<PAGE>
As filed with the Securities and Exchange Commission on , 1997
-------------
Registration No. 333-25269
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Exact name of Registrant)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NEW YORK 63
93-1225432
(State of Incorporation) (Primary Standard
(I.R.S. Employer
Industrial
Identification No.)
Classification Code
<PAGE>
Number)
</TABLE>
125 Wolf Road, Suite 110
Albany, New York 12205
(800) 537-2033
(Address, including zip code, and telephone number,
including area code, or registrant's principal
executive officer)
<PAGE>
William T. McCallum
President and Chief Executive Officer
First Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
<PAGE>
Approximate Date of Proposed Public Offering: Upon the effective date
of this Registration Statement.
It is proposed that this Registration Statement will become effective
on July , 1997.
<PAGE>
<PAGE>
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following:
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering:
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and
list the Securities Act registration statement for the same offering:
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box:
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933
or until the registration statement shall become effective on
such date as the Commission acting pursuant to said Section 8(a)
may determine.
<PAGE>
<PAGE>
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional
Information As Required by
Form S-1
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FORM S-1
PROSPECTUS
CAPTION ITEM
1. Forepart of Registration Statement
and Outside Front Cover Page Cover Page
2. Inside Front and Outside Cover Page;
Back Cover Pages Table of
Contents
3. Summary Information, Risk Factors Key Features
of
and Ratio of Earnings
the
Annuity; First
to Fixed Charges
Great-West Life &
Annuity
Insurance
Company
4. Use of Proceeds
Not
Applicable
5. Determination of Offering Price
Not
Applicable
6. Dilution
Not
Applicable
7. Selling Security Holders
<PAGE>
Not
Applicable
8. Plan of Distribution
Distribution
of
the
Contracts
9. Description of Securities
The
Guarantee
Period
Fund;
<PAGE>
The Market Value
Adjustment
10. Interest of Named Experts
Legal
Matters;
Experts
and Counsel
11. Information with Respect First
Great-Life &
to the Registrant
Annuity
Insurance
Company
and The
Series
Account Selected
Financial Data; Legal
<PAGE>
Proceedings; Financial
Statements
12. Disclosure of Commission,
Position on Indemnification
for Securities Act Liabilities
</TABLE>
<PAGE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATMENT RLEATING TO THESE SECURITIESHAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICIATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
THE SCHWAB VARIABLE
ANNUITY(TM)
A FLEXIBLE PREMIUM DEFERRED FIXED AND
VARIABLE ANNUITY
Distributed by
CHARLES SCHWAB &
CO., INC.
---------------------------------------------
Issued
by
FIRST GREAT-WEST LIFE
& ANNUITY
INSURANCE
COMPANY
This prospectus describes interests under a flexible premium
deferred annuity
contract, The Schwab Variable Annuity (the "Contract"). The
Contract is issued
on a group basis by First Great-West Life & Annuity Insurance
Company (the
"Company"). Participation in the Contract will be accounted for by
the issuance
of a certificate showing your interest under the Contract. Your
certificate is
also hereafter referred to as the "Contract."
Your investment in the Contract may be allocated among twenty-four
Investment
Divisions of the Variable Annuity-1 Series Account ("Series
Account") and the
available Guarantee Periods under the Guarantee Period Fund. The
Investment
Divisions invest in various underlying funds (open-end investment
companies)
offered by fund families such as Federated, INVESCO, Janus,
Lexington, Berger,
Alger, Schwab Funds, Stein Roe, Strong, Montgomery, American Century,
<PAGE>
SAFECO and
Van Eck. You also have the option of allocating some or all of your
investment
in the Contract to the Guarantee Period Fund which allows you to
select one or
more Guarantee Periods, each of which offers you a specified interest
rate for a
specified period. There may be a market value adjustment on
the amounts
withdrawn from the Guarantee Period Fund.
The minimum initial investment is $5,000 ($2,000 if an IRA) or
$1,000 if made
under an Automatic Contribution Plan ("ACP"). The minimum
subsequent
Contribution is $500 (or $100 per month if made under an ACP).
There are no sales charges, redemption, surrender or withdrawal
charges. The
Contract provides a Free Look Period of 10 days from your
receipt of the
Contract, during which time you may cancel your investment in the
Contract.
During the Free Look Period, all Contributions allocated to an
Investment
Division will be allocated first to the Schwab Money Market
Investment Division
and will remain there until the next Transaction Date following the
end of the
Free Look Period. Contributions to the Guarantee Period Fund will
be allocated
immediately into the specified Guarantee Period(s).
Your Variable Account Value will increase or decrease based on the
investment
performance of the options you select. You bear the entire investment
risk under
the Contract prior to the annuity commencement date for all
amounts in your
<PAGE>
Variable Sub-Accounts. While there is a guaranteed death benefit,
there is no
guaranteed or minimum Variable Account Value on amounts allocated to
Investment
Divisions. Therefore, the Annuity Account Value you receive could
be less than
the total amount of your Contributions.
<PAGE>
<PAGE>
Amounts allocated to the Guarantee Period Fund may be subject to a
Market Value
Adjustment which could result in receipt of less than your
Contributions if you
surrender, Transfer, make a partial withdrawal or apply amounts to
purchase an
annuity before a Guarantee Period Maturity Date. Whether such a
result actually
occurs depends on the timing of the transaction, the amount of the
Market Value
Adjustment and the interest rate credited. The interest rate in
subsequent
Guarantee Periods may be more or less than the rate of a previous
Guarantee
Period.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A
CRIMINAL OFFENSE. NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE
INFORMATION OR
TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN
CONNECTION WITH THE OFFERS CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT
LAWFULLY BE MADE. PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE
REFERENCE.
Prospectus Dated
______________, 1997
The Contracts are not deposits of, or guaranteed or endorsed by any
bank, nor
are the Contracts federally insured by the Federal Deposit
Insurance
Corporation, the Federal Reserve Board or any other government
agency. The
<PAGE>
Contracts involve certain investment risks, including
possible loss of
principal.
To Place Orders and for Account Information: Contact the Schwab
Annuity Service
Center at 800-838-0649 or P.O. Box 7806, San Francisco, California
94120-9327.
About This Prospectus: This Prospectus concisely presents important
information
you should have before investing in the Contract. Please read it
carefully and
retain it for future reference. You can find more detailed
information
pertaining to the Contract in the Statement of Additional
Information dated
_____________, 1997 (as may be amended from time to time), and
filed with the
Securities and Exchange Commission. The Statement of Additional
Information is
incorporated by reference into this Prospectus, and may be
obtained without
charge by contacting the Schwab Annuity Service Center at
800-838-0649 or P.O.
Box 7806 San Francisco, California 94120-9327.
<PAGE>
<PAGE>
TABLE OF
CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Page
DEFINITIONS................................................................
....................
K E Y F E A T U R E S O
F T H E
ANNUITY....................................................................
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
A N D T H E
S E R I E S
ACCOUNT..............................................................
T H E E L I G
I B L E
FUNDS......................................................................
.......
T H E G U A R A N T E E
P E R I O D
FUND......................................................................
T H E M A R K E T
V A L U E
ADJUSTMENT.................................................................
...
A P P L I C A T I
O N A N D
CONTRIBUTIONS..............................................................
....
A N N U I T Y A C C O U N T
V A L U E
<PAGE>
.........................................................................
TRANSFERS..................................................................
....................
C A
S H
WITHDRAWALS................................................................
...............
T E L E P H
O N E
TRANSACTIONS...............................................................
..........
D E A
T H
BENEFIT....................................................................
..............
C H A R G E
S A N D
DEDUCTIONS.................................................................
........
P A Y M E
N T
OPTIONS....................................................................
............
F E D E R A
L T A X
MATTERS....................................................................
........
A S S I G N M E N
T S O R
PLEDGES....................................................................
.....
P E R F O R M A
N C E
DATA.......................................................................
........
D I S T R I B U T I O N O
F T H E
CONTRACTS..................................................................
S E L E C T E D F I N
A N C I A L
DATA.......................................................................
<PAGE>
.
V O T I
N G
RIGHTS.....................................................................
.............
R I G H T S R E S E R V E D
B Y T H E
<PAGE>
COMPANY.................................................................
L E G
A L
PROCEEDINGS................................................................
..............
L E G
A L
MATTERS....................................................................
..............
EXPERTS....................................................................
....................
A V A I L A
B L E
INFORMATION................................................................
..........
EXHIBITS...................................................................
....................
F I N A N C
I A L
STATEMENTS.................................................................
..........F-1
</TABLE>
---------------------------------------------------------------------------
-----
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESPERSON, OR
OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
<PAGE>
ON.
---------------------------------------------------------------------------
-----
<PAGE>
The Contract is not available in all states.
<PAGE>
<PAGE>
-----------------------------------------------
DEFINITIONS
-----------------------------------------------
Accumulation Period - The period between the Effective Date and
the Payment
Commencement Date.
Annuitant - The person named in the application upon whose life the
payment of
an annuity is based and who will receive annuity payments. If a
Contingent
Annuitant is named, then the Annuitant will be considered the Primary
Annuitant.
While the Annuitant is living and at least 30 days prior to
the annuity
commencement date, the Owner may, by Request, change the Annuitant.
Annuity Account - An account established by the Company in the name
of the Owner
that reflects all account activity under this Contract.
Annuity Account Value - The sum of the Variable and Fixed
Sub-Accounts credited
to the Owner under the Annuity Account; less Transfers, partial
withdrawals,
amounts applied to an annuity option, periodic withdrawals,
charges deducted
under the Contract and, less Premium Tax, if any.
Annuity Payment Period - The period beginning on the annuity
commencement date
and continuing until all annuity payments have been made under the
Contract.
Annuity Unit - An accounting measure used to determine the dollar
value of any
variable annuity payment after the first annuity payment is made.
Automatic Contribution Plan ("ACP") - A plan which allows for
<PAGE>
automatic periodic
Contributions. The Contribution amount will be withdrawn from a
designated
pre-authorized account and automatically credited to the Annuity
Account.
Beneficiary - The person(s) designated by the Owner, in the
application, or as
subsequently changed by the Owner by Request, to receive any death
benefit which
may become payable under the terms of the Contract. If the surviving
spouse of
an Owner is the surviving Joint Owner, the surviving spouse will
become the
Beneficiary upon such Owner's death and may elect to take the death
benefit, if
any, or elect to continue the Contract in force.
Company - First Great-West Life & Annuity Insurance Company, the
issuer of this
annuity, located at 125 Wolf Road, Suite 110, Albany, New York 12205.
Contingent Annuitant - The person named in the application, unless
later changed
by the Owner by Request while the Annuitant is alive and before
annuity payments
have commenced, who becomes the Annuitant when the Primary
Annuitant dies. No
new Contingent Annuitant may be designated after the death of
the Primary
Annuitant.
Contractual Guarantee of a Minimum Rate of Interest - The minimum
interest rate
applicable to each Fixed Sub-Account equal to an annual effective
rate in effect
at the time the Contribution is made and as reflected in written
confirmation of
<PAGE>
the Contribution. This is the minimum rate allowed by law and is
subject to
change in accordance with changes in applicable law. Under
current law, the
minimum rate is 3%.
Contributions - Purchase amounts received under the Contract and
allocated to
the Fixed or Variable Sub-Account(s) prior to any Premium Tax
or other
deductions.
Effective Date - The date on which the first Contribution is
credited to the
Annuity Account.
Eligible Fund - A registered management investment company, or
portfolio
thereof, in which the assets of the Series Account may be invested.
<PAGE>
<PAGE>
Fixed Sub-Accounts - The subdivision(s) of the Owner's
Annuity
Account
reflecting the value of Contributions made to a fixed
interest
investment option
available under the Contract and any Fixed Sub-Account Riders.
Guarantee Period - One of the time intervals available in
the
Guarantee Period
Fund during which the Company will credit a stated rate of interest.
The
Company
may stop offering any time interval at any time for new
Contributions.
Amounts
allocated to one or more Guaranteed Periods may be subject to
a
Market Value
Adjustment.
Guarantee Period Fund - A Fixed Sub-Account in which amounts
allocated
will be
credited a stated rate of interest for the applicable
Guarantee
Period(s).
Guarantee Period Maturity Date - The last day of any Guarantee
Period.
Individual Retirement Annuity (IRA) - An annuity contract used
in a
retirement
savings program that is intended to satisfy the requirements
of
Section 408 of
the Internal Revenue Code of 1986, as amended.
Investment Division - A division of the Series Account containing
the
shares of
an Eligible Fund. There is an Investment Division for each
Eligible
Fund.
<PAGE>
Market Value Adjustment - An adjustment which may be made to
amounts
paid out
before the Guarantee Period Maturity Date due to
surrenders,
partial
withdrawals, Transfers, and amounts applied to the periodic
withdrawal
option or
to purchase an annuity, as applicable. The Market Value Adjustment
may
increase
or decrease the amount payable on one of the
above-described
distributions. A
negative adjustment may result in an effective interest rate
lower
than the
applicable Contractual Guarantee of a Minimum Rate of Interest and
the
value of
the Contribution(s) allocated to the Guarantee Period being
less
than the
Contribution(s) made. The Market Value Adjustment is detailed on
page
---.
Net Investment Factor - The Net Investment Factor for each
Variable
<PAGE>
Sub-Account
for any valuation date is determined by dividing (a) by (b),
and
subtracting (c)
from the result where: (a) is the net result of (i) the net
asset
value per
share of underlying fund shares determined as of the end of
the
current
valuation period, plus (ii) the per share amount of any dividend
(or
capital
gain, if applicable) if the "ex-dividend" date occurs during
the
current
valuation period, minus or plus (iii) a per unit charge or credit
for
any taxes
incurred by or provided for in the Variable Sub-Account, which
is
determined by
First GWL&A to have resulted from the investment operations of
the
Variable
Sub-Account; and (b) is the net result of (i) the net asset value
per
share of
the underlying fund determined as of the end of the
immediately
preceding
valuation period, minus or plus (ii) the per unit charge or credit
for
any taxes
incurred by or provided for in the Variable Sub- Account; and (c)
the
mortality
risk charge of 0.85%.
Non-Qualified Annuity Contract - An annuity contract which is
not
intended to be
part of a qualified retirement plan and is not intended
to
satisfy the
requirements of Section 408 of the Internal Revenue Code of 1986,
as
<PAGE>
amended.
Owner (Joint Owner) or You - The person(s), while the Annuitant
is
living, named
in the Contract Data Page who is entitled to exercise all rights
and
privileges
under the Contract. Joint Owners must be husband and wife as of
the
date the
Contract is issued. The Annuitant will be the Owner unless
otherwise
indicated
in the application. If a Contract is purchased as an IRA, the
Owner
and the
Annuitant must be the same individual and no Joint Owner may
be
named. Any
reference to Owner in the singular tense shall include the
plural,
and vice
versa, as applicable.
Payment Commencement Date - The date on which annuity payments
or
periodic
withdrawals commence under a payment option. The Payment
Commencement
Date must
<PAGE>
be at least one year after the Effective Date of the Contract.
If a
Payment
Commencement Date is not shown on the Contract Data Page,
annuity
payments will
commence on the first day of the month of the Annuitant's
90th
birthday. The
Payment Commencement Date may be changed by the Owner within 60
days
prior to
commencement of annuity payments or it may be changed by
the
Beneficiary upon
the death of the Owner. If this is an IRA, payments which satisfy
the
minimum
distribution requirements of the Internal Revenue Code of 1986,
as
amended, must
begin no later than the Owner's attainment of age 70 1/2.
<PAGE>
<PAGE>
Premium Tax - The amount of tax, if any, charged by a
state
or other
governmental authority.
Request - Any instruction in a form satisfactory to the Company
and
received at
the Schwab Annuity Service Center (or other annuity service
center
subsequently
named) from the Owner or the Owner's designee (as specified in a
form
acceptable to the Company) or the Beneficiary (as applicable)
as
required by
any provision of the Contract or as required by the Company.
All
Requests are
subject to any action taken or payment made by the Company before it
was
processed.
Schwab Annuity Service Center - P.O. Box 7806, San
Francisco,
California
94120-9327, telephone 800-838-0649.
Series Account - The segregated account established by the
Company
under New
York law and registered as a unit investment trust under the
Investment
Company
Act of 1940, as amended.
Simplified Employee Pension - An individual retirement annuity
(IRA)
which may
accept contributions from one or more employers under a
retirement
savings
program intended to satisfy the requirements of Section 408(k) of
the
Internal
Revenue Code of 1986, as amended.
<PAGE>
Surrender Value - The Annuity Account Value with a Market
Value
Adjustment, if
applicable, on the effective date of the surrender, less Premium Tax,
if
any.
Transaction Date - The date on which any Contribution or Request
from
the Owner
will be processed by the Company at the Schwab Annuity
Service
Center.
Contributions and Requests received after 4:00 p.m. EST/EDT will
be
deemed to
have been received on the next business day. Requests will be
processed
and the
Variable Account Value will be determined on each day that the
New
York Stock
Exchange is open for trading.
Transfer - The moving of money from among and between the
Investment
Division(s)
and the Guaranteed Period Fund.
<PAGE>
Variable Account Value - The sum of the values of the
Variable
Sub-Accounts
credited to the Owner under the Annuity Account.
Variable Sub-Accounts - The sub-division(s) of the Owner's
Annuity
Account
containing the value credited to the Owner under the Annuity
Account
from an
Investment Division.
We, our, us, or First GWL&A: First Great-West Life & Annuity
Insurance
Company.
<PAGE>
<PAGE>
KEY FEATURES OF
THE
ANNUITY
The Contract currently allows you to invest in your choice
of
twenty-four
different Investment Divisions offered by thirteen
different
mutual fund
investment advisers. You can also invest in the Guarantee
Period
Fund. Your
Annuity Account Value allocated to an Investment Division will
vary
with the
investment performance of the Investment Division you select.
You
bear the
entire investment risk for all amounts invested in the
Investment
Division(s).
Your Annuity Account Value could be less than the total
amount
of your
Contributions.
Who should invest. The Contract is designed for investors who
are
seeking
long-term tax deferred asset accumulation with a wide range
of
investment
options. The Contract can be used for retirement or other
long-term
investment
purposes. The deferral of income taxes is particularly attractive
to
investors
in high federal and state tax brackets who have already fully
taken
advantage of
their ability to make IRA contributions or "pre-tax"
contributions
to their
employer sponsored retirement or savings plans.
<PAGE>
A Wide Range of Variable Investment Choices. The Contract
gives
you an
opportunity to select among twenty-four different
Investment
Divisions. Each
Investment Division invests in shares of an Eligible Fund.
The
Eligible Funds
cover a wide range of investment objectives as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Objective Eligible Funds
Aggressive Growth SteinRoe Capital
Appreciation Fund
Janus Aspen
Aggressive Growth Portfolio
Alger American
Small Capitalization
Portfolio
American
Century VP Capital
Appreciation
Berger IPT-Small
Company Growth Fund
<PAGE>
Strong Discovery
Fund II
International Aggressive Growth
Montgomery Variable Series:
International
Small Cap
Fund
Lexington
Emerging Markets Fund
Growth Montgomery
Variable Series: Growth Fund
Schwab Asset
Director - High Growth
Portfolio
Janus Aspen
Growth Portfolio
Alger American
Growth Portfolio
International Growth Janus Aspen
Worldwide Growth Portfolio
American Century
VP International
Index Schwab S&P 500
Portfolio
Growth & Income SAFECO RST
Equity Portfolio
Federated
American Leaders Fund II
Equity Income INVESCO
VIF-Industrial Income Portfolio
Balanced/Asset Allocation INVESCO
VIF-Total Return Portfolio
Specialized Federated
Utility Fund II
Van Eck
Worldwide Hard Assets Fund
High Yield Bond INVESCO VIF-High
Yield Portfolio
<PAGE>
Government Bond Federated Fund
for U.S. Government
Securities II
Money Market Schwab Money
Market Portfolio
</TABLE>
<PAGE>
<PAGE>
The distinct investment objectives and policies for each Eligible
Fund
are more
fully described in their individual fund prospectuses which
are
available from
the Schwab Annuity Service Center, P.O. Box 7806, San
Francisco,
California
94120-9327, or via telephone at 1-800-838-0649.
The Guarantee Period Fund. The Contract also gives you
an
opportunity to
allocate your Contributions and to transfer your Annuity
Account
Value to the
Guarantee Period Fund. This Fixed Sub-Account option is comprised
of
Guarantee
Periods, each of which has its own stated rate of interest and its
own
maturity
date. The stated rate of interest for the Guarantee Period
will
depend on the
date the Guarantee Period is established and the duration of
the
Guarantee
Period you select from among those available. The rates declared
are
subject to
a minimum (Contractual Guarantee of a Minimum Rate of Interest), but
the
Company
may declare higher rates (the stated rate of interest).
The
Contractual
Guarantee of a Minimum Rate of Interest will be disclosed in
the
written
confirmation. The stated rate of interest will not be less than
the
Contractual
Guarantee of a Minimum Rate of Interest and will also be
<PAGE>
disclosed
in the
written confirmation. Amounts withdrawn or transferred from
a
Guarantee Period
prior to the Guarantee Period Maturity Date may be subject
to a
Market Value
Adjustment. (See "Market Value Adjustment," page __.)
How to Invest. You must complete a Contract application form in
order
to invest
in the Contract and you must pay by check or instruct us to
transfer
funds from
your Schwab account. The minimum initial investment is $5,000
(or
$2,000 if in
an IRA). Subsequent investments must be at least $500. The
minimum
initial
investment may be reduced to $1,000 should the Owner agree to
make
additional
$100 per month minimum recurring deposits through an ACP.
Free Look Period. The Contract provides for a Free Look Period
which
allows you
<PAGE>
to cancel your investment generally within 10 days of your
receipt
of the
Contract. You can cancel the Contract during the Free Look Period
by
delivering
or mailing the Contract to the Schwab Annuity Service Center.
The
cancellation
is not effective unless we receive a notice which is postmarked
before
the end
of the Free Look Period. If the Contract is returned, the Contract
will
be void
from the start and the greater of: (a) Contributions received
less
surrenders,
withdrawals and distributions, or (b) the Annuity Account Value
less
surrenders,
withdrawals and distributions, will be refunded. These procedures
may
vary where
required by state law. (See "Application and Contributions," page
___.)
Allocation of the Initial Investment. Any initial
Contribution
allocated to an
Investment Division (other than certain 1035 exchanges -
see
"Application and
Contributions," page __) will be allocated to the Schwab Money
Market
Portfolio
until the next Transaction Date following the end of the Free
Look
Period. At
that time, the Variable Account Value will be allocated to
the
Investment
Divisions in accordance with your instructions. (See "Annuity
Account
Value,"
page __.) Your initial investment inthe Guarantee Period Fund
will be
<PAGE>
immediately allocated to the Guarantee Period(s) specified in
the
application.
Charges and Deductions Under the Contract. The Contract is a "no
load"
variable
annuity and, as such, imposes no sales charges, redemption
or
withdrawal
charges.
There is a Mortality and Expense Risk Charge at an effective
annual
rate of
0.85% of the value of the net assets in the Variable Account.
A
Contract
Maintenance Charge of $25 will be deducted annually from your
Annuity
Account
Value. There will be a transfer fee of $10 for each Transfer in
excess
of twelve
Transfers per calendar year. (See "Charges and Deductions," page __.)
Depending on your state of residence, we may deduct a charge
for
Premium Tax
from purchase payments or amounts withdrawn or at the
Payment
<PAGE>
Commencement Date.
(See "Charges and Deductions," page __.)
The Market Value Adjustment may increase or decrease the value
of a
Guarantee
Period if the Guarantee Period is broken prior to the Guarantee
Period
Maturity
Date. A negative adjustment may result in an effective interest
rate
lower than
the stated rate of interest for the Guarantee Period and
the
Contractual
Guarantee of a Minimum Rate of Interest and the value of the
Guarantee
Period
being less than Contribution(s). (See "Market Value Adjustment,"
page
__.)
<PAGE>
<PAGE>
Switching Investments. You may switch Contributions among
the
Investment
Divisions or Guarantee Period Fund as often as you like with
no
immediate tax
consequences. You may make a Transfer Request to the Schwab
Annuity
Service
Center. A transfer fee may apply. (See "Charges and
Deductions,"
page __.)
Amounts Transferred out of a Guarantee Period prior to the
Guarantee
Period
Maturity Date may be subject to a Market Value Adjustment.
(See
"Market Value
Adjustment," page __.)
Full and Partial Withdrawals. You may withdraw all or part of
your
Annuity
Account Value before the earlier of the annuity commencement date
you
selected
or the Annuitant's or Owner's death. Withdrawals may be taxable
and
if made
prior to age 59 1/2 may be subject to a 10% penalty tax. Withdrawals
of
amounts
allocated to a Guarantee Period prior to the Guarantee Period
Maturity
Date may
be subject to Market Value Adjustment. (See "Market Value
Adjustment,"
page __.)
The minimum partial withdrawal prior to the Market Value
Adjustment
is $500.
There is no limit on the number of withdrawals made. The
Company
may delay
payment of withdrawals from your Variable Sub-Accounts by up to 7
days
and may
<PAGE>
delay withdrawals from the Guarantee Period Fund by up to 6
months.
(See "Cash
Withdrawals," page __.)
Annuity Options. Beginning on the first day of the month
immediately
following
the annuity commencement date you select, you may elect to
receive
annuity
payments on a fixed or variable basis. (The default date is the
first
day of the
month that the Annuitant attains age 91.) A wide range of
annuity
options are
available to provide flexibility in choosing an annuity
payment
schedule that
meets your particular needs. These annuity options include
alternatives
designed
to provide payments for life (for either a single or joint
life),
with or
without a guaranteed minimum number of payments. (See
"Payment
Options," page
__.)
<PAGE>
Death Benefit. The amount of the death benefit, if payable
before
annuity
payments commence, will be the greater of (a) the Annuity
Account
Value with a
Market Value Adjustment, if applicable, as of the date a Request
for
payment is
received, less Premium Tax, if any; or (b) the sum of
Contributions
paid, less
partial withdrawals and Periodic Withdrawals, less charges
deducted
under the
Contract, if any, less Premium Tax, if any. (See "Death Benefit,"
page
__.)
Customer Service. Schwab's professional representatives are
available
toll-free
to assist you. If you have any questions about your Contract,
please
telephone
the Schwab Annuity Service Center (800-838-0649) or write to the
Schwab
Annuity
Service Center at P.O. Box 7806, San Francisco,
California
94120-9327. All
inquiries should include the Contract number and the Owner's name.
As a
Contract
Owner you will receive periodic statements confirming any
transactions
relating
to your Contract, as well as a quarterly statement and an annual
report.
<PAGE>
<PAGE>
VARIABLE ANNUITY FEE
TABLE
The purpose of this table and the examples that follow is
to
assist you
in understanding the various costs and expenses that you will
bear
directly or
indirectly when investing in the Contract. The table and
examples
reflect
expenses related to the Investment Divisions as well as of
the
Eligible Funds.
The table assumes that the entire Annuity Account Value is
allocated
to one or
more Investment Divisions. The information set forth should
be
considered
together with the narrative provided under the heading "Charges
and
Deductions,"
page __ of this Prospectus, and with the Funds' prospectuses.
In
addition to the
expenses listed below, Premium Tax may be applicable.
<PAGE>
Contract Owner Transaction Expenses1
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sales Load
None
Surrender Fee
None
Transfer Fee (First 12 Per Year)2
None
Annual Contract Maintenance Charge3
$25.00
Investment Division Annual Expenses1
(as a percentage of average Variable
Account assets)
Mortality and Expense Risk Charge
0.85%
Administrative Expense Charge
0.00%
Other Fees and Expenses of the Variable Account
<PAGE>
0.00%
-----
Total Investment Division Annual Expenses
0.85%
<PAGE>
</TABLE>
--------
1 The Contract Owner Transaction Expenses apply to each
Contract,
regardless of
how the Annuity Account Value is allocated. The Investment
Division
Annual
Expenses do not apply to the Guarantee Period Fund.
2 There is a $10 fee for each transfer in excess of 12 in any
calendar
year.
3 The Contract Maintenance Charge is currently waived for
Contracts
with an
Annuity Account Value of at least $50,000. If your Annuity
Account
Value falls
below $50,000 due to a withdrawal, the Contract Maintenance
Charge
will be
reinstated until such time as your Annuity Account Value is equal to
or
greater
than $50,000. This charge may also be waived for Contracts issued
under
certain
sponsored arrangements.
<PAGE>
<PAGE>
Eligible Fund Annual Expenses (1)
(as a percentage of Eligible Fund net assets, after
expenses
reimbursements)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total
Management
Other 12b-1
Eligible Fund
Fees
Expenses Fees
Expenses
(after expenses
(after expenses (after
expenses (after expenses
reimbursement)
reimbursement)
reimbursement) reimbursement)
Portfolio
Alger American Growth Portfolio .75% .04%
0%
.79%
Alger American Small
Capitalization Portfolio .85%
<PAGE>
.03% 0%
.88%
American Century VP Capital Appreciation 1.00%
0%
0% 1.00%
American Century VP International 1.50%
0%
0% 1.50%
<PAGE>
Berger IPT-Small Company Growth Fund .0%
1.15% 0%
1.15%
Federated American Leaders Fund II
.53% .32%
0% .85%
Federated Fund for U.S. Government Securities II .0%
.80%
0% .80%
Federated Utility Fund II .24%
.61% 0%
.85%
INVESCO VIF-High Yield Portfolio .60%
.27% 0%
<PAGE>
.87%
INVESCO VIF-Industrial Income Portfolio .75% .20%
0%
.95%
INVESCO VIF-Total Return Portfolio .75%
.19% 0%
.94%
Janus Aspen Aggressive
Growth Portfolio .72%
.04% 0%
.76%
Janus Aspen Growth Portfolio .65% .04%
0%
.69%
Janus Aspen Worldwide
Growth Portfolio .66%
.14% 0%
.80%
Lexington Emerging Markets Fund .85%
.79%
0% 1.64%
Montgomery Variable Series: Growth Fund2 1.00%
<PAGE>
.25%
0% 1.25%
Montgomery Variable Series:
International Small Cap Fund2 1.25%
.25%
0% 1.50%
SAFECO RST Equity Portfolio .70% .02%
0% .72%
Schwab Asset Director -
<PAGE>
High Growth Portfolio .60% .15%
0%
.75%
Schwab Money Market Portfolio .44%
.06% 0%
.50%
Schwab S&P 500 Portfolio3 .13%
.15% 0%
.28%
SteinRoe Capital Appreciation Fund .50%
.26%
0% .76%
Strong Discovery Fund II 1.00%
.21% 0%
1.21%
Van Eck Worldwide Hard Assets Fund .90%
.18%
0% 1.08%
</TABLE>
---------------------------------
(1) The figures given above (other than for the Montgomery
Variable
Series:
Growth Fund, Montgomery Variable Series: International Small Cap
Fund
and Schwab
<PAGE>
S&P 500 Portfolio - see notes 2 and 3, below) reflect the
amounts
deducted after
expense offset arrangements, if any, from the Eligible Funds
during
1996. From
time to time, an Eligible Fund's investment adviser, in its
sole
discretion, may
waive all or part of its fees and/or voluntarily assume
certain
expenses. For a
more complete description of the Eligible Funds' fees and
expenses,
see the
Eligible Funds' prospectuses. As of the date of this
Prospectus,
certain fees
are being waived or expenses are being assumed, in each case on
a
voluntary
basis. Without such waivers or reimbursements, the total
Eligible
Fund annual
expenses that would have been incurred for the last completed
fiscal
year would
be: 8.57% for Berger IPT-Small Company Growth Fund; 1.07% for
Federated
American
Leaders Fund II; 1.81% for Federated Fund for U.S.
Government
Securities II;
1.32% for INVESCO VIF-High Yield Portfolio; 1.19% for
INVESCO
VIF-Industrial
Income Portfolio; 1.30% for INVESCO VIF-Total Return Portfolio;
.83%
for Janus
Aspen Aggressive Growth Portfolio; .83% for Janus Aspen
Growth
Portfolio; .91%
for Janus Aspen Worldwide Growth Portfolio; 2.23% for Lexington
Emerging
Markets
Fund; and 0.95% for Schwab Money Market Portfolio; 2.68% forSchwab
S&P 500
<PAGE>
Portfolio and 3.92% for Schwab asset Directors- High Growth
Portfolio.
See the
Eligible Funds' prospectuses for a discussion of fee waiver
and
expense
reimbursements.
2 For the Montgomery Variable Series: Growth Fund and
Montgomery
Variable
Series: International Small-Cap Fund, the fund manager has
agreed
to reduce
management fees, if necessary, to keep total annual operating
expenses
to 1.25%
and 1.50%, respectively. The fund manager may also
voluntarily
further reduce
management fees and other expenses to increase the return to
the
Funds'
investors and voluntarily elected to do so in 1996 so that the
actual
expenses
charged in 1996 for both of these funds were 0.00%. Without
such
waivers or
reimbursements, the total Eligible Fund expenses that would have
been
incurred
<PAGE>
for the last completed fiscal year would be: 6.98% for the
Montgomery
Variable
Series: Growth Fund and 6.30% for the Montgomery Variable
Series:
International
Small-Cap Fund.
3 The figures given above reflect a voluntary waiver of a
portion
of the
management fee for the Schwab S&P 500 Portfolio effective May 1,
1997.
Prior to
that date the applicable management fee was 0.20%.
5
<PAGE>
<PAGE>
Examples(1)
If you retain, annuitize, or surrender the Contract at the end of
the
applicable
time period, you would pay the following fees and expenses
on a
$1,000
investment, assuming a 5% annual return on assets:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Divisions 1 Year
3
Years
Alger American Growth Portfolio $ 8.26
$27.11
Alger American Small
Capitalization Portfolio $ 9.20
$30.16
American Century VP Capital Appreciation $10.45
$34.21
American Century VP International $15.63
$50.93
Berger IPT-Small Company Growth Fund $12.00
$39.25
Federated American Leaders Fund II $ 8.89
$29.14
Federated Fund for U.S. Government Securities II $ 8.37
<PAGE>
$27.45
Federated Utility Fund II $ 8.89
$29.14
INVESCO VIF-High Yield Portfolio $ 9.09
$29.82
INVESCO VIF-Industrial Income Portfolio $ 9.93
$32.52
INVESCO VIF-Total Return Portfolio $ 9.82
$32.19
Janus Aspen Aggressive
Growth Portfolio $ 7.95
<PAGE>
$26.09
Janus Aspen Growth Portfolio $ 7.22
$23.71
Janus Aspen Worldwide
Growth Portfolio $ 8.37
$27.45
Lexington Emerging Markets Fund $17.08
$55.57
Montgomery Variable Series: Growth Fund $13.04
$42.60
Montgomery Variable Series:
International Small-Cap Fund $15.63
$50.93
SAFECO RST Equity Portfolio $ 7.53
$24.73
Schwab Asset Director -
High Growth Portfolio $ 7.84
$25.75
Schwab Money Market Portfolio $ 5.24
$17.23
Schwab S&P 500 Portfolio $ 2.94
$
9.68
SteinRoe Capital Appreciation Fund $ 7.95
$26.09
Strong Discovery Fund II $12.63
<PAGE>
$41.26
Van Eck Worldwide Hard Assets Fund $11.28
$36.90
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST
OR
FUTURE
EXPENSES. ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE
SHOWN,
SUBJECT
TO THE GUARANTEES IN THE CONTRACT.
These examples assume that no premium taxes have been assessed
(although
premium
taxes may be applicable - see "Premium Tax," page __).
(1) The Eligible Fund Annual Expenses and these examples are
based
<PAGE>
on data
provided by the Eligible Funds. The Company has no reason to doubt
the
accuracy
or completeness of that data, but the Company has not verified
the
Eligible
Funds' figures. In preparing the Eligible Fund Expense table and
the
Examples
above, the Company has relied on the figures provided by the
Eligible
Funds.
6
<PAGE>
<PAGE>
------------------------------------------------------
FIRST GREAT-WEST LIFE & ANNUITY
INSURANCE
COMPANY
AND THE SERIES
ACCOUNT
------------------------------------------------------
First Great-West Life & Annuity Insurance Company ("First GWL&A")
The Company is a stock life insurance company organized
under
the laws
of the state of New York. First GWL&A was incorporated on April 9,
1996
and is a
wholly owned subsidiary of Great-West Life & Annuity
Insurance
Company
("Great-West"). First GWL&A commenced operations upon receipt of
its
certificate
of authority from the Superintendent of Insurance of New York on May
28,
1997.
First GWL&A is principally engaged in the sale of
life
insurance,
accident and health insurance and annuities. It is admitted to
do
business in
the states of New York and Iowa.
Great-West is a wholly-owned subsidiary of The Great-West
Life
Assurance Company ("GWL"). GWL is a subsidiary of Great-West
Lifeco
Inc., a
holding company. Great-West Lifeco Inc. is in turn a subsidiary
of
Power
<PAGE>
Financial Corporation, a financial services company. Power
Corporation
of
Canada, a holding and management company, has voting control of
Power
Financial
Corporation. Mr. Paul Desmarais, through a group of private
holding
companies,
which he controls, has voting control of Power Corporation of Canada.
The Series Account
The Variable Annuity-1 Series Account
("Series
Account") was
established by the Company on January 15, 1997 as a separate
account
under the
laws of the State of New York. The Series Account is
registered
with the
Securities and Exchange Commission ("Commission") under the
Investment
Company
Act of 1940, as amended ("1940 Act"), as a unit investment
trust.
<PAGE>
The Series
Account meets the definition of a "separate account" under
the
federal
securities laws. However, such registration does not
involve
supervision of the
management of the Series Account or the Company by the Commission.
The Company does not guarantee the investment performance
of
the Series
Account. The portion of the Annuity Account Value attributable
to
the Series
Account and the amount of variable annuity payments depend on
the
investment
performance of the Eligible Funds. Thus, the Contract Owner
bears
the full
investment risk for all Contributions allocated to the Series
Account.
The Series Account is administered and accounted for
as
part of the
general business of the Company; but the income, capital gains,
or
capital
losses of each Investment Division are credited to or charged
against
the assets
held in that Investment Division in accordance with the terms of
the
Contract,
without regard to other income, capital gains or capital losses
of
any other
Investment Division or arising out of any other business
the
Company may
conduct. Under New York law, the assets of the Series Account are
not
chargeable
with liabilities arising out of any other business the Company
may
<PAGE>
conduct.
Nevertheless, all obligations arising under the Contracts
are
generally
corporate obligations of the Company.
The Series Account currently has twenty-four
Investment
Divisions
available for allocation of Contributions. If, in the future,
the
Company
determines that marketing needs and investment conditions
warrant,
it may
establish additional Investment Divisions which will be made
available
to Owners
to the extent and on a basis to be determined by the Company,
(See
"Addition,
Deletion, or Substitution"). Each Investment Division invests
in
shares of an
Eligible Fund, each having a specific investment objective.
7
<PAGE>
<PAGE>
<PAGE>
------------------------------------------------------
THE ELIGIBLE FUNDS
------------------------------------------------------
The Eligible Funds described below are offered
exclusively
for use as
funding vehicles for insurance products and, consequently, are
not
publicly
available mutual funds. Each Eligible Fund has separate
investment
objectives
and policies. As a result, each Eligible Fund operates as a
separate
investment
portfolio and the investment performance of one Eligible Fund has
no
effect on
the investment performance of any other Eligible Fund. See the
Eligible
Funds'
prospectuses for more information.
The Alger American Fund
Alger American Small Capitalization Portfolio: Seeks
long-term
capital
appreciation by investing at least 65% of its total
assets,
except
during temporary defensive periods, in equity securities
of
companies
that, at the time of purchase, have total
market
capitalization within
the range of companies included in the Russell
2000
Growth Index
("Russell Index") or the S&PSmallCap 600Index ("S&P Index"),
updated
quarterly. Both indexes are broad indexes of
<PAGE>
small
capitalization
stocks. As of March 31, 1997, the range of
market
capitalization of the
companies in the Russell Index was $10 million to
$1.94
billion; the
range of market capitalization of the companies in the
S&P
Index at
that date was $32 million to $2.579 billion. The
combined
range as of
that date was $10 million to $2.579 billion. The
Portfolio
may invest
up to 35% of its total assets in equity securities
of
companies that,
at the time of purchase, have total market
capitalization
outside this
combined range, and in excess of that amount (up to 100% of
its
assets)
during temporary defensive periods.
