As Filed with the Securities and Exchange Commission on July 10, 1997
Registration No. 33- ______
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
AAL VARIABLE LIFE ACCOUNT I
(Exact name of trust)
AID ASSOCIATION FOR LUTHERANS
(Name of depositor)
4321 North Ballard Road
Appleton, Wisconsin 54919-0001
Name and complete address of agent for service of process:
WOODROW E. ENO, ESQ.
SECRETARY AND GENERAL COUNSEL
AID ASSOCIATION FOR LUTHERANS
4321 North Ballard Road
Appleton, WI 54919-0001
Copy to:
DIANE AMBLER, ESQ.
MAYER BROWN & PLATT
2000 Pennsylvania Avenue
Washington, D.C. 20006
(202) 463-2000
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration Statement
Title and amount of securities being registered : Variable Universal Life
Insurance Certificates
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
elects to register an indefinite number or amount of its securities under the
Securities Act of 1933
The Registrant hereby amends this Registration Statement on such dates as may be
necessary to delay its effective date until the Registrant shall file a further
amendment 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>
AAL Variable Life Account
Aid Association for Lutherans
Cross Reference to Items Required by form N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS
1 Cover Page,
2 Inside Cover Page
3 NA
4 Distribution
5 Investment Options
6 NA
7 Not Applicable
8 Definitions
9 Litigation
10
(a) NA
(b) NA
(c) Access to Certificate Value
(d) Access to Certificate Value, Investment Options
(e) Certificate Summary
(f) Investment Options, General Information
(g) General Information
(h) General Information
(i) Federal Tax Matters, General Information, Premiums,
Benefits, Charges, Cash Value, Access to
Certificate Values
11 Investment Options
12 NA
13
(a) Charges, Investment Options
(b) Charges
(c) Charges
(d) NA
(e) NA
(f) NA
(g) NA
14 Certificate Summary, General Information,
15 Premiums, How to Receive Service
16 Premiums, Investment Options, Cash Value
17 Access to Certificate Value, General Information
18
(a) Investment Options, Charges
(b) NA
(c) Investment Options
19 General Information
20 General Information
21 Access to Certificate Values, How to Receive Service
22 General Information, Benefits
23 NA
24 NA
25 Investment Options
26 NA
27 Inside Cover
28 General information
29 Inside Cover
<PAGE>
30 through 37 NA
38 Certificate Summary
39 Distribution
40 NA
41 Distribution
42 NA
43 NA
44 Investment Options, Cash Value,
45 NA
46 Investment Options, Cash Value
47 NA
48 Cover page
49 NA
50 NA
51 I
(a) Cover Page
(b) NA
(c) Investment Options
(d) NA
(e) NA
(f) Cash Value, General Information Certificate
Termination
(g) Premiums
(h) NA
(i) NA
(j) NA
52
(a) General Information, Investment Options
(b) NA
53 Federal Tax Matters
54 through 58 NA
59 Financial Statements
<PAGE>
AAL
VARIABLE
UNIVERSAL
LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Offered by:
AID ASSOCIATION FOR LUTHERANS
4321 North Ballard Road
Appleton, Wisconsin 54919-0001
(414) 734-5721
(AAL Logo)
AID ASSOCIATION FOR LUTHERANS
AAL's Variable Universal Life Provides You With These Benefits
Death Benefit Protection
Flexible Premium Payment Options
A Variety of Investment Options for Your Cash Value
Death Benefit Guarantee Upon Payment of Death Benefit Guarantee Premium
AAL Variable Life Account I
AAL Variable Product Series Fund, Inc.
The AAL Variable Product Money Market Portfolio
The AAL Variable Product Bond Portfolio
The AAL Variable Product Balanced Portfolio
The AAL Variable Product Large Company Stock Portfolio
The AAL Variable Product Small Company Stock Portfolio
AAL VARIABLE UNIVERSAL LIFE
AAL VARIABLE UNIVERSAL LIFE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Offered by:
AID ASSOCIATION FOR LUTHERANS
4321 North Ballard Road
Appleton, Wisconsin 54919-0001
(414) 734-5721
<PAGE>
PROSPECTUS Dated , 1998
Aid Association for Lutherans ("AAL") is offering the flexible premium variable
life insurance Certificate (the "Certificate") described in this Prospectus to
persons who are eligible for membership in AAL. Membership is open to Lutherans
and their families. AAL offers life, disability income insurance and annuities
to its members and to employees of AAL, its subsidiaries and affiliated
companies who reside in Wisconsin, and mutual funds are offered through a
subsidiary, AAL Capital Management Corporation. All members are part of one of
over 9,600 local AAL branches throughout the United States. The Certificate
provides life insurance benefits. You may choose from two death benefit options.
Under the Level Death Benefit Option the death benefit is usually the Specified
Amount. Under the Variable Death Benefit the death benefit is usually equal to
the Specified Amount plus the Certificate's Cash Value, which can vary. You can
also choose the timing and amounts of your premium payments and allocate your
Cash Value among the underlying Subaccounts. You may use your Cash Value to keep
your Certificate in force, or borrow a portion of it. You can also surrender
your Certificate and receive the Cash Value less any surrender charges.
Your Certificate's Cash Value will vary with the investment experience of the
underlying funding options you choose. Although Certificate values will vary,
the Certificate can be guaranteed to stay in force through the Guaranteed Death
Benefit Provision.
It may not be to your advantage to replace existing life insurance or supplement
existing variable life insurance with this Certificate.
Please read this prospectus carefully and retain it for future reference.
You should rely only on the information contained in this document. AAL has not
authorized anyone to provide you with information that is different.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A PROSPECTUS
FOR THE PORTFOLIO OR PORTFOLIOS BEING CONSIDERED MUST ACCOMPANY THIS PROSPECTUS
AND SHOULD BE READ IN CONJUNCTION HEREWITH.
<PAGE>
TABLE OF CONTENTS
DEFINITIONS.....
CERTIFICATE SUMMARY
INTRODUCTION
WHO IS AAL?
WHAT IS THE PURPOSE OF THE CERTIFICATE?
WHAT LIFE INSURANCE PROTECTION IS PROVIDED?
WHAT PREMIUMS MAY I PAY?
WHAT INVESTMENT OPTIONS DO I HAVE?
WHAT IS THE CASH VALUE OF THE CERTIFICATE?
WHAT CHARGES DO I PAY?
HOW CAN I TAKE CASH OUT OF MY CERTIFICATE?
HOW CAN MY CERTIFICATE TERMINATE?
BENEFITS
DEATH BENEFIT
INCREASING YOUR SPECIFIED AMOUNT?
DECREASING YOUR SPECIFIED AMOUNT
CHANGING YOUR DEATH BENEFIT OPTION
DEATH BENEFIT GUARANTEE
MATURITY BENEFIT
ADDITIONAL BENEFITS
PREMIUMS
DEATH BENEFIT GUARANTEE PREMIUM
FLEXIBILITY
LIMITS
NET PREMIUM & PREMIUM ALLOCATION
INVESTMENT OPTIONS
FIXED ACCOUNT
VARIABLE ACCOUNT
INVESTMENT OBJECTIVES OF THE FUND PORTFOLIOS
TRANSFERS
REVIEW OF INVESTMENT STRATEGY
VOTING PRIVILEGES
CASH VALUE
FIXED ACCOUNT CASH VALUE
VARIABLE ACCOUNT CASH VALUE
WHAT AFFECTS CASH VALUE
SURRENDER VALUE
CHARGES
PERCENT OF PREMIUM CHARGE
CASH VALUE CHARGES
SURRENDER CHARGE
ACCESS TO CASH VALUE
PARTIAL WITHDRAWALS
LOANS
SURRENDER
CERTIFICATE TERMINATION
EARLY TERMINATION AND REINSTATEMENT
DEATH, MATURITY, AND SURRENDER
<PAGE>
PAYOUT OPTIONS
SELECTION
OPTION 1: INTEREST
OPTION 2: A SELECTED AMOUNT OF INCOME
OPTION 3: A SET PERIOD
OPTION 4: FOR LIFE
OPTION 5: JOINT & SURVIVOR
HOW TO MAKE PAYMENTS AND RECEIVE SERVICE
APPLYING FOR A CERTIFICATE
TIMELY PROCESSING
WRITTEN REQUESTS
TELEPHONE TRANSACTIONS
DEATH CLAIMS
GENERAL INFORMATION
FREE LOOK
ENTIRE CONTRACT
STATEMENTS IN THE APPLICATION
CHANGE OF CERTIFICATE
INCONTESTABILITY
MISSTATEMENT OF AGE OR SEX
MAINTENANCE OF SOLVENCY
BASIS OF COMPUTATIONS
REPORTS TO OWNERS
MEMBERSHIP
OWNERSHIP
BENEFICIARY
COLLATERAL ASSIGNMENT
RIGHTS RESERVED BY AAL
DIRECTORS AND OFFICERS
FEDERAL TAX MATTERS
VARIABLE ACCOUNT TAX STATUS
LIFE INSURANCE QUALIFICATION
PRE-DEATH DISTRIBUTIONS
DIVERSIFICATION REQUIREMENTS
OTHER CONSIDERATIONS
LITIGATION
DISTRIBUTION
ILLUSTRATIONS
LEGAL MATTERS AND EXPERTS
<PAGE>
DEFINITIONS
AAL: Aid Association for Lutherans, a fraternal benefit society organized under
the laws of the State of Wisconsin, owned and operated for its members. It is
the issuer of the Certificates.
AALCMC: AAL Capital Management Corporation, an indirect subsidiary of Aid
Association for Lutherans and a registered broker-dealer. It serves as principal
underwriter of the Certificates.
AAL Representative: An AAL District Representative who is appropriately licensed
by state insurance department officials to sell the Certificates, and is also a
licensed Registered Representative of AALCMC.
Accumulation Unit: A unit of measure used to calculate the Cash Value in each
Subaccount of the Variable Account. A further description is contained in the
Section "Cash Value", specifically the subsection "Variable Account", of this
Prospectus.
Accumulation Unit Value: On any Valuation Date, the value of the Accumulation
Unit of each Subaccount of the Variable Account. A further description is
contained in the Section "Cash Value", specifically the subsection "Variable
Account", of this Prospectus.
Age: The Issue Age of the insured plus the number of Certificate Years elapsed.
Beneficiary: The person(s) named by the Certificate Owner to receive the death
proceeds under the Certificate. A beneficiary need not be a natural person.
Cash Value: The total value of the Certificate. Cash Value equals the sum of the
Subaccount cash values plus Fixed Account cash value.
Certificate: The flexible premium variable life insurance Certificate offered by
AAL and described in this prospectus.
Certificate Anniversary: The same date in each succeeding year as the
Certificate Issue Date.
Certificate Year: The 12-month period following the Issue Date or a Certificate
Anniversary. The Certificate Year is always based upon the time elapsed since
the Issue Date.
Death Benefit: The amount paid upon the death of the Insured.
Death Benefit Option: Either of the two methods used to determine the Death
Benefit.
Death Benefit Guarantee: A Certificate provision that guarantees insurance
coverage if you meet certain conditions.
Death Benefit Guarantee Premium: The minimum monthly premium required to keep
your particular Certificate's Death Benefit Guarantee intact. Different
combinations of age, sex, risk class, specified amount and additional benefits
will result in different Death Benefit Guarantee Premiums. Your Death Benefit
Guarantee Premium is listed on page 3A of your Certificate and it is further
described in the Section "PREMIUMS" of this Prospectus.
<PAGE>
Fixed Account: A Cash Value accumulation option that credits an interest rate.
The Fixed Account is part of AAL's general account, which includes all of AAL's
assets other than those in any AAL separate account.
Fund: AAL Variable Product Series Fund, Inc., which is described in the Fund
Prospectus accompanying this Prospectus.
Home Office: AAL's office at 4321 Ballard Road, Appleton, Wisconsin 54919-0001,
or such other place as AAL shall specify in a notice to the Certificate Owner.
Insured: The person on whose life the Certificate is issued.
Internal Revenue Code: The Internal Revenue Code of 1986, as amended.
Issue Age: The age of the insured as of his or her last birthday on or before
the issue date.
Issue Date: The date insurance coverage begins under this Certificate.
Monthly Deduction Date: The date each month on which monthly charges are taken
from Cash Value. It occurs each month on the nearest Valuation Date, on or
preceding the day of the month which corresponds to the day of the month on
which the Certificate was issued. A further description is contained in the
"Charges" Section of this Prospectus.
Net Asset Value: The unit of valuation for a Fund portfolio as computed and
described in such Fund's prospectus.
Specified Amount: Initially, the amount of life insurance for which the
Certificate was issued. The Specified Amount of your Certificate may change, as
described in your Certificate. This is further described in the "Benefits"
Section of this Prospectus.
Subaccount: A subdivision of the Variable Account. Each Subaccount invests
exclusively in the shares of a corresponding portfolio of the Fund. This is
further described in the "Investment Options" Section, specifically in the
Variable Account" subsection.
Surrender Value: Cash Value less any applicable surrender charges and
outstanding loan balances.
Valuation Date: Any day upon which both the New York Stock Exchange is open for
regular trading and AAL is open for business. The Exchange is regularly closed
on Saturdays and Sundays and on New Year's Day, the third Monday in February,
Good Friday, the last Monday in May, Independence Day, Labor Day, Thanksgiving
and Christmas. If one of these holidays falls on a Saturday or Sunday, the
Exchange will be closed on the preceding Friday or the following Monday. AAL
will also be closed on the Friday after Thanksgiving and the day before
Christmas.
Valuation Period: The period of time from the end of one Valuation Date to the
end of the next Valuation Date.
Variable Account: The AAL Variable Life Account I. It is a separate account of
AAL.
Written Request: A written request or notice signed by the Certificate Owner,
received in good order by AAL at its Home Office.
You, Your: The Owner of the Certificate.
<PAGE>
CERTIFICATE SUMMARY
INTRODUCTION
As you read this prospectus, keep in mind that you are considering the purchase
of a life insurance contract. Because a substantial part of your premium pays
for life insurance, you should not buy this Certificate unless a primary reason
for your purchase is to provide life insurance protection. Since it is cash
value life insurance with investment aspects, the Certificate can also serve a
second purpose. In addition to providing life insurance coverage, cash may also
be available for use during your lifetime. Because it is variable universal life
insurance, it has significant investment aspects that require you to make
investment decisions and take investment risk. No claim is made that the
Certificate is in any way similar or comparable to a systematic investment plan
of a mutual fund. This section provides only an overview of the more significant
provisions of the Certificate. It omits details that are provided in the rest of
this Prospectus. The Table of Contents will help you locate more details or
other specific topics.
WHAT IS AAL?
AAL (Aid Association for Lutherans) was organized on November 24, 1902. It is a
fraternal benefit society under Internal Revenue Code section 501(c)(8) and
incorporated under the laws of the state of Wisconsin. As of December 31, 1997,
AAL had approximately 1.7 million members and is the world's largest fraternal
benefit society in terms of assets (over $-- billion) and life insurance in
force ($--- billion), ranking it in the top two percent of all life insurers in
the United States in terms of ordinary life insurance in force.
WHAT IS THE PURPOSE OF THE CERTIFICATE?
This Certificate provides life insurance protection on the Insured as long as
the Certificate is in effect. It also may provide cash available for use during
your lifetime.
Like traditional life insurance, the Certificate has a death benefit,
accumulates a cash value and offers loan and surrender privileges. Unlike
traditional life insurance, the Certificate offers flexible premiums and a
choice of investment alternatives, including the opportunity to participate in
the risks and returns of equities.
Your choice of premiums, investment options, and your use of withdrawal and loan
privileges will be key factors in the Certificate's performance. The choices you
make directly impact how long the Certificate remains in effect and the amount
of cash available for use.
WHAT LIFE INSURANCE PROTECTION IS PROVIDED?
You choose one of two Death Benefit Options. Under the Level Death Benefit
option the death benefit is usually the Specified Amount. Under the Variable
Death Benefit option the death benefit is usually equal to the Specified Amount
plus the Certificate's Cash Value which can vary according to gains or losses as
a result of the investment options selected.
If your Cash Value builds to a large total compared to your Specified Amount,
your death benefit will be increased as necessary to comply with federal tax
law. This is required to maintain your Certificate's tax status as life
insurance.
<PAGE>
Your Certificate is guaranteed to stay in effect as long as the Death Benefit
Guarantee is intact. This guarantee is available until age 65 or your 10th
Certificate anniversary, if later, provided you pay certain minimum premium
amounts.
You may change Death Benefit Options, and increase or decrease your Death
Benefit by changing your Specified Amount, as provided for in your Certificate.
Additional benefits are also available. They include Accidental Death Benefit,
Disability Waiver, Guaranteed Purchase Option, and Applicant Waiver. See your
Certificate for details.
WHAT PREMIUMS MAY I PAY?
You choose when and how much premium to pay, within certain restrictions. To
keep your Certificate in effect during the first four (4) years, you should pay
at least the Death Benefit Guarantee Premium. Your Certificate will likely lapse
if you fail to pay at least these premiums.
If you want to make regular payments, AAL will send you billing statements of an
amount you select. You can choose monthly, quarterly, semi-annual or annual
payments.
To keep your Death Benefit Guarantee, your total premiums paid less partial
withdrawals must equal or exceed the total Death Benefit Guarantee Premiums plus
any outstanding loan balance. AAL recommends you pay at least the Death Benefit
Guarantee Premiums to adequately fund your Certificate. Paying these premiums
guarantees that your Certificate will not lapse until age 65, or for 10 years
from issuance if longer.
The amount of premiums paid may effect the tax status of your Certificate. The
Internal Revenue Code's definition of life insurance limits the amount of
premium you may pay.
WHAT INVESTMENT OPTIONS DO I HAVE?
You choose where to allocate your premiums among the Variable Accounts (called
"Subaccounts") and the Fixed Account.
Premiums you allocate to the Fixed Account are credited to your Fixed Account's
Cash Value. Cash Value in the Fixed Account accumulates at a fixed rate of
interest as declared by AAL. This rate is guaranteed never to be lower than 4%.
The Fixed Account is a part of AAL's general account. The general account
includes all of AAL's assets other than those in our separate accounts
(including the Variable Account).
Each Subaccount invests in a portfolio of a mutual fund. The current portfolios
are Money Market, Bond, Large Company Stock, Small Company Stock, and Balanced.
Each portfolio has a different investment strategy. Premiums allocated to a
Subaccount will increase that Subaccount's Cash Value. Each Subaccount's cash
value will accumulate based on the investment experience of that Subaccount's
portfolio.
You may transfer the Cash Value among the Subaccounts and Fixed Account, as
specified in the Certificate. This allows you to adjust your investment strategy
at any time.
<PAGE>
WHAT IS THE CASH VALUE OF THE CERTIFICATE?
The total Cash Value at any time is equal to the sum of the Cash Values in the
Subaccounts and the Fixed Account.
Premiums increase Cash Value. Charges and cash you withdraw from the Certificate
decrease Cash Value. The investment experience of the Subaccount(s) you select
also affects your Certificate's Cash Value as does the interest credited to the
Fixed Account. Investment gains, if any, increase Cash Value, while any
investment losses decrease Cash Value.
Your decisions on the premiums to pay, the accounts to invest in, and the
amounts you withdraw from the Certificate have a great impact on your
Certificate's Cash Value.
Important Note: The primary purpose for paying enough premium to build your Cash
Value is to cover increasing Cost of Insurance rates as you (the Insured) get
older. Unless you build your Cash Value over time, you will need to cover
increasing costs with higher premiums. Your Cash Value also depends upon the
investment experience of the Subaccount(s) in which your Cash Value is invested
and, if this experience is low or negative, you may also need to pay higher
premiums.
WHAT CHARGES DO I PAY?
Charges are necessary to pay for the insurance coverage provided, cover the
expenses of issuing and administering the Certificate, and to fund AAL's
fraternal activities. Charges are:
Cost of Insurance Charge - A monthly charge for life insurance coverage. This
charge varies by risk class, sex, amount at risk, and age.
Mortality and Expense Risk Charge - Monthly charges are deducted from the
Subaccounts of the Variable Account to pay for the mortality and expense risks
borne by AAL. During the first 15 years the monthly charge is 1/16 th of one
percent of the total Subaccount Cash Value. This charge drops to 1/48 th of one
percent of the total Subaccount Cash Value in Certificate Year 16.
Administrative Charge - A monthly charge of $4 is deducted to cover
administrative costs.
Issue Charge - A monthly charge to cover issue costs is deducted for the first
36 months. This charge will vary by age, risk class, sex and Specified Amount.
Percent of Premium Charge - A charge of 3 % of each premium is taken to cover
sales and other expenses and provide support for AAL's fraternal activities.
Additional Insurance Benefits Charge - A charge will be taken each month for any
additional insurance benefits you have.
Surrender Charge - If you choose to surrender your Certificate or reduce your
Specified Amount, AAL will reduce your Cash Value by the Surrender Charge. The
charge decreases over the first 10 Certificate years to zero in the 11th
Certificate Year. A new Surrender Charge schedule begins for the increase in
Specified Amount each time you increase your Specified Amount.
<PAGE>
HOW CAN I TAKE CASH OUT OF MY CERTIFICATE?
You can choose to take cash out of the Certificate through a loan, partial
withdrawal, or full surrender.
You may take one partial withdrawal per Certificate year at no charge. You will
be charged $25 for each additional withdrawal. A partial withdrawal will reduce
your Cash Value and may reduce your Specified Amount. It will also reduce the
amount of premiums considered "paid" to meet the Death Benefit Guarantee premium
requirement.
You make take up to 92% of your Cash Value out as a loan. You will be charged 8%
per annum on the loan balance until you reach your 15th Certificate anniversary.
Thereafter the rate will drop to 7 1/4% per annum.
Cash Value securing a loan may earn a lower interest rate than other Cash Value
in the Fixed Account. AAL will determine the rates earned.
If you surrender your Certificate, you will receive the Cash Value less any
surrender charge and outstanding loans.
Both partial withdrawals and loans will reduce the Cash Value available to pay
your insurance costs. You should carefully consider the impact on the insurance
your Certificate will be able to provide, now and in the future, before
exercising these privileges.
These privileges can be a major advantage of this Certificate. When you pay
enough premiums, the power of tax-deferred earnings, with favorable investment
experience, can build significant Cash Value. Under these circumstances, some
Cash Value will be available for your use, in addition to paying your insurance
costs.
HOW CAN MY CERTIFICATE TERMINATE?
Without the Death Benefit Guarantee, this Certificate will terminate (lapse)
when there is not enough Cash Value to pay the monthly charges. If this happens,
you have a short period to pay enough premiums to keep the Certificate in
effect. Your Certificate will not terminate while the Death Benefit Guarantee is
intact.
Your Certificate will terminate when the Insured dies and the death benefit is
paid.
Your Certificate will terminate if you surrender your Certificate for its
surrender value (Cash Value less loans and surrender charges).
Your Certificate will terminate if you reach age 100. At that time the greater
of the Specified Amount less any loans, and Cash Value less any loans, will be
paid to you.
There may be tax consequences when money is received from a Certificate. Please
consult with your tax advisor.
<PAGE>
BENEFITS
DEATH BENEFIT
The death benefit is the amount payable upon the death of the Insured. At the
time of purchase, you must choose between two available Death Benefit Options.
The amount payable under either option will be determined as of the date of the
Insured's death. Loans plus unpaid interest always reduce the death benefit
paid.
Suicide Exclusion
If the Insured commits suicide within one year of the issue date AAL will not
pay a death benefit but will return all premiums paid. The one year period in
the Suicide Exclusion provision will apply at issue and to each increase in the
Specified Amount beginning on the effective date of each increase. The only
amount payable attributable to the increase will be a refund of the monthly
deductions for the increase.
Level Death Benefit - Option 1
The death benefit under this option is the greater of the Specified Amount, or
the death benefit factor multiplied by Cash Value. The death benefit factor is
2.5 through age 40 and decreases yearly to 1 at age 95. The death benefit factor
helps to qualify your Certificate as life insurance under federal tax law. A
table of death benefit factors is contained in your Certificate.
Option 1 generally provides a level Death Benefit. Choose Death Benefit Option 1
if: 1) you do not expect your insurance needs to generally increase; and 2) you
wish to minimize you insurance costs. All other things being equal, Option 1
will provide greater growth in Cash Value than Option 2.
Variable Death Benefit - Option 2
The death benefit will be the greater of the Specified Amount plus Cash Value or
the death benefit factor (described above) multiplied by Cash Value.
Option 2 provides a death benefit that varies over time. It increases and
decreases along with your Cash Value. Choose Death Benefit Option 2 if: 1) you
expect your insurance costs to increase; or 2) you wish to have an increasing
death benefit. Option 2 will provide a greater death benefit than Option 1.
INCREASING YOUR SPECIFIED AMOUNT
You have the right to increase the Specified Amount at any time on or before the
certificate anniversary following the insured's 80th birthday if the insured is
insurable for the increase under AAL's underwriting guidelines and policies
An increase must be at least $10,000. Proof of insurability may be required and,
if you are not the Insured, proof of insurable interest may also be required.
When an increase is approved, it becomes effective as of the date shown on the
new page 3A that is sent to you.
The cost of insurance rate for each increase will be based on the sex, age on
the last certificate anniversary, and risk class of the insured at the time the
increase takes effect.
Each increase will be subject to AAL's expense charges in effect at the time of
increase. The expense charges for each increase will be based on the insured's
age on the last certificate anniversary and sex at the time of increase and will
apply for the number of months shown on the new page 3A.1. A new set of
surrender charges will apply to each increase in the Specified Amount. These
charges will all be shown on the new page 3A.1.
<PAGE>
DECREASING YOUR SPECIFIED AMOUNT
You have the right to decrease the Specified Amount after it has been in effect
for one year. The Specified Amount remaining in effect cannot be less than
$10,000.
The decrease will be effective as of the date the request is received at the
Home Office. The decrease will be subtracted first from any previous increases
in the specified amount, starting with the most recent, then from the original
specified amount.
A surrender charge will be subtracted from the Cash Value if a surrender charge
is in effect for that part of the Specified Amount decreased. The surrender
charges are shown on the Table of Surrender Charges in the Certificate on page
3A.1.
CHANGING YOUR DEATH BENEFIT OPTION
You may change your Death Benefit Option at any time. A $25 charge will be
applied to your Cash Value for each Death Benefit Option Change.
If you apply to change from the Level Death Benefit Option to the Variable Death
Benefit Option, AAL may require proof of insurability from you. Also, your
Specified Amount of insurance decreases so your death benefit immediately after
the change will be the same as immediately before the change. The change is not
allowed if it reduces your Specified Amount below $10,000.
If you change from the Variable Death Benefit Option to the Level Death Benefit
Option your Specified Amount increases. The increase is determined so your death
benefit immediately after the change will be the same as immediately before the
change.
DEATH BENEFIT GUARANTEE
The Death Benefit Guarantee, as long as it is intact, assures that your coverage
will continue even if the Cash Value is insufficient to pay the current monthly
deductions. To keep the Death Benefit Guarantee intact you must meet the test
described below. Basically, the test requires you to pay a minimum amount of
premiums, and the insured to be under age 65 (or the Certificate has been in
effect not more than 10 years).
<PAGE>
AAL will test the Death Benefit Guarantee on each monthly deduction date as
follows:
1) the sum of all premiums paid (less any partial withdrawals) must be greater
than or equal to the Death Benefit Guarantee Premium (see next page) times the
number of months since the Certificate Issue Date, plus any outstanding loan,
and
2) the Insured's age is less than 65 or, if longer, the Certificate has been in
effect no more than 10 years.
If part 1) of the test is not met, AAL will notify the Certificate Owner and
allow two months to pay enough premium or loan repayment to meet the
requirements of the test. If you do not pay the required premium or loan
repayment, the Death Benefit Guarantee will end, and may not be reinstated.
Changes in the Specified Amount and optional benefits on the Certificate will
change the Death Benefit Guarantee Premium. The new Death Benefit Guarantee
Premium is required from the first monthly deduction date following the change.
MATURITY BENEFIT
Upon the Insured's attaining age 100, the Certificate will provide a maturity
benefit equal to the greater of the Cash Value less any loans, or the Specified
Amount, less any loans.
ADDITIONAL BENEFITS
Several additional benefits are available on most Certificates. They include
Accidental Death Benefit, Disability Waiver, Guaranteed Purchase Option, and
Applicant Waiver. See your Certificate for details.
PREMIUMS
DEATH BENEFIT GUARANTEE PREMIUM
The Death Benefit Guarantee Premium is the minimum premium, on a monthly basis,
that is required to keep your Death Benefit Guarantee intact. Your Death Benefit
Guarantee Premium is equal to:
1) a factor, based on age, sex, and risk class, multiplied by your Specified
Amount divided by 1,000; plus
2) the monthly administrative charge of $4; plus
3) a required premium for each additional benefit you choose.
Your particular Death Benefit Guarantee Premium is listed on page 3A of your
Certificate.
You may choose to pay on a different basis than monthly or to pay lump sums. In
these cases, premiums paid in excess of the current month's Death Benefit
Guarantee Premium will be counted toward future Death Benefit Guarantee Premium
requirements.
