exchange Commission with respect thereto; and
FURTHER RESOLVED, that the appropriate Officers of the Company be, and
they hereby are, authorized on behalf of Variable Account and on behalf of
the
<PAGE>
Page 3
Company to take any and all action that they may deem necessary or
advisable in order to sell the Contracts, including any registrations,
filings and qualifications of the Company, its officers, agents and
employees, and the Contracts under the insurance and securities laws of any
of the states of the United States of America or other jurisdictions, and
in connection therewith to prepare, execute, deliver and file all such
applications, reports, covenants, resolutions, applications for exemptions,
consents to service of process and other papers and instruments as may be
required under such laws, and to take any and all further action which said
officers or counsel of the Company may deem necessary or desirable
(including entering into whatever agreements and contracts as may be
necessary) in order to maintain such registrations or qualifications for as
long as said officers or counsel deem it to be in the best interests of
Variable Account and the Company; and
FURTHER RESOLVED, that the President and the Vice President and Chief
Actuary of the Company be, and they hereby are authorized in the names and
on behalf of Variable Account and the Company to execute and file
irrevocable written consents on the part of Variable Account and of the
Company to be used in such states wherein such consents to service of
process may be requisite under the insurance or securities laws therein in
connection with said registration or qualification of Contracts and to
appoint the appropriate state official, or such other person as may be
allowed by said insurance or securities laws, agent of Variable Account and
of the Company for the purpose of receiving and accepting process; and
FURTHER RESOLVED, that the President of the Company be, and hereby is,
authorized to establish procedures under which the Company will institute
procedures for providing voting rights for owners of such Contracts with
respect to securities owned by Variable Account; and
FURTHER RESOLVED, that the President of the Company is hereby
authorized to execute such agreement or agreements as deemed necessary and
appropriate (i) with any qualified entity under which such entity will be
appointed principal underwriter and distributor for the Contracts and (ii)
with one or more qualified banks or other qualified entities to provide
administrative and/or custodial services in connection with the
establishment and maintenance of Variable Account and the design, issuance,
and administration of the Contracts.
FURTHER RESOLVED, that, since it is expected that Variable Account
will invest in the securities issued by one or more investment companies,
the appropriate officers of the Company are hereby authorized to execute
whatever agreement or agreements as may be necessary or appropriate to
enable such investments to be made.
FURTHER RESOLVED, that the appropriate officers of the Company, and
each of them, are hereby authorized to execute and deliver all such
documents and
<PAGE>
Page 4
papers and to do or cause to be done all such acts and things as they may
deem necessary or desirable to carry out the foregoing resolutions and the
intent and purposes thereof.
The foregoing resolution is still in full force and effect this 18th day of
April, 1997.
/s/ John H. Livingston
--------------------------------------------
John H. Livingston
CORPORATE SEAL Secretary
<PAGE>
A Missouri Stock Company
================================================================================
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Adjustable Death Benefit
Death Benefit payable at Insured's death prior to the Maturity Date.
Premium payments are flexible, subject to the limits described herein.
Policy Value, less indebtedness, payable on the Maturity Date.
This Policy is Nonparticipating. Dividends are not payable.
================================================================================
WE WILL PAY the proceeds of this policy to:
1. you if the Insured is living on the Maturity Date; or
2. the Beneficiary when we receive due proof satisfactory to us that the
Insured died while this Policy was in force; and
WE WILL PROVIDE the other rights and benefits of this Policy.
Payment of any benefits and all other rights are subject to the terms of this
Policy. This Policy is issued in consideration of the application and payment
of the Initial Premium.
"FREE LOOK" PERIOD - You may cancel this Policy by returning it by the later of:
(a) the 20th day after you receive it; or (b) the 45th day after the application
is signed. You may return it to us or to the agent who sold it to you. When we
receive the Policy, we will cancel it and refund any premiums that were paid.
DEATH BENEFIT - The amount and the duration of the Death Benefit may vary as
described in Sections 6 and 7 of the Policy. ADDITIONAL PREMIUM PAYMENTS MAY BE
REQUIRED TO KEEP THIS POLICY IN FORCE.
POLICY VALUE - The Policy Value of this Policy prior to the Maturity Date is
equal to the Variable Account Value plus the Fixed Account Value. The Variable
Account Value of this Policy may increase or decrease daily depending on the
investment experience of the Investment Divisions selected as described in
Sections 12 and 13 of the Policy. The Variable Account Value is not guaranteed
as to fixed dollar amounts.
Signed for United Investors Life Insurance Company at Birmingham, Alabama.
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Secretary President
================================================================================
THIS POLICY IS A LEGAL CONTRACT
BETWEEN YOU AND UNITED INVESTORS LIFE INSURANCE COMPANY
READ YOUR POLICY CAREFULLY
<TABLE>
<S> <C> <C> <C>
INSURED: JOHN DOE POLICY NUMBER: U000001
POLICY DATE: JAN 01, 1997 ISSUE AGE AND SEX: 35 MALE
MATURITY DATE: JAN 01, 2062 INITIAL FACE AMOUNT: $100,000
</TABLE>
================================================================================
<PAGE>
GUIDE TO POLICY PROVISIONS
- --------------------------------------------------------------------------------
PROVISIONS SECTION
Additional Premiums........................................... 7
Age and Sex................................................... 2
Amount of Insurance........................................... 2
Amount of Proceeds............................................ 5
Assignment.................................................... 3
Automatic Paid-Up Benefit..................................... 19
Beneficiary................................................... 3
Cash Surrender Value.......................................... 15
Change of Beneficiary......................................... 3
Death Benefit................................................. 6
Definitions................................................... 1
Delay or Suspension of Payments............................... 18
Errors in Age or Sex.......................................... 4
Fixed Account................................................. 10
Fixed Account Value........................................... 11
Incontestability.............................................. 4
Initial Premium............................................... 2
Investment Divisions.......................................... 13
Loans......................................................... 17
Partial Surrenders............................................ 16
Payment of Proceeds........................................... 21
Policy Date................................................... 2
Policy Exchange Option........................................ 20
Policy Value.................................................. 9
Premium Provisions............................................ 7
Suicide....................................................... 4
Transfers..................................................... 14
Variable Account Value........................................ 12
- --------------------------------------------------------------------------------
Page 1
<PAGE>
1. DEFINITIONS
- --------------------------------------------------------------------------------
Accumulation Unit - An accounting unit used to calculate the Policy Value.
Attained Age - The age of the Insured on his or her last birthday at the
beginning of the Policy Year.
Cash Surrender Value - The Policy Value less any Surrender Charges.
Death Benefit - The amount to be paid to the Beneficiary upon death of the
Insured.
Fixed Account - Part of the General Account of United Investors Life Insurance
Company to which you may allocate all or a portion of your Premiums or Policy
Values.
General Account - The General Account consists of all assets of United Investors
Life Insurance Company other than those in any separate account.
In Force - The Insured's life remains insured under the terms of this Policy.
Insured - The person whose life is insured by this Policy.
Investment Divisions - The Investment Divisions named under Policy Data. Each
is part of a variable account of ours.
Issue Age - The age of the Insured on his or her last birthday prior to the
Policy Date. The Issue Age is shown under Policy Data.
Loan Balance - All existing loans on this Policy plus Policy loan interest which
has been either accrued or been added to the Policy loan.
Maturity Date - The date on which proceeds, as defined herein, are payable if
the Insured is living. The Maturity Date is shown under Policy Data.
Monthly Anniversary - The same day in each month as the Policy Date. If the
Monthly Anniversary falls on a date other than a Valuation Date, the next
following Valuation Date will be deemed the Monthly Anniversary.
Net Premium - The Premium received less the Premium Expense Charge shown in the
Policy Data.
Net Amount at Risk - The excess of the Death Benefit over the Policy Value on
the Monthly Anniversary before the cost of insurance is deducted.
Net Cash Surrender Value - The Cash Surrender Value minus any Policy loans and
any Policy loan interest.
Policy Anniversary - The same day and month as the Policy Date each year the
Policy remains in force. If the Policy Anniversary falls on a date other than a
Valuation Date, the next following Valuation Date will be deemed the Policy
Anniversary.
Policy Date - The date from which Policy Anniversaries and Policy Years are
determined. Your Policy Date is shown under Policy Data.
Policy Month - The first Policy Month starts on the Policy Date. Subsequent
Policy Months start on the Monthly Anniversary.
Policy Value - The Policy Value equals the Fixed Account Value plus the
Variable Account Value.
Reallocation Date - The date 30 days after the Policy Date, or the next
Valuation Date thereafter.
Terminate - This Policy is no longer in force. All insurance coverage under
this Policy has stopped.
Valuation Date - Each day that the New York Stock Exchange is open for trading.
Valuation Period - The interval of time between a Valuation Date and the next
Valuation Date. It is measured from the closing of the New York Stock Exchange.
Variable Account Value - The sum of the values of the Investment Divisions under
this Policy.
We, Our, Us - United Investors Life Insurance Company.
Written Request - A request in writing signed by you.
You, Your - The Owner of this Policy. The Owner may be someone other than the
Insured. The Owner is shown in the application unless the Owner has been
changed as provided in this Policy.
Page 2
<PAGE>
- --------------------------------------------------------------------------------
2. POLICY DATA
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
POLICY NUMBER: U0000001 POLICY DATE: JAN 01, 1997
INSURED: JOHN DOE ISSUE AGE AND SEX: 35 MALE
OWNER: JOHN DOE INITIAL FACE AMOUNT: $100,000
RISK CLASS: STD. NONTOBACCO MATURITY DATE: JAN 01, 2062
</TABLE>
- --------------------------------------------------------------------------------
Due to the variable nature of this Flexible Premium Variable Life Policy, it is
possible that this Policy will terminate before the Maturity Date (See
Termination and Grace Period in Section 7).