<PAGE>
Alger American Growth Portfolio: Seeks long-term
capital
appreciation
by investment of at least 65% of its total assets,
except
during
temporary defensive periods, in equity securities of
companies
that, at
the time of purchase of the securities, have
total
market
capitalization of $1 billion or greater. The Portfolio
may
invest up to
35% of its total assets in equity securities of
companies
that, at the
time of purchase, have total market capitalization of
less
than $1
billion.
American Century Variable Portfolios, Inc.
American Century VP Capital Appreciation: Seeks
capital
growth by
investing in common stocks (including
securities
convertible into
common stocks and other equity equivalents) and
other
securities that
meet certain fundamental and technical standards of
selection
and have,
in the opinion of the investment manager,
better-than-average
potential
for appreciation. The Portfolio's investment manager
intends
to stay
fully invested in such securities, regardless of the
movement
of stock
prices generally.
<PAGE>
American Century VP International: Seeks capital growth
by
investing
primarily in an internationally diversified portfolio
of
securities of
foreign companies that meet certain fundamental and
technical
standards
of selection and have, in the opinion of the
investment
manager,
potential for capital appreciation. The Portfolio will
invest
primarily
in common stocks (defined to include depository
receipts
for common
stock and other equity equivalents) of such
companies.
Investment in
securities for foreign issues typically involves a
greater
degree of
risk than an investment in domestic securities.
Berger Institutional Products Trust
<PAGE>
Berger IPT-Small Company Growth Fund: Seeks
capital
appreciation by
investing primarily in equity securities (including common
and
preferred stocks, convertible debt securities and other
8
<PAGE>
<PAGE>
securities having equity features) of small
growth
companies with
market capitalization of less than $1 billion at the time
of
initial
purchase.
Federated Insurance Series
Federated American Leaders Fund II: Seeks to
achieve
long-term growth
of capital as a primary objective and seeks to
provide
income as a
secondary objective through investment of at least 65 %
of
its total
assets (under normal circumstances) in common stocks
of
"blue chip"
companies.
Federated Fund for U.S. Government Securities II: Seeks
to
provide
current income through investment of at least 65% of
its
total assets
in securities which are primary or direct obligations
of
the U.S.
government or its agencies or instrumentalities or which
are
guaranteed
as to principal and interest by the U.S. government,
its
agencies, or
instrumentalities and in certain collateralized
mortgage
obligations,
and repurchase agreements.
Federated Utility FundII: Seeks to provide highcurrent
income and
<PAGE>
moderate capital appreciation by investing in
a
professionally-managed,
diversified portfolio of utility company equity and
debt
securities.
INVESCO Variable Investment Funds, Inc.
INVESCO VIF-Industrial Income Portfolio: Seeks the
best
possible
current income while following sound investment
practices.
Capital
growth potential is an additional consideration in
the
selection of
portfolio securities. The Portfolio normally invests
at
least 65% of
its total assets in dividend-paying common stocks. Up
to
10% of the
Portfolio's total assets may be invested in equity
securities
that do
<PAGE>
not pay regular dividends. The remaining assets are
invested
in other
income-producing securities such as corporate bonds.
The
Portfolio also
has the flexibility to invest in other types of securities.
INVESCO VIF-Total Return Portfolio: Seeks a high
total
return on
investment through capital appreciation and current
income.
The Total
Return Portfolio seeks to achieve its investment objective
by
investing
in a combination of equity securities (consisting of
common
stocks and,
to a lesser degree, securities convertible into common
stock)
and fixed
income securities.
INVESCO VIF-High Yield Portfolio: Seeks a high level
of
current income
by investing substantially all of its assets in lower
rated
bonds and
other debt securities and in preferred stock. These
bonds
and other
securities are sometimes referred to as "junk bonds."
The
High Yield
Portfolio pursues its investment objective
through
investment in a
variety of long-term, intermediate-term, and
short-term
bonds.
Potential capital appreciation is a factor in
the
selection of
investments, but is secondary to the Portfolio's
<PAGE>
primary
objective.
Janus Aspen Series
Janus Aspen Aggressive Growth Portfolio: Seeks
long-term
growth of
capital in a manner consistent with the preservation
of
capital. The
Portfolio normally invests at least 50% of its
equity
assets in
securities issued by medium-sized companies.
Medium-sized
companies are
those whose market capitalizations fall within the range
of
companies
in the S&P MidCap 400 Index (the "MidCap
Index").
Companies whose
capitalization falls outside this range after the
Portfolio's
initial
purchase continue to be considered medium-sized
companies
for the
purpose of this policy. As of December 30, 1996,
the
<PAGE>
MidCap Index
included companies with capitalizations
between
approximately $192
million to $6.5 billion. The range of the MidCap Index
is
expected to
change on a regular basis. Subject to the above policy,
the
Portfolio
may also invest in smaller or larger issuers.
9
<PAGE>
<PAGE>
Janus Aspen Growth Portfolio: Seeks long-term growth
of
capital in a
manner consistent with the preservation of capital.
The
Portfolio
pursues its objective by investing in common stocks
of
companies of any
size. This Portfolio generally invests in larger,
more
established
issuers.
Janus Aspen Worldwide Growth Portfolio: Seeks
long-term
growth of
capital in a manner consistent with the preservation
of
capital. The
Portfolio pursues its objective primarily through
investments
in common
stocks of foreign and domestic issuers. The
Portfolio
has the
flexibility to invest on a worldwide basis
in
companies and
organizations of any size, regardless of country
of
organization or
place of principal business activity. The Portfolio
normally
invests in
issuers from at least five different countries,
including
the United
States; however, it may at times invest in fewer than
five
countries or
even a single country.
Lexington Emerging Markets Fund, Inc.
Lexington Emerging Markets Fund: Seeks long term growth
<PAGE>
of
capital
primarily through investment in equity securities
of
companies
domiciled in, or doing business in emerging countries
and
emerging
markets. For purposes of its investment objective, the
Fund
considers
emerging country equity securities to be any country
whose
economy and
market the World Bank or United Nations considers to
be
emerging or
developing. The Fund may also invest in
equity
securities and
equivalents traded in any market of companies that derive
50%
or more
of their total revenue from either goods or services
produced
in such
emerging countries or markets or sales made in such
countries.
Montgomery Variable Series
<PAGE>
Montgomery Growth Fund: Seeks capital appreciation
by
investing at
least 65% of its total assets (under normal conditions)
in
the equity
securities of domestic corporations. In addition
to
capital
appreciation, this Fund emphasizes value. While the
Fund
emphasizes
investments in common stock, it also invests in other
types
of equity
securities (including options on equity
securities,
warrants and
futures contracts on equity securities). The Fund may
invest
up to 35%
of its total assets in debt securities rated within the
three
highest
grades of S&P, Moody's or Fitch, or unrated debt
securities
deemed to
be of comparable quality by its portfolio manager
using
guidelines
approved by the Board of Trustees.
Montgomery International Small Cap Fund: Seeks
capital
appreciation by
investing at least 65% of its total assets (under
normal
conditions) in
equity securities of companies outside the United
States
having total
market capitalizations of less than $1 billion,
sound
fundamental
values and potential for long-term growth at a
reasonable
price. The
<PAGE>
Fund generally invests the remaining 35% of its
total
assets in a
similar manner but may invest those assets in
companies
having market
capitalizations of $1 billion or more, or in debt
securities,
including
up to 5% of its total assets in debt securities rated
below
investment
grade.
SAFECO Resource Series Trust
SAFECO RST Equity Portfolio: Seeks long-term growth
of
capital and
reasonable current income. The Portfolio ordinarily
invests
principally
in common stocks or securities convertible into common
stocks.
Schwab Annuity Portfolios
Schwab Money Market Portfolio: Seeks maximum current
income
consistent
<PAGE>
with liquidity and stability of capital. It seeks to
achieve
its
objective by investing in short-term money market
10
<PAGE>
<PAGE>
instruments. This Portfolio is neither insured
nor
guaranteed by the
United States Government and there can be no assurance that
it
will be
able to maintain a stable net asset value of $1.00 per
share.
Schwab Asset Director-High Growth Portfolio: Seeks
to
provide high
capital growth with less volatility than an all
stock
portfolio. The
High Growth Fund seeks to meet its investment objective
by
investing in
a mix of stocks, bonds, and cash equivalents.
Schwab S&P 500 Portfolio: Seeks to track the price
and
dividend
performance (total return) of common stocks of
U.S.
companies, as
represented in the Standard & Poor's Composite Index of
500
stocks (the
"Index"). The S&P 500 Fund invests primarily in the
common
stocks of
companies composing the Index.
SteinRoe Variable Investment Trust
SteinRoe Capital Appreciation Fund: Seeks capital growth
by
investing
primarily in common stocks, convertible
securities,
and other
securities selected for prospective capital growth.
Strong Discovery Fund II, Inc.
<PAGE>
Strong Discovery Fund II: Seeks capital growth. The
Fund
invests in
securities that the Fund's investment adviser
believes
represent
attractive growth opportunities. The Fund
normally
emphasizes equity
investments, although it has the flexibility to invest in
any
security
the Fund's investment adviser believes has the potential
for
capital
appreciation.
Van Eck Worldwide Insurance Trust
Van Eck Worldwide Hard Assets Fund: Seeks
long-term
capital
appreciation by investing in hard asset securities;
i.e.,
commodities
<PAGE>
or securities of firms involved (directly or
indirectly)
in the
following areas: precious metals, ferrous and
non-ferrous
metals,
energy, real estate, and other non-agricultural
commodities.
The Fund
seeks opportunities in all the global stock, bond,
and
commodity
markets, including domestic markets. Current income
is
not an
investment objective.
The two Alger American Funds are advised by Fred
Alger
Management, Inc.
of New York, New York. The two American Century Variable
Portfolios,
Inc., are
advised by American Century Investment Management of Kansas
City,
Missouri,
advisers to the American Century family of mutual funds. The
Berger
IPT-Small
Company Growth Fund is advised by Berger Associates of Denver,
Colorado.
The
three Federated Insurance Series Portfolios are advised by
Federated
Advisers of
Pittsburgh, Pennsylvania. The three INVESCO Variable Investment
Funds,
Inc.,
Portfolios are advised by INVESCO Funds Group, Inc., of
Denver,
Colorado.
INVESCO Trust Company is the sub-adviser for the INVESCO
VIF-Industrial
Income
Portfolio. The three Janus Aspen Series Portfolios are advised by
Janus
Capital
<PAGE>
Corporation of Denver, Colorado. The Lexington Emerging Markets Fund
is
advised
by Lexington Management Corporation of Saddle Brook, New Jersey.
The
two
Montgomery Variable Series Funds are advised by Montgomery
Asset
Management,
L.P. of San Francisco, California. The SAFECO RST Equity Portfolio
is
advised
by SAFECO Asset Management Company of Seattle, Washington. The
three
Schwab
Annuity Portfolios are advised by Charles Schwab Investment
Management,
Inc., of
San Francisco, California. The SteinRoe Capital Appreciation Fund
is
advised by
Stein Roe & Farnham Incorporated of Chicago, Illinois. Strong
Discovery
Fund II
is advised by Strong Capital Management, Inc. of Milwaukee,
Wisconsin.
The Van
Eck Worldwide Hard Assets Fund is advised by Van Eck
Associates
Corporation of
New York, New York.
<PAGE>
***
<PAGE>
<PAGE>
Meeting investment objectives depends on various
factors,
including,
but not limited to, how well the Eligible Fund managers
anticipate
changing
economic and market conditions. THERE IS NO ASSURANCE THAT ANY OF
THESE
ELIGIBLE
FUNDS WILL ACHIEVE THEIR STATED OBJECTIVES.
The Contracts are not deposits of, or guaranteed or
endorsed
by, any
bank, nor are the Contracts federally insured by the Federal
Deposit
Insurance
Corporation, the Federal Reserve Board or any other
government
agency. The
Contracts involve certain investment risks, including
possible
loss of
principal.
Each Eligible Fund is registered with the Commission as
an
open-end
management investment company or portfolio thereof. The
Commission
does not
supervise the management or the investment practices and policies
of
any of the
Eligible Funds.
Since some of the Eligible Funds are available to
registered
separate
accounts of other insurance companies offering variable annuity
and
variable
life products, there is a possibility that a material conflict may
arise
between
the interests of the Series Accountand one or more other separate
accounts
<PAGE>
investing in the Eligible Funds. In the event of a
material
conflict, the
affected insurance companies are required to take any necessary steps
to
resolve
the matter, including stopping their separate accounts
from
investing in the
Eligible Funds. See the Eligible Funds' prospectuses for more
details.
Additional information concerning the
investment
objectives and
policies of all of the Eligible Funds and the investment
advisory
services and
administrative services and charges can be found in the
current
prospectuses for
the Eligible Funds, which can be obtained by calling the Schwab
Annuity
Service
Center at 800-838-0649, or by writing to Schwab Annuity Service
Center,
P.O. Box
7806, San Francisco, California 94120-9327. The Eligible
Funds'
prospectuses
<PAGE>
should be read carefully before any decision is made concerning
the
allocation
of Contributions to, or Transfers among, the Investment Divisions.
Addition, Deletion, or Substitution
The Company does not control the Eligible Funds and
cannot
guarantee
that any of the Eligible Funds will always be available
for
allocation of
Contributions or Transfers. The Company retains the right to
make
changes in the
Series Account and in its investments. Currently, Schwab must
approve
certain
changes.
First GWL&A and Schwab reserve the right to eliminate
the
shares of any
Eligible Fund held by an Investment Division and to substitute shares
of
another
Eligible Fund or of another investment company, for the shares of
any
Eligible
Fund, if the shares of the Eligible Fund are no longer available
for
investment
or if, in First GWL&A's and Schwab's judgment, investment in
any
Eligible Fund
would be inappropriate in view of the purposes of the Series
Account.
To the
extent required by the 1940 Act, a substitution of
shares
attributable to the
Owner's interest in an Investment Division will not be made
without
prior notice
to the Owners and the prior approval of the Commission.
<PAGE>
Nothing
contained herein
shall prevent the Series Account from purchasing other
securities
for other
series or classes of variable annuity policies, or from effecting
an
exchange
between series or classes of variable policies on the basis of
Requests
made by
you.
New Investment Divisions may be established when, in
our
discretion,
marketing, tax, investment or other conditions so warrant. Any
new
Investment
Divisions will be made available to Owners on a basis to
be
determined by us.
Each additional Investment Division will purchase shares in a
Eligible
Fund or
in another mutual fund or investment vehicle. We may also eliminate
one
or more
Investment Divisions if, in our sole discretion, marketing,
tax,
<PAGE>
investment or
other conditions so warrant. In the event any Investment Division
is
eliminated,
we will notify the Owners and request a re-allocation of the
amounts
invested in
the eliminated Investment Division.
12
<PAGE>
<PAGE>
In the event of any such substitution or change, we
may
make such
changes to your Contract as may be necessary or appropriate
to
reflect such
substitution or change. Furthermore, if deemed to be in the
best
interests of
persons having voting rights under the Contracts, the
Series
Account may be
operated as a management company under the 1940 Act or any other
form
permitted
by law, may be de- registered under such Act in the event
such
registration is
no longer required, or may be combined with one or more other
separate
accounts.
Such changes will be made in compliance with applicable law.
------------------------------------------------------
THE GUARANTEE PERIOD
FUND
------------------------------------------------------
Guarantee Period Fund
Amounts allocated to the Guarantee Period Fund under
the
Contract will
be deposited to, and accounted for, in a non-unitized market
value
separate
account established by the Company under Section 4240 of the New
York
Insurance
Code and in accordance with New York Regulation 128. These
amounts
accordingly,
are not partof the Series Account.A non-unitized market valueseparate
account
<PAGE>
is a separate account in which the Owner does not participate in
the
performance
of the assets through unit values. Therefore, Owners
allocating
Contributions do
not receive a unit ownership of assets accounted for in this
separate
account.
The assets accrue solely to the benefit of the Company and any gain
or
loss in
the separate account is borne entirely by the Company. For
amounts
allocated to
the Guarantee Period Fund, Owners will receive the Contract
guarantees
made by
the Company.
Contributions allocated to or amounts transferred to
the
Guarantee
Period Fund will establish a new Guarantee Period of a
duration
selected by the
Owner from those currently being offered by the Company.
Every
<PAGE>
Guarantee Period
offered by the Company will have a time interval of at
least
one year.
Contributions allocated to the Guarantee Period Fund will
be
credited on the
Transaction Date.
Each Guarantee Period will have its own stated rate
of
interest and
Guarantee Period Maturity Date. The stated rate of
interest
applicable to a
Guarantee Period will depend on the date the Guarantee Period
is
established and
the duration chosen by the Owner.
As of the date of this Prospectus, Guarantee Periods
with
annual time
intervals of 1 to 10 years are offered. The Guarantee Periods may
be
changed in
the future; however, any such modification will not have an
impact
on any
Guarantee Period then in effect.
The value of amounts in each Guarantee Period is
the
Owner's
Contributions, less Premium Tax, if any, in that Guarantee Period,
plus
interest
earned, less amounts distributed, withdrawn (in whole or in
part),
Transferred
or applied to an annuity option, periodic withdrawals, and
charges
deducted
under the Contract. If a Guarantee Period is broken, a Market
Value
Adjustment
may be assessed. Any such amount withdrawn or Transferred
<PAGE>
from a
Guarantee
Period will be paid in accordance with the MVA formula
(See
"Market Value
Adjustment," page __.)
Investments
The Company intends to invest in assets which, in
the
aggregate, have
characteristics, especially cash flow patterns, reasonably
related
to the
characteristics of its liabilities. Various techniques will be used
to
achieve
the objective of close aggregate matching of assets and liabilities.
The
Company
will primarily invest in investment-grade fixed income
securities
including:
Securities issued by the U.S. Government or
its
agencies or
<PAGE>
instrumentalities, which issues may or may not be guaranteed by the
U.S.
Government.
13
<PAGE>
<PAGE>
Debt securities which have an investment grade, at
the
time of
purchase, within the four highest grades assigned by
Moody's
Investment
Services, Inc. (Aaa, Aa, A or Baa), Standard &
Poor's
Corporation (AAA,
AA, A or BBB) or any other nationally recognized
rating
service.
Other debt instruments, including, but not
limited
to, issues
of banks or bank holding companies and of
corporations,
which
obligations, although not rated by Moody's, Standard &
Poor's,
or other
nationally recognized rating firms, are deemed by
the
Company's
management to have an investment quality comparable
to
securities which
may be purchased as stated above.
Commercial paper, cash or cash
equivalents,
and other
short-term investments having a maturity of less than
one
year which
are considered by the Company's management to have
investment
quality
comparable to securities which may be purchased as
stated
above.
In addition, the Company may invest in futures and
options.
Financial
futures and related options thereon and options on securities
<PAGE>
are
purchased
solely for non-speculative hedging purposes. The Company may
sell a
futures
contract or purchase a put option on futures or securities to
protect
the value
of securities held in or to be sold for the general account or
the
non-unitized
separate account in the event the securities prices are anticipated
to
decline.
Similarly, if securities prices are expected to rise, the Company
may
purchase a
futures contract or a call option thereon against anticipated
positive
cash flow
or may purchase options on securities.
WHILE THE FOREGOING GENERALLY DESCRIBES THE INVESTMENT
STRATEGY
FOR THE
GUARANTEE PERIOD FUND, THE COMPANY IS NOT OBLIGATED TO INVEST THE
ASSETS
ATTRIBUTABLE TO THE GUARANTEE PERIOD FUND ACCORDING TO ANY PARTICULAR
STRATEGY, EXCEPT AS MAY BE REQUIRED BY NEW YORK AND OTHER
STATE
INSURANCE
<PAGE>
LAWS, NOR WILL THE STATED RATE OF INTEREST THAT THE COMPANY
ESTABLISHES
NECESSARILY RELATE TO THE PERFORMANCE OF THE NON-UNITIZED MARKET
VALUE
SEPARATE ACCOUNT.
Subsequent Guarantee Periods
Prior to the date annuity payments commence, you may
invest
the value
of amounts held in a maturing Guarantee Period in any Guarantee
Period
that we
offer at that time. On the quarterly statement issued prior to
the
end of any
Guarantee Period, we will notify you of the upcoming maturity of
a
Guarantee
Period. THE GUARANTEE PERIOD AVAILABLE FOR NEW CONTRIBUTIONS MAY
BE
CHANGED AT
ANY TIME, INCLUDING BETWEEN THE DATE OF NOTIFICATION OF A
MATURING
GUARANTEE
PERIOD AND THE DATE A SUBSEQUENT GUARANTEE PERIOD BEGINS.
Information
regarding
the current Guarantee Periods then available and their stated rate
of
interest
may be obtained by calling the Schwab Annuity Service Center at:
1-800-838-0649.
If the Company receives no direction from the
Contract
Owner by the
Guarantee Period Maturity Date, the Company will
automatically
allocate the
amount from the maturing Guarantee Period to a Guarantee
Period
equal in
duration to the one just ended. If at that time, the
<PAGE>
duration
previously chosen
is no longer available, the amount will be allocated to the
next
shortest
available Guarantee Period duration. If none of the above
is
available, the
value of matured Guarantee Periods will be allocated to the
Schwab
Money Market
Investment Division. In any event, a Guarantee Period will not
renew
for a term
equal in duration to the one just ended if the Guarantee
Period
will mature
after the Payment Commencement Date. No Guarantee Period may
mature
later than
six months after a Payment Commencement Date. For example, if a
3-year
Guarantee
Period matures and the Payment Commencement Date begins 1 3/4
years
from the
Guarantee Period Maturity Date, the matured value will
be
transferred to a
2-year Guarantee Period.
<PAGE>
14
<PAGE>
<PAGE>
Breaking A Guarantee Period
Any Transfer, withdrawal or the selection of an annuity
option
prior to
the Guarantee Period Maturity Date will be known as breaking a
Guarantee
Period.
When a Request to break a Guarantee Period is received, the
Guarantee
Period
that is closest to the Guarantee Period Maturity Date will be
broken
first. If a
Guarantee Period is broken, a Market Value Adjustment may
be
assessed. The
Market Value Adjustment may increase or decrease the value of
the
amount
Transferred or withdrawn from the Guarantee Period Fund.
The
Market Value
Adjustment may reduce the value of amounts held in a Guarantee
Period
below the
amount of your Contribution(s) allocated to that Guarantee Period.
(See
"Market
Value Adjustment," page __.)
Interest Rates
Declared rates are effective annual rates of interest.
The
rate is
guaranteed throughout the Guarantee Period. FOR GUARANTEE
PERIODS
NOT YET IN
EFFECT, FIRST GWL&A MAY DECLARE INTEREST RATES DIFFERENT THAN
THOSE
CURRENTLY IN
EFFECT. When a subsequent Guarantee Period begins, the rate
applied
will not be
less than the rate then applicable to new Contracts of the same type
with the
<PAGE>
same Guarantee Period.
The stated rate of interest must be at least equal to
the
Contractual
Guarantee of a Minimum Rate of Interest. The Company may
declare
higher rates.
The Contractual Guarantee of a Minimum Rate of Interest is
based
on the
applicable state standard non-forfeiture law which is currently
3%
for the
Contract.
The determination of the stated rate of interest is
influenced
by, but
does not necessarily correspond to, interest rates available
on
fixed income
investments which the Company may acquire using funds
deposited
into the
Guarantee Period Fund. In addition, the Company will consider
other
items in
<PAGE>
determining the stated rate of interest including
regulatory
and tax
requirements, sales commissions and administrative expenses
borne
by the
Company, general economic trends, and competitive factors.
Market Value Adjustment
Distributions from the amounts allocated to a Guarantee
Period
due to a
full surrender or partial withdrawal, Transfer, application
of
amounts to the
periodic withdrawal option or to purchase an annuity prior to
a
Guarantee Period
Maturity Date will be subject to a Market Value Adjustment ("MVA").
An
MVA may
increase or decrease the amount payable on one of the
above
described
distributions. Amount available for a full surrender,
partial
withdrawal or
Transfer = amount Requested + MVA. The MVA is calculated
by
multiplying the
amount Requested by the Market Value Adjustment Factor ("MVAF").
The MVA reflects the relationship as of the time of
its
calculation
between (a) the U.S. Treasury Strip ask side yield as published
in
the Wall
Street Journal on the last business day of the week prior to the
date
the stated
rate of interest was established for the Guarantee Period; and
(b)
the U.S.
Treasury Strip ask side yield as published in the Wall
Street
<PAGE>
Journal on the
last business day of the week prior to the week the Guarantee Period
is
broken.
There would be a downward adjustment if Treasury rates at the time
the
Guarantee
Period is broken, exceed Treasury rates when the Guarantee Period
was
created.
There would be an upward adjustment if Treasury rates at the time
the
Guarantee
Period is broken, are lower than when the Guarantee Period was
created.
The MVA
factor is the same for all Contracts.
1. The formula used to determine the MVA is:
MVA = (amount applied) X (MVAF)
15
<PAGE>
<PAGE>
<PAGE>
The Market Value Adjustment Factor (MVAF) is:
MVAF = {[(1 + i)/(1 + j)] N/12} - 1
where:
a) i is the U.S. Treasury Strip ask side
yield
as
published in the Wall Street Journal on the
last
business day
of the week prior to the date the stated rate
of
interest was
established for the Guarantee Period. The term
of i
is
measured in years and equals the term of the
Guarantee
Period;
b) j is the U.S. Treasury Strip ask side
yield
as
published in the Wall Street Journal on the
last
business day
of the week prior to the week the Guarantee Period
is
broken.
The term of j equals the remaining term to maturity
of
the
Guarantee Period, rounded up to the higher number
of
years;and
c) N is the number of complete months
remaining
until
maturity.
If N is less than 6, the MVA will equal 0.
2. The Market Value Adjustment will apply to any Guarantee Period
six
<PAGE>
or more
months prior to the Guarantee Period Maturity Date in each of
the
following
situations:
a) Transfer to another Guarantee Period or to
an
Investment Division offered under this Contract; or
b) Surrenders, partial
withdrawals,
annuitization or
Periodic Withdrawals.
3. The Market Value Adjustment will not apply to any
Guarantee
Period having
fewer than six months prior to the Guarantee Period Maturity Date
in
each of the
following situations:
<PAGE>
a) Transfer to an Investment Division
offered
under this
Contract; or
b) Surrenders, partial
withdrawals,
annuitization or
Periodic Withdrawals.
c) A single sum payment upon death of the
Owner
or
Annuitant.
See Appendix A for Illustrations of the MVA.
------------------------------------------------------
APPLICATION
AND
CONTRIBUTIONS
------------------------------------------------------
Contributions
All Contributions may be paid at the Schwab Annuity
Service
Center by a
check payable to the Company or by transfer to the Company
of
available funds
from your Schwab account.
The initial Contribution for the Contract must be at
least
$5,000 (or
$2,000 if for an IRA). Subsequent Contributions must be at
least
$500. This
minimum initial investment may be reduced to $1,000, but only if
you
participate
in an Automatic Contribution Plan and contribute at least $100 per
<PAGE>
16
<PAGE>
<PAGE>
month through a recurring deposit. A confirmation will be issued to
you
upon
the acceptance of each Contribution.
Your Contract will be issued and your Contribution
generally
will be
accepted and credited within two business days after receipt of
an
acceptable
application and receipt of the initial Contribution at the
Schwab
Annuity
Service Center. All Contributions should be paid to the Schwab
Annuity
Service
Center by check (payable to First GWL&A) or by instructing Schwab
to
transfer to
First GWL&A available funds from your account with Schwab. Acceptance
is
subject
to there being sufficient information in a form acceptable to us and
we
reserve
the right to reject any application or Contribution.
The Schwab Annuity Service Center will process
your
application and
Contributions. If your application is complete and your
initial
Contribution is
being transferred from funds available in your Schwab
account,
then the
Contribution will generally be credited within two business
days
following
receipt of the application. If your application is
incomplete,
the Schwab
Annuity Service Center will either complete the application
from
information
Schwab has on file, or contact you for the additional information.
<PAGE>
No
transfer
of funds will be made from your Schwab account until
your
application is
complete. The funds will be credited as Contributions to the
Contract
when they
are transferred.
If your Contribution is by check, and the application
is
complete,
Schwab will use its best efforts to credit the Contribution
on
the day of
receipt, but in all such cases it will be credited to your
Contract
within two
business days of receipt. If your application is incomplete, the
Schwab
Annuity
Service Center will complete the application from information Schwab
has
on file
or contact you by telephone to obtain the required
information.
If your
application remains incomplete for five business days, we
will
return to you
<PAGE>
both the check and the application unless you consent to
our
retaining the
initial Contribution and crediting it as soon as the requirements
are
fulfilled.
A Contract may be returned within ten days after
receipt
("Free Look
Period"). During the Free Look Period, all contributions will
be
processed as
follows:
(1) Amounts to be allocated to one or more of the
then
available
Guarantee Periods will be allocated as
directed,
effective
upon the Transaction Date.
(2) Amounts the Owner has directed to be allocated to
one
or more
of the Investment Divisions will first
be
allocated to the
Schwab Money Market Investment Division
until
the next
Transaction Date following the end of the Free
Look
Period. On
that date, the Variable Account Value held in
the
Schwab Money
Market Investment Division will be allocated to
the
Investment
Divisions selected by the Owner.
(3) During the Free Look Period, you may change
the
allocation
percentages among the Investment
<PAGE>
Divisions
and/or your
selection of Investment Divisions to
which
Contributions will
be allocated after the Free Look Period.
(4) If the Contract is returned, the contract will
be
void from
the start and the greater of: (a)
Contributions
received less
surrenders, withdrawals and distributions, or (b)
the
Annuity
Account Value less surrenders, withdrawals
and
distributions,
will be refunded. Exercising the return
privilege
requires the
return of the Contract to the Company or to the
Schwab
Annuity
Service Center.
Amounts the Owner has contributed from a 1035 exchange of
the
<PAGE>
variable
annuity issued by Transamerica Occidental Life Insurance
Company
and First
Transamerica Occidental Life Insurance Company distributed by
Charles
Schwab &
Co., Inc. (previously referred to as the Schwab Investment
Advantage
Annuity
Contract) will be immediately allocated to the Investment
Divisions
selected by
the Owner. If the Contract is returned, it will be void from the
start
and the
greater of: (a) Contributions
17
<PAGE>
<PAGE>
received less surrenders, withdrawals and distributions, or (b)
the
Annuity
Account Value less surrenders, withdrawals and distributions, will
be
refunded.
Additional Contributions may be made at any time prior to
the
Payment
Commencement Date, as long as the Annuitant is living.
Additional
Contributions
must be at least $500 or $100 per month if under an
ACP.
Additional
Contributions will be credited within two days following receipt.
Total Contributions may exceed $1,000,000 with our
prior
approval.
The Company reserves the right to modify the limitations
set
forth in
this section.
------------------------------------------------------
ANNUITY ACCOUNT
VALUE
------------------------------------------------------
Before the date annuity payments commence, your
Annuity
Account Value
is the sum of each Variable and Fixed Sub-Account
established
under your
Contract.
Before the annuity commencement date, the Variable
Account
Value is the
total dollar amount of all Accumulation Units under each of
<PAGE>
your
Variable
Sub-Accounts. Initially, the value of each Accumulation Unit was set
at
$10.00.
Each Variable Sub-Account's value prior to the Payment
Commencement
Date is
equal to: (a) net Contributions allocated to the
corresponding
Investment
Division; plus or minus (b) any increase or decrease in the value
of
the assets
of the Variable Sub- Account due to investment results; less
(c)
the daily
Mortality and Expense Risk Charge; less (d) reductions for
the
Contract
Maintenance Charge deducted on the last business day of each
Contract
Year; less
(e) any applicable Transfer Fees; and less (f) any withdrawals
or
Transfers from
the Variable Sub-Account.
<PAGE>
A Valuation Period is the period between successive
Valuation
Dates. It
begins at the close of the New York Stock Exchange (generally
4:00
p.m. ET) on
each Valuation Date and ends at the close of the New York
Stock
Exchange on the
next succeeding Valuation Date. A Valuation Date is each day that
the
New York
Stock Exchange is open for regular business. The value of
an
Investment
Division's assets is determined at the end of each Valuation Date.
To
determine
the value of an asset on a day that is not a Valuation Date, the
value
of that
asset as of the end of the previous Valuation Date will be used.
The Variable Account Value is expected to change
from
Valuation Period
to Valuation Period, reflecting the investment experience of
the
selected
Investment Division(s) as well as the deductions for charges.
Contributions which you allocate to an Investment Division
are
used to
purchase Variable Accumulation Units in the Investment Division(s)
you
select.
The number of Accumulation Units to be credited will be determined
by
dividing
the portion of each Contribution allocated to the
Investment
Division by the
value of an Accumulation Unit determined at the end of the
Valuation
Period
during which the Contribution was received. In the case of
<PAGE>
the
initial
Contribution, Accumulation Units for that payment will be
credited
to the
Variable Account Value (and, except for certain 1035
exchanges),
held in the
Schwab Money Market Investment Division until the end of the
Free
Look Period
(see "Application and Contributions," page __). In the case of
any
subsequent
Contribution, Accumulation Units for that payment will be credited
at
the end of
the Valuation Period during which we receive the Contribution.
The
value of an
Accumulation Unit for each Investment Division for a
Valuation
Period is
established at the end of each Valuation Period and is calculated
by
multiplying
the value of that unit at the end of the prior Valuation
Period
by the
Investment Division's Net Investment Factor for the Valuation Period.
<PAGE>
18
<PAGE>
<PAGE>
Unlike a brokerage account, amounts held under a
Contract
are not
covered by the Securities Investor Protection Corporation ("SIPC") .
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TRANSFERS
------------------------------------------------------
In General
Prior to the Payment Commencement Date you may Transfer all
or
part of
your Annuity Account Value among and between the Investment
Divisions
and the
available Guarantee Periods by sending a Request to the Schwab
Annuity
Service
Center. The Request must specify the amounts being Transferred,
the
Investment
Division(s) and/or Guarantee Period(s) from which the Transfer is
to
be made,
and the Investment Division(s) and/or Guarantee Period(s) that
will
receive the
Transfer.
Currently, there is no limit on the number of Transfers
you
can make
among the Investment Divisions during any calendar year. There is
no
charge for
the first twelve Transfers per calendar year, but there will
be a
charge of $10
for each additional Transfer in each calendar year. We reserve the
right to
limit the number of Transfers you make. The charge will be
deducted
<PAGE>
from the
amount transferred. All Transfers made on a single Transaction
Date
will be
aggregated to count as only one Transfer toward the twelve
free
Transfers;
however, if a one time rebalancing Transfer also occurs on
the
Transaction Date,
it will be counted as a separate and additional Transfer.
Transfers involving the Guarantee Period Fund
(including
Transfers to
or from the Investment Division(s)) are not limited during
any
calendar year.
These Guarantee Period Fund Transfers are counted against
your
twelve free
Transfers as discussed above. The $10 charge will apply to each
Transfer
made in
excess of the first twelve Transfers each calendar year.
<PAGE>
A Transfer generally will be effective on the date
the
Request for
Transfer is received by the Schwab Annuity Service Center if
received
before
4:00 p.m. Eastern Time. Under current law, there will not be any
tax
liability
to you if you make a Transfer.
Transfers involving the Investment Divisions will
result
in the
purchase and/or cancellation of Accumulation Units having a total
value
equal to
the dollar amount being Transferred to or from a particular
Investment
Division.
The purchase and/or cancellation of such units generally shall be
made
using the
Variable Account Value as of the end of the Valuation Date on which
the
Transfer
is effective.
When a Transfer is made from amounts in a Guarantee
Period
before the
Guarantee Period Maturity Date, the amount Transferred may
be
subject to a
Market Value Adjustment. (See "Market Value Adjustment," page
--.) A
Request for
Transfer from amounts in a Guarantee Period made prior to the
Guarantee
Period
Maturity Date for Transfers on the Guarantee Period Maturity
Date
will not be
counted for the purpose of determining any Transfer Fee on
Transfers
in excess
<PAGE>
of the twelve Transfers per calendar year if these Transfers are
to
take place
on the Guarantee Period Maturity Date.
Possible Restrictions
We reserve the right without prior notice to modify,
restrict,
suspend
or eliminate the Transfer privileges at any time. For
example,
restrictions may
be necessary to protect Owners from adverse impacts on
portfolio
management of
large and/or numerous Transfers by market timers or others. We
have
determined
that the movement of significant amounts from one Investment Division
to
another
may prevent the underlying Eligible Fund from taking advantage
of
investment
opportunities because the Eligible Fund must maintain
a
significant cash
position in order to handle redemptions. Such movement
<PAGE>
19
<PAGE>
<PAGE>
may also cause a substantial increase in Eligible Fund
transaction
costs which
must be indirectly borne by Owners. Therefore, we reserve the right
to
require
that all Transfer Requests be made by the Owner and not by an
Owner's
designee
and to require that each Transfer Request be made by a
separate
communication to
us. We also reserve the right to request that each Transfer Request
be
submitted
in writing and be manually signed by the Owner; facsimile
Transfer
Requests may
not be allowed. Transfers among the Investment Divisions may also
be
subject to
such terms and conditions as may be imposed by the Eligible Funds.
Custom Transfer: Dollar Cost Averaging (Automatic Transfers)
The Owner may Request to automatically Transfer at
regular
intervals,
predetermined amounts from one Investment Division selected
from
among those
being allowed under this option (which may be modified by the
Company
from time
to time) to any of the other Investment Divisions. The
intervals
between
Transfers may be monthly, quarterly, semi-annually or annually.
The
Transfer
will be initiated on the Transaction Date one frequency
period
following the
date of the Request. Transfers will continue on that same day
each
interval
unless terminated by you or for other reasons as set forth in
<PAGE>
the
Contract. If
there are insufficient funds in the applicable Variable Sub-Account
on
the date
of Transfer, no Transfer will be made; however, Dollar
Cost
Averaging will
resume once there are sufficient funds in the applicable
Variable
Sub-Account.
Dollar Cost Averaging will terminate automatically upon the
annuity
commencement
date. Amounts transferred through Dollar Cost Averaging are not
counted
against
the twelve free Transfers allowed in a calendar year.
Automatic Transfers must meet the following conditions:
1. The minimum amount that can be Transferred out of
the
selected
Investment Division is $100 per month.
2. The Owner must specify dollar amount to be
Transferred,
designate
<PAGE>
he Investment Division(s)to which the Transfer will be made and
the
percent to
be allocated to such Investment Division(s). The Accumulation
Unit
values will
be determined on the Transfer Date.
Dollar Cost Averaging may be used to purchase
Accumulation
Units of the
Investment Divisions over a period of time. The Owner, by
Request,
may cease
Dollar Cost Averaging at any time. Participation in Dollar
Cost
Averaging does
not, however, assure a greater profit, nor will it prevent
or
necessarily
alleviate losses in a declining market. The Company reserves
the
right to
modify, suspend or terminate Dollar Cost Averaging at any time.
Custom Transfer: Rebalancer Option
The Owner may Request to automatically Transfer among
the
Investment
Divisions on a periodic basis by electing the Rebalancer
Option.
This option
automatically reallocates the Variable Account Value to maintain
a
particular
allocation among Investment Divisions selected by the Owner.
The
amount
allocated to each Investment Division will increase or decrease
at
different
rates depending on the investment experience of the Investment
Division.
The Owner may Request that the rebalancing occur one
time
<PAGE>
only, in
which case the Transfer will take place on the Transaction Date of
the
Request.
This Transfer will count as one Transfer towards the twelve
free
Transfers
allowed in a calendar year. (See "Transfer Fee," page __.)
Rebalancing may also be set up on a quarterly,
semiannual
or annual
basis, in which case the first Transfer will be initiated on
the
Transaction
Date one frequency period following the date of the Request. On
the
Transaction
Date for the specified Request, assets will be
automatically
reallocated to the
selected Investment Divisions. Rebalancing will continue on the
same
Transaction
Date for
20
<PAGE>
<PAGE>
<PAGE>
subsequent periods. In order to participate in the Rebalancer
Option,
the entire
Variable Account Value must be included. Transfers set up with
these
frequencies
will not count against the twelve free Transfers allowed in a
calendar
year.