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FLEXIBILITY
You choose when and how much premium to pay, within certain restrictions. You
need to pay at least the Death Benefit Guarantee Premium for four years, without
taking any loans or partial withdrawals, to keep your Certificate in effect.
Failure to pay this Premium will likely result in the lapse of your Certificate.
After that time you may be able to pay less and keep your Certificate in effect.
However, if you do pay less, you will lose the Death Benefit Guarantee and you
run a greater risk that your Cash Value will not grow enough to keep your
Certificate in effect.
Planned periodic premiums are those you choose to pay on a regular basis. AAL
will send you billing statements of an amount you select. You can choose
quarterly, semi-annual or annual statements. Pre-authorized automatic monthly
check payments may also be arranged.
You may make payments in addition to planned periodic premiums. You also may
choose a new planned periodic premium. AAL recommends you pay at least the Death
Benefit Guarantee premiums to adequately fund your Certificate.
LIMITS
AAL reserves the right to:
- - - -Limit any increase in planned periodic premiums.
- - - -Limit the number and amount of payments in addition to planned periodic
payments.
- - - -Refuse any premium if the payment would increase the difference between the
Death Benefit and the Cash Value.
The Internal Revenue Code excludes life insurance death benefits from gross
income. To qualify for this exclusion, federal tax law limits the premiums you
may pay. AAL will return the portion of any premium payment that causes this
limit to be exceeded.
In the event of a reduction in the Specified Amount, If either the total premium
payments already made or the Cash Value exceeds the applicable limit stated in
the Internal Revenue Code regarding the definition of life insurance, AAL will
refund any excess premiums or Cash Value necessary to comply with the limit
stated in the Internal Revenue Code.
NET PREMIUM & PREMIUM ALLOCATION
Net premiums equal the premiums you pay less the 3% of premium charge. You
decide how to allocate your net premiums among the available accounts. At
purchase, you select a percentage for each account that will be used to allocate
each net premium. If you do not designate premium allocation percentages, the
entire amount will be allocated to the Money Market Subaccount. The percentages
must be whole numbers, and add to 100%. You may change your allocation
percentages at any time.
Your initial premium will be allocated to the accounts you choose (or to the
Money Market Account as discussed below) at the time the Certificate is issued.
Premiums paid after issue are allocated according to the premium allocation
percentages you have chosen. This allocation occurs at the end of the day if AAL
receives your premium payment before the close of the New York Stock Exchange
("NYSE"), which is usually 3:00 P.M. Central Time, and that day is a Valuation
Date. If your payment is received on a non-Valuation Date or after the NYSE
closes, the allocation occurs as of the end of the next Valuation Date.
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In certain states, a refund of premium or the greater of premium or accumulated
values is required if you exercise your free look privilege. See "Free Look" in
the "General Information Section". In these cases, AAL reserves the right to
allocate premiums to the Money Market Subaccount until the expiration of the
"free look period" plus an additional 5 day period. At that time AAL will
allocate your accumulated premiums to the accounts based on your net premium
allocation percentages.
INVESTMENT OPTIONS
You choose where to allocate your net premiums among the Fixed Account and
Subaccounts of the Variable Account.
FIXED ACCOUNT
The Fixed Account is a Cash Value accumulation option that credits an interest
rate. The Fixed Account is part of AAL's general account, which includes all of
AAL's assets other than those in any AAL separate account.
Cash Values allocated to the Fixed Account are combined with all the general
assets of AAL and are invested in those assets chosen by AAL and allowed by
applicable law. Any premiums allocated to the Fixed Account will be subject to
all fees and expenses associated with the Variable Account, except for the fund
annual expenses and the mortality and expense risk charge.
AAL will quarterly declare an effective annual interest rate for the Fixed
Account.
Interest is credited on each premium allocated or accumulated value transferred
to the Fixed Account from the date of the allocation or transfer. Interest is
credited daily.
Under the Fixed Account option, the guaranteed minimum interest credited to the
Fixed Account will be at the effective rate of 4% per year, compounded daily.
AAL may credit interest at a rate in excess of 4% per year; however, AAL is not
obligated to do so. There is no specific formula for the determination of excess
interest. Such excess interest, if any, will be determined by AAL based on
numerous factors. Some of the factors that AAL may consider in determining
whether to credit interest above 4% to amounts allocated to the Fixed Account,
and the amount thereof, include, but are not limited to, general economic
trends, rates of return currently available and anticipated on AAL's
investments, regulatory and tax requirements and competitive factors.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 4%
PER YEAR WILL BE DETERMINED AT THE SOLE DISCRETION OF AAL. THE OWNER ASSUMES THE
RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 4% FOR ANY GIVEN YEAR.
Because of exemptive and exclusionary provisions, interests in the Fixed Account
have not been registered under the Securities Act of 1933 ("1933 Act"), and the
Fixed Account has not been registered as an investment company under the
Investment Company Act of 1940 ("1940 Act"). Accordingly, neither the Fixed
Account nor any interests therein are generally subject to the provisions of the
1933 or 1940 Acts. Disclosures regarding the Fixed Account option and the Fixed
Account, however, may be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements in prospectuses.
A lower rate of interest may be credited to the portion of the Fixed Account
securing a loan.
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VARIABLE ACCOUNT
The Variable Account is AAL Variable Life Account I. It is a separate account of
AAL established by the Board of Directors of AAL on May 8, 1997 pursuant to the
laws of the State of Wisconsin. The Variable Account is registered with the
Securities and Exchange Commission (the "SEC") as a unit investment trust under
the Investment Company Act of 1940. Such registration, however, does not involve
supervision by the SEC of the management or investment policies or practices of
the Variable Account.
AAL owns the assets of the Variable Account and keeps them legally segregated
from the assets of the general account. The assets of the Variable Account
shall, at the time during the year that adjustments in the reserves are made,
have a value at least equal to the reserves and other contract liabilities with
respect to the Variable Account and, at all other times, shall have a value
approximately equal to or in excess of such reserves and liabilities. The assets
of the Variable Account shall not be chargeable with liabilities arising out of
any other business AAL may conduct, except to the extent that the assets of the
Variable Account exceed the reserves and other contract liabilities of the
Variable Account arising under the Certificates supported by the Variable
Account.
Income, and gains and losses, whether or not realized, from the assets in each
Subaccount are credited to or charged against that Subaccount without regard to
any of AAL's other income, gains or losses. The value of the assets in the
Variable Account is determined at the end of each Valuation Date.
The Variable Account currently consists of five Subaccounts, which are: Money
Market, Bond, Large Company Stock, Small Company Stock, and Balanced. Each
Subaccount invests in a corresponding portfolio of the AAL Variable Product
Series Fund, Inc. (a mutual fund - referred to below as the "Fund"). Additional
Portfolios may be added or substituted for the current Portfolios.
Net Premiums allocated to a Subaccount, and the resulting Cash Value, will
accumulate based on the investment experience of that Subaccount's corresponding
Fund portfolio.
Each of these portfolios has a different investment objective. No assurance may
be given that any portfolio will achieve its investment objective.
AAL Variable Product Series Fund AAL Variable Product Series Fund, Inc. (the
"Fund") is a Maryland corporation registered with the SEC under the 1940 Act as
a diversified, open-end investment company (commonly known as a "Mutual Fund").
This registration does not involve supervision by the SEC of the management or
investment practices or policies of the Fund.
Shares of the Fund are currently offered to the AAL Variable Annuity Account I
and to the Variable Account to fund benefits payable under the Certificates. The
Fund may, at a later date, also offer its shares to other separate accounts of
AAL or to a subsidiary or affiliated company of AAL. Shares of the Fund may also
be offered directly to AAL.
The Fund currently consists of five separate Portfolios, each with its own
investment objectives, investment program, policies and restrictions. The
investment objectives of each Portfolio are described below. No assurance can be
given that each Portfolio of the Fund will achieve its investment objective
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INVESTMENT OBJECTIVES OF THE FUND PORTFOLIOS
The Money Market Portfolio: seeks to provide maximum current income to the
extent consistent with liquidity and a stable net asset value of $1.00 per share
by investing in a diversified portfolio of high quality, short-term money market
instruments.
The Bond Portfolio: seeks to achieve investment results that approximate the
total return of the Lehman Brothers Aggregate Bond Index by investing primarily
in bonds and other debt securities included in the index. This objective is
consistent with a goal of maximizing total return, consistent with reasonable
risk. Investments are in bonds and other debt securities included in the Index.
The Large Company Stock Portfolio: seeks to achieve investment results that
approximate the performance of the Standard & Poor's 500 Composite Stock Price
Index by investing primarily in common stocks included in the index.
The Balanced Portfolio: seeks to achieve investment results that reflect
investment in common stocks, bonds and money market instruments, each of which
will be selected consistent with the investment policies of the AAL Variable
Product Large Company Stock, Bond and Money Market Portfolios, respectively.
The Small Company Stock Portfolio: seeks to achieve investment results that
approximate the performance of the Wilshire Small Cap Index by investing in
common stocks included in the index.
Fund Expenses
AAL acts as investment adviser to the Fund. For this service, AAL deducts a
daily advisory fee of .35% per year of each Fund's average daily net assets.
Additional Fund expenses are currently reimbursed by AAL but this reimbursement
may be modified or canceled at any time. More information concerning these
additional expenses is contained in the Fund Prospectus.
TRANSFERS
You may transfer the Cash Value among the Subaccounts and Fixed Account by
submitting a written request to AAL's Home Office. You may also transfer by
telephone if you have completed the Telephone Transaction Authorization Form.
Any transfer among the Subaccounts or to the Fixed Account will result in the
crediting and cancellation of Accumulation Units based on the Accumulation Unit
values determined as of the end of the Valuation Period during which the
transfer request is received, in good order, by AAL. You should carefully
consider current market conditions and each portfolio's investment policies and
related risks before allocating money to the portfolios.
The total amount of any transfer must be at least $500, or it may be less as
long as you transfer the entire cash value from an account. Of the total
transfer being made, the amount transferred to any account must be at least $50.
Twelve transfers per Certificate Year may be made from Subaccounts without
charge. AAL reserves the right to charge $25 for each transfer in excess of
twelve.
Only one transfer may be made from the Fixed Account in each Certificate Year.
The transfer may not exceed the greater of $500 or 25% of the Cash Value in the
Fixed Account at the time of transfer. This transfer is not subject to charge.
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REVIEW OF INVESTMENT STRATEGY
You should periodically review the allocation of your Cash Value among the
Subaccounts and Fixed Account. Consider the current market conditions,
investment risks and objectives of the portfolios and your own objectives. A
full description of the portfolio, its investment objectives, policies and
restrictions, its expenses, risks and other aspects of its operation is
contained in the accompanying Prospectus for the Fund. Read the accompanying
Fund Prospectus carefully.
VOTING PRIVILEGES
To the extent required by law, AAL will vote the Portfolio shares held in a
Subaccount at shareholder meetings of the Fund, if any, in accordance with
instructions received from persons having voting interests in the corresponding
Subaccount of the Variable Account. If, however, the 1940 Act or any regulation
thereunder should be amended or if the present interpretation thereof should
change, and as a result AAL determines that it is permitted to vote the Fund
shares in its own right, it may elect to do so.
The Owner will have the voting interest with respect to Fund shares attributable
to the Certificate
The number of votes which an Owner has the right to instruct will be calculated
separately for each Subaccount. The number of votes that each Owner may instruct
will be determined by dividing a Certificate's Accumulated Value in a Subaccount
by the Net Asset Value per share of the corresponding Portfolio in which the
Subaccount invests. Fractional shares will be counted. The number of votes of
the portfolio which the Owner has the right to instruct will be determined as of
the record date established by the portfolio for determining shareholders
eligible to vote at the meeting of the Fund. Voting instructions will be
solicited by written communications prior to such meeting in accordance with
procedures established by the Fund.
Any portfolio shares held in the Variable Account for which AAL does not receive
timely voting instructions, or which are not attributable to Owners or
Annuitants, will be represented at the meeting and voted by AAL in proportion to
the instructions received from all Owners. Any portfolio shares held by AAL or
its affiliates will be voted in proportion to the aggregate votes of all
shareholders in the portfolio. Each person having a voting interest in a
Subaccount will receive proxy materials, reports and other materials relating to
the appropriate portfolio.
CASH VALUE
FIXED ACCOUNT CASH VALUE
The Fixed Account Cash Value reflects net premiums allocated to it, transfers to
or from the Subaccounts, credited interest, and any deductions. Each day the
Cash Value in the Fixed Account will change based upon these factors. See the
Certificate for further detail.
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VARIABLE ACCOUNT CASH VALUE
Number of Accumulation Units
The number of Accumulation Units for this Certificate in any Subaccount may
increase or decrease at the end of each Valuation Period depending on the
transactions that occur in the Subaccount during the Valuation Period. When
transactions occur, the actual dollar amounts of the transactions are converted
to Accumulation Units. The number of Accumulation Units for a transaction in a
Subaccount is determined by dividing the dollar amount of the transaction by the
Accumulation Unit Value of the Subaccount at the end of the Valuation Period
during which the transaction occurs.
The number of Accumulation Units in a Subaccount increases when the following
transactions occur during the Valuation Period:
Net premiums are allocated to the Subaccount; or
Cash value is transferred to the Subaccount from another Subaccount or from the
Fixed Account.
The number of Accumulation Units in a Subaccount decreases when the following
transactions occur during the Valuation Period:
Cash Value is transferred from the Subaccount to another Subaccount or to the
Fixed Account, including loan transfers;
Partial withdrawals and partial withdrawal charges are taken from the
Subaccount; or
Monthly deductions or transfer charges are taken from the Subaccount.
A charge for a Death Benefit Option change is allocated to the Subaccount.
A charge for a Certificate change is allocated to the Subaccount.
Surrender Charges are allocated to the Subaccount.
Accumulation Unit Value
For each Subaccount, the initial Accumulation Unit Value was set when the
Subaccount was established. The Accumulation Unit Value may increase or decrease
from one Valuation Period to the next.
The Accumulation Unit Value for a Subaccount for any Valuation Period is equal
to:
The net asset value of the corresponding fund portfolio at the end of the
Valuation Period;
Plus the amount of any dividend, capital gain or other distribution made by the
fund portfolio if the "ex-dividend" date occurs during the Valuation Period;
Plus or minus any cumulative credit or charge for taxes reserved which is
determined by AAL to have resulted from the operation of the portfolio;
Divided by the total number of accumulation units held in the Subaccount at the
end of the Valuation Period before any of the transactions, referred to in the
Number of Accumulation Units subsection above, have occurred.
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WHAT AFFECTS CASH VALUE
The Cash Value of your Certificate, at any one time, is determined by: (a)
multiplying the total number of Accumulation Units for each Subaccount by its
appropriate current Accumulation Unit Value; (b) if you have elected a
combination of Subaccounts, totaling the resulting values; and (c) adding any
value in the Fixed Account. While loans are not deducted from Cash Value, loans
do reduce the amount you would receive upon surrender of your Certificate and
the amount available to pay insurance charges. Loans also accrue interest
charges and may result in less interest credited to your Certificate.
Over the life of your Certificate, many factors determine its Cash Value. They
include:
- - - - premiums paid
- - - - the investment experience of the Subaccounts - interest credited to the Fixed
Account - loans taken and loan repayments - partial withdrawals taken - charges
and deductions taken
Because a Certificate's Cash Value is based on the variables listed above, it
cannot be predetermined. Cash Value in the Variable Account will largely be
determined by market conditions and investment experience of the
Fund's portfolios corresponding to the Subaccounts chosen by the Owner. The
Owner will bear all such risk.
The value of the Fixed Account is guaranteed as to principal and interest at 4%,
subject to the charges described in the "Charges" Section. There is no
guaranteed minimum Cash Value for the Variable Account.
SURRENDER VALUE
The Surrender Value is the total amount you may withdraw from the Certificate .
It is equal to the Cash Value less any Surrender Charges and any outstanding
loan principal and accrued interest.
You will be advised at least annually as to the number of Accumulation Units
which are credited to the Certificate, the current Accumulation Unit Values, the
Variable Account Cash Value, the Fixed Account Cash Value, the Cash Value and
the Surrender Value.
CHARGES
Charges are necessary to pay for the insurance provided, cover the expenses
generated by issuing and administering the Certificate, and to fund AAL's
fraternal activities.
PERCENT OF PREMIUM CHARGE
A charge of 3% of each premium payment is taken to cover sales and other
expenses and provide support for AAL's fraternal activities.
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CASH VALUE CHARGES
On each Monthly Deduction Date charges are deducted from your Cash Value. These
include cost of insurance, administrative and issue charges, mortality and risk
expense charges and charges for additional benefits you may have selected. (No
mortality and risk expense charges are deducted from the Fixed Account.)
The cost of insurance charge and additional benefit charges vary by risk class,
amount at risk, Specified Amount and, in most states, sex. The cost of insurance
rates, used to calculate these charges, are determined by AAL based on
expectations as to future mortality and expense experience. Any change in these
rates will be applied on a uniform basis to all insureds of the same risk class.
However, AAL cannot use cost of insurance rates higher than the annual
guaranteed cost of insurance rates shown in the Certificate. The guaranteed
rates are no greater than certain of the 1980 Commissioners Ordinary Mortality
Tables (and, where unisex cost of insurance rates apply, the 1980 Commissioners
Ordinary Mortality Table B). These rates are based on the age and risk class of
the Insured. They are also based on the sex of the Insured, except that unisex
rates are used where appropriate under applicable laws. AAL charges rates that
are currently lower than the guaranteed rates, and may also charge current rates
in the future.
A monthly administrative charge of $4 is deducted to cover administrative costs.
This charge is for expenses such as premium billing and collection, Certificate
value calculation, transaction confirmations and periodic reports.
The monthly issue expense charge covers issue costs. It is deducted for the
first 36 months. This charge will vary by age, risk class, Specified Amount and,
in most states, sex.
Monthly mortality and expense risk charges are deducted from the Variable
Account to pay for the mortality and expense risks borne by AAL. The mortality
risk assumed is that insureds, as a group, may live for a shorter period of time
than estimated and, therefore, the cost of insurance charges specified in the
Certificate will be insufficient to meet actual claims. The expense risk assumed
is that other expenses incurred in issuing and administering the certificates
and operating the Separate Account will be greater than the charges assessed for
such expenses. AAL will realize a gain from this charge to the extent it is not
needed to provide mortality benefits and expenses under the Certificates, and
will realize a loss to the extent the charge is not sufficient. During the first
15 years the monthly charge is 1/16 th of one percent of the total Subaccount
Cash Value. This charge drops to 1/48 th of one percent in Certificate Year 16
The Monthly Deduction is deducted from each account on a basis proportional to
the Cash Value in that account. For Subaccounts, this is accomplished by selling
Accumulation Units and withdrawing their value from that account. For the Fixed
Account the Cash Value is reduced by the Fixed Account's proportion of the
Monthly Deduction.
The Monthly Deduction is made as of the same day each month, beginning with the
Issue Date, if that day of the month is a Valuation Date. If that day of the
month does not fall on a Valuation Date, the deduction date is the nearest
previous Valuation Date.
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SURRENDER CHARGE
If you choose to surrender your Certificate or reduce your Specified Amount, AAL
will reduce the Cash Value by the surrender charge assessed proportionately
against the amounts you have invested in each of your selected Subaccounts and
the Fixed Account. This charge is imposed as a deferred sales and administrative
charge. It covers expenses associated with underwriting, issuing and
distributing the Certificate.
The initial Surrender Charge is based on an amount per thousand of Specified
Amount for which the Certificate is issued. The amount per thousand varies by
sex, risk class, and Issue Age. Your actual Surrender Charges are listed on page
3A1 of your Certificate. The initial Surrender Charge is level for the first 3
years and, thereafter, it declines by 1/8th of the initial amount annually so
that, beginning in the 11th year after the Issue Date (assuming no increases in
Specified Amount) the Surrender Charge will be zero.
If you increase your Certificate's Specified Amount, a new Surrender Charge is
applicable, in addition to the existing surrender charge. It is based on an
amount per thousand of the Specified Amount increase. The amount per thousand
varies by sex, risk class, and age at time of increase. The actual Surrender
Charges for the increased Specified Amount will be listed on a new page 3A1 of
your Certificate, which will be mailed to you at the time of the increase. The
new Surrender Charge is level for the first 3 years after the increase and,
thereafter, it declines by 1/8th of the initial amount annually so that,
beginning in the 11th year after the increase date (assuming no additional
increases in Specified Amount) the Surrender Charge will be zero.
If you decrease the Specified Amount while the Surrender Charge applies, a
portion of the surrender charge will be assessed. The decrease will be
subtracted first from any previous increase in the Specified Amount, starting
with the most recent, then from the original Specified Amount. The portion of
the charge assessed will be proportional to the amount of the decrease, based on
the Surrender Charges for the Specified Amount from which the decrease is
subtracted.
ACCESS TO CASH VALUE
PARTIAL WITHDRAWALS
You may take one partial withdrawal of your Cash Value per year at no charge.
$25 is charged for each additional withdrawal during a Certificate Year. The
amount of a partial withdrawal may not exceed the Surrender Value on the date of
the request. It is implemented by either the redemption of Accumulation Units
and/or reduction in the Fixed Account balance.
For a Certificate with the Level Death Benefit Option:
A partial withdrawal will reduce your Cash Value, Specified Amount, Death
Benefit, and the amount of premiums considered paid to meet the Death Benefit
Guarantee premium requirement. If the Death Benefit is equal to the Specified
Amount at the time of the partial withdrawal, the amount of the reduction in the
Death Benefit will be equal to the amount of the partial withdrawal. If the
Death Benefit is greater than the Specified Amount, (a) the Specified Amount
will be reduced by the amount (if any) by which the withdrawal amount exceeds
the difference between the Death Benefit and the Specified Amount, (b) the new
Death Benefit will be based on the Death Benefit factor, Cash Value, and
Specified Amount after the reduction.
The Specified Amount remaining in effect after a partial withdrawal may not be
less than $10,000. Any request for a partial withdrawal that would reduce the
Specified Amount below this amount will not be granted.
For a Certificate with the Variable Death Benefit Option:
A partial withdrawal will reduce the Cash Value and Death Benefit by the amount
of the withdrawal, but will not reduce the Specified Amount.
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LOANS
You make borrow up to 92% of your Cash Value using your Certificate as security
for a loan. Interest will accrue on an annual basis at 8% on the loan balance
until you reach your 15th Certificate anniversary. Thereafter the rate will drop
to 7 1/4% per annum. You may choose the amount and account to which the loan is
allocated.
A lower interest rate may be credited to the portion of the Fixed Account Cash
Value that equals the amount of the total outstanding loan. AAL will determine
the rate credited. In no case will the rate credited be less than 4% annually.
The amount of loan allocated to each Subaccount will be transferred from that
account to the Fixed Account as security for the loan. Each month, if the total
loan (principal plus accrued interest) exceeds the total Fixed Account Cash
Value, the difference will be transferred from the Variable Account to the Fixed
Account as security for the loan.
You may repay all or part of your loan at any time while your Certificate is in
force. Unless you indicate otherwise to AAL, all payments will be assumed to be
premium payments. Upon your request, AAL will set up a loan repayment schedule
for you.
If you surrender your Certificate, you will receive the Cash Value less any
surrender charge and outstanding loan balance. Partial withdrawals also reduce
your premiums credited toward the Death Benefit Guarantee requirements. Loans
are added to the required premiums when testing whether Death Benefit Guarantee
requirements have been met.
Both partial withdrawals and loans will reduce the Cash Value available to pay
your insurance costs. You should carefully consider the impact on the insurance
your Certificate will be able to provide, now and in the future, before
exercising these privileges.
SURRENDER
You may surrender this Certificate for its Surrender Value by sending a written
request to AAL.
CERTIFICATE TERMINATION
EARLY TERMINATION AND REINSTATEMENT
Termination
Your Certificate will terminate if your Monthly Deduction is greater than your
Surrender Value, your Death Benefit Guarantee is not intact, and payment
sufficient to cover the next two monthly deductions is not received within 61
days of the Cash Value deficiency. If this Cash Value deficiency occurs, you
have the right to reinstate your Certificate, within certain limitations. The
requirements for reinstatement and associated limitations are described in your
Certificate.
Reinstatement
You may reinstate the Certificate any time within three years after it has
terminated so long as you did not surrender it for its surrender value. To
reinstate your Certificate you must submit evidence of insurability satisfactory
to AAL and pay a premium at least equal to:
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The reinstated loan amount; plus
Any Surrender Charge at the time of reinstatement; plus The first two Monthly
Deduction amounts after reinstatement; less The Cash Value at termination; less
Any Surrender Charge credited back at reinstatement; plus The new Surrender
Charge taken for any reduction in the Specified Amount you request at
reinstatement plus 3% on the sum of the above to cover the percent of premium
charge, All divided by one minus the current percent of premium expense charge
rate.
The premium paid upon reinstatement will be used first to pay any unpaid monthly
deductions that occurred during the grace period. Your Certificate will then be
reinstated as of the date AAL approves your application for reinstatement.
If you reinstate this Certificate, AAL will not contest the validity of the
reinstated Certificate after it has been in effect during the lifetime of the
insured for two years from the date of reinstatement. After this Certificate has
been in force two years from the issue date, any contest of the validity of the
reinstated Certificate will be limited to statements made in the application for
reinstatement.
DEATH, MATURITY, AND SURRENDER
Your Certificate will terminate if the Insured dies, or if the Owner surrenders
the Certificate. If the Certificate is in effect at age 100, it will mature
(end) and the greater of the Specified Amount less any outstanding loan and the
Cash Value less any outstanding loan will be paid to the Owner.
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PAYOUT OPTIONS
SELECTION
All or part of the life insurance proceeds from death, maturity or surrender may
be applied to one of several Payout Options in place of a lump sum payment. You
may choose or change a payout option while the Insured is alive. The beneficiary
may choose an option at the Insured's death, unless you have chosen an option
which does not allow the beneficiary to change it.
OPTION 1 : INTEREST
The proceeds are left with AAL to earn interest. The rate of interest is
determined annually by the AAL Board of Directors. It will never be less than 3%
annually.
OPTION 2: A SELECTED AMOUNT OF INCOME
The proceeds with interest are used to make payments of a selected amount at
regular intervals until the proceeds with interest have been paid. The payment
period may not exceed 30 years. The rate of interest used will not be less than
3% annually.
OPTION 3 : A SET PERIOD
The proceeds with interest are used to make payments at regular intervals. You
may choose a specified number of years, not to exceed 30. Guaranteed payments
are shown in the Certificate. The rate of interest used will not be less than 3%
annually. The amount of payment may be greater than that guaranteed, as declared
annually by AAL's Board of Directors.
OPTION 4 : LIFE PAYMENT
The proceeds are left with AAL to earn interest. These funds are used to make
payments at regular intervals while the person named to receive payments is
alive. AAL will guarantee the amount of these payments for a specified number of
years. A period of 10, or 20 years may be selected.
The amount of the payments depends on the age and sex of the persons named to
receive payments at the time AAL issues the payment contract. Representative
guaranteed payments are shown in the Certificate. They are based on a guaranteed
effective annual interest rate of 3.5% using the "1983 Table a " annuitant
mortality table.
OPTION 5 : JOINT & SURVIVOR
The proceeds with interest are used to make payments at regular intervals while
both persons named to receive payments are alive. AAL will guarantee the amount
of these payments for a specified number of years. A period of 10, or 20 years
may be selected.
Upon the death of one of the persons named to receive payments, AAL will
continue making payments to the survivor with the payments reduced by 1/3 after
the end of the guaranteed period. If the survivor also dies during the
guaranteed period, the unpaid proceeds will be paid in one sum at the survivor's
death.
The amount of the payments depends on the age and sex of the persons named to
receive payments at the time AAL issues the payment contract. Representative
guaranteed payments are shown in the Certificate. They are based on a guaranteed
effective annual interest rate of 3.5% using the "1983 Table a" annuitant
mortality table.
<PAGE>
HOW TO MAKE PAYMENTS OR RECEIVE SERVICE
APPLYING FOR A CERTIFICATE
AAL Variable Universal Life Certificates are sold by district representatives of
AAL who are also registered representatives of AALCMC. To apply for a AAL
Variable Universal Life Certificate please contact your AAL representative. You
can locate your representative by calling 1-800-???-??? or visiting our Webpage
www.aal.org.
TIMELY PROCESSING
AAL will process all requests in a timely fashion. Requests received by 3:00
p.m. Central Time on a Valuation Date will use the Certificate's Cash Value as
of the close of that Valuation Date. AAL will process requests received after
that time using the Certificate's Cash Value as of the close of business of the
following Valuation Date
Payment of any amount due from the Variable Account will be made within seven
calendar days after AAL receives your written request. Payment may be postponed
when the New York Stock Exchange has been closed and for such other periods as
the SEC may permit . Payment from the Fixed Account Cash Value may be deferred
up to 6 months.