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INITIAL PREMIUM: $100.00
MINIMUM MONTHLY PREMIUM: $ 55.08
PLANNED PERIODIC PREMIUM: $100.00 MODE: MONTHLY BANK
DRAFT
- --------------------------------------------------------------------------------
MINIMUM FACE AMOUNT: $50,000
MINIMUM FACE AMOUNT INCREASE: $25,000
DEATH BENEFIT GUARANTEE PERIOD: JAN 01, 1997 THROUGH JAN 01, 2027*
DEATH BENEFIT OPTION: B (FACE AMOUNT PLUS POLICY VALUE)
MINIMUM TRANSFER AMOUNT: $ 100
MINIMUM PARTIAL SURRENDER AMOUNT: $ 100
</TABLE>
- --------------------------------------------------------------------------------
*The Death Benefit guarantee will remain in effect as long as the sum
of the premiums paid, minus any Partial Surrenders and any loan
balance, equals or exceeds the required Minimum Monthly Premium
multiplied by the number of months the Policy has been inforce (See
Grace Period in Section 7).
Page 3
<PAGE>
- --------------------------------------------------------------------------------
2. POLICY DATA (Continued)
- --------------------------------------------------------------------------------
EXPENSE CHARGES AND FEES
ADMINISTRATIVE CHARGE:
CURRENT: $5.00 per month for the life of the Policy.
MAXIMUM: $7.50 per month for the life of the Policy.
MORTALITY AND EXPENSE
RISK CHARGE:
CURRENT: POLICY YEARS 1 - 10:
.002466% of average daily net assets of each
Investment Division deducted daily (equivalent
to .90% per year)
POLICY YEARS 11 & LATER:
.001918% of average daily net assets of each
Investment Division deducted daily (equivalent
to .70% per year)
MAXIMUM: ALL POLICY YEARS:
.002466% of average daily net assets of each
Investment Division deducted daily (equivalent
to .90% per year).
PREMIUM EXPENSE CHARGE: 3.5% subtracted from each premium payment for
premium and DAC taxes.
GUARANTEED DEATH 1 Cent per $1,000 of Total Face Amount payable
BENEFIT CHARGE: monthly during the Death Benefit Guarantee
Period while Death Benefit guarantee remains in
effect.
VL973A Page 3A
<PAGE>
- --------------------------------------------------------------------------------
2. POLICY DATA (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED ACCOUNT
- --------------------------------------------------------------------------------
GUARANTEED INTEREST RATE: 4.00% For all Policy
Years
- --------------------------------------------------------------------------------
INVESTMENT DIVISIONS
- --------------------------------------------------------------------------------
Each Mutual Fund Portfolio represents a separate Investment Division of the
Variable Account. Assets of each Investment Division are invested in a
corresponding Mutual Fund Portfolio.
- --------------------------------------------------------------------------------
MUTUAL FUND: TMK/United Funds, Inc.
- --------------------------------------------------------------------------------
PORTFOLIOS: Asset Strategy International
Balanced Limited-Term Bond
Bond Money Market
Growth Science & Technology
High Income Small Cap
Income
- --------------------------------------------------------------------------------
PREMIUM ALLOCATION SCHEDULE ON THE POLICY DATE
- --------------------------------------------------------------------------------
ACCOUNT PERCENT OF PREMIUMS
------------------- -------------------
Fixed Account 0%
Asset Strategy 10%
Balanced 10%
Bond 10%
Growth 10%
High Income 10%
Income 10%
International 10%
Limited-Term Bond 5%
Money Market 5%
Science & Technology 10%
Small Cap 10%
Page 3B
<PAGE>
- --------------------------------------------------------------------------------
2. POLICY DATA (CONTINUED)
- --------------------------------------------------------------------------------
TABLE OF SURRENDER CHARGES PER $1,000 OF INITIAL FACE AMOUNT
------------------------------------------------------------
<TABLE>
<CAPTION>
Policy Charge at Policy Charge at
Year End of Year* Year End of Year*
<S> <C> <C> <C>
1 7.00 9 4.45
2 7.00 10 3.82
3 7.00 11 3.18
4 7.00 12 2.55
5 7.00 13 1.91
6 6.36 14 1.27
7 5.73 15 0.64
8 5.09 16 & Later 0.00
</TABLE>
*The Surrender Charge at the end of each Policy Year based on the Initial Face
Amount is shown above. Between Policy Anniversaries the Surrender Charge will
be an interpolation of the charge at the end of the current Policy Year and the
charge at the end of the previous Policy Year.
- --------------------------------------------------------------------------------
For any increase in Face Amount, a Surrender Charge based on the increase will
be imposed in addition to the Surrender Charge stated above. We will provide
you with a supplemental Policy Data Page which describes any additional
Surrender Charges.
PARTIAL SURRENDER CHARGE: Lesser of $25 or 2% of the Partial
Surrender Amount, plus a portion
of the Surrender Charge.
- --------------------------------------------------------------------------------
POLICY LOANS
- --------------------------------------------------------------------------------
MAXIMUM LOAN VALUE: 90% OF POLICY VALUE LESS
SURRENDER CHARGES
LOAN INTEREST RATE CHARGED: 6.00%
MINIMUM INTEREST RATE CREDITED ON LOANED 4.00%
AMOUNTS:
ADDITIONAL INTEREST RATE CURRENTLY 2.00%
CREDITED ON PREFERRED LOAN AMOUNTS:
- --------------------------------------------------------------------------------
Page 3C
<PAGE>
TABLE OF MAXIMUM COST OF INSURANCE RATES
MONTHLY COST OF INSURANCE RATES PER $1,000
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0 0.21943 34 0.13760 67 2.29201
1 0.08587 35 0.14428 68 2.52819
2 0.08254 36 0.15179 69 2.79077
3 0.08087 37 0.16181 70 3.08860
4 0.07753 38 0.17266 71 3.42980
5 0.07336 39 0.18435 72 3.82530
6 0.06919 40 0.19855 73 4.27493
7 0.06502 41 0.21358 74 4.77159
8 0.06252 42 0.22946 75 5.30544
9 0.06169 43 0.24700 76 5.87269
10 0.06252 44 0.26622 77 6.46947
11 0.06753 45 0.28796 78 7.09996
12 0.07670 46 0.31137 79 7.78482
13 0.08921 47 0.33646 80 8.54724
14 0.10339 48 0.36406 81 9.40951
15 0.11340 49 0.39419 82 10.39222
16 0.12342 50 0.42851 83 11.49455
17 0.13093 51 0.46787 84 12.69876
18 0.13593 52 0.51311 85 13.98063
19 0.13927 53 0.56509 86 15.32651
20 0.14011 54 0.62296 87 16.71801
21 0.13844 55 0.68759 88 18.15089
22 0.13593 56 0.75815 89 19.64755
23 0.13260 57 0.83297 90 21.23308
24 0.12926 58 0.91627 91 22.94951
25 0.12509 59 1.00976 92 24.87000
26 0.12258 60 1.11430 93 27.20133
27 0.12091 61 1.23080 94 30.42888
28 0.12008 62 1.36520 95 35.49222
29 0.12008 63 1.51760 96 44.51508
30 0.12091 64 1.68724 97 62.83141
31 0.12342 65 1.87335 98 107.67365
32 0.12675 66 2.07519 99 1000.00000
33 0.13176
</TABLE>
- --------------------------------------------------------------------------------
WE GUARANTEE THAT THE COST OF INSURANCE RATES WE CHARGE WILL NOT EXCEED THE
ABOVE RATES, OR A MULTIPLE THEREOF FOR SUBSTANDARD RISK CLASS. THE MONTHLY COST
OF INSURANCE CHARGE AND COST OF INSURANCE RATES ARE DESCRIBED IN SECTION 8 OF
THE POLICY.
VL973D Page 3D
<PAGE>
3. OWNER AND BENEFICIARY
- --------------------------------------------------------------------------------
OWNER - The Owner as of the Policy Date is shown in the Policy Data. The Owner
may receive all benefits and exercise all rights granted by this Policy during
the Insured's lifetime. If there is more than one Owner at a given time, all
must exercise the rights of ownership by joint action.
BENEFICIARY - The Beneficiary of this Policy is as stated in the application,
unless subsequently changed by the Owner. If no Beneficiary is living at the
death of the Insured, the proceeds will be paid to you, if you are living, or to
your estate.
CHANGE IN POLICY OWNER AND BENEFICIARY - Unless you provide otherwise in writing
to us, you may change the Owner or Beneficiary during the lifetime of the
Insured. Changes must be made by written request filed with us. The change
will take effect on the date the request was signed, but it will not apply to
payments made by us before we accept the request in writing.
ASSIGNMENT - You may assign this Policy. However, no assignment will bind us
until it is filed in writing at our Home Office. When it is filed, your rights
and the rights of any Beneficiary will be subject to it. We will not be
responsible for the validity of any assignment.
4. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT - This Policy, including the application, and any Riders,
Amendments or Endorsements attached hereto, is the entire contract between you
and us. Any change must be made in writing by one of our officers.
All statements in the application are representations and not warranties. No
statement shall be used to void this Policy or to defend against a claim unless
contained in the application.
PAYMENT OF BENEFITS - All benefits are payable at our Home Office. We may
require you to submit this Policy before we approve changes or pay benefits.
ERRORS IN AGE AND SEX - If the Insured's age or sex is misstated, the benefits
under this Policy will be those which the last Monthly Cost of Insurance Charge
would have provided at the correct age and sex.
SUICIDE EXCLUSION - If the Insured dies by suicide, while sane or insane, within
two years from the Policy Date, our liability will be limited to the total
premiums paid less any Partial Surrenders and any loan balances.
If the Insured dies by suicide, while sane or insane, within two years from the
effective date of any Face Amount increase, the proceeds under this Policy shall
be reduced by the excess, if any, of the Net Amount At Risk on the date of death
over the corresponding amount in effect just prior to the date of increase, and
increased by the total Monthly Cost of Insurance Charges deducted for this
excess.
INCONTESTABILITY - This Policy will be incontestable after it has been in force
during the lifetime of the Insured for two years from the Policy Date.
A new two year contestability period shall apply to each increase in insurance
amount that requires evidence of good health beginning on the effective date of
each increase, and will apply only to statements made in the application for the
increase.
If this Policy is reinstated, a new two year contestability period (apart from
any remaining contestability period) shall apply from the date of the
application for reinstatement and will apply only to statements made in the
application for reinstatement.