The Owner must specify the percentage of Variable
Account
Value to be
allocated to each Investment Division and the frequency
of
rebalancing. The
Owner, by Request, may modify the allocations or cease the
Rebalancer
Option at
any time. The Rebalancer Option will terminate automatically upon
the
Payment
Commencement Date. Participation in the Rebalancer Option
and
Dollar Cost
Averaging at the same time is not allowed. Participation in
the
Rebalancer
Option does not assure a greater profit, nor will it prevent
or
necessarily
alleviate losses in a declining market. The Company reserves
the
right to
modify, suspend, or terminate the Rebalancer Option at any time.
------------------------------------------------------
CASH WITHDRAWALS
------------------------------------------------------
Withdrawals
You (the Owner) may withdraw from the Contract all or
part
<PAGE>
of your
Annuity Account Value at any time during the life of the Annuitant
and
prior to
the date annuity payments commence by Request at the Schwab
Annuity
Service
Center subject to the rules below. Federal or state laws, rules
or
regulations
may apply. The amount payable to you if you surrender your
Contract
is your
Annuity Account Value, with a Market Value Adjustment, if
applicable,
on the
effective date of the surrender, and less any applicable
Premium
Tax. No
withdrawals may be made after the date annuity payments commence.
A Request for a partial withdrawal will result in a
reduction
in your
Annuity Account Value equal to the sum of the dollar amount
withdrawn.
A Market
<PAGE>
Value Adjustment may apply. (See "Market Value Adjustment,"
page
__.) The
partial withdrawal proceeds may be greater or less than the
amount
requested,
depending on the effect of the Market Value Adjustment.
The minimum partial withdrawal before application of the
MVA
is $500.
Partial withdrawals are unlimited; however, you must specify
the
Investment
Division(s) or Guarantee Period(s) from which the withdrawal is
to
be made.
After any partial withdrawal, if the remaining Annuity Account
Value
is less
than $2,000, then a full surrender may be required.
The following terms apply:
(a) No partial withdrawals are permitted after the
date
annuity
payments commence.
(b) A partial withdrawal will be effective upon
the
Transaction
Date.
(c) A partial withdrawal from amounts in a
Guarantee
Period may be
subject to the Market Value
Adjustment
provisions, the
Guarantee Period Fund provisions of the
Contract,
and the
terms of the attached Guarantee Period Fund
Rider(s),
if any.
Withdrawals may be taxable (this includes
<PAGE>
Periodic
Withdrawals,
discussed below). Moreover, the Internal Revenue Code (the
"Code")
provides that
a 10% penalty tax may be imposed on the taxable portions
of
certain early
withdrawals. The Code generally requires us to withhold federal
income
tax from
withdrawals. However, generally you will be entitled to elect,
in
writing, not
to have tax withholding apply unless withholding is mandatory for
your
Contract.
Withholding applies to the portion of the withdrawal which is
included
in your
income and subject to federal income tax. The tax withholding rate
is
10% of the
taxable amount of the withdrawal. Withholding applies only if
the
taxable amount
of the withdrawal is at least $200. Some states also
require
withholding for
<PAGE>
state income taxes. (See "Federal Tax Matters," page __.)
21
<PAGE>
<PAGE>
Withdrawal Requests must be in writing to ensure that
your
instructions
regarding withholding are followed. If an adequate election is
not
made, the
Request will be denied and no withdrawal or partial
withdrawal
will be
processed.
After a withdrawal of all of your total Annuity
Account
Value, or at
any time that your Annuity Account Value is zero, all your
rights
under the
Contract will terminate.
Since IRAs are offered by this Prospectus, reference should
be
made to
the applicable provisions of the Code for any
additional
limitations or
restrictions on cash withdrawals.
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TELEPHONE
TRANSACTIONS
------------------------------------------------------
We will employ reasonable procedures to confirm
that
instructions
communicated by telephone are genuine and if we follow such
procedures
we will
not be liable for any losses due to unauthorized or
fraudulent
instructions.
However, we may be liable for such losses if we do not follow
those
reasonable
<PAGE>
procedures. The procedures we will follow for telephone transactions
may
include
requiring some form of personal identification prior to acting
on
instructions
received by telephone, providing written confirmation of
the
transaction, and/or
tape recording the instructions given by telephone.
We reserve the right to suspend telephone
transaction
privileges at any
time, for some or all Contracts, and for any reason.
Withdrawals
are not
permitted by telephone.
------------------------------------------------------
DEATH BENEFIT
<PAGE>
------------------------------------------------------
Payment of Death Benefit
Before the date annuity payments commence, the death
benefit,
if any,
will be equal to the greater of: (a) the Annuity Account Value with
an
MVA, if
applicable, as of the date the Request for payment is received,
less
Premium
Tax, if any, or (b) the sum of Contributions paid, less
partial
withdrawals
and/or Periodic Withdrawals, less Premium Tax, if any. The
death
benefit will
become payable following the Company's receipt of a
Request
from the
Beneficiary. When an Owner or the Annuitant dies before the
annuity
commencement
date and a death benefit is payable to a Beneficiary, the death
benefit
proceeds
will remain invested in accordance with the allocation
instructions
given by the
Owner(s) until new allocation instructions are Requested by
the
Beneficiary or
until the death benefit is actually paid to the Beneficiary. The
death
benefit
will be determined as of the date payments commence; however,
on
the date a
payment option is processed, amounts in the Variable
Sub-Account
will be
Transferred to the Money Market Investment Division unless
the
Beneficiary
<PAGE>
otherwise elects by Request. Subject to the distribution rules
set
forth below,
payment of the death benefit may be Requested to be made as follows:
A. Proceeds from the Variable Sub-Account(s)
1. payment in a single sum; or
2. payment under any of the variable
annuity
options
provided under this Contract.
B. Proceeds from the Guarantee Period(s)
22
<PAGE>
<PAGE>
1. payment in a single sum; or
2. payment under any of the annuity
options
provided
under this Contract.
In any event, no payment of benefits provided under
the
Contract will
be allowed that does not satisfy the requirements of Section 72(s)
of
the Code
and any other applicable federal or state laws, rules or regulations.
Distribution Rules
1. Death of Annuitant
Upon the death of the Annuitant while the Owner is
living,
and before
the annuity commencement date, the Company will pay the
death
benefit to the
Beneficiary unless there is a Contingent Annuitant.
If a Contingent Annuitant was named by the
Owner(s)
prior to the
Annuitant's death, and the Annuitant dies before the
annuity
commencement date
while the Owner and Contingent Annuitant are living, no death
benefit
will be
payable by reason of the Annuitant's death and the
Contingent
Annuitant will
become the Annuitant.
If the Annuitant dies after the date annuity
payments
commence and
before the entire interesthas been distributed, any benefit payable
must be
distributed to the Beneficiary in accordance with and at least
<PAGE>
as
rapidly as
under the payment option applicable to the Annuitant on the
Annuitant's
date of
death.
If a corporation or other non-individual is an Owner,
or
if the
deceased Annuitant is an Owner, the death of the Annuitant will
be
treated as
the death of an Owner and the Contract will be subject to the
"Death
of Owner"
provisions described below.
2. Death of Owner
If the Owner is not the Annuitant:
<PAGE>
(1) If there is a Joint Owner who is the surviving
spouse
of the
deceased Owner, the Joint Owner will become the Owner
and
Beneficiary
and may elect to take the death benefit or elect
to
continue the
Contract in force.
(2) In all other cases, the Company will pay the
death
benefit to the
Beneficiary even if a Joint Owner (who was not the
Owner's
spouse on
the date of the Owner's death), the Annuitant and/or
the
Contingent
Annuitant are alive at the time of the Owner's death,
unless
the sole
Beneficiary is the deceased Owner's surviving
spouse
and the
Beneficiary elects to become the Owner and Annuitant and
to
continue
the Contract in force.
If the Owner is not the Annuitant, and the Owner dies
after
annuity
payments commence and before the entire interest has been
distributed
while the
Annuitant is living, any benefit payable will continue to
be
distributed to the
Annuitant at least as rapidly as under the payment option
applicable
on the
Owner's death. All rights granted the Owner under the Contract
will
pass to any
surviving Joint Owner and, if none, to the Annuitant.
<PAGE>
If the Owner is the Annuitant (Owner/Annuitant):
(1) If there is a Joint Owner who is the surviving
spouse
of the
deceased Owner and a Contingent Annuitant, the Joint
Owner
will become
the Owner and the Beneficiary, the Contingent Annuitant
will
become the
Annuitant, and the Contract will continue in force.
23
<PAGE>
<PAGE>
(2) If there is a Joint Owner who is the surviving
spouse
of the
deceased Owner but no Contingent Annuitant, the Joint
Owner
will become
the Owner, Annuitant and Beneficiary and may elect to
take
the death
benefit or continue the Contract in force.
(3) In all other cases, the Company will pay the
death
benefit to the
Beneficiary, even if a Joint Owner (who was not the
Owner's
spouse on
the date of the Owner's death), Annuitant and/or
Contingent
Annuitant
are alive at the time of the Owner's death, unless the
sole
Beneficiary
is the deceased Owner's surviving spouse and the
Beneficiary
Requests
to become the Owner and Annuitant and to continue
the
Contract in
force.
Any death benefit payable to the Beneficiary upon an
Owner's
death will
be distributed as follows:
(1) If the Owner's surviving spouse is the person entitled
to
receive
benefits upon the Owner's death, the surviving spouse will
be
treated
as the Owner and will be allowed to take the death benefit
or
continue
the Contract in force; or
<PAGE>
(2) If the Beneficiary is a non-spouse individual,
she/he
may elect,
not later than one year after the Owner's date of death,
to
receive the
death benefit in either a single sum or payment
under
any of the
variable or fixed annuity options available under
the
Contract,
provided that (a) such annuity is distributed
in
substantially equal
installments over the life or life expectancy of
the
Beneficiary or
over a period not extending beyond the life
expectancy
of the
Beneficiary; and (b) such distributions begin not later
than
one year
after the Owner's date of death. If no election
is
received by the
Company from a non-spouse Beneficiary such
that
substantially equal
<PAGE>
installments have begun not later than one year after
the
Owner's date
of death, then the entire amount must be distributed
within
five years
of the Owner's date of death. The death benefit will
be
determined as
of the date the payments commence; or
(3) If a corporation or other non-individual entity
is
entitled to
receive benefits upon the Owner's death, the death
benefit
must be
completely distributed within five years of the Owner's date
of
death.
Beneficiary
You may select one or more Beneficiaries. If more than
one
Beneficiary
is selected, unless you indicate otherwise, they will share equally
in
any death
benefit payable. You may change the Beneficiary any time before
the
Annuitant's
death.
You may, while the Annuitant is living, change
the
Beneficiary by
Request. A change of Beneficiary will take effect as of the date
the
Request is
processed by the Schwab Annuity Service Center, unless a
certain
date is
specified by the Owner. If the Owner dies before the Request
was
processed, the
change will take effect as of the date the Request was made, unless
<PAGE>
the
Company
has already made a payment or otherwise taken action on a
designation
or change
before receipt or processing of such Request. A
beneficiary
designated
irrevocably may not be changed without the written consent of
that
Beneficiary,
except as allowed by law.
The interest of any Beneficiary who dies before
the
Owner or the
Annuitant will terminate at the death of the Beneficiary.
The
interest of any
Beneficiary who dies at the time of, or within 30 days after,
the
death of an
Owner or the Annuitant will also terminate if no benefits have been
paid
to such
Beneficiary, unless the Owner otherwise indicates by Request.
The
benefits will
then be paid as though the Beneficiary had died before the
deceased
<PAGE>
Owner or
Annuitant. If no Beneficiary survives the Owner or Annuitant,
as
applicable, the
Company will pay the death benefit proceeds to the Owner's estate.
If the surviving spouse of an Owner is the surviving
Joint
Owner,
the surviving spouse will
24
<PAGE>
<PAGE>
become the Beneficiary upon such Owner's death and may elect to
take
the death
benefit or may elect to continue the Contract in force. If there is
no
surviving
Joint Owner, and no named Beneficiary is alive at the time at
the
time of an
Owner's death, any benefits payable will be paid to the Owner's
estate.
Contingent Annuitant
While the Annuitant is living, the Owner(s) may, by
Request,
designate
or change a Contingent Annuitant from time to time. A change
of
Contingent
Annuitant will take effect as of the date the Request is processed
at
the Schwab
Annuity Service Center, unless a certain date is specified by
the
Owner(s).
------------------------------------------------------
CHARGES AND
DEDUCTIONS
------------------------------------------------------
No deductions are made from Contributions except for
any
applicable
Premium Tax. Therefore, the full amount of the
Contributions
(less any
applicable Premium Tax) are invested in the Contract.
As more fully described below, charges under the Contract
are
assessed
only as deductions for Premium Tax, if applicable, for
<PAGE>
certain
Transfers, as a
Contract Maintenance Charge, and as charges against the assets in
the
Owner's
Variable Sub-Account(s) for our assumption of mortality and
expense
risks. In
addition, a Market Value Adjustment may apply to withdrawals
and
surrenders,
Transfers, amounts applied to purchase an annuity, and
distributions
resulting
from death of the Owner or Annuitant if the amounts held in a
Guarantee
Period
are paid out prior to the Guarantee Period Maturity Date.
Mortality and Expense Risk Charge
We deduct a Mortality and Expense Risk Charge from
your
Variable
Sub-Account(s) at the end of each Valuation Period to compensate us
for
bearing
<PAGE>
certain mortality and expense risks under the Contract. This is
a
daily charge
equal to an effective annual rate of 0.85% of the value of the
net
assets in
your Variable Sub-Account(s). The approximate portion of
this
charge
attributable to mortality risks is 0.68%; the approximate portion
of
this charge
estimated to be attributable to expense risk is 0.17% of the value
of
the net
assets in your Variable Sub-Account(s). We guarantee that this
charge
will never
increase beyond 0.85%.
The Mortality and Expense Risk Charge is reflected in
the
Accumulation
Unit Values for each of your Variable Sub-Accounts. Thus,
this
charge will
continue to be applicable should you choose a variable annuity
payment
option or
the periodic withdrawal option.
Annuity Account Values and annuity payments are not affected
by
changes
in actual mortality experience incurred by us. The mortality
risks
assumed by us
arise from our contractual obligations to make annuity
payments
determined in
accordance with the annuity tables and other provisions
contained
in the
Contract. Thus you are assured that neither the Annuitant's
longevity
nor an
unanticipated improvement in general life expectancy will
<PAGE>
adversely
affect the
annuity payments under the Contract.
We bear substantial risk in connection with the
death
benefit before
the annuity commencement date, since we will pay a death
benefit
equal to the
greater of the Annuity Account Value with a Market
Value
Adjustment, if
applicable, as of the later of the date of death or the date
the
Request for
payment is received, less Premium Tax, if any; or the sum of
the
Contributions
paid, less partial withdrawals and/or Periodic Withdrawals, less
any
charges
under Contract less Premium Tax, if any (i.e., we bear the risk
of
unfavorable
experience in your Variable Sub-Accounts).
The expense risk assumed is the risk that our actual
expenses
in
<PAGE>
administering the Contracts and
25
<PAGE>
<PAGE>
the Series Account will be greater than anticipated, or
exceed
the amount
recovered through the Contract Maintenance Charge plus the
amount,
if any,
recovered through Transfer Fees.
If the Mortality and Expense Risk Charge is
insufficient
to cover
actual costs and risks assumed, the loss will fall on us.
Conversely,
if this
charge is more than sufficient, any excess will be profit to
us.
Currently, we
expect a profit from this charge. Our expenses for distributing
the
Contracts
will be borne by our general assets, including any profits from
this
charge.
Contract Maintenance Charge
We currently deduct a $25 annual Contract Maintenance
Charge
from the
Annuity Account Value only on each Contract anniversary date.
This
charge
partially covers our costs for administering the Contracts and
the
Series
Account. Once you have selected a payment option, this charge
will
cease to
apply other than for the Periodic Withdrawal Option. The
Contract
Maintenance
Charge is deducted from your Annuity Account Value allocated to
the
Schwab Money
Market Investment Division. If you do not have sufficient
Annuity
Account Value
<PAGE>
allocated to the Schwab Money Market Investment Division to cover
the
Contract
Maintenance Charge, then the charge or any portion thereof will
be
deducted on a
pro rata basis from all your Variable Sub-Accounts with current
value.
If the
entire Annuity Account is held in the Guarantee Period Fund or
there
are not
enough funds in any Variable Sub-Account to pay the entire
charge,
then the
Contract Maintenance Charge will be deducted on a pro rata basis
from
amounts
held in all Guarantee Periods. There is no MVA on amounts
deducted
from a
Guarantee Period for the Contract Maintenance Charge. The
Contract
Maintenance
Charges is currently waived for Contracts with an Annuity
Account
Value of at
least $50,000. If your Annuity Account Value falls below
$50,000
due to a
withdrawal, the Contract Maintenance Charge will be reinstated
until
<PAGE>
such time
as your Annuity Account Value is equal to or greater than
$50,000.
This charge
may also be waived for Contracts issued under certain
sponsored
arrangements. We
do not expect a profit from amounts received from the
Contract
Maintenance
Charge.
Premium Tax
We may be required to pay state premium taxes
or
retaliatory taxes
currently ranging from 0% to 3.5% in connection with
Contributions
or values
under the Contracts. Currently, the premium tax rate in New York
for
annuities
is 0%. Depending on applicable state law, we will deduct charges for
the
premium
taxes we incur with respect to a particular Contract from
the
Contributions,
from amounts withdrawn, or from amounts applied on the
Payment
Commencement
Date. In some states, charges for both direct premium taxes
and
retaliatory
premium taxes may be imposed at the same or different times
with
respect to the
same Contribution, depending on applicable state law.
Transfer Fee
There will be a $10 charge for each Transfer in
excess
of twelve
Transfers in anycalendar year. We do not expect a profit from the
Transfer fee
<PAGE>
for excess Transfers.
Other Taxes
Under present laws, we will incur state or local taxes
(in
addition to
the Premium Tax described above) in New York. No charges are
currently
made for
taxes other than Premium Tax. However, we reserve the right to
deduct
charges in
the future for federal, state, and local taxes or the economic
burden
resulting
from the application of any tax laws that we determine to
be
attributable to the
Contracts.
Expenses of the Eligible Funds
<PAGE>
26
<PAGE>
<PAGE>
The value of the assets in the Investment Divisions
reflect
the value
of Eligible Fund shares and therefore the fees and expenses
paid
by each
Eligible Fund. A complete description of the fees, expenses,
and
deductions from
the Eligible Funds are found in the Eligible Funds'
prospectuses.
(See "The
Eligible Funds," page __.) Current prospectuses for the Funds can
be
obtained by
calling the Schwab Annuity Service Center at 800-838-0649, or
by
writing to the
Schwab Annuity Service Center, P.O. Box 7806, San
Francisco,
California
94120-9327.
------------------------------------------------------
PAYMENT OPTIONS
------------------------------------------------------
Periodic Withdrawal Option
The Owner may Request that all or part of the Annuity
Account
Value be
applied to a Periodic Withdrawal Option. The amount applied
to a
Periodic
Withdrawal is the Annuity Account Value with an MVA, if applicable,
less
Premium
Tax, if any.
In Requesting Periodic Withdrawals, the Owner must elect:
- The withdrawal frequency of either 12-, 6-, 3-,
<PAGE>
or
1-month
intervals;
- A withdrawal amount; a minimum of $100 is required;
- The calendar day of the month on which withdrawals
will
be made;
- One withdrawal option; and
- The allocation of withdrawals from the Owner's
Variable
and/or
Fixed Sub-Account(s) as
follows:
1) Prorate the amount to be paid across
all
Variable and
Fixed Sub-Accounts in proportion to
the
<PAGE>
assets in
each sub-account; or
2) Select the Variable and/or
Fixed
Sub-Account(s) from
which withdrawals will be made. Once
the
Variable
and/or Fixed Sub-Accounts have
been
depleted, the
Company will automatically prorate
the
remaining
withdrawals against all remaining
available
Variable
and/or Fixed Sub-Accounts unless the
Owner
Requests
the selection of another
Variable
and/or Fixed
Sub-Account.
The Owner may elect to change the withdrawal
option
and/or the
frequency once each calendar year.
While Periodic Withdrawals are being received:
1. the Owner may continue to exercise all
contractual
rights that
are available prior to electing an annuity
option,
except that
no Contributions may be made;
2. for Periodic Withdrawals from Guarantee Periods six
or
more
months prior to its Guarantee Period Maturity
Date, a
Market
Value Adjustment, if applicable, will be assessed;
3. the Owner may keep the same investment options as
<PAGE>
were
in
force before periodic withdrawals began;
4. charges and fees under the Contract continue to
apply;
and
5. maturing Guarantee Periods renew into the
shortest
Guarantee
Period then available.
27
<PAGE>
<PAGE>
Periodic Withdrawals will cease on the earlier of the date:
1. the amount elected to be paid under the
option
selected has
been reduced to zero;
2. the Annuity Account Value is zero;
3. the Owner Requests that withdrawals stop; or
4. an Owner or the Annuitant dies.
The Owner must elect one of the following five (5)
withdrawal
options:
1. Income for a Specified Period for at least
thirty-six
(36)
months - The Owner elects the duration over
which
withdrawals
will be made. The amount paid will vary based on
the
duration; or
2. Income of a Specified Amount for at least
thirty-six
(36)
months - The Owner elects the dollar amount of
the
withdrawals.
Based on the amount elected, the duration may vary;
or
3. Interest Only - The withdrawals will be based on
the
amount of
interest credited to the Guarantee Period Fund
between
each
withdrawal. Available only if 100% of the
account
value is
invested in the Guarantee Period Fund; or
4. MinimumDistribution - If thisis an IRA contract, the
Owner
may Request minimum distributions as specified
under
<PAGE>
Code
Section 401(a)(9); or
5. Any Other Form for a period of at least thirty-six
(36)
months - Any
other form of Periodic Withdrawal which is acceptable to
the
Company.
If Periodic Withdrawals cease, the Owner may
resume
making
Contributions. The Owner may elect to restart a Periodic
Withdrawal
program;
however, the Company may limit the number of times the Owner
may
restart a
Periodic Withdrawal program.
Periodic withdrawals may be taxable, subject to withholding
and
subject
to the 10% penalty tax. IRAs are subject to complex rules
with
<PAGE>
respect to
restrictions on and taxation of distributions, including
the
applicability of
penalty taxes. A competent tax adviser should be consulted
before a
Periodic
Withdrawal Option is requested. (See "Federal Tax Matters," page __.)
Annuity Date
The date annuity payments commence may be chosen when
the
Contract is
purchased or at a later date. This date must be at least one
year
after the
initial Contribution. In the absence of an earlier election, the
annuity
date is
the first day of the month of the Annuitant's 90th birthday.
If an option has not been elected within 30 days of
the
annuity
commencement date, the Annuity Account Value held in the
Fixed
Sub-Account(s)
will be applied under Fixed Annuity Payment Option 3,
discussed
below, to
provide payments for life with a guaranteed period of 20 years.
The
Annuity
Account Value held in the Variable Sub-Account(s) will be applied
under
Variable
Annuity Payment Option 1, discussed below, to provide payments
for
life with a
guaranteed period of 20 years.
Under section 401(a)(9) of the Code, a Contract which
is
purchased and
used in connection with an Individual Retirement Account or
with
<PAGE>
certain other
plans qualifying for special federal income tax treatment is subject
to
complex
"minimum distribution" requirements, which require that
distributions
under such
a plan must begin by a specific date, and also that the
entire
interest of the
plan participant must be distributed within certain
specified
periods under
formulas that specify minimum annual distributions. The
application
of the
minimum distribution requirements to each person will vary
according
to the
person's age and other circumstances. A prospective purchaser
may
wish to
28
<PAGE>
<PAGE>
<PAGE>
consult a competent tax adviser regarding the application of the
minimum
distribution requirements. (See "Federal Tax Matters," page __.)
Annuity Options
An annuity option may be selected by the Owner when
the
Contract is
purchased, or at a later date. This selection may be changed,
by
Request, at any
time up to 30 days before the annuity date. In the absence of
an
election,
payments will automatically commence on the annuity date as
described
above. The
amount to be applied is the Annuity Account Value on the
annuity
date. The
minimum amount that may be withdrawn from the Annuity Account Value
to
purchase
an annuity payment option is $2,000 with an MVA, if applicable. If
the
amount is
less than $2,000, the Company may pay the amount in a single
sum
subject to the
Contract provisions applicable to a partial withdrawal. Payments may
be
elected
to be received monthly, quarterly, semi-annually or
annually.
Payments to be
made under the annuity payment option selected must be at least $50.
The
Company
reserves the right to make payments using the most frequent
payment
interval
which produces a payment of not less than $50. The maximum
amount
that may be
applied under any payment option is $1,000,000, unless
prior
<PAGE>
approval is
obtained from the Company.
A single sum payment may be elected. If it is, then
the
amount to be
paid is the Surrender Value. If the Owner elects a variable
annuity
with funds
from the Owner's Variable Sub-Accounts, then the amount to
be
applied is the
Annuity Account Value held in the Variable Sub-Account(s), as of
the
annuity
commencement date, less any applicable Premium Tax. If the Owner
elects
a fixed
annuity with funds from the Fixed Sub-Accounts, then the amount to
be
applied is
the Annuity Account Value held in the Fixed Sub-Account(s), as of
the
annuity
commencement date with an MVA, if applicable, less any
applicable
Premium Tax.
Fixed Annuity Payment Options
<PAGE>
Option 1: Income of Specified Amount
The amount applied under this option may be paid in
equal
annual,
semiannual, quarterly or monthly installments of the dollar
amount
elected for
not more than 240 months. Upon death of the Annuitant,
the
Beneficiary will
begin to receive the remaining payments at the same interval that
was
elected by
the Owner.
Option 2: Income for a Specified Period
Payments are paid annually, semiannually, quarterly
or
monthly, as
elected, for a selected number of years not to exceed 240 months.
Upon
death of
the Annuitant, the Beneficiary will begin to receive the
remaining
payments at
the same interval that was elected by the Owner.
Option 3: Fixed Life Annuity with Guaranteed Period
This option provides for monthly payments during a
designated
period
and thereafter throughout the lifetime of the Annuitant.
The
designated period
may be 5, 10, 15 or 20 years. Upon death of the Annuitant, for
each
remaining
designated period, the amounts payable under this payment option will
be
paid to
the Beneficiary.
Option 4: Fixed Life Annuity
<PAGE>
This annuity is payable monthly during the lifetime of
the
Annuitant,
terminating with the last payment due prior to the death of
the
Annuitant. Since
no minimum number of payments is guaranteed, this option may offer
the
maximum
level of monthly payments of the annuity options. It is possible that
29
<PAGE>
<PAGE>
only one payment may be made if the Annuitant died before the date
on
which the
second payment was due. Upon the death of the Annuitant, all
payments
cease and
no amounts are payable to the Beneficiary.
Option 5: Any Other Form
This option allows an Owner the ability to choose any
other
form of
annuity which is acceptable to the Company.
Variable Annuity Payment Options
Option 1: Variable Life Annuity with Guarantee Period
This option provides for payments during a
designated
period and
thereafter throughout the life time of the Annuitant. The
designated
period may
be 5, 10, 15 or 20 years. Upon death of the Annuitant, for
each
remaining
designated period, the amounts payable under this payment option will
be
paid to
the Beneficiary.
Option 2: Variable Life Annuity
This annuity is payable during the lifetime of
the
Annuitant. The
annuity terminates with the last payment due prior to the
death
of the
Annuitant. Since no minimum number of payments is guaranteed,
this
option may
offer the maximum level of monthly payments of the annuity
options. It is
possible that only one payment may be made if the Annuitant died
<PAGE>
before
the date
on which the second payment was due. Upon the death of
the
Annuitant, all
payments cease and no amounts are payable to the Beneficiary.
Variable annuity payment options are subject to
the
following
provisions:
Amount of First Payment
The first payment under a variable annuity payment option
will
be based
on the value of the amounts held in each Variable Sub-Account
on
the 5th
Valuation Date preceding the annuity commencement date. It will
be
determined by
<PAGE>
applying the appropriate rate to the amount applied under the
payment
option.
Annuity Units
The number of Annuity Units paid to the Annuitant for
each
Variable
Sub-Account is determined by dividing the amount of the first
monthly
payment by
its Accumulation Unit Value on the 5th Valuation Date preceding
the
date the
first payment is due. The number of Annuity Units used to calculate
each
payment
for a Variable Sub-Account remains fixed during the Annuity
Payment
Period.
Amount of Payments after the First
Payments after the first will vary depending upon
the
investment
experience of the Investment Divisions. The subsequent amount
paid
from each
sub-account is determined by multiplying (a) by (b) where (a) is
the
number of
sub-account Annuity Units to be paid and (b) is the
sub-account
Annuity Unit
value on the 5th Valuation Date preceding the date the annuity
payment
is due.
The total amount of each variable annuity payment will be
the
sum of the
variable annuity payments for each Variable Sub- Account. The
Company
guarantees
that the dollar amount of each payment after the first will not
be
<PAGE>
affected by
variations in expenses or mortality experience.
30
<PAGE>
<PAGE>
Transfers After the Annuity Commencement Date
Once annuity payments have begun, no Transfers may be made
from
a fixed
annuity payment option to a variable annuity payment option,
or
vice versa;
however, for variable annuity payment options, Transfers may
be
made among
Investment Divisions. Transfers after the annuity commencement date
will
be made
by converting the number of Annuity Units being Transferred to
the
number of
Accumulation Units of the Variable Sub-Account to which the
Transfer
is made.
The result will be that the next annuity payment, if it were made
at
that time,
would be the same amount that it would have been without
the
Transfer.
Thereafter, annuity payments will reflect changes in the value
of
the new
Annuity Units.
***
For annuity options involving life income, the actual
age
and/or sex of
the Annuitant will affect the amount of each payment. We reserve
the
right to
ask for satisfactory proof of the Annuitant's age. We may delay
annuity
payments
until satisfactory proof is received. Since payments to
older
Annuitants are
expected to be fewer innumber, the amount of each annuity payment
under a
<PAGE>
selected annuity form will be greater for older Annuitants than
for
younger
Annuitants.
If the age or sex of the Annuitant has been misstated,
the
payments
established will be made on the basis of the correct age or sex.
If
payments
were too large because of misstatement, the difference
with
interest may be
deducted by the Company from the next payment or payments. If
payments
were too
small, the difference with interest may be added by the Company
to
the next
payment. This interest is at an annual effective rate which will
not
be less
than the Contractual Guarantee of a Minimum Rate of Interest.
The Payment Commencement Date and annuity options
available
for IRAs
<PAGE>
may also be controlled by endorsements, the plan documents,
or
applicable law.
Once payments start under the annuity form selected by
the
Owner: (a)
no changes can be made in the annuity form, (b) no
additional
Contributions will
be accepted under the Contract, and (c) no further
withdrawals,
other than
withdrawals made to provide annuity benefits, will be allowed.
***
A portion or the entire amount of the annuity payments may
be
taxable
as ordinary income. If, at the time the annuity payments begin,
we
have not
received a proper written election not to have federal income
taxes
withheld, we
must by law withhold such taxes from the taxable portion of
such
annuity
payments and remit that amount to the federal government
(an
election not to
have taxes withheld is not permitted for certain
Qualified
Contracts). State
income tax withholding may also apply. (See "Federal
Tax-Matters,"
below.)
------------------------------------------------------
FEDERAL TAX MATTERS
------------------------------------------------------
Introduction
<PAGE>
The following discussion is a general description of
federal
income tax
considerations relating to the Contracts and is not intended as
tax
advice.
Further, this discussion is based on the assumption that the
Contract
qualifies
as an annuity contract for federal income tax purposes.
This
discussion is not
intended to address the tax consequences resulting from all of
the
situations in
which a person may be entitled to or may receive a
distribution
under the
Contract. Any person concerned about these tax implications
should
consult a
competent tax adviser before initiating any transaction.
This
discussion is
based upon our
<PAGE>
31
<PAGE>
<PAGE>
understanding of the present federal income tax laws as they
are
currently
interpreted by the Internal Revenue Service. No representation is
made
as to the
likelihood of the continuation of the present federal income tax
laws
or of the
current interpretation by the Internal Revenue Service. Moreover,
no
attempt has
been made to consider any applicable state or other tax laws.
The Contract may be purchased on a non-tax
qualified
basis
("Non-Qualified Contract") or purchased and used in connection
with
IRAs. The
ultimate effect of federal income taxes on the amounts held
under a
Contract, on
annuity payments, and on the economic benefit to you, the
Annuitant,
or the
Beneficiary may depend on the type of Contract, and on the
tax
status of the
individual concerned. In addition, certain requirements must
be
satisfied in
purchasing an IRA and receiving distributions from an IRA in order
to
continue
receiving favorable tax treatment. Therefore, purchasers of
IRAs
should seek
competent legal and tax advice regarding the suitability of
the
Contract for
their situation, the applicable requirements, and the
tax
treatment of the
rights and benefits of the Contract. The following discussion
assumes
that an
<PAGE>
IRA is purchased with proceeds from and/or Contributions that
qualify
for the
intended special federal income tax treatment.
Tax Status
The Company is taxed as a life insurance company
under
Part I of
Subchapter L of the Code.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities
in
general. An
Owner who is a natural person generally is not taxed on increases
(if
any) in
the value of an Annuity Account Value until distribution occurs
by
withdrawing
all or part of the Annuity Account Value (e.g., withdrawals or
annuity
payments
<PAGE>
under the annuity form elected). However, under certain
circumstances,
the Owner
may be subject to taxation currently. In addition, an
assignment,
pledge, or
agreement to assign or pledge any portion of the Annuity Account
Value
generally
will be treated as a distribution. The taxable portion of a
distribution
(in the
form of a single sum payment or an annuity) is taxable as
ordinary
income. An
IRA Contract may not be assigned as collateral.
The Owner of any annuity contract who is not a natural
person
(e.g. a
corporation) generally must include in income any increase in
the
excess of the
Annuity Account Value over the "investment in the contract"
(discussed
below)
during each taxable year. The rule does not apply where the
non-natural
person
is the nominal owner of a Contract and the beneficial owner is a
natural
person.
The rule also does not apply in the following circumstances:
(1)
where the
annuity Contract is acquired by the estate of a decedent, (2) where
the
Contract
is held under an IRA, (3) where the Contract is a qualified
funding
asset for a
structured settlement, and (4) where the Contract is purchased
on
behalf of an
employee upon termination of a qualified plan. A prospective Owner
that
is not a
<PAGE>
natural person may wish to discuss these matters with a competent
tax
adviser.
The following discussion generally applies to a
Contract
owned by a
natural person.
Withdrawals
In the case of a withdrawal under an IRA,
including
withdrawals under
the Periodic Withdrawal Option, a ratable portion of the
amount
received may be
non-taxable. The amount of the non-taxable portion is
generally
determined by
the ratio of the "investment in the contract" to the individual's
total
accrued
benefit under the retirement plan. The "investment in the
contract"
generally
equals the amount of any nondeductible Contributions paid by or
on
behalf of any
individual. Special tax rules may be available for certain
distributions
<PAGE>
from an
IRA.
32
<PAGE>
<PAGE>
With respect to Non-Qualified Contracts, partial
withdrawals,
including
Periodic Withdrawals, are generally treated as taxable income to
the
extent that
the Annuity Account Value immediately before the
withdrawal
exceeds the
"investment in the contract" at that time. If a partial withdrawal
is
made from
a Guarantee Period which is subject to a Market Value
Adjustment,
then the
Annuity Account Value immediately before the withdrawal will not
be
altered to
take into account the Market Value Adjustment. As a result,
for
purposes of
determining the taxable portion of the partial withdrawal, the
Annuity
Account
Value will not reflect the amount, if any, deducted from
or
added to the
Guarantee Period due to the Market Value Adjustment. Full surrenders
are
treated
as taxable income to the extent that the amount received exceeds
the
"investment
in the contract." The taxable portion of any annuity payment
is
taxed at
ordinary income tax rates.
Annuity Payments
Although the tax consequences may vary depending on
the
annuity form
elected under the Contract, in general, only the portion of the
annuity
payment
that represents the amount by which the Annuity Account
<PAGE>
Value
exceeds the
"investment in the contract" will be taxed; after the investment in
the
contract
is recovered, the full amount of any additional annuity payments
is
taxable. For
fixed annuity payments, in general there is no tax on the
portion
of each
payment which represents the same ratio that the "investment in
the
contract"
bears to the total expected value of the annuity payments for
the
term of the
payments; however, the remainder of each annuity payment is
taxable.
Once the
investment in the Contract has been fully recovered, the
full
amount of any
additional annuity payments is taxable. If the annuity
payments
cease as a
result of an Annuitant's death before full recovery of
the
"investment in the
contract," you should consult a competent tax
adviser
regarding the
<PAGE>
deductibility of the unrecovered amount.
Penalty Tax
In the case of a distribution pursuant to a
Non-Qualified
Contract,
there may be imposed a federal income tax penalty equal to 10%
of
the amount
treated as taxable income. In general, however, there is no
penalty
tax on
distributions: (1) made on or after the date on which the recipient
of
payments
under the Contract attains age 59 1/2; (2) made as a result
of
death or
disability of the recipient of payments under the Contract; or
(3)
received in
substantially equal periodic payments as a life annuity or a joint
and
survivor
annuity for the lives or life expectancies of the Owner
and a
"designated
beneficiary." Other exemptions or tax penalties may apply
to
certain
distributions pursuant to an IRA. For more details regarding
these
exemptions or
penalties consult a competent tax adviser.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Contract because of
the
death of an
Owner or the Annuitant. Generally such amounts are includible in
the
income of
the recipient as follows: (1) if distributed in a lump sum, they
are
taxed in
<PAGE>
the same manner as a full surrender, as described above, or (2)
if
distributed
under an annuity form, they are taxed in the same manner as
annuity
payments, as
described above.
Distribution-at-Death Rules
In order to be treated as an annuity contract,
the
terms of the
Contract must provide the following two distribution rules: (A) if
any
Contract
Owner dies on or after the date annuity payments commence, and
before
the entire
interest in the Contract has been distributed, the remainder of
his
interest
will not be distributed under a slower distribution schedule than
that
provided
for in the method in effect on the Contract Owner's death;
and
(B) if any
<PAGE>
Contract Owner dies before the date annuity payments
commence,
his entire
interest must generally be distributed within five years after the
date
of death
provided that if such interest is payable to a designated
Beneficiary,
then such
interest may be made over the life of that designated
Beneficiary
or over a
period not extending beyond the life expectancy of that Beneficiary,
so
long as
payments commence within one year after the Contract Owner's death.
If
the sole
designated Beneficiary
33
<PAGE>
<PAGE>
is the spouse of the Contract Owner, the Contract may be continued
in
the name
of the spouse as Contract Owner. The designated Beneficiary is
the
natural
person designated by the terms of the Contract or by the
Contract
Owner as the
individual to whom ownership of the contract passes by reason of
the
Contract
Owner's death. If the Contract Owner is not an individual, then
for
purposes of
the distribution at death rules, the Primary Annuitant
is
considered the
Contract Owner. In addition, when the Contract Owner is not
an
individual, a
change in the Primary Annuitant is treated as the death of the
Contract
Owner.
Transfers, Assignments, or Exchanges
A Transfer of ownership of a Contract, the designation of
an
Annuitant,
Payee or other Beneficiary who is not also the Owner, or
the
exchange of a
Contract may result in adverse tax consequences to the Owner
that
are not
discussed herein. An Owner contemplating any such
designation,
transfer,
assignment, or exchange of a Contract should contact a competent
tax
adviser
with respect to the potential tax effects of such a transaction.
Multiple Contracts
All deferred, non-qualified annuity contracts that
<PAGE>
are
issued by the
Company (or our affiliates) to the same Owner during any calendar
year
will be
treated as one annuity contract for purposes of determining
the
amount
includible in gross income under section 72(e) of the Code.
Amounts
received
under any such Contract may be taxable (and may be subject to the
10%
Penalty
Tax) to the extent of the combined income in all such Contracts.