WRITTEN REQUESTS
You may exercise any of the following privileges: -Premium Payment -Change in
Death Benefit Option -Increase/Decrease in Specified Amount -Partial Withdrawal
- - - -Surrender -Reinstatement -Transfers -Dropping an Additional Benefit -Loan
- - - -Filing a Death Claim -Selecting/Changing a Settlement Option -Change in
Allocation Instructions -Loan repayment -Beneficiary Change(s) by sending
written notice (and payment and/or evidence of insurability, if applicable) to
AAL at its Home Office:
AID ASSOCIATION FOR LUTHERANS
4321 North Ballard Road
Appleton, Wisconsin 54919-0001
<PAGE>
TELEPHONE TRANSACTIONS
If AAL has received a properly completed Telephone Transaction Authorization
Form, you may perform various transactions over the phone. Phone services
include: partial withdrawals, transfers, premium payment allocation changes,
loans, and certain other transactions.
AAL has adopted reasonable security procedures to ensure the authenticity of
telephone instructions, including: requiring identifying information, recording
conversations, and providing written confirmations of transactions.
Nevertheless, AAL will honor telephone instructions from any person who provides
the correct identifying information, so there is a risk of possible loss to the
Owner if an unauthorized person uses this service in the Owner's name.
If several persons seek to effect telephone instructions at or about the same
time, or if AAL's recording equipment malfunctions, it may be impossible for you
to make a telephone transaction at that time. If this occurs, you should submit
a Written Request. Also, if due to malfunction or other circumstances, the
recording of the Owner's telephone request is incomplete or not fully
comprehensible, AAL will not process the transaction.
The Phone number for telephone transactions is 1-800-???-???
AAL reserves the right to restrict telephone transactions at any time.
DEATH CLAIMS
Written notice of death must be given to AAL. Notice should include the
Insured's name and Certificate number. Help may be obtained through an AAL
Capital Management Corporation Registered Representative.
A claim form will be sent, when AAL receives your notice. Complete the claim
form and send it to the Home Office along with a certified copy of the death
Certificate. Processing of the claim will begin as soon as these items are
received.
<PAGE>
GENERAL INFORMATION
FREE LOOK
How to Cancel Your Certificate
Your Certificate provides for an initial "free look" period. That is, you as the
Certificate Owner, have the right to return your Certificate within 10 days
after you receive it. To return your Certificate you may either:
1. Deliver or mail your Certificate along with a written request to cancel to
your AAL Representative, or
2. Deliver or mail your Certificate along with a written request to cancel to
the Home Office:
AAL (Aid Association for Lutherans)
4321 Ballard Road
Appleton, WI 54919-0001
Generally within 7 days after AAL receives your request for cancellation, it
will cancel the Certificate and send you a refund. Some states may require a
"free look" period longer than 10 days.
The Amount Refunded After Cancelling a Certificate During the "Free Look" Period
AAL will refund to you an amount equal to the Certificate's Accumulation Unit
Value as of the date the returned Certificate or notification of cancellation is
received by AAL. This may be more or less than the premium you paid depending
upon the investment experience of the Subaccount(s) you selected.
If your state requires a full refund of all premiums, your premium will be
allocated to the Money Market Subaccount until your "free look" period has
expired.
ENTIRE CONTRACT
The entire contract between you and AAL is made up of:
The Certificate including any attached riders, endorsements or amendments;
The application attached to the Certificate, including any applications for
increase in the Specified Amount; and
The AAL Articles of Incorporation and Bylaws which are in effect on the issue
date of the Certificate.
STATEMENTS IN THE APPLICATION
Statements made in the application will be treated as representations and not
warranties. No statement will be used by AAL to void the contract or to deny a
claim unless it appears in the application.
CHANGE OF CERTIFICATE
No representative of AAL except the president or the secretary may change any
part of the Certificate on behalf of AAL.
<PAGE>
INCONTESTABILITY
AAL will not contest the validity of the Certificate after it has been in effect
during the lifetime of the insured for two years from the issue date. AAL will
not contest the validity of an increase in the Specified Amount after it has
been in effect during the lifetime of the insured for two years from the date of
increase. Any contest of the validity of the increase will be limited to
statements made in the application for the increase. See the Certificate for
more details.
MISSTATEMENT OF AGE OR SEX
The values of the Certificate are based on the insured's age and sex. If the
date of birth or sex shown on the application is wrong, the proceeds payable
will be adjusted to the amount that would be provided by the most recent cost of
insurance charge at the correct attained age or sex.
MAINTENANCE OF SOLVENCY
This provision applies only to values in the Fixed Account.
If AAL's reserves for any class of Certificates become impaired, you may be
required to make an extra payment. AAL's Board of Directors will determine the
amount of any extra payment based on each member's fair share of the deficiency.
If the payment is not made, it will be charged as a loan against the Certificate
with interest at a rate of 5 percent per year. You may choose an equivalent
reduction in benefits instead of or in combination with the loan. Any
indebtedness and interest charged against the Certificate, or any agreement for
a reduction in benefits, shall have priority over the interest of any owner,
beneficiary, or collateral assignee under the Certificate.
BASIS OF COMPUTATIONS
Minimum guaranteed Cash Values for the Fixed Account are based on the
Commissioner's 1980 Standard Ordinary Mortality Table, age last birthday, with
interest at the rate of 4 percent. These values equal or exceed the minimum
values required by law. A detailed statement of how AAL calculates cash values
for the Certificate has been filed with the insurance department of the state or
district where this Certificate was delivered.
REPORTS TO OWNERS
At least once each Certificate year, AAL will send you a report concerning the
current status of your Certificate. There is no charge for this report.
Upon your request, AAL will send you an illustration of hypothetical values for
the Certificate. AAL may charge a reasonable fee for each illustration
requested.
We will also send period reports with financial information on the Portfolios,
including information on the investments held in each Portfolio as required by
the Securities and Exchange Commission .
Confirmation notices will be sent during the year for certain Certificate
transactions.
<PAGE>
MEMBERSHIP
For Insureds age Issue Age 15 and under, the Insured will become a benefit
member of AAL. For Insureds Issue Age 16 and over, the person who applied for
membership is a benefit member of AAL. The rights and benefits of membership are
set forth in the Articles of Incorporation and Bylaws of AAL. Membership cannot
be transferred.
OWNERSHIP
For Insureds age Issue Age 15 and under, the Insured is the owner of the
Certificate, unless ownership has been transferred. For Insureds Issue Age 16
and over, the person who is named as the Owner on the application for insurance
is the Owner, unless ownership has been transferred.
If you are not the insured, you should name a successor Owner who will become
the Owner if you die before the insured. If you die before the insured and there
is no successor Owner named, ownership of the Certificate will pass to your
estate.
During the Insured's lifetime, you may transfer ownership of the Certificate by
sending a signed written request to the AAL. The transfer must be approved by
AAL before it is valid.
BENEFICIARY
The beneficiary is the person, entity or organization named to receive the death
benefit after the Insured dies. The Bylaws of AAL list those eligible to be
beneficiaries. Beneficiaries are designated as first, second and third class.
You may name more than one person or organization in the same class.
If no beneficiary has been named or survives the insured, AAL will pay the
proceeds as follows:
To your estate if you are the Insured; or
To you if you are not the Insured.
During the Insured's lifetime, you may change the beneficiary by sending a
signed written request to AAL. The change must be approved by AAL before it is
valid.
COLLATERAL ASSIGNMENT
You may assign the Certificate as collateral security for a loan or other
obligation. This may limit your rights to the Cash Value and the beneficiary's
rights to the proceeds.
The assignments must be in writing and filed at our home office. AAL assumes no
responsibility as to the validity of any assignment. AAL is not liable for any
payment made or any other action taken on the Certificate before the assignment
was recorded at our home office.
<PAGE>
Any Certificate loan obtained before an assignment is recorded at our home
office has priority over the assignment.
RIGHTS RESERVED BY AAL
Subject to applicable law, AAL reserves the right to make certain changes if, in
its judgment, they would best serve the interests of the Owners or would be
appropriate in carrying out the purposes of the Certificate. AAL will obtain,
when required, the necessary Owner approval or regulatory approval. Examples of
the changes AAL may make include, but are not limited to:
To operate the Variable Account in any form permitted under the 1940
Act or in any other form permitted by law.
To add, delete, combine, or modify Subaccounts in the Variable Account.
To add, delete, or substitute, for the portfolio shares held in any
Subaccount, the shares of another portfolio of the Fund or the shares of another
investment company or series thereof, or any other investment permitted by law.
To make any amendments to the Certificates necessary for the
Certificates to comply with the provisions of the Internal Revenue Code or any
other applicable federal or state law.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECTORS AND OFFICERS
- - - ------------------------------------ ----------------------------------- -----------------------------------
Business Experience During the Position with Aid Association for
Last Five (5) Years Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Herbert J. Arkebauer Professor, Southwest Missouri Director (6/72)
State University
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Raymond G. Avischious President/CEO, Shurfine Central Director (5/77)
Corp.
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Richard E. Beumer President/CEO, Sverdrup Director (2/87)
Corporation
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Kenneth Daly Partner, KPMG Peat Marwick LLP Director (2/94)
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Elizabeth A. Duda None Director (5/79)
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Edward A. Engel President, E. A. Engel & Director (11/78)
Associates
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Gary J. Greenfield President, Wisconsin Lutheran Director (1/93)
College
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
James W. Hanson None Director (8/86)
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Robert H. Hoffman Executive, Taylor Corp. Director (2/87)
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Robert E. Long Senior Vice President, Park Bank Director (2/82)
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Robert B. Peregrine Attorney, Peregrine Law offices, Director (2/78)
S.C.
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Kathi P. Seifert Group President, Kimberly Clark Director (12/94)
Corp.
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Roger B. Wheeler President, Wheel-Air, Inc., Director (8/91)
Wheel-Air Charter, Inc.
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
E. Marlene Wilson President, Volunteer Management Director (6/81)
Associates
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Rev. Thomas Zehnder President, Florida-Geporgia Director (1/97)
District, Lutheran Church
Missouri Synod
- - - ------------------------------------ ----------------------------------- -----------------------------------
<PAGE>
- - - ------------------------------------ ----------------------------------- -----------------------------------
Richard L. Gunderson Chairman of the Board, since Director, Chairman of the Board
1/97, CEO, 12/95 to 12/96,
President 9/85 to 11/95, Aid
Association for Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
John O. Gilbert CEO since 1/97, President/COO Director, President/CEO
since 12/95, Executive Vice
President, 1/95 to 12/95, Senior
Vice President, 1/92 to 1/95, Aid
Association for Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Roger J. Johnson Executive Vice President since Executive Vice President
3/97, Senior Vice President,
11/95 to 3/97, prior to that,
Vice President , Aid Association
for Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Ronald G. Anderson Senior Vice President, Chief Senior Vice President, Chief
Investment Officer Aid Investment Officer
Association for Lutherans since
4/96, president, AAL Capital
Management Corporation since
1/97, Vice President, general Re
Corp. 3/95 to 3/96, Chairman
General Re Financial products
Corp. 1/91 to 3/95
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Woodrow E. Eno Senior Vice President, Secretary, Senior Vice President, Secretary,
General Counsel, Aid Association General Counsel
for Lutherans since 4/96, Vice president,
AEGON, 5/93 to 1/96, Vice President/General
Counsel Health Insurance Association of
America, 7/80 to 5/93
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Steven A. Weber Senior Vice President, since Senior Vice President
11/95, Vice President 2/89 to
11/95, Aid Association for
Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Jerome Laubenstein Senior Vice President since Senior Vice President
11/95, prior to that Vice
President, Aid Association for
Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
- - - ------------------------------------ ----------------------------------- -----------------------------------
Fred Ohlde Senior Vice President since Senior Vice President
11/95, prior to that Vice
President, Aid Association for
Lutherans
- - - ------------------------------------ ----------------------------------- -----------------------------------
</TABLE>
<PAGE>
FEDERAL TAX MATTERS
VARIABLE ACCOUNT TAX STATUS
Both investment income and realized capital gains of the Variable Account (i.e.,
income and capital gains distributed to the Variable Account by the Fund) are
reinvested without tax since the Internal Revenue Code (the "Code") presently
imposes no applicable tax. However, AAL reserves the right to make a deduction
for taxes, should they be imposed with respect to such items in the future.
LIFE INSURANCE QUALIFICATION
Section 7702 of the Code includes a definition of life insurance for tax
purposes. The Secretary of the Treasury has been granted authority to prescribe
regulations to carry out the purposes of the section, and proposed regulations
governing mortality charges were issued in 1991. AAL believes that the
Certificate meets the statutory definition of life insurance. As such, and
assuming the diversification standards of Section 817(h), discussed below, are
satisfied, (a) death benefits paid under the Certificate should generally be
excluded from the gross income of the beneficiary for federal income tax
purposes under Section 101(a)(1) of the Code and (b) You should not generally be
taxed on the Cash Value under a Certificate, including increments thereof, prior
to actual receipt.
AAL intends to comply with any future final regulations issued under Sections
7702 and 817(h) and any amendments to these sections, and reserves the right to
make such changes as deemed necessary to assure such compliance. Any changes
will apply uniformly to affected Certificate holders and will be made only after
advance written notice.
PRE-DEATH DISTRIBUTIONS
The taxation of pre-death distributions depends on whether the Certificate is
considered a modified endowment contract (a "MEC"). A Certificate's
qualification as a MEC is discussed below.
General Rules: Assuming a Certificate is not a MEC, upon surrender you will be
taxed on the excess of Surrender Value plus unpaid Certificate loans and
interest less gross premiums paid reduced by untaxed withdrawals.
Partial withdrawals are only taxable to the extent the withdrawal exceeds total
premiums paid less prior untaxed partial withdrawals. However, partial
withdrawals made within the first 15 years may be taxable in certain limited
instances where the Surrender Value plus unpaid loans exceeds the total premiums
paid less the untaxed portion of prior partial withdrawals.
Loans received under the Certificate, assuming the Certificate is not a MEC,
will not be treated as subject to tax when taken. Generally, amounts of loan
interest paid by individuals will be considered nondeductible "personal
interest".
Modified Endowment Contracts:
A class of contracts known as "MECs" has been created under Code Section 7702A.
Pre-death distribution rules for Certificates considered to be MECs will differ
from the general rules above. A contract will be a MEC if it fails the "7-Pay
Premium test". A Certificate fails this test if the amount paid into the
Certificate in the first seven years or in the first seven years after a
material change, exceeds the amount that would have been paid had the
Certificate provided for the payment of seven level annual premiums. AAL will
notify the you if the Certificate becomes a MEC.
<PAGE>
A MEC Certificate may be aggregated with other MECs purchased by you from AAL
during any one calendar year for purposes of determining the taxable portion of
withdrawals from the Certificate. The Certificate is subject to a 7-Pay test
during the first seven Certificate years and any time a material change to the
contract takes effect. A material change, for these purposes, includes the
exchange of a life insurance Certificate for another, and conversion of a term
life Certificate to a whole life or universal life Certificate. In addition, an
increase in the future benefits provided constitutes a material change unless
the increase is attributable to (1) the payment of premiums necessary to fund
the lowest death benefit payable in the first 7 Certificate Years, or (2) the
crediting of interest or other earnings with respect to such premiums. A
reduction in death benefits during the first 7 Certificate Years, or during any
& pay test period, may also cause a Certificate to be considered a MEC.
All distributions, including Certificate loans and collateral assignments, from
a MEC Certificate will be currently taxable to the extent that the cash value of
the Certificate immediately before payment exceeds gross premiums paid
(increased by the amount of loans previously taxed and reduced by untaxed amount
previously received). These rules may also apply to distributions made during
the two year period prior to the time that a Certificate becomes a MEC. A
penalty tax equal to 10% of the amount includible in income will also apply to
certain surrenders or loans taken by you if you have not reached the age of
59&1/2, unless you are disabled, or the surrenders are part of a series of equal
periodic payments made not less frequently than annually for your life or life
expectancy. The penalty tax will also apply to income received on a surrender or
loan if the Owner of a MEC is a corporation.
DIVERSIFICATION REQUIREMENTS
For the Certificate to be treated as a life insurance contract for federal
income tax purposes, the Variable Account and the Fund must satisfy investment
diversification requirements set forth in Section 817(h) of the Code and
Treasury Department regulations thereunder. These requirements must be satisfied
at the end of each calendar quarter, or within 30 days thereafter.
The AAL Variable Product Series Fund, Inc. has met the diversification
requirements at all relevant items. AAL intends to take any action necessary to
maintain the compliance of the Variable Account and the Fund with the
diversification requirements. In addition, the Treasury Department may provide
future guidance concerning the extent to which you may direct investments in
variable funding options under the Certificate. If such guidance is issued, the
Certificate may need to be modified to comply with it.
OTHER CONSIDERATIONS
Because of the complexity of the law and its application to a specific
individual, tax advice may be needed by a person contemplating purchase of a
Certificate or the exercise of options under a Certificate. The above comments
concerning federal income tax consequences are not exhaustive, and special rules
exist with respect to situations not discussed in the Prospectus.
The preceding description is based upon AAL's understanding of current federal
income tax law. AAL cannot assess the probability that changes in tax laws,
particularly affecting life insurance, will be made.
The preceding comments do not take into account estate and gift, state income or
other state tax considerations which may be involved in the purchase of a
Certificate or the exercise of elections under the Certificate. For complete
information on such federal and state tax considerations, a qualified tax
adviser should be consulted.
<PAGE>
LITIGATION
There are no pending proceedings commenced by, or known to be contemplated by a
governmental authority, and no pending legal proceedings, material with respect
to prospective purchasers of the Certificates, to which the Variable Account,
AAL or the principal underwriter is a party to or to which the assets of the
Variable Account are subject. As a fraternal benefit society offering
certificates of insurance, AAL is ordinarily involved in litigation. AAL does
not believe that any current litigation or administrative proceeding is material
to the its ability to meet its obligations under the Certificate or to the
Variable Account, nor does AAL expect to incur significant losses from such
actions.
DISTRIBUTION
AAL Capital Management Corporation ("AALCMC") is an indirect subsidiary of AAL
and a registered broker-dealer. AALCMC serves as the principal underwriter of
the Certificates. Certificates are distributed by registered representatives of
AALCMC. AALCMC also serves as the principal underwriter of the AAL Variable
Annuity and the AAL Mutual Funds. AALCMC's fiscal year operates on a calendar
year basis.
ILLUSTRATIONS
The following tables illustrate how the death benefits, Cash Values,
and Surrender Values of a hypothetical Certificate could vary over an extended
period of time, assuming hypothetical rates of return equivalent constant gross
annual rates of 0%, 6%, and 12%.
The Certificates illustrated include the following:
1. Male, Nonsmoker, Age 40, Variable Death Benefit, Specified Amount $250,000,
Current Rates
2. Male, Nonsmoker, Age 40, Variable Death Benefit, Specified Amount $250,000,
Guaranteed Rates
3. Male, Nonsmoker, Age 40, Level Death Benefit, Specified Amount $250,000,
Current Rates
4. Male, Nonsmoker, Age 40, Level Death Benefit, Specified Amount $250,000,
Guaranteed Rates
The values would be different from those shown if the gross annual investment
rates of return averaged 0%, 6%, or 12% over a period of years, but also
fluctuated above or below those averages for individual Certificate years. The
illustrations assume no Certificate loans or withdrawals have been taken. The
amounts would differ if unisex rates were used.
The second column of each table, labeled "Premiums Accumulated at 5%", shows the
amount which would accumulate if an amount equal to the annual premium, (after
taxes) were invested to earn interest at 5% compounded annually. All premium
payments are illustrated as if they were made at the beginning of the year.
The amounts shown for death benefits, Cash Values, and Surrender Values reflect
the fact that the net investment return on the Certificate is lower than the
gross investment return on the Variable Account. This results from the charges
levied against the Variable Account (e.g. the mortality and expense risk charge)
as well as the premium load, administrative charges and Surrender Charges. The
difference between the Cash Value and the Surrender Value is the Surrender
Charge.
<PAGE>
The tables illustrate the cost of insurance and other charges at both current
rates and the maximum rates guaranteed in the Certificate. The amounts shown at
the end of each Certificate year reflect a daily investment advisory fee
equivalent to an annual rate of .35% of the aggregate average daily net assets
of the Subaccounts. Actual fees may vary by Subaccount and may be subject to
agreements by the sponsor to waive or otherwise reimburse each Fund for
operating expenses which exceed certain limits. There can be no assurance that
the expense reimbursement arrangements will continue in the future, and any
unreimbursed expenses would be reflected in the values included on the tables.
The effect of these investment management expenses on a 0% gross rate of return
would result in a net rate of return of (x.xx)%, on 6% it would be x.xx%, and on
12% it would be xxx.
The tables assume the deduction of charges including administrative and sales
charges. The tables reflect the fact that we do not currently make any charge
against the Variable Account for state or Federal taxes. If such a charge is
made in the future, it will take a higher gross rate of return than the rates
shown to produce the death benefits, Cash Values, and Surrender Values shown.
AAL will furnish, upon request, a comparable illustration based on the proposed
Insured's Issue Age, Risk Class, Sex, Specified Amount, Death Benefit Option and
premium amount requested.
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustration of Death Benefits, Cash Values and Surrender Values
Based on Current Charges
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- - - ----------------------------------------------------------- ---------------------------------------------------------
Issue Age - 40 Variable Death Benefit Option
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Risk Class - Standard Nonsmoker Specified Amount - $250,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Sex Male Annual Premium - $X,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ------------------ ------------------ ---------------------- ----------------------------------------
End of Policy Premium Accumulated End of Year DEATH BENEFIT Assuming
Hypothetical Gross Annual Investment
Return of
- - - ------------------ ------------------ ---------------------- ----------------------------------------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
Year Premiums at 5% 0% 6% 12%
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
1 $ $ - $ - $ $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
2 $ $ - $ - $ $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
3 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
4 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
5 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
6 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
7 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
8 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
9 $ $ - $ - $ $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
10 $ $ - $ - $ $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
15 $ $ - $ - $ $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
20 $ $ - $ - $ $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
25 $ $ - $ - $ $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
30 $ $ - $ - $ $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- - - ------------- ----------------- -------------------------------------- --------------------------------------
End of Year CASH VALUE Assuming End of Year SURRENDER VALUE Assuming
Hypothetical Gross Annual Investment Annual Investment Return of
Return of Hypothetical
- - - ------------- ----------------- -------------------------------------- --------------------------------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
End of Premiums 0% 6% 12% 0% 6% 12%
Policy Year
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
1 $ $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
2 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
3 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
4 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
5 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
6 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
7 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
8 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
9 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
10 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
15 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
20 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
25 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
30 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The values would be different from those shown above if the actual gross annual
rates of return averaged 0%, 6%. and 12% over a period of years but varied above
or below that average during the period. The above values assume no loans or
withdrawals are taken.
THE HYPOTHETICAL GROSS RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT,
AND THE ALLOCATIONS MADE TO THE VARIABLE ACCOUNT. NO REPRESENTATION CAN BE MADE
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES AND VALUES SET FORTH IN THE ILLUSTRATION ARE NOT
GUARANTEED.
<PAGE>
Illustration of Death Benefits, Cash Values and Surrender Values
Based on Current Charges
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- - - ----------------------------------------------------------- ---------------------------------------------------------
Issue Age - 40 Level Death Benefit Option
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Risk Class - Standard Nonsmoker Specified Amount - $250,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Sex Male Annual Premium - $X,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ------------------ ------------------ ---------------------- ----------------------------------------
End of Policy Premium Accumulated End of Year DEATH BENEFIT Assuming
Hypothetical Gross Annual Investment
Return of
- - - ------------------ ------------------ ---------------------- ----------------------------------------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
Year Premiums at 5% 0% 6% 12%
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
1 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
2 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
3 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
4 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
5 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
6 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
7 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
8 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
9 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
10 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
15 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
20 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
25 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
30 $ $ - $ - $ - $ -
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- - - ------------- ----------------- -------------------------------------- --------------------------------------
End of Year CASH VALUE Assuming End of Year SURRENDER VALUE Assuming
Hypothetical Gross Annual Investment Annual Investment Return of
Return of Hypothetical
- - - ------------- ----------------- -------------------------------------- --------------------------------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
End of Premiums 0% 6% 12% 0% 6% 12%
Policy Year
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
1 $ $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
2 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
3 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
4 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
5 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
6 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
7 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
8 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
9 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
10 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
15 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
20 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
25 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
30 $ $ - $ - $ - $ - $ $
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The values would be different from those shown above if the actual gross annual
rates of return averaged 0%, 6%. and 12% over a period of years but varied above
or below that average during the period. The above values assume no loans or
withdrawals are taken.
THE HYPOTHETICAL GROSS RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT,
AND THE ALLOCATIONS MADE TO THE VARIABLE ACCOUNT. NO REPRESENTATION CAN BE MADE
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES AND VALUES SET FORTH IN THE ILLUSTRATION ARE NOT
GUARANTEED.
<PAGE>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustration of Death Benefits, Cash Values and Surrender Values
Based on Guaranteed Charges
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- - - ----------------------------------------------------------- ---------------------------------------------------------
Issue Age - 40 Variable Death Benefit Option
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Risk Class - Standard Nonsmoker Specified Amount - $250,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Sex Male Annual Premium - $X,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ------------------ ------------------ ---------------------- ----------------------------------------
End of Policy Premium Accumulated End of Year DEATH BENEFIT Assuming
Hypothetical Gross Annual Investment
Return of
- - - ------------------ ------------------ ---------------------- ----------------------------------------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
Year Premiums at 5% 0% 6% 12%
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
1 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
2 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
3 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
4 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
5 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
6 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
7 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
8 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
9 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
10 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
15 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
20 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
25 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
30 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- - - ------------- ----------------- -------------------------------------- --------------------------------------
End of Year CASH VALUE Assuming End of Year SURRENDER VALUE Assuming
Hypothetical Gross Annual Investment Annual Investment Return of
Return of Hypothetical
- - - ------------- ----------------- -------------------------------------- --------------------------------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
End of Premiums 0% 6% 12% 0% 6% 12%
Policy Year
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
1 $ $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
2 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
3 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
4 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
5 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
6 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
7 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
8 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
9 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
10 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
15 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
20 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
25 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
30 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The values would be different from those shown above if the actual gross annual
rates of return averaged 0%, 6%. and 12% over a period of years but varied above
or below that average during the period. The above values assume no loans or
withdrawals are taken.
THE HYPOTHETICAL GROSS RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT,
AND THE ALLOCATIONS MADE TO THE VARIABLE ACCOUNT. NO REPRESENTATION CAN BE MADE
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES AND VALUES SET FORTH IN THE ILLUSTRATION ARE NOT
GUARANTEED.
<PAGE>
Illustration of Death Benefits, Cash Values and Surrender Values
Based on Guaranteed Charges
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- - - ----------------------------------------------------------- ---------------------------------------------------------
Issue Age - 40 Level Death Benefit Option
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Risk Class - Standard Nonsmoker Specified Amount - $250,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ----------------------------------------------------------- ---------------------------------------------------------
Sex Male Annual Premium - $X,000
- - - ----------------------------------------------------------- ---------------------------------------------------------
- - - ------------------ ------------------ ---------------------- ----------------------------------------
End of Policy Premium Accumulated End of Year DEATH BENEFIT Assuming
Hypothetical Gross Annual Investment
Return of
- - - ------------------ ------------------ ---------------------- ----------------------------------------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
Year Premiums at 5% 0% 6% 12%
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
1 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
2 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
3 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
4 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
5 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
6 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
7 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
8 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
9 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
10 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
15 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
20 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
25 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
30 $ $ - $ - $ - $
- - - ------------------ ------------------ ---------------------- ---------------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- - - ------------- ----------------- -------------------------------------- --------------------------------------
End of Year CASH VALUE Assuming End of Year SURRENDER VALUE Assuming
Hypothetical Gross Annual Investment Annual Investment Return of
Return of Hypothetical
- - - ------------- ----------------- -------------------------------------- --------------------------------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
End of Premiums 0% 6% 12% 0% 6% 12%
Policy Year
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
1 $ $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
2 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
3 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
4 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
5 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
6 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
7 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
8 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
9 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
10 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
15 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
20 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
25 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
30 $ $ - $ - $ - $ - $ $ -
- - - ------------- ----------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The values would be different from those shown above if the actual gross annual
rates of return averaged 0%, 6%. and 12% over a period of years but varied above
or below that average during the period. The above values assume no loans or
withdrawals are taken.
THE HYPOTHETICAL GROSS RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT,
AND THE ALLOCATIONS MADE TO THE VARIABLE ACCOUNT. NO REPRESENTATION CAN BE MADE
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
THIS IS AN ILLUSTRATION. AN ILLUSTRATION IS NOT INTENDED TO PREDICT ACTUAL
PERFORMANCE. INTEREST RATES AND VALUES SET FORTH IN THE ILLUSTRATION ARE NOT
GUARANTEED.
<PAGE>
LEGAL MATTTERS AND EXPERTS
The legal validity of the Certificates described in this Prospectus has been
passed upon by Mark J. Mahoney, Esq. of the law department of AAL. Mayer Brown &
Platt has acted as special counsel on matters related to the federal securities
laws.
The financial statements of AAL have been audited by Ernst & Young LLP. The
financial statements of AAL should be distinguished from the financial
statements of the variable Account and should be considered only as bearing upon
the ability of AAL to meet its obligations under the certificates. They should
not be considered as bearing upon the investment experience of the Subaccounts
of the Variable Account.