VL974 Page 4
<PAGE>
4. GENERAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUAL REPORT - We will send you a report within 30 days following your Policy
Anniversary which shows the following information:
1. the current Policy Value;
2. any payments since the last report;
3. all charges since the last report;
4. any Partial Surrenders since the last report;
5. any loan balance on this Policy;
6. the current Cash Surrender Value;
7. the Net Cash Surrender Value; and
8. the current Death Benefit.
STATE LAWS - This Policy is governed by the law of the state in which it is
delivered. The values and benefits of this Policy are at least equal to those
required by such state.
MATURITY DATE - The Maturity Date of this Policy is shown in the Policy Data.
This date is the Policy Anniversary on which the Insured attains age 100. If
the Insured survives to Attained Age 100 and you ask us to continue this Policy,
we will extend the Maturity Date if in doing so this Policy still qualifies as
life insurance according to the Internal Revenue Service and your state. In
order to continue this Policy beyond Attained Age 100, we may require that the
Death Benefit not exceed the Policy Value.
5. AMOUNT OF PROCEEDS
- --------------------------------------------------------------------------------
The proceeds payable by this Policy are:
. Upon the death of the Insured prior to the Maturity Date, the Death Benefit,
less any loan balance and any overdue Monthly Deductions.
. On the Maturity Date, unless the Maturity Date has been extended, the Policy
Value less any loan balance.
. On surrender of the Policy prior to the Maturity Date, the Net Cash Surrender
Value.
The proceeds may be taken in a lump sum or applied under one of the Payment
Options listed in the Payment of Proceeds Provision.
6. DEATH BENEFIT
- --------------------------------------------------------------------------------
AMOUNT OF DEATH BENEFIT - The amount of the Death Benefit depends on the total
Face Amount, the Policy Value on the date of the Insured's death, and the Death
Benefit Option in effect at that time.
The Initial Face Amount and the Death Benefit Option are shown in the Policy
Data. The Total Face Amount is the sum of all of the Face Amount portions. The
Initial Face Amount and each Face Amount increase still in effect are Face
Amount portions.
Option A - The amount of the Death Benefit under Option A is the greater of:
a. the total Face Amount at the beginning of the Policy Month when the death
occurs; or
b. the Policy Value on the date of death multiplied by the applicable factor
from the Table of Death Benefit Factors below.
Option B - The amount of the Death Benefit under Option B is the greater of:
a. the total Face Amount at the beginning of the Policy Month when the death
occurs plus the Policy Value on the date of death; or
b. the Policy Value on the date of death multiplied by the applicable factor
from the Table of Death Benefit Factors below.
Page 5
<PAGE>
6. DEATH BENEFITS (Continued)
- --------------------------------------------------------------------------------
TABLE OF DEATH BENEFIT FACTORS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGE FACTOR AGE FACTOR AGE FACTOR
----------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
0-40 2.50 60 1.30 80 1.05
41 2.43 61 1.28 81 1.05
42 2.36 62 1.26 82 1.05
43 2.29 63 1.24 83 1.05
44 2.22 64 1.22 84 1.05
45 2.15 65 1.20 85 1.05
46 2.09 66 1.19 86 1.05
47 2.03 67 1.18 87 1.05
48 1.97 68 1.17 88 1.05
49 1.91 69 1.16 89 1.05
50 1.85 70 1.15 90 1.05
51 1.78 71 1.13 91 1.04
52 1.71 72 1.11 92 1.03
53 1.64 73 1.09 93 1.02
54 1.57 74 1.07 94 1.01
55 1.50 75 1.05 95 1.00
56 1.46 76 1.05 96 1.00
57 1.42 77 1.05 97 1.00
58 1.38 78 1.05 98 1.00
59 1.34 79 1.05 99 1.00
</TABLE>
This table is based on the Insured's age last birthday at the beginning of the
policy year (attained age).
- --------------------------------------------------------------------------------
CHANGE IN DEATH BENEFIT OPTION - The Owner may change the Death Benefit Option
after this Policy has been in force for at least one year, subject to the
following requirements:
1. the Owner must request the change in writing;
2. once the Death Benefit Option has been changed, it cannot be changed again
for one year;
3. if Death Benefit Option A is changed to Option B, the Total Death Benefit
will remain the same, the Face Amount will be decreased by an amount equal to
the Policy Value on the date of the change;
4. if Death Benefit Option B is changed to Option A, the Total Death Benefit
will remain the same, the Face Amount will be increased by an amount equal to
the Policy Value on the date of the change. The Risk Class for the last Face
Amount portion to go into effect which is still in force will apply to the
Face Amount increase.
Any change in Death Benefit Option will take effect on the Monthly Anniversary
on or following the date we approve the request for the change.
VL976 Page 6
<PAGE>
6. DEATH BENEFIT (Continued)
- --------------------------------------------------------------------------------
CHANGE IN FACE AMOUNT - The Owner may change the Face Amount of this Policy on
any Monthly Anniversary after the Policy has been in force at least one year,
subject to the following requirements. Once the Face Amount has been changed, it
cannot be changed again for the next twelve months.
Face Amount Increase - To increase the Face Amount the Owner must:
1. submit an application for the increase.
2. submit proof satisfactory to us that the Insured is an insurable risk; and
3. pay any additional premium which is required.
The Face Amount can not be increased after the Insured reaches age 75. Each
Face Amount increase must be at least as large as the Minimum Face Amount
Increase shown in the Policy Data. A Face Amount increase will take effect on
the Monthly Anniversary on or following the day we approve the application for
the increase.
The Risk Class that applies for any Face Amount increase may be different from
the Risk Class that applies for the Initial Face Amount.
The following changes will be made to reflect the increase:
1. The Minimum Monthly Premium will be increased.
2. Additional Surrender Charges equal to the Face Amount increase (in $1,000's)
multiplied by the Surrender Charge Factors shown in the Policy Data will
apply for 15 years following the increase.
We will furnish a supplement to the Policy Data that shows:
1. the Risk Class and the amount of the increase; and
2. the values for the changes described above.
Face Amount Decrease - The Owner must request in writing any decrease in the
Face Amount. The decrease will take effect on the later of:
1. the Monthly Anniversary on or following the day we receive the Owner's
request for the decrease; or
2. the Monthly Anniversary one year after the last change in Face Amount was
made.
A Face Amount decrease will be used to reduce any previous Face Amount increases
which are then in effect starting with the latest increase and continuing in the
reverse order in which the increases were made. If any portion of the decrease
is left after all Face Amount increases have been reduced, it will be used to
reduce the Initial Face Amount. We will not permit a Face Amount decrease that
would reduce the Initial Face Amount below the Minimum Face Amount shown in the
Policy Data.
The Minimum Monthly Premium will be reduced to reflect the Face Amount decrease.
The new Minimum Monthly Premium will be shown on a supplement to the Policy
Data.
We will deduct a charge from the Policy Value when the Face Amount is decreased.
The maximum charge we will deduct each time the Face Amount is decreased is the
lesser of:
1. the total of the current Surrender Charge for the amount of each Face Amount
portion reduced; or
2. the Policy Value when the decrease is made.
The charge will be deducted for each Face Amount portion reduced, starting with
the charge for the first Face Amount portion reduced, and continued in the same
order in which the reductions are made until the charge is completely deducted.
Future Surrender Charges will be reduced proportionately for any charges
deducted. After the Face Amount is decreased, the Surrender Charges for each
Face Amount portion for which a charge is deducted will be equal to the
Surrender Charges shown for that Face Amount portion in the Policy Data, or in
the supplement to the Policy Data, multiplied by the ratio of:
1. the amount of the Surrender Charge in effect for the Face Amount portion at
the time the charge is deducted minus the amount of the charge deducted for
the Face Amount portion; divided by
2. the amount of the Surrender Charge in effect for the Face Amount portion at
the time the charge is deducted.
VL976A Page 7
<PAGE>
7. PREMIUM PROVISIONS
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PREMIUMS - Premiums are payable in advance at our Administrative Office or to an
authorized agent.
ALLOCATION OF PREMIUMS - You may choose to allocate premiums to the Investment
Divisions of the Variable Account, the Fixed Account, or a combination thereof.
You may choose any whole percentage from 0% to 100%.
INITIAL PREMIUM - The Initial Premium is shown in the Policy Data. Between the
date the Initial Premium was received and the Policy Date, we will credit
interest on the Initial Premium as if it had been invested in the Money Market
Investment Division.
On the Policy Date the portion of the initial Net Premium you allocate to the
Investment Divisions of the Variable Account, plus any accrued interest on that
amount, will be allocated to the Money Market Investment Division. On the
Reallocation Date the value in the Money Market Investment Division will be
allocated among the Investment Divisions according to the premium allocation
percentages you specified in your application.
If Additional Premiums are received prior to the Reallocation Date, the
additional Net Premium you allocate to the Investment Divisions of the Variable
Account will also be allocated to the Money Market Investment Division until the
Reallocation Date.
PLANNED PERIODIC PREMIUMS - Planned Periodic Premiums may be paid annually,
semi-annually, quarterly or monthly by bank draft. The Planned Periodic Premium
and the payment interval in effect on the Policy Date are shown in the Policy
Data. The Owner may change the amount and frequency of premiums. We have the
right to limit the amount of any increase. Each premium after the Initial
Premium must be at least $25.00. We may increase this minimum limit 90 days
after we send the Owner written notice of such increase.
ADDITIONAL PREMIUMS - Additional unscheduled premium payments can be made at any
time while this Policy is in force. We reserve the right to refund or limit the
number and amount of any premiums paid so this Policy will continue to be
treated as a life insurance policy for federal income tax purposes. If premiums
are limited by us, future premium payments may be required.
On the date we receive an Additional Premium or a Planned Periodic Premium, the
Net Premium will be allocated according to the allocation percentage you
specified in your application; or, if subsequently changed, according to your
instructions currently in effect.
MINIMUM PAYMENTS TO AVOID POLICY TERMINATION - You may make additional premium
payments to maintain the Policy in force to avoid Policy termination, as
described in the Grace Period Provision. Such payments may not exceed the limit
established by law to qualify your Policy as a contract of life insurance for
federal tax purposes.