In
addition,
the Treasury Department has specific authority to issue regulations
that
prevent
the avoidance of section 72(e) through the serial purchase of
annuity
contracts
or otherwise. Congress has also indicated that the Treasury
Department
may have
authority to treat the combination purchase of an immediate
annuity
contract and
separate deferred annuity contracts as a single annuity
contract
<PAGE>
under its
general authority to prescribe rules as may be necessary to
enforce
the income
tax laws.
Withholding
Annuity distributions generally are subject to
withholding
for the
recipient's federal income tax liability at rates that
vary
according to the
type of distribution and the recipient's tax status.
Recipients,
however,
generally are provided the opportunity to elect not to have
tax
withheld from
distributions. Certain distributions from IRAs are subject to
mandatory
federal
income tax withholding.
Possible Changes in Taxation
In past years, legislation has been proposed that would
have
adversely
modified the federal taxation of certain annuities. For
example,
one such
proposal would have changed the tax treatment of
non-qualified
annuities that
did not have "substantial life contingencies" by taxing income as it
is
credited
to the annuity. There is always the possibility that the
tax
treatment of
annuities could change by legislation or other means (such as
IRS
regulations,
revenue rulings, judicial decisions, etc.). Moreover,it is also
possible that
<PAGE>
any change could be retroactive (that is, effective prior to
the
date of the
change).
Section 1035 Exchanges
Code Section 1035 provides that no gain or loss shall
be
recognized on
the exchange of one annuity contract for another. A
replacement
contract
obtained in a tax-free exchange of contracts succeeds to
the
status of the
original contract. Special rules apply to Contracts issued prior
to
August 14,
1982. Prospective Owners wishing to take advantage of a Section
1035
exchange
should consult their tax adviser.
Individual Retirement Annuities
<PAGE>
The Contract may be used with IRAs as described in Section
408
of the
Code. Section 408 of the
34
<PAGE>
<PAGE>
Code permits eligible individuals to contribute to an
individual
retirement
program known as an Individual Retirement Annuity. Also,
certain
kinds of
distributions from certain types of qualified and
non-qualified
retirement plans
may be "rolled over" following the rules set out in the Code
to
maintain
favorable tax treatment, to an Individual Retirement Annuity.
The
sale of a
Contract for use with an IRA may be subject to special
disclosure
requirements
of the Internal Revenue Service. Purchasers of the Contract for
use
with IRA's
will be provided with supplemental information required by the
Internal
Revenue
Service or other appropriate agency. Such purchasers will have
the
right to
revoke their purchase within seven days of purchase of the IRA
Contract.
Various tax penalties may apply to contributions in excess
of
specified
limits, aggregate distributions in excess of $150,000
annually,
distributions
that do not satisfy specified requirements, and certain
other
transactions. The
Contract will be amended as necessary to conform to the
requirements
of the
Code. Purchasers should seek competent advice as to the
suitability
of the
Contract for use with IRA's.
<PAGE>
If a Contract is issued in connection with an
employer's
Simplified
Employee Pension ("SEP") plan, Owners, Annuitants
and
Beneficiaries are
cautioned that the rights of any person to any of the
benefits
under the
Contract may be subject to the terms and conditions of the
plan
itself,
regardless of the terms and conditions of the Contract.
If a Contract is purchased to fund an IRA the Annuitant
must
also be
the Owner. In addition, if a Contract is purchased to fund an
IRA,
minimum
distributions must commence not later than April 1st of
the
calendar year
following the calendar year in which you attain age 70 1/2. You
should
consult
your tax adviser concerning these matters.
The Contract and prototype IRA endorsement have been
submitted
for IRS
<PAGE>
approval and determination that they are acceptable under
Section
408 of the
Code, so that each individual who purchases a Contract with an
IRA
endorsement
will be considered to have adopted a retirement savings program
that
satisfies
the requirements of Section 408 of the Code. The IRS approval
is a
determination
only as to the form of the Contract and does not represent
a
determination of
the merits of the Contract.
At the time the Initial Contribution is paid, a
prospective
purchaser
must specify whether he or she is purchasing a Non-Qualified Contract
or
an IRA.
If the initial Contribution is derived from an exchange or surrender
of
another
annuity contract, we may require that the prospective
purchaser
provide
information with regard to the federal income tax status of the
previous
annuity
contract. We will require that persons purchase separate
Contracts
if they
desire to invest monies qualifying for different annuity tax
treatment
under the
Code. Each such separate Contract would require the minimum
initial
Contribution
stated above. Additional Contributions under a Contract must
qualify
for the
same federal income tax treatment as the initial
Contribution
under the
<PAGE>
Contract; we will not accept an additional Contribution
under a
Contract if the
federal income tax treatment of such Contribution would be
different
from that
of the initial Contribution.
Seek Tax Advice
The foregoing discussion of the federal income tax
consequences
is only
a brief summary and is not intended as tax advice. Further,
the
federal income
tax consequences discussed herein reflect our understanding of
current
law and
the law may change. Federal estate tax consequences and state and
local
estate,
inheritance, and other tax consequences of ownership or receipt
of
distributions
under a Contract depend on the individual circumstances of
each
Owner or
recipient of the distribution. A COMPETENT TAX ADVISER SHOULD
BE
CONSULTED FOR
<PAGE>
FURTHER INFORMATION.
35
<PAGE>
<PAGE>
------------------------------------------------------
ASSIGNMENTS OR
PLEDGES
------------------------------------------------------
Generally, rights in the Contract may be assigned or
pledged
for loans
at any time during the life of the Annuitant; however, if
the
Contract is an
IRA, the Owner may not assign the Contract as collateral.
If a non-IRA Contract is assigned, the interest of
the
assignee has
priority over the interest of the Owner and the interest of
the
Beneficiary. Any
amount payable to the assignee will be paid in a single sum.
A copy of any assignment must be submitted to the Company
at
the Schwab
Annuity Service Center. Any assignment is subject to any action taken
or
payment
made by the Company before the assignment was processed.
The
Company is not
responsible for the validity or sufficiency of any assignment.
If any portion of the Annuity Account Value is assigned
or
pledged for
a loan, it may be treated as a distribution. A competent tax
adviser
should be
consulted for further information.
------------------------------------------------------
PERFORMANCE DATA
<PAGE>
------------------------------------------------------
From time to time, we may advertise yields and
average
annual total
returns for the Investment Divisions. In addition, we
may
advertise the
effective yield of the Schwab Money Market Investment Division.
These
figures
will be based on historical information and are not intended
to
indicate future
performance.
The yield of the Schwab Money Market Investment
Division
refers to the
annualized income generated by an investment in that
Investment
Division over a
<PAGE>
specified seven-day period. The yield is calculated by assuming
that
the income
generated for that seven-day period is generated each
seven-day
period over a
52-week period and is shown as a percentage of the investment.
The
effective
yield is calculated similarly but, when annualized, the
income
earned by an
investment in that Investment Division is assumed to
be
reinvested. The
effective yield will be slightly higher than the yield
because
of the
compounding effect of this assumed reinvestment.
The yield of an Investment Division (other than the
Schwab
Money Market
Investment Division) refers to the annualized income generated by
an
investment
in that Investment Division over a specified thirty-day period.
The
yield is
calculated by assuming that the income generated by the
investment
during that
thirty-day period is generated each thirty-day period over
a
twelve-month period
and is shown as a percentage of the investment.
The yield calculations do not reflect the effect of
any
Premium Tax
that may be applicable to a particular Contract. To the extent
that
premium
taxes are applicable to a particular Contract, the yield of
that
Contract will
be reduced. For a description of the methods used to determine
<PAGE>
yield
and total
returns, see the Statement of Additional Information.
Investment Division Effective Yield
Money Market 4.10%
The average annual total return of an Investment
Division
refers to
return quotations assuming an investment has been held in
the
Investment
Division for various periods of time including, but not limited
to,
a period
measured from the date the Investment Division commenced
operations.
When an
Investment
36
<PAGE>
<PAGE>
Division has been in operation for 1, 5, and 10 years, respectively,
the
average
annual total return for these periods will be provided. The
average
annual total
return quotations will represent the average annual compounded
rates
of return
that would equate an initial investment of $1,000 to the
redemption
value of
that investment (excluding Premium Tax) as of the last day
of
each of the
periods for which total return quotations are provided.
For
additional
information regarding yields and total returns calculated using
the
standard
formats briefly described herein, please refer to the Statement
of
Additional
Information.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Division One
Three Five
Since Inception Date of
Year Year
Year
Inception Underlying Fund
Alger American
Growth Portfolio 12.39% 15.18%
15.60%
17.58%
<PAGE>
1/9/89
Alger American Small
Capitalization Portfolio 3.30%
11.89% 10.04%
17.70%
9/21/88
American Century VP Capital
Appreciation -5.11%
6.49% 5.23%
9.78%
11/20/87
American Century VP International 13.35% N/A
N/A
12.17%
5/1/94
<PAGE>
Berger IPT-Small Company N/A N/A
N/A
1.73%
4/15/96
Growth Fund
Federated American Leaders
Fund II 20.55% N/A
N/A
17.01%
2/10/94
Federated Fund for U.S.
Government Securities 3.32% N/A
N/A
4.71%
3/28/94
Federated Utility Fund II 10.62% N/A
N/A
9.67%
2/10/94
INVESCO VIF-High
Yield Portfolio 15.60% N/A
N/A
12.61%
5/1/94
INVESCO VIF-Industrial
Income Portfolio 21.25% N/A
N/A
20.41%
8/1/94
<PAGE>
INVESCO VIF-Total
Return Portfolio 11.23% N/A
N/A
12.98%
6/1/94
Janus Aspen Aggressive
Growth Portfolio 7.04%
15.97% N/A
20.27%
9/13/93
Janus Aspen
Growth Portfolio 17.45%
15.57% N/A
15.21%
9/13/93
Janus Aspen Worldwide
<PAGE>
Growth Portfolio 27.95%
17.59% N/A
22.13%
9/13/93
Lexington Emerging Markets Fund
6.55% N/A
N/A
0.56%
3/30/94
Montgomery Variable Series:
Growth Fund N/A N/A
N/A
26.14%
2/9/96
Montgomery Variable Series:
International Small-Cap Fund N/A N/A
N/A
-2.54%
11/27/96
SAFECO RST Equity Portfolio 23.73%
19.44% 18.25%
13.45%
7/21/87
37
<PAGE>
<PAGE>
Schwab Asset Director-High
Growth Portfolio N/A N/A
N/A
3.54%
11/1/96
Schwab S&P 500 Portfolio N/A N/A
N/A
5.16%
11/1/96
SteinRoe Capital Appreciation
Fund 25.87%
11.84% 16.37%
16.50%
1/1/89
Strong Discovery Fund II -0.04%
7.92% N/A
11.30%
5/8/92
Van Eck Worldwide Hard Assets
Fund 17.04%
6.72% 13.54%
7.25%
9/1/89
</TABLE>
Performance information for any Investment Division
reflects
only the
performance of a hypothetical Contract under which Annuity
Account
Value is
<PAGE>
allocated to an Investment Division during a particular time period
on
which the
calculations are based. Performance information should be considered
in
light of
the investment objectives and policies and characteristics of
the
Eligible Funds
in which the Investment Division invests, and the market
conditions
during the
given time period, and should not be considered as a representation
of
what may
be achieved in the future.
Reports and promotional literature may also contain
other
information
including (1) the ranking of any Investment Division derived
from
rankings of
variable annuity separate accounts or their investment
products
tracked by
Lipper Analytical Services, Inc., VARDS, Morningstar, Value
Line,
<PAGE>
IBC/Donoghue's
Money Fund Report, Financial Planning Magazine, Money
Magazine,
Bank Rate
Monitor, Standard & Poor's Indices, Dow Jones Industrial
Average,
and other
rating services, companies, publications, or other persons who
rank
separate
accounts or other investment products on overall performance or
other
criteria,
and (2) the effect of tax-deferred compounding on investment returns,
or
returns
in general, which may be illustrated by graphs, charts, or
otherwise,
and which
may include a comparison, at various points in time, of the
return
from an
investment in a Contract (or returns in general)
on a
tax-deferred basis
(assuming one or more tax rates) with the return on a currently
taxable
basis.
Other ranking services and indices may be used.
We may from time to time also disclose
cumulative
(non-annualized)
total returns for the Investment Divisions. We may from time
to
time also
disclose yield and standard total returns for any or all
Investment
Divisions.
We may also advertise performance figures for the
Investment
Divisions
based on the performance of an Eligible Fund prior to the time
the
Series
Account commenced operations.
<PAGE>
For additional information regarding the
calculation
of other
performance data, please refer to the Statement of
Additional
Information.
------------------------------------------------------
DISTRIBUTION OF
THE
CONTRACTS
------------------------------------------------------
Charles Schwab & Co., Inc. ("Schwab") is the
principal
underwriter and
distributor of the Contracts. Schwab is registered with the
Securities
and
Exchange Commission as a broker/dealer and is a member of the
National
Association of Securities Dealers, Inc. ("NASD"). Its principal
offices
are
located at 101 Montgomery, San Francisco, California 94104, telephone
<PAGE>
800-838-0649.
Certain administrative services are provided by Schwab
to
assist the
Company in the processing of the Contracts, which services are
described
in
written agreements between Schwab and the Company. The Company
has
agreed to
indemnify Schwab (and its agents, employees, and controlling
persons)
for
certain damages arising out of the sale of the Contracts,
including
those
arising under the securities laws.
------------------------------------------------------
SELECTED FINANCIAL
DATA
------------------------------------------------------
First GWL&A was incorporated on April 9, 1996 and had
no
operations
until receipt of its certificate of authority from
the
Superintendent of
Insurance of New York on May 28, 1997. Please see the
financial
statements of
First Great-West Life & Annuity Insurance Company included
elsewhere
in this
Prospectus for information related to its financial condition.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS
<PAGE>
The Company
The Company commenced operations as a New York domiciled
life
insurer
as of May 28, 1997. Accordingly, as of the date of this Prospectus,
the
Company
has not had a significant operating history. The Company
will
operate in one
business segment as a provider of life, health and annuity products
to
groups of
individuals associated with employers or distributors; however,
the
business
operations of First GWL&A will be segregated into two major
business
units: the
Employee Benefits division, which distributes life,
health,
disability income
insurance and 401(k) products to employee groups,
primarily to
<PAGE>
small-to-mid-sized corporations; and the Financial
Services
Division, which
distributes accumulation and payout annuity products for
both
group and
individual clients, primarily in the public\non-profit sectors,
as
well as
insurance products for individual clients.
Liquidity and Capital Resources
The principal short- and long-term liquidity needs of
the
Company will
be closely managed to satisfy policyholder benefits. The
liquidity
needs of the
Company will be closely managed through cash flow matching
of
assets and
liabilities, and the forecasting of earned and required
yields
to ensure
consistency between policyholder requirements and the yield of
assets.
Regulation and Reserves
The Company is subject to regulation and supervision by
the
insurance
departments of the state in which it is licensed. This
regulation
covers a
variety of areas, including policy reserve requirements, adequacy
of
company
capital and surplus, operational standards, and financial
accounting
policies
and procedures.
Pursuant to state insurance laws and regulations, the
Company is
<PAGE>
obligated to hold policy reserves to meet its obligations under
all
outstanding
insurance contracts. These reserves are based on a number
of
assumptions as to
future experience. Neither the reserve requirements nor the
other
aspects of
state insurance regulation provide absolute protection to holders
of
insurance
contracts if the Company were to experience unexpected losses
(e.g.,
infectious
diseases or catastrophic investment losses).
Competition
The Company is engaged in a business that is highly
competitive
due to
the large number of
39
<PAGE>
<PAGE>
insurance companies and other entities competing in
marketing,
administering,
and selling insurance products. There are approximately
2,300
insurers in the
life insurance business in the United States.
Segment Information
The Company operates in one business segment as a
provider
of life,
health and annuity products to groups of individuals associated
with
employers
or distributors.
Employees and Facilities
The Company has an administrative services agreement
with
Great-West
Life & Annuity Insurance Company, to provide administrative
support
for all
aspects of the Company's business. Great-West Life & Annuity
has
approximately
4,300 employees in its U.S. operations. The Company's
executive
offices are
located at 125 Wolf Road, Suite 110, Albany, New York 12205.
State Regulation
As a life insurance company organized and operated under
New
York law,
First GWL&A is subject to provisions governing such companies
and
regulation by
the New York Superintendent of Insurance.
<PAGE>
First GWL&A's books and accounts are subject to review
and
examination
by the New York Division of Insurance at any time, and a
full
examination of its
operations is conducted triennially.
In addition, First GWL&A is subject to comprehensive
and
detailed
regulation and supervision by the supervisory agencies in
each
jurisdiction in
which it conducts business. Each state's supervisory
agency
has broad
administrative authority which includes, but is not limited to,
the
power to
regulate licenses to transact business, trade practices,
agent
licensing, policy
<PAGE>
forms, claims practices, underwriting practices, reserve
requirements,
fixing
maximum interest rates on life insurance policy loans and
minimum
rates for
accumulation of surrender values, the form and content of
required
financial
statements and the type and amounts of investments permitted.
First
GWL&A is
required to file detailed annual reports with supervisory agencies
in
each of
the jurisdictions in which it does business and its accounts
are
subject to
examination by such agencies at regular intervals. Under
insurance
guaranty fund
laws in most states, insurers can be assessed up to
prescribed
limits for
insurance contract losses incurred by insolvent companies.
In addition, most jurisdictions, including New
York,
regulate
affiliated groups of insurers such as First GWL&A and
its
affiliates under
insurance holding company legislation. Under such laws,
intercorporate
transfers
of assets and dividend payments from insurance subsidiaries may
be
subject to
prior notice or approval, depending on the size of such transfers
and
payments
in relation to the financial position of the company making
the
transfer.
Changes in control also are regulated under these laws.
Although the federal government generally does not
<PAGE>
directly
regulate
the business of insurance, federal initiatives often have
an
impact on the
business in a variety of ways. Current and proposed federal
measures
which may
significantly affect First GWL&A's insurance business include
employee
benefits
regulation, controls on medical care costs, insurance
reform,
managed care
regulation, medical entitlement programs (e.g., Medicare), removal
of
barriers
preventing banks from engaging in the insurance and mutual
fund
businesses, the
taxation of insurance companies and the tax treatment of
insurance
products.
The Securities and Exchange Commission regulates
certain
separate
accounts of First GWL&A and the mutual funds used as funding
vehicles
for those
accounts.
<PAGE>
Directors and Officers
Set forth below is information concerning the
Company's
directors and
executive officers, together
40
<PAGE>
with their principal occupation for the past five years.
Unless
otherwise
indicated, all of the directors and executive officers have been
engaged
for not
less than five years in their present principal occupation or
in
another
executive capacity with the companies or firms identified.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Directors Principal Occupation Last
5 Years
Marcia D. Alazraki Partner, Simpson Thacher
& Bartlett
James Balog Director of
Great-West since March 1993;
previously
Chairman,
Lambert Brussels Capital
Corporation
James W. Burns, O.C. Chairman of the
Boards of Lifeco1 and GWL;
Deputy
Chairman,
PCC2
Paul Desmarais, Jr. Chairman and Co-Chief
Executive Officer, PCC;
Chairman, PFC3
<PAGE>
Robert Gratton Chairman of the Board
of Great-West; President
and
Chief Executive
Officer, PFC
N. Berne Hart Director of Great-West
since February 1992;
previously Chairman,
United Banks of Colorado,
Inc.
Stuart Z. Katz Partner, Fried,
Frank, Harris, Shriver &
Jacobson
William T. McCallum President and
Chief Executive Officer,
Great-West;
President and
Chief Executive Officer
(U.S. Operations), GWL
<PAGE>
Brian E. Walsh Partner,
Trinity L.P. since January
1996;
previously Managing
Director and
Co-head, Global Investment
Bank, Bankers Trust
Company
1 Great-West Lifeco Inc.
2 Power Corporation of Canada
3 Power Financial Corporation
<PAGE>
Executive Officers Principal Occupation Last 5 Years
------------------ ---------------------------------
William T. McCallum President and Chief Executive
Officer of the
Company and Great-
West; President and Chief
Executive Officer (U.S.
Operations), GWL
Dennis Low Executive Vice President,
Financial Services of the
Company, Great-
West and GWL
James D. Motz Executive Vice President,
Employee Benefits of the
Company, Great-
West and GWL
Robert D. Bond Senior Vice President,
Financial Services of the
Company,
Great-
West and GWL; prior to May
1992, National Director,
Public
Marketing, Aetna Life Insurance
Company
John T. Hughes Senior Vice President, Chief
Investment Officer of
the Company,
Great-West and GWL
41
<PAGE>
<PAGE>
D. Craig Lennox Senior Vice President, General
Counsel and Secretary of
the
Company and Great-West; Senior
Vice President and Chief
U.S.
Legal Officer, GWL
Martin L. Rosenbaum Senior Vice President, Employee
Benefits Operations
of the
Company, Great-West and GWL
Douglas L. Wooden Senior Vice President, Financial
Services of the
Company, Great-
West and GWL
</TABLE>
Executive Compensation
Executive officers of the Company may also serve one or
more
affiliated
companies of First GWL&A. Allocations have been made as to
each
individual's
time devoted to his duties as an executive officer of the Company.
The
following
table shows the cash compensation paid, based on these allocations,
to
the Chief
Executive Officer and the other four most highly compensated
executive
officers
(collectively, the "Named Executive Officers") whose
allocated
compensation
exceeded $60,000, for services rendered in all capacities to
the
Company in
1996.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
<PAGE>
Compensation Table
===========================================================================
====================
==============================
Name and Year Annual
Long-Term
Principal Position Compensation(1)
Compensation Awards
Salary
Bonus
Securities Under
($)
($)
Options Granted (2)
---------------------------------------------------------------------------
--------------------
------------------------------
W.T. McCallum, 1996 0
0
<PAGE>
None
President and
Chief Executive
Officer
---------------------------------------------------------------------------
--------------------
------------------------------
D. Low, Executive 1996 0
0
None
Vice President,
Financial Services
---------------------------------------------------------------------------
--------------------
------------------------------
J.T. Hughes, Senior 1996 0
0
None
Vice President, Chief
Investment Officer
---------------------------------------------------------------------------
--------------------
------------------------------
D.L. Wooden, Senior 1996 0
0
None
Vice President,
Financial Services
<PAGE>
---------------------------------------------------------------------------
--------------------
------------------------------
J.D. Motz, 1996 0
0
None
Executive Vice
President, Employee
Benefits
===========================================================================
====================
==============================
</TABLE>
<PAGE>
(1) The aggregate of perquisites and other personal benefits,
securities or
property provided to each Named Executive Officer in 1996 did not
exceed the
lesser of $50,000 and 10% of the total of the individual's annual
salary and
bonus.
(2) Options are for common shares of Lifeco ("Lifeco Options").
Lifeco options
are granted by Great-West
42
<PAGE>
<PAGE>
Lifeco pursuant to the Great-West Lifeco Inc. Stock Option
Plan which was
approved by Great-West Lifeco shareholders on April 24, 1996.
Lifeco options
become exercisable 20% per year commencing on the first anniversary
date of the
grant and expire 10 years after the date of the grant.
Pension Plan Table
The following table sets out the pension benefits payable
to the Named
Executive Officers by Great- West Life or the Company, as of December
31, 1996.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employees' Pension
Plan
===========================================================================
====================
=====
Remuneration Years of Service
($)
15 20 25
30
35
---------------------------------------------------------------------------
--------------------
-----
400,000 120,000 160,000 200,000
240,000 240,000
---------------------------------------------------------------------------
--------------------
-----
500,000 150,000 200,000 250,000
300,000 300,000
<PAGE>
---------------------------------------------------------------------------
--------------------
-----
600,000 180,000 240,000 300,000
360,000 360,000
---------------------------------------------------------------------------
--------------------
-----
700,000 210,000 280,000 350,000
420,000 420,000
---------------------------------------------------------------------------
--------------------
-----
800,000 240,000 320,000 400,000
480,000 480,000
---------------------------------------------------------------------------
--------------------
-----
900,000 270,000 360,000 450,000
540,000 540,000
---------------------------------------------------------------------------
--------------------
-----
1,000,000 300,000 400,000 500,000
600,000 600,000
===========================================================================
====================
=====
<PAGE>
</TABLE>
The Named Executive Officers have the following years of service:
Name Years of Service
W.T. McCallum 30
D. Low 31
J.T. Hughes 6
D.L. Wooden 5
J.D. Motz 27
For W.T. McCallum, the benefits shown are payable commencing
December
31, 2000,
and remuneration is the average of the highest 36
consecutive
months of
compensation during the last 86 months of employment. For D. Low,
J.T.
Hughes,
D.L. Wooden and J.D. Motz, the benefits shown are payable upon
the
attainment of
age 62, and remuneration is the average of the highest 60
consecutive
months of
compensation during the last 86 months of employment.
Compensation
includes
salary and bonuses prior to any deferrals. The normal form of
pension
is a life
only annuity. Other optional forms of pension payment
are
available on an
actuarially equivalent basis. The benefits listed in the table
are
subject to
deduction for social security and other retirement benefits.
43
<PAGE>
<PAGE>
Ownership of Securities
All of the Company's outstanding shares are owned
by
Great-West Life &
Annuity Insurance Company, 8515 East Orchard Road, Englewood, CO
80111.
GWL&A is
in turn owned 100% by the Great-West Life Assurance Company, 100
Osborne
Street
North, Winnipeg, Manitoba, Canada R3C 3A5. The Great-West Life
Assurance
Company
is owned 99.5% by Great-West Lifeco Inc., both of which share the
same
address.
Great-West Lifeco Inc. is owned 86.5% by Power
Financial
Corporation, 751
Victoria Square, Montreal, Quebec, Canada H2Y 2J3. It is owned
68.3%
by 171263
<PAGE>
Canada Inc., which is owned 100% by Power Corporation of Canada,
both
of which
share the same address as Power Financial Corporation. Mr.
Paul
Desmarais, 751
Victoria Square, Montreal, Quebec, Canada H2Y 2J3, through a group
of
private
holding companies, which he controls, has voting control of
Power
Corporation of
Canada.
------------------------------------------------------
VOTING RIGHTS
------------------------------------------------------
To the extent required by applicable law, all Eligible
Fund
shares held
in the Series Account will be voted by the Company at regular
and
special
shareholder meetings of the respective Eligible Funds
in
accordance with
instructions received from persons having voting interests in
the
corresponding
Investment Division. If, however, the 1940 Act or any
regulation
thereunder
should be amended, or if the present interpretation thereof
should
change, or if
we determine that we are allowed to vote all Eligible Funds shares
in
our own
rights, we may elect to do so.
Before the annuity commencement date, you the Owner, have
the voting
interest. The number of votes which are available to you will
<PAGE>
be
calculated
separately for each of your Variable Sub-Accounts. That
number
will be
determined by applying your percentage interest, if any,
in a
particular
Investment Division to the total number of votes attributable to
that
Investment
Division. You hold a voting interest in each Investment Division
to
which your
Annuity Account Value is allocated. If you select a variable
annuity
option, the
votes attributable to a Contract will decrease as annuity payments
are
made.
The number of votes of an Eligible Fund will be
determined
as of the
date coincident with the date established by that Eligible Fund
for
determining
<PAGE>
shareholders eligible to vote at the meeting of the Eligible
Funds.
Voting
instructions will be solicited by written communication prior to
such
meeting in
accordance with procedures established by the respective Eligible
Funds.
Shares as to which no timely instructions are received
and
shares held
by us as to which Owners have no beneficial interest will be voted
in
proportion
to the voting instructions which are received with respect to
all
Contracts
participating in the Investment Division. Voting instructions
to
abstain on any
item to be voted upon will be applied on a pro rata basis to
reduce
the votes
eligible to be cast.
Each person or entity having a voting interest in a
Investment
Division
will receive proxy material, reports and other material
relating
to the
appropriate Eligible Fund.
It should be noted that generally the Eligible Funds are
not
required
to, and do not intend to, hold annual or other regular meetings
of
shareholders.
Contract Owners have no voting rights in the Company.
44
<PAGE>
<PAGE>
<PAGE>
------------------------------------------------------
RIGHTS RESERVED BY
THE
COMPANY
------------------------------------------------------
The Company reserves the right to make certain
changes
if, in its
judgment, they would best serve the interests of Owners and
Annuitants
or would
be appropriate in carrying out the purposes of the Contracts.
Any
changes will
be made only to the extent and in the manner permitted by
applicable
laws. Also,
when required by law, the Company will obtain your approval of
the
changes and
approval from any appropriate regulatory authority. Such
approval
may not be
required in all cases, however. Examples of the changes the
Company
may make
include:
- To operate the Series Account in any form
permitted
under the
Investment Company Act of 1940 or in any other form
permitted
by law.
- To transfer any assets in any Investment Division
to
another
Investment Division, or to one or more separate
accounts,
or to a
Guarantee Period; or to add, combine or remove
Investment
<PAGE>
Divisions of
the Series Account.
- To substitute, for the Eligible Fund shares in
any
Investment
Division, the shares of another Eligible Fund or shares
of
another
investment company or any other investment permitted by law.
- To make any changes required by the Internal Revenue
Code
or by any
other applicable law in order to continue treatment of
the
Contract as
an annuity.
- To change the time or time of day at which a Valuation
Date
is
deemed to have ended.
- To make any other necessary technical changes in
the
<PAGE>
Contract in
order to conform with any action the above
provisions
permit the
Company to take, including to change the way the
Company
assess
charges, but without increasing as to any then
outstanding
Contract the
aggregate amount of the types of charges which
the
Company has
guaranteed.
------------------------------------------------------
LEGAL PROCEEDINGS
------------------------------------------------------
There are at present no material legal proceedings to
which
the Series
Account is a party or to which the assets of the Series Account
are
subject. The
Company is not currently a party to, and its property is not
currently
subject
to, any material legal proceedings. The lawsuits to which the Company
is
a party
are, in the opinion of management, in the ordinary course of
business,
and are
not expected to have a material adverse effect on the
financial
results,
conditions or prospects of the Company.
------------------------------------------------------
LEGAL MATTERS
<PAGE>
------------------------------------------------------
Advice regarding certain legal matters concerning
the
federal
securities laws applicable to the issue and sale of the
Contract
has been
provided by Jorden Burt Berenson & Johnson LLP. The organization of
the
Company,
the Company's authority to issue the Contract, and the validity of
the
form of
the Contract have been passed upon by W. Kay Adam, Vice
President,
Counsel and
Associate Secretary of the Company.
45
<PAGE>
<PAGE>
<PAGE>
------------------------------------------------------
EXPERTS
------------------------------------------------------
The balance sheet of First Great-West Life & Annuity
Insurance
Company
as of April 4, 1997 included in this prospectus has been audited
by
Deloitte &
Touche LLP, independent auditors, as stated in their report
appearing
herein,
and is included in reliance upon the report of such firm
given
upon their
authority as experts in accounting and auditing.
------------------------------------------------------
AVAILABLE
INFORMATION
------------------------------------------------------
We have filed a registration statement
("Registration
Statement") with
the Commission under the 1933 Act relating to the Contracts
offered
by this
Prospectus. This Prospectus has been filed as a part of
the
Registration
Statement and does not contain all of the information set
forth
in the
Registration Statement and exhibits thereto. Reference is
hereby
made to the
Registration Statementand exhibits for further information relating
to us and
the Contracts. Statements contained in this Prospectus, as to
<PAGE>
the
content of the
Contracts and other legal instruments, are summaries. For a
complete
statement
of the terms thereof, reference is made to the instruments as filed
as
exhibits
to the Registration Statement. The Registration Statement and
its
exhibits may
be inspected and copied at the offices of the Commission located
at
450 Fifth
Street, N.W., Washington, D.C.
The Statement of Additional Information contains
more
specific
information relating to the Series Account and First GWL&A.
The
Table of
Contents of the Statement of Additional Information is set forth
below:
<PAGE>
1. General Information
2. First Great-West Life & Annuity Insurance Company
and
the
Variable Annuity-1 Series Account
3. Calculation of Annuity Payments
4. Postponement of Payments
5. Services
6. Withholding
7. Calculation of Performance Data
46
<PAGE>
<PAGE>
Appendix A
On the following pages are four examples of Market
Value
Adjustments
illustrating (1) increasing interest rates, (2) decreasing
interest
rates, (3)
flat interest rates (i and j are within .10% of each other), and
(4)
less than 6
months to maturity.
Example #1 - Increasing Interest Rates
Deposit: $25,000 on November 1,
1996
Maturity Date: December 31, 2006
Interest Guarantee Period: 10 years
i: assumed to be 6.15%
Surrender Date: July 1, 2001
j: 7.00%
Amount Surrendered: $10,000
N: 65
MVAF = {[(1 + i)/(1 + j)]N/12} - 1
= {[1.0615/1.07]65/12} - 1
= .957718 - 1
= -.042282
MVA = (amount Transferred or
surrendered)
x MVAF
= $10,000 x - .042282
= - $422.82
Surrender Value = (amount Transferred or surrendered
+
MVA)x(1-CDSC)
= ($10,000 +
-
$422.82)x(1-0)
= $9,577.18
<PAGE>
Example #2 - Decreasing Interest Rates
Deposit: $25,000 on November 1,
1996
Maturity Date: December 31, 2006
Interest Guarantee Period: 10 years
i: assumed to be 6.15%
Surrender Date: July 1, 2001
j: 5.00%
Amount Surrendered: $10,000
N: 65
MVAF = {[(1 + i)/(1 + j)]N/12} - 1
= {[1.0615/1.05]65/12} - 1
= .060778
<PAGE>
MVAF = (amount Transferred or
surrendered)
x MVAF
= $10,000 x .060778
= $607.78
Surrender Value = (amount Transferred or surrendered
+
MVA)x(1-CDSC)
= ($10,000
+
$607.78)x(1-0)
= $10,607.78
47
<PAGE>
<PAGE>
Example #3 - Flat Interest Rates
Deposit: $25,000 on November 1,
1996
Maturity Date: December 31, 2006
Interest Guarantee Period: 10 years
i: assumed to be 6.15%
Surrender Date: July 1, 2001
j: 6.24%
Amount Surrendered: $10,000
N: 65
MVAF = {[(1 + i)/(1 + j)]N/12} - 1
= {[1.0615/1.0624]65/12} - 1
= .995420 - 1
= -.004580
MVA = (amount Transferred or
surrendered)
x MVAF
= $10,000 x -.004589
= - $45.80
Surrender Value = (amount Transferred or surrendered
+
MVA)x(1-CDSC)
= ($10,000
-
$45.80)x(1-0)
= $9,954.20
Example #4 - N is less than 6 (less than 6 months to
maturity)
Deposit: $25,000 on November 1,
1996
Maturity Date: December 31, 2006
Interest Guarantee Period: 10 years
i: assumed to be 6.15%
Surrender Date: July 1, 2006
j: 7.00%
Amount Surrendered: $10,000
N: 5
<PAGE>
MVAF = {[(1 + i)/(1 + j)]N/12} - 1
= {[1.0615/1.07]5/12} - 1
= .99668 - 1
= -.00332
However, N is less than 6, so MVAF = 0
MVAF = (amount Transferred or surrendered) x MVAF
= $10,000 x 0
= $0
Surrender Value = (amount Transferred or surrendered
+
MVA)x(1-CDSC)
<PAGE>
= ($10,000 + $0)x(1-0)
= $10,000
48
<PAGE>
49
<PAGE>
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(A wholly-owned subsidiary of
Great-West Life & Annuity Insurance Company)
Balance Sheet as of April 4, 1997 and
Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of First Great-West Life & Annuity Insurance Company:
We have audited the accompanying balance sheet of First Great-West
Life & Annuity Insurance Company (a wholly-owned subsidiary of
Great-West Life & Annuity Insurance Company) as of April 4, 1997.
This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all material
<PAGE>
respects, the financial position of First Great-West Life & Annuity
Insurance Company as of April 4, 1997 in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
<PAGE>
Denver, Colorado
April 14, 1997
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
BALANCE SHEET
APRIL 4, 1997
ASSETS
Cash
$6,000,000
TOTAL ASSETS
$6,000,000
STOCKHOLDER'S EQUITY
Common stock, $1,000 par value, 2,000 shares authorized,
$2,000,000
issued and outstanding
Additional paid-in capital
$4,000,000
TOTAL STOCKHOLDER'S EQUITY
$6,000,000
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
APRIL 4, 1997
1. ORGANIZATION
Organization - First Great-West Life & Annuity Insurance
Company (the Company) is a wholly-owned subsidiary of Great-West
Life & Annuity Insurance Company (The Parent Corporation). The
Company was incorporated as a stock life insurance company on April
9, 1996 in the State of New York and was capitalized on April 4,
1997 through a $6,000,000 cash investment from its Parent for 2,000
shares of common stock. The Company is currently seeking licensure
as an insurance company in the State of New York.
Basis of Presentation - The preparation of financial
statements in conformity with generally accepted accounting
principles which requires management to make estimates and
assumptions that affected the reported amounts of assets and
liabilities at the date of the financial statements. Actual
results could differ from those estimates.
<PAGE>
2. SIGNIFICANT ACCOUNTING PRINCIPLES
Cash - cash includes only amounts in demand deposit accounts.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of the issuance and
distribution
of the
Contracts, other than commissions on sales of the Contracts are
as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Securities and Exchange Commission fee
$
303.03
---------
Accounting fees and expenses
$
5,000.00
---------
Legal fees and expenses
$
20,000.00
---------
</TABLE>
Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Provisions exist under the laws of the state of
New
York and
<PAGE>
the Bylaws of First GWL&A whereby First GWL&A may indemnify a
director,
officer,
or controlling person of First GWL&A against liabilities
arising
under the
Securities Act of 1933. The following excerpts contain the
substance
of these
provisions:
New York Corporate Code
Section 721. Nonexclusivity of statutory provisions
for
indemnification of
directors and officers.
The indemnification and advancement of expenses granted pursuant to,
or
provided
<PAGE>
by, this article shall not be deemed exclusive of any other rights
to
which a
director or officer seeking indemnification or advancement
of
expenses may be
entitled, whether contained in the certificate of incorporation or
the
by-laws
or, when authorized by such certificate of incorporation
or
by-laws, (i) a
resolution of shareholders, (ii) a resolution of directors,
or
(iii) an
agreement providing for such indemnification, provided that
no
indemnification
may be made to or on behalf of any director or officer if a
judgment
or other
final adjudication adverse to the director or officer establishes
that
his acts
were committed in bad faith or were the result of active
and
deliberate
dishonesty and were material to the cause of action so adjudicated,
or
that he
personally gained in fact a financial profit or other advantage
to
which he was
not legally entitled. Nothing contained in this article shall
affect
any rights
to indemnification to which corporate personnel other
than
directors and
officers may be entitled by contract or otherwise under law.
<PAGE>
Section 722. Authorization for indemnification of directors
and
officers.
(a) A corporation may indemnify any person made, or threatened to
be
made, a
party to an action or proceeding ( other than one by or in
the
right of the
corporation to procure a judgment in its favor), whether civil
or
criminal,
including an action by or in the right of any other corporation of
any
type or
kind, domestic or foreign, or any partnership, joint venture,
trust,
employee
benefit plan or other enterprise, which any director or
officer
of the
corporation served in any capacity at the request of the
corporation,
by reason
of the fact that he, his testator or intestate, was a director
or
officer of the
corporation, or served such other corporation, partnership,
joint
venture,
trust, employee benefit plan or other enterprise in any
capacity,
against
judgments, fines, amounts paid in settlement and reasonable
expenses,
including
attorneys' fees actually and necessarily incurred as a result of
such
action or
proceeding, or any appeal therein, if such director or officer
acted,
in good
faith, for a purpose which he reasonably believed to be in, or, in
the
case of
service for any other corporation or any partnership, joint
<PAGE>
venture,
trust,
employee benefit plan or other enterprise, not opposed to, the
best
interests of
the corporation and, in criminal actions or proceedings, in
addition,
had no
reasonable cause to believe that his conduct was unlawful.