This prospectus does not contain financial statements for the Separate Account
because it has not yet commenced operations, has no assets or liabilities and it
has received no income nor incurred any expenses as of the date of this
prospectus.
Actuarial matters in this prospectus have been examined by -----, who is
- - - --------of AAL. His opinion on actuarial matters is filed as an exhibit to the
registration statement filed with the Securities and Exchange Commission for the
AAL Variable Life Account I.
APPENDIX - FINANCIAL STATEMENTS
(To be supplied in a pre-effective amendment to the Registration Statement)
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The Bylaws of Aid Association for Lutherans do provide for the indemnification
of officers, directors, employees or agents of the Company.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
AAL represents that the fees and charges deducted under the Certificate, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred and the risks assumed by AAL.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross Reference Sheet
The prospectus consisting of ___ pages. Undertaking to file reports.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons:
Mark J. Mahoney, Esq.
Mayer, Brown & Platt
Ernst & Young LLP
Actuary
<PAGE>
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
1.A.
(1) Resolution of the Board of Directors of Aid Association for
Lutherans establishing AAL Variable Life Account I
(2) Not Applicable
(3) (a) Form of Underwriting Agreement
(b) Form of Distribution Agreement (see (3)(a)
(c) Schedule of Sales Commissions **
(4) Not applicable
(5) (a) Specimen Flexible Premium Variable Universal Life
Insurance Certificates
(b) Certificate Riders and Endorsements
(c) Application Form
(6) (a) Articles of Incorporation of Aid Association for Lutherans
(b) By-laws of Aid Association for Lutherans
(7) Not applicable (8) Form of participation agreement (9) Not
applicable (10) Application form (See 5(c))
B. Not applicable
C. Not applicable
2. Opinion and consent of Mark J. Mahoney, Esq., as to the legality of
the securities being registered **
3. Not applicable
4. Not applicable
5. Not applicable
6. Opinion and consent of ________________________, as to actuarial
matters pertaining to the securities being registered **
7. (a) Consent of Ernst & Young LLP, Independent Accountants **
(b) Consent of Mayer Brown & Platt. **
** To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant, AAL
Variable Life Account, has duly caused this registration statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Appleton and the State of
Wisconsin, on this 26th day of June, 1997.
Aid Association for Lutherans
Variable Life Account
(SEAL) (Registrant)
By: Aid Association for Lutherans
(Depositor)
Attest: /s/ Woodrow Eno By: /s/ John O. Gilbert
------------------------ ----------------------------------
Vice President-Counsel President
and Secretary, Secretary Aid Association for Lutherans
of the Board
Pursuant to the requirements of the Securities Act of 1933, Aid Association for
Lutherans has duly caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the City of Appleton and the State of Wisconsin, on
the 26th day of June, 1997.
Aid Association for Lutherans
(SEAL)
Attest: /s/ Woodrow E. Eno By: /s/ Robert Lyle
----------------------- ---------------------------------
Vice President-Counsel Vice President and Actuary
and Secretary, Secretary Aid Association for Lutherans
of the Board
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the date(s) set forth below.
/s/ John O. Gilbert President and Chief Executive Officer
John O. Gilbert (Principal Executive Officer)
June - -, 1997
/s/ Ronald G. Anderson Chief Financial Officer
Ronald G. Anderson
/s/ Carl Rudolph (Principal Financial Officer,
Carl Rudolph Principal Accounting Officer) -- ,1997
<PAGE>
All of the Board of Directors:
- - - -----------------------
Herbert J. Arkebauer
- - - -----------------------
Raymond G. Avischious
- - - -----------------------
Richard E. Beumer
- - - -----------------------
Kenneth Daly
- - - -----------------------
Elizabeth A. Duda
- - - -----------------------
Edward A. Engel
- - - -----------------------
Gary J. Greenfield
- - - -----------------------
Richard L. Gunderson
- - - -----------------------
John O. Gilbert
- - - -----------------------
James W. Hanson
- - - -----------------------
Robert H. Hoffman
- - - -----------------------
Rev. Thomas Zehnder
- - - -----------------------
Robert E. Long
- - - -----------------------
Robert B. Peregrine
- - - -----------------------
Kathi P. Seifert
- - - -----------------------
Roger B. Wheeler
- - - -----------------------
E. Marlene Wilson
John O. Gilbert, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named Directors of Aid Association for Lutherans
pursuant to powers of attorney duty executed by such persons.
/S/John O. Gilbert June 26, 1997
Attorney-in-Fact
<PAGE>
Exhibit Index
1.A.(1) Resolution of the Board of Directors of Aid Association for
Lutherans establishing AAL Variable Life Account I
1.A.(3)(a) Form of Underwriting Agreement
1.A.(3)(b) Form of Distribution Agreement (see (3)(a)
1.A.(5)(a) Specimen Flexible Premium Variable Universal Life Insurance
Certificates
1.A.(5)(b) Certificate Riders and Endorsements
1.A.(5)(c) Application Form
1.A.(6)(a) Articles of Incorporation of Aid Association for Lutherans
1.A.(6)(b) By-laws of Aid Association for Lutherans
1.A.(8) Form of participation agreement
1.A.(10) Application form (See 5(c))
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
including any state Insurance Commission, if applicable, of shares of such
Society, and to file the same, with all exhibits thereto and other supporting or
related documents, with such Commission, granting unto such attorneys-in-fact,
and each of them, full power and authority to do and perform any and all acts
necessary or incidental to the performance and execution of the powers herein
expressly granted.
/s/ Herbert J. Arkebauer
Herbert J. Arkebauer
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Raymond G. Avischious
Raymond G. Avischious
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Richard E. Beumer
Richard E. Beumer
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Kenneth Daly
Kenneth Daly
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Elizabeth A. Duda
Elizabeth A. Duda
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Edward A. Engel
Edward A. Engel
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint Richard L. Gunderson and
Woodrow E. Eno and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director of such Society to any Registration Statement or Registration
Statements, or other applicable forms relating to a variable universal life
product, and all amendments including post-effective amendments, thereto, to be
filed by such Society with the Securities and Exchange Commission and any state
Insurance Commission, if applicable, of shares of such Society, and to file the
same, with all exhibits thereto and other supporting or related documents, with
such Commission, granting unto such attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
/s/ John O. Gilbert
John O. Gilbert
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert and Woodrow
E. Eno and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the undersigned's name as
such director of such Society to any Registration Statement or Registration
Statements, or other applicable forms relating to a variable universal life
product, and all amendments including post-effective amendments, thereto, to be
filed by such Society with the Securities and Exchange Commission and any state
Insurance Commission, if applicable, of shares of such Society, and to file the
same, with all exhibits thereto and other supporting or related documents, with
such Commission, granting unto such attorneys-in-fact, and each of them, full
power and authority to do and perform any and all acts necessary or incidental
to the performance and execution of the powers herein expressly granted.
/s/ Gary J. Greenfield
Gary J. Greenfield
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Richard L. Gunderson
Richard L. Gunderson
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ James W. Hanson
James W. Hanson
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Robert H. Hoffman
Robert H. Hoffman
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Robert E. Long
Robert E. Long
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Robert B. Peregrine Sr.
Robert B. Peregrine Sr.
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Kathi P. Seifert
Kathi P. Seifert
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Roger G. Wheeler
Roger G. Wheeler
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Marlene Wilson
Marlene Wilson
Director
AID ASSOCIATION FOR LUTHERANS
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned director of AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized under the laws
of the state of Wisconsin (the "Society"), the Depositor of AAL Variable Life
Account I does hereby make, constitute and appoint John O. Gilbert, Ronald G.
Anderson and Woodrow E. Eno and each or any of them, the undersigned's true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director of such Society to any Registration Statement or
Registration Statements, or other applicable forms relating to a variable
universal life product, and all amendments including post-effective amendments,
thereto, to be filed by such Society with the Securities and Exchange Commission
and any state Insurance Commission, if applicable, of shares of such Society,
and to file the same, with all exhibits thereto and other supporting or related
documents, with such Commission, granting unto such attorneys-in-fact, and each
of them, full power and authority to do and perform any and all acts necessary
or incidental to the performance and execution of the powers herein expressly
granted.
/s/ Thomas R. Zehnder
Rev. Thomas Zehnder
Director
AID ASSOCIATION FOR LUTHERANS
BE IT RESOLVED, That the Board of Directors of Aid Association for Lutherans
(the "Company"), hereby establishes a separate account, pursuant to the
provisions of the Wisconsin Insurance Laws, designated the AAL Variable Life
Account (hereinafter the "Variable Account"), for the following use and
purposes, and subject to such conditions as hereinafter set forth; and
FURTHER RESOLVED, That the Variable Account is established for the purpose of
providing for the issuance by the Company of certain variable life insurance
Certificates (the "Certificates"), and shall constitute a funding medium to
support reserves under such Certificates issued by the Company; and
FURTHER RESOLVED, That the income, gains and losses, realized or unrealized,
from assets allocated to the Variable Account shall be credited to or charged
against the Variable Account, without regard to other income, gains or losses of
the Company; and
FURTHER RESOLVED, That the assets of the Variable Account equal to the reserves
and other liabilities under the Certificates and any other Certificates issued
through the Variable Account may not be charged with liabilities arising out of
any other business the Company may conduct; and
FURTHER RESOLVED, That the Variable Account shall be divided into investment
subaccounts (the "Subaccounts"), each of which shall invest in the shares of a
mutual fund portfolio, and net premiums under the Certificates shall be
allocated in accordance with instructions received from owners of the
Certificates; and
FURTHER RESOLVED, That the President, Executive Vice President, and Vice
President - Investments are jointly authorized to add or remove any Subaccount
of the Variable Account or add or remove any mutual fund as may hereafter be
deemed necessary or appropriate; and
FURTHER RESOLVED, That the income, gains and losses, realized or unrealized,
from assets allocated to each Subaccount of the Variable Account shall be
credited to or charged against such Subaccount of the Variable Account, without
regard to other income, gains or losses of any other Subaccount of the Variable
Account; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, be, and they hereby are, severally authorized to invest such amount
or amounts of the Company's cash in the Variable Account or in any Subaccount
thereof or in any mutual fund as may be deemed necessary or appropriate to
facilitate the commencement of the Variable Account's and/or the fund's
operations and/or to meet any minimum capital requirements under the Investment
Company Act of 1940 (the "1940 Act"); and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, be, and they hereby are, severally authorized to transfer cash from
time to time from the Company's general account to the Variable Account, or from
the Variable Account to the general account, as deemed necessary or appropriate
and consistent with the terms of the Certificates; and
FURTHER RESOLVED, That the Board of Directors of the Company reserves the right
to change the designation of the Variable Account hereafter to such other
designation as it may deem necessary or appropriate; and
<PAGE>
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, with such assistance from the Company's independent certified public
accountants, legal counsel and independent consultants or others as they may
require, be, and they hereby are, severally authorized and directed to take all
action necessary to: (a) register the Variable Account as a unit investment
trust under the 1940 Act; (b) register the Certificates in such amounts, which
may be an indefinite amount, as such officers of the Company shall from time to
time deem appropriate under the Securities Act of 1933 (the "1933 Act"); and (c)
take all other actions that are necessary in connection with the offering of the
Certificates for sale and the operation of the Variable Account in order to
comply with the 1940 Act, the Securities Exchange Act of 1934, the 1933 Act, and
other applicable Federal laws, including the filing of any registration
statements, any undertakings, no-action requests, consents, and any applications
for exemptions from the 1940 Act or other applicable federal laws and any
amendments to the foregoing as the officers of the Company shall deem necessary
or appropriate; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, are severally authorized and empowered to prepare, execute and cause
to be filed with the Securities and Exchange Commission on behalf of the
Variable Account, and by the Company as sponsor and depositor, a Notification of
Registration on Form N-8A, a registration statement registering the Account as
an investment company under the 1940 Act, and a registration statement
registering the Certificates under the 1933 Act, and any and all amendments to
the foregoing on behalf of the Variable Account and the Company and on behalf of
and as attorneys-in-fact for the principal executive officer and/or the
principal financial officer and/or the principal accounting officer and/or any
other officer of the Company; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President-
Counsel and Secretary, Vice President and Actuary, and Controller are duly
appointed as agents for service under any such registration statement and are
duly authorized to receive communications and notices from the Securities and
Exchange Commission with respect thereto; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, are severally authorized on behalf of the Variable Account and on
behalf of the Company to take any and all action that each of them may deem
necessary or advisable in order to offer and sell the Certificates, including
any registrations, filings and qualifications both of the Company, its officers,
agents and employees, and of the Certificates, under the insurance and
securities laws of any of the states of the United States of America or other
jurisdictions, and in connection therewith to prepare, execute, deliver and file
all such applications, requests, undertakings, reports, covenants, resolutions,
applications for exemptions, consents to service of process and other papers and
instruments as may be required under such laws, and to take any and all further
action which such officers or legal counsel of the Company may deem necessary or
desirable (including entering into whatever agreements and contracts may be
necessary) in order to maintain such registrations or qualifications for as long
as the officers or legal counsel deem it to be in the best interests of the
Variable Account and the Company; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, be, and they hereby are, severally authorized in the names and on
behalf of the Variable Account and the Company to execute and file irrevocable
written consents on the part of the Variable Account and of the Company to be
used in such states wherein such consents to service of process may be required
under the insurance or securities laws therein in connection with the
registration or qualification of the Certificates and to appoint the appropriate
state official, or such other person as may be allowed by insurance or
securities laws, agent of the Variable Account and of the Company for the
purpose of receiving and accepting process; and
<PAGE>
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, be, and hereby are, severally authorized to establish procedures
under which the Company will provide voting rights for owners of the
Certificates with respect to securities owned by the Variable Account; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, are hereby severally authorized to execute such agreement or
agreements as deemed necessary and appropriate (i) with AAL Capital Management
Corporation or other qualified entity under which AAL Capital Management
Corporation or such other entity will be appointed principal underwriter and
distributor for the Certificates, (ii) with one or more qualified banks or other
qualified entities to provide administrative and/or custody services in
connection with the establishment and maintenance of the Variable Account and
the design, issuance, and administration of the Certificates, and (iii) with the
designated mutual funds and/or the principal underwriter and distributor of
those funds for the purchase and redemption of fund shares; and
FURTHER RESOLVED, That the President, Executive Vice President, Vice President
and Actuary, and Controller, and each of them, with full power to act without
the others, are hereby severally authorized to execute and deliver such
agreements and other documents and do such acts and things as each of them may
deem necessary or desirable to carry out the foregoing resolutions and the
intent and purposes thereof; and
FURTHER RESOLVED, That the Company hereby adopts and establishes the following
Standards of Suitability for its officers, employees, and agents with respect to
the suitability of the Certificates for applicants:
1. No recommendation shall be made to an applicant to purchase a
Certificate, and no Certificate shall be issued, in the absence of reasonable
grounds to believe that the purchase of the Certificate is suitable for the
applicant on the basis of information furnished after reasonable inquiry of the
applicant concerning the applicant's insurance and investment objectives,
financial situation and needs, and any other information known to the Company or
to the agent making the recommendation;
2. A good faith, reasonable inquiry shall be made as to the facts and
circumstances concerning a prospective contractowner's insurance and financial
needs and no recommendation shall be made that the prospective contractowner
purchase a Certificate when such a purchase is not reasonably consistent with
the information that is known or reasonably should be known to the Company or
its agents. In making such recommendation, factors which may be considered are:
age, earnings, marital status, number and age of dependents, the value of
savings or other assets, and current life insurance program.
Additionally, the Company's agents, as registered representatives, will be
subject to supervision by a registered broker-dealer with respect to suitability
and other sales practices under the rules of the National Association of
Securities Dealers, Inc.; and
FURTHER RESOLVED, that the Company hereby adopts and establishes the following
Standards of Conduct for itself and its officers, directors, and employees
(each, an "Employee") with respect to the purchase or sale of investments of the
Variable Account:
<PAGE>
No Employee shall:
1. Employ any device, scheme or artifice to defraud the Variable Account or the
owners of the Certificates;
2. Make any untrue statement of a material fact with respect to the investments
of the Variable Account or omit to state a material fact necessary in order to
make the statements made, in light of the circumstances in which they were made,
not misleading;
3. Engage in any act, practice or course of business that operates or would
operate as a fraud or deceit upon the Variable Account or the owners of the
Certificates;
4. Engage in any manipulative practice with respect to the Variable Account or
the owners of the Certificates;
5. Sell to, or purchase from, the Variable Account any securities or other
property, except as permitted under applicable laws, rules, regulations, order,
or other interpretation of any government, agency, or self-regulatory
organization;
6. Purchase or allow to be purchased for the Variable Account any securities of
which the Company or an affiliated company is the issuer, except as permitted
under applicable laws, rules, regulations, order, or other interpretation of any
government, agency, or self-regulatory organization;
7. Accept any compensation other than a regular salary or wages from the Company
or an affiliated company for the sale or purchase of investment securities to or
from the Variable Account except as permitted under applicable laws, rules,
regulations, orders, or other interpretations of any government, agency or
self-regulatory organization;
8. Engage in any joint transaction, participation or common undertaking whereby
the Company or an affiliated company participates with the Variable Account in
any transaction in which the Company or an affiliated company obtains an
advantage in the price or quality of the item purchased, the service received or
in the cost of such service, and the Variable Account or the owners of the
Certificates are disadvantaged in any of these respects by the same transaction;
or
9. Borrow money or securities from the Variable Account other than under a
Certificate loan provision.
FURTHER RESOLVED, that the Company shall require any third party providing
administrative services to the Variable Account to adopt Standards of Conduct
encompassing the standards set forth above.
AMENDED AND RESTATED
PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT
BY AND BETWEEN AAL CAPITAL MANAGEMENT CORPORATION
AND AID ASSOCIATION FOR LUTHERANS
DATED NOVEMBER 23,1994, AS AMENDED July 10,1997
<PAGE>
TABLE OF CONTENTS
1. Appointment of DISTRIBUTOR
2. Underwriting Responsibilities of DISTRIBUTOR .
3. Additional Services to be Provided by DISTRIBUTOR
3.1 Preparation of Sales Literature and Advertising Materials
3.2 Licensing of Field and Home Office Staff
3.3 Regulatory Compliance
3.4 Field Training
3.5 Confirmations
4. Responsibilities of AAL
4.1 Sales Commissions
4.2 Sales Credits and Field Expenses
4.3 Registrations of Securities and Investment Adviser
4.4 Books and Records
4.5 Duty to Keep Informed
4.6 Transfer Agent and Management
5 Joint Procedures for Communications with the Public and with Registered
Representatives
6. Fees to be Paid to DISTRIBUTOR by AAL
6.1 Services
6.2 Determination of Charge/Expense Formulas for Services
6.3 Preparation and Negotiation of Final Annual Budget for
Services
6.4 Accounting Procedures
7. Independent Contractor
8. indemnification
8.1 Indemnification of AAL
8.2 Indemnification of DISTRIBUTOR
9. Authorized Representations
10. Amendment or Assignment of Agreement
11. Termination of Agreement
12. Miscellaneous
13. Definition of Terms
14. Compliance with Securities Laws
15. Regulatory Examinations
16. Notices
17. Governing Law
Schedule A: Variable Annuity Schedule of Sales Commissions
Schedule B: Variable Life Schedule of Sales Commissions
<PAGE>
PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT
This PRINCIPAL UNDERWRITING AND SERVICING AGREEMENT made and entered this
23rd day of November, 1994, amended October 28, 1996 and July 10, 1997, by and
between AAL CAPITAL MANAGEMENT CORPORATION, a corporation organized and existing
under the laws of the State of Delaware, ( "DISTRIBUTOR" or "AALCMC") and AID
ASSOCIATION FOR LUTHERANS, a fraternal benefit society organized and existing
under the laws of the State of Wisconsin ("AAL"), on its own behalf and on
behalf of AAL Variable Annuity Account I "VARIABLE ANNUITY ACCOUNT" and AAL
Variable Life Account I "VARIABLE LIFE ACCOUNT) both collectively "ACCOUNTS."
RECITALS
AAL and its VARIABLE ANNUITY ACCOUNT and VARIABLE LIFE ACCOUNT, separate unit
investment trust investment accounts registered under the Investment Company Act
of 1940 (the "1940 Act"), propose to offer for sale certain flexible premium
deferred variable annuity and variable universal life contracts (the
"Certificates"), interests under which are registered with the Securities and
Exchange Commission (the "SEC") as securities under the Securities Act of 1933
(the " 1933 Act"), the 1940 Act, and applicable state laws.
Premiums received from owners of Certificates will be deposited at the owner's
designation in the respective ACCOUNTS and/or in the AAL General Account. The
ACCOUNTS will invest solely in portfolio shares "subaccounts" of the AAL
Variable Product Series Fund, Inc.
"FUND."
DISTRIBUTOR is a wholly-owned indirect subsidiary of AAL, is registered as a
broker-dealer with the SEC under the Securities Exchange Act of 1934 (the "1934
Act") and with state securities authorities in all 50 states, is a member of the
National Association of Securities Dealers, Inc. ("NASD"), and is authorized to
offer and sell mutual funds and variable insurance products, and acts as
DISTRIBUTOR of The AAL Mutual Funds, a registered investment company.
AAL and DISTRIBUTOR intend to enter into an agreement by which DISTRIBUTOR will
act as the principal underwriter in a continuous offering of the Certificates
for AAL, to begin on the effective date of the registration statements in
connection with the Certificates under the 1933 Act, and state securities and
insurance registrations. This Agreement pertains to the sale of Certificates by
Registered Representatives licensed with DISTRIBUTOR, and not to the sale of
Certificates by any other party and/or broker-dealer who may be authorized by
AAL to sell Certificates or who may have a separate Distribution or Selling
Agreement with AAL or DISTRIBUTOR.
THEREFORE, in consideration of the covenants and mutual promises of the parties
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, DISTRIBUTOR and AAL agree as follows:
<PAGE>
AGREEMENT
1. Appointment of DISTRIBUTOR
AAL hereby appoints DISTRIBUTOR as the principal underwriter for the
Certificates during the term of this Agreement in each state or other
jurisdiction where the Certificates may legally be sold. The Certificates may
also be sold by representatives of other broker-dealer firms with which AALCMC
has executed a selling agreement. In addition, AAL may retain other firms to
serve as principal underwriters of the Certificates. Anything in this Agreement
to the contrary notwithstanding, AAL retains the ultimate right to suspend sales
in any jurisdiction or jurisdictions, or to refuse to sell a Certificate to any
applicant for any reason whatsoever.
2. Underwriting Responsibilities of DISTRIBUTOR
DISTRIBUTOR agrees to offer and sell the Certificates, as agent for AAL, from
time to time during the term of this Agreement upon the terms described in the
Certificate Prospectuses. As used in this Agreement, the term "Prospectuses"
shall mean the Prospectuses and the Statements of Additional Information
included as part of the Registration Statement for AAL and the ACCOUNTS, as such
Prospectuses and Statements of Additional Information may be amended or
supplemented from time to time. The term "Registration Statement" shall mean the
Registration Statement, as amended from time to time and filed by AAL and the
respective ACCOUNTS with the SEC, and effective under the 1933 Act and/or the
1940 Act.
After the effective date of the Registration Statement for the Certificates,
DISTRIBUTOR will hold itself out to receive applications, satisfactory to
DISTRIBUTOR, for the purchase of the Certificates and will promptly transmit
applications and premiums received for the Certificates which it accepts to AAL
or to its designee, currently the AAL Service Center c/o Continuum Inc., 301
West 11th Street, Kansas City, MO 64105.
All purchases shall be deemed effective at the time and in the manner set forth
in the Prospectuses. All applications, when accepted by DISTRIBUTOR and by AAL,
shall designate the allocation of premiums by the purchaser among the separate
investment options represented by the sub-accounts and the AAL General Account,
as defined and described in the Certificate Prospectuses. All premiums from
purchasers shall be deposited by AAL in either the ACCOUNTS, to be promptly
allocated among the sub-accounts or to the AAL General Account, as designated by
the purchaser. Premiums allocated to the sub-accounts of the ACCOUNTS shall be
expressed as "accumulation units" of the Certificate as that term is defined in
the Prospectus. The above allocation statements are subject to any specific
allocation of premium requirements that may be set forth in the Certificate
pertaining to allocations during, the free look period and allocations in
connection with incomplete applications.
DISTRIBUTOR agrees to be solely responsible for the operation of its business as
a registered broker-dealer in connection with all its underwriting activities
under this Agreement, and shall operate such business in accordance with all
applicable laws and regulations. All sales of the Certificates by DISTRIBUTOR
shall be made through Registered Representatives who are "Associated Persons"
("Associated Persons" as defined by the 1934 Act) of DISTRIBUTOR, and who are
also District Representatives of AAL. DISTRIBUTOR shall be responsible for
selling only through Registered Representatives who are properly licensed to
sell Certificates in jurisdictions where offers and sales take place.
<PAGE>
DISTRIBUTOR is responsible for certain services relating to the distribution of
all prospectus(es) of the ACCOUNTS and Fund used by its Registered
Representatives in the marketing of the Certificates. These services include,
but are not limited to design, layout, printing, mailing or other delivery
services.
3. Additional Services to be Provided by DISTRIBUTOR In addition to the
underwriting responsibilities of DISTRIBUTOR described in paragraph 2 above,
DISTRIBUTOR agrees to provide the following additional services to AAL:
3.1 Preparation of Sales Literature and Advertising Materials
DISTRIBUTOR will be responsible for the initiation, preparation, printing and
distribution of all public sales literature and advertising materials, as well
as all training and marketing materials distributed to its Registered
Representatives as "broker-dealer only" materials under the NASD rules, which
are used by DISTRIBUTOR and its Registered Representatives in connection with
the sale of the Certificates. AAL will, in a timely manner, provide DISTRIBUTOR
with any and all materials and information necessary to enable DISTRIBUTOR to
fulfill its obligations set forth in this section regarding sales literature and
advertising materials. AAL will provide DISTRIBUTOR with the names of AAL
employees who will review and approve the materials described in this
subsection. DISTRIBUTOR will coordinate and provide copies of such materials to
designated employees of AAL during the development process and all advertising
and sales literature will be approved by both AAL and DISTRIBUTOR prior to use.
DISTRIBUTOR will complete all of the necessary filings and approvals with the
NASD and state securities authorities prior to the public use of such sales
material and advertising. DISTRIBUTOR will provide copies of all materials to
AAL. AAL will file and obtain approval of all such sales material and
advertising with State Insurance Commissioners where such filing is required by
state laws. AAL will promptly advise DISTRIBUTOR when such filings and approvals
are completed. Materials will only be made available for public use or
Registered Representative use after all securities and insurance filings and
approvals are completed and AAL has given approval for materials to be used.
DISTRIBUTOR will be responsible for maintaining an inventory and approval
history of all of its sales literature, advertising and "broker-dealer only"
materials, and for the distribution of such materials to its Registered
Representatives and to the public.
3.2 Licensing of Field and Home Office Staff
DISTRIBUTOR will be responsible for managing the licensing of all of its
Registered Representatives in connection with the sale of the Certificates, and
will directly handle all licensing by the NASD and state securities authorities
that is necessary for the sale of the Certificates. AAL will be responsible for
obtaining the necessary insurance licenses with state insurance authorities for
the offer and sale of the Certificates. AAL and DISTRIBUTOR shall develop a
joint electronic data base and reporting system to consolidate securities and
insurance licensing information for their District Representatives and
Registered Representatives, respectively. The system will provide controls
satisfactory to DISTRIBUTOR in the processing of Certificate applications to
assure that all of its Registered Representatives are properly licensed when
offering and selling the Certificates. The system shall be kept current by:
(i) DISTRIBUTOR providing securities licensing, data to AAL; and
(ii) AAL providing insurance licensing data to a database that shall be
maintained by AAL.
<PAGE>
The system described herein shall be equally accessible to AAL and DISTRIBUTOR.
DISTRIBUTOR and AAL will cooperate to assure the appropriate licensing of AAL
and DISTRIBUTOR's home office employees (including DISTRIBUTOR's wholesalers)
who require securities or insurance licenses in connection with their work on
the Certificates. DISTRIBUTOR will arrange for pre-licensing study and training
to assist such persons in obtaining their securities licenses as requested by
AAL. All AAL employees who are Associated Persons of DISTRIBUTOR as a result of
being licensed as securities Registered Representatives will be subject to
compliance procedures and supervision of DISTRIBUTOR in connection with all work
related to the Certificates in the same manner as all other Associated Persons.
3.3 Regulatory Compliance
DISTRIBUTOR will have responsibility for compliance by all of its Registered
Representatives who are Associated Persons of DISTRIBUTOR (including employees
of AAL) with all securities laws and regulations in connection with the offer
and sale of the Certificates. Compliance supervision shall include, but not be
limited to, the following matters: acceptance of new business; suitability
determinations (as made in accordance with NASD rules or other applicable SEC or
self-regulatory organizations' rules and regulations); field training,
supervision and sales practices; books and records requirements; approval and
use of all advertising, sales literature and broker-dealer only materials;
supervision of confirmation terms and processing; the payment of commissions;
and compliance with the written supervisory procedures of DISTRIBUTOR.