HOW LONG THE POLICY VALUE WILL CONTINUE YOUR INSURANCE - The Policy will
continue in force each month as long as the Net Cash Surrender Value on the
Monthly Anniversary at the beginning of that month is large enough to cover the
Monthly Deductions made for that month. During the Death Benefit Guaranteed
Period shown in the Policy Data, the Net Cash Surrender Value at the beginning
of a Policy Month may not be large enough to continue this Policy in force for
that month. This Policy will still continue in force for that month if the sum
of premiums paid at the beginning of that month, minus any Partial Surrenders
and any loan balance, are not less than accumulated Minimum Monthly Premiums as
of that Monthly Anniversary as described in Grace Period.
TERMINATION - This Policy will terminate on the earliest of the following dates:
1. the date you surrender the Policy;
2. the date the Policy terminates because any loan balance exceeds the Cash
Surrender Value;
3. the date of the Insured's death;
4. the Maturity Date; or
5. the end of the Grace Period.
Payment of the amount required, as described in the Grace Period Provision, will
keep the Policy in force with respect to items 2 and 5 above.
Page 8
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7. PREMIUM PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
GRACE PERIOD - If: (1) the Policy loan balance exceeds the Policy Value less
Surrender Charges; or (2) the Net Cash Surrender Value is less than the Monthly
Deduction on a Monthly Anniversary, a Grace Period of 61 days will be allowed
for the payment of additional premiums so the Monthly Deduction can be made. At
least 30 days before this Policy ends without value we will mail to Your last
known address a notice of the amount of premium needed. We will send a copy of
the notice to the last known address of any assignee of record. That premium
will be due on the Monthly Anniversary on which the Net Cash Surrender Value was
first insufficient. If that premium is not paid within the Grace Period, this
Policy will end without value.
During the Death Benefit Guarantee Period shown in the Policy Data, this Policy
will not enter the Grace Period if the sum of the premiums paid less any loan
balance and Partial Surrenders is at least:
a. the Minimum Monthly Premium shown in the Policy Data; times
b. the number of months the Policy has been in force.
If the Minimum Monthly Premium has changed since the Policy Date, the total
premium amount required will be based on the different Minimum Monthly Premiums
required and the number of months for which each applied. If the Death Benefit
Guarantee ends due to insufficient premium payments, it may not be restored by
payment of additional premiums.
The payment required will be sufficient to keep the Policy in force for three
months irrespective of investment performance. The payment required will not
exceed: (a) the amount by which the Policy loan balance exceeds the Policy Value
less surrender charges; plus (b) any accrued and unpaid Monthly Deductions as of
the date of notice; plus (c) an amount sufficient to cover the next two Monthly
Deductions.
If such payment is not made by the end of the Grace Period, the Policy will
terminate without value. If the Insured dies during the grace period, any loan
balance or overdue monthly deductions will be deducted from the Death Benefit to
determine the proceeds payable.
REINSTATEMENT - This Policy may be reinstated (coverage restored) any time
within five years after it has terminated at the end of a grace period. To
reinstate this Policy the Owner must:
1. submit an application for reinstatement;
2. provide evidence of insurability satisfactory to us;
3. pay or agree to reinstatement of any loan balance; and
4. pay the premium required to reinstate the Policy, as described below.
The premium required to reinstate the Policy equals the total of the following
amounts:
1. the amounts that would have been required for this Policy to continue in
force without entering a Grace Period for each month during the Grace Period
at the end of which it terminated; and
2. the amount that will be required for this Policy to continue in force
without entering a Grace Period for next three months after the
Reinstatement Date. The Reinstatement Date will be the Monthly Anniversary
on or following the day we approve the application for reinstatement. The
Policy Value on the Reinstatement Date will be equal to the Policy Value on
the Monthly Anniversary when the Grace Period ended. The Surrender Charge on
the Reinstatement Date will be counted from the original Policy Date.
This Policy may not be reinstated after:
1. it has been surrendered for its Net Cash Surrender Value; or
2. the Insured's death; or
3. the Maturity Date.
Page 9
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8. CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
MONTHLY DEDUCTION - At the beginning of each Policy Month we make a deduction
from the Policy Value. The Monthly Deduction will be deducted from the
Investment Divisions of the Variable Account and the Fixed Account in the same
proportion that their values bear to the total Policy Value, excluding amounts
transferred to the Fixed Account to secure Policy loans. The Monthly Deduction
is equal to:
a. the Monthly Cost of Insurance Charge described below; plus
b. the Current Administrative Charge described in the Policy Data; plus
c. the Guaranteed Death Benefit Charge, if any, described in the Policy
Data; plus
d. the cost of any additional benefits added by Riders to the Policy.
MONTHLY COST OF INSURANCE CHARGE - The Monthly Cost of Insurance for a Policy
Month is calculated as (a) multiplied by the result of (b) minus (c) where:
a. is the Cost of Insurance Rate divided by 1,000;
b. is the Death Benefit at the beginning of the Policy Month divided by
1.0032737; and
c. is the Policy Value at the beginning of the Policy Month before the
Monthly Deduction.
If you have selected Death Benefit Option A and if there have been any increases
in the Face Amount, the Policy Value will be considered a part of the Initial
Face Amount. If the Policy Value exceeds the Initial Face Amount, the excess
will be considered part of the increases in Face Amount in the order of the
increases.
COST OF INSURANCE RATE - The Cost of Insurance Rate is the rate applied to the
insurance under this Policy to determine the Monthly Deduction. It is based on
the Attained Age, sex, total Face Amount and Risk Class of the insured. The Risk
Class on the Policy Date will apply for the Face Amount at issue. For any
subsequent Face Amount Increase, the Cost of Insurance Rate will be based on the
Risk Class applicable to that increase.
Our current scale of cost of Insurance Rates is subject to change based on our
expectations as to future experience. Any change will be on a uniform basis for
all Policies issued to Insureds of the same age, sex, policy duration, and Risk
Class. No change will occur as a result of change in the health, occupation, or
avocations of the Insured. The rates will not exceed the Maximum Cost of
Insurance Rates shown in the Policy Data which are the 1980 Commissioners
Standard Ordinary Mortality Table, Male or Female, Smoker or Non-Smoker, Age
Last Birthday, or a multiple thereof for substandard Risk Class.
MORTALITY AND EXPENSE RISK CHARGE DEDUCTION - This is a deduction from each of
the Investment Divisions of the Variable Account, computed on a daily basis
starting on the Policy Date. This charge compensates us for the mortality and
expense risks assumed by us under this Policy. The daily deduction rates are
shown in the Policy Data.
OTHER CHARGES AND DEDUCTIONS - The following other deductions will be made as
they occur. Deductions will be made from the Investment Divisions of the
Variable Account and the Fixed Account in the same proportion that their values
bear to the total unloaned Policy Value.
a. pro rata portion of Surrender Charge for Face Amount Decreases; and
b. amounts deducted for Partial Surrenders.
Premium Expense Charge - The Premium Expense Charge is deducted from each
premium payment as it is received. The Premium Expense Charge percentage is
shown in the Policy Data.
Page 10
<PAGE>
9. POLICY VALUE
- --------------------------------------------------------------------------------
The Policy Value is equal to the Fixed Account Value plus the Variable Account
Value.
BASIS USED FOR POLICY VALUES - The methods and factors used to calculate your
Policy Values and reserves are based on certain mortality tables and interest
rates required by state law. We use the 1980 Commissioners Standard Ordinary
Mortality Tables, Male or Female, Smoker or Non-Smoker, Age Last Birthday. All
values are equal to or greater than those required by law. Where required, we
have filed a statement with the insurance officials of the state where this
Policy was delivered. The statement outlines the methods used to determine the
Policy Values.
10. FIXED ACCOUNT
- --------------------------------------------------------------------------------
INTEREST RATES - The Guaranteed Interest Rate is shown in the Policy Data. This
interest rate is the minimum effective annual rate at which interest will be
credited to amounts allocated to the Fixed Account of your Policy.
The Company may credit interest to the Fixed Account of your Policy at a rate
greater than the Guaranteed Interest Rate. Any interest credited to the Fixed
Account of your Policy in excess of the Guaranteed Interest Rate will be
determined at the sole discretion of the Company. The rate of interest credited
may be different for unloaned values, Preferred Loan Values, and Non-Preferred
Loan Values. (See the Policy Loans Provision.) At the end of each Policy Month
we will credit interest on amounts in the Fixed Account as follows:
a. on amounts that remain in the Fixed Account for the entire Policy Month
from the beginning to the end of the month;
b. on amounts allocated to the Fixed Account during the Policy Month that
are Net Premium Payments or loan re-payments, from the date we receive
them to the end of the Policy Month;
c. on amounts transferred to the Fixed Account during the Policy Month, from
the date of the transfer to the end of the Policy Month; and
d. on amounts deducted or withdrawn from the Fixed Account during the Policy
Month, from the beginning of the Policy Month to the date of the
deduction or Surrender.
Page 11
<PAGE>
11. FIXED ACCOUNT VALUE
- --------------------------------------------------------------------------------
On the Policy Date, the value of the Fixed Account is equal to the initial Net
Premium Payment allocated to the Fixed Account plus any accrued interest from
the date of receipt of the payment to the Policy Date minus the portion of the
first month's Monthly Deduction allocated to the Fixed Account.
On any Monthly Anniversary thereafter the Fixed Account is equal to:
a. the Fixed Account Value on the preceding Monthly Anniversary; plus
b. the sum of all Net Premium Payments allocated to the Fixed Account since
the previous Monthly Anniversary; plus
c. the sum of all loan repayments allocated to the Fixed Account since the
previous Monthly Anniversary; plus
d. total interest credited to the Fixed Account since the previous Monthly
Anniversary; plus
e. the amount of any transfers from the Variable Account to the Fixed
Account, including amounts transferred to secure Policy loans, since the
previous Monthly Anniversary; minus
f. the amount of any transfers from the Fixed Account to the Variable
Account since the previous Monthly Anniversary; minus
g. the portion of Partial Surrenders (including surrender charges) allocated
to the Fixed Account since the previous Monthly Anniversary; minus
h. the portion of the Monthly Deduction allocated to the Fixed Account since
the previous Monthly Anniversary.