II-1
<PAGE>
<PAGE>
(b) The termination of any such civil or criminal action
or
proceeding by
judgment, settlement, conviction or upon a plea of nolo
contendere,
or its
equivalent, shall not in itself create a presumption that any
such
director or
officer did not act, in good faith, for a purpose which he
reasonably
believed
to be in, or, in the case of service for any other
corporation
or any
partnership, joint venture, trust, employee benefit plan or
other
enterprise,
not opposed to, the best interests of the corporation or that he
had
reasonable
cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to
be
made, a
party to an action by or in the right of the corporation to
procure a
judgment
in its favor by reason of the fact that he, his testator or
intestate,
is or was
a director or officer of the corporation, or is or was serving at
the
request of
the corporation as a director or officer of any other corporation of
any
type or
kind, domestic or foreign, of any partnership, joint venture,
trust,
employee
benefit plan or other enterprise, against amounts paid
in
settlement and
reasonable expenses, including attorneys' fees, actually
and
necessarily
<PAGE>
incurred by him in connection with the defense or settlement of
such
action, or
in connection with an appeal therein, if such director or officer
acted,
in good
faith, for a purpose which he reasonably believed to be in, or, in
the
case of
service for any other corporation or any partnership, joint
venture,
trust,
employee benefit plan or other enterprise, not opposed to, the
best
interests of
the corporation, except that no indemnification under this
paragraph
shall be
made in respect of (1) a threatened action, or a pending action which
is
settled
or otherwise disposed of, or (2) any claim, issue or matter as
to
which such
person shall have been adjudged to be liable to the corporation,
unless
and only
to the extent that the court in which the action was brought, or,
if
no action
was brought, any court of competent jurisdiction, determines
upon
application
<PAGE>
that, in view of all the circumstances of the case, the person
is
fairly and
reasonably entitled to indemnity for such portion of the
settlement
amount and
expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be
deemed
to have
requested a person to serve an employee benefit plan where
the
performance by
such person of his duties to the corporation also imposes
duties
on, or
otherwise involves services by, such person to the plan
or
participants or
beneficiaries of the plan; excise taxes assessed on a person
with
respect to an
employee benefit plan pursuant to applicable law shall be
considered
fines; and
action taken or omitted by a person with respect to an employee
benefit
plan in
the performance of such person's duties for a purpose
reasonably
believed by
such person to be in the interest of the participants
and
beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed
to
the best
interests of the corporation.
Section 723. Payment of indemnification other than by court award.
(a) A person who has been successful, on the merits or otherwise, in
the
defense
of a civil or criminal action or proceeding of the
character
<PAGE>
described in
section 722 shall be entitled to indemnification as authorized in
such
section.
(b) Except as provided in paragraph (a), any indemnification
under
section 722
or otherwise permitted by section 721, unless ordered by a court
under
section
724 (Indemnification of directors and officers by a court), shall
be
made by the
corporation, only if authorized in the specific case:
(1) By the board acting by a quorum consisting of directors who are
not
parties
to such action or proceeding upon a finding that the director or
officer
has met
the standard of conduct set forth in section 722 or
established
pursuant to
section 721, as the case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable or, even
if
<PAGE>
obtainable,
a quorum of disinterested directors so directs; (A) By the
board
upon the
opinion in writing of independent legal counsel that
indemnification
is proper
in the circumstances because the applicable standard of conduct
set
forth in
such sections has been met by such director or officer,
or
(B) By the
shareholders upon a finding that the director or officer has met
the
applicable
standard of conduct set forth in such sections.
II-2
<PAGE>
<PAGE>
(c) Expenses incurred in defending a civil or criminal action
or
proceeding may
be paid by the corporation in advance of the final disposition of
such
action or
proceeding upon receipt of an undertaking by or on behalf of
such
director or
officer to repay such amount as, and to the extent, required
by
paragraph (a) of
section 725.
Section 724. Indemnification of directors and officers by a court.
(a) Notwithstanding the failure of a corporation to
provide
indemnification, and
despite any contrary resolution of the board or of the
shareholders
in the
specific case under section 723 (Payment of indemnification other
than
by court
award), indemnification shall be awarded by a court to the
extent
authorized
under section 722 (Authorization for indemnification of directors
and
officers),
and paragraph (a) of section 723. Application therefor may be
made,
in every
case, either:
(1) In the civil action or proceeding in which the expenses
were
incurred or
other amounts were paid, or
(2) To the supreme court in a separate proceeding, in which case
the
application
shall set forth the disposition of any previous application made
to
any court
<PAGE>
for the same or similar relief and also reasonable cause for the
failure
to make
application for such relief in the action or proceeding in which
the
expenses
were incurred or other amounts were paid.
(b) The application shall be made in such manner and form as may
be
required by
the applicable rules of court or, in the absence thereof,
by
direction of a
court to which it is made. Such application shall be upon
notice
to the
corporation. The court may also direct that notice be given at
the
expense of
the corporation to the shareholders and such other persons as it
may
designate
in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court
may
allow a
<PAGE>
person such reasonable expenses, including attorneys' fees, during
the
pendency
of the litigation as are necessary in connection with his
defense
therein, if
the court shall find that the defendant has by his pleadings
or
during the
course of the litigation raised genuine issues of fact or law.
Section 725. Other provisions affecting indemnification
of
directors and
officers.
(a) All expenses incurred in defending a civil or criminal action
or
proceeding
which are advanced by the corporation under paragraph (c)
of
section 723
(Payment of indemnification other than by court award) or allowed
by
a court
under paragraph (c) of section 724 (Indemnification of directors
and
officers by
a court) shall be repaid in case the person receiving
such
advancement or
allowance is ultimately found, under the procedure set forth in
this
article,
not to be entitled to indemnification or, where indemnification
is
granted, to
the extent the expenses so advanced by the corporation or allowed
by
the court
exceed the indemnification to which he is entitled.
(b) No indemnification, advancement or allowance shall be
made
under this
article in any circumstance where it appears:
<PAGE>
(1) That the indemnification would be inconsistent with the
law
of the
jurisdiction of incorporation of a foreign corporation
which
prohibits or
otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision
of the
certificate of incorporation, a by-law, a resolution of the
board
or of the
shareholders, an agreement or other proper corporate action,
in
effect at the
time of the accrual of the alleged cause of action asserted in
the
threatened or
pending action or proceeding in which the expenses were
incurred
or other
amounts were paid, which prohibits or otherwise limits
indemnification;
or
II-3
<PAGE>
<PAGE>
<PAGE>
(3) If there has been a settlement approved by the
court,
that the
indemnification would be inconsistent with any condition
with
respect to
indemnification expressly imposed by the court in approving
the
settlement.
(c) If any expenses or other amounts are paid by way
of
indemnification,
otherwise than by court order or action by the shareholders,
the
corporation
shall, not later than the next annual meeting of
shareholders
unless such
meeting is held within three months from the date of such
payment,
and, in any
event, within fifteen months from the date of such
payment,
mail to its
shareholders of record at the time entitled to vote for
the
election of
directors a statement specifying the persons paid, the amounts
paid,
and the
nature and status at the time of such payment of the litigation
or
threatened
litigation.
(d) If any action with respect to indemnification of directors
and
officers is
taken by way of amendment of the by-laws, resolution
of
directors, or by
agreement, then the corporation shall, not later than the next
annual
meeting of
shareholders, unlesssuch meeting isheld within three months fromthe
date of
<PAGE>
such action, and, in any event, within fifteen months from the
date
of such
action, mail to its shareholders of record at the time entitled to
vote
for the
election of directors a statement specifying the action taken.
(e) Any notification required to be made pursuant to the
foregoing
paragraph (c)
or (d) of this section by any domestic mutual insurer shall
be
satisfied by
compliance with the corresponding provisions of section one thousand
two
hundred
sixteen of the insurance law.
(f) The provisions of this article relating to indemnification
of
directors and
officers and insurance therefor shall apply to domestic corporations
and
foreign
corporations doing business in this state, except as provided
in
section 1320
(Exemption from certain provisions).
<PAGE>
Section 726. Insurance for indemnification of directors and officers.
(a) Subject to paragraph (b), a corporation shall have power
to
purchase and
maintain insurance:
(1) To indemnify the corporation for any obligation which it incurs
as
a result
of the indemnification of directors and officers under the
provisions
of this
article, and
(2) To indemnify directors and officers in instances in
which
they may be
indemnified by the corporation under the provisions of this article,
and
(3) To indemnify directors and officers in instances in which
they
may not
otherwise be indemnified by the corporation under the provisions of
this
article
provided the contract of insurance covering such directors
and
officers
provides, in a manner acceptable to the superintendent
of
insurance, for a
retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any
payment,
other than
cost of defense, to or on behalf of any director or officer:
(1) if a judgment or other final adjudication adverse to the
insured
director or
officer establishes that his acts of active and
deliberate
dishonesty were
material to the cause of action so adjudicated, or that he
<PAGE>
personally
gained in
fact a financial profit or other advantage to which he was not
legally
entitled,
or
(2) in relation to any risk the insurance of which is
prohibited
under the
insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may
be
included
in a single contract or supplement thereto. Retrospective
rated
contracts are
prohibited.
II-4
<PAGE>
<PAGE>
(d) The corporation shall, within the time and to the
persons
provided in
paragraph (c) of section 725 (Other provisions
affecting
indemnification of
directors or officers), mail a statement in respect of
any
insurance it has
purchased or renewed under this section, specifying the
insurance
carrier, date
of the contract, cost of the insurance, corporate
positions
insured, and a
statement explaining all sums, not previously reported
in a
statement to
shareholders, paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread
the
risk of
corporate management, notwithstanding any other general or special
law
of this
state or of any other jurisdiction including the federal government.
Bylaws of First GWL&A
Article II, Section 11. Indemnification of Directors.
The corporation may, by resolution of the Board of Directors,
indemnify
and save
harmless out of the funds of the Company to the extent permitted
by
applicable
law, any Director, Officer, or employee of the corporation or
any
member or
officer of any Committee, and his or her heirs, executors and
administrators,
from and against all claims, liabilities, costs, charges,
and
<PAGE>
expenses
whatsoever that any such Director, Officer, employee or any
such
member or
officer sustains or incurs in or about any action, suit, or
proceeding
that is
brought, commenced, or prosecuted against him or her for or
in
respect of any
act, deed, matter or thing whatsoever made, done, or permitted by
him
or her in
or about the execution of the duties of his or her office or
employment
with the
corporation, or in or about the execution of his or her duties
as a
Director or
Officer of another company which he or she so serves at the
request
and on
behalf of the corporation, or in or about the execution of his or
her
duties as
a member or officer of any such Committee, and all other
claims,
liabilities,
<PAGE>
costs, charges and expenses that he or she sustains or incurs, in
or
about or in
relation to any such duties or the affairs of the corporation,
the
affairs of
such other company which he or she so serves or the affairs of
such
Committee,
except such claims, liabilities, costs, charges or expenses as
are
occasioned by
acts of omissions which were in bad faith, involved
intentional
misconduct, a
violation of the New York Insurance Law or a knowing violation of
any
other law
or which resulted in such person gaining in fact a financial
profit
or other
advantage to which he or she was not entitled. The
corporation
may, by
resolution of the Board of Directors, indemnify and save
harmless
out of the
funds of the corporation to the extent permitted by
applicable
law, any
Director, Officer, or employee of any subsidiary corporation of
the
corporation
on the same basis, and within the same constraints as,
described
in the
preceding sentence. No payment of indemnification shall be
made
unless notice
has been filed with the Superintendent of Insurance pursuant to
Section
1216 of
the New York Insurance Law.
Item 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
<PAGE>
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. Form of Principal Underwriter and Distribution Agreement
is
incorporated by reference to Registrant's
Registration
Statement.
2. Not applicable.
3. (a) Articles of Incorporation of First Great-West
Life &
Annuity
Insurance Company is incorporated by reference
to
Registrant's
Registration Statement.
(b) Bylaws of First Great-West Life & Annuity
Insurance
Company is
incorporated by reference to Registrant's
Registration
Statement.
<PAGE>
II-5
<PAGE>
<PAGE>
4. (a) Form of Combination Fixed and Variable Group
Annuity
Contract
filed herewith as Exhibit 4(a).
(b) Form of IRA Endorsement is incorporated by
reference
to
Registrant's Registration Statement.
5. Opinion and consent of W. Kay Adam as to the legality
of
the
securities being registered filed herewith as Exhibit 5.
6. Not applicable.
7. Not applicable.
8. Not applicable.
9. Not applicable.
10. Administrative Services Agreement between First
Great-West
Life &
Annuity Insurance Company and Great-West Life &
Annuity
Insurance
Company filed herewith as Exhibit 10.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Not applicable.
18. Not applicable.
<PAGE>
19. Not applicable.
20. Not applicable.
21. Not applicable.
22. Not applicable.
23. (a) Consent of Jorden Burt Berenson & Johnson LLP,
is
incorporated
by reference to Registrant's Registration Statement.
<PAGE>
(b) Consent of Deloitte & Touche LLP, is incorporated
by
reference
to Registrant's Registration Statement.
(c) Consent of W. Kay Adam filed herewith as Exhibit 5.
II-6
<PAGE>
<PAGE>
24. Power of Attorney for Ms. Alazraki, Messrs. Balog,
Burns,
Desmarais, Jr., Gratton, Hart, Katz and Walsh
are
incorporated by
reference to Registrant's Registration Statement.
25. Not applicable.
26. Not applicable.
27. Financial Data Schedule for First Great-West Life &
Annuity
Insurance Company is incorporated by reference
to
Registrant's
Registration Statement.
Item 17. UNDERTAKINGS
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being
made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3)
of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events
arising after
the effective date of the registration statement
(or
the most
recent post-effective amendment thereof)
which,
individually or in
the aggregate, represent a fundamental change in
the
information
set forth in the registration statement;
<PAGE>
(iii) To include any material information with respect
to
the plan
of distribution not previously disclosed in
the
registration
statement or any material change to such
information
in the
registration statement, including (but not limited to)
any
addition
or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under
the
Securities
Act of 1933, each such post-effective amendment shall be deemed
to
be a new
registration statement relating to the securities offered
therein,
and the
<PAGE>
offering of such securities at that time shall be deemed to be
the
initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective
amendment any
of the securities being registered which remain unsold at
the
termination of
the offering.
(4) Insofar as indemnification for liability arising under
the
Securities
Act of 1933 may be permitted to directors, officers and
controlling
persons
of the registrant pursuant to the foregoing provisions,
or
otherwise, the
registrant has been advised that in the opinion of
the
Securities and
Exchange Commission such indemnification is against
public
policy as
expressed in the Act and is, therefore, unenforceable. In
the
event that a
claim for indemnification against such liabilities (other than
the
payment
by the registrant of expenses incurred or paid by a
director,
officer or
controlling person of the registrant in the successful
defense
of any
action, suit or proceeding) is asserted by such
director,
officer or
controlling person in connection with the securities
being
registered, the
registrant will, unless in the opinion of its counsel the
<PAGE>
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.
II-7
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of
1933, the
Registrant has duly caused this Pre-Effective Amendment No.
1
to its
Registration Statement on Form S-1 to be signed on its behalf, in
the
City of
Englewood, State of Colorado, on this 30th day of June , 1997.
FIRST GREAT-WEST
LIFE &
ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ William
T.
McCallum
William T.
McCallum,
President
and Chief
Executive
Officer
As required by the Securities Act of 1933, this
Registration
Statement
has been signed by the following persons in the capacities with
First
Great-West
Life & Annuity Insurance Company
and on the dates indicated:
<TABLE>
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
Signature and Title
Date
/s/ Robert Gratton*
6/30 ,1997
Director, Chairman of the
Board (Robert Gratton)
/s/ William T. McCallum
6/30 ,1997
Director, President and Chief Executive
Officer (William T. McCallum)
<PAGE>
/s/ G.R. Derback
6/30 ,1997
Vice President, Financial Control
and Controller (Glen R. Derback)
S-1
<PAGE>
<PAGE>
Signature and Title
Date
/s/ Marcia D. Alazraki*
6/30 ,1997
Director (Marcia D. Alazraki)
/s/ James Balog*
6/30 ,1997
Director (James Balog)
/s/ James W. Burns*
6/30 ,1997
Director (James W. Burns)
/s/ Paul Desmarais, Jr.*
6/30 ,1997
Director (Paul Desmarais, Jr.)
/s/ N. Berne Hart*
6/30 ,1997
Director (N. Berne Hart)
/s/ Stuart Z. Katz*
6/30 ,1997
Director (Stuart Z. Katz)
/s/ Brian E. Walsh*
6/30 ,1997
Director (Brian E. Walsh)
<PAGE>
*By: /s/ D.C. Lennox
6/30 ,1997
D. C. Lennox
Attorney-in-fact pursuant to Powers of Attorney filed with
the
Registration Statement.
</TABLE>
<PAGE>
<PAGE>
Exhibit Table
Form S-1
Exhibit
1. Form of Underwriting agreement and
and Distribution Agreement
1
3. (i) Articles of Incorporation
1
(ii) Bylaws
1
4. (i) Form of Combination Fixed and
Variable Annuity Contract
2
(ii) Form of IRA Endorsement
1
5. Opinion and consent of W. Kay Adam
2
10. Administrative Services Agreement between First
Great-West Life & Annuity Insurance Company,
and Great-West Life & Annuity Insurance Company
2
23. (a) Consent of Jorden Burt Berenson & Johnson LLP
1
(b) Consent of Deloitte & Touche
1
(c) Consent of W. Kay Adam
2
24. Powers of Attorney for Ms. Alazraki and Messrs. Balog,
Burns, Desmarais, Jr., Gratton, Hart, Katz, and Walsh
1
<PAGE>
27. Financial Data Schedule
1
1 Filed with Registration Statement.
2 Filed with this Pre-Effective Amendment No. 1 to the Registration
Statement.
<PAGE>
Exhibit 4 (i)
Form of Combination Fixed and Variable Annuity
Contract
<PAGE>
CERTIFICATE DATA
PAGE
ANNUITY INFORMATION
OWNER INFORMATION
Annuity Certificate Number: 1234567
Effective Date: March 1, 1996
Status of Annuity: Non-Qualified
Initial Contribution: $5,000
Payment Commencement Date: March 1, 2006
Owner: JOHN C. DOE
Date of Birth: April 1, 1944
Tax ID Number: 111-11-1111
Joint Owner: JANE B. DOE
Date of Birth: November 12, 1948
Tax ID Number: ###-##-####
<PAGE>
ANNUITANT INFORMATION
Annuitant: JOHN C. DOE
Date of Birth: March 22, 1942
Tax ID Number: ###-##-####
Contingent Annuitant: DAVID J. DOE
Date of Birth: June 6, 1964
Tax ID Number: ###-##-####
<PAGE>
CERTIFICATE INFORMATION
This Certificate Data Page, together with the Initial Premium
Allocation
Confirmation, reflects the information with which your
Certificate has been
established as of the Effective Date. If you wish to change or
correct any
information on this page, please call the Schwab Annuity Service
Center
immediately at 1-800-838-0649.
o_CONTRACTUAL GUARANTEE OF A MINIMUM RATE OF INTEREST: 3%
<PAGE>
o_CHARGES: Charges at the time we issued this Certificate are shown
below.
Risk Charge:
Mortality: Expense: Total:
.68% maximum .17% maximum .85% maximum
Certificate Maintenance Charge: $25.00 maximum annually
o_PAYMENT COMMENCEMENT DATE: The date on which annuity payments
or periodic
withdrawals will start. This Certificate Data Page indicates
the date that
you selected, or if no date is specified, the latest date on
which payments
can start. (You may change the Payment Commencement Date
prior to
commencement of annuity payments, or it may be changed by the
Beneficiary
upon the death of an Owner.)
SERVICE
CENTER:
Schwab Annuity
Service Center
P.O. Box
7806
San Francisco,
California 94120-7806
1-800-838-0649
POLICYHOLDER INFORMATION: Trustees of ABC
Trust, Inc.
Policyholder
<PAGE>
<PAGE>
BENEFICIARY
INFORMATION
Beneficiary: Sally Smith
Date of Birth: January
17, 1956
Tax ID Number:
###-##-####
<PAGE>
<PAGE>
First Great-West Life & Annuity
Insurance Company
A Stock Company
125 Wolf Road Albany,
NY 12205
FLEXIBLE PREMIUM FIXED AND
VARIABLE
DEFERRED GROUP ANNUITY
PLEASE READ THIS ANNUITY CERTIFICATE
CAREFULLY.
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT VALUE MAY BE SUBJECT
TO A MARKET
VALUE ADJUSTMENT, AND MAY RESULT IN POSITIVE OR NEGATIVE ADJUSTMENTS
TO AMOUNTS
PAYABLE DUE TO SURRENDERS, TRANSFERS, AND AMOUNTS APPLIED TO
PURCHASE AN
ANNUITY. THE MARKET VALUE ADJUSTMENT IS APPLIED TO THE AMOUNT OF
TRANSFER OR
WITHDRAWAL REQUESTED AND A NEGATIVE ADJUSTMENT MAY CAUSE THE AMOUNT
TRANSFERRED
OR WITHDRAWN TO BE LESS THAN THE AMOUNT REQUESTED. THE MARKET VALUE
ADJUSTMENT
WILL NOT APPLY TO ANY GUARANTEE PERIOD HAVING FEWER THAN 6 MONTHS
PRIOR TO THE
GUARANTEE PERIOD MATURITY DATE FOR: 1) TRANSFER TO ANOTHER
GUARANTEE PERIOD,
FIXED SUB-ACCOUNT OR TO A VARIABLE SUB-ACCOUNT OFFERED UNDER
THIS CERTIFICATE; OR
2) SURRENDERS, PARTIAL WITHDRAWALS, ANNUITIZATION OR PERIODIC
WITHDRAWALS; OR
3) A SINGLE SUM PAYMENT UPON DEATH OF AN OWNER OR THE ANNUITANT.
ALL PAYMENTS AND VALUES BASED ON THE INVESTMENT EXPERIENCE OF
THE VARIABLE
ACCOUNT VALUE ARE VARIABLE, MAY INCREASE OR DECREASE ACCORDINGLY,
AND ARE NOT
GUARANTEED AS TO AMOUNT.
THE SMALLEST ANNUAL RATE OF INVESTMENT RETURN WHICH WOULD HAVE TO
<PAGE>
BE EARNED ON
THE ASSETS OF THE SEPARATE ACCOUNT SO THAT THE DOLLAR AMOUNT OF
VARIABLE ANNUITY
PAYMENTS WILL NOT DECREASE IS 5.85%.
A 10% FEDERAL TAX PENALTY MAY APPLY IF A SURRENDER, WITHDRAWAL, OR
DISTRIBUTION
IS TAKEN PRIOR TO THE TAXPAYER'S ATTAINMENT OF AGE 59 1/2.
FREE LOOK PERIOD
10 DAY RIGHT TO EXAMINE CERTIFICATE. IF NOT SATISFIED WITH THE
CERTIFICATE,
RETURN IT TO THE COMPANY OR THE SCHWAB ANNUITY SERVICE CENTER WITHIN
10 DAYS OF
RECEIVING IT. THE CERTIFICATE WILL BE VOID FROM THE START, AND
THE COMPANY WILL REFUND THE GREATER OF: 1) CONTRIBUTIONS RECEIVED; OR
2) THE ANNUITY ACCOUNT VALUE LESS SURRENDERS, WITHDRAWALS, AND
DISTRIBUTIONS.
FLEXIBLE PREMIUM FIXED AND VARIABLE DEFERRED GROUP ANNUITY.
Contributions may be made until the Payment Commencement Date or
until the death
benefit is payable to a Beneficiary. The Owner is as shown on the
Certificate
Data Page unless changed as provided for in this Certificate. The
Company will
pay the Annuitant the first of a series of annuity payments on
the annuity
commencement date by applying the Annuity Account Value with a
Market Value
Adjustment, if applicable, of the Owner's Annuity Account
according to the
Payment Options Provisions. Subsequent payments will be paid on the
same day of
<PAGE>
each frequency period according to the provisions of this
Certificate. Any
paid-up annuity, cash surrender value or death benefits that may
be available
under this Certificate will not be less than the minimum benefits
required by
any statute of the state in which this Certificate is delivered.
Non-Participating. Not eligible to share in the Company's divisible
surplus.
Signed for First Great-West Life & Annuity Insurance Company on the
issuance of
this Certificate.
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
D.C. Lennox, W.T. McCallum,
Secretary President and Chief Executive
Officer
J434 NY
(97)
<PAGE>
Table of Contents
Use this Table of Contents to locate specific topics in
this annuity Certificate.
DEFINITIONS............................................................3
GENERAL PROVISIONS
E n t i r e
Contract....................................................5
C e r t i f i c a t e
Modification...........................................5
Non-Participating..................................................5
Misstatement of Age or
Sex.........................................5
Reports............................................................6
<PAGE>
N o t i c e a n d
Proof...................................................6
T a x C o n s e q u e n c e s o f
Payments.......................................6
Currency...........................................................6
V o t i n g
Rights......................................................6
OWNERSHIP PROVISIONS
R i g h t s o f
Owner....................................................6
Beneficiary........................................................6
D e s i g n a t i o n o f
Beneficiary........................................6
C h a n g e o f
Beneficiary..............................................7
D e a t h o f
Beneficiary...............................................7
S u c c e s s i v e
Beneficiaries...........................................7
Annuitant..........................................................7
C o n t i n g e n t
Annuitant...............................................7
C h a n g e o f
Ownership................................................7
C o l l a t e r a l
Assignment..............................................7
O w n e r s h i p o f S e r i e s
Account.......................................7
<PAGE>
CONTRIBUTIONS PROVISIONS
Effective
Date.....................................................8
Contributions......................................................8
Allocation of
Contributions.......................................8
ACCOUNT VALUE AND MARKET VALUE ADJUSTMENT PROVISIONS
Certificate Maintenance
Charge.....................................8
Variable Account
Value.............................................8
Accumulation Units.................................................9
A c c u m u l a t i o n U n i t
Value............................................9
N e t I n v e s t m e n t
Factor..............................................9
R i s k
Charge........................................................9
G u a r a n t e e P e r i o d
Fund..............................................9
V a l u e o f G u a r a n t e e
Period.........................................10
Allocation at Guarantee Period Maturity
Date......................10
B r e a k i n g a G u a r a n t e e
Period.......................................10
M a r k e tV a l u e
Adjustment...........................................11
<PAGE>
<PAGE>
Table of Contents
(continued)
Use this Table of Contents to locate specific topics in
this annuity
Certificate.
TRANSFER PROVISIONS
Transfers.........................................................11
D o l l a rC o s t
Averaging.............................................12
T h e R e b a l a n c e r
Option.............................................12
DEATH BENEFIT PROVISIONS
P a y m e n t o f D e a t h
Benefit..........................................13
D i s t r i b u t i o n
Rules...............................................13
Compliance with Code Section
72(s)................................14
SURRENDERS AND PARTIAL WITHDRAWALS
S u r r e n d e r
Benefit.................................................14
P a r t i a l
Withdrawals...............................................14
Postponement......................................................15
PAYMENT OPTIONS
H o w t o
Elect......................................................15
S e l e c t i o n o f P a y m e n t
Options......................................15
Variable Annuity Payment
Options..................................15
F i x e d A n n u i t y P a y m e n t
Options.....................................16
P e r i o d i c W i t h d r a w a l
Option........................................17
H o w t o E l e c t P e r i o d i c
<PAGE>
Withdrawals.................................17
Periodic Withdrawal Options
Available.............................17
<PAGE>
<PAGE>
Definitions
Accumulation Period - the period between the Effective Date and
the Payment
Commencement Date.
Accumulation Unit - an accounting measure used to determine the
Variable Account
Value before the date annuity payments commence.
Annuitant - the person named in the application and in the
Certificate Data Page
upon whose life the payment of an annuity is based and who will
receive annuity
payments. If a Contingent Annuitant is named, then the
Annuitant will be
considered the Primary Annuitant.
Annuity Account - an account that reflects the total value of
the Owner's
Variable and Fixed Sub-Accounts.
Annuity Account Value - the sum of the Variable and Fixed
Sub-Accounts credited
to the Owner under the Annuity Account.
Annuity Payment Period - the period beginning on the Payment
Commencement Date
and continuing until all annuity payments have been made under this
Certificate.
Annuity Unit - an accounting measure used to determine the dollar
value of any
variable dollar annuity payment after the first annuity payment is
made.
Automatic Contribution Plan - a plan provided to the Owner to
allow for
automatic payment of Contributions. The Contribution amount will
be withdrawn
from a pre-authorized account and automatically credited to the
Annuity Account.
Beneficiary - the person(s) designated by the Owner to receive
death proceeds
which may become payable upon the death of an Owner or the
Annuitant. If the
<PAGE>
surviving spouse of an Owner is the surviving Joint Owner, the
surviving spouse
will be deemed to be the Beneficiary upon such Owner's death and
may take the
death benefit or elect to continue this Certificate in force. The
Beneficiary is
shown on the Certificate Data Page unless later changed by the Owner.
Certificate - the document issued to the Owner which specifies the
rights and
obligations of the Owner.
Company - First Great-West Life & Annuity Insurance Company, the
underwriter
for this annuity, located at 125 Wolf Road, Albany, New York 12205.
Contingent Annuitant - the person named in the application who will
become the
Annuitant upon the death of the Primary Annuitant. The Contingent
Annuitant is
the person named in the Certificate Data Page, unless later changed
by Request
while the Primary Annuitant is alive and before annuity payments have
commenced.
Contract - the document issued to the Policyholder which specifies
the rights
and obligations of the Policyholder.
Contractual Guarantee of a Minimum Rate of Interest - the minimum
interest rate
applicable to each Fixed Sub-Account in effect at the time the
Contribution is
made. The Contractual Guarantee of a Minimum Rate of Interest is 3%.
<PAGE>
Contributions - purchase amounts received and allocated to the
Variable or Fixed
Sub-Account(s) prior to any Premium Tax or other deductions.
Effective Date - the date on which the first Contribution is
credited to the
Annuity Account.
Eligible Fund - a registered management investment company in which
the assets
of the Series Account may be invested.
Fixed Account Value - the sum of the values of the Fixed
Sub-Accounts credited
to the Owner under the Annuity Account.
Fixed Sub-Accounts - the sub-division(s) of the Annuity Account
described in the
Certificate and in the attached Fixed Sub-Account Riders, if any.
<PAGE>
Guarantee Period - one of the time intervals of the Guarantee
Period Fund
available under this Certificate. The Company will specify the
Guarantee Period
time intervals that are available and the predetermined rate of
interest that
will apply to each of the Guarantee Period time intervals. This rate
of interest
will be equal to the annual effective rate in effect at the
time the
Contribution is made and as reflected in written
confirmation of the
Contribution. The Company may stop offering any time interval at
any time for
new Contributions. Amounts allocated to one or more Guarantee
Periods may be
subject to a Market Value Adjustment.
Guarantee Period Fund - A type of Fixed Sub-Account.
Guarantee Period Maturity Date - the last day of any Guarantee
Period.
Individual Retirement Annuity (IRA) - an annuity Contract used for a
retirement
savings program that is intended to satisfy the requirements of
Section 408 of
the Internal Revenue Code of 1986, as amended.
Investment Division - a division of the Series Account containing
the shares of
a specific portfolio of the Eligible Fund. There is an Investment
Division for
each portfolio of the Eligible Fund.
Market Value Adjustment - an adjustment which may be made to
amounts paid out
before the Guarantee Period Maturity Date due to
surrenders, partial
withdrawals, Transfers, and amounts applied to a periodic
withdrawal or to
purchase an annuity, as applicable. The Market Value Adjustment may
increase or
decrease the amount payable on one of the above described
distributions. A
negative adjustment may result in an effective interest rate
lower than the
<PAGE>
Contractual Guarantee of a Minimum Rate of Interest applicable to
this Contract
and the value of the Contribution(s) allocated to the Guarantee
Period being
less than the Contribution(s) made.
Non-qualified Annuity Certificate - an annuity Certificate which is
not intended
to be a part of a qualified retirement plan and is not intended to
satisfy the
requirements of Section 408 of the Internal Revenue Code of 1986, as
amended.
Owner (Joint Owners) - the person or persons named in the Certificate
Data Page.
The Owner is entitled to exercise all rights and privileges
under the
Certificate, while the Annuitant is living, except as
reserved by the
Policyholder. Joint Owners must be husband and wife as of the
Effective Date.
The Annuitant will be the Owner unless otherwise indicated in the
application.
If a Certificate is purchased as an Individual Retirement Annuity
under Section
408 of the Code, the Annuitant must be the sole Owner; no Joint
Owner may be
named.
Payment Commencement Date - the date on which annuity payments
or periodic
withdrawals commence under a payment option. The Payment
Commencement Date must
be at least one year after this Certificate's Effective Date.
If a Payment
Commencement Date is not shown on the Certificate Data Page,
annuity payments
will begin on the first day of the month of the Annuitant's 90th
birthday. The
Payment Commencement Date may be changed by the Owner prior to
commencement of
annuity payments or it may be changed by the Beneficiary upon the
death of an
Owner. If this is an IRA Certificate, payments which satisfy
the minimum
<PAGE>
distribution requirements of the Code must begin no later
than the
Owner/Annuitant's attainment of age 70 1/2.
Policyholder - the organization entering into the contract and
whose name
appears on the Certificate Data Page as the Policyholder.
Premium Tax - the amount of tax, if any, charged by a state
or other
governmental authority.
Request - any instruction in a form satisfactory to the Company and
received at
the Schwab Annuity Service Center (or other annuity service center
subsequently
named) from the Owner or the Owner's designee (as specified in a form
acceptable
to the Company) or the Beneficiary, (as applicable) as required by
any provision
of this Certificate or as required by the Company. The Request is
subject to any
action taken or payment made by the Company before it was processed.
Schwab Annuity Service Center - Post Office Box 7806, San
Francisco, California 94120-7806. The toll-free telephone
number is 1-800-838-0649.
Simplified Employee Pension (SEP) - an Individual Retirement Annuity
(IRA) which
may accept Contributions from one or more employers under a
retirement savings
program intended to satisfy the requirements of Section 408(k) of
the Internal
Revenue Code of 1986, as amended.
Series Account - the segregated investment account established by
the Company
under New York law and registered as a unit investment trust
under the
Investment Company Act of 1940, as amended.
<PAGE>
Surrender Value - will be equal to:
(a) Annuity Account Value with a Market Value
Adjustment, if applicable, on the effective date
of the surrender; less
(b) Premium Tax, if any.
Definitions (continued)
<PAGE>
Transaction Date - the date on which any Contribution or Request
from the Owner
will be processed by the Company at the Schwab Annuity
Service Center.
Contributions and Requests received after 4:00 p.m. EST/EDT will
be deemed to
have been received on the next business day. Requests will be
processed and the
Variable Account Value will be valued on each date that the New
York Stock
Exchange is open for trading.
Transfer - the moving of money from one sub-account to
one or more
sub-account(s).
Valuation Date - the date on which the net asset value of each
Eligible Fund is
determined.
Valuation Period - the period between two successive Valuation Dates.
VariableAccount Value- thesum ofthevalues ofthe Variable Sub-Accounts
credited to the Owner under the Annuity Account. The Variable
Account Value is
<PAGE>
credited with a return based upon the investment experience of the
Investment
Division(s) selected by the Owner and will increase or decrease
accordingly.
Variable Sub-Accounts - sub-division(s) of the Owner's
Annuity Account
containing the value credited to the Owner from an Investment
Division.
General Provisions
<PAGE>
What is your agreement with us?
ENTIRE CONTRACT
<PAGE>
This Certificate, Certificate Data Page, riders and amendments, if
any, form the
Entire Contract between the Owner and the Company. This
Entire Contract
supersedes all prior representations, statements, warranties,
promises and
agreements of any kind, whether oral or written, relating to the
subject matter
of this Certificate. All statements in the application made by an
Owner or the
Annuitant will be considered representations and not warranties.
How can this Certificate be modified?
CERTIFICATE MODIFICATION
Upon 30 days notice to the Policyholder, the Company may at any time
and without
the consent of the Policyholder or any other person, modify this
Certificate as
needed to conform to changes in tax or other law. Such modifications
will become
part of this Certificate. Nothing in the group annuity contract
invalidates or
impairs any right granted to the Certificate Owner by New
York Statutes
Insurance Law Section 3219 or the Certificate.
If this Certificate is purchased as an IRA, the Company reserves
the right to
modify this Certificate to the extent necessary to qualify it as an
Individual
Retirement Annuity as described in Section 408 of the Internal
Revenue Code of
1986, as amended, and all related sections and regulations which
are in effect
<PAGE>
during the term of this Certificate.The Company may terminate
certain Variable
and Fixed Sub-Accounts. In that event, the Owner, by Request, may
change the
allocation of the Contributions and maturing Guarantee Periods. If no
Request is
made by the date the sub-account is terminated, future
Contributions and
maturing Guarantee Periods will be allocated to the Money Market
Sub-Account.
Any modification will not affect the terms, provisions or conditions
which are,
or may be, applicable to Contributions previously made to any
such Variable
Sub-Account. Any modification will not affect the terms of any
unmatured
Guarantee Period or other Fixed Sub- Account, except as may be
described in the
attached Fixed Sub-Account riders, if any.
The Company may cease offering existing variable or fixed
annuity payment
options.
ONLY THE PRESIDENT, A VICE-PRESIDENT, OR
THE SECRETARY OF THE COMPANY CAN MODIFY
OR WAIVE ANY PROVISION OF THIS CERTIFICATE.
<PAGE>
NON-PARTICIPATING
This Certificate is non-participating. It is not eligible to
share in the
Company's divisible surplus.
<PAGE>
What if the Annuitant's age or sex is misstated?
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, the
annuity payments
established will be made on the basis of the correct age. If
payments were too
large because of misstatement, the difference with interest may be
deducted by
the Company from the next payment or payments. If payments were too
small, the
difference with interest may be added by the Company to the next
payment. The
interest rate used will be 3%.
General Provisions (continued)
How will the Contract values be reported?
REPORTS
The Company will furnish the Owner, at least annually, a
statement of the
Annuity Account Value and the Surrender Value. The Company will
furnish the
Owner copies of any other notices, reports or documents
required by law.
What are the notice and proof requirements?
<PAGE>
NOTICE AND PROOF
Any notice or demand by the Company to or upon the Owner, or any
other person
may be given by mailing it to that person's last known address as
stated in the
Company's file. In the event of the death of an Owner or the
Annuitant, the
Company will require proof of death.
Any application, report, Request, election, direction, notice or
demand by the
Owner, or any other person, must be made in a form satisfactory to
the Company.
<PAGE>
What are the tax consequences?
TAX CONSEQUENCES OF PAYMENTS
The Owner or Beneficiary, as the case may be, must determine the
timing and
amount of any benefit payable. Payments elected by the Owner in
the form of
<PAGE>
periodic withdrawals, surrenders or partial withdrawals will be tax
reported to
the Owner. Annuity payments are payable to the Annuitant and
will be tax
reported to the Annuitant. Payments made to a Beneficiary will be
tax reported
to the Beneficiary. It is recommended that a competent tax adviser
be consulted
prior to obtaining any distribution from, or changing the
ownership of, this
Certificate. A 10% federal tax penalty may apply if a surrender,
withdrawal, or
distribution is taken prior to the taxpayer's attainment of age 59
1/2.
Nothing contained herein will be construed to be tax or legal
advice. Neither
the Policyholder nor the Company assumes any responsibility or
liability for any
damages or costs, including but not limited to taxes, penalties,
interest or
attorney's fees incurred by the Owner, the Annuitant, the
Beneficiary, or any
other person arising out of any such determination.
CURRENCY
All Contributions and all transactions will be in the currency of
the United
States of America.
What are the voting rights?
VOTING RIGHTS
<PAGE>
The Company will vote the shares of an Eligible Fund. To the extent
required by
law, the Company will vote according to the instructions of
the Owner in
proportion to the interest in the Variable Sub-Account. In such
event, the
Company will send proxy materials and form(s) to the Owner for a
reply. If no
reply is received by the date specified in the proxy materials, the
Company will
vote shares of the appropriate Eligible Fund in the same proportion
as shares of
the Eligible Fund for which replies have been received.
During the Annuity Payment Period, the number of votes will
decrease as the
assets held to fund annuity payments decrease. The Owner will be
entitled to
receive the proxy materials and form(s).
Ownership Provisions
<PAGE>
What are the Owner's rights?