3.4 Field Training
Immediately after the effective date of the Registration Statement for the
Certificates, DISTRIBUTOR shall be responsible for conducting field training of
all of its associated Registered Representatives in those states where the
Certificates are approved for sale. The training program shall be developed and
conducted by DISTRIBUTOR. DISTRIBUTOR will coordinate with AAL concerning those
AAL employees who will be involved in the development of the training program
and in its execution. The training program shall be approved by both AAL and
DISTRIBUTOR prior to implementation.
3.5 Confirmations
DISTRIBUTOR shall be responsible to assure that all purchases, sales or other
transactions occurring in the account of an owner of a Certificate sold by its
Registered Representatives shall be confirmed to the owner in writing in a form
and manner which complies with the requirements of the 1934 Act, state laws and
regulations, and the disclosure requirements of the NASD. Such confirmations
will be furnished by the broker-dealer to all owners of Certificates in
accordance with securities laws, will reflect the facts of the transaction, and
will show that they are being, sent by AAL on behalf of DISTRIBUTOR acting, in
the capacity of agent for AAL. The parties agree that the form and the manner of
use of confirmations in connection with transactions occurring in such accounts
shall be supervised by DISTRIBUTOR. AAL agrees that AAL and its agent, Continuum
Inc., will prepare and distribute such confirmations in accordance with
DISTRIBUTOR's instructions. AAL agrees that AAL will make no changes or
variations in either the form or the manner of distribution of such
confirmations without the written approval of DISTRIBUTOR and shall cause such
confirmations to be issued as directed by DISTRIBUTOR and on behalf of
DISTRIBUTOR
<PAGE>
4. Responsibilities of AAL
4.1 Sales Commissions
AAL will pay DISTRIBUTOR a sales commission on Certificate sales pursuant to
Schedules A and B attached hereto. DISTRIBUTOR intends to reallocate commissions
to its Registered Representatives (including General Agent and General Manager
Registered Representatives) for the sale of Certificates in accordance with a
written fee schedule agreement between DISTRIBUTOR and its associated Registered
Representatives. DISTRIBUTOR, for its convenience, authorizes AAL as agent for
DISTRIBUTOR, to make commission payments due to DISTRIBUTOR directly to its
Registered Representatives.
All commissions for the sale of the Certificates due to DISTRIBUTOR from AAL
shall be reflected on DISTRIBUTOR's financial records as a receipt from AAL and
a disbursement to DISTRIBUTOR'S Registered Representatives, notwithstanding the
direct payment of such commissions by AAL to such Registered Representatives.
AAL agrees to pay commissions directly to such Registered Representatives as a
convenience to DISTRIBUTOR and recognizes that this agreement to pay is purely
ministerial in nature and not discretionary. The financial records maintained by
or for DISTRIBUTOR shall properly reflect such payments.
Notwithstanding the foregoing, it is agreed that AAL shall have the right in the
payment of such commissions to treat such commissions as part of AAL employee
compensation to such Registered Representatives for the purpose of calculation
of AAL benefits programs and withholding taxes; provided however, that AAL will
provide DISTRIBUTOR in advance with a written, signed opinion of outside
counsel, who shall have acceptable expertise in securities laws, stating that
the payment of commissions pursuant to this Agreement:
(i) shall not require AAL to resister as a broker-dealer under federal
law, or state laws (if ascertainable), and (ii shall not violate
DISTRIBUTOR's obligation to supervise and directly pay commissions to
its Registered Representatives under applicable SEC and NASD rules.
AAL will maintain and provide records and reports reflecting the calculation of
all commissions paid to, and any other cash and non-cash compensation
(collectively "Commissions"), received by DISTRIBUTOR'S Registered
Representatives and the details of the transactions upon which such Commissions
are based, and will respond to any inquiries about Commission payments, pursuant
to this paragraph. DISTRIBUTOR shall designate to AAL the records required and
such records shall be maintained subject to the provisions of Paragraph 4.3
below.
4.2 Sales Credits and Field Expenses
Any expenses or charges for AAL field services for the Certificates will be paid
directly by AAL. Sales credits for sales of the Certificates will be based on
gross premiums received for the Certificates, subject to any exceptions that may
exist or be developed with respect to internal transfers of funds among AAL and
affiliated companies.
<PAGE>
4.3 Registrations of Securities and Investment Adviser
AAL shall be solely responsible, at its expense, for registration of the
Certificates, the ACCOUNTS, the FUND, and for the registration of AAL as an
investment adviser of the FUND, with all required state and federal authorities.
AAL, agrees to maintain such registration statements in effect at all times
during the term of this Agreement, and to file such amendments, reports and
other documents as may be necessary to assure that there will be no untrue
statement of material fact in any Registration Statement and that there shall be
no omission to state a material fact in the Registration Statement or Form ADV,
which omission would make the statements therein misleading,. AAL may direct
DISTRIBUTOR, and DISTRIBUTOR shall perform, any or all of the services described
in this paragraph.
4.4 Books and Records
AAL agrees to maintain all books and records required and designated by
DISTRIBUTOR under the securities laws in connection with the offer and sale of
the Certificates by its Registered Representatives, as specifically required by
Section 17 of the 1934 Act, Rule I7a-3 and 17a-4 under the 1934 Act or as
required by the NASD and such other or further books or records as may be
required by rule or regulation of any other federal or state regulatory
organization or self-regulatory organization, to the extent such requirements
are applicable to the variable annuity and variable life operations as mutually
determined for purposes of this Agreement by DISTRIBUTOR and AAL. AAL shall
maintain such books and records as agent on behalf of DISTRIBUTOR who shall be
the owner thereof. AAL agrees that such books and records will be open and
available to DISTRIBUTOR at all times, shall be surrendered promptly on request,
without charge, to DISTRIBUTOR, and shall be subject to inspection by the SEC in
accordance with Section 17 of the 1934 Act, and by the NASD or other
self-regulatory organization, at any time. The parties represent and warrant
that DISTRIBUTOR has provided a schedule to AAL that describes the books and
records to be maintained by AAL, on behalf of DISTRIBUTOR.
4.5 Duty to Keep Informed
AAL shall at its expense keep DISTRIBUTOR fully informed on a current basis of
any changes or other material matters affecting the Certificates or FUND. AAL
will use its best efforts to provide advance notice to DISTRIBUTOR of any
proposed chances in the Certificates or FUND and to discuss such matters with
DISTRIBUTOR prior to taking any action. AAL shall furnish DISTRIBUTOR copies of
all information, financial statements, books and records and other papers which
DISTRIBUTOR may reasonably request in connection with its due diligence inquiry
or for use in connection with the distribution of Certificates.
<PAGE>
4.6 Transfer Agent and Management
AAL shall be solely responsible for the selection and supervision of a Transfer
Agent for the Certificates; management of all Certificate accounts, including
the sub-accounts, establishing and maintaining account records and processing;
and the receipt and disbursement of all monies related to the Certificates.
Notwithstanding its responsibility for these matters, AAL shall keep DISTRIBUTOR
currently informed, through reports requested by DISTRIBUTOR, of all activities
related to the Certificates and the FUND. AAL will also keep DISTRIBUTOR
informed and consult with DISTRIBUTOR in advance of any changes to the
procedures for the management or administration of the Certificates or to any of
the underlying records or documents related thereto. AAL recognizes that any
communications with Certificate owners, or prospective Certificate owners,
related to the Certificates sold by DISTRIBUTOR'S Registered Representatives
subject to securities regulations and must be approved in advance by AAL and
DISTRIBUTOR and may require filing with and approval by the NASD and state
securities authorities. Such communications include but are not limited to:
correspondence statement stuffers, newspaper or magazine articles, confirmation
messages and other similar written materials.
5. Joint Procedures for Communications with the Public and with Registered
Representatives
The parties recognize that all written materials which are provided to AAL
members or prospective members in connection with the Certificates sold by
DISTRIBUTOR'S Registered Representatives are required to meet specific standards
established by securities and insurance regulatory authorities. Such materials
will include advertising and sales materials, correspondence, magazine articles,
newspaper articles, press releases and any other written public communication.
To assure compliance with all applicable rules and laws, it is agreed that
DISTRIBUTOR will manage and coordinate the distribution of all public written
materials related to the Certificates sold by DISTRIBUTOR'S Registered
Representatives, including materials related to the FUND. No public materials
will be released without the prior written approval of both AAL and DISTRIBUTOR,
and both parties shall cooperate in the preparation and review of such
materials. AAL will provide DISTRIBUTOR with the names of its employees
designated to give approval for such written materials. All nonpublic written
communications with DISTRIBUTOR'S Registered Representatives and to employees of
AAL or DISTRIBUTOR, related to the Certificates shall be reviewed and approved
by both AAL and DISTRIBUTOR prior to use. Such materials include, without
limitation, field updates, "broker-dealer only" materials, training materials,
compliance information, and administrative forms sent to owners. AAL and
DISTRIBUTOR will establish internal policies to insure that all such materials
are appropriately and timely reviewed and shall cooperate with each other in
establishing such procedures.
<PAGE>
6. Fees to be Paid to DISTRIBUTOR by AAL
6.1 Services
DISTRIBUTOR shall perform certain services, as requested by AAL, in connection
with DISTRIBUTOR's role as principal underwriter in AAL's continuous offering of
the Certificates ("Services"). Services shall be initially designated as
"Marketing Services", "Broker-Dealer Administration", "Licensing", "Regulatory
Compliance", "Field Training", and "Consulting". The parties represent and
warrant that AAL and DISTRIBUTOR have mutually agreed to the definition and
composition of each of the foregoing Services. AAL and DISTRIBUTOR agree that
the definition and composition of each of the foregoing Services, and additional
services to be rendered in connection with the sale of the Certificates, shall
be reaffirmed or amended, as the case may be, on an annual basis in connection
with the preparation and negotiation of the "Final Annual Budget" (as that term
is defined in Paragraph 6.3) for Services for such year.
6.2 Determination of Charge/Expense Formulas for Services
The parties represent and warrant that DISTRIBUTOR and AAL agree on the methods
to determine and calculate the amount of Services to be charged by DISTRIBUTOR
as an expense to AAL (the "Charge/Expense Formulas"). Charge/Expense Formulas
shall be initially determined and defined as "Sales Credit Charges", "Direct
Expenses", and "Per Hour Charges". AAL and DISTRIBUTOR covenant and agree that:
(i) Charge/Expense Formulas shall be reaffirmed or amended, as the case
may be, on an annual basis in connection with the preparation and negotiation of
the Final Annual Budget for Services for such year; and
(ii) Charge/Expense Formulas shall include a portion of DISTRIBUTOR's
general overhead expenses as specifically stated in the underlying detail
schedules for Charge/Expense Formulas ("Detail Schedules").
DISTRIBUTOR and AAL affirm and agree that the Detail Schedules were reviewed by
representatives of both AAL and DISTRIBUTOR in the due diligence process. The
parties represent and warrant that DISTRIBUTOR and AAL agree on the allocation
of dollar amounts of Services to the various categories of Charge/Expense
Formulas (" Services Allocation"). Services Allocation shall be initially
determined as set forth in the Final Annual Budget for the 1995 calendar year.
AAL and DISTRIBUTOR covenant and agree that Services Allocation shall be
reaffirmed or amended, as the case may be, on an annual basis in connection with
the preparation and negotiation of the Final Annual Budget for Services for such
year.
6.3 Preparation and Negotiation of Final Annual Budget for Services
Each successive year that this Agreement is in effect, DISTRIBUTOR shall prepare
a projected annual budget for the successive year (the " Projected Annual
Budget") and deliver the Projected Annual Budget to a designated representative
of AAL. Each successive year that this Agreement is in effect, AAL shall provide
comments to DISTRIBUTOR on the content of the Projected Annual Budget AAL and
DISTRIBUTOR covenant and agree that:
<PAGE>
(i) a final, agreed form of the Projected Annual Budget (the "Final
Annual Budget") shall be determined on or before the deadline date set forth for
the submission of annual budgets pursuant to AAL budget policies; and
(ii) the policies, definitions and operating procedures (including but
not limited to "Billing Process", and "Billable Items") set forth in P.O.P. 251
- - - - "Subsidiary and Affiliate Billing", shall be followed in connection with the
preparation and negotiation of the Projected Annual Budget and the Final Annual
Budget.
6.4 Accounting Procedures
DISTRIBUTOR and AAL, covenant and agree that:
(i) payroll & expense records and procedures,
(ii) invoicing procedures; and
(iii) the time and manner of charge/expense payment for the VA Services
set forth in this Agreement shall be determined by reference to certain AALCMC
accounting manuals and procedures. Notwithstanding the foregoing, the parties
covenant and agree that the provisions of this Agreement pertaining to books and
records (e.g. Paragraph 4.4 hereof) shall apply to all transactions relating to
Services and the offering and sale of Certificates by DISTRIBUTOR The parties
agree that because of the sensitive and confidential nature of these records and
procedures, such records and procedures shall not be disclosed nor disseminated
except to authorized accounting and management personnel of AAL and DISTRIBUTOR.
DISTRIBUTOR and AAL acknowledge that unanticipated conditions may materially
change the Final Annual Budget. DISTRIBUTOR and AAL agree that the nature of
these unanticipated conditions can be characterized as either a "permanent
change" or a "temporary change". For example, a permanent change is the
elimination of a Service that DISTRIBUTOR provides pursuant to this Agreement
and a temporary chance is AAL's assumption of a Service, pursuant to
DISTRIBUTOR's request. DISTRIBUTOR and AAL covenant and agree that the
accounting treatment for permanent changes shall be redetermined on an annual
basis and the accounting treatment for a temporary change shall be as set forth
herein. In the event a temporary change occurs, DISTRIBUTOR and AAL covenant and
agree that AAL shall be permitted a payment credit towards any outstanding
charges/expenses for Services performed by DISTRIBUTOR, for certain services
rendered by AAL employees and agents in connection with the offering and sale of
the Certificates (e.g. legal or accounting services) ("Services Offset") The
relevant terms and conditions of this Agreement shall apply to the Services
Offset (e.g. determination for Final Annual Budget, accounting procedures). On a
monthly basis during the term of this Agreement:
(i) DISTRIBUTOR shall provide written documentation to AAL for
Services; and
(ii) AAL shall provide written documentation to DISTRIBUTOR for
Services Offset rendered during the preceding calendar month (collectively, the
"Accounting Statements").
The Accounting Statements shall reasonably itemize and detail the Services and
Services Offset provided by each of the parties during the proceeding, month.
The format for the Accounting Statements shall follow certain CMC accounting
procedures.
<PAGE>
7. Independent Contractor
In performing its duties hereunder, DISTRIBUTOR shall be an independent
contractor and neither DISTRIBUTOR, nor any of its officers, directors,
employees, or Registered Representatives is, or shall be, an employee of AAL in
the performance of DISTRIBUTOR's duties hereunder. DISTRIBUTOR shall be
responsible for the employment, control, and conduct of its officers, agents and
employees and for injury to such agents or employees or to others through its
agents or employees. DISTRIBUTOR assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all employee taxes
thereunder.
8. lndemnification
8.1 Indemnification of AAL
DISTRIBUTOR agrees to indemnify and hold harmless AAL and each of its present or
former directors, officers, employees, representatives and each person, if any,
who controls or previously controlled AAL within the meaning of Section 15 of
the 1933 Act, against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable counsel fees
incurred in connection therewith) to which AAL or any such person may become
subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Certificate by any person which
may be based upon any wrongful act by DISTRIBUTOR or any of DISTRIBUTOR's
directors, officers, employees or representatives, or may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering the Certificates filed or made public by AAL or any amendment thereof
or supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to AAL by DISTRIBUTOR.
In no case is DISTRIBUTOR's indemnity in favor of AAL, or any person indemnified
to be deemed to protect AAL or such indemnified person against any liability to
which AAL or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement, or is DISTRIBUTOR to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against AAL or any
person indemnified unless AAL or such person, as the case may be, shall have
notified DISTRIBUTOR in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon AAL or upon such person (or after AAL or
such person shall have received notice to such service on any designated agent).
However, failure to notify DISTRIBUTOR of any such claim shall not relieve
DISTRIBUTOR from any liability which DISTRIBUTOR may have to AAL or any person
<PAGE>
against whom such action is brought otherwise than on account of DISTRIBUTOR's
indemnity agreement contained in this Paragraph. DISTRIBUTOR shall be entitled
to participate, at its own expense, in the defense, or, if DISTRIBUTOR so
elects, to assume the defense of any suit brought to enforce any such claim,
but, if DISTRIBUTOR elects to assume the defense, such defense shall be
conducted by legal counsel chosen by DISTRIBUTOR and satisfactory to AAL and to
the defendant or defendants who are entitled to such indemnification. In the
event that DISTRIBUTOR elects to assume the defense of any suit and retain legal
counsel, AAL and the defendant or defendants who arc entitled to such
indemnification, shall bear the fees and expenses of any additional legal
counsel retained by them. If DISTRIBUTOR does not elect to assume the defense of
any such suit, DISTRIBUTOR will reimburse AAL and the defendant or defendants
entitled to such indemnification for the reasonable fees and expenses of any
legal counsel retained by them. DISTRIBUTOR agrees to promptly notify AAL of the
commencement of any litigation or proceedings against it or any of its officers,
employees or representatives in connection with the issue or sale of the
certificates.
8.2 Indemnification of DISTRIBUTOR
AAL agrees to indemnify and hold harmless DISTRIBUTOR and each of its present or
former directors, officers, employees, representatives and each person, if any,
who controls or previously controlled DISTRIBUTOR within the meaning of Section
15 of the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition, or with regard to the terms and conditions, of
any Certificates by any person that may be based upon any wrongful act by AAL or
any of AAL's directors, officers, employees or representatives (other than
DISTRIBUTOR) or any other broker/distributors who are selling Certificates for
AAL, may be based upon any untrue statement or alleged untrue statement or a
material fact contained in a registration statement, prospectus, shareholder
report or other information covering the Certificates or FUND filed or made
public by AAL or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading unless such statement
or omission was made in reliance upon information furnished to AAL by
DISTRIBUTOR. In no case is AAL's indemnity in favor of DISTRIBUTOR, or any
person indemnified to be deemed to protect DISTRIBUTOR or such indemnified
person against any liability to which DISTRIBUTOR or such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement, or is AAL to be liable under its
indemnity agreement contained in this Paragraph with respect to any claim made
against DISTRIBUTOR or person indemnified unless DISTRIBUTOR, or such person, as
the case may be, shall have notified AAL in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon DISTRIBUTOR
or upon such person (or after DISTRIBUTOR or such person shall have received
notice of such service on any designated agent). However, failure to notify AAL
of any such claim shall not relieve AAL from any liability which AAL may have to
DISTRIBUTOR or any person against whom such action is brought otherwise than on
account of AAL's indemnity agreement contained in this Paragraph. AAL shall be
entitled to participate, at its own expense, in the defense, or, if AAL so
elects, to assume the defense of any suit brought to enforce any such claim, but
if AAL elects to assume the defense, such defense shall be conducted by legal
counsel chosen by AAL and satisfactory to DISTRIBUTOR and to the defendant or
defendants entitled to such indemnification. In the event that AAL elects to
assume the defense of any suit and retain legal counsel, DISTRIBUTOR and the
defendant or defendants entitled to such indemnification, shall bear the fees
and expenses of any additional legal counsel retained by them. If AAL does not
elect to assume the defense of any such suit, AAL will reimburse DISTRIBUTOR and
the defendant or defendants entitled to such indemnification for the reasonable
fees and expenses of any legal counsel retained by them. AAL agrees to promptly
notify DISTRIBUTOR of the commencement of any litigation or proceedings against
it or any of its trustees, officers, employees, or representatives in connection
with the issue or sale of the Certificates.
<PAGE>
9. Authorized Representations
DISTRIBUTOR is not authorized by AAL to give on behalf of AAL any information or
to make any representations in connection with the sale of Certificates other
than the information and representations contained in a Registration Statement
filed with the SEC under the 1933 Act and/or the 1940 Act, covering the
Certificates, the ACCOUNTS, or the FUND, as such Registration Statements may be
amended or supplemented from time to time, or contained in shareholder reports
or other material that may be prepared by or on behalf of AAL for DISTRIBUTOR's
use. This shall not be construed to prevent DISTRIBUTOR from preparing and
distributing advertising and sales literature or other material as it may deem
appropriate, subject to the requirements of Paragraph 5 above.
10. Amendment or Assignment of Agreement
This Agreement may not be amended or assigned except by written agreement of
both parties.
11. Termination of Agreement
This Agreement may be terminated by either party hereto, without the payment of
any penalty, on 90 days prior notice in writing to the other party.
12. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Nothing herein contained shall be deemed to require AAL to take any
action contrary to its Charter or by-laws, or any applicable statutory or
regulatory requirement to which it is subject or by which it is bound, or to
relieve or deprive the Board of Directors of AAL of responsibility for and
control of the conduct of the affairs of AAL.
13. Definition of Terms
Any questions of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1933 Act, the 1934 Act, the Advisers Act or the 1940 Act shall be resolved by
reference to such term or provision and to interpretation thereof, if any, by
the United States courts or, in the absence of any controlling decision of any
such court, by rules, regulations or orders of the SEC validly Issued pursuant
to such Act.
<PAGE>
14. Compliance with Securities Laws
AAL represents that it is registered as an investment adviser under the Advisers
Act and agrees that it will comply with all the provisions of the Act and of the
rules and regulations thereunder. AAL and DISTRIBUTOR each agree to comply with
all of the applicable terms and provisions of the 1933 Act, the 1934 Act, the
1940 Act, the Advisers Act, and all applicable state laws. Each party hereto
shall advise the other promptly of (a) any action of the SEC or any authorities
of any state or territory, of which it has knowledge, affecting the registration
or qualification of the ACCOUNTS or the Certificates, or the right to offer the
Certificates for sale or (b) the happening of any event which makes untrue any
statement, or which requires the making of any change in any Registration
Statement or any current prospectus or statement of additional information, in
order to make the statements therein not materially misleading.
I5. Regulatory Examinations
DISTRIBUTOR and AAL agree to cooperate fully in any insurance regulatory
examination, investigation, or proceeding or any judicial proceeding arising in
connection with the Certificates. DISTRIBUTOR and AAL further agree to cooperate
fully in any securities regulatory examination, investigation or proceeding or
any judicial proceeding with respect to AAL, DISTRIBUTOR, their affiliates and
their agents or representatives, to the extent that such examination,
investigation or proceeding is in connection with Certificates distributed under
this Agreement. DISTRIBUTOR shall furnish applicable Federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement which such authorities may request in order to
ascertain whether AAL's operations are being conducted in a manner consistent
with any applicable laws or regulations.
16. Notices
Any notice required to be given pursuant to this Agreement shall be deemed duly
given if delivered or mailed by registered mail, postage prepaid, to DISTRIBUTOR
or to AAL at 222 West College Avenue, Appleton, Wisconsin, 54919-0007.
17. Governing Law
This Agreement shall be governed and construed in accordance with the laws of
the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized representatives and their respective corporate seals to
be hereunto affixed, as of the day and year first above written.
Aid Association for Lutherans
by: John 0. Gilbert President
attest: Woodrow E. Eno Senior Vice President, Secretary and General Counsel
AAL Capital Management Corporation
By: Robert G. Same, Executive Vice President and Chief Operating Officer
attest:
AID ASSOCIATION
FOR LUTHERANS
A FRATERNAL BENEFIT SOCIETY
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE CERTIFICATE
Death benefit payable at death of insured before maturity date Maturity proceeds
payable on maturity date Adjustable death benefit Flexible premiums payable
during lifetime of insured until maturity date Death benefit guarantee upon
payment of Death Benefit Guarantee Premiums Return on cash value based on the
investment options selected
The amount and duration of the death benefit of this Certificate may increase or
decrease as described herein depending on the investment experience of the
Subaccounts.
A death benefit guarantee is provided until the later of 10 years from the issue
date or the Insured's Attained Age 65 if minimum monthly premiums are paid as
defined in this Certificate.
The cash value of this Certificate may increase or decrease daily depending on
the investment experience of the Subaccounts. There is no guaranteed minimum
cash value.
This is a Certificate of membership and flexible premium variable life
insurance. It is a legal contract between You and Aid Association for Lutherans
(AAL). It is issued in return for the application and the payment of the first
premium.
This Certificate provides insurance on the life of the person named above. AAL
will pay the death benefits to the beneficiary when the insured dies before the
maturity date if this Certificate is still in effect at the time of death. AAL
will pay the owner the maturity proceeds if the insured is still living on the
maturity date and the Certificate is still in effect.
NOTICE OF TEN DAY RIGHT TO CANCEL CERTIFICATE READ THIS CERTIFICATE CAREFULLY.
Within 10 days after You first receive this Certificate, You may cancel it for
any reason. To cancel, the Certificate must be delivered or mailed with a
Written Request to Your AAL district representative or the home office. If You
return (cancel) the Certificate, this Certificate shall be void from the
beginning and AAL will pay a refund of: (1) the difference between payments made
and amounts allocated to the Variable Account, plus (2) the value of the amount
allocated to the Variable Account as of the date the returned Certificate is
received by us, plus, (3) any fees imposed on the amounts allocated to the
Variable Account. If state law does not permit such a refund, then the refund
will equal premiums paid, without interest. Refunds will usually occur within
seven days of notice of cancellation, although a refund of premiums paid by
check may be delayed until the check clears your bank.
Signed for Aid Association for Lutherans at the home office, 4321 North Ballard
Road, Appleton, Wisconsin 54919.
<PAGE>
TABLE OF CERTIFICATE PROVISIONS
1. General Provisions And Exclusions
1.1 Definitions
1.2 Entire Contract
1.3 Statements in the Application
1.4 Change of Contract
1.5 Incontestability
1.6 Misstatement of Age or Sex
1.7 Maintenance of Solvency
1.8 Suicide
1.9 Change of Certificate
2. Death Benefit and Maturity
2.1 Death Benefit
2.2 Level Death Benefit-Option I
2.3 Increasing Death Benefit-Option II
2.4 Death Benefit Option Change
2.5 Death Benefit Guarantee
2.6 Increases in Specified Amount
2.7 Decreases in Specified Amount
2.8 Death Benefit Factor
2.9 Maturity
3. Premiums
3.1 When and Where to Pay Premiums
3.2 Planned Periodic Premium
3.3 Net Premium
3.4 Net Premium Allocations
3.5 Additional Premium Payments
3.6 Limits on Premiums
3.7 Continuation of Insurance
3.8 Grace Period
3.9 Reinstatement
4. Certificate Values
4.1 Cash Value
4.2 Monthly Deductions
4.3 Cost of Insurance Rates
4.4 Cost of Insurance Charge
4.5 Expense Charges
4.6 Monthly Mortality And Expense Risk Charge
4.7 Surplus Refunds
5. Fixed Account
5.1 Fixed Account
5.2 Interest Earned on The Fixed Account Cash Value
5.3 Fixed Account Cash Value
5.4 Basis of Computations
6. Variable Account
6.1 Variable Account
6.2 Variable Subaccount Cash Values
6.3 Number of Accumulation Units
6.4 Accumulation Unit Value
6.5 Transfer of Accumulated Values
6.6 Change of Portfolio or Investment Policy
<PAGE>
7. Certificate Loans
7.1 Loans
7.2 Loan Interest
7.3 Total Loan
7.4 Loan Repayment
7.5 Termination Due to Excess Loan
8. Surrender & Withdrawal
8.1 Surrender Value
8.2 Surrender Charge
8.3 Full Surrender
8.4 Partial Withdrawals
8.5 Delay of Payment
9. Certificate Reports
9.1 Annual Report
9.2 Illustrative Report
10. Membership, Ownership, Assignment And Beneficiary
10.1 Membership
10.2 Ownership
10.3 Beneficiary
10.4 Collateral Assignment
10.5 Change of Owner or Beneficiary
11. Filing a Death Claim
11.1 Notice of Death
11.2 Claim Forms
12. Settlement Options
12.1 Owner--Choosing A Settlement Option
12.2 Beneficiary--Changing A Settlement
Option for the Death Proceeds
12.3 Settlement Options
12.4 Guaranteed Interest Rate on Settlement Options
12.5 Settlement Agreement
Any benefit riders and a copy of the application follow Section 12.
<PAGE>
1. GENERAL PROVISIONS AND EXCLUSIONS
1.1 DEFINITIONS
"AAL" means Aid Association for Lutherans.
"Accumulation Unit" is a unit of measure used to calculate the cash value in
each Subaccount of the Variable Account.
"Accumulation Unit Value" on any Valuation Date, is the value of the
Accumulation Units of each Subaccount of the Variable Account.
"Certificate Anniversary" means the same date in each succeeding year as the
Certificate Issue Date.
"Death Benefit Guarantee Premium" is the minimum monthly premium required to
keep Your particular Certificate's Death Benefit Guarantee intact.
"Fixed Account" is an investment option that credits an interest rate. The Fixed
Account is part of AAL's general account which includes all of AAL's assets
other than those in any separate account of AAL.
"Fund" means the AAL Variable Product Series Fund, Inc. The Fund has portfolios
that correspond to each of the Subaccounts of the Variable Account. The current
portfolios are shown on page 3A.
"Insured's Attained Age" is not the insured's actual current age, but is the
issue age shown on page 3A plus the number of Certificate anniversaries that
have passed since the issue date of this Certificate.