12. VARIABLE ACCOUNT VALUE
- --------------------------------------------------------------------------------
The Variable Account Value is the sum of the values of the Investment Divisions
under this Policy.
On the Policy Date, the value of the Investment Divisions is equal to the
initial Net Premium Payment allocated to the Investment Divisions of the
Variable Account plus any accrued interest from the date of receipt of the
payment to the Policy Date minus the portion of the first month's Monthly
Deduction allocated to the Investment Division.
On any Monthly Anniversary thereafter, the value of each Investment Division is
equal to:
a. the value of the Investment Division on the preceding Monthly
Anniversary, multiplied by the appropriate Net Investment Factor
(described in the Investment Divisions Provision) since the previous
Monthly Anniversary; plus
b. the sum of all Net Premium Payments allocated to the Investment Division
since the previous Monthly Anniversary; plus
c. the sum of all loan repayments allocated to the Investment Division since
the previous Monthly Anniversary; plus
d. the amount of any transfers from other Investment Divisions or from the
Fixed Account to the Investment Division since the previous Monthly
Anniversary; minus
e. the amount of any transfers to other Investment Divisions or to the Fixed
Account, including amounts transferred to secure a Policy loan, from the
Investment Division since the previous Monthly Anniversary; minus
f. the portion of any Partial Surrenders (including Surrender Charges)
allocated to the Investment Division since the previous Monthly
Anniversary; minus
g. the portion of the Monthly Deduction allocated to the Investment Division
since the previous Monthly Anniversary.
Page 12
<PAGE>
13. INVESTMENT DIVISIONS
- --------------------------------------------------------------------------------
THE INVESTMENT DIVISIONS - Each of the Investment Divisions is part of a
variable account of ours. Those available as of the Policy Date are named under
Policy Data. We have allocated a part of our assets for this and certain other
policies to the Investment Divisions. Such assets remain our property. They
cannot be charged, however, with liabilities from any other business in which we
may take part.
ALLOCATIONS TO, AND INVESTMENT OF THE INVESTMENT DIVISIONS - Premiums (excluding
grace period premiums) and transfers will be allocated as you specify. All
other additions to or deductions from the Investment Divisions will be allocated
as specified under Charges and Deductions in Section 8 and Repayment in Section
17. Each Investment Division will buy or liquidate shares or units of the
Investment Portfolio shown for that Investment Division under Policy Data or as
later added or changed.
DETERMINING INVESTMENT RESULTS - The Policy Value will change due to the
investment results of the Investment Divisions. We use an index to measure
these changes in investment results. The index is called a unit value. Each
Investment Division has its own unit value.
For each Investment Division the unit value was initially set at $1.00.
Thereafter, the unit value for a given Valuation Period is equal to the unit
value for the prior Valuation Period multiplied by the new investment factor for
the given Valuation Period.
At the end of any Valuation Period the value of an Investment Division is equal
to the number of units multiplied by the unit value.
NET INVESTMENT FACTOR/HOW IT IS DETERMINED - The Net Investment Factor is an
index applied to measure the investment performance of an Investment Division
from one Valuation Period to the next. The Net Investment Factor may be greater
or less than one; therefore, the value of a unit may increase or decrease.
The Net Investment Factor of an Investment Division for any Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result, where:
1. is the result of:
a. the net asset value per share of the Portfolio shares held in the
Investment Division determined at the end of the current Valuation
Period; plus
b. the per share amount of any dividend or capital gain distributions on
the Portfolio shares held in the Investment Division, if the "ex-
dividend" date occurs during the current Valuation Period; plus or minus
c. a charge or credit for any taxes reserved for the current Valuation
Period which we determine to have resulted from the investment
operations of the Investment Division;
2. is the result of:
a. the net asset value per share of the Portfolio shares held in the
Investment Division, determined at the end of the last prior Valuation
Period; plus or minus
b. the charge or credit for any taxes reserved for the last prior Valuation
Period; and
3. is a deduction for the current Mortality and Expense Risk Charge shown in
the Policy Data.
Page 13
<PAGE>
13. INVESTMENT DIVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
CHANGES IN THE INVESTMENT DIVISIONS - This would happen if laws or regulations
changed, we added Investment Divisions, the mutual fund became unavailable or,
in our judgement, the mutual fund was no longer suitable for investment. If any
of these situations occurred, we would have the right to add or substitute
Investment Divisions other than those shown under Policy Data. We would first
seek approval of the Securities and Exchange Commission and, where required, the
insurance regulator of the state where this Policy is delivered.
OTHER CHANGES - To the extent permitted by applicable laws and regulations
(including any order of the SEC), we may make changes as follows:
1. The variable account may be operated as a management company under the
investment Company Act of 1940, or in any other form permitted by law, if we
deem it to be in the best interest of the Policy Owners.
2. The variable account may be deregistered under the Investment Company Act of
1940 in the event registration is no longer required.
3. The variable account may be combined with other separate investment
accounts.
4. The provisions of this and other Policies may be modified to comply with any
other applicable federal or state laws; or to take advantage of any benefits
allowed by changes in applicable laws.
In the event of such changes, we may make appropriate endorsement on this and
other policies having an interest in the variable account and take other actions
as may be necessary to effect such a change.
14. TRANSFERS
- --------------------------------------------------------------------------------
TRANSFERS - By written request or other request acceptable to us, you may
transfer all or a part of the values held in the variable Investment Division to
one or more variable Investment Divisions or to the Fixed Account up to twelve
times in a Policy Year.
You may transfer all or a part of the values held in the Fixed Account to one or
more of the Investment Divisions of the Variable Account once per Policy Year.
However, if a transfer is made from the Fixed Account to a variable Investment
Division, no transfer from the variable Investment Division to the Fixed Account
may be made for six months from the transfer date.
The amount transferred from the Fixed Account to a variable Investment Division
may not exceed the greater of: (a) 25% of the prior Policy Anniversary's
unloaned Fixed Account Value; or (b) the amount of the prior Policy Year's
transfer.
The value remaining in the variable Investment Division or the Fixed Account
after a transfer must not be less than $100. If the value remaining would be
less than $100, we will treat the transfer request as a request for a transfer
of the total value.
We may further suspend or modify this transfer privilege at any time with the
necessary approval of the Securities and Exchange Commission.
Page 14
<PAGE>
15. CASH SURRENDER VALUE
- --------------------------------------------------------------------------------
CASH SURRENDER VALUE - The Cash Surrender Value of this Policy equals the Policy
Value minus the Surrender Charge. The Surrender Charges for each Policy Year
based on the Initial Face Amount are shown in the Policy Data.
When this Policy terminates, the Policy Value may be less than the Surrender
Charge. If so, the Owner will not have to pay the difference to us. If this
Policy is reinstated, the Surrender Charge will also be reinstated as described
in the Reinstatement Provision.
NET CASH SURRENDER VALUE - The Net Cash Surrender Value of this Policy is equal
to the Cash Surrender Value less any loan balance on this Policy. You may
surrender this Policy for its Net Cash Surrender Value at any time. Upon
surrender this Policy will terminate.
16. PARTIAL SURRENDERS
- --------------------------------------------------------------------------------
You may make a Partial Surrender from the Net Cash Surrender Value at any time
during the Insured's life and before the Policy has terminated. The Minimum
Partial Surrender Amount is shown in the Policy Data. The Partial Surrender
Amount may not exceed the Net Cash Surrender Value, less $300.
A Partial Surrender will be made from the Investment Divisions of the Variable
Account and from the unloaned value in the Fixed Account in the same proportion
that their values bear to the total unloaned Policy Value, unless you instruct
us otherwise.
We will make a Surrender Charge when a Partial Surrender is made. The maximum
Surrender Charge we will make is the lesser of $25 or 2% of the Partial
Surrender Amount plus a portion of the Surrender Charge equal to:
(a) the percentage of the Net Cash Surrender Value being withdrawn;
multiplied by
(b) the Surrender Charge then in effect.
The Face Amount will be reduced if Death Benefit Option A is in effect when a
Partial Surrender is made. Such a reduction will be equal to the amount of the
Partial Surrender.
Any Face Amount reduction will be used first to reduce any Face Amount increases
then in effect starting with the latest increase and continuing in the reverse
order in which the increases were made. If any of the reduction is left after
all Face Amount increases have been reduced, it will be used to reduce the
Initial Face Amount.
We will not permit a Partial Surrender that would reduce the Face Amount below
the Minimum Face Amount shown in the Policy Data.
We may limit the number of Partial Surrenders in a Policy Year; but this limit
will not be less than one.
Page 15
<PAGE>
17. POLICY LOANS
- --------------------------------------------------------------------------------
HOW LOANS MAY BE MADE - The loan value of this Policy is the only security
required for the loan. Nothing else is needed. Just send us a written request.
The amount of your loan and any loan interest will be transferred from the
Investment Divisions of the Variable Account to the Fixed Account. We will
allocate the amount transferred in the proportion that the value of each
Investment Division bears to the Variable Account Value unless you specify the
Investment Division from which the loan is to be made. Your Policy loan may be
divided into two parts, the Preferred Loan Amount, and the Non-Preferred Loan
Amount. The Preferred Loan Amount is equal to the amount of the loan that does
not exceed the Policy Value minus the total premiums paid, excluding any grace
period premiums. The Non-Preferred Loan Amount is equal to any portion of the
loan which exceeds the Preferred Loan Amount.
The Minimum Interest Rate Credited On Loaned Amounts is shown in the Policy
Data. This rate is the minimum effective annual rate at which interest will be
credited to loaned amounts. We may also credit additional interest on the
Preferred Loan Amount. The Additional Interest Rate we are currently crediting
on Preferred Loan Amounts is shown in the Policy Data. We will send you a new
Policy Data Page whenever this Additional Interest Rate changes.
LOAN INTEREST CHARGED - The Loan Interest Rate Charged is shown in the Policy
Data. We calculate the Policy Value as of the date of the loan. Interest to
pay for the loan until the next Policy Anniversary will be included in
determining the maximum loan value.
Interest is charged daily, and payable at the end of the Policy Year. If
interest is not paid when it is due, it will be added to your loan balance and
charged interest at the Loan Interest Rate Charged shown in the Policy Data.