RIGHTS OF OWNER
<PAGE>
While the Annuitant is living, the Owner has the sole and
absolute power to
exercise all rights and privileges in this Certificate. Upon the
death of an
Owner or the Annuitant, the Death Benefit Provisions section will
apply.
How is the Beneficiary determined?
BENEFICIARY
The Owner may, while the Annuitant is living, designate or change a
Beneficiary
by Request from time to time as provided below. If an Owner
dies and the
surviving Joint Owner is the surviving spouse of the deceased
Owner, such
surviving spouse will become the Beneficiary and may take the death
benefit or
elect to continue this Certificate in force.
DESIGNATION OF BENEFICIARY
Unless changed as provided below, or as otherwise required by
law, the
Beneficiary will be as shown on the Certificate Data Page. Unless
otherwise
indicated, if more than one Beneficiary is designated, then
each such
Beneficiary so designated will share equally in any benefits
and or rights
granted by the Contract to such Beneficiary or allowed by the
Company. If the
Beneficiary is a partnership, any benefits will be paid to the
partnership as it
existed at the time of an Owner's or the Annuitant's death. The
Company may rely
on an affidavit by any responsible person to identify a Beneficiary
<PAGE>
or verify
the non-existence of a Beneficiary not identified by name.
Ownership Provisions
(continued)
CHANGE OF BENEFICIARY
The Owner may, while the Annuitant is living, change the Beneficiary
by Request.
The Company shall not be bound by any change of Beneficiary unless it
is made in
writing and recorded at the Schwab Annuity Service Center. A
change of
Beneficiary will take effect as of the date the Request is
processed at the
<PAGE>
Schwab Annuity Service Center, unless a certain date is specified by
the Owner.
If an Owner dies before the date the Request was processed, the
change will take
effect as of the date of the Request, unless the Company has
already made a
payment or has otherwise taken action on a designation or change
before receipt
or processing of such Request. A Beneficiary designated irrevocably
may not be
changed without the written consent of that Beneficiary, except to
the extent
<PAGE>
required by law.
DEATH OF BENEFICIARY
The interest of any Beneficiary who dies before an Owner or the
Annuitant will
terminate at the death of such Beneficiary. The interest of any
Beneficiary who
dies at the time of, or within 30 days after, the death of an
Owner or the
Annuitant will also terminate if no benefits have been paid to such
Beneficiary,
unless the Owner has indicated otherwise by Request. The benefits
will then be
paid as though the Beneficiary had died before the deceased Owner or
Annuitant.
SUCCESSIVE BENEFICIARIES
If an Owner dies, and the surviving Joint Owner is the surviving
spouse of the
deceased Owner, the surviving spouse will become the Beneficiary
and may take
the death benefit or elect to continue this Certificate in force. If
there is no
surviving Joint Owner, and no named Beneficiary is alive at the
time of an
Owner's death, any benefits payable will be paid to the Owner's
estate.
ANNUITANT
While the Annuitant is living and at least 30 days prior to
the annuity
<PAGE>
commencement date, the Owner may, by Request, change the Annuitant.
A change of
Annuitant will take effect as of the date the Request is processed at
the Schwab
Annuity Service Center.
How is the Contingent Annuitant determined?
CONTINGENT ANNUITANT
While the Annuitant is alive, the Owner may, by Request, designate
or change a
Contingent Annuitant from time to time. A change of Contingent
Annuitant will
take effect as of the date the Request is processed at the
Schwab Annuity
Service Center, unless a certain date is specified by the
Owner.
Can the ownership of this Certificate be changed?
CHANGE OF OWNERSHIP
<PAGE>
If this is an IRA Certificate, the Owner's right to change the
ownership is
restricted. An IRA Certificate may not be sold, assigned,
transferred,
discounted or pledged as collateral for a loan or as
security for the
performance of an obligation or for any other purpose to any person
other than
as may be required or permitted under Section 408 of the Internal
Revenue Code
of 1986, or under any other applicable section of the Code, as
amended.
<PAGE>
If this is a non-qualified Certificate, the Owner may change the
ownership while
the Annuitant is living. Any change of ownership must be made by
Request on a
form satisfactory to the Company. The change will take effect as of
the date the
Request is processed at the Schwab Annuity Service Center, unless a
certain date
is specified by the Owner, and is subject to any action taken or
payment made by
the Company before it was processed.
Can this Certificate be assigned?
COLLATERAL ASSIGNMENT
If this is an IRA Certificate, the Owner may not assign this
Certificate as
collateral.
If this is a non-qualified Certificate, the Owner can assign this
Certificate as
collateral while the Annuitant is living. The interest of the
assignee has
priority over the interest of the Owner and the interest of any
Beneficiary. Any
amounts payable to the assignee will be paid in a single sum.
A copy of any assignment must be submitted to the Company at the
Schwab Annuity
Service Center. Any assignment is subject to any action taken or
payment made by
theCompanybeforetheassignment wasprocessed.TheCompanyisnotresponsible
for the validity of any assignment. An assignment, pledge or
<PAGE>
agreement to assign
or pledge any portion of the Annuity Account Value generally will be
treated as
a distribution. It is recommended that a competent tax adviser
be consulted
prior to making such a change to this Certificate.
Who owns the Series Account?
OWNERSHIP OF SERIES ACCOUNT
The Company has absolute ownership of the assets of the Series
Account. The
portion of the assets of the Series Account equal to the reserves
and other
Certificate liabilities with respect to the Series Account are not
chargeable
with liabilities arising out of any other business the Company may
conduct.
<PAGE>
Contributions Provisions
<PAGE>
What is the Effective Date?
EFFECTIVE DATE
The Effective Date, shown on the Certificate Data Page, is the date
the initial
Contribution is credited to the Annuity Account.
How may Contributions be made?
CONTRIBUTIONS
Contributions should be payable to First Great-West Life & Annuity
Insurance
Company (the Company) at the Schwab Annuity Service Center at any
time during
the Accumulation Period. All Contributions must be paid in a form
acceptable to
the Company, during the lifetime of the Annuitant and before
the Payment
Commencement Date. Coverage will begin on the Effective Date.
At any time after the Effective Date, the Owner may make
additional
Contributions. The minimum amount accepted after the initial
Contribution is
$500 except subsequent payments made via an Automatic Contribution
Plan have a
minimum of $100 per month. Total Contributions while this
Certificate is in
force may exceed $1,000,000 with prior approval from the Company.
The Company
may modify these limitations.
How are Contributions allocated?
<PAGE>
ALLOCATION OF CONTRIBUTIONS
During the Free Look Period, all Contributions will be processed as
follows:
Amounts to be allocated to one or more of the Fixed
Sub-Accounts will be
allocated as directed, effective upon the Transaction Date.
(Allocation
will not be delayed until the end of the Free
Look Period.)
Amounts to be allocated to one or more of the Variable Sub-Accounts
will first
be allocated to the Money Market Sub-Account and will
remain there
until the next Transaction Date following end of the Free
Look Period
plus five calendar days. On that date, the Variable Account
Value held
in the Money Market Sub-Account will be allocated to
the Variable
Sub-Accounts selected by the Owner. During the Free Look
Period, the
Owner may re-allocate among the Variable Sub- Accounts.
<PAGE>
If the Certificate is returned during the Free Look
Period, it will be void from the start, and the Company
will refund the greater of: 1) Contributions received; or
2) the Annuity Account Value less surrenders,
<PAGE>
withdrawals, and distributions.
After the Free Look Period, subsequent Contributions will be
allocated in the
Annuity Account as Requested by the Owner. If there are no
accompanying
instructions, then allocations will be made in accordance
with standing
instructions. Allocations will be effective upon the Transaction
Date.
Account Value and Market Value Adjustment Provisions
What is the annual Certificate Maintenance Charge? CERTIFICATE
MAINTENANCE
CHARGE The following charge is applicable to a Certificate having
an Annuity
Account Value of less than $50,000. Each year, beginning on
the first
anniversary of the Certificate Effective Date, a Certificate
Maintenance Charge
of not more than $25 will be deducted from the Annuity Account. This
charge will
be deducted from the Money Market Fund Sub-Account. If there is not
sufficient
value in the Money Market Sub-Account to cover all of the
Certificate
Maintenance Charge, the remainder will be deducted
proportionately from the
other Variable Sub-Accounts based on their relative values. If
<PAGE>
there is not
sufficient value in the Variable Sub-Accounts, then the
remainder will be
deducted from the Fixed Sub- Accounts. There is no Certificate
Maintenance
Charge after the Annuity Commencement Date. There is no Market Value
Adjustment
on amounts taken from Fixed Sub-Accounts for a Certificate
Maintenance Charge.
VARIABLE ACCOUNT PROVISIONS
How is the Variable Account Value determined?
VARIABLE ACCOUNT VALUE
The Variable Account Value for the Owner on any date during the
Accumulation
Period will be the sum of the values of the Variable Sub-Accounts.
The value of the Owner's interest in a Variable Sub- Account will be
determined
by multiplying the number of the Owner's Accumulation Units by the
accumulation
unit value for that Variable Sub-Account.
<PAGE>
Account Value and Market Value
Adjustment Provisions (continued)
<PAGE>
ACCUMULATION UNITS
For each Contribution, the number of Accumulation Units credited
for the Owner
to a Variable Sub-Account will be determined by dividing the
amount of the
Contribution, less Premium Tax, if any, by the accumulation unit
value for that
Variable Sub-Account on the applicable Transaction Date.
ACCUMULATION UNIT VALUE
The initial accumulation unit value of each Variable Sub-
Account was
established at $10. The accumulation unit value of a Variable
Sub-Account on a
Valuation Date is calculated by multiplying the accumulation unit
value as of
the immediately preceding Valuation Date by the net investment
factor as
described in the Net Investment Factor provision below.
The dollar value of an Accumulation Unit will vary in amount
depending on the
investment experience of the Eligible Fund and charges taken
from the
Sub-Account.
NET INVESTMENT FACTOR
<PAGE>
The net investment factor for any Variable Sub-Account for any
Valuation Period
is determined by dividing (a) by (b), and subtracting (c) from the
result where:
(a) is the net result of:
(i) the net asset value per share of the Eligible Fund shares
held in the
Variable Sub-Account determined as of the end of
the current
Valuation Period; plus
(ii) the per share amount of any dividend (or, if applicable,
capital gain
distributions) made by the applicable Eligible Fund on
shares held in
the Variable Sub-Account if the "ex-dividend" date occurs
during the
current Valuation Period; minus or plus
(iii) a per unit charge or credit for any taxes incurred by or
reserved for
in the Variable Sub-Account, which is determined by the
Company to
<PAGE>
have resulted from the investment operations of
the Variable
Sub-Account.
(b) is the net result of:
(i) the net asset value per share of the Eligible Fund shares
held in the
Variable Sub-Account determined as of the end of the
immediately
preceding Valuation Period; minus or plus
<PAGE>
(ii) the per unit charge or credit for any taxes incurred by
or reserved
for in the Variable Sub-Account for the immediately
preceding
Valuation Period.
(c) is an amount representing the risk charge deducted from
each Variable
Sub-Account on a daily basis, equal to an annual rate as
shown in the
table below as a percentage of the daily net asset value of
each Variable
Sub-Account. This charge will not exceed:
Mortality: Expense: Total:
.68% maximum .17% maximum .85% maximum
The net investment factor may be greater than, less than, or
equal to one.
Therefore, the accumulation unit value may increase, decrease
or remain
unchanged.
The per share amount of any dividend referred to in paragraph (a)(ii)
includes a
deduction for an investment advisory fee. This fee compensates the
investment
adviser for services provided to the Eligible Fund. The fee may
differ between
Eligible Funds and may be renegotiated each year.
<PAGE>
RISK CHARGE
The risk charge compensates the Company for its assumption of
certain mortality
and expense risks. This charge is set forth above in the Net
Investment Factor
provision.
FIXED ACCOUNT PROVISIONS
How is the Fixed Account Value determined?
GUARANTEE PERIOD FUND
The Guarantee Period Fund is a type of Fixed Sub- Account. The
Owner, by
Request, may allocate all or a portion of a Contribution to any of
the several
Guarantee Periods then offered by the Company. The sum of the
values of the
<PAGE>
Owner's Guarantee Periods is the value of the Owner's interest in
the Guarantee
Period Fund.
Account Value and Market Value
Adjustment Provisions (continued)
<PAGE>
What is the value of each Guarantee Period?
VALUE OF GUARANTEE PERIOD
All Contributions allocated to a Guarantee Period will earn an
annual effective
rate of interest equal to the rate stated by the Company for the
applicable
Guarantee Period from the Transaction Date to the end of the
Guarantee Period.
The account will be credited daily with interest earned.
If the Owner does not break a Guarantee Period, the annual
effective rate will
be at least the Contractual Guarantee of a Minimum Rate of
Interest. If the
Owner breaks a Guarantee Period, a Market Value Adjustment may apply.
The Market
Value Adjustment is applied to the amount of Transfer or withdrawal
Requested
and a negative adjustment may cause the amount Transferred or
withdrawn to be
less than the amount Requested.
Each Guarantee Period has its own value, which is calculated as
follows:
the Owner's Contributions, less Premium Tax, if any, in
that Guarantee Period; plus
interest earned; less
amounts Transferred, distributed, surrendered (in whole
or in part), or applied to an annuitization
option; less
periodic withdrawals; less
A"A Certificate Maintenance Charges.
<PAGE>
ALLOCATION AT GUARANTEE PERIOD
MATURITY DATE
At any time prior to the Guarantee Period Maturity Date, the Owner
may Request
to allocate the maturity value of that Guarantee Period among
any of the
Variable and Fixed Sub-Accounts then offered by the Company
under this
Certificate. The election is effective on its Guarantee Period
Maturity Date.
If the election is not received at the Schwab Annuity Service
Center prior to
the Guarantee Period Maturity Date, the value of the matured
Guarantee Period
will be allocated to a new Guarantee Period with the same Guarantee
Period as
<PAGE>
the matured Guarantee Period. If the new Guarantee Period would
mature later
than the Payment Commencement Date, the value will be allocated to
the Guarantee
Period that matures closest to the Payment Commencement Date.
If the Company is not then offering the same Guarantee Period
under the
<PAGE>
Certificate, the value of the matured Guarantee Period will be
allocated to a
new Guarantee Period with the closest shorter Guarantee Period then
available.
If none of the above is available, the value of the matured
Guarantee Period
will be allocated to the Money Market Sub-Account.
If held to maturity, amounts from a matured Guarantee Period
allocated to a new
Guarantee Period or other Fixed Sub-Account will earn the annual
effective rate
applicable to that Guarantee Period or Fixed Sub- Account. This
annual effective
rate may differ from the annual effective rate applicable to
the matured
Guarantee Period.
What if the Guarantee Period is broken prior to maturity?
BREAKING A GUARANTEE PERIOD
Any Transfer, surrender (in whole or in part), distribution due to
death, or the
selection of an annuity option prior to the Guarantee Period
Maturity Date will
be known as breaking a Guarantee Period. When a Request to break
a Guarantee
Period is received, the Guarantee Period that is closest to the
Guarantee Period
Maturity Date will be broken first.
<PAGE>
If a Guarantee Period is broken, a Market Value
Adjustment may be assessed. The Market Value
Adjustment may increase or decrease the value of the
amount being Transferred or withdrawn from the
Guarantee Period. The Market Value Adjustment is
described below.
Account Value and Market Value
Adjustment Provisions (continued)
MARKET VALUE ADJUSTMENT
Distributions from the amounts allocated to a Guarantee Period
due to a full
surrender or partial withdrawal, Transfer, application of
amounts to the
Periodic Withdrawal Option or to purchase an annuity, prior to
a Guarantee
Period Maturity Date will be subject to a Market Value Adjustment
("MVA"). An
<PAGE>
MVA may increase or decrease the amount payable on one of the above
described
distributions. The Amount Available for a full surrender, partial
withdrawal, or
Transfer is the Amount Requested plus the MVA.
Amount Available = Amount Requested + MVA
<PAGE>
The MVA is calculated by multiplying the amount Requested by the
Market Value
Adjustment Factor ("MVAF"). The formula used to determine the MVA
is:
MVA = (Amount Requested) X (MVAF)
The Market Value Adjustment Factor (MVAF) is:
[GRAPHIC
OMITTED]-1
where:
i is the U.S. Treasury Strip ask side yield as published in The
Wall Street
Journal on the last business day of the week prior to the date
the stated
rate of interest was established for the Guarantee Period.
The term of i
is measured in years and equals the term of the Guarantee
Period; and
j is the U.S. Treasury Strip ask side yield as published in The
Wall
Street Journal on the last business day of the week prior to
the week the
Guarantee Period is broken. The term of j equals the
remaining term to
maturity of the Guarantee Period, rounded up to the higher
number of
years; and
N is the number of complete months remaining until maturity.
The Market Value Adjustment will equal 0 if N is less than 6.
If The Wall Street Journal ceases to publish the U.S. Treasury
<PAGE>
Strip ask side
yield, an alternate source for the same index will be used. If
the Treasury
Strip ask side yield is not published anywhere, an appropriate
substitute index
of publicly traded obligations will be chosen.
The Market Value Adjustment will apply to any Guarantee Period
broken six or
more months prior to the Guarantee Period Maturity Date in each of
the following
situations:
Transfers to another Guarantee Period, Fixed Sub- Account or to an
Investment
Division offered under this Certificate; or
Surrenders, partial withdrawals, annuitization or periodic
withdrawals.
The Market Value Adjustment will not apply to any Guarantee Period
having fewer
than 6 months prior to the Guarantee Period Maturity Date in
each of the
following situations:
<PAGE>
Transfer to another Guarantee Period, Fixed Sub- Account or to
a Variable
Sub-Account offered under this Certificate; or
Surrenders, partial withdrawals, annuitization or periodic
withdrawals.
<PAGE>
<PAGE>
Transfer Provisions
Can Transfers be made between the Fixed and Variable Sub-Accounts?
TRANSFERS
The Owner may make Transfers by Request. The
following provisions apply:
(a) At any time prior to the date annuity payments
begin, the Owner, by Request, may Transfer all or
a portion of the Annuity Account Value among the
Variable and Fixed Sub-Accounts currently offered
by the Company. No Transfers are permitted after
the election of a fixed annuity payment option;
however, if a variable annuity payment option is
elected, Transfers may be made from one Variable
Sub-Account to another.
(b) A Transfer will be effective upon the Transaction
Date.
(c) A Transfer from Fixed Sub-Accounts will be
subject to the terms of the Fixed Account
Provisions and the attached Fixed Sub-Account
Rider(s), if any. The Annuity Account Value may
be Transferred prior to the Guarantee Period
Maturity Date. The Market Value Adjustment will
be assessed except in the situations described in
the Market Value Adjustment Provision.
(d) There is no administrative charge for the first
twelve Transfers made in a calendar year. There is
a $10 administrative fee for each subsequent
Transfer. All Transfers made on a single
Transaction Date will be aggregated to count as
only one Transfer toward the twelve free Transfers;
however, if a one time rebalancing Transfer also
occurs on the Transaction Date, it will be counted
as a separate and additional Transfer.
<PAGE>
Transfer Provisions (continued)
Is Dollar Cost Averaging offered?
DOLLAR COST AVERAGING
By Request, the Owner may elect Dollar Cost Averaging in order to
purchase units
<PAGE>
of the Variable Sub-Accounts over a period of time.
The Owner may Request to automatically Transfer a predetermined
dollar amount,
subject to the Company's minimum, at regular intervals from any
one or more
designated Variable Sub-Accounts to one or more of the
remaining, then
available, Variable Sub-Accounts. The unit value will be determined
on the dates
of the Transfers. The Owner must specify the percentage to be
Transferred into
<PAGE>
each designated Variable Sub-Account. Transfers may be set up on any
one of the
following frequency periods: monthly, quarterly, semiannually, or
annually. The
Transfer will be initiated on the Transaction Date one
frequency period
following the date of the Request. The Company will provide a list
of Variable
Sub-Accounts eligible for Dollar Cost Averaging which may be
modified from time
to time. Amounts Transferred through Dollar Cost Averaging are
not counted
against the twelve free Transfers allowed in a calendar year.
The Owner may terminate Dollar Cost Averaging at any time by
Request. Dollar
Cost Averaging will terminate automatically upon the annuity
commencement date.
Participation in Dollar Cost Averaging and the Rebalancer Option
at the same
time is not allowed. Participation in Dollar Cost Averaging does
not assure a
greater profit, or any profit, nor will it prevent or necessarily
alleviate
losses in a declining market. The Company reserves the right to
modify, suspend,
or terminate Dollar Cost Averaging at any time.
Is rebalancing available?
THE REBALANCER OPTION
By Request, the Owner may elect the Rebalancer Option in order to
automatically
Transfer among the Variable Sub-Accounts on a periodic basis.
This type of
automatic Transfer program automatically reallocates the Variable
Account Value
to maintainaparticularpercentage allocationamong VariableSub-Accounts
selected by the Owner. The amount allocated to each Variable
<PAGE>
Sub-Account will
grow or decline at different rates depending on the investment
experience of the
Variable Sub-Account.
The Owner may Request that rebalancing occur one time only, in
which case the
Transfer will take place on the Transaction Date of the Request.
This Transfer
will count as one Transfer towards the twelve free Transfers
allowed in a calendar year.
Rebalancing may also be set up on a quarterly, semiannual, or
annual basis, in
which case the first Transfer will be initiated on the
Transaction Date one
frequency period following the date of the Request. On the
Transaction Date for
the specified Request, assets will be automatically reallocated to
the selected
funds. Rebalancing will continue on the same Transaction Date for
subsequent
periods. In order to participate in the Rebalancer Option, the
entire Variable
Account Value must be included. Transfers set up with these
frequencies will not
count against the twelve free Transfers allowed in a calendar year.
The Owner must specify the percentage of Variable Account Value to
be allocated
to each Variable Sub-Account and the frequency of rebalancing.
The Owner may
terminate the Rebalancer Option at any time by Request. The
Rebalancer Option
will terminate automatically upon the annuity commencement date.
<PAGE>
Participation in the Rebalancer Option and Dollar Cost Averaging
at the same
time is not allowed. Participation in the Rebalancer Option does
not assure a
greater profit, nor will it prevent or necessarily alleviate
losses in a
declining market. The Company reserves the right to modify,
suspend, or
terminate the Rebalancer Option at any time.
Death Benefit Provisions
<PAGE>
How is the death benefit paid?
PAYMENT OF DEATH BENEFIT
Upon the death of an Owner or the Annuitant, the death benefit
will become
payable in accordance with these death benefit provisions
following the
Company's receipt of a Request, while this Certificate is in force.
The amount of the death benefit will be as follows:
If the Owner or Annuitant dies after the date annuity payments
commence and
before the entire interest has been distributed, the remaining
annuity payments,
if any, will be paid to the Beneficiary under the payment option
applicable on
the date of death. The Beneficiary will not be allowed to change
the method of
distribution in effect on the date of the Owner's or Annuitant's
death or to
elect a new payment option; or
If the Owner or Annuitant dies before the date annuity payments
commence, the
Company will pay proceeds to the Beneficiary the greater of A
and B, plus C
below:
A. the Variable Account Value as of the date the
Request for payment is received, less Premium Tax,
if any; and
B. the sum of Contributions allocated to the Variable
Sub-Account(s), less partial surrenders and
Periodic Withdrawals taken from the Variable
Sub-Account(s), less amounts Transferred to the
Fixed Sub-Account(s), less Premium Tax, if any.
<PAGE>
Plus
C. the Fixed Account Value as of the date the Request
for payment is received, less Premium Tax, if any.
When an Owner or the Annuitant dies before the annuity commencement
date and a
death benefit is payable to a Beneficiary, the death benefit
proceeds will
remain invested in accordance with the allocation instructions
given by the
Owner until new allocation instructions are Requested by the
Beneficiary or
until the death benefit is actually paid to the Beneficiary. The
death benefit
will be determined as of the date payments commence; however, on
the date a
payment option is processed, amounts in the Variable
Sub-Account will be
Transferred to the Money Market Investment Division unless the
Beneficiary
otherwise elects by Request. Distribution of the death benefit may
be Requested
to be made as follows (subject to the distribution rules set forth
below):
<PAGE>
A. Proceeds from the Variable Sub-Account(s)
1. payment in a single sum; or
2. payment under any of the variable annuity options
provided under the Certificate.
<PAGE>
B. Proceeds from the Fixed Sub-Account(s)
1. payment in a single sum; or
2. payment under any of the annuity options provided
under this Certificate.
DISTRIBUTION RULES
If Annuitant Dies Before Annuity Commencement Date
Upon the death of the Annuitant while the Owner is living, and
before the
annuity commencement date, the death benefit provided under the
Certificate will
be paid to the Beneficiary unless there is a surviving Contingent
Annuitant.
If a Contingent Annuitant was named by the Owner prior to the
Annuitant's death,
and the Annuitant dies before the annuity commencement date, while
the Owner and
Contingent Annuitant are living, no death benefit will be payable
by reason of
the Annuitant's death and the Contingent Annuitant will become the
Annuitant.
If a corporation or other non-individual is an Owner, or if
the deceased
Annuitant is an Owner, the death of the Annuitant will be treated
as the death
of an Owner and the Certificate will be subject to the death
of an Owner
provisions described below.
If an Owner Dies Before Annuity Commencement Date If an Owner dies
before the
annuity commencement date, and such Owner was the Annuitant, the
following
provisions shall apply:
<PAGE>
(1) If there is a Joint Owner (who is the surviving spouse of
the deceased
Owner) and a Contingent Annuitant, the Joint Owner will become
the Owner and
the Beneficiary, the Contingent Annuitant will become the
Annuitant, and the
Certificate will continue in force;
(2) If there is a Joint Owner who is the surviving spouse of
the deceased
Owner but no Contingent Annuitant, the Joint Owner will become
the Owner,
the Annuitant and the Beneficiary, and may take the death
benefit or elect
to continue this Certificate in force;
(3) In all other cases, the Company will pay the death
benefit to the
Beneficiary even if a former spouse Joint Owner, the Annuitant
and/or the
Contingent Annuitant are alive at the time of an Owner's death,
unless the
sole Beneficiary is the deceased Owner's surviving
spouse and the
Beneficiary Requests to become the Owner and the Annuitant, and
to continue
the Certificate in force.
If an Owner dies before the annuity commencement date, and such
Owner was not
<PAGE>
the Annuitant, the following provisions shall apply:
(1) If there is a Joint Owner who is the surviving spouse of
the deceased
Owner, the Joint Owner will become the Owner and Beneficiary
and may take
the death benefit or elect to continue this Certificate in force.
(2) In all
other cases, the Company will pay the death benefit to the
Beneficiary even
if a former spouse Joint Owner, the Annuitant and/or the
Contingent
Annuitant are alive at the time of the Owner's death,
unless the sole
<PAGE>
Beneficiary is the
Death Benefit Provisions (continued)
deceased Owner's surviving spouse and such Beneficiary Requests to
become
the Owner and the Annuitant and to continue the Certificate in force.
To whom and when is the death benefit payable? Any death benefit
payable to the
Beneficiary upon an Owner's death will be distributed as follows:
(1) If the Owner's surviving spouse is the person entitled
to receive
benefits upon the Owner's death, the surviving spouse will be
treated as the
Owner and will be allowed to take the death benefit or
continue the
Certificate in force.
(2) If a non-spouse individual is the person entitled to
receive benefits
upon the Owner's death, such individual may elect, not later
than one year
after the Owner's date of death, to receive the death benefit
in either a
single sum or payment under any of the variable or fixed
annuity options
available under the Certificate, provided that: (a) such
annuity is
distributed in substantially equal installments over the
life or life
expectancy of such Beneficiary; and (b) such distributions
begin not later
than one year after the Owner's date of death. If no election
is received
by the Company from an individual non- spouse Beneficiary
such that
substantially equal installments have begun no later than one
year after
<PAGE>
the Owner's date of death, then the entire amount must be
distributed
within five years of the Owner's date of death; or
(3) If a corporation or other non-individual entity is
entitled to receive benefits upon the Owner's death,
the
death benefit must be completely distributed within five
years of the
Owner's date of death.
The death benefit will be determined as of the date the payments
commence.
If Annuitant Dies After Annuity Commencement Date Upon the
death of the
Annuitant (or any Owner/Annuitant) after the annuity commencement
date, any
benefit payable must be distributed to the Beneficiary in accordance
with and at
least as rapidly as under the annuity option then in effect.
If an Owner Dies After Annuity Commencement Date and While the
Annuitant is
Living Upon the death of an Owner after the annuity commencement
date and while
the Annuitant is living, any benefit payable will continue to be
distributed to
the Annuitant at least as rapidly as under the annuity option then
in effect.
All of the Owner's rights granted under the Certificate or
allowed by the
Company will pass to any surviving Joint Owner and, if none, to the
Annuitant.
<PAGE>
COMPLIANCE WITH CODE SECTION 72(s)
In any event, no payment of benefits provided under the
Certificate will be
allowed that does not satisfy the requirements of Code Section 72(s),
as amended
from time to time, and any other applicable federal or state
law, rules or
regulations. These death benefit provisions will be interpreted and
administered
in accordance with such requirements.
<PAGE>
Surrenders And Partial Withdrawals
Can withdrawals be made from this Certificate? SURRENDER BENEFIT
At any time
prior to the date annuity payments commence and subject to the
provisions of
this Certificate, the Owner may surrender this Certificate for
the Surrender
Value which will be computed as of the Transaction Date. The
Company will make
the distribution, paid in a single sum, as soon as practical after
receipt of
the Request.
PARTIAL WITHDRAWALS
The Owner may make a partial withdrawal from the Annuity Account
Value at any
time, by Request, prior to the date annuity payments commence and
subject to the
terms of this Certificate. A Market Value Adjustment may apply.
The minimum
partial withdrawal amount is $500. After any partial
withdrawal, if the
remaining Annuity Account Value is less than $2,000, then a full
surrender may
be required.
By Request, the Owner must elect the Variable or Fixed
Sub-Account(s), or a
combination of them, from which a partial withdrawal is to be
made and the
amount to be withdrawn from each sub-account.
The Annuity Account Value will be reduced by the partial withdrawal
amount. The
partial withdrawal proceeds may be greater than or less than
the amount
requested, depending on the effect of the Market Value Adjustment.
<PAGE>
The following terms apply:
(a) No partial withdrawals are permitted after the date
annuity payments commence.
(b) If a partial withdrawal is made within 30 days of the
date annuity
payments are scheduled to commence, the Company may delay
the Payment
Commencement Date by 30 days.
(c) A partial withdrawal will be effective upon the
Transaction Date.
(d) A partial withdrawal from a Fixed Sub-Account may be subject to
the Market
Value Adjustment Provisions, the Fixed Account
Provisions of this
Certificate, and the terms of the attached Fixed Sub-Account
Rider(s), if
any.
Surrenders And Partial Withdrawals
(continued)
POSTPONEMENT
In accordance with state law, if the Company receives a Request for
surrender or
partial withdrawal, the Company may postpone any cash payment as
follows:
<PAGE>
from the Fixed Account Value, for no more than 6
months (30 days in West Virginia); and
from the Variable Account Value, for no more than 7 business days.
During the postponement period:
<PAGE>
the Fixed Sub-Account(s) will continue to earn interest at
the annual
effective rate applicable to the Guarantee Period (or
at the rate
applicable to the attached Fixed Sub-Account Riders, if any)
that was in
effect at the time the Request for surrender or partial
withdrawal was
made; and
the Variable Account Value will continue to be subject to the
investment
experience (gains or losses) of the underlying Eligible
Fund(s) and all
applicable charges.
Payment Options
How are annuity payment options and the Periodic Withdrawal Option
elected?
HOW TO ELECT
The Request of the Owner is required to elect, or change the
election of, a
payment option and must be received by the Company at least 30 days
prior to the
Payment Commencement Date.
At any time prior to the Payment Commencement Date, the Owner
may Transfer
between Fixed and Variable Sub-Account options, subject to
the Transfer
provisions of this Certificate.
However, on the Payment Commencement Date, the following restrictions
<PAGE>
apply:
the Variable Account Value may be applied only to
any of the variable annuity payment options
available; and
the Fixed Account Value may be applied only to any of the
fixed annuity
payment options available.
If an option has not been elected within 30 days of the Payment
Commencement
Date:
The Variable Account Value will be applied under Variable Annuity
Payment
Option 1 to provide payments for life with a guaranteed
period of 20
years; and
<PAGE>
The Fixed Account Value will be applied under Fixed Annuity
Payment
Option 3 to provide payments for life with a guaranteed
period of 20
years.
What guidelines apply to annuity payment options?
SELECTION OF PAYMENT OPTIONS
<PAGE>
(a) A single sum payment may be elected. If so, the
amount to be paid is the Surrender Value.
(b) If a fixed annuity payment option is elected, the amount to be
applied is
the Fixed Account Value, as of the Payment Commencement
Date, plus a
Market Value Adjustment, if applicable, less
Premium Tax, if any.
(c) If a variable annuity payment option is elected, the amount to
be applied
is the Variable Account Value, as of the Payment Commencement
Date, less
Premium Tax, if any.
(d) The minimum amount that may be withdrawn
from the Annuity Account Value to purchase an
annuity payment option is $2,000. If the amount
is less than $2,000, the Company may pay the
amount in a single sum subject to the Partial
Withdrawals Provision. Payments may be elected
to be received on any of the following frequency
periods: monthly, quarterly, semiannually, or
annually.
(e) Payments to be made under the annuity payment option selected
must be at
least $50. The Company reserves the right to make the
payments using the
most frequent payment interval which produces a payment of
not less than
$50.
(f) The maximum amount that may be applied under any annuity
payment option
is $1,000,000, unless prior approval is obtained from the
Company.
(g) For information on electing periodic withdrawals, refer to
the Periodic
<PAGE>
Withdrawal Option section on Page 17.
What variable annuity payment options are
available?
VARIABLE ANNUITY PAYMENT OPTIONS
The guaranteed annuity table is based on mortality from the 1983
Table (a) for
Individual Annuity Valuation and a guaranteed interest rate of 5% per
year.
The following variable annuity payment options are available:
(a) Option 1: Variable Life Annuity with Guaranteed
<PAGE>
Period
Payments for the guaranteed Annuity Payment Period elected or
the lifetime
of the Annuitant whichever is longer. The guaranteed
Annuity Payment
Period elected may be 5, 10, 15, or 20 years. Upon death of the
Annuitant,
the Beneficiary will begin to receive the remaining payments
at the same
interval elected by the Owner. See Table A.
<PAGE>
Payment Options (continued)
(b) Option 2: Variable Life Annuity
Payments for the Annuitant's lifetime, without a
guaranteed period. See Table A. Upon death of
the Annuitant, all payments cease and no
amounts are payable to the Beneficiary.
(c) Option 3: Any Other Form
Any other form of variable annuity which is acceptable to the
Company.
VARIABLE ANNUITY PAYMENT PROVISIONS
These variable annuity payment options are subject to the following
provisions:
Amount of First Payment
The first payment under a variable annuity payment option will be
based on the
value of each Variable Sub- Account on the 5th Valuation Date
preceding the date
annuity payments commence. It will be determined by applying the
appropriate
rate from Table A to the amount applied under the payment option.
Annuity Units
The number of Annuity Units paid to the Annuitant for each Variable
Sub-Account
is determined by dividing the amount of the first payment by the sub-
account's
annuity unit value on the 5th Valuation Date preceding the date
the first
payment is due. The number of Annuity Units used to calculate each
<PAGE>
payment for a
Variable Sub-Account remains fixed during the Annuity Payment Period.
Amount of Payments after the First
Payments after the first will vary depending upon the investment
experience of
the Variable Sub-Accounts. The subsequent amount paid from each
sub-account is
determined by multiplying (a) by (b) where (a) is the number of
sub-account
Annuity Units to be paid and (b) is the sub-account annuity unit
value on the
5th Valuation Date preceding the date the annuity payment is
due. The total
amount of each variable annuity payment will be the sum of the
variable annuity
payments for each Variable Sub-Account. The Company guarantees that
the dollar
amount of each payment after the first will not be affected by
variations in
expenses or mortality experience.
<PAGE>
The 5% interest rate stated above is the measuring point for
subsequent annuity
payments. If the actual Net Investment Factor (annualized)
exceeds 5%, the
payment will increase at a rate equal to the amount of such excess.
Conversely,
if the actual rate is less than 5%, annuity payments will
decrease. It the
assumed rate of interest were to be increased, annuity payments would
start at a
higher level, but would increase more slowly or decrease more
rapidly.
<PAGE>
The annuity Unit value at the end of any Valuation Period is
determined by
multiplying the Annuity Unit value for the immediately preceding
Valuation
Period by the product of:
(a) the Net Investment Factor of the Variable Sub-
Account for the Valuation Period for which the
Annuity Unit is being determined; and
(b) a daily factor of .999866 to neutralize the assumed investment
return of 5%
per year used in the annuity table.
The value of each Variable Sub-Account's Annuity Unit is set
initially at $10.
The value of the Annuity Units is determined as of a Valuation
Period five days
prior to the payment in order to permit calculation of amounts
of annuity
payments and mailing of checks in advance of their due date.
Transfers After the Payment Commencement Date
Once variable annuity payments have begun, the Owner may Transfer all
or part of
the Variable Account Value from one Variable Sub-Account to another.
Transfers
after the Payment Commencement Date will be made by converting
the number of
Annuity Units being Transferred to the number of Annuity
Units of the
sub-account to which the Transfer is made. The result will be
that the next
annuity payment, if it were made at that time, would be the same
amount that it
would have been without the Transfer. Thereafter, annuity payments
will reflect
changes in the value of the new Annuity Units. Once annuity payments
have begun,
<PAGE>
no Transfers may be made from a fixed annuity payment option to
a variable
annuity payment option, or from a variable annuity payment option
to a fixed
annuity payment option. The Contract's Transfer provisions will
apply.
What fixed annuity payment options are available?
FIXED ANNUITY PAYMENT OPTIONS
The guaranteed annuity table is based on mortality from the 1983
Table (a) for
Individual Annuity Valuation and a guaranteed interest rate of 2
1/2% per year.
The Company may offer a better rate than the guaranteed rate
shown. The rate
offered will result in annuity benefits at the time of commencement
that will
not be less than those available to new single premium annuity
applicants of the
same class at the time.
The following fixed annuity payment options are available:
(a) Option 1: Income of Specified Amount
An annuity payment at 12-, 6-, 3-, or 1-month intervals,
of an amount
<PAGE>
elected by the Owner for an Annuity Payment Period of not
more than 240
months. Upon death of the Annuitant, the Beneficiary
will begin to
receive the remaining payments at the same interval that was
elected by
the Owner. See Table C.
Payment Options (continued)
<PAGE>
(b) Option 2: Income for a Specified Period
An annuity payment at 12-, 6-, 3-, or 1-month intervals, for
the number of
months elected, for an Annuity Payment Period of not
more than 240
months. Upon death of the Annuitant, the Beneficiary
will begin to
receive the remaining payments at the same interval that was
elected by
the Owner. See Table C.
(c) Option 3: Fixed Life Annuity with Guaranteed Period
Payments for the guaranteed Annuity Payment Period elected
which may be 5,
10, 15, or 20 years or the lifetime of the Annuitant whichever
is longer.
Upon death of the Annuitant, any amounts remaining payable
under this
payment option will be paid to the Beneficiary. See Table B.
(d) Option 4: Fixed Life Annuity
Monthly payments for the Annuitant's lifetime, without
a guaranteed period. See Table B. Upon death of
the Annuitant, all payments cease and no amounts
are payable to the Beneficiary.
(e) Option 5: Any Other Form
Any other form of annuity which is acceptable to the Company.
What guidelines apply to periodic withdrawals?
PERIODIC WITHDRAWAL OPTION
The Owner must Request that all or part of the Annuity Account Value
<PAGE>
be applied
to a Periodic Withdrawal Option. Premium Tax, if applicable, will
be deducted
before applying the amount Requested. While periodic withdrawals
are being
received:
a Market Value Adjustment applies to periodic withdrawals
from Guarantee
Periods 6 or more months prior to maturity;
the Owner may keep the same Fixed and Variable
Sub-Accounts as were in force before periodic
withdrawals began;
Charges and fees under this Certificate continue to
apply;
<PAGE>
o the Owner may continue to exercise all contractual
rights that are
available prior to electing a payment option, except that no
Contributions
may be made;
o if a partial withdrawal is made from a Fixed Sub- Account,
the Market
Value Adjustment, if applicable, will be applied;
<PAGE>
Guarantee Periods renew into the shortest Guarantee Period then
available.