"Monthly Deduction Date" is the day, each month, on which monthly charges are
taken from the cash value. It occurs each month on the Valuation Date, on or
preceding the day of the month which is the same day of the month on which the
Certificate was issued.
"Net Asset Value" means the unit of valuation for a Fund portfolio as computed
for a Valuation Period and described in such Fund's prospectus.
"Subaccount" means a subdivision of the Variable Account. Each Subaccount
invests exclusively in the shares of a corresponding portfolio of the Fund. The
current Subaccounts are shown on page 3.
"Valuation Date" means any day that both the New York Stock Exchange is open for
regular trading and AAL is open for business.
<PAGE>
"Valuation Period" means the period of time from the end of one Valuation Date
to the end of the next Valuation Date.
"Variable Account" means the AAL Variable Life Account I. It is a separate
account of AAL.
"Written Request" means a Written Request signed by You that is satisfactory in
form and content to AAL.
"You" or "Your" mean the owner of this Certificate.
1.2 ENTIRE CONTRACT
The entire contract between You and AAL is made up of:
This Certificate including any attached riders, endorsements or amendments;
The attached application, including any applications for increase in the
specified amount; and
The AAL Articles of Incorporation and Bylaws which are in force on the issue
date of this Certificate.
1.3 STATEMENTS IN THE APPLICATION
Statements made in the application will be treated as representations and not
warranties. No statement will be used by AAL to void the contract or to deny a
claim unless it appears in the application.
1.4 CHANGE OF CONTRACT
No representative of AAL except the president or the secretary may change any
part of this Certificate on behalf of AAL.
1.5 INCONTESTABILITY
AAL will not contest the validity of this Certificate after it has been in
effect during the lifetime of the insured for two years from the issue date.
Also see Sections 2.6 and 3.9.
1.6 MISSTATEMENT OF AGE OR SEX
The values of this Certificate are based on the insured's age and sex, except
where otherwise required by law. If the date of birth or sex shown on the
application is wrong, the proceeds payable will be adjusted to the amount that
would be provided by the most recent cost of insurance charge at the correct
attained age or sex.
1.7 MAINTENANCE OF SOLVENCY
This provision applies only to values in the Fixed Account.
<PAGE>
If AAL's reserves for any class of Certificates become impaired, You may be
required to make an extra payment. AAL's Board of Directors will determine the
amount of any extra payment based on each member's fair share of the deficiency.
If the payment is not made, it will be charged as a loan against this
Certificate with interest at a rate of 5 percent per year. You may choose an
equivalent reduction in benefits instead of or in combination with the loan.
Any indebtedness and interest charged against this Certificate, or any agreement
for a reduction in benefits, shall have priority over the interest of any owner,
beneficiary, or collateral assignee under this Certificate.
1.8 SUICIDE
The death benefit will not be paid if the insured commits suicide, while sane or
insane, within one year of the issue date. AAL will refund all premiums paid,
without interest. Any Certificate loans and unpaid interest, and any partial
withdrawals will be deducted from the premiums refunded. Also see Section 2.6.
1.9 CHANGE OF CERTIFICATE
You have the right to have substandard ratings and flat extras removed or
reduced, to change from smoker to non-smoker risk class, and to add additional
benefits which are offered by AAL for new flexible premium variable life
insurance Certificates at the time the change is made.. These rights are all
subject to the insured being insurable for the change at the time of the change
under AAL's underwriting guidelines and policies. A written application
providing proof of insurability for the change under AAL's underwriting
guidelines and policies may be required. You have the right to drop additional
benefits without proof of insurability.
Other rights You have to change the Certificate are described elsewhere in the
Certificate.
2. DEATH BENEFIT AND MATURITY
2.1 DEATH BENEFIT
The death benefit payable upon the death of the insured depends on the death
benefit option in effect on the date of the insured's death. The death benefit
option You selected is shown on page 3A.
Any Certificate loan and unpaid interest will be deducted from the death benefit
payable.
<PAGE>
2.2 LEVEL DEATH BENEFIT - OPTION I
The death benefit payable when the insured dies is the larger of:
The specified amount shown on page 3A; or
The cash value on the date of death multiplied by the death benefit factor.
2.3 INCREASING DEATH BENEFIT - OPTION II
The death benefit payable when the insured dies is the larger of:
The specified amount shown on page 3A plus the cash value on the date of death;
or
The cash value on the date of death multiplied by the death benefit factor.
2.4 DEATH BENEFIT OPTION CHANGE
You have the right to change from Level Death Benefit Option I to the Increasing
Death Benefit Option II upon Written Request, if the insured is insurable for
the Increasing Death Benefit Option II according to AAL's underwriting
guidelines and policies. A written application providing proof of insurability
under AAL's guidelines and policies may be required.
If this change is made, the specified amount will be decreased so that it equals
the death benefit less the cash value immediately preceding the effective date
of the change. The decrease in specified amount will be applied in the order
specified in Section 2.7. This change may not be made if it would reduce the
specified amount below $10,000.
You have the right to change from the Increasing Death Benefit, Option II, to
the Level Death Benefit, Option I upon Written Request. If this change is made,
the specified amount will be increased to equal the death benefit in effect
immediately preceding the effective date of the change.
A $25 charge will be deducted from the cash value for each Death Benefit Option
change. This charge will be allocated in the method described in Section 4.2. A
change of Death Benefit Option becomes effective on the date shown on the new
page 3A that is sent to You.
<PAGE>
2.5 DEATH BENEFIT GUARANTEE
Your Certificate is guaranteed not to enter the grace period on a Monthly
Deduction Date if the Death Benefit Guarantee is intact. The Death Benefit
Guarantee will remain intact if, on each Monthly Deduction Date:
1) the Insured's Attained Age is less than 65 or the Certificate is less than 10
years from the Certificate issue date, whichever is later, and
2) premiums paid less withdrawals equals or exceeds required premiums plus the
total Certificate loan.
For this purpose:
premiums paid less withdrawals is the sum of all premiums paid, minus any
partial withdrawals and related charges; and
required premiums plus the total Certificate loan is the Death Benefit Guarantee
Premium, as shown on page 3A, times the number of months since the Certificate
issue date, including the current month, plus the total Certificate loan as of
the Monthly Deduction Date.
Your Death Benefit Guarantee Premium will change each time: 1) the specified
amount is increased or decreased; or 2) riders are added, changed, or
terminated. The new Death Benefit Guarantee Premium will apply from the first
Monthly Deduction Date on or after the date of the change until the next such
change. Your Certificate will have an initial Death Benefit Guarantee Premium
plus an additional Death Benefit Guarantee Premium for each of these changes.
<PAGE>
For each Death Benefit Guarantee Premium there is an associated effective
period. The effective period for the initial Death Benefit Guarantee Premium is
the number of months from the issue date up to the Monthly Deduction Date prior
to the 1st change creating a new Death Benefit Guarantee Premium. For other
Death Benefit Guarantee Premiums, the associated effective period is equal to
the number of months from the first Monthly Deduction Date on or after the date
of the change creating the Death Benefit Guarantee Premium, to the Monthly
Deduction Date prior to the next change creating a new Death Benefit Guarantee
Premium. If there has not been a subsequent change the effective period is equal
to the number of months since the first Monthly Deduction Date on or after the
date of the change, including the current month.
If Your Death Benefit Guarantee Premium has ever changed, the required premiums,
used in determining if the Death Benefit Guarantee remains intact, are equal to
the sum of each Death Benefit Guarantee Premium times the number of months in
its associated effective period.
If on a Monthly Deduction Date, sufficient premiums have not been paid to
maintain the Death Benefit Guarantee, an additional period lasting until two
additional Monthly Deduction Dates have occurred will be allowed for payment of
a premium sufficient to meet the cumulative required premium as outlined above.
Notice of such required premium will be mailed to Your last known address. If
the premium is not paid within this period, the Death Benefit Guarantee
provision will no longer be in effect, and cannot be reinstated.
For any month in which the monthly deduction is being paid by a Waiver of
Monthly Deduction Benefit Rider attached to this contract, the Death Benefit
Guarantee Premium for that month will be zero.
<PAGE>
2.6 INCREASES IN SPECIFIED AMOUNT
You have the right to increase the specified amount at any time on or before the
Certificate Anniversary following the insured's 80th birthday if the insured is
insurable for the increase under AAL's underwriting guidelines and policies. A
written application providing proof of insurability under AAL's underwriting
guidelines and policies may be required.
An increase must be at least $10,000. Proof of insurability may be required and,
if You are not the insured, proof of insurable interest may also be required.
When an increase is approved, it becomes effective on the date shown on the new
page 3A that is sent to You.
The cost of insurance rate for each increase will be based on the sex, age on
the last Certificate Anniversary, and risk class of the insured at the time the
increase takes effect. An increase is not allowed if the risk class of the
insured at time of increase is standard and the risk class of the insured shown
on page 3A is "STANDARD NONSMOKER".
Each increase will be subject to AAL's expense charges in effect at the time of
increase. The expense charges for each increase will be based on the insured's
sex and age on the last Certificate Anniversary and will apply for the number of
months shown on the new page 3A.1. A new set of surrender charges will apply to
each increase in the specified amount. These charges will all be shown on the
new page 3A.1.
AAL will not contest the validity of the increase after it has been in effect
during the lifetime of the insured for two years from the date of increase. Any
contest of the validity of the increase will be limited to statements made in
the application for the increase.
The one year period in the Suicide Exclusion provision will apply to each
increase beginning on the effective date of each increase. The only amount
payable will be a refund of the monthly deductions for the increase.
2.7 DECREASES IN SPECIFIED AMOUNT
You have the right to decrease the specified amount at anytime after this
Certificate has been in effect for one year, if specified amount remaining in
effect is at least $10,000. If either the total premium payments already made or
the cash value exceeds the applicable limit stated in the Internal Revenue Code
regarding the definition of life insurance for the reduced specified amount, AAL
will refund any excess premiums or cash value necessary to comply with the limit
stated in the Internal Revenue Code.
The decrease will be effective on the date the request is received at the home
office. The decrease will be subtracted first from any previous increases in the
specified amount, starting with the most recent, then from the original
specified amount.
A surrender charge will be subtracted from the cash value if a surrender charge
is in effect for that part of the specified amount. The surrender charges are
shown on the Table of Surrender Charges on page 3A.1.
<PAGE>
2.8 DEATH BENEFIT FACTOR
The death benefit factor depends on the age of the insured on the last
Certificate Anniversary before the date of death. The table below shows the
death benefit factor for each age.
Age Factor Age Factor
0-40 2.50 68 1.17
41 2.43 69 1.16
42 2.36 70 1.15
43 2.29 71 1.13
44 2.22 72 1.11
45 2.15 73 1.09
46 2.09 74 1.07
47 2.03 75 1.05
48 1.97 76 1.05
49 1.91 77 1.05
50 1.85 78 1.05
51 1.78 79 1.05
52 1.71 80 1.05
53 1.64 81 1.05
54 1.57 82 1.05
55 1.50 83 1.05
56 1.46 84 1.05
57 1.42 85 1.05
58 1.38 86 1.05
59 1.34 87 1.05
60 1.30 88 1.05
61 1.28 89 1.05
62 1.26 90 1.05
63 1.24 91 1.04
64 1.22 92 1.03
65 1.20 93 1.02
66 1.19 94 1.01
67 1.18 95 & over 1.00
The purpose of the death benefit factor is to help qualify Your Certificate as a
life insurance contract under the Corridor Test in federal tax law.
2.9 MATURITY
AAL will pay You the maturity proceeds if the insured is still living on the
maturity date shown on page 3A. The maturity proceeds will be the greater of
cash value less any loan and unpaid loan interest or the specified amount less
any unpaid loan and loan interest.
<PAGE>
3. PREMIUMS
3.1 WHEN AND WHERE TO PAY PREMIUMS
Premiums may be paid at any time and in any amount, subject to the restrictions
described below. If premium payments are not sufficient to maintain a surrender
value larger than the monthly deduction amount and Your Death Benefit Guarantee
under section 3.6 is not in effect, Your insurance coverage will terminate. Pay
premiums by making Your check payable to Aid Association for Lutherans and
sending it to: Aid Association for Lutherans, 4321 North Ballard Road, Appleton,
Wisconsin 54919. Include Your Certificate number.
3.2 PLANNED PERIODIC PREMIUM
The amount and frequency of the planned periodic premium You have selected are
shown on page 3A. Changes in frequency and increases or decreases in amount of
payments may be made at any time. AAL reserves the right to limit the amount of
any increase.
3.3 NET PREMIUM
The net premium is the premium paid less the percentage of premium expense
charge. The percentage of premium expense charge is shown on page 3A.1.
3.4 NET PREMIUM ALLOCATIONS
Net premiums are allocated to the Subaccounts and Fixed Account according to the
premium allocation percentages You select for this Certificate, except as
otherwise provided below. Each net premium is allocated to a Subaccount in the
form of Accumulation Units. The number of Accumulation Units is determined by
dividing the net premium by the value of an Accumulation Unit, next computed
after AAL receives Your premium.
The initial premium allocation percentages You selected are specified in the
application. If You do not designate premium allocation percentages, the entire
net premium will be allocated to the money market Subaccount. Your first premium
will be allocated as of the end of the Valuation Period during which AAL
approves Your application. All subsequent premiums will be allocated as of the
end of the Valuation Period during which they are received at AAL.
AAL reserves the right to allocate Your premium payments to the money market
Subaccount until the expiration of 15 days from the issue date as shown on page
3. At the end of this period, the cash value of this Certificate will be
allocated according to the premium allocation percentages You specified in the
application.
<PAGE>
Each premium allocation percentage must be a whole percent. The sum of the
premium allocation percentages must be 100%%. AAL reserves the right to adjust
Your allocation to eliminate fractional percentages.
You may change Your premium allocation percentages by sending a Written Request
to AAL. AAL will provide a form for You to use to make this request. The change
will be effective as of the date Your Written Request is received at AAL's
service center. The change will apply to premium payments received at AAL on or
after the effective date of the change.
3.5 ADDITIONAL PREMIUM PAYMENTS
Additional premium payments may be made; however, AAL reserves the right to
limit the number and amount of these additional payments.
3.6 LIMITS ON PREMIUMS
The Internal Revenue Code provides for the exclusion of increases in cash value
and the death benefit from gross income. To qualify for this exclusion, You must
meet the Guideline Premium Limit and the Corridor Test. The Guideline Premium
Limit requires that total premium payments not exceed the limit stated in the
Code. AAL, therefore, will not accept any premium or that part of any premium
payment that would cause this limit to be exceeded. The Corridor Test requires
that the death benefit be greater than or equal to the cash value multiplied by
a factor stated in the Code. AAL, therefore, reserves the right to refuse any
premium which would increase the death benefit because of the requirements of
the Corridor Test.
3.7 CONTINUATION OF INSURANCE COVERAGE
If You stop making premium payments, or payments are not large enough to cover
the monthly deductions, and the Death Benefit Guarantee under Section 2.5 is not
in effect, the insurance coverage provided by this Certificate will continue in
effect until the surrender value is not large enough to pay a monthly deduction.
This Certificate will then terminate at the end of the grace period.
<PAGE>
3.8 GRACE PERIOD
When the Death Benefit Guarantee under Section 2.5 is not in effect, a grace
period will begin on a Monthly Deduction Date if the surrender value is less
than the amount of the monthly deductions. Written notice of the required
premium will be sent to You at least 31 days before this Certificate terminates.
The required premium is the amount of premium needed to cover the next two
monthly deductions. Any surrender value is applied to reduce the premium amount
needed before notice is sent. If the full required payment is not received by
AAL at its home office before the end of the grace period, this Certificate will
terminate on the 61st day after the grace period begins.
When You pay a premium during the grace period, the overdue monthly deductions
are paid first. Any additional premium amount, less the percent of premium
expense charge, is added to the cash value. If the insured dies during the grace
period, any unpaid monthly deductions will be deducted from the death proceeds.
3.9 REINSTATEMENT
You may reinstate this Certificate any time within three years after it has
terminated so long as You did not surrender it for its surrender value. To
reinstate Your Certificate the insured must be insurable for reinstatement at
the time of reinstatement under AAL's underwriting guidelines and policies, and
pay a premium at least equal to:
The reinstated loan amount; plus
Any surrender charge at the time of reinstatement; plus
The first two monthly deduction amounts after reinstatement; less
The cash value at termination; less
Any surrender charge credited back at reinstatement; plus
The new surrender charge taken for any reduction in the specified amount at
reinstatement;
All divided by one minus the current percent of premium expense charge rate.
<PAGE>
The premium paid upon reinstatement will be used first to pay any unpaid monthly
deductions that occurred during the grace period. Your Certificate will then be
reinstated on the date AAL approves Your application for reinstatement.
If You reinstate this Certificate, AAL will not contest the validity of the
reinstated Certificate after it has been in effect during the lifetime of the
insured for two years from the date of reinstatement. After this Certificate has
been in force two years from the issue date, any contest of the validity of the
reinstated Certificate will be limited to statements made in the application for
reinstatement.
4. CERTIFICATE VALUES
4.1 CASH VALUE
The cash value on the issue date of this Certificate is the first net premium
less the monthly deductions for the first month.
On any Monthly Deduction Date after the issue date the cash value is equal to
the sum of the cash values for this Certificate in the Subaccounts and in the
Fixed Account. See section 5 on the Fixed Account and section 6 on the Variable
Account for how cash values are determined.
4.2 MONTHLY DEDUCTIONS
Each month on the Monthly Deduction Date, AAL will deduct from the cash value of
this Certificate the following:
The cost of insurance charge; and
A monthly mortality and expense risk charge; and
The cost of any benefit riders attached to this Certificate; and
Any expense charges in effect.
Allocation Method: Deductions, except for the monthly mortality and expense risk
charge (see 4.6), will be taken from the Subaccounts and Fixed Account according
to the ratio that the cash value in the Subaccount or Fixed Account of this
Certificate bears to the total cash value of this Certificate at the time of
deduction. When doing this calculation the total cash value and the Fixed
Account cash value will be reduced by the total Certificate loan.
<PAGE>
Deductions from a Subaccount results in the cancellation of Accumulation Units
from that Subaccount.
So long as the surrender value is large enough to meet these deductions on the
Monthly Deduction Date or the Death Benefit Guarantee is in effect, this
Certificate will remain in effect.
4.3 COST OF INSURANCE RATES
The cost of insurance rate is based on the sex, age on the last Certificate
Anniversary, and risk class of the insured. Cost of insurance rates are
determined by AAL based on expectations as to future mortality and expense
experience. Any change in these rates will be applied on a uniform basis to all
insureds of the same age, sex and risk class. However, AAL cannot use cost of
insurance rates higher than the annual guaranteed cost of insurance rates shown
in the table on page 3B divided by 1.0032737. The guaranteed cost of insurance
rates are based on certain of the 1980 Commissioner's Standard Ordinary
Mortality Table, age last birthday. The rates and tables used are based on age,
risk class and sex of the insured.
4.4 COST OF INSURANCE CHARGE
The cost of insurance charge is calculated on each Monthly Deduction Date for
the next month. It is equal to the cost of insurance rate multiplied by the
amount of insurance at risk. The amount of insurance at risk is:
The death benefit on the Monthly Deduction Date; less
The cash value on the Monthly Deduction Date times 1.0032737.
4.5 EXPENSE CHARGES
AAL will deduct from the cash value of this Certificate the following expense
charges:
A monthly Certificate fee; and
A monthly expense charge.
A premium expense charge will also be deducted from each premium payment.
All of the above charges and their durations are shown on page 3A.1.
In addition to the above charges, a $25 change fee will be charged for all
Certificate changes described in Section 1.9.
<PAGE>
4.6 MORTALITY AND EXPENSE RISK CHARGES
On each Monthly Deduction Date, AAL will deduct an amount that is a percent of
the total cash value in the Subaccounts of this Certificate as a monthly
mortality and expense risk charge. It is guaranteed not to exceed, on an annual
basis, .90%% of the monthly value of the Subaccounts. This charge will be
deducted until the 15th Certificate Anniversary is reached, at which time the
charge is guaranteed to be at least .5%% less than the current mortality and
expense risk charge in effect for Certificates which have not reached their 15th
Certificate Anniversary.
4.7 SURPLUS REFUNDS
This Certificate will participate in any surplus refunds, declared for this
Certificate, annually by the AAL Board of Directors. Surplus refunds will be
allocated as determined by AAL unless You request payment in cash. Charges were
determined so that AAL does not expect any surplus refund to be declared.
5. FIXED ACCOUNT
5.1 FIXED ACCOUNT
Premiums allocated to the Fixed Account and transfers of cash value from a
Subaccount to the Fixed Account become part of the general account assets of
AAL. The general account includes all of AAL's assets, except those assets
segregated in the Variable Account or any other separate account of AAL.
5.2 INTEREST EARNED ON THE FIXED ACCOUNT CASH VALUE
AAL will credit interest to the Fixed Account cash value on a daily basis. A
current interest rate will be declared periodically by the AAL Board of
Directors and is guaranteed not to change more than quarterly. AAL guarantees
that the rate of interest credited to the Fixed Account will never be less than
4 percent annually.
A lower rate of interest may be credited to the portion of the Fixed Account
cash value that equals the amount of any total Certificate loan, but it will not
be less than 4 percent.
5.3 FIXED ACCOUNT CASH VALUE
On any Valuation Date after the issue date, the Fixed Account cash value is
equal to:
The Fixed Account cash value on the last Valuation Date increased with interest
for each day since the last Valuation Date; plus
<PAGE>
The portion of the net premiums allocated to the Fixed Account and received
since the last Valuation Date increased with interest from the date the premium
was received to the current Valuation Date; plus
The amount of any transfers, less any charge for the transfer, from the
Subaccounts to the Fixed Account, including loan transfers, since the last
Valuation Date increased with interest from the date the transfer was received
to the current Valuation Date; less
The amount of any transfers from the Fixed Account to the Subaccounts since the
last Valuation Date, and the interest that would have been credited from the
date the transfer was made to the current Valuation Date; less
Any portion of any partial withdrawals taken from the Fixed Account and made
since the last Valuation Date, including any charge for the withdrawal, and the
interest that would have been credited from the date of the partial withdrawal
to the current Valuation Date; less
Any portion of any surrender charges taken from the Fixed Account resulting from
any decreases in specified amount since the last Valuation Date, and the
interest that would have been credited from the date of the decrease to the
current Valuation Date; less
The amount of any death benefit option change charge taken from the Fixed
Account resulting from any change in death benefit option since the last
Valuation Date, and the interest that would have been credited from the date of
the change to the current Valuation Date; less
Any portion of any Certificate change charge taken from the Fixed Account and
the interest that would have been credited from the date of the change to the
current Valuation Date; less
If the Valuation Date is a Monthly Deduction Date, the monthly deductions
allocated to the Fixed Account for that month.
No interest is credited for February 29th.
<PAGE>
5.4 BASIS OF COMPUTATIONS
Minimum guaranteed cash values for the Fixed Account are based on the
Commissioner's 1980 Standard Ordinary Mortality Table, age last birthday, with
interest at the rate of 4 percent.
These values equal or exceed the minimum values required by law. A detailed
statement of how AAL calculates cash values for this Certificate has been filed
with the insurance department of the state or district where this Certificate
was delivered.
6. VARIABLE ACCOUNT
6.1 VARIABLE ACCOUNT
The AAL Variable Life Account is a separate investment account established by
AAL under Wisconsin law. The Variable Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940.
AAL uses the assets of the Variable Account to buy shares in the AAL Variable
Product Series Fund, Inc. The Fund is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a diversified
open-end management investment company. The Variable Account has Subaccounts
which are invested in corresponding specific portfolios of the Fund. These
Subaccounts and portfolios are shown on page 3A.
AAL, consistent with then applicable law, may:
Combine one separate account with another separate account, operate the separate
account as a management investment company, deregister the separate account as
an investment company or modify the Variable Account;
Add, delete, combine or modify Subaccounts;
Make any new Subaccount available to You on a basis to be determined by AAL.
Invest the assets of any new Subaccount in a new portfolio of the Fund, a
different investment company or in any other investment; and
<PAGE>
AAL owns the assets of the Variable Account and keeps them legally segregated
from the assets of the general account. The assets of the Variable Account
shall, at the time during the year that adjustments in the reserves are made,
have a value at least equal to the reserves and other contract liabilities with
respect to the Variable Account and, at all other times, shall have a value
approximately equal to or in excess of such reserves and liabilities. The assets
of the Variable Account shall not be chargeable with liabilities arising out of
any other business AAL may conduct, except to the extent that the assets of the
Variable Account exceed the reserves and other contract liabilities of the
Variable Account arising under the Certificates supported by the Variable
Account.
Income, and gains and losses, whether or not realized, from the assets in each
Subaccount are credited to or charged against that Subaccount without regard to
any of AAL's other income, gains or losses. The value of the assets in the
Variable Account is determined at the end of each Valuation Date.
6.2 VARIABLE SUBACCOUNT CASH VALUES
The cash value for this Certificate in each Subaccount as of a Valuation Date is
equal to:
The number of Accumulation Units for this Certificate in that Subaccount
multiplied by the Accumulation Unit Value for that Subaccount.
The cash value for any day that is not a Valuation Date will be determined as of
the next Valuation Date.
6.3 NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units for this Certificate in any Subaccount may
increase or decrease at the end of each Valuation Period depending on the
transactions that occur in the Subaccount during the Valuation Period. When
transactions occur, the actual dollar amounts of the transactions are converted
to Accumulation Units. The number of Accumulation Units for a transaction in a
Subaccount is determined by dividing the dollar amount of the transaction by the
Accumulation Unit Value of the Subaccount at the end of the Valuation Period
during which the transaction occurs.
The number of Accumulation Units in a Subaccount increases when the following
transactions occur during the Valuation Period:
Net premiums are allocated to the Subaccount; or
<PAGE>
Cash value is transferred to the Subaccount from another Subaccount or from the
Fixed Account.
The number of Accumulation Units in a Subaccount decreases when the following
transactions occur during the Valuation Period:
Cash value is transferred from the Subaccount to another Subaccount or to the
Fixed Account, including loan transfers;
Partial withdrawals and partial withdrawal charges are taken from the
Subaccount; or
Monthly deductions or transfer charges are taken from the Subaccount.
A charge for a Death Benefit Option change is allocated to the Subaccount.
A charge for a Certificate change is allocated to the Subaccount.
Surrender charges are allocated to the Subaccount.
6.4 ACCUMULATION UNIT VALUE
For each Subaccount, the initial Accumulation Unit Value was set when the
Subaccount was established. The Accumulation Unit Value may increase or decrease
from one Valuation Period to the next.
The Accumulation Unit Value for a Subaccount for any Valuation Period is equal
to:
The Net Asset Value of the corresponding Fund portfolio at the end of the
Valuation Period;
Plus the amount of any dividend, capital gain or other distribution made by the
Fund portfolio if the "ex-dividend" date occurs during the Valuation Period;
Plus or minus any cumulative credit or charge for taxes reserved which is
determined by AAL to have resulted from the operation of the portfolio;
Divided by the total number of Accumulation Units held in the Subaccount at the
end of the Valuation Period before any of the transactions referred to in
Section 6.3 have occurred.
<PAGE>
6.5 TRANSFER OF CASH VALUES
At any time, You may transfer all or a portion of the cash value of this
Certificate among the Subaccounts and the Fixed Account by sending a Written
Request to AAL. AAL will provide a form for You to use. The transfer will be
effective as of the end of the Valuation Period during which Your Written
Request is received at AAL. Transfers are subject to the following:
The total dollar amount of any transfer cannot be less than the smaller of $500
or the cash value of the Subaccount or Fixed Account from which the transfer is
being made at the time of transfer.
The dollar amount of any transfer to a Subaccount or the Fixed Account may not
be less than $50.
You may make 12 transfers from one or more Subaccounts to one or more other
Subaccounts or the Fixed Account in each Certificate year without charge. AAL
will charge $25 per transfer for each transfer in excess of the 12th in each
Certificate year, which will be applied against the transfer amount prior to the
transfer being allocated as You direct.
You may make only 1 transfer from the Fixed Account in each Certificate year.
The transfer may not exceed the greater of $500 or 25%% of the cash value of the
Fixed Account at the time of transfer. This transfer will not be subject to a
transfer charge.
AAL may delay making transfers subject to the same conditions described in
Section 8.5.
6.6 CHANGE OF PORTFOLIO OR INVESTMENT POLICY
AAL may determine that a portfolio of a Fund is no longer desirable for
investment by a Subaccount or the shares of a portfolio are no longer available
for investment. If that occurs, AAL has the right to substitute another
portfolio of the Fund, or to invest in another investment company. This change
would be subject to any required prior approval by the Securities and Exchange
Commission and the insurance supervisory officials in the state where this
Certificate is delivered.
<PAGE>
Any change in the investment policy of the Variable Account will be subject to
any required prior approval by the insurance supervisory officials of the state
of Wisconsin. AAL will notify You of any material change in investment policy.
7. CERTIFICATE LOANS
7.1 LOANS
Using the value of this Certificate as security, You may obtain a loan. The most
You may borrow is 92 percent of the surrender value. AAL has the right to delay
payment of the loan as described under section 8.5.