AMOUNT OF LOAN AVAILABLE - You may borrow up to 90% of the Policy Value less
Surrender Charges. A loan must be for at least $200.
LIMIT ON POLICY LOANS - This Policy will terminate without value, as described
in the Grace Period Provision, if the total loan balance is greater than the
Policy Value less Surrender Charges.
REPAYMENT - All or part of a loan may be repaid at any time while the insured is
alive and this Policy is in force. Repayment must be in amount of at least $200
or the outstanding loan balance if less. Repayments will be allocated to the
Fixed Account and the Investment Divisions of the Variable Account based on the
premium allocation instructions then in effect, unless you specify otherwise.
Page 16
<PAGE>
18. DELAY OR SUSPENSION OF PAYMENTS
- --------------------------------------------------------------------------------
We will normally pay any Partial Surrender amount, loan amount, or the Net Cash
Surrender Value within 7 days after we receive your written request in our Home
Office. The Company may defer payment of any amounts from the Fixed Account,
except for a loan used to pay a premium to us, for up to six months from the
date of receipt of your written request to surrender. If the Company defers
payment for more than 30 days, the Company will pay interest on the amount
deferred. Interest will be paid at a rate not less than the Guaranteed Interest
Rate shown in the Policy Data. We may also defer payment of any amounts derived
from premiums paid by check until such time as the check has cleared.
We have the right, to suspend or delay the date of any payment of any amounts
from any Investment Division of the Variable Account for any period:
1. When the New York Stock Exchange is closed.
2. When trading on the New York Stock Exchange is restricted.
3. When an emergency exists, and as a result:
a. disposal of securities held in the Investment Divisions is not
reasonably practicable; or
b. it is not reasonably practicable to fairly determine the value of the
Investment Divisions; or
4. During any other period when the Securities and Exchange Commission by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in the above items 2 and 3 exist.
19. AUTOMATIC PAID-UP BENEFIT
- --------------------------------------------------------------------------------
If premium payments cease, insurance under this Policy and any benefits provided
by a Rider attached to this Policy will continue as provided in the Grace Period
Provision in Section 7. This Policy will not continue beyond the Maturity Date.
Any Riders attached to this Policy will not continue beyond the termination date
described in the Rider.
20. POLICY EXCHANGE OPTION
- --------------------------------------------------------------------------------
For two years after the Policy is issued, you can exchange it for one that
provides benefits that do not vary with the investment return of the Investment
Divisions of the Variable Account. Since the Policy itself offers a fixed
return option, all you need to do is transfer all of the Policy Value in the
Investment Divisions of the Variable Account to the Fixed Account. Any
restrictions on transfers to the Fixed Account will be waived. We will
automatically credit all future premium payments to the Fixed Account unless you
request a different allocation. There will be no effect on the Policy's Death
Benefit, Face Amount, Net Amount at Risk, Risk Class, or Issue Age. Only the
method of funding the Policy Value will be affected.
Page 17
<PAGE>
21. PAYMENT OF PROCEEDS
- --------------------------------------------------------------------------------
PAYMENT - Any amount payable at the death of the Insured will be paid in one
sum, unless you provide otherwise. All or part of this sum may be applied under
any Payment Option, subject to the following conditions:
1. No option may be selected unless the proceeds are payable to a natural
person in that person's own right.
2. Payment may not be less than $25.00 each or less than $120.00 in a year.
3. If you have not elected an option when a Beneficiary becomes entitled to
proceeds, the Beneficiary may elect the option.
4. The election must be filed with us in writing.
5. We may require exchange of this Policy for a contract covering the
election.
CLAIMS OF CREDITORS - So far as permitted by law, the proceeds will not be
subject to any claims of the Beneficiary's creditors.
PAYMENT OPTIONS -
Option 1 - Fixed Amount - Payment of a fixed amount, but not less than 7% of the
proceeds each year, until the proceeds are fully paid.
Option 2 - Fixed Period - Payment for a fixed period, not exceeding 30 years.
The payment amount for each $1,000 of Proceeds applied under Option 2 will be
based on our Payment Rates in effect on the settlement date. These rates are
guaranteed not to be less than the Guaranteed Minimum Monthly Payment For Each
$1,000 Proceeds Applied Under Option 2 shown in the tables on page 19.
Option 3 - Life Income - Payment for a fixed period and life thereafter. No
payment will become due after death, except payment for any remaining fixed
period. The payment amount for each $1,000 of Proceeds applied under Option 3
will be based on our Payment Rates in effect on the settlement date. These
rates are guaranteed not to be less than the Guaranteed Minimum Monthly Life
Income Payment For Each $1,000 Proceeds Applied Under Option 3 shown in the
tables on page 19. These payments are based on the 1983 Individual Annuity
Mortality Table with interest at 3%.
Option 4 - Proceeds Left at Interest - Payment of interest on proceeds left with
us for any period agreed upon. The interest may be paid at selected intervals
or allowed to accumulate.
Other Payment Options - The proceeds may be paid in any other manner to which we
agree in writing.
More Favorable Payment Options - When proceeds become payable, we may be
offering payment contracts with higher guaranteed minimum payments. If so,
these more favorable contracts will be available subject to any conditions in
effect at that time.
INTEREST RATE - The interest rate on funds held under all options will be at
least 3% compounded annually.
WITHDRAWAL AND CHANGES - Except as to Option 3, if the payee selected the
option, this payee with our consent may modify the terms of the option or select
another option at any time.
DEATH OF PAYEE - If the payee dies, the value of any remaining guaranteed
payments will be paid to the payee's estate, unless otherwise provided in the
election of the option. The value will be based on the guaranteed interest rate
for the Payment Option Selected.
Page 18
<PAGE>
<TABLE>
<CAPTION>
GUARANTEED MINIMUM MONTHLY PAYMENT
FOR EACH $1,000 PROCEEDS APPLIED UNDER OPTION 2
YRS. PAYMENT YRS. PAYMENT YRS. PAYMENT YRS. PAYMENT YRS. PAYMENT YRS. PAYMENT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.47 6 15.14 11 8.86 16 6.53 21 5.32 26 4.59
2 42.86 7 13.16 12 8.24 17 6.23 22 5.15 27 4.47
3 28.99 8 11.68 13 7.71 18 5.96 23 4.99 28 4.37
4 22.06 9 10.53 14 7.26 19 5.73 24 4.84 29 4.27
5 17.91 10 9.61 15 6.87 20 5.51 25 4.71 30 4.18
- ---------------------------------------------------------------------------------------------
</TABLE>
To obtain the minimum payments for other intervals, multiply the monthly payment
by 11.839 for annual, by 5.963 for semi-annual or by 2.993 for quarterly
payments.
================================================================================
GUARANTEED MINIMUM MONTHLY LIFE INCOME PAYMENT
FOR EACH $1,000 PROCEEDS APPLIED UNDER OPTION 3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GUARANTEED PERIOD GUARANTEED PERIOD
----------------- -----------------
MALE 10 15 20 FEMALE 10 15 20
AGE YEARS YEARS YEARS AGE YEARS YEARS YEARS
<S> <C> <C> <C> <C> <C> <C> <C>
20 3.03 3.03 3.03 20 2.93 2.93 2.93
25 3.14 3.14 3.13 25 3.02 3.02 3.01
30 3.27 3.27 3.26 30 3.12 3.12 3.12
35 3.44 3.43 3.41 35 3.26 3.25 3.24
40 3.64 3.63 3.60 40 3.42 3.41 3.40
45 3.90 3.87 3.82 45 3.63 3.61 3.59
50 4.22 4.17 4.08 50 3.89 3.86 3.82
55 4.62 4.53 4.39 55 4.22 4.18 4.11
60 5.14 4.96 4.71 60 4.66 4.57 4.44
61 5.26 5.06 4.78 61 4.76 4.66 4.51
62 5.39 5.16 4.84 62 4.86 4.75 4.58
63 5.52 5.26 4.90 63 4.98 4.85 4.65
64 5.66 5.36 4.96 64 5.10 4.95 4.72
65 5.81 5.46 5.02 65 5.22 5.05 4.79
66 5.96 5.56 5.08 66 5.36 5.16 4.86
67 6.11 5.66 5.13 67 5.50 5.26 4.93
68 6.28 5.76 5.18 68 5.65 5.37 5.00
69 6.44 5.86 5.23 69 5.80 5.49 5.06
70 6.61 5.96 5.27 70 5.96 5.60 5.12
71 6.78 6.05 5.31 71 6.14 5.71 5.18
72 6.96 6.14 5.34 72 6.31 5.83 5.23
73 7.14 6.23 5.37 73 6.50 5.94 5.28
74 7.32 6.31 5.40 74 6.69 6.04 5.32
75 7.49 6.38 5.42 75 6.89 6.14 5.35
76 7.67 6.45 5.44 76 7.09 6.24 5.39
77 7.84 6.51 5.45 77 7.29 6.33 5.41
78 8.01 6.57 5.47 78 7.49 6.41 5.43
79 8.17 6.62 5.48 79 7.69 6.48 5.45
80 8.33 6.66 5.49 80 7.89 6.55 5.47
81 8.48 6.70 5.49 81 8.08 6.61 5.48
82 8.61 6.73 5.50 82 8.26 6.66 5.49
83 8.74 6.76 5.50 83 8.43 6.70 5.49
84 8.86 6.79 5.51 84 8.59 6.74 5.50
85 8.97 6.81 5.51 85 8.74 6.77 5.50
- -------------------------------------------------------------------------------
</TABLE>
Rates for other ages will be furnished upon request
- --------------------------------------------------------------------------------
Page 19
<PAGE>
UNITED INVESTORS LIFE INSURANCE COMPANY
ADMINISTRATIVE OFFICE
2323 Bryan St. - Suite 1100
P. O. Box 219065 . Dallas, TX 75221-9065 . 800-453-1271
HOME OFFICE
Birmingham, Alabama
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Adjustable Death Benefit
Death Benefit payable at Insured's death prior to Maturity Date.
Premium payments are flexible, subject to the limits described herein.
Policy Value, less indebtedness, payable on the Maturity Date.
This Policy is Nonparticipating. Dividends are not payable.