HOW TO ELECT PERIODIC WITHDRAWALS
The Request of the Owner is required to elect, or change
the election of, the Periodic Withdrawal Option. The
Owner must Request:
o the withdrawal frequency of either 12-, 6-, 3-,
or 1-month intervals;
o a withdrawal amount; a minimum of $100 is
required;
o the calendar month, day, and year on which
withdrawals are to begin;
o one Periodic Withdrawal Option; and
o the allocation of withdrawals from the Variable
and/or Fixed Sub-Account(s) as follows:
1) Prorate the amount to be paid across all
Variable and Fixed Sub-Accounts in
proportion to the assets in each sub-account;
or
2) Select the Variable and/or Fixed Sub-
Account(s) from which withdrawals will be
made. Once the Variable and/or Fixed Sub-
Accounts(s) have been depleted, the Company
will automatically prorate the remaining
withdrawals against all remaining available
Sub-Accounts, unless the Owner Requests the
selection of another Variable Sub-Account.
The Owner may elect to change the
withdrawal option and/or frequency once each
calendar year.
<PAGE>
Periodic Withdrawals will cease on the earlier of the date:
the amount elected to be paid under the option selected
has been reduced to zero;
the Annuity Account Value is zero;
the Owner Requests that withdrawals stop;
<PAGE>
the Owner purchases an annuity option; or
of death of an Owner or the Annuitant.
PERIODIC WITHDRAWAL OPTIONS
<PAGE>
AVAILABLE
The Owner must elect one of these 5 withdrawal options:
1) Income for a Specified Period for at least thirty-six
(36) months - The Owner elects the duration over
which withdrawals will be made. The amount paid
will vary based on the duration; or
2) Income of a Specified Amount for at least thirty-
six (36) months - The Owner elects the dollar
amount of the withdrawals. Based on the amount
elected, the duration may vary; or
3) Interest Only - The withdrawals will be based on
the amount of interest credited to the Fixed Sub-
Account(s) between each withdrawal. Available
only if 100% of the account value is invested in the
Fixed Sub-Account; or
4) Minimum Distribution - If this is an IRA
Certificate, the Owner may Request minimum
distributions as specified under Internal Revenue
Code 401(a)(9); or
5) Any Other Form for a period of at least thirty-six (36)
months - Any
other form of periodic withdrawal which is acceptable to the
Company.
TABLE A - Variable
Life Annuity
FEMALE
<PAGE>
Monthly Payment for
Each $1,000
of Annuity
Account Value
<PAGE>
Without With Guaranteed Period
<PAGE>
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
20 4.29 4.29 4.29 4.29 4.29
21 4.31 4.31 4.30 4.30 4.30
22 4.32 4.32 4.32 4.31 4.31
23 4.33 4.33 4.33 4.32 4.32
24 4.34 4.34 4.34 4.34 4.33
25 4.36 4.36 4.35 4.35 4.35
26 4.37 4.37 4.37 4.37 4.36
27 4.39 4.39 4.38 4.38 4.38
28 4.40 4.40 4.40 4.40 4.39
29 4.42 4.42 4.42 4.41 4.41
30 4.44 4.44 4.44 4.43 4.42
31 4.46 4.46 4.45 4.45 4.44
32 4.48 4.48 4.47 4.47 4.46
33 4.50 4.50 4.49 4.49 4.48
34 4.52 4.52 4.52 4.51 4.50
35 4.55 4.54 4.54 4.53 4.52
36 4.57 4.57 4.56 4.56 4.55
37 4.60 4.60 4.59 4.58 4.57
<PAGE>
38 4.63 4.62 4.62 4.61 4.59
39 4.65 4.65 4.65 4.64 4.62
40 4.69 4.68 4.68 4.67 4.65
41 4.72 4.72 4.71 4.70 4.68
<PAGE>
42 4.75 4.75 4.74 4.73 4.71
43 4.79 4.79 4.78 4.76 4.74
44 4.83 4.83 4.82 4.80 4.77
<PAGE>
45 4.87 4.87 4.86 4.84 4.81
46 4.91 4.91 4.90 4.88 4.85
47 4.96 4.96 4.94 4.92 4.88
48 5.01 5.00 4.99 4.96 4.92
49 5.06 5.06 5.04 5.01 4.97
50 5.12 5.11 5.08 5.06 5.01
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
51 5.17 5.17 5.14 5.11 5.05
52 5.23 5.23 5.20 5.16 5.10
53 5.30 5.29 5.26 5.22 5.15
54 5.37 5.36 5.33 5.27 5.20
55 5.44 5.43 5.40 5.34 5.25
56 5.52 5.51 5.47 5.40 5.31
57 5.60 5.59 5.54 5.47 5.37
58 5.69 5.68 5.62 5.54 5.43
59 5.79 5.77 5.71 5.62 5.49
60 5.89 5.87 5.80 5.69 5.55
61 6.00 5.97 5.90 5.78 5.61
62 6.11 6.08 6.00 5.86 5.67
<PAGE>
63 6.24 6.20 6.11 5.95 5.74
64 6.37 6.33 6.22 6.04 5.80
65 6.51 6.47 6.34 6.14 5.87
<PAGE>
66 6.66 6.61 6.47 6.24 5.93
67 6.82 6.77 6.60 6.34 5.99
68 7.00 6.93 6.74 6.44 6.05
69 7.19 7.11 6.89 6.54 6.11
<PAGE>
70 7.39 7.31 7.05 6.65 6.16
71 7.62 7.51 7.21 6.75 6.21
72 7.86 7.74 7.38 6.85 6.26
73 8.12 7.98 7.56 6.96 6.30
74 8.41 8.23 7.74 7.05 6.34
75 8.72 8.51 7.93 7.15 6.37
76 9.06 8.80 8.12 7.24 6.40
77 9.42 9.11 8.31 7.32 6.42
78 9.81 9.44 8.51 7.39 6.44
79 10.24 9.80 8.70 7.46 6.46
80 10.71 10.16 8.88 7.52 6.47
If payments commence on any other date than the exact age of the
Annuitant as
shown above, the amount of the monthly payment shall be
determined by the
Company on the actuarial basis used in determining the above amounts.
<PAGE>
<PAGE>
<PAGE>
TABLE A - Variable
Life Annuity
<PAGE>
MALE
Monthly Payment for
Each $1,000
of Annuity
Account Value
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
20 4.38 4.38 4.37 4.37 4.36
21 4.39 4.39 4.39 4.38 4.38
22 4.41 4.41 4.40 4.40 4.39
23 4.43 4.42 4.42 4.42 4.41
24 4.44 4.44 4.44 4.43 4.42
25 4.46 4.46 4.46 4.45 4.44
26 4.48 4.48 4.48 4.47 4.46
27 4.50 4.50 4.50 4.49 4.48
<PAGE>
28 4.52 4.52 4.52 4.51 4.50
29 4.55 4.55 4.54 4.53 4.52
30 4.57 4.57 4.56 4.55 4.54
31 4.60 4.59 4.59 4.58 4.57
<PAGE>
32 4.62 4.62 4.62 4.60 4.59
33 4.65 4.65 4.64 4.63 4.61
34 4.68 4.68 4.67 4.66 4.64
35 4.72 4.71 4.70 4.69 4.67
<PAGE>
36 4.75 4.75 4.74 4.72 4.70
37 4.79 4.78 4.77 4.75 4.73
38 4.82 4.82 4.81 4.79 4.76
39 4.86 4.86 4.85 4.82 4.79
40 4.91 4.90 4.89 4.86 4.82
41 4.95 4.95 4.93 4.90 4.86
42 5.00 4.99 4.97 4.94 4.90
43 5.05 5.04 5.02 4.98 4.93
44 5.10 5.09 5.07 5.03 4.97
45 5.16 5.15 5.12 5.07 5.02
46 5.21 5.20 5.17 5.12 5.06
47 5.28 5.26 5.23 5.17 5.10
48 5.34 5.33 5.29 5.23 5.15
49 5.41 5.39 5.35 5.28 5.20
50 5.48 5.46 5.41 5.34 5.24
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
51 5.55 5.53 5.48 5.40 5.29
52 5.63 5.61 5.55 5.46 5.35
53 5.71 5.69 5.63 5.53 5.40
<PAGE>
54 5.80 5.77 5.70 5.60 5.45
55 5.89 5.87 5.79 5.67 5.51
56 5.99 5.96 5.88 5.74 5.57
<PAGE>
57 6.10 6.06 5.97 5.82 5.62
58 6.21 6.17 6.07 5.90 5.68
59 6.33 6.29 6.17 5.98 5.74
60 6.46 6.42 6.28 6.07 5.80
<PAGE>
61 6.60 6.55 6.40 6.16 5.86
62 6.75 6.69 6.52 6.26 5.91
63 6.91 6.84 6.64 6.34 5.97
64 7.09 7.01 6.78 6.43 6.02
65 7.27 7.18 6.91 6.52 6.07
66 7.47 7.36 7.06 6.62 6.12
67 7.68 7.56 7.21 6.71 6.17
68 7.91 7.76 7.36 6.80 6.21
69 8.15 7.98 7.52 6.90 6.26
70 8.42 8.21 7.68 6.98 6.29
71 8.69 8.46 7.84 7.07 6.33
72 8.99 8.71 8.01 7.15 6.36
73 9.31 8.98 8.18 7.23 6.38
74 9.65 9.27 8.35 7.30 6.41
75 10.02 9.57 8.52 7.37 6.43
76 10.41 9.88 8.68 7.43 6.44
77 10.84 10.21 8.84 7.49 6.46
78 11.29 10.55 9.00 7.54 6.47
79 11.78 10.93 9.15 7.59 6.48
80 12.29 11.27 9.30 7.63 6.49
<PAGE>
If payments commence on any other date than the exact age of the
Annuitant as
shown above, the amount of the monthly payment shall be
determined by the
Company on the actuarial basis used in determining the above amounts.
<PAGE>
<PAGE>
TABLE B - Life
Annuity
FEMALE
Monthly Payment for
Each $1,000
of Annuity
Account Value
<PAGE>
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
20 2.61 2.61 2.61 2.61 2.61
<PAGE>
21 2.63 2.63 2.63 2.63 2.63
22 2.65 2.65 2.65 2.64 2.64
23 2.67 2.67 2.66 2.66 2.66
24 2.69 2.69 2.68 2.68 2.68
<PAGE>
25 2.71 2.71 2.70 2.70 2.70
26 2.73 2.73 2.72 2.72 2.72
27 2.75 2.75 2.75 2.74 2.74
28 2.77 2.77 2.77 2.77 2.76
29 2.79 2.79 2.79 2.79 2.79
30 2.82 2.82 2.82 2.81 2.81
31 2.84 2.84 2.84 2.84 2.83
32 2.87 2.87 2.87 2.86 2.86
33 2.90 2.90 2.89 2.89 2.89
34 2.93 2.93 2.92 2.92 2.91
35 2.96 2.96 2.95 2.95 2.94
36 2.99 2.96 2.98 2.98 2.97
37 3.02 3.02 3.02 3.01 3.00
38 3.05 3.05 3.05 3.04 3.04
39 3.09 3.09 3.09 3.08 3.07
40 3.13 3.13 3.12 3.12 3.10
41 3.17 3.16 3.16 3.15 3.14
42 3.21 3.21 3.20 3.19 3.18
43 3.25 3.25 3.24 3.23 3.22
44 3.30 3.29 3.29 3.28 3.26
<PAGE>
45 3.34 3.34 3.33 3.32 3.30
46 3.39 3.39 3.38 3.37 3.35
47 3.44 3.44 3.43 3.42 3.39
48 3.50 3.50 3.49 3.47 3.44
<PAGE>
49 3.56 3.55 3.54 3.52 3.49
50 3.62 3.61 3.60 3.58 3.54
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
<PAGE>
Annuitant Period Years Years Years Years
51 3.68 3.68 3.66 3.64 3.59
52 3.75 3.74 3.73 3.70 3.65
53 3.82 3.81 3.79 3.76 3.71
54 3.89 3.88 3.86 3.83 3.77
55 3.97 3.96 3.94 3.90 3.83
56 4.05 4.04 4.02 3.97 3.89
57 4.14 4.13 4.10 4.05 3.96
58 4.23 4.22 4.19 4.13 4.03
59 4.33 4.32 4.28 4.21 4.10
60 4.44 4.42 4.38 4.30 4.17
61 4.55 4.53 4.48 4.39 4.24
62 4.67 4.65 4.59 4.48 4.31
63 4.79 4.77 4.70 4.58 4.39
64 4.93 4.90 4.82 4.68 4.46
65 5.07 5.04 4.95 4.78 4.53
66 5.23 5.19 5.09 4.89 4.61
67 5.39 5.35 5.23 5.00 4.68
68 5.57 5.52 5.38 5.11 4.74
69 5.76 5.71 5.53 5.23 4.81
<PAGE>
70 5.96 5.90 5.70 5.34 4.87
71 6.19 6.11 5.87 5.46 4.93
72 6.43 6.34 6.05 5.57 4.98
73 6.69 6.58 6.24 5.68 5.03
<PAGE>
74 6.97 6.84 6.43 5.79 5.07
75 7.28 7.12 6.63 5.90 5.11
76 7.61 7.41 6.83 5.99 5.14
<PAGE>
77 7.97 7.73 7.04 6.09 5.17
78 8.36 8.06 7.24 6.17 5.19
79 8.78 8.42 7.44 6.24 5.21
80 9.24 8.79 7.64 6.31 5.22
If payments commence on any other date than the exact age of the
Annuitant as
shown above, the amount of the monthly payment shall be
determined by the
Company on the actuarial basis used in determining the above amounts.
<PAGE>
<PAGE>
TABLE B - Life
Annuity
MALE
Monthly Payment for
Each $1,000
<PAGE>
of Annuity
Account Value
<PAGE>
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
20 2.72 2.72 2.72 2.72 2.71
21 2.74 2.74 2.74 2.74 2.73
22 2.76 2.76 2.76 2.76 2.75
23 2.79 2.78 2.78 2.78 2.78
24 2.81 2.81 2.81 2.80 2.80
25 2.83 2.83 2.83 2.83 2.82
26 2.86 2.86 2.86 2.85 2.85
27 2.89 2.88 2.88 2.88 2.87
28 2.91 2.91 2.91 2.91 2.90
29 2.94 2.94 2.94 2.93 2.93
30 2.97 2.97 2.97 2.96 2.95
31 3.00 3.00 3.00 2.99 2.98
32 3.04 3.03 3.03 3.03 3.01
33 3.07 3.07 3.07 3.06 3.05
34 3.11 3.10 3.10 3.09 3.08
35 3.14 3.14 3.14 3.13 3.11
<PAGE>
36 3.18 3.18 3.18 3.17 3.15
37 3.22 3.22 3.22 3.21 3.19
38 3.27 3.28 3.26 3.25 3.23
<PAGE>
39 3.31 3.31 3.30 3.29 3.27
40 3.36 3.36 3.35 3.33 3.31
41 3.41 3.41 3.40 3.38 3.35
42 3.46 3.46 3.45 3.43 3.39
<PAGE>
43 3.52 3.51 3.50 3.48 3.44
44 3.57 3.57 3.56 3.53 3.49
45 3.63 3.63 3.61 3.58 3.54
46 3.70 3.69 3.67 3.64 3.59
47 3.76 3.75 3.73 3.69 3.64
48 3.83 3.82 3.80 3.76 3.69
49 3.90 3.89 3.87 3.82 3.75
50 3.98 3.97 3.94 3.88 3.81
Without With Guaranteed Period
Age of Guaranteed 5 10 15 20
Annuitant Period Years Years Years Years
51 4.05 4.04 4.01 3.95 3.86
52 4.14 4.12 4.09 4.02 3.93
53 4.22 4.21 4.17 4.10 3.99
54 4.32 4.30 4.25 4.17 4.05
55 4.41 4.39 4.34 4.25 4.11
56 4.51 4.50 4.44 4.33 4.18
57 4.62 4.60 4.54 4.42 4.25
58 4.74 4.72 4.64 4.51 4.31
59 4.86 4.84 4.75 4.60 4.38
60 5.00 4.96 4.87 4.69 4.45
<PAGE>
61 5.14 5.10 4.99 4.79 4.51
62 5.29 5.25 5.12 4.89 4.58
63 5.45 5.40 5.25 4.99 4.65
<PAGE>
64 5.62 5.57 5.39 5.09 4.71
65 5.81 5.74 5.54 5.20 4.77
66 6.00 5.93 5.69 5.30 4.83
67 6.21 6.12 5.85 5.41 4.88
<PAGE>
68 6.44 6.33 6.01 5.51 4.93
69 6.68 6.55 6.18 5.61 4.98
70 6.94 6.79 6.35 5.71 5.02
71 7.21 7.03 6.52 5.80 5.06
72 7.51 7.29 6.70 5.90 5.09
73 7.82 7.57 6.88 5.98 5.12
74 8.16 7.86 7.06 6.08 5.15
75 8.52 8.16 7.24 6.14 5.17
76 8.90 8.48 7.42 6.21 5.19
77 9.32 8.81 7.59 6.27 5.21
78 9.77 9.16 7.76 6.33 5.22
79 10.24 9.52 7.93 6.38 5.24
80 10.75 9.90 8.09 6.43 5.24
<PAGE>
If payments commence on any other date than the exact age of the
Annuitant as
shown above, the amount of the monthly payment shall be
determined by the
Company on the actuarial basis used in determining the above amounts.
<PAGE>
<PAGE>
<PAGE>
TABLE C - Income of Specified
Amount
- Income for a Specified
Period
Payment for Each
$1,000
of Annuity
Account Value
Years Monthly Quarterly Semiannually
Annually
1 84.28 252.32 503.09
1,000.00
2 42.66 127.72 254.65
506.17
3 28.79 86.19 171.85
<PAGE>
341.60
4 21.86 65.44 130.47
259.33
5 17.70 52.99 105.65
210.00
6 14.93 44.69 89.11
177.12
7 12.95 38.77 77.30
153.65
8 11.47 34.33 68.45
136.07
9 10.32 30.88 61.58
122.40
10 9.39 28.13 56.08
111.47
<PAGE>
11 8.64 25.87 51.59
102.54
12 8.02 24.00 47.85
95.11
13 7.49 22.41 44.69
88.83
14 7.03 21.06 41.98
83.45
<PAGE>
15 6.64 19.88 39.64
78.80
16 6.30 18.86 37.60
74.73
17 6.00 17.95 35.79
71.15
18 5.73 17.15 34.20
67.97
19 5.49 16.43 32.77
65.13
20 5.27 15.79 31.48
62.58
If payments are for an amount or duration different
than that
outlined above, the Company will determine the proper
amount or
duration using the actuarial basis used to determine
the above
amounts.
<PAGE>
FLEXIBLE PREMIUM FIXED AND VARIABLE DEFERRED GROUP ANNUITY.
Contributions may be made until the Payment Commencement Date or until
the death
benefit is payable to a Beneficiary. The Owner is as shown on the
Certificate
Data Page unless changed as provided for in this Certificate. The
Company will
pay the Annuitant the first of a series of annuity payments on the
annuity
commencement date by applying the Annuity Account Value with a
Market Value
Adjustment, if applicable, of the Owner's Annuity Account
according to the
Payment Options Provisions. Subsequent payments will be paid on the
same day of
each frequency period according to the provisions of this
Certificate. Any
paid-up annuity, cash surrender value or death benefits that may be
available
under this Certificate will not be less than the minimum benefits
required by
any statute of the state in which this Certificate is delivered.
Non-Participating. Not eligible to share in the Company's divisible
surplus.
CORPORATE HEADQUARTERS - Albany, New York
J434 NY
<PAGE>
<PAGE>
EXHIBIT 5
Opinion of Counsel
<PAGE>
June 27, 1997
Securities and Exchange Commission
450 Fifth St., N.W.
Washington, D.C. 20549
Re: Opinion of Counsel
Gentlemen:
This letter is furnished as the requisite opinion of
counsel described
in Form S-1, Part II, Item 16(5) and (23c) in connection with a
registration
statement on Form S-1 (File No. 333-25269) (the "Registration
Statement") filed
by First Great-West Life & Annuity Insurance Company (the
"Company") for the
registration of $1,000,000 of securities under the Securities Act
of 1933, as
amended.
I am the Vice President, Counsel and Associate
Secretary of the
Company. Inso acting, I have madesuch examination of the Registration
Statement, applicable law, records and documents as in my judgment
<PAGE>
are necessary
or appropriate to enable me to render the opinion expressed below.
For purposes
of such examination, I have assumed the genuineness of all
signatures and the
conformity to the original of all copies.
My opinion herein as to any other law is based upon a
limited inquiry
thereof which I have deemed appropriate under the circumstances.
Based on the foregoing, I am of the opinion with
respect to the
securities, assuming that the securities will be issued and sold in
accordance
with the provisions of the registration statement, to which the
Registration
Statement is applicable and with which this opinion accompanies, will
be legally
issued and represent binding obligations of the Company.
I hereby consent to the use of my name under the
caption "Legal
<PAGE>
Opinions" in the prospectus contained in the Registration Statement
and the use
<PAGE>
of this opinion as an exhibit to the Registration Statement.
Sincerely,
/s/ W. Kay Adam
W. Kay Adam
Vice President,
Counsel
and Associate
Secretary
<PAGE>
EXHIBIT 10
Administration Services
Agreement
<PAGE>
<PAGE>
ADMINISTRATION SERVICES AGREEMENT
between
First Great-West Life & Annuity Insurance Company
and
Great-West Life & Annuity Insurance Company
AGREEMENT made as of the 15th day of May, 1997 by and between First
Great-West
Life & Annuity Insurance Company ("FGWL"), a New York
corporation, with
principal offices at 125 Wolf Road, Albany, New York 12205 and
Great-West Life &
Annuity Insurance Company ("GWL&A"), a Colorado corporation,
with principal
<PAGE>
offices at 8515 East Orchard Road, Englewood, Colorado 80111.
WHEREAS, FGWL desires GWL&A to perform on its behalf, certain
corporate support
services, investment services, marketing administrative services and
other back
office administrative services with respect to FGWL's insurance
business and
operations (collectively called "services"); and further FGWL
desires to make
use of certain property, equipment, personnel and facilities
(collectively
<PAGE>
called "facilities") of GWL&A in the day-to-day operations of
FGWL, to the
extent requested from time to time by FGWL; and
WHEREAS, FGWL and GWL&A contemplate that such an arrangement
will achieve
certain operating economies and improve services to the benefit of
GWL&A, FGWL
and FGWL's insureds; and
WHEREAS, FGWL AND GWL&A wish to assure that all charges for services
and the use
of facilities incurred hereunder are reasonable and in
accordance with the
applicable laws and regulations of the State of New York
(collectively the "New
York Insurance Laws"), including without limitation, New York
Insurance
Department Regulation No.33, and to the extent practicable, reflect
actual costs
and are determined in a fair and equitable manner.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the
parties hereto agree as follows:
SECTION 1 Terms of Appointment
1.01 Subject to the conditions set forth in this
Agreement,
FGWL hereby appoints GWL&A as
Administrative Services
Agent to perform the services described herein
in the name
of and on behalf of FGWL. By way of example
and without
limiting the foregoing (i) all forms
utilized in
connectionwithFGWL'sbusinessandallcorrespondence
with policyholders shall bear its name and
<PAGE>
contain its New
York home office address; (ii) all
communications with
policyholders shall be in FGWL's name; (iii)
all toll free
numbers maintained for policyholder service
shall
034322\0004\01659\973TG8C0.OTH
<PAGE>
3
be used solely for FGWL business; and
(iv) all bank
accounts into which its funds are deposited or
from which
its funds are withdrawn shall be FGWL accounts.
1.02 In accordance with the terms of this
Agreement and upon
mutual and written agreement between both
parties, FGWL
may appoint GWL&A as Administrative Services
Agent for
other insurance business of FGWL and GWL&A may
accept such
<PAGE>
appointments. FGWL acknowledges that GWL&A may
subcontract
its rights and responsibilities
enumerated in this
Agreement to its wholly-owned subsidiary,
FASCorp. FASCorp
shall observe and be bound by all terms and
conditions of
this Agreement in performing such services.
However, GWL&A
shall remain liable to FGWL for the
performance of said
services by FASCorp as if they had been
performed by
<PAGE>
GWL&A. The charges for such services shall be
determined
in a manner consistent with Section 3 of this
Agreement
and shall be included in the statement provided
to FGWL by
GWL&A with respect thereto. Services which may
be assigned
to FASCorp are those services provided under
Exhibit E.
1.03 GWL&A agrees to perform its duties and
obligations
hereunder in accordance with accepted industry
practice,
and in full compliance with the rules and
regulations of
state insurance departments and other
regulatory bodies
with jurisdiction of FGWL.
1.04 GWL&A agrees that it will perform, at the
direction of
FGWL, those Administrative Services as set
forth in
Exhibit A, B, C, D and E attached, which may be
amended by
mutual agreement. GWL&A shall have only the
authority
necessary or incident to the performance of
those services
expressly set forth in this Agreement or in
the Exhibits
and shall have no other express or implied
authority or
right to act on behalf of FGWL or to bind FGWL
with regard
to any statement, presentation or undertaking.
GWL&A shall
have no authority to alter, amend, or
<PAGE>
waive any
contractual provision on behalf of FGWL
without FGWL's
express written authorization.
1.05 The performance of services by GWL&A with
respect to the
business and operations of FGWL shall at
all times be
subject to the direction and control of
the Board of
Directors of FGWL. Subject to the terms,
conditions and
limitations of this Agreement, GWL&A agrees
to perform
diligently and in a professional manner the
services set
forth in this Agreement, and
034322\0004\01659\973TG8C0.OTH 06/21/97
12:7PM
<PAGE>
4
such other services as FGWL determines to be
reasonably
necessary in the conduct of its insurance
operations.
1.06 In providing any services hereunder which
require the
exercise of judgment by GWL&A, GWL&A shall
perform its
<PAGE>
services in accordance with any standards,
guidelines and
procedures FGWL develops and communicates to
GWL&A.
1.07 The performance of services by GWL&A for FGWL
shall in no
way impair the absolute control of the
business and
operations of GWL&A or FGWL by their
respective Board of
Directors. GWL&A shall act hereunder so as to
assure the
<PAGE>
separate operating identify of FGWL.
1.08 All books, records, and files established and
maintained
by GWL&A with respect to its performance of
services under
this Agreement which, absent this Agreement,
would have
been held by FGWL, are the property of
FGWL, shall be
subject to examination during all
reasonable business
hours by FGWL, persons authorized by
FGWL or any
regulatory agency having jurisdiction over
FGWL, and shall
be delivered to FGWL at least quarterly.
SECTION 2 Term
Subject to termination as provided in
Section 8 hereof,
this Agreement shall remain in full force and
effect for
the initial term of the Agreement, which shall
be from the
effective date hereof to April 30, 2000,
and this
Agreement shall continue in full force and
effect from
year to year thereafter until such termination,
each such
additional year being an additional
term of this
Agreement.
SECTION 3 Fees and Expenses
3.01 FGWL will pay GWL&A the actual cost
incurred for the
<PAGE>
services provided by GWL&A on a quarterly
basis. GWL&A
shall submit to FGWL within thirty (30) days of
the end of
each calendar quarter a written statement of
the amount be
owed by Company for services and the use of
facilities
pursuant to this Agreement in that calendar
quarter, and,
in the absence of any dispute with respect
thereto, FGWL
shall pay to GWL&A within fifteen (15) days
following
receipt of such written statement the amount
set forth in
the statement. Actual cost will be calculated
based upon
the expenses (direct and indirect including
overhead)
incurred by GWL&A on behalf of FGWL. For
investment
034322\0004\01659\973TG8C0.OTH
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<PAGE>
5
services related to the management of assets,
actual cost
will be calculated based upon actual cost
incurred for the
<PAGE>
various asset categories of investments.
3.02 Subject to New York Insurance Regulation 33,
the bases for
determining such charges to FGWL shall be
those used by
GWL&A for internal cost distribution, and
shall include,
where appropriate, records prepared at least
annually for
this purpose. Such bases shall be modified and
adjusted by
<PAGE>
mutual agreement where necessary or
appropriate to fairly
and equitably reflect the actual
incidence of cost
incurred by GWL&A on behalf of FGWL.
3.03 GWL&A shall be responsible for maintaining
full and
accurate accounts and records of the services
rendered by
GWL&A, the facilities used pursuant to this
Agreement and
such other additional information as FGWL may
reasonably
request for purposes of its internal
bookkeeping and
accounting operations. To the extent such
accounts and
records pertain to GWL&A's computation of
charge, GWL&A
shall keep such accounts and records available
at its home
offices for audit, inspection, and
copying during
reasonable business hours by FGWL, persons
authorized by
FGWL or any regulatory agency having
jurisdiction over
FGWL.
3.04 At least ninety (90) days prior to the end
of any term
hereof, GWL&A shall give FGWL written
notice of any
increase in the cost of providing services or
charges to
FGWL or to change the manner of payment. If
GWL&A and FGWL
do not agree to changes in such costs and
charges before
<PAGE>
the end of the term during which such notice
is given by
GWL&A, this issue shall be submitted to an
independent
certified public accountant acceptable to
both parties,
whose determination shall be binding.
SECTION 4 Representations and Warranties of GWL&A
---------------------------------------
GWL&A represents and warrants to FGWL as
follows:
4.01 It is a corporation duly organized and in
good standing
under the laws of the State of Colorado.
4.02 It is empowered under applicable laws to
enter into and
perform the services contemplated in this
Agreement.
034322\0004\01659\973TG8C0.OTH 06/21/97
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<PAGE>
6
<PAGE>
4.03 All requisite corporate proceedings have
been taken to
authorize it to enter into and perform
the services
contemplated in the Agreement.
SECTION 5 Representations and Warranties of FGWL
<PAGE>
--------------------------------------
FGWL represents and warrants to GWL&A as
follows:
5.01 It is a corporation duly organized and in
good standing
under the laws of the State of New York.
5.02 It is empowered under the applicable laws to
enter into
and perform this Agreement.
5.03 All requisite corporate proceedings have
been taken to
authorize it to enter into and perform this
Agreement.
5.04 All of the policies and other forms provided by
FGWL shall
have been duly filed as necessary and
approved by all
rules and regulations of each state insurance
department,
and other regulatory bodies with jurisdiction
over FGWL.
SECTION 6 Indemnification
6.01 GWL&A shall not be responsible for and
FGWL shall
indemnify and hold GWL&A harmless from and
against, any
and all costs, expenses, losses, damages,
charges,
reasonable attorney's fees, payments and
liability, which
may be asserted against GWL&A or for which it
may be held
to be liable, arising out of or attributable
<PAGE>
to:
a. Any actions taken by GWL&A in
good faith
and with
due care in compliance with the
terms of
this Agreement;
b. FGWL's refusal or failure to
comply with the
terms of
this Agreement, or which arise
out of FGWL's
negligence or misconduct or which
arise out
of breach
of any representation or warranty
of FGWL
hereunder;
c. Reliance on or use by GWL&A in
accordance
with the
terms of this Agreement such
information and
materials provided by or at the
direction of
FGWL
<PAGE>
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<PAGE>
7
<PAGE>
and instructions or directions given by the
authorized
individuals described in Exhibit
F;
d. The offer or sale of the contracts, unless as
provided
to the contrary or otherwise agreed upon in
any other
agreements between FGWL and GWL&A;
or
e. Any failure by FGWL to comply
with Federal,
state or local laws or
regulations with
respect to the offering and/or
sale of any
insurance products or securities.
6.02 FGWL shall not be responsible for and
GWL&A shall
indemnify and hold FGWL harmless from and
against, any and
all costs, expenses, losses, damages, charges,
reasonable
attorney's fees, payments and liability,
which may be
asserted against FGWL or for which it may be
held to be
liable, arising out of or attributable to:
a. Any actions taken by FGWL in good faith
and with
due care in compliance with the
terms of this
Agreement;
b. GWL&A's refusal or failure to comply with
<PAGE>
the terms
of this Agreement, or which arise out
of GWL&A's
negligence or misconduct or which arise
out of the
breach of any representation or
warranty of GWL&A
hereunder;
c. Any failure by GWL&A to comply
with Federal,
state or local laws or
regulations with
respect to the offering and/or
sale of any
insurance products or securities.
6.03 Neither FGWL nor GWL&A shall be liable for
damages due to
delay or failure to perform any obligation
under this
Agreement where such delay or failure results
directly or
indirectly from circumstances beyond the
control and
without the fault or negligence of such Party.
6.04 At any time GWL&A may apply to a person
indicated on
FGWL's "Schedule of Authorized Personnel"
set forth in
Exhibit F attached hereto and incorporated
herein by
reference as a person authorized to give
instructions
under this section with respect to any matter
arising in
connection with this Agreement. GWL&A shall
not be liable
<PAGE>
for, and shall be indemnified by FGWL, against
any action
taken or omitted by GWL&A in good
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<PAGE>
<PAGE>
8
faith and in the exercise of due care and diligence
in reliance
upon such written instructions.
6.05 FGWL shall immediately provide GWL&A with
written notice
of any change of authority of persons
authorized and
enumerated in Exhibit F to provide GWL&A with
instructions
or directions relating to services to be
performed by
GWL&A under this Agreement.
6.06 If either party believes it is entitled to
indemnification
hereunder, it shall, within five business (5)
days of its
discovery of the commencement of any action
or threat of
any action, give written notice to the other
party of any
claim for which it believes it is
entitled to
indemnification; provided, however, that the
failure to
provide timely notice shall not relieve the
indemnifying
party of any liability which it may have to
the other
party as long as such notice is not
unreasonably withheld
or delayed.
6.07 The provisions of this Section shall survive
<PAGE>
termination
of this Agreement.
6.08 The provisions of this Section shall not be
deemed to be a
limitation on a party's right to
injunction, specific
performance or any other legal or equitable
remedy to
which either party may be entitled by
virtue of this
Agreement or to prevent any breach or
threatened breach of
this Agreement.
6.09 In no event and under no
circumstances,
however, shall any party
under this
agreement be liable to the
other parties
under any provision of this
agreement for
lost profits or for
exemplary, special,
punitive or consequential
damages.
SECTION 7 Duties of FGWL and GWL&A
------------------------
7.01 FGWL shall, from time to time, provide GWL&A
with current
forms of policies and applications, names
and states of
license of all insurance and/or broker-dealer
agents and
<PAGE>
representatives authorized to sell the
contracts.
7.02 FGWL shall have full and free access,
during ordinary
business hours, to all documents, records
(including all
bank records), reports, books, files and
other materials
relative to this Agreement and maintained by
GWL&A.
<PAGE>
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<PAGE>
9
7.03 Any advertising in connection with the
Contracts utilized
by GWL&A must be approved in writing by FGWL
prior to such
advertising.
7.04 GWL&A shall establish and maintain
facilities and
procedures for the safekeeping of check
forms and
facsimile signature imprinting devices, if
any, and all
other documents, reports, records, books,
files and other
materials relative to this Agreement.
7.05 It is expressly understood and agreed that all
documents,
reports, records, books, files and other
materials
relative to this Agreement shall be the sole
property of
FGWL and that such property shall be held by
GWL&A, as
agent, during the effective terms of this
Agreement.
Application software and all copies thereof
developed by
GWL&A (or by FASCorp., in providing services
<PAGE>
as set forth
in Exhibit E) for FGWL's use shall
become, and that
developed by FGWL and provided to GWL&A shall
remain, the
property of the Company in perpetuity. To
the extent
permitted by any applicable law, FGWL shall
have the same
rights as GWL&A in any other software or
copies thereof
obtained by GWL&A under license from third
party vendors.
FGWL may purchase other software or copies
thereof from
third party vendors for its exclusive use
of GWL&A's
equipment if FGWL so desires. GWL&A agrees
that any
software or copies thereof purchased by FGWL
and used by
GWL&A in connection with this Agreement shall
remain the
property of the Company.
7.06 GWL&A shall maintain back-up computer tape
files on a
daily basis. The purpose of back-up and
recovery is to
permit file recovery in the event of
destruction of normal
processing files. GWL&A shall maintain such
records, and
shall retain those records for three years
after the
duration of this Agreement, FGWL may review the
procedures
in effect and inspect the storage facility upon
demand.
<PAGE>
7.07 GWL&A shall use its best efforts to continue in
effect the
insurance coverages described in Exhibit G
attached hereto
provided that such coverage is available from
an insurance
carrier at a reasonable cost to GWL&A. GWL&A
shall not
voluntarily cause any termination,
reduction, or
alteration of these coverages without the
consent of FGWL.
<PAGE>
7.08 All charges or premiums received by GWL&A shall
be held by
GWL&A on behalf of FGWL and shall be promptly
remitted to
the person entitled to it or deposited in a
FGWL account.
Any
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<PAGE>
10
payments received by GWL&A for insurance on
behalf of FGWL
shall be deemed received by FGWL.
7.09 If GWL&A receives any notice from any source
(including,
but not limited to, the policy owner or
regulatory agency)
of a lawsuit or other legal or administrative
hearing or
proceeding being brought against FGWL and
involving the
business administered for FGWL by GWL&A, or
the threat of
any such lawsuit, hearing or proceeding,
GWL&A shall
immediately notify FGWL and send a copy of
all legal
documents, correspondence and other
material relevant
thereto to which GWL&A reasonably has access.
GWL&A agrees
to cooperate fully with FGWL in connection
<PAGE>
with any suit,
hearing or proceeding and shall provide
FGWL with all
books, records, documents and data requested
by FGWL in
connection therewith; provided, however,
GWL&A shall be
entitled to review such request with its
counsel prior to
furnishing FGWL with such materials so long as
such review
is done in a timely manner.
7.10 GWL&A will conduct its business and
performance
obligations in accordance with all applicable
federal and
state laws, rules and regulations and in a
manner which
will not put FGWL registrations and
licenses in any
jeopardy of revocation or suspension or cause
FGWL or any
of its affiliates to sustain any disciplinary
action of
any nature.
7.11 GWL&A acknowledges and agrees that all books
and records
maintained by GWL&A in connection with the
Contracts shall
be maintained and preserved in conformity
with the
requirements of Rules 17a-3 and 17a-4 of the
Securities
Exchange Act of 1934 (the "1934 Act"), to the
extent that
such requirements are applicable to the
Contracts, and
that all such books and records are maintained
and held by
<PAGE>
GWL&A on behalf of FGWL, whose property they
are and shall
remain. GWL&A further acknowledges and
agrees that
applicable books and records are at all times
subject to
inspection by the Securities and Exchange
Commission
("SEC") in accordance with Section 17(a) of
the 1934 Act,
and undertakes to permit examination of
such books and
records at any time during business
hours by
<PAGE>
representatives or designees of the SEC
or National
Association of Securities Dealers, Inc.
7.12 GWL&A acknowledges, covenants and agrees
that it shall
issue payments, including commission
payments to retail
broker-dealers, on behalf of and on the
account(s) of
FGWL, as a purely ministerial service for and
on behalf of
FGWL, and that
034322\0004\01659\973TG8C0.OTH 06/21/97
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<PAGE>
11
the records in respect of such payments shall
be properly
reflected by GWL&A on the books and records
maintained by
it for FGWL.
7.13 GWL&A acknowledges, covenants and agrees that
it will send
confirmations as required by law for
transactions which
constitutes the sale of securities to the
contract owner
in such form as required by applicable law,
regulation or
rule.
<PAGE>
7.14 GWL&A shall provide FGWL with full and free
access as
reasonably requested, during ordinary
business hours, to
all documents, records, reports, books,
files and other
materials relative to this Agreement and
maintained by
GWL&A.
SECTION 8 Termination of Agreement
8.01 a) This Agreement may be terminated by
either party
hereto
upon 90 days written notice to the
other party.
b) This Agreement may be terminated
immediately upon
written notice of one party to the
other hereto
in the event of bankruptcy or
insolvency of such
party to which notice is given.
c) This Agreement may be terminated immediately
at any
time upon the mutual written consent of the
parties
<PAGE>
hereto.
d) This Agreement shall automatically be
terminated in the
event of its assignment, subject to the
provisions of
Section 9.01.