You may choose which account(s) the loan is to be taken from among the
Subaccounts and Fixed Account. If You do not choose, the loan will be allocated
to the Subaccounts according to the method described in section 4.2. Cash value
will be transferred to the Fixed Account from each Subaccount equal to the
allocation of the loan taken from that Subaccount. On each Monthly Deduction
Date the excess of the total Certificate loan over the Fixed Account cash value
will be transferred from the Subaccounts to the Fixed Account. The cash value
transferred will be allocated among the Subaccounts according to the method
described in section 4.2.
7.2 LOAN INTEREST
The annual interest rate charged to a loan prior to the 15th Certificate
Anniversary is 8 percent. Once Certificate Anniversary 15 is reached AAL will
charge 7.25%% on loans. Interest accrues daily from the loan issue date.
A lower rate of interest may be credited to the portion of the Fixed Account
cash value that equals the amount of any outstanding Certificate loan.
7.3 TOTAL CERTIFICATE LOAN
The total Certificate loan is equal to the loan principal plus any accrued
interest.
7.4 LOAN REPAYMENT
You may repay a loan in part or in full at any time. When You send in a payment
for Your loan, be sure to state that it is a loan payment.
<PAGE>
7.5 TERMINATION DUE TO EXCESS LOAN
If the total Certificate loan ever equals or exceeds the cash value minus any
surrender charges, and the Death Benefit Guarantee under section 2.5 is not in
effect, this Certificate will terminate without value. Written notice will be
sent to You and any assignee at the last known address. You will have 31 days
from the date written notice is mailed to make the required payment to keep this
Certificate in force.
SURRENDER & WITHDRAWALS
8.1 SURRENDER VALUE
The surrender value is the cash value minus:
Any surrender charges; and
Any loans and unpaid loan interest.
8.2 SURRENDER CHARGE
A surrender charge will be subtracted from the cash value if this Certificate is
surrendered during the surrender charge period, or You decrease the specified
amount. The surrender charges are shown on the Table of Surrender Charges on
page 3A.1.
8.3 FULL SURRENDER
You may surrender this Certificate for its full surrender value by sending a
Written Request to AAL. The surrender will be effective as of the date the
request is received at the home office and insurance coverage will end on that
day.
AAL has the right to delay paying the cash value as described under Section 8.5.
8.4 PARTIAL WITHDRAWALS
You may withdraw part of the surrender value of this Certificate by sending a
Written Request to the home office. A $25 charge will be deducted from the cash
value for each partial withdrawal after the first one in any one Certificate
year.
A partial withdrawal:
Will reduce the cash value by the amount of the partial withdrawal;
Will reduce the specified amount by the amount of the partial withdrawal if
Death Benefit Option I is in effect except for the part of the withdrawal which
is equal to (a) minus (b), if positive, where:
<PAGE>
a)is the cash value as of the date of the partial withdrawal, before the partial
withdrawal is taken, multiplied by the death benefit factor; and
b)is the specified amount before the partial withdrawal is taken;
A partial withdrawal may not be made if the specified amount would be reduced
below the minimum allowed by AAL.
You may choose how the partial withdrawal will be taken from among the
Subaccounts, except that the Fixed Account cash value may not be reduced below
the total Certificate loan. If You do not choose, the partial withdrawal will be
taken from the Subaccounts according to the method described in 4.2.
AAL has the right to delay paying the amount withdrawn as described under
Section 8.5.
8.5 DELAY OF PAYMENT
Payment of any withdrawal value, cash surrender value, or loan value will
normally be made within 7 days after Your Written Request is received at AAL.
However, AAL may delay this payment or any other type of payment from the
Variable Account for any period when:
The New York Stock Exchange is closed for trading other than customary weekend
and holiday closings;
Trading on the New York Stock Exchange is restricted;
An emergency exists as a result of which it is not reasonably practicable to
dispose of securities held in the Variable Account or to fairly determine their
value; or
The Securities and Exchange Commission by order permits the delay for the
protection of security holders.
AAL may delay payment of any withdrawal value, cash surrender value or loan
value from the Fixed Account for up to 6 months after Your Written Request is
received at AAL.
<PAGE>
9. CERTIFICATE REPORTS
9.1 ANNUAL REPORT
At least once each Certificate year, AAL will send You a report concerning the
current status of Your Certificate. There is no charge for this report.
9.2 ILLUSTRATIVE REPORT
Upon Your request, AAL will send You an illustration of future values for this
Certificate. AAL may charge a reasonable fee for each illustration requested.
10. MEMBERSHIP, OWNERSHIP, ASSIGNMENT AND BENEFICIARY
10.1 MEMBERSHIP
The person who applied for this Certificate and is listed as the member on the
application for insurance is a benefit member of AAL. The rights and benefits of
membership are set forth in the Articles of Incorporation and Bylaws of AAL.
Membership cannot be transferred.
10.2 OWNERSHIP
The owner of this Certificate is the person listed as owner on the application
for insurance, unless ownership has been transferred.
If You are not the insured, You should name a successor owner who will become
the owner if You die before the insured. If You die before the insured and there
is no successor owner named, ownership of this Certificate will pass to Your
estate.
10.3 BENEFICIARY
The beneficiary is the person, entity or organization named to receive the death
benefit after the insured dies. The Bylaws of AAL list those eligible to be
beneficiaries. Beneficiaries are designated as first, second and third class.
You may name more than one person or organization in the same class.
Unless You indicate otherwise, the proceeds payable when the insured dies will
be paid as follows:
Equally to the beneficiaries in the first class who survive the insured. If none
in the first class survive the insured, then;
Equally to the beneficiaries in the second class who survive the insured. If
none in the second class survive the insured, then;
Equally to the beneficiaries in the third class who survive the insured.
<PAGE>
If no beneficiary has been named or survives the insured, AAL will pay the
proceeds as follows:
To Your estate if You are the insured; or
To You if You are not the insured.
If any beneficiary dies at the same time as the insured, or within 15 days after
the insured dies but before the death benefits are paid, AAL will pay the
proceeds as though that beneficiary had died before the insured.
10.4 COLLATERAL ASSIGNMENT
You may assign this Certificate as collateral security for a loan or other
obligation. This may limit Your rights to the cash value and the beneficiary's
rights to the proceeds.
The assignments must be in writing and filed at our home office. AAL assumes no
responsibility as to the validity of any assignment. AAL is not liable for any
payment made or any other action taken on this Certificate before the assignment
was recorded at our home office.
Any Certificate loan obtained before an assignment is recorded at our home
office has priority over the assignment.
10.5 CHANGE OF OWNER OR BENEFICIARY
During the insured's lifetime, You may transfer ownership of this Certificate or
change the beneficiary by sending a signed Written Request to the home office.
The transfer or change must be approved by AAL before it is valid. If approved,
it will be effective on the date it was signed or on the date it was received at
the home office if no date appears on the request. AAL will provide a form for
You to use.
The change will not affect any payment made or action taken by AAL before the
change was received and approved at the home office.
11. FILING A DEATH CLAIM
11.1 NOTICE OF DEATH
Written notice of death must be given to AAL at its home office. Notice should
include the insured's name and the Certificate number. Help may be obtained
through an AAL district representative.
<PAGE>
11.2 CLAIM FORMS
A claim form will be sent, upon receiving the death claim notice. Complete the
claim form and send it to the home office along with a certified copy of the
death Certificate. Processing of the claim will begin as soon as these items are
received.
12. SETTLEMENT OPTIONS
12.1 OWNER--CHOOSING A SETTLEMENT OPTION
All or part of the proceeds from death, maturity or surrender may be applied to
one or more of the settlement options described below in place of a lump sum
payment.
You may choose a settlement option while the insured is alive.
The minimum amount that may be applied to any one settlement option is $1,000.
12.2 BENEFICIARY--CHOOSING A SETTLEMENT OPTION FOR THE DEATH PROCEEDS
The beneficiary may choose to receive the death proceeds in a lump sum payment
or under any settlement option, unless the owner has chosen a mandatory method
of payment in the beneficiary designation that does not allow the beneficiary to
change it. AAL will provide a form to use. On lump sum payments, we will pay
interest on the death proceeds at a rate required by law from the date of the
insured's death until the date of payment.
12.3 SETTLEMENT OPTIONS
The minimum amount that may be applied to any one settlement option is $1,000.
Payments may be received on a monthly, quarterly, semiannual, or annual basis
provided each payment is at least $25. The first payment under an option will be
made on the first business day following the end of the payment interval chosen.
The settlement options are as follows:
OPTION 1 - INTEREST
The proceeds are left with AAL to earn interest. Interest earned may be paid in
cash at regular intervals or may be left with AAL to accumulate with interest.
All or part of these proceeds may be withdrawn upon request.
OPTION 2 - SPECIFIED AMOUNT INCOME
The proceeds are used to make payments at regular intervals for a specified
amount until the proceeds with interest have been paid. The payment period may
not exceed 30 years. The unpaid proceeds may be withdrawn upon request.
<PAGE>
OPTION 3 - FIXED PERIOD INCOME
The proceeds are used to make payments at regular intervals for a fixed number
of years, not to exceed 30 years. The unpaid proceeds may be withdrawn upon
request. Guaranteed payments are shown in the table below.
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
Number Number
of Monthly of Monthly
Years Payment Years Payment
2 $42.96 17 $6.24
3 $29.06 18 $5.98
4 $22.12 19 $5.74
5 $17.95 20 $5.53
6 $15.18 21 $5.33
7 $13.20 22 $5.16
8 $11.71 23 $5.00
9 $10.56 24 $4.85
10 $ 9.64 25 $4.72
11 $ 8.88 26 $4.60
12 $ 8.26 27 $4.49
13 $ 7.73 28 $4.38
14 $ 7.28 29 $4.28
15 $ 6.89 30 $4.19
16 $ 6.54
OPTION 4 - LIFE INCOME WITH GUARANTEED PAYMENT PERIOD
The proceeds are used to make payments at regular intervals for the lifetime of
the payee. If the payee dies during the guaranteed period, payments will be
continued to the end of that period. A period of 10 or 20 years may be elected.
The amount of the payments depends on the age and sex of the payee at the time
AAL issues the settlement agreement. Guaranteed payments are shown in the table
below.
<PAGE>
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
10 YEAR 20 YEAR
GUARANTEED GUARANTEED
PAYMENT PAYMENT
PERIOD PERIOD
Age Male Female Male Female
50 $4.53 $4.19 $4.38 $4.13
51 $4.61 $4.26 $4.44 $4.18
52 $4.69 $4.32 $4.50 $4.24
53 $4.77 $4.39 $4.56 $4.29
54 $4.85 $4.45 $4.62 $4.35
55 $4.93 $4.52 $4.68 $4.40
56 $5.03 $4.61 $4.74 $4.46
57 $5.14 $4.70 $4.80 $4.53
58 $5.24 $4.78 $4.87 $4.59
59 $5.35 $4.87 $4.93 $4.66
60 $5.45 $4.96 $4.99 $4.72
61 $5.58 $5.07 $5.05 $4.79
62 $5.71 $5.18 $5.11 $4.86
63 $5.85 $5.30 $5.18 $4.93
64 $5.98 $5.41 $5.24 $5.00
65 $6.11 $5.52 $5.30 $5.07
66 $6.27 $5.67 $5.35 $5.14
67 $6.43 $5.82 $5.40 $5.20
68 $6.59 $5.96 $5.44 $5.27
69 $6.75 $6.11 $5.49 $5.33
70 $6.91 $6.26 $5.54 $5.40
71 $7.09 $6.44 $5.57 $5.44
72 $7.26 $6.63 $5.60 $5.49
73 $7.44 $6.81 $5.62 $5.53
74 $7.61 $7.00 $5.65 $5.58
75 $7.79 $7.18 $5.68 $5.62
76 $7.95 $7.38 $5.69 $5.64
77 $8.12 $7.58 $5.71 $5.66
78 $8.28 $7.78 $5.72 $5.69
79 $8.45 $7.98 $5.74 $5.71
80 $8.61 $8.18 $5.75 $5.73
<PAGE>
OPTION 5 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENT PERIOD
The proceeds are used to make payments at regular intervals for the lifetime of
both payees. Upon the death of one of the payees, payments will be continued for
the lifetime of the surviving payee. If both payees die during the guaranteed
period, payments will be continued to the end of that period. A period of 10 or
20 years may be elected. The amount of the payments depends upon the age and sex
of the payees at the time AAL issues the settlement agreement. Guaranteed
payments are shown in the tables below.
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
PAYMENTS GUARANTEED FOR 10 YEARS
Male Female Ages
Ages 50 55 60 65 70 75 80
- - - -------------------------------------------------------------------------------
50 $3.91 $4.05 $4.18 $4.29 $4.38 $4.45 $4.49
55 $3.99 $4.17 $4.36 $4.53 $4.67 $4.78 $4.86
60 $4.06 $4.28 $4.53 $4.77 $5.00 $5.19 $5.32
65 $4.11 $4.37 $4.67 $5.00 $5.34 $5.64 $5.87
70 $4.14 $4.43 $4.79 $5.20 $5.66 $6.11 $6.48
75 $4.17 $4.48 $4.86 $5.34 $5.91 $6.52 $7.07
80 $4.18 $4.50 $4.91 $5.44 $6.09 $6.83 $7.56
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
PAYMENTS GUARANTEED FOR 20 YEARS
Male Female Ages
Ages 50 55 60 65 70 75 80
- - - -------------------------------------------------------------------------------
50 $3.90 $4.03 $4.16 $4.25 $4.32 $4.36 $4.38
55 $3.98 $4.15 $4.32 $4.47 $4.58 $4.64 $4.67
60 $4.04 $4.25 $4.47 $4.68 $4.84 $4.94 $4.98
65 $4.08 $4.32 $4.59 $4.85 $5.07 $5.21 $5.28
70 $4.11 $4.37 $4.67 $4.97 $5.24 $5.42 $5.50
75 $4.12 $4.39 $4.70 $5.04 $5.34 $5.55 $5.64
80 $4.12 $4.40 $4.72 $5.07 $5.38 $5.60 $5.71
OTHER OPTIONS
AAL also has other settlement options which may be chosen. Information about
these options may be obtained from an AAL district representative or the home
office.
<PAGE>
12.4 GUARANTEED INTEREST RATE ON SETTLEMENT OPTIONS
Options 1, 2, and 3 are based on a guaranteed effective annual interest rate of
3%%. Options 4 and 5 are based on a guaranteed effective annual interest rate of
3 1/2%% using the "1983 Table a" annuitant mortality table.
12.5 SETTLEMENT AGREEMENT
AAL will issue a separate settlement agreement whenever proceeds are applied to
any settlement option. The settlement agreement will be issued to the payee. The
payee is the person named to receive the payments.
If the payee dies on or after the settlement agreement commencement date and
before the entire interest in the settlement agreement has been paid, the
remaining portion of such interest will be paid at least as rapidly as under the
method of payment in effect as of the date of the payee's death.
<PAGE>
AID ASSOCIATION
FOR LUTHERANS
A FRATERNAL BENEFIT SOCIETY
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE CERTIFICATE
Death benefit payable at death of insured before maturity date Maturity proceeds
payable on maturity date Adjustable death benefit Flexible premiums payable
during lifetime of insured until maturity date Death benefit guarantee upon
payment of Death Benefit Guarantee Premiums Return on cash value based on the
investment options selected
The amount and duration of the death benefit of this Certificate may increase or
decrease as described herein depending on the investment experience of the
Subaccounts.
A death benefit guarantee is provided until the later of 10 years from the issue
date or the Insured's Attained Age 65 if minimum monthly premiums are paid as
defined in this Certificate.
The cash value of this Certificate may increase or decrease daily depending on
the investment experience of the Subaccounts. There is no guaranteed minimum
cash value.
This is a Certificate of membership and flexible premium variable life
insurance. It is a legal contract between You and Aid Association for Lutherans
(AAL). It is issued in return for the application and the payment of the first
premium.
This Certificate provides insurance on the life of the person named above. AAL
will pay the death benefits to the beneficiary when the insured dies before the
maturity date if this Certificate is still in effect at the time of death. AAL
will pay the owner the maturity proceeds if the insured is still living on the
maturity date and the Certificate is still in effect.
NOTICE OF TEN DAY RIGHT TO
CANCEL CERTIFICATE
READ THIS CERTIFICATE CAREFULLY. Within 10 days after You first receive this
Certificate, You may cancel it for any reason. To cancel, the Certificate must
be delivered or mailed with a Written Request to Your AAL district
representative or the home office. If You return (cancel) the Certificate, this
Certificate shall be void from the beginning and AAL will pay a refund of: (1)
the difference between payments made and amounts allocated to the Variable
Account, plus (2) the value of the amount allocated to the Variable Account as
of the date the returned Certificate is received by us, plus, (3) any fees
imposed on the amounts allocated to the Variable Account. If state law does not
permit such a refund, then the refund will equal premiums paid, without
interest. Refunds will usually occur within seven days of notice of
cancellation, although a refund of premiums paid by check may be delayed until
the check clears your bank.
Signed for Aid Association for Lutherans at the home office, 4321 North Ballard
Road, Appleton, Wisconsin 54919.
<PAGE>
TABLE OF CERTIFICATE PROVISIONS
1. General Provisions And Exclusions
1.1 Definitions
1.2 Entire Contract
1.3 Statements in the Application
1.4 Change of Contract
1.5 Incontestability
1.6 Misstatement of Age or Sex
1.7 Maintenance of Solvency
1.8 Suicide
1.9 Change of Certificate
2. Death Benefit and Maturity
2.1 Death Benefit
2.2 Level Death Benefit-Option I
2.3 Increasing Death Benefit-Option II
2.4 Death Benefit Option Change
2.5 Death Benefit Guarantee
2.6 Increases in Specified Amount
2.7 Decreases in Specified Amount
2.8 Death Benefit Factor
2.9 Maturity
3. Premiums
3.1 When and Where to Pay Premiums
3.2 Planned Periodic Premium
3.3 Net Premium
3.4 Net Premium Allocations
3.5 Additional Premium Payments
3.6 Limits on Premiums
3.7 Continuation of Insurance
3.8 Grace Period 3.9 Reinstatement
4. Certificate Values
4.1 Cash Value
4.2 Monthly Deductions
4.3 Cost of Insurance Rates
4.4 Cost of Insurance Charge
4.5 Expense Charges
4.6 Monthly Mortality And Expense Risk
Charge
4.7 Surplus Refunds
5. Fixed Account
5.1 Fixed Account
5.2 Interest Earned on The Fixed Account
Cash Value
5.3 Fixed Account Cash Value
5.4 Basis of Computations
6. Variable Account
6.1 Variable Account
6.2 Variable Subaccount Cash Values
6.3 Number of Accumulation Units
6.4 Accumulation Unit Value
6.5 Transfer of Accumulated Values
6.6 Change of Portfolio or Investment
Policy
<PAGE>
7. Certificate Loans
7.1 Loans
7.2 Loan Interest
7.3 Total Loan
7.4 Loan Repayment
7.5 Termination Due to Excess Loan
8. Surrender & Withdrawal
8.1 Surrender Value
8.2 Surrender Charge
8.3 Full Surrender
8.4 Partial Withdrawals
8.5 Delay of Payment
9. Certificate Reports
9.1 Annual Report
9.2 Illustrative Report
10. Membership, Ownership, Assignment
And Beneficiary
10.1 Membership
10.2 Ownership
10.3 Beneficiary
10.4 Collateral Assignment
10.5 Change of Owner or Beneficiary
11. Filing a Death Claim
11.1 Notice of Death
11.2 Claim Forms
12. Settlement Options
12.1 Owner--Choosing A Settlement Option
12.2 Beneficiary--Changing A Settlement
Option for the Death Proceeds
12.3 Settlement Options
12.4 Guaranteed Interest Rate on Settlement
Options
12.5 Settlement Agreement
Any benefit riders and a copy of the application follow Section 12.
<PAGE>
1. GENERAL PROVISIONS AND EXCLUSIONS
1.1 DEFINITIONS
"AAL" means Aid Association for Lutherans.
"Accumulation Unit" is a unit of measure used to calculate the cash value in
each Subaccount of the Variable Account.
"Accumulation Unit Value" on any Valuation Date, is the value of the
Accumulation Units of each Subaccount of the Variable Account.
"Certificate Anniversary" means the same date in each succeeding year as the
Certificate Issue Date.
"Death Benefit Guarantee Premium" is the minimum monthly premium required to
keep Your particular Certificate's Death Benefit Guarantee intact.
"Fixed Account" is an investment option that credits an interest rate. The Fixed
Account is part of AAL's general account which includes all of AAL's assets
other than those in any separate account of AAL.
"Fund" means the AAL Variable Product Series Fund, Inc. The Fund has portfolios
that correspond to each of the Subaccounts of the Variable Account. The current
portfolios are shown on page 3A.
"Insured's Attained Age" is not the insured's actual current age, but is the
issue age shown on page 3A plus the number of Certificate anniversaries that
have passed since the issue date of this Certificate.
"Monthly Deduction Date" is the day, each month, on which monthly charges are
taken from the cash value. It occurs each month on the Valuation Date, on or
preceding the day of the month which is the same day of the month on which the
Certificate was issued.
"Net Asset Value" means the unit of valuation for a Fund portfolio as computed
for a Valuation Period and described in such Fund's prospectus.
"Subaccount" means a subdivision of the Variable Account. Each Subaccount
invests exclusively in the shares of a corresponding portfolio of the Fund. The
current Subaccounts are shown on page 3.
"Valuation Date" means any day that both the New York Stock Exchange is open for
regular trading and AAL is open for business.
<PAGE>
"Valuation Period" means the period of time from the end of one Valuation Date
to the end of the next Valuation Date.
"Variable Account" means the AAL Variable Life Account I. It is a separate
account of AAL.
"Written Request" means a Written Request signed by You that is satisfactory in
form and content to AAL.
"You" or "Your" mean the owner of this Certificate.
1.2 ENTIRE CONTRACT
The entire contract between You and AAL is made up of:
This Certificate including any attached riders, endorsements or amendments;
The attached application, including any applications for increase in the
specified amount; and
The AAL Articles of Incorporation and Bylaws which are in force on the issue
date of this Certificate.
1.3 STATEMENTS IN THE APPLICATION
Statements made in the application will be treated as representations and not
warranties. No statement will be used by AAL to void the contract or to deny a
claim unless it appears in the application.
1.4 CHANGE OF CONTRACT
No representative of AAL except the president or the secretary may change any
part of this Certificate on behalf of AAL.
1.5 INCONTESTABILITY
AAL will not contest the validity of this Certificate after it has been in
effect during the lifetime of the insured for two years from the issue date.
Also see Sections 2.6 and 3.9.
1.6 MISSTATEMENT OF AGE OR SEX
The values of this Certificate are based on the insured's age and sex, except
where otherwise required by law. If the date of birth or sex shown on the
application is wrong, the proceeds payable will be adjusted to the amount that
would be provided by the most recent cost of insurance charge at the correct
attained age or sex.
1.7 MAINTENANCE OF SOLVENCY
This provision applies only to values in the Fixed Account.
<PAGE>
If AAL's reserves for any class of Certificates become impaired, You may be
required to make an extra payment. AAL's Board of Directors will determine the
amount of any extra payment based on each member's fair share of the deficiency.
If the payment is not made, it will be charged as a loan against this
Certificate with interest at a rate of 5 percent per year. You may choose an
equivalent reduction in benefits instead of or in combination with the loan.
Any indebtedness and interest charged against this Certificate, or any agreement
for a reduction in benefits, shall have priority over the interest of any owner,
beneficiary, or collateral assignee under this Certificate.
1.8 SUICIDE
The death benefit will not be paid if the insured commits suicide, while sane or
insane, within one year of the issue date. AAL will refund all premiums paid,
without interest. Any Certificate loans and unpaid interest, and any partial
withdrawals will be deducted from the premiums refunded. Also see Section 2.6.
1.9 CHANGE OF CERTIFICATE
You have the right to have substandard ratings and flat extras removed or
reduced, to change from smoker to non-smoker risk class and to add additional
benefits which are offered by AAL for new flexible premium variable life
insurance certificates at the time the change is made. These rights are all
subject to the insured being eligible for the change at the time of the change
under AAL's underwriting guidelines and policies. A written application
providing proof of insurability for the change under AAL's underwriting
guidelines and policies may be required. You have to right to drop additional
benefits without proof of insurablility.
Other rights You have to change the Certificate are described elsewhere in the
Certificate.
2. DEATH BENEFIT AND MATURITY
2.1 DEATH BENEFIT
The death benefit payable upon the death of the insured depends on the death
benefit option in effect on the date of the insured's death. The death benefit
option You selected is shown on page 3A.
Any Certificate loan and unpaid interest will be deducted from the death benefit
payable.
<PAGE>
2.2 LEVEL DEATH BENEFIT - OPTION I
The death benefit payable when the insured dies is the larger of:
The specified amount shown on page 3A; or
The cash value on the date of death multiplied by the death benefit factor.
2.3 INCREASING DEATH BENEFIT - OPTION II
The death benefit payable when the insured dies is the larger of:
The specified amount shown on page 3A plus the cash value on the date of death;
or
The cash value on the date of death multiplied by the death benefit factor.
2.4 DEATH BENEFIT OPTION CHANGE
You have the right to change from Level Death Benefit Option I to the Increasing
Death Benefit Option II upon Written Request, if the insured is insurable for
the Increasing Death Benefit Option II according to AAL's underwriting
guidelines and policies. A written application providing proof of insurability
under AAL's guidelines and policies may be required.
If this change is made, the specified amount will be decreased so that it equals
the death benefit less the cash value immediately preceding the effective date
of the change. The decrease in specified amount will be applied in the order
specified in Section 2.7. This change may not be made if it would reduce the
specified amount below $10,000.
You have the right to change from the Increasing Death Benefit, Option II, to
the Level Death Benefit, Option I upon Written Request. If this change is made,
the specified amount will be increased to equal the death benefit in effect
immediately preceding the effective date of the change.
A $25 charge will be deducted from the cash value for each Death Benefit Option
change. This charge will be allocated in the method described in Section 4.2. A
change of Death Benefit Option becomes effective on the date shown on the new
page 3A that is sent to You.
<PAGE>
2.5 DEATH BENEFIT GUARANTEE
Your Certificate is guaranteed not to enter the grace period on a Monthly
Deduction Date if the Death Benefit Guarantee is intact. The Death Benefit
Guarantee will remain intact if, on each Monthly Deduction Date:
1) the Insured's Attained Age is less than 65 or the Certificate is less than 10
years from the Certificate issue date, whichever is later, and
2) premiums paid less withdrawals equals or exceeds required premiums plus the
total Certificate loan.
For this purpose:
premiums paid less withdrawals is the sum of all premiums paid, minus any
partial withdrawals and related charges; and
required premiums plus the total Certificate loan is the Death Benefit Guarantee
Premium, as shown on page 3A, times the number of months since the Certificate
issue date, including the current month, plus the total Certificate loan as of
the Monthly Deduction Date.
Your Death Benefit Guarantee Premium will change each time: 1) the specified
amount is increased or decreased; or 2) riders are added, changed, or
terminated. The new Death Benefit Guarantee Premium will apply from the first
Monthly Deduction Date on or after the date of the change until the next such
change. Your Certificate will have an initial Death Benefit Guarantee Premium
plus an additional Death Benefit Guarantee Premium for each of these changes.
<PAGE>
For each Death Benefit Guarantee Premium there is an associated effective
period. The effective period for the initial Death Benefit Guarantee Premium is
the number of months from the issue date up to the Monthly Deduction Date prior
to the 1st change creating a new Death Benefit Guarantee Premium. For other
Death Benefit Guarantee Premiums, the associated effective period is equal to
the number of months from the first Monthly Deduction Date on or after the date
of the change creating the Death Benefit Guarantee Premium, to the Monthly
Deduction Date prior to the next change creating a new Death Benefit Guarantee
Premium. If there has not been a subsequent change the effective period is equal
to the number of months since the first Monthly Deduction Date on or after the
date of the change, including the current month.
If Your Death Benefit Guarantee Premium has ever changed, the required premiums,
used in determining if the Death Benefit Guarantee remains intact, are equal to
the sum of each Death Benefit Guarantee Premium times the number of months in
its associated effective period.
If on a Monthly Deduction Date, sufficient premiums have not been paid to
maintain the Death Benefit Guarantee, an additional period lasting until two
additional Monthly Deduction Dates have occurred will be allowed for payment of
a premium sufficient to meet the cumulative required premium as outlined above.
Notice of such required premium will be mailed to Your last known address. If
the premium is not paid within this period, the Death Benefit Guarantee
provision will no longer be in effect, and cannot be reinstated.
For any month in which the monthly deduction is being paid by a Waiver of
Monthly Deduction Benefit Rider attached to this contract, the Death Benefit
Guarantee Premium for that month will be zero.
<PAGE>
2.6 INCREASES IN SPECIFIED AMOUNT
You have the right to increase the specified amount at any time on or before the
Certificate Anniversary following the insured's 80th birthday if the insured is
insurable for the increase under AAL's underwriting guidelines and policies. A
written application providing proof of insurability under AAL's underwriting
guidelines and policies may be required.