- --------------------------------------------------------------------------------
<PAGE>
ACCELERATED DEATH BENEFIT RIDER
- --------------------------------------------------------------------------------
NOTICE: This Rider provides for accelerated payment of the Policy proceeds. It
is not intended or designed to provide health, nursing home, or long-term care
insurance. If Accelerated Benefits are advanced under the terms of this Rider,
future death benefits and cash surrender benefits of the Policy will be reduced.
Benefits advanced under this Rider may or may not be taxable. Whether or not the
Owner or the Beneficiary incurs a tax liability when benefits are advanced
depends on how the IRS interprets applicable portions of the Tax Code. As with
all tax matters, the Owner should consult a personal tax advisor to assess the
impact of this benefit.
This Rider is made a part of the Policy to which it is attached. This benefit is
subject to all the provisions of this Rider and the Policy. The effective date
of this Rider is the Policy Date of the Policy.
BENEFIT - We will advance the Accelerated Benefit, as defined below, if the
Insured has been diagnosed by a Physician as having a Terminal Illness, subject
to the provisions of this Rider. We will advance the Accelerated Benefit in a
lump sum. There is no charge for this Rider prior to the time Accelerated
Benefits are paid.
ACCELERATED BENEFIT - The Accelerated Benefit payable will be equal to the
amount requested by the Owner, subject to the minimum and maximum requirements
described below, less adjustments for:
a. the current Rider Administrative Expense Charge; and
b. expected future interest at the Policy Loan Interest Rate Charged shown
in the Policy Data.
Minimum Accelerated Benefit Amount - The Accelerated Benefit may not be less
than $5,000. The Face Amount remaining after payment of the Accelerated Benefit
must not be less than $10,000.
Maximum Accelerated Benefit Amount - The Accelerated Benefit may not exceed the
lesser of: (a) $250,000 minus the sum of all benefits previously paid under this
Rider; or (b) 75% of the Policy Death Benefit at the time benefits were first
paid under this Rider, less any Loan Balance.
EFFECT OF RIDER BENEFITS ON POLICY VALUES AND BENEFITS - On the date the
Accelerated Benefit is advanced, a percentage reduction equal to the amount of
the Accelerated Benefit advanced divided by the total Death Benefit just before
the advance, will be made in the following Policy values and benefits:
1. the Death Benefit, Initial Face Amount, and each Face Amount Increase;
2. the Policy Value and Cash Surrender Value; and
3. the Loan Balance.
The Cash Surrender Value will be increased by the amount of the Loan Balance
reduction before the Cash Surrender Value adjustment is made. The Accelerated
Benefit payable will be reduced by the Loan Balance reduction.
We will furnish new Policy Data pages which reflect the reduced benefits. Future
premiums and Monthly Deductions will be based on these reduced benefits.
DEFINITIONS -
Rider Administrative Expense Charge - We will charge an administrative expense
charge at the time the Accelerated Benefit is paid. The amount of the Rider
Administrative Expense Charge will be based on our current practice in effect on
the date the Accelerated Benefit is paid, but will not exceed $250.
(Please turn to back of page)
<PAGE>
DEFINITIONS (Continued) -
Physician - Physician means an individual who is licensed to practice medicine
and treat illness or injury in the state in which treatment is received and who
is acting within the scope of that license. Physician does not include: (a) the
Insured; (b) the Owner; (c) any person who lives with the Insured or the Owner;
or (d) a member of the Insured's or Owner's immediate family.
Terminal Illness - Terminal illness means an imminent death expected as a result
of a noncorrectable medical condition that is diagnosed by a Physician:
a. on or after the Effective Date of this Rider and while this Rider is in
force; and
b. with reasonable medical certainty that the death of the Insured will
occur within 12 months from the date of the Physician's statement.
PROOF OF LOSS - Written proof of the Insured's Terminal Illness must be received
by us within 90 days after the date of diagnosis. This proof must include a
properly completed Claim Form and a written Physician's statement signed by the
Physician, in a form acceptable to us. We may request additional medical
information from the Physician submitting the statement.
We reserve the right to have a Physician of our choosing examine the Insured, at
our expense, prior to advancing the Accelerated Benefit. If that Physician
provides a different Physician's statement, we reserve the right to rely on that
Physician's statement for claim purposes.
PAYMENT OF CLAIMS - All benefits described in this Rider will be available as
soon as we receive satisfactory Proof of Loss. All Rider benefits will be paid
to the Owner. If the Insured's death occurs prior to our receipt of satisfactory
Proof of Loss, the Accelerated Benefit will not be paid.
INCONTESTABILITY - This Rider will be incontestable, after it has been in force
during the lifetime of the Insured for two years from its effective date.
TERMINATION - This Rider will terminate on the earlier of:
1. the date that the Policy is surrendered, terminated, exchanged, or matures;
or
2. the Monthly Anniversary coinciding with or next following the date we receive
your written request to terminate this Rider.
UNITED INVESTORS LIFE INSURANCE COMPANY
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Secretary President
<PAGE>
DISABILITY WAIVER OF MONTHLY DEDUCTIONS RIDER
- --------------------------------------------------------------------------------
This Rider is made a part of the Policy to which it is attached. This benefit is
subject to all the provisions of this Rider and the Policy. The effective date
of this Rider is the Policy Date of the Policy unless otherwise shown in the
Policy Data.
BENEFIT - This Rider provides for the waiver of the Monthly Deduction described
in Section 8 of the Policy. The Monthly Deductions will be waived as stated
below provided that:
1. we receive due proof of the Total Disability of the Insured, as that term is
defined in this Rider;
2. the Total Disability has existed continuously for at least six months;
3. this Rider and the Policy were in force at the time Total Disability began;
and
4. the Policy Anniversary coinciding with or next following the Insured's 60th
birthday has not passed at the time Total Disability began.
However, we will not waive Monthly Deductions for a period of more than one year
prior to receiving written notice of the claim at our Administrative Office,
unless notice could not reasonably have been given sooner. If this Rider was not
requested at the time of a Face Amount Increase, or if the Insured did not
qualify for this Rider at the time of the Face Amount Increase, Monthly
Deductions attributable to that increase will not be waived.
If the Total Disability of the Insured begins during the Grace Period, a premium
sufficient to cover the Monthly Deductions, as described in the Grace Period
Provision in Section 7 of the Policy, must be paid to us before any Monthly
Deductions will be waived.
DEFINITION OF TOTAL DISABILITY - Total Disability means that the Insured, as a
result of bodily injury or disease, is unable to work at any occupation for
which the Insured is qualified by education, training or experience, with due
regard to his vocation and earnings prior to disability.
Total Disability also means the complete and irrevocable loss of sight in both
eyes, loss of the use of both hands or both feet, or one hand and one foot.
RISKS NOT COVERED - No premium will be waived if disability results from:
1. an intentionally, self-inflicted injury; or
2. an act attributable to war, whether declared or undeclared, while the Insured
is in the military service of any country.
PROOF - Before any Monthly Deduction is waived, we must receive written proof of
Total Disability at our Administrative Office. Proof of continuance of
disability, including medical examination by physicians we designate, must be
furnished at reasonable intervals upon request. After 2 years of Total
Disability, proof will not be required more often than once a year. If the
required proof is not given or if the Insured recovers, no further Monthly
Deductions will be waived.
COST OF INSURANCE - While this Rider is in force, the Monthly Deduction
described in Section 8 of the Policy will include the Cost of Insurance for the
benefits provided by this Rider. The Monthly Cost of Insurance for this Rider
will be calculated as (a) multiplied by (b) where:
a. is the Cost of Insurance Rate for this Rider divided by 1,000; and
b. is the Policy Death Benefit at the beginning of the Policy Month plus
any amounts of insurance provided under an Additional Insured Rider.
COST OF INSURANCE RATE - The Cost of Insurance Rates for this Rider are shown in
the Policy Data. The Cost of Insurance Rates for each Policy Year will be based
on the Insured's Attained Age and sex at the beginning of the Policy Year.
(Please turn to back of page)
<PAGE>
EFFECT ON POLICY PROVISIONS - If Monthly Deductions are being waived as provided
in this Rider, we will not allow changes in the Policy Face Amount or in the
Death Benefit Option.
INCONTESTABILITY - This Rider will be incontestable, after it has been in force
during the lifetime of the Insured for two years from its effective date.
TERMINATION - This Rider will terminate on the earliest of:
1. the Policy Anniversary coinciding with or next following the Insured's 60th
birthday; provided that such termination will not affect any benefit which
became payable because of Total Disability which began prior to that Policy
Anniversary;
2. the date the Policy is surrendered, terminated, exchanged, or matures; or
3. the Monthly Anniversary coinciding with or next following the date we receive
your written request to terminate this Rider.
UNITED INVESTORS LIFE INSURANCE COMPANY
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Secretary President
<PAGE>
ADDITIONAL INSURED TERM INSURANCE RIDER
- --------------------------------------------------------------------------------
This Rider is made a part of the Policy to which it is attached. This benefit is
subject to all the provisions of this Rider and the Policy. The effective date
of this Rider is the Policy Date of the Policy, unless otherwise shown in the
Policy Data.
BENEFIT - The amount of insurance provided by this Rider for each Additional
Insured is shown in the Policy Data. We will pay the insurance provided by this
Rider upon receipt of due proof that the death of an Additional Insured occurred
while this Rider was in force.
ATTAINED AGE - Attained Age means the age of an Additional Insured on his or her
last birthday at the beginning of the Policy Year.
ERRORS IN AGE AND SEX - If an Additional Insured's age or sex is misstated, the
benefits under this Rider for that Additional Insured will be the amount which
would have been provided by last month's Cost of Insurance charge at the correct
age and sex.
COST OF INSURANCE - While this Rider is in force, the Monthly Deduction
described in Section 8 of the Policy will include the Cost of Insurance for the
benefits provided by this Rider. The Monthly Cost of Insurance for this Rider
will be calculated as (a) multiplied by (b) where:
a. is the Cost of Insurance Rate for each Additional Insured divided by 1,000;
and
b. is the amount of insurance shown for each Additional Insured in the Policy
Data.
COST OF INSURANCE RATE - The Cost of Insurance Rate for each Additional Insured
is based on the Attained Age, sex, and Risk Class of that Additional Insured.