8.02 If either of the parties hereto shall
breach this
<PAGE>
Agreement or be in default in the performance
of any of
its duties and obligations hereunder ("the
defaulting
party"), the other party hereto may give
written notice
thereof to the defaulting party and if such
default or
breach shall not have been remedied within
thirty (30)
days after such written notice is given,
then the party
giving such written notice may terminate this
Agreement by
giving thirty (30) days written notice of such
termination
to the defaulting party; provided, however,
if GWL&A
elects to terminate this Agreement for
other than
non-payment of fees and charges and if FGWL
shall so
request in writing, GWL&A shall continue to
provide the
services described herein to FGWL for a period
of six (6)
month following such termination, such
services to be
provided in accordance with the terms of this
Agreement
and at
034322\0004\01659\973TG8C0.OTH 06/21/97
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<PAGE>
12
<PAGE>
the fees in effect for the term immediately
preceding such
six (6) month period. Termination of this
Agreement by
default or breach by FGWL shall not constitute
a waiver of
any rights of GWL&A in reference to services
performed
prior to such termination of rights of
GWL&A to be
reimbursed for out-of-pocket expenditures;
termination of
this Agreement by default or breach by GWL&A
shall not
constitute a waiver by FGWL of any other
rights it might
have under this Agreement.
8.03 In the event of a termination, GWL&A will
make its
computer record formats and other
relevant systems
information available to FGWL for a machine
conversion. In
connection therewith, GWL&A agrees that it
will offer
reasonable assistance to FGWL in converting the
records of
FGWL from the GWL&A system to whatever
service or system
is selected by FGWL (subject to reimbursement
by FGWL for
such assistance at reasonable rates and
fees mutually
agreed to at that time). As described in
Section 7.05, all
data contained in the computer files is the
exclusive
property of FGWL. In addition, GWL&A will
provide FGWL
<PAGE>
with such data processing services and
facilities as FGWL
may request for a period of 180 days
following such
termination.
SECTION 9 Assignment
9.01 This Agreement shall not be assignable by
either party
<PAGE>
without the prior written consent of the
other, except
where such assignment is by operation of
law or is
specifically provided for by this Agreement.
9.02 This Agreement shall inure to the benefit
of and be
binding upon the parties hereto, and their
respective
successors and assigns, provided that any
assignment is
performed in accordance with paragraph 9.01
above.
SECTION 10 Arbitration
Any unresolved dispute or difference between
the parties
arising out of or relating to this Agreement, or
the breach
thereof, except as provided in Section 3.04, shall
be settled
by arbitration in accordance with the Commercial
Arbitration
Rules of the American Arbitration
Association and the
Expedited Procedures thereof. The award
rendered by the
Arbitrator shall be final and binding upon the
parties, and
judgment upon the award rendered by the
Arbitrator may be
entered in any Court having jurisdiction
thereof. The
arbitration shall take place in the State of New
York
034322\0004\01659\973TG8C0.OTH
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<PAGE>
13
SECTION 11 Miscellaneous
11.01 FGWL or its duly authorized independent
and/or internal
auditors will have the right under this
Agreement to
perform on-site audits of records and
accounts directly
pertaining to the policies serviced by GWL&A
hereunder at
GWL&A's facilities in accordance with
reasonable
procedures and at any time, upon one (1)
week prior
notice. At the request of FGWL, GWL&A will
make available
to FGWL's auditors and to
representatives of the
appropriate regulatory agencies all reasonably
requested
records, data and access to operating
procedures.
11.02 The parties hereto agree that all tapes, books,
reference
<PAGE>
manuals,instructions, records, information
and data
pertaining to the business of the other
party, GWL&A's
systems, and the policyowners serviced by GWL&A
hereunder,
which are exchanged or received
pursuant to the
negotiation of and/or the carrying out of this
Agreement,
shall remain confidential and shall not be
voluntarily
disclosed to any other person. All such
tapes, books,
<PAGE>
reference manuals, instructions, records,
information and
data in the possession of each of the parties
hereto shall
be returned to the party from whom it was
obtained upon
the termination or expiration of this
Agreement.
11.03 This Agreement constitutes the entire
agreement
between the parties hereto and may not
be modified
except in a written instrument
executed by both
parties hereto, and except that if any
section herein
contained shall be found to be
unenforceable as
contrary to the current law, that
section shall be
severed and the remaining sections of
this Agreement
shall continue to be enforceable.
11.04 This Agreement shall take effect as of the
date set forth
in the caption hereof.
11.05 This Agreement shall be governed by the laws of the
State of
New York.
11.06 Any amendment to this
Agreement or to the
services set forth in Exhibit
A through E
hereto shall be filed for review
pursuant to
Section 1505 of the New York
<PAGE>
Insurance Law.
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PAGE>
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed
in duplicate, in their names and on their behalf, by and through
their duly
authorized officers as of the day and year first above written.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: /s/ D.L. Wooden
Title: Senior Vice President
<PAGE>
By: /s/ Dennis Los
Title: Executive Vice President
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: /s/ W.T. McCallum
Title: President and Chief Executive Officer
<PAGE>
By: /s/ D.C. Lennox
Title: Senior Vice President, General Counsel and
Secretary
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<PAGE>
15
EXHIBIT A
CORPORATE SUPPORT SERVICES
GWL&A shall provide the following services:
A. Human Resources, Payroll and Benefits
1. Manage and administer a centralized payroll system.
2. Prepare and distribute employee paychecks or electronic
funds
transfers
(EFT).
3. Assist with, maintain and monitor the compensation
system and
policies
for FGWL.
4. Make all necessary employment filings, deposits and
withholding on
behalf of FGWL.
<PAGE>
5. Provide all accounting services related to
payroll and
compensation functions; prepare, conduct and analyze
salary and
compensation surveys; and assist with the
management of human
resources.
6. Cover the employees of FGWL under GWL&A's benefit plans
(including
Retirement and Health and Welfare plans).
GWL&A will be
responsible for performing all accounting and
administrative
services related to the maintenance and
administration of these
employees under the various plans.
7. Make all disbursements for these procedures on FGWL's
behalf and
shall be made from a FGWL bank account.
<PAGE>
B. Treasury
1. Provide cash management and other necessary treasury
services to
FGWL, and provide assistance with respect to
various banking
services and liquidity needs as requested from time
to time by
<PAGE>
FGWL.
2. Assist FGWL in maintaining or establishing any bank
accounts and
processing any and all disbursements on such accounts,
including
claims- related disbursements, as required by FGWL.
C. Accounts Payable
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<PAGE>
16
1. Manage and administer a centralized accounts payable
system
2. Process invoices and requests for disbursements
approved by FGWL
personnel and issue checks/EFT as requested by FGWL.
D. Accounting Services
1. FGWL will retain control over all FGWL accounting
matters.
2. At the initiation of FGWL and for such time as agreed
upon by both
parties,GWL&Ashallprovidethefollowing back-endfinancial
accounting services
a. Prepare and maintain financial statements and
<PAGE>
reports,
including,
annual quarterly and monthly statements on both
statutory and
generally accepted accounting principles (GAAP)
bases
b. Prepare and disseminate information filings with
regulatory
entities
and rating agencies
c. Prepare and disseminate federal, state, and local
payroll tax
and
premium tax returns and other related matters
d. Process cash receipts, cash disbursements and
escheat items
D. Corporate Systems and Technology
1. Provide access to and use of a central accounting
computer system.
<PAGE>
2. Provide programming/support personnel to maintain,
administer and
operate the central accounting computer system;
and provide
requested assistance to FGWL in connection with its
use of the
central accounting computer.
E. Corporate Tax
<PAGE>
1. Prepare and coordinate consolidated federal and state
income tax
returns and other necessary tax documentation.
2. Provide necessary assistance with corporate tax issues
that may
arise
from time to time.
F. Risk Management Services
1. Provide risk management services to FGWL and
assist FGWL in
obtaining any necessary or requested corporate
insurance
coverages.
G. Audit Services
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<PAGE>
17
1. Provide internal audit services to assist FGWL in
confirming
compliance with laws, regulations, policies and
procedures
applicable to FGWL.
2. At the request of FGWL, GWL&A shall make available
to FGWL's
external auditors and to representatives of appropriate
<PAGE>
regulatory
agencies all reasonably requested records, data
and access to
operating procedures.
H. Legal Services
1. At the request of FGWL, provide legal services,
including, but not
limited to, the negotiation, preparation and review of
contracts;
the rendering of legal advice on regulatory
compliance,
governmental relations and various other legal
matters; and the
representation in, or management of outside counsel
retained for
the purpose of, prosecution, defense or
resolution of legal
actions with respect to FGWL business being
administrated at the
home office of GWL&A.
I. Actuarial Services
<PAGE>
1. Provide actuarial services for FGWL,
including reserve
calculations and valuations, calculation and
revision of rate
tables, product development and implementation,
and cash flow
testing and any other actuarial services as requested
by FGWL.
2. Provide actuarial services for the preparation of
regulatory
filings; prepare the actuarial component of annual,
quarterly and
<PAGE>
monthly statements, financial projections and
experience studies.
3. Assist in reinsurance treaty negotiations and
maintenance.
4. Prepare the year end actuarial opinion and memorandum.
J. Other Services
1. Provide office space, furniture and supplies to FGWL
employees or
officers located in Colorado, as necessary or as
requested by FGWL
employees.
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<PAGE>
18
EXHIBIT B
INVESTMENT SERVICES
GWL&A shall provide the following services:
A. Investment Services
1. Provide investment management services to FGWL's
<PAGE>
general account
and separate accounts in accordance with policies and
procedures
established by the FGWL Board of Directors and
Investment
Committee.
2. Provide assistance in the execution and performance of
investment
decisions (including, but not limited to,
purchases, sales,
exchanges and collection of matured investments) in
accordance
with FGWL policies and procedures and at the
direction of FGWL
management.
3. Manage all investments and assets held by FGWL or
custodied in a
custodial account in the name of FGWL at a bank or
trust company
selected by FGWL, consistent with the New York
Insurance Laws. In
<PAGE>
addition, deposit all monies collected by GWL&A on
behalf of FGWL
in a bank account in the name of FGWL.
4. Maintain all investment related records and
databases. Provide
reports to FGWL on a quarterly and annual basis
detailing
investments held and transactions made as well as
any other
reports or information requested by FGWL or by the
New York
<PAGE>
Insurance Department.
5. Assure that all investments and investment
practices made on
behalf of FGWL are consistent with the New York
Insurance Laws,
including but not limited to, Section 1405 of the
Insurance Law
and New York Insurance Department Regulation 130.
To facilitate the delivery of securities held by GWL&A,
FGWL does
hereby appoint GWL&A as its true and lawful attorney and
authorizes it, in
FGWL's name, place and stead to register all securities from
time to time
managed by GWL&A pursuant to this Agreement, other than
securities in bearer
form, in FGWL's name and to execute endorsements, assignments,
or other
instruments of transfer of securities so registered and due bills
and dividend
orders as GWL&A may deem proper in connection with the transfer
of any such
securities, GWL&A being expressly authorized to execute any such
instruments,
either by signing FGWL's name alone without any designation
of itself as
attorney-in-fact or by signing FGWL's name as such attorney.
034322\0004\01659\973TG8C0.OTH
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<PAGE>
19
<PAGE>
Whenever GWL&A receives and collects monies for the
account of
FGWL, it will not commingle such monies with its own, but will
deposit such
monies in an appropriate separate account in the name of FGWL.
B. Investment Objectives, Policies and Restrictions
The parties acknowledge that FGWL has furnished GWL&A
with written
investment guidelines. In providing investment services
pursuant to this
agreement, GWL&A will observe the following general investment
objectives,
policies and restrictions, except that no investment which is
inconsistent with
FGWL's written investment guidelines shall be made pursuant thereto.
GWL&A will have full discretion to invest and reinvest the
funds made
available to it for that purpose by FGWL as follows:
Investment Objectives
FGWL's investment objective is to obtain as high a level
of current
interest income as is consistent, in the view of GWL&A, with
preservation of
<PAGE>
invested capital. There are market risks inherent in all
investments in
securities, and there can be no assurance that GWL&A will
achieve this
objective. The primary objective of preserving capital will preclude
realization
of the highest available income yields.
Investment Policies
<PAGE>
GWL&A will seek to achieve the above-stated objective by
investing in a
diversified portfolio of securities. In selecting securities for this
portfolio,
GWL&A will seek the highest available yields consistent with
the rating
standards and other policies stated herein.
Portfolio securities will be selected pursuant to the
following
fundamental investment policies:
1. CASH BALANCES. Cash balances occurring pending permanent
investment
will be invested in high grade, corporate commercial paper. The
corporate paper
must have the highest rating by one or more of the nationally
recognized rating
organizations. Other acceptable short-term investments include
U.S. Treasury
bills and notes, certificates of deposit, time deposits, bankers
acceptances and
money market funds.
2. CORPORATE BONDS. The purchases of corporate bonds
will include
bonds, notes, debentures and other evidences of indebtedness issued,
assumed or
guaranteed by a corporation incorporated under the laws of the
United States of
America, of any state, district or territorial possession
thereof or of the
Dominion of Canada or any province thereof; provided that the
bonds are rated
class 1 or 2
034322\0004\01659\973TG8C0.OTH 06/21/97
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<PAGE>
<PAGE>
20
by the Securities Valuation Office ("SVO") of the National
Association of
Insurance Commissioners ("NAIC").
3. GOVERNMENT OBLIGATIONS. The purchase of government
obligations will
include bonds, notes, bills and other evidences of indebtedness
issued, assumed
or guaranteed by the U.S. Government, its agencies or
instrumentalities or of
any state or municipality thereof; or of the Dominion of Canada or
any province
thereof; provided the bonds are rated class 1 or 2 by the Securities
Valuation
Office ("SVO") of the National Association of Insurance Commissioners
("NAIC").
4. MORTGAGE-BACKED SECURITIES. The purchase of mortgage-
backed securities will include obligations issued by:
A. The Government National Mortgage Association (GNMA)
B. The Federal National Mortgage Association (FNMA)
<PAGE>
C. The Federal Home Loan Mortgage Corporation (FHLMC)
D. FHA and VA insured or guaranteed loans, or any
other
government guaranteed loans.
5. EQUITY SECURITIES. Equity securities are defined
to include
<PAGE>
preferred stocks, mutual fund shares or common stocks which are
traded on a
national stock exchange, provided that the preferred stocks are rated
class 1 or
2 by the SVO of the NAIC.
Investment Restrictions
In the course of its investment management activity for
FGWL, GWL&A MAY
NOT engage in or execute transactions in any of the following:
1. Borrow money for any purpose on behalf of FGWL.
2. Pledge, mortgage or hypothecate the assets of FGWL.
3. Purchase the securities or any non-government
issuer if, as a
result, more than 10% of the total assets of the portfolio would be
invested in
the securities of the issuer.
4. Invest more than 25% of the portfolio, measured at
the time of
investment, in a single industry. For the purpose of this
restriction,
mortgage-backed securities do not constitute an industry.
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<PAGE>
21
<PAGE>
5. Enter into any investment which would violate the New
York
Insurance Law.
6. Purchase or sell investments, other than portfolio
investments
listed in policies 1 through 5 under Investment Policies above,
without prior
written approval of FGWL.
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<PAGE>
22
<PAGE>
EXHIBIT C
BACK OFFICE POLICYOWNER SERVICES
SCHWAB VARIABLE AND FIXED ANNUITIES
GWL&A shall provide the following services:
<PAGE>
A. Contract Issue
1. Provide access to and use of central accounting
computer systems
for establishing and maintaining annuitant and contract owner
records.
2. Provide programming/support personnel to maintain,
administer and
operate the central accounting computer systems;
and provide
requested assistance to FGWL in connection with its
use of the
central accounting computers.
3. Generate the contract data pages, issue contracts
for paid
business and mail to contract owners or agents.
System will
produce contract data pages.
4. Notify FGWL and/or its agent of any error or missing
data needed
for annuitant or contract owner records.
5. Produce and mail required confirmation statements.
B. Collection Processing
1. Process payments received by FGWL to customer accounts
on the
System.
2. Prepare and mail required confirmation of transactions.
3. Deposit any cash received directly by GWL&A under the
policies
into a FGWL designated bank account.
<PAGE>
4. Transmit daily accounting to FGWL general ledger.
5. Prepare and mail refunds as appropriate (declines, free
look).
C. Banking
1. Maintain all funds for FGWL in a depository account.
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<PAGE>
23
<PAGE>
2. Be responsible for reconciling the daily deposits to
cash
processed to customer accounts.
3. Transfer funds from the depository account to one of
the following
as appropriate:
<PAGE>
a. General Account of FGWL
b. Mutual Fund Custodian Account(s)
c. Disbursement Account of FGWL
d. Separate Accounts of FGWL
Bank accounts and mutual fund accounts to be
established by FGWL
with appropriate signing and trading authorizations
established
for GWL&A personnel.
4. Generate from the system daily cash journal summary
reports and
maintain details of activity.
5. Process disbursement transactions for policyowner or
beneficiary,
surrenders, withdrawals, loans and death claims.
6. Produce checks for annuitants in the payout phase.
7. FGWL will maintain balances in the appropriate FGWL
bank accounts
necessary to meet administrative needs identified in
the contract.
8. FGWL will obtain the appropriate authorizations to
allow GWL&A to
transfer funds amongst FGWL accounts.
9. Reprocess dishonored items.
10.Provide check production for systematic payouts.
D. Accounting/Auditing
1. Generate daily accounting extracts for policies
maintained on the
system.
<PAGE>
2. Generate accounting information necessary to post
entries to
ledgers.
3. Retain system generated reports in accordance with
a retention
schedule as mutually agreed upon and as required by
regulatory
authorities. GWL&A will provide access to such
reports for
internal and external reporting.
034322\0004\01659\973TG8C0.OTH
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<PAGE>
24
<PAGE>
4. Determine the "Net Amount Available for Investment" in
mutual fund
and places fund purchase/redemption orders with the
appropriate
mutual funds. GWL&A will receive confirmation of
mutual fund
investments.
<PAGE>
5. Maintain an inventory of all mutual fund shares owned,
including
the date purchased and sold, cost, book value, gain,
loss, and
other relevant information.
6. Reconcile the inventory of mutual fund shares owned
to reports
which have been supplied by mutual funds of mutual
fund shares
owned.
7. Cooperate in annual audit of general account and
separate account
financials conducted for purposes of financial
statement
certification and publication and accommodate FGWL or
regulatory
audits, as required.
E. Pricing/Valuation
1. Collect information needed in determining variable
account unit
values from the mutual fund. This information
includes the daily
net asset value of the underlying mutual funds, any
capital gains
or dividend distribution made by the mutual funds and
the number
of mutual fund shares acquired or sold during the
immediate
preceding valuation date.
2. Enter required information into system for unit value
calculation
to be performed.
3. Generate separate account ledger activity associated
with unit
<PAGE>
values.
F. Contract Owner Service/Record Maintenance
1. As requested by FGWL, receives and implements
contract owner
service requests including information requests,
beneficiary
changes, transfer of funds between eligible mutual
funds, payout
requests, exchange of policies and changes of
any other
information maintained on the system.
2. Research contract owner inquiries using both data
stored in the
system and manual records.
3. Generate a set of daily journals confirming financial
changes made
to annuity or life accounts.
4. Address name and contract changes will be coordinated
between
GWL&A and FGWL.
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<PAGE>
<PAGE>
25
<PAGE>
5. Produce tax reporting.
6. Maintain policyowner records at the home offices of
both FGWL and
GWL&A. Information shall be maintained either on-line,
on
microfilm, or in hard copy.
G. Disbursements
1. Receive contractowner requests for systematic, partial
and full
surrenders from FGWL. Retain and account for any
contract
administrative charges.
2. Process all surrender requests against policyowner
files.
Generate related separate account ledger accounting.
3. Contact policyowner regarding tax withholding
procedures, if
necessary.
4. Subject to FGWL approval, generate FGWL checks and
forward to
contract owner in accordance with applicable law.
Deducts all tax
withholding necessary.
4. Prepare and mail confirmation statements of
disbursement
transactions to contract owners.
5. Generate a report on surrenders, if required.
H. Claims
1. Receiverequests forand process claimsexamination ofdeath
claims. Submit to FGWL for approval.
<PAGE>
2. Upon approval by FGWL, generate disbursement of funds
(from a FGWL
bank account) and generated related accounting.
3. Make changes to owner and/or annuitant information as
directed by
FGWL where no payout is required.
I. Annuity Benefit Processing
1. FGWL or its agent notifies owner of approaching
annuitization
approximately 90 days before annuitization date.
2. Receive information regarding annuitants going into the
annuity
(payout) phase.
<PAGE>
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<PAGE>
3. Calculate the amount of the initial annuity payment
for variable
<PAGE>
payout based on tables supplied by FGWL.
Calculation of fixed
payout based on information supplied by FGWL.
4. Generate checks or electronic fund transfer for
payment of amount
due to annuitant in accordance with applicable
law. Deduct
applicable premium taxes and withholding taxes.
5. Update annuitant records.
6. Generate accounting entries to record disbursements.
7. Generate premium tax and withholding reporting.
GWL&A will make
all payments to the appropriate regulatory agencies
for any taxes
withheld and will effect all necessary
associated reports.
Generate accounting entries to record transactions.
J. Proxy processing
1. Receive record date information from the underlying
mutual funds.
Receive proxy solicitation material from underlying
mutual funds.
2. Prepare proxy cards, if applicable.
3. Mail solicitation and resolicitations, if necessary.
4. Maintain all proxy registers and other required proxy
material.
5. Tabulate returned proxy cards and transmits results to
underlying
mutual funds.
<PAGE>
K. Period Reports to Policyowners
1. Prepare and mail statement of account to each
policyowner. Mail
on scheduled supplied by FGWL.
2. Insert and mail semi-annual and annual reports to
policyowners, as
required, both underlying mutual fund and Separate
Account
reports. Filing of reports with NASD and SEC will be done by FGWL.
Printing
of reports will be done by GWL&A.
L. Regulatory Statement Reports
1. Prepare IRS reports for contract owners who received
annuity
payments or distributions. Mails to contract owners and
transmits to IRS.
034322\0004\01659\973TG8C0.OTH
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<PAGE>
<PAGE>
27
<PAGE>
2. Prepare other IRS reports, as required.
3. Respond to requests for calculations applicable to
annuity
payments as may be necessary to tax calculations.
M. Product Development and Pricing
1. Actuarial product pricing support for new
investment options
including determination of rates, policy load
structures and
development of actuarial documents for filing with
state insurance
departments.
2. Providing information to First GWL&A to enable First
GWL&A to set
rates for inforce policies.
3. Calculation of historic rates of return for portfolios
in First
GWL&A Series Accounts.
4. Consulting with FASCorp personnel regarding
maintenance of market
value adjustment and other pricing formulas on the
administrative
system.
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<PAGE>
28
EXHIBIT D
<PAGE>
CORPORATELY-OWNED LIFE INSURANCE
SINGLE PREMIUM WHOLE LIFE
GWL&A shall provide the following services:
A. Contract Issue
1. Provide access to and use of central accounting
computer
systems for establishing and maintaining insured
and
contract owner records.
2. Provide programming/support personnel to maintain,
administer
and operate the central accounting computer
systems; and
provide requested assistance to FGWL in
connection with its
use of the central accounting computers.
<PAGE>
3. Review application &/or enrollment forms, apply
issue criteria
developed by FGWL to application for life insurance
contract.
Verify license status of brokers/agents based on
information
supplied by FGWL. FGWL to provide a written
set of issue
criteria to GWL&A.
4. Prepare contract data pages, issue specimen
contracts for
<PAGE>
paid business and mail to contract owners or
agents.
5. Establish and maintain insured and contract owner
records, as applicable, on computer and manual
systems.
6. Notify dealer/agent of any error or missing data
needed
for insured or contract owner records.
7. Produce and mail required confirmation statements.
8. Deposits monies received with application into FGWL
depository account.
9. Maintain inventory of all issue-related forms,
contracts,
and endorsements based on updates provided by FGWL.
10. For policies being exchanged from another company,
GWL&A will request the funds from the other insurance
034322\0004\01659\973TG8C0.OTH 06/21/97
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<PAGE>
29
company using forms supplied by FGWL. FGWL will
establish signing authority for GWL&A personnel.
B. Collection Processing
<PAGE>
1. Process payments received by FGWL to
customer
accounts on the System.
2. Prepare and mail required confirmation of
transactions.
3. Deposit any cash received directly by
GWL&A
under the policies into a FGWL designated bank
account.
4. Transmit daily accounting to FGWL general
ledger.
5. Prepare and mail refunds as appropriate
(declines,
<PAGE>
free look).
C. Banking
1. Records wire transfers received directly by GWL&A
and
assigns them a control number.
<PAGE>
2. Deposits are placed into a FGWL depository account.
3. Transfer funds from the depository account to:
General Account of FGWL
Bank accounts to be established by FGWL with
appropriate signing
and trading authorizations established for GWL&A
personnel.
4. Generate from the system daily cash journal summary
reports and maintain details of activity.
5. Process disbursement transactions for policyowner
or
beneficiary, surrenders, withdrawals, loans and
death
claims.
6. FGWL will maintain balances in the appropriate FGWL
bank accounts necessary to meet administrative
needs
identified in the contract.
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<PAGE>
30
7. FGWL will obtain the appropriate authorizations to
allow
GWL&A to transfer funds amongst FGWL accounts.
<PAGE>
D. Accounting/Auditing
1. Generate daily accounting extracts for policies
maintained
on the system.
2. Generate accounting information necessary to post
entries
to ledgers.
3. Retain system generated reports in accordance with
a retention
schedule as mutually agreed upon and as required by
regulatory
authorities. GWL&A will provide access to such
reports for
internal and external reporting.
4. Cooperate in annual audit of general account
and separate
<PAGE>
account financials conducted for purposes of
financial
statement certification and publication and
accommodate FGWL
or regulatory audits, as required.
E. Contract Owner Service/Record Maintenance
1. As requested by FGWL, receives and implements
contract owner
<PAGE>
service requests including information requests,
beneficiary
changes, payout requests, exchange of policies and
changes of
any other information maintained on the system.
2. Research contract owner inquiries using both data
stored
in the system and manual records.
3. Generate a set of daily journals confirming
financial
changes made to life accounts.
4. Address name and contract changes will be
coordinated
between GWL&A and FGWL.
5. Produce tax reporting.
6. Maintain policyowner records at the home offices of
both
FGWL and GWL&A. Information shall be maintained
either on-line, on microfilm, or in hard copy.
034322\0004\01659\973TG8C0.OTH
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<PAGE>
31
F. Disbursements
<PAGE>
1. Receive contract owner requests for partial and
full
surrenders from FGWL. Retain and account for any
contract administrative charges.
2. Process all surrender requests against policyowner
files.
3. Contact policyowner regarding tax withholding
procedures,
if necessary.
4. Subject to FGWL approval, generate FGWL checks and
forward to contract owner in accordance with
applicable
law. Deducts all tax withholding necessary.
5. Prepare and mail confirmation statements of
disbursement
transactions to contract owners.
<PAGE>
6. Generate a report on surrenders, if required.
G. Claims
1. Receive requests for and process claims
examination
<PAGE>
of death claims. Submit to FGWL for approval.
2. Upon approval by FGWL, generate
disbursement of funds
(from a FGWL bank account) and generated
related
accounting.
3. Make changes to owner and/or insured information as
directed by FGWL where no payout is required.
H. Agents/Commissions
1. Verifies license status of brokers/agents based on
information supplied by FGWL.
2. Produces detailed commission transactions for each
policy
financial transaction processed including premium
application or reversal, cancellation, etc. for
which a
commission is required.
3. Prepares commission statements for broker/dealer
firms.
Provides check production extract file for any
required
034322\0004\01659\973TG8C0.OTH
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<PAGE>
32
checks. Check production will be through a GWL&A
<PAGE>
checkwriting system.
4. Creates tax reporting forms, if required.
I. Period Reports to Policyowners
1. Prepare and mail statement of account to each
policyowner. Mail on scheduled supplied by FGWL.
J. Product Development and Pricing
1. Actuarial product pricing support options
including
determination of rates, policy load structures and
development
of actuarial documents for filing with state
insurance
departments.
<PAGE>
2. Provide information to FGWL to enable it to set
rates for
inforce policies.
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<PAGE>
<PAGE>
33
EXHIBIT E
BACK OFFICE POLICYOWNER SERVICES
GROUP DEFINED CONTRIBUTION PLANS
GWL&A shall provide the following services:
A. Contract Issue
1. Provide access to and use of central accounting
computer systems
for establishing and maintaining annuitant and contract owner
records.
2. Provide programming/support personnel to maintain,
administer and
operate the central accounting computer systems;
and provide
requested assistance to FGWL in connection with its
use of the
central accounting computers.
3. Review application, apply issue criteria developed
by FGWL to
application for annuity contract. Verify license
status of
brokers/agents based on information supplied by
FGWL. FGWL to
provide a written set of issue criteria to GWL&A.
4. Prepare contract data pages, issue contracts for paid
business and
<PAGE>
mail to contract owners or agents. System will
produce contract
data pages.
5. Establish and maintain annuitant and contract owner
records, as
applicable, on computer and manual systems.
6. Notify dealer/agent of any error or missing data needed
for
annuitant or contract owner records.
7. Produce and mail required confirmation statements.
8. Deposits monies received with application into FGWL
depository
account.
9. Maintain inventory of all issue-related forms,
contracts, and
endorsements based on updates provided by FGWL.
<PAGE>
10. For policies being exchanged from another company
or IRA funds
being transferred, GWL&A will request the funds
from the other
insurance company using forms supplied by FGWL.
FGWL will
establish signing authority for GWL&A personnel.
B. Collection Processing
<PAGE>
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<PAGE>
34
1. Receive from lockbox the remittance information in
accordance with
processing requirements.
2. Process payments received by FGWL to customer accounts
on the
System.
3. Prepare and mail required confirmation of transactions.
4. Deposit any cash received directly by GWL&A under the
policies
into a FGWL designated bank account.
5. Transmit daily accounting to FGWL general ledger.
6. Prepare and mail refunds as appropriate (declines, free
look).
C. Banking
1. Photocopies checks received directly by GWL&A and
assigns them a
control number. Balances, edits, endorses and
prepares daily
deposit. Reconciles banklockbox deposits toapplications
received.
2. Deposits are placed into a FGWL depository account.
<PAGE>
3. Transfer funds from the depository account to one of
the
following as appropriate:
a. General Account of FGWL
b. Mutual Fund Custodian Account(s)
c. Disbursement Account of FGWL
d. Separate Accounts of FGWL
Bank accounts and mutual fund accounts to be
established by FGWL
with appropriate signing and trading authorizations
established
for GWL&A personnel.
4. Generate from the system daily cash journal summary
reports and
maintain details of activity.
<PAGE>
5. Process disbursement transactions for policyowner or
beneficiary,
surrenders, withdrawals, loans and death claims.
6. Produce checks for annuitants in the payout phase.
7. FGWL will maintain balances in the appropriate FGWL
bank accounts
<PAGE>
necessary to meet administrative needs identified in
the contract.
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<PAGE>
35
8. FGWL will obtain the appropriate authorizations to
allow GWL&A to
transfer funds amongst FGWL accounts.
9. Reprocess dishonored items.
10. Provide check production for systematic payouts.
D. Accounting/Auditing
1. Generate daily accounting extracts for policies
maintained on the
system.
2. Generate accounting information necessary to post
entries to
ledgers.
3. Retain system generated reports in accordance with
a retention
schedule as mutually agreed upon and as required by
regulatory
authorities. GWL&A will provide access to such
reports for
internal and external reporting.
<PAGE>
4. Determine the "Net Amount Available for Investment" in
mutual fund
and places fund purchase/redemption orders with the
appropriate
mutual funds. GWL&A will receive confirmation of
mutual fund
investments.
5. Maintain an inventory of all mutual fund shares owned,
including
the date purchased and sold, cost, book value, gain,
loss, and
other relevant information.
6. Reconcile the inventory of mutual fund shares owned
to reports
which have been supplied by mutual funds of mutual
fund shares
owned.
7. Cooperate in annual audit of general account and
separate account
financials conducted for purposes of financial
statement
<PAGE>
certification and publication and accommodate FGWL or
regulatory
audits, as required.
E. Pricing/Valuation
1. Collect information needed in determining variable
account unit
values from the mutual fund. This information
includes the daily
<PAGE>
net asset value of the underlying mutual funds, any
capital gains
or dividend distribution made by the mutual funds and
the number
of mutual fund shares acquired or sold during the
immediate
preceding valuation date.
2. Enter required information into system for unit value
calculation
to be performed.
034322\0004\01659\973TG8C0.OTH
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<PAGE>
36
3. Generate separate account ledger activity associated
with unit
values.
F. Contract Owner Service/Record Maintenance
1. As requested by FGWL, receives and implements
contract owner
service requests including information requests,
beneficiary
changes, transfer of funds between eligible mutual
funds, payout
requests, exchange of policies and changes of
any other
information maintained on the system.
<PAGE>
2. Research contract owner inquiries using both data
stored in the
system and manual records.
3. Generate a set of daily journals confirming financial
changes made
to annuity or life accounts.
4. Address name and contract changes will be coordinated
between
GWL&A and FGWL.
5. Produce tax reporting.
6. Maintain policyowner records at the home offices of
both FGWL and
GWL&A. Information shall be maintained either on-line,
on
microfilm, or in hard copy.
G. Disbursements
1. Receive contractowner requests for systematic, partial
and full
<PAGE>
surrenders from FGWL. Retain and account for any
contract
administrative charges.
2. Process all surrender requests against policyowner
files.
Generate related separate account ledger accounting.
3. Contact policyowner regarding tax withholding
procedures, if
<PAGE>
necessary.
4. Subject to FGWL approval, generate FGWL checks and
forward to
contract owner in accordance with applicable law.
Deducts all tax
withholding necessary.
5. Prepare and mail confirmation statements of
disbursement
transactions to contract owners.
6. Generate a report on surrenders, if required.
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37
H. Claims
1. Receive requests for and process claims examination of
death
claims. Submit to FGWL for approval.
2. Upon approval by FGWL, generate disbursement of
funds (from a
FGWL bank account) and generated related accounting.
3. Make changes to owner and/or annuitant information as
directed by
FGWL where no payout is required.
<PAGE>
I. Agents/Commissions
1. Verifies license status of brokers/agents based on
information
supplied by FGWL.
2. Produces detailed commission transactions for each
policy
financial transaction processed including premium application or
reversal,
cancellation, etc. for which a commission is required.
3. Prepares commission statements for broker/dealer firms.
Provides
check production extract file for any required checks.
Check
production will be through a GWL&A checkwriting system.
4. Creates tax reporting forms, if required.
<PAGE>
J. Annuity Benefit Processing
1. Notifies owner of approaching annuitization
approximately 90 days
before annuitization date.
2. Receive information regarding annuitants going into the
annuity
<PAGE>
(payout) phase.
3. Calculate the amount of the initial annuity payment
for variable
payout based on tables supplied by FGWL.
Calculation of fixed
payout based on information supplied by FGWL.
4. Generate checks or electronic fund transfer for
payment of amount
due to annuitant in accordance with applicable
law. Deduct
applicable premium taxes and withholding taxes.
5. Create and maintain annuitant records.
6. Generate accounting entries to record disbursements.
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38
7. Generate premium tax and withholding reporting.
GWL&A will make
all payments to the appropriate regulatory agencies
for any taxes
withheld and will effect all necessary
associated reports.
Generate accounting entries to record transactions.
K Proxy processing
<PAGE>
1. Receive record date information from the underlying
mutual funds.
Receive proxy solicitation material from underlying
mutual funds.
2. Prepare proxy cards, if applicable.
3. Mail solicitation and resolicitations, if necessary.
4. Maintain all proxy registers and other required proxy
material.
5. Tabulate returned proxy cards and transmits results to
underlying
mutual funds.
L. Period Reports to Policyowners
1. Prepare and mail statement of account to each
policyowner. Mail
on scheduled supplied by FGWL.
<PAGE>
2. Insert and mail semi-annual and annual reports to
policyowners, as
required, both underlying mutual fund and
Separate Account
reports. Filing of reports with NASD and SEC will
be done by
GWL&A.
Printing of reports will be done by GWL&A.
<PAGE>
M. Regulatory Statement Reports
1. Prepare IRS reports for contract owners who received
annuity
payments or distributions. Mails to contract owners and transmits to
IRS.
2. Prepare other IRS reports, as required.
3. Respond to requests for calculations applicable to
annuity
payments as may be necessary to tax calculations.
N. Product Development and Pricing
1. Actuarial product pricing support for new
investment options
including determination of rates, policy load
structures and
development of actuarial documents for filing with
state insurance
departments.
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<PAGE>
39
2. Provide information to First GWL&A to enable it to set
rates for
inforce policies.
<PAGE>
3. Calculation of historic of return for portfolios in
First GWL&A
Series Accounts.
4. Consulting with FASCorp personnel regarding
maintenance of market
value adjustment and other pricing formulas on the
administrative
system.
5. Monitoring performance of portfolios with the series
accounts of
FGWL&A. When performance is inadequate, recommending
replacement funds.
6. Case specific pricing per the guidelines in the
Statement of
Variability for the 457 market product.
O. Underwriting
1. Responding to request for Proposals (RFP's) including
coordinating
<PAGE>
price quotes, responding to specific questions and
determining
strategy for quoting.
2. Provide information to enable FGWL&A to establish
prices for
inforce cases
3. Contract negotiations for specifically priced cases per
the
<PAGE>
Statement of Variability.
4. Working with FASCorp to establish administrative
procedures once
cases are awarded to First GWL&A.
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40
EXHIBIT F
SCHEDULE OF AUTHORIZED PERSONNEL
The following individuals are authorized by First Great-West
Life & Annuity
Insurance Company to give instructions or direction to Great-West
Life & Annuity
Insurance Company with respect to matters arising in
connection with the
servicing to be performed under this Agreement:
W.T. McCallum -- Chairman of the Board, President and Chief Executive
Officer
D. Low -- Executive Vice President, Financial Services
J.D. Motz -- Executive Vice President, Employee Benefits
R.D. Bond -- Senior Vice President, Financial Services
J.T. Hughes -- Senior Vice President, Chief Investment Officer
D.C. Lennox -- Senior Vice President, General Counsel and Secretary
M.L. Rosenbaum -- Senior Vice President, Employee Benefits Operations
D.L. Wooden -- Senior Vice President, Financial Services
W.K. Adam -- Vice President, Counsel and Associate Secretary
J.N. Clayton -- Vice President and Treasurer
G.R. Derback -- Vice President and Treasurer
M.S. Hollen -- Vice President, Investment Administration
J.L. McCallen -- Vice President and Actuary
<PAGE>
J.D. Roeske -- Vice President, Individual Financial Services
G.E. Seller -- Vice President, Major accounts, Financial Services
R.K. Shaw -- Vice President, Financial Services
D.E. Cunningham -- Assistant Vice President, Savings Products
B.A. Byrne -- Assistant Counsel and Assistant Secretary
M.J. Pavlik -- Assistant Treasurer
R.G. Schultz -- Assistant Counsel and Assistant Secretary
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41
<PAGE>
EXHIBIT G
INSURANCE COVERAGE
The following insurance coverages are maintained by Great-West
Life & Annuity
<PAGE>
Insurance Company:
Fidelity Bond Insurance
4831996 American Home Assurance Company
$15,000,000
4832000 American Home Assurance Company
Add'l $15 mil
81247717G Chubb Insurance Company of Canada
$20,000,000
81469435A Chubb Insurance Company of Canada
Add'l $20 mil
Liability Insurance
TGL0000967 Reliance Insurance Company $
5,000,000
CBP084869C Lombard General
$10,000,000
TXL00000958 Reliance Insurance Company
$15,000,000
(96)7928-42-47 Chubb Insurance Company of Canada
$25,000,000
XCP 373842 CIGNA Insurance Company of Canada
$30,000,000
XXX-000-677-5872 Allenz Insurance Company of Canada
$15,000,000
All amounts are in Canadian dollars
<PAGE>
<PAGE>