The Risk Class for each Additional Insured on the effective date of this Rider
will apply for the amount of the Additional Insured's insurance provided by this
Rider at issue. For any subsequent increase in an Additional Insured's amount of
insurance, the Cost of Insurance Rate will be based on the Risk Class applicable
to that increase.
Our current scale of Cost of Insurance Rates is subject to change based on our
expectations as to future mortality, expenses, lapses, and taxes. Any change
will be on a uniform basis for insureds of the same age, sex, and Risk Class. No
change will occur as a result of change in the health, occupation, or avocations
of the Insured. The rates will not exceed the Maximum Cost of Insurance Rates
shown in the Policy Data for each Additional Insured which are the 1980
Commissioners Standard Ordinary Mortality Table, Male or Female, Smoker or Non-
Smoker, Age Last Birthday, or a multiple thereof for substandard Risk Class.
DECREASE IN AMOUNT OF INSURANCE - You may decrease an Additional Insured's
amount of insurance by written request. The amount of insurance may not be
decreased to less than $50,000. The decrease will take effect on the Monthly
Anniversary on or following our receipt of your written request.
INCREASE IN AMOUNT OF INSURANCE - You may increase an Additional Insured's
amount of insurance. The amount of insurance on each Additional Insured cannot
be increased after that Additional Insured reaches age 75. Each increase must be
at least $25,000.
To increase the amount of insurance you must:
1. submit an application for the increase; and
2. submit proof satisfactory to us that the Additional Insured is an insurable
risk.
The increase will take effect on the Monthly Anniversary on or following the day
we approve your application for the increase. The Risk Class that applies for
any increase may be different than the Risk Class that applies for the initial
amount of insurance. We will furnish a supplement to the Policy Data that shows
the Risk Class and the amount of the increase.
BENEFICIARY - The Beneficiary for insurance under this Rider is as stated in the
application for this Rider, unless changed later by the Owner.
SUICIDE EXCLUSION - If an Additional Insured commits suicide, while sane or
insane, within two years from the effective date of this Rider, our liability
will be limited to the total Cost of Insurance charges deducted for that
Additional Insured. If an Additional Insured dies by suicide, while sane or
insane, within two years from the effective date of any increase in that
Additional Insured's amount of insurance, our liability with respect to that
increase will be limited to the total Cost of Insurance charges deducted for
that increase.
(Please turn to back of page)
<PAGE>
INCONTESTABILITY - An Additional Insured's coverage provided under this Rider
will be incontestable after it has been in force during the lifetime of such
Additional Insured for two years from its effective date. Any increase in the
amount of insurance for an Additional Insured will be incontestable after the
increase has been in force during the lifetime of such Additional Insured for
two years from the effective date of the increase.
CONVERSION - You may convert the term insurance provided by this Rider on each
Additional Insured to a new policy without evidence of insurability, provided
that:
1. this Rider is in force;
2. the Policy Anniversary nearest the Additional Insured's 75th birthday has not
passed; and
3. we receive a written application for the conversion.
The new policy will be issued:
1. on a level premium whole life plan;
2. for an amount of insurance equal to or less than the amount of insurance on
the Additional Insured provided by this Rider on the date of conversion;
3. at a premium according to our rates then in use at the Attained Age of the
Additional Insured; and
4. in the same Risk Class as the coverage on the Additional Insured, or if there
has been an increase in coverage, in the same Risk Class as the most recent
increase.
Riders may be included in the new policy only with our consent.
TERMINATION - This Rider will terminate on the earliest of:
1. the Monthly Anniversary on which there is no longer any Additional Insured
covered under this Rider;
2. the date that the Policy is surrendered, terminated, exchanged, or matures;
3. 31 days after the death of the person Insured under the Policy; or
4. the Monthly Anniversary coinciding with or next following the date we receive
your written request to terminate this Rider.
TERMINATION OF AN ADDITIONAL INSURED'S COVERAGE - The term insurance provided by
this Rider on each Additional Insured will terminate on the earliest of:
1. the Policy Anniversary coinciding with or next following the Additional
Insured's 99th birthday;
2. the date that the Additional Insured's coverage is converted; or
3. the Monthly Anniversary coinciding with or next following the date we receive
your written request to terminate the Additional Insured's coverage.
UNITED INVESTORS LIFE INSURANCE COMPANY
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Secretary President
<PAGE>
CHILDREN'S TERM INSURANCE RIDER
- --------------------------------------------------------------------------------
This Rider is made a part of the Policy to which it is attached. This benefit is
subject to all the provisions of this Rider and the Policy. The effective date
of this Rider is the Policy Date of the Policy, unless otherwise shown in the
Policy Data.
BENEFIT - We agree to pay the insurance provided by this Rider upon receipt of
due proof that the death of an Insured Child occurred while this Rider was in
force. The amount of insurance provided by this Rider is shown in the Policy
Data.
DEFINITION OF INSURED CHILDREN - An Insured Child, referred to in this Rider as
"Child", is a person who:
1. has attained age 14 days; and
2. is a natural child, adopted child or step child of the Insured; or
3. was acquired by the Insured after the date of the application; and
4. had not attained age 22 on the date of the application for this benefit.
COST OF INSURANCE - While this Rider is in force, the Monthly Deduction
described in Section 8 of the Policy will include the Cost of Insurance for the
benefits provided by this Rider. The Monthly Cost of Insurance for this Rider is
shown in the Policy Data.
EXPIRY OF INSURANCE ON EACH CHILD - The expiry date of the insurance on the life
of each Child is the earliest of:
1. the Policy Anniversary coinciding with or next following the 25th birthday of
such Child;
2. the Policy Anniversary coinciding with or next following the Insured's 65th
birthday; or
3. 90 days after the death of the person Insured under the Policy.
OPTION FOR CONVERSION UPON EXPIRY - When the insurance on the life of each Child
expires, it may be converted without evidence of insurability to a new policy.
The Owner must make a proper written application for conversion. The first
premium for the new policy must be paid within 31 days of the expiry date of the
insurance being converted. The new policy will be issued:
1. on any level premium whole life plan we are issuing at that time;
2. for an amount of insurance not greater than 5 times the amount of insurance
provided by this Rider;
3. at a premium according to our rates then in use for the Child's age at that
time;
4. with additional benefits included only with our consent.
If a Child eligible for a new policy dies within the period permitted for
conversion, but before the date of issue of the new policy, the amount of
insurance in effect under this Rider will be paid as if death occurred while
insurance under this Rider on the life of such Child was in force.
DEATH OF THE INSURED - If the death of the Insured occurs prior to the Policy
Anniversary coinciding with or next following the Insured's 65th birthday, the
insurance on the life of each Child may be converted without evidence of
insurability to a new policy. The Owner must make a proper written application
for conversion and pay the first premium within 90 days following the date of
the Insured's death.
(Please turn to back of page)
<PAGE>
BENEFICIARY - The Beneficiary for insurance on each Child insured under this
Rider is the Insured, if living, otherwise the estate of such Child. You may
change the Beneficiary at any time.
OWNERSHIP - During the lifetime of the Insured, you will be the Owner of the
insurance provided by this Rider. After the death of the Insured, you will be
the Owner, if living, otherwise each Insured Child will be the Owner of
insurance on such Child's life.
SUICIDE EXCLUSION - If the Insured commits suicide, while sane or insane, within
2 years from the effective date of this Rider, our liability will be limited to
the total Cost of Insurance charges deducted for this Rider while the Rider was
in force.
TERMINATION - This Rider will terminate on the earliest of:
1. the Policy Anniversary coinciding with or next following the Insured's 65th
birthday;
2. the date that the Policy is surrendered, terminated, exchanged, or matures;
or
3. the Monthly Anniversary coinciding with or next following the date we receive
your written request to termination this Rider.
It is the Owner's responsibility to notify us that their youngest Child has
reached age 25 and to request termination of this Rider.
ERRORS IN AGE - If the age of the Insured has been misstated, the expiry date of
this Rider or the dates of expiry of insurance provided by this Rider will be
those dates according to the correct age.
UNITED INVESTORS LIFE INSURANCE COMPANY
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Secretary President
<PAGE>
ACCIDENTAL DEATH BENEFIT RIDER
- --------------------------------------------------------------------------------
This Rider is made a part of the Policy to which it is attached. This benefit is
subject to all the provisions of this Rider and the Policy. The effective date
of this Rider is the Policy Date of the Policy unless otherwise shown in the
Policy Data.
BENEFIT - We agree to pay, subject to the terms and conditions of this Rider,
the Accidental Death Benefit shown in the Policy Data upon receipt of due proof
that the death of the Insured:
1. resulted, directly and independently of all other causes, from accidental
bodily injuries sustained after the effective date of this Rider;
2. occurred within 90 days after such injury; and
3. occurred while this Rider was in force and before the Policy Anniversary
nearest the Insured's 70th birthday.
RISKS NOT COVERED - This provision does not apply to deaths resulting directly
or indirectly from:
1. suicide or any self-inflicted injury;
2. bodily or mental infirmity or disease of any kind;
3. committing or attempting to commit an assault or felony;
4. war, declared or undeclared, or insurrection, or any event incident to
either;
5. military or naval service in time of war; or
6. operating, riding in, or descending from any kind of aircraft if the Insured:
. is a pilot, officer, or member of the crew; or
. is being flown for the purpose of descent from such aircraft while in flight
. is giving or receiving any kind of training or instruction.
COST OF INSURANCE - While this Rider is in force, the Monthly Deduction
described in Section 8 of the Policy will include the Cost of Insurance for the
benefits provided by this Rider. The Monthly Cost of Insurance for this Rider is
shown in the Policy Data.
INCONTESTABILITY - This Rider will be incontestable, after it has been in force
during the lifetime of the Insured for two years from its effective date.
TERMINATION - This Rider will terminate on the earliest of:
1. the Policy Anniversary coinciding with or next following the Insured's 70th
birthday;
2. the date that the Policy is surrendered, terminated, exchanged, or matures;
or
3. the Monthly Anniversary coinciding with or next following the date we receive
your written request to terminate this Rider.
UNITED INVESTORS LIFE INSURANCE COMPANY
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Secretary President