An increase must be at least $10,000. Proof of insurability may be required and,
if You are not the insured, proof of insurable interest may also be required.
When an increase is approved, it becomes effective on the date shown on the new
page 3A that is sent to You.
The cost of insurance rate for each increase will be based on the sex, age on
the last Certificate Anniversary, and risk class of the insured at the time the
increase takes effect. An increase is not allowed if the risk class of the
insured at time of increase is standard and the risk class of the insured shown
on page 3A is "STANDARD NONSMOKER".
Each increase will be subject to AAL's expense charges in effect at the time of
increase. The expense charges for each increase will be based on the insured's
sex and age on the last Certificate Anniversary and will apply for the number of
months shown on the new page 3A.1. A new set of surrender charges will apply to
each increase in the specified amount. These charges will all be shown on the
new page 3A.1.
AAL will not contest the validity of the increase after it has been in effect
during the lifetime of the insured for two years from the date of increase. Any
contest of the validity of the increase will be limited to statements made in
the application for the increase.
The one year period in the Suicide Exclusion provision will apply to each
increase beginning on the effective date of each increase. The only amount
payable will be a refund of the monthly deductions for the increase.
2.7 DECREASES IN SPECIFIED AMOUNT
You have the right to decrease the specified amount at anytime after this
Certificate has been in effect for one year, if specified amount remaining in
effect is at least $10,000. If either the total premium payments already made or
the cash value exceeds the applicable limit stated in the Internal Revenue Code
regarding the definition of life insurance for the reduced specified amount, AAL
will refund any excess premiums or cash value necessary to comply with the limit
stated in the Internal Revenue Code.
The decrease will be effective on the date the request is received at the home
office. The decrease will be subtracted first from any previous increases in the
specified amount, starting with the most recent, then from the original
specified amount.
A surrender charge will be subtracted from the cash value if a surrender charge
is in effect for that part of the specified amount. The surrender charges are
shown on the Table of Surrender Charges on page 3A.1.
<PAGE>
2.8 DEATH BENEFIT FACTOR
The death benefit factor depends on the age of the insured on the last
Certificate Anniversary before the date of death. The table below shows the
death benefit factor for each age.
Age Factor Age Factor
0-40 2.50 68 1.17
41 2.43 69 1.16
42 2.36 70 1.15
43 2.29 71 1.13
44 2.22 72 1.11
45 2.15 73 1.09
46 2.09 74 1.07
47 2.03 75 1.05
48 1.97 76 1.05
49 1.91 77 1.05
50 1.85 78 1.05
51 1.78 79 1.05
52 1.71 80 1.05
53 1.64 81 1.05
54 1.57 82 1.05
55 1.50 83 1.05
56 1.46 84 1.05
57 1.42 85 1.05
58 1.38 86 1.05
59 1.34 87 1.05
60 1.30 88 1.05
61 1.28 89 1.05
62 1.26 90 1.05
63 1.24 91 1.04
64 1.22 92 1.03
65 1.20 93 1.02
66 1.19 94 1.01
67 1.18 95 @& over 1.00
The purpose of the death benefit factor is to help qualify Your Certificate as a
life insurance contract under the Corridor Test in federal tax law.
2.9 MATURITY
AAL will pay You the maturity proceeds if the insured is still living on the
maturity date shown on page 3A. The maturity proceeds will be the greater of
cash value less any loan and unpaid loan interest or the specified amount less
any unpaid loan and loan interest.
<PAGE>
3. PREMIUMS
3.1 WHEN AND WHERE TO PAY PREMIUMS
Premiums may be paid at any time and in any amount, subject to the restrictions
described below. If premium payments are not sufficient to maintain a surrender
value larger than the monthly deduction amount and Your Death Benefit Guarantee
under section 3.6 is not in effect, Your insurance coverage will terminate. Pay
premiums by making Your check payable to Aid Association for Lutherans and
sending it to: Aid Association for Lutherans, 4321 North Ballard Road, Appleton,
Wisconsin 54919. Include Your Certificate number.
3.2 PLANNED PERIODIC PREMIUM
The amount and frequency of the planned periodic premium You have selected are
shown on page 3A. Changes in frequency and increases or decreases in amount of
payments may be made at any time. AAL reserves the right to limit the amount of
any increase.
3.3 NET PREMIUM
The net premium is the premium paid less the percentage of premium expense
charge. The percentage of premium expense charge is shown on page 3A.1.
3.4 NET PREMIUM ALLOCATIONS
Net premiums are allocated to the Subaccounts and Fixed Account according to the
premium allocation percentages You select for this Certificate, except as
otherwise provided below. Each net premium is allocated to a Subaccount in the
form of Accumulation Units. The number of Accumulation Units is determined by
dividing the net premium by the value of an Accumulation Unit, next computed
after AAL receives Your premium.
The initial premium allocation percentages You selected are specified in the
application. If You do not designate premium allocation percentages, the entire
net premium will be allocated to the money market Subaccount. Your first premium
will be allocated as of the end of the Valuation Period during which AAL
approves Your application. All subsequent premiums will be allocated as of the
end of the Valuation Period during which they are received at AAL.
AAL reserves the right to allocate Your premium payments to the money market
Subaccount until the expiration of 15 days from the issue date as shown on page
3. At the end of this period, the cash value of this Certificate will be
allocated according to the premium allocation percentages You specified in the
application.
<PAGE>
Each premium allocation percentage must be a whole percent. The sum of the
premium allocation percentages must be 100%%. AAL reserves the right to adjust
Your allocation to eliminate fractional percentages.
You may change Your premium allocation percentages by sending a Written Request
to AAL. AAL will provide a form for You to use to make this request. The change
will be effective as of the date Your Written Request is received at AAL's
service center. The change will apply to premium payments received at AAL on or
after the effective date of the change.
3.5 ADDITIONAL PREMIUM PAYMENTS
Additional premium payments may be made; however, AAL reserves the right to
limit the number and amount of these additional payments.
3.6 LIMITS ON PREMIUMS
The Internal Revenue Code provides for the exclusion of increases in cash value
and the death benefit from gross income. To qualify for this exclusion, You must
meet the Guideline Premium Limit and the Corridor Test. The Guideline Premium
Limit requires that total premium payments not exceed the limit stated in the
Code. AAL, therefore, will not accept any premium or that part of any premium
payment that would cause this limit to be exceeded. The Corridor Test requires
that the death benefit be greater than or equal to the cash value multiplied by
a factor stated in the Code. AAL, therefore, reserves the right to refuse any
premium which would increase the death benefit because of the requirements of
the Corridor Test.
3.7 CONTINUATION OF INSURANCE COVERAGE
If You stop making premium payments, or payments are not large enough to cover
the monthly deductions, and the Death Benefit Guarantee under Section 2.5 is not
in effect, the insurance coverage provided by this Certificate will continue in
effect until the surrender value is not large enough to pay a monthly deduction.
This Certificate will then terminate at the end of the grace period.
<PAGE>
3.8 GRACE PERIOD
When the Death Benefit Guarantee under Section 2.5 is not in effect, a grace
period will begin on a Monthly Deduction Date if the surrender value is less
than the amount of the monthly deductions. Written notice of the required
premium will be sent to You at least 31 days before this Certificate terminates.
The required premium is the amount of premium needed to cover the next two
monthly deductions. Any surrender value is applied to reduce the premium amount
needed before notice is sent. If the full required payment is not received by
AAL at its home office before the end of the grace period, this Certificate will
terminate on the 61st day after the grace period begins.
When You pay a premium during the grace period, the overdue monthly deductions
are paid first. Any additional premium amount, less the percent of premium
expense charge, is added to the cash value. If the insured dies during the grace
period, any unpaid monthly deductions will be deducted from the death proceeds.
3.9 REINSTATEMENT
You may reinstate this Certificate any time within three years after it has
terminated so long as You did not surrender it for its surrender value. To
reinstate Your Certificate the insured must be insurable for reinstatement at
the time of reinstatement under AAL's underwriting guidelines and policies, and
pay a premium at least equal to:
The reinstated loan amount; plus
Any surrender charge at the time of reinstatement; plus
The first two monthly deduction amounts after reinstatement; less
The cash value at termination; less
Any surrender charge credited back at reinstatement; plus
The new surrender charge taken for any reduction in the specified amount at
reinstatement;
All divided by one minus the current percent of premium expense charge rate.
<PAGE>
The premium paid upon reinstatement will be used first to pay any unpaid monthly
deductions that occurred during the grace period. Your Certificate will then be
reinstated on the date AAL approves Your application for reinstatement.
If You reinstate this Certificate, AAL will not contest the validity of the
reinstated Certificate after it has been in effect during the lifetime of the
insured for two years from the date of reinstatement. After this Certificate has
been in force two years from the issue date, any contest of the validity of the
reinstated Certificate will be limited to statements made in the application for
reinstatement.
4. CERTIFICATE VALUES
4.1 CASH VALUE
The cash value on the issue date of this Certificate is the first net premium
less the monthly deductions for the first month.
On any Monthly Deduction Date after the issue date the cash value is equal to
the sum of the cash values for this Certificate in the Subaccounts and in the
Fixed Account. See section 5 on the Fixed Account and section 6 on the Variable
Account for how cash values are determined.
4.2 MONTHLY DEDUCTIONS
Each month on the Monthly Deduction Date, AAL will deduct from the cash value of
this Certificate the following:
The cost of insurance charge; and
A monthly mortality and expense risk charge; and
The cost of any benefit riders attached to this Certificate; and
Any expense charges in effect.
Allocation Method: Deductions, except for the monthly mortality and expense risk
charge (see 4.6), will be taken from the Subaccounts and Fixed Account according
to the ratio that the cash value in the Subaccount or Fixed Account of this
Certificate bears to the total cash value of this Certificate at the time of
deduction. When doing this calculation the total cash value and the Fixed
Account cash value will be reduced by the total Certificate loan.
<PAGE>
Deductions from a Subaccount results in the cancellation of Accumulation Units
from that Subaccount.
So long as the surrender value is large enough to meet these deductions on the
Monthly Deduction Date or the Death Benefit Guarantee is in effect, this
Certificate will remain in effect.
4.3 COST OF INSURANCE RATES
The cost of insurance rate is based on the sex, age on the last Certificate
Anniversary, and risk class of the insured. Cost of insurance rates are
determined by AAL based on expectations as to future mortality and expense
experience. Any change in these rates will be applied on a uniform basis to all
insureds of the same age, sex and risk class. However, AAL cannot use cost of
insurance rates higher than the annual guaranteed cost of insurance rates shown
in the table on page 3B divided by 1.0032737. The guaranteed cost of insurance
rates are based on certain of the 1980 Commissioner's Standard Ordinary
Mortality Table, age last birthday. The rates and tables used are based on age,
risk class and sex of the insured.
4.4 COST OF INSURANCE CHARGE
The cost of insurance charge is calculated on each Monthly Deduction Date for
the next month. It is equal to the cost of insurance rate multiplied by the
amount of insurance at risk. The amount of insurance at risk is:
The death benefit on the Monthly Deduction Date; less
The cash value on the Monthly Deduction Date times 1.0032737.
4.5 EXPENSE CHARGES
AAL will deduct from the cash value of this Certificate the following expense
charges:
A monthly Certificate fee; and
A monthly expense charge.
A premium expense charge will also be deducted from each premium payment.
All of the above charges and their durations are shown on page 3A.1.
In addition to the above charges, a $25 change fee will be charged for all
Certificate changes described in Section 1.9.
<PAGE>
4.6 MORTALITY AND EXPENSE RISK CHARGES
On each Monthly Deduction Date, AAL will deduct an amount that is a percent of
the total cash value in the Subaccounts of this Certificate as a monthly
mortality and expense risk charge. It is guaranteed not to exceed, on an annual
basis, .90%% of the monthly value of the Subaccounts. This charge will be
deducted until the 15th Certificate Anniversary is reached, at which time the
charge is guaranteed to be at least .5%% less than the current mortality and
expense risk charge in effect for Certificates which have not reached their 15th
Certificate Anniversary.
4.7 SURPLUS REFUNDS
This Certificate will participate in any surplus refunds, declared for this
Certificate, annually by the AAL Board of Directors. Surplus refunds will be
allocated as determined by AAL unless You request payment in cash. Charges were
determined so that AAL does not expect any surplus refund to be declared.
5. FIXED ACCOUNT
5.1 FIXED ACCOUNT
Premiums allocated to the Fixed Account and transfers of cash value from a
Subaccount to the Fixed Account become part of the general account assets of
AAL. The general account includes all of AAL's assets, except those assets
segregated in the Variable Account or any other separate account of AAL.
5.2 INTEREST EARNED ON THE FIXED ACCOUNT CASH VALUE
AAL will credit interest to the Fixed Account cash value on a daily basis. A
current interest rate will be declared periodically by the AAL Board of
Directors and is guaranteed not to change more than quarterly. AAL guarantees
that the rate of interest credited to the Fixed Account will never be less than
4 percent annually.
A lower rate of interest may be credited to the portion of the Fixed Account
cash value that equals the amount of any total Certificate loan, but it will not
be less than 4 percent.
5.3 FIXED ACCOUNT CASH VALUE
On any Valuation Date after the issue date, the Fixed Account cash value is
equal to:
The Fixed Account cash value on the last Valuation Date increased with interest
for each day since the last Valuation Date; plus
<PAGE>
The portion of the net premiums allocated to the Fixed Account and received
since the last Valuation Date increased with interest from the date the premium
was received to the current Valuation Date; plus
The amount of any transfers, less any charge for the transfer, from the
Subaccounts to the Fixed Account, including loan transfers, since the last
Valuation Date increased with interest from the date the transfer was received
to the current Valuation Date; less
The amount of any transfers from the Fixed Account to the Subaccounts since the
last Valuation Date, and the interest that would have been credited from the
date the transfer was made to the current Valuation Date; less
Any portion of any partial withdrawals taken from the Fixed Account and made
since the last Valuation Date, including any charge for the withdrawal, and the
interest that would have been credited from the date of the partial withdrawal
to the current Valuation Date; less
Any portion of any surrender charges taken from the Fixed Account resulting from
any decreases in specified amount since the last Valuation Date, and the
interest that would have been credited from the date of the decrease to the
current Valuation Date; less
The amount of any death benefit option change charge taken from the Fixed
Account resulting from any change in death benefit option since the last
Valuation Date, and the interest that would have been credited from the date of
the change to the current Valuation Date; less
Any portion of any Certificate change charge taken from the Fixed Account and
the interest that would have been credited from the date of the change to the
current Valuation Date; less
If the Valuation Date is a Monthly Deduction Date, the monthly deductions
allocated to the Fixed Account for that month.
No interest is credited for February 29th.
<PAGE>
5.4 BASIS OF COMPUTATIONS
Minimum guaranteed cash values for the Fixed Account are based on the
Commissioner's 1980 Standard Ordinary Mortality Table, age last birthday, with
interest at the rate of 4 percent.
These values equal or exceed the minimum values required by law. A detailed
statement of how AAL calculates cash values for this Certificate has been filed
with the insurance department of the state or district where this Certificate
was delivered.
6. VARIABLE ACCOUNT
6.1 VARIABLE ACCOUNT
The AAL Variable Life Account is a separate investment account established by
AAL under Wisconsin law. The Variable Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940.
AAL uses the assets of the Variable Account to buy shares in the AAL Variable
Product Series Fund, Inc. The Fund is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a diversified
open-end management investment company. The Variable Account has Subaccounts
which are invested in corresponding specific portfolios of the Fund. These
Subaccounts and portfolios are shown on page 3A.
AAL, consistent with then applicable law, may:
Combine one separate account with another separate account, operate the separate
account as a management investment company, deregister the separate account as
an investment company or modify the Variable Account;
Add, delete, combine or modify Subaccounts;
Make any new Subaccount available to You on a basis to be determined by AAL.
Invest the assets of any new Subaccount in a new portfolio of the Fund, a
different investment company or in any other investment; and
<PAGE>
AAL owns the assets of the Variable Account and keeps them legally segregated
from the assets of the general account. The assets of the Variable Account
shall, at the time during the year that adjustments in the reserves are made,
have a value at least equal to the reserves and other contract liabilities with
respect to the Variable Account and, at all other times, shall have a value
approximately equal to or in excess of such reserves and liabilities. The assets
of the Variable Account shall not be chargeable with liabilities arising out of
any other business AAL may conduct, except to the extent that the assets of the
Variable Account exceed the reserves and other contract liabilities of the
Variable Account arising under the Certificates supported by the Variable
Account.
Income, and gains and losses, whether or not realized, from the assets in each
Subaccount are credited to or charged against that Subaccount without regard to
any of AAL's other income, gains or losses. The value of the assets in the
Variable Account is determined at the end of each Valuation Date.
6.2 VARIABLE SUBACCOUNT CASH VALUES
The cash value for this Certificate in each Subaccount as of a Valuation Date is
equal to:
The number of Accumulation Units for this Certificate in that Subaccount
multiplied by the Accumulation Unit Value for that Subaccount.
The cash value for any day that is not a Valuation Date will be determined as of
the next Valuation Date.
6.3 NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units for this Certificate in any Subaccount may
increase or decrease at the end of each Valuation Period depending on the
transactions that occur in the Subaccount during the Valuation Period. When
transactions occur, the actual dollar amounts of the transactions are converted
to Accumulation Units. The number of Accumulation Units for a transaction in a
Subaccount is determined by dividing the dollar amount of the transaction by the
Accumulation Unit Value of the Subaccount at the end of the Valuation Period
during which the transaction occurs.
The number of Accumulation Units in a Subaccount increases when the following
transactions occur during the Valuation Period:
Net premiums are allocated to the Subaccount; or
<PAGE>
Cash value is transferred to the Subaccount from another Subaccount or from the
Fixed Account.
The number of Accumulation Units in a Subaccount decreases when the following
transactions occur during the Valuation Period:
Cash value is transferred from the Subaccount to another Subaccount or to the
Fixed Account, including loan transfers;
Partial withdrawals and partial withdrawal charges are taken from the
Subaccount; or
Monthly deductions or transfer charges are taken from the Subaccount.
A charge for a Death Benefit Option change is allocated to the Subaccount.
A charge for a Certificate change is allocated to the Subaccount.
Surrender charges are allocated to the Subaccount.
6.4 ACCUMULATION UNIT VALUE
For each Subaccount, the initial Accumulation Unit Value was set when the
Subaccount was established. The Accumulation Unit Value may increase or decrease
from one Valuation Period to the next.
The Accumulation Unit Value for a Subaccount for any Valuation Period is equal
to:
The Net Asset Value of the corresponding Fund portfolio at the end of the
Valuation Period;
Plus the amount of any dividend, capital gain or other distribution made by the
Fund portfolio if the "ex-dividend" date occurs during the Valuation Period;
Plus or minus any cumulative credit or charge for taxes reserved which is
determined by AAL to have resulted from the operation of the portfolio;
Divided by the total number of Accumulation Units held in the Subaccount at the
end of the Valuation Period before any of the transactions referred to in
Section 6.3 have occurred.
<PAGE>
6.5 TRANSFER OF CASH VALUES
At any time, You may transfer all or a portion of the cash value of this
Certificate among the Subaccounts and the Fixed Account by sending a Written
Request to AAL. AAL will provide a form for You to use. The transfer will be
effective as of the end of the Valuation Period during which Your Written
Request is received at AAL. Transfers are subject to the following:
The total dollar amount of any transfer cannot be less than the smaller of $500
or the cash value of the Subaccount or Fixed Account from which the transfer is
being made at the time of transfer.
The dollar amount of any transfer to a Subaccount or the Fixed Account may not
be less than $50.
You may make 12 transfers from one or more Subaccounts to one or more other
Subaccounts or the Fixed Account in each Certificate year without charge. AAL
will charge $25 per transfer for each transfer in excess of the 12th in each
Certificate year, which will be applied against the transfer amount prior to the
transfer being allocated as You direct.
You may make only 1 transfer from the Fixed Account in each Certificate year.
The transfer may not exceed the greater of $500 or 25%% of the cash value of the
Fixed Account at the time of transfer. This transfer will not be subject to a
transfer charge.
AAL may delay making transfers subject to the same conditions described in
Section 8.5.
6.6 CHANGE OF PORTFOLIO OR INVESTMENT POLICY
AAL may determine that a portfolio of a Fund is no longer desirable for
investment by a Subaccount or the shares of a portfolio are no longer available
for investment. If that occurs, AAL has the right to substitute another
portfolio of the Fund, or to invest in another investment company. This change
would be subject to any required prior approval by the Securities and Exchange
Commission and the insurance supervisory officials in the state where this
Certificate is delivered.
<PAGE>
Any change in the investment policy of the Variable Account will be subject to
any required prior approval by the insurance supervisory officials of the state
of Wisconsin. AAL will notify You of any material change in investment policy.
7. CERTIFICATE LOANS
7.1 LOANS
Using the value of this Certificate as security, You may obtain a loan. The most
You may borrow is 92 percent of the surrender value. AAL has the right to delay
payment of the loan as described under section 8.5.
You may choose which account(s) the loan is to be taken from among the
Subaccounts and Fixed Account. If You do not choose, the loan will be allocated
to the Subaccounts according to the method described in section 4.2. Cash value
will be transferred to the Fixed Account from each Subaccount equal to the
allocation of the loan taken from that Subaccount. On each Monthly Deduction
Date the excess of the total Certificate loan over the Fixed Account cash value
will be transferred from the Subaccounts to the Fixed Account. The cash value
transferred will be allocated among the Subaccounts according to the method
described in section 4.2.
7.2 LOAN INTEREST
The annual interest rate charged to a loan prior to the 15th Certificate
Anniversary is 8 percent. Once Certificate Anniversary 15 is reached AAL will
charge 7.25%% on loans. Interest accrues daily from the loan issue date.
A lower rate of interest may be credited to the portion of the Fixed Account
cash value that equals the amount of any outstanding Certificate loan.
7.3 TOTAL CERTIFICATE LOAN
The total Certificate loan is equal to the loan principal plus any accrued
interest.
7.4 LOAN REPAYMENT
You may repay a loan in part or in full at any time. When You send in a payment
for Your loan, be sure to state that it is a loan payment.
<PAGE>
7.5 TERMINATION DUE TO EXCESS LOAN
If the total Certificate loan ever equals or exceeds the cash value minus any
surrender charges, and the Death Benefit Guarantee under section 2.5 is not in
effect, this Certificate will terminate without value. Written notice will be
sent to You and any assignee at the last known address. You will have 31 days
from the date written notice is mailed to make the required payment to keep this
Certificate in force.
SURRENDER & WITHDRAWALS
8.1 SURRENDER VALUE
The surrender value is the cash value minus:
Any surrender charges; and
Any loans and unpaid loan interest.
8.2 SURRENDER CHARGE
A surrender charge will be subtracted from the cash value if this Certificate is
surrendered during the surrender charge period, or You decrease the specified
amount. The surrender charges are shown on the Table of Surrender Charges on
page 3A.1.
8.3 FULL SURRENDER
You may surrender this Certificate for its full surrender value by sending a
Written Request to AAL. The surrender will be effective as of the date the
request is received at the home office and insurance coverage will end on that
day.
AAL has the right to delay paying the cash value as described under Section 8.5.
8.4 PARTIAL WITHDRAWALS
You may withdraw part of the surrender value of this Certificate by sending a
Written Request to the home office. A $25 charge will be deducted from the cash
value for each partial withdrawal after the first one in any one Certificate
year.
A partial withdrawal:
Will reduce the cash value by the amount of the partial withdrawal;
Will reduce the specified amount by the amount of the partial withdrawal if
Death Benefit Option I is in effect except for the part of the withdrawal which
is equal to (a) minus (b), if positive, where:
<PAGE>
a)is the cash value as of the date of the partial withdrawal, before the partial
withdrawal is taken, multiplied by the death benefit factor; and
b)is the specified amount before the partial withdrawal is taken;
A partial withdrawal may not be made if the specified amount would be reduced
below the minimum allowed by AAL.
You may choose how the partial withdrawal will be taken from among the
Subaccounts, except that the Fixed Account cash value may not be reduced below
the total Certificate loan. If You do not choose, the partial withdrawal will be
taken from the Subaccounts according to the method described in 4.2.
AAL has the right to delay paying the amount withdrawn as described under
Section 8.5.
8.5 DELAY OF PAYMENT
Payment of any withdrawal value, cash surrender value, or loan value will
normally be made within 7 days after Your Written Request is received at AAL.
However, AAL may delay this payment or any other type of payment from the
Variable Account for any period when:
The New York Stock Exchange is closed for trading other than customary weekend
and holiday closings;
Trading on the New York Stock Exchange is restricted;
An emergency exists as a result of which it is not reasonably practicable to
dispose of securities held in the Variable Account or to fairly determine their
value; or
The Securities and Exchange Commission by order permits the delay for the
protection of security holders.
AAL may delay payment of any withdrawal value, cash surrender value or loan
value from the Fixed Account for up to 6 months after Your Written Request is
received at AAL.
<PAGE>
9. CERTIFICATE REPORTS
9.1 ANNUAL REPORT
At least once each Certificate year, AAL will send You a report concerning the
current status of Your Certificate. There is no charge for this report.
9.2 ILLUSTRATIVE REPORT
Upon Your request, AAL will send You an illustration of future values for this
Certificate. AAL may charge a reasonable fee for each illustration requested.
10. MEMBERSHIP, OWNERSHIP, ASSIGNMENT AND BENEFICIARY
10.1 MEMBERSHIP
The insured will become a benefit member of AAL on the Certificate Anniversary
date on or following the insured's 16th birthday. The rights and benefits of
membership are set forth in the Articles of Incorporation and Bylaws of AAL.
Membership cannot be transferred.
10.2 OWNERSHIP AND CONTROL
The insured is the owner of this Certificate. Because of age, the insured cannot
exercise the rights of ownership. Therefore, the person who applied for this
Certificate will have control over ownership rights, except for transfer of
ownership, until the insured gains control of the Certificate.
10.3 TRANSFER OF CONTROL
Control of this Certificate may be transferred by the person who has control to:
An eligible person other than the insured as determined by AAL; or
The insured at any time after the Certificate Anniversary date on or following
the insured's 16th birthday.
Control of this Certificate shall automatically transfer to the insured:
On the Certificate Anniversary date on or following the insured's 21st birthday.
When the person who has control dies after the Certificate Anniversary date on
or following the insured's 16th birthday.
If the person who has control of this Certificate dies before the Certificate
Anniversary date on or following the insured's 16th birthday, control shall be
vested in an eligible person according to AAL's Bylaws.
AAL reserves the right to divest any person of control of this Certificate if
such action is in the best interest of the insured as determined by AAL. Control
shall then be vested in some other person according to AAL's Bylaws.
<PAGE>
10.4 BENEFICIARY
The beneficiary is the person, entity or organization named to receive the death
benefit after the insured dies. The Bylaws of AAL list those eligible to be
beneficiaries. Beneficiaries are designated as first, second and third class.
You may name more than one person or organization in the same class.
Unless You indicate otherwise, the proceeds payable when the insured dies will
be paid as follows:
Equally to the beneficiaries in the first class who survive the insured. If none
in the first class survive
the insured, then;
Equally to the beneficiaries in the second class who survive the insured. If
none in the second class survive the insured, then;
Equally to the beneficiaries in the third class who survive the insured.
If no beneficiary has been named or survives the insured, AAL will pay the
proceeds as follows:
To Your estate if You are the insured; or
To You if You are not the insured.
If any beneficiary dies at the same time as the insured, or within 15 days after
the insured dies but before the death benefits are paid, AAL will pay the
proceeds as though that beneficiary had died before the insured.
10.5 CHANGE OF OWNER OR BENEFICIARY
Until the insured has obtained control of this Certificate, the person who has
control of the Certificate may change the beneficiary by sending a signed
Written Request to the home office.
After the insured has obtained control, the insured may transfer ownership or
change the beneficiary by sending a signed Written Request to the home office.
The new owner should consider naming a successor owner who will become the owner
if the owner dies before the insured. If a successor owner is not chosen,
ownership of the Certificate will pass to the owner's estate.
Any transfer or change must be approved by AAL before it is valid. Once
approved, it will be effective on the date it was signed or on the date it was
received at the home office if no date appears on the request.
AAL will provide a form for You to use.
The change will not affect any payment made or action taken by AAL before the
change was received and approved at the home office.
10.6 COLLATERAL ASSIGNMENT
You may assign this Certificate as collateral security for a loan or other
obligation. This may limit Your rights to the cash value and the beneficiary's
rights to the proceeds.
The assignments must be in writing and filed at our home office. AAL assumes no
responsibility as to the validity of any assignment. AAL is not liable for any
payment made or any other action taken on this Certificate before the assignment
was recorded at our home office.
Any Certificate loan obtained before an assignment is recorded at our home
office has priority over the assignment.
11. FILING A DEATH CLAIM
11.1 NOTICE OF DEATH
Written notice of death must be given to AAL at its home office. Notice should
include the insured's name and the Certificate number. Help may be obtained
through an AAL district representative.
<PAGE>
11.2 CLAIM FORMS
A claim form will be sent, upon receiving the death claim notice. Complete the
claim form and send it to the home office along with a certified copy of the
death Certificate. Processing of the claim will begin as soon as these items are
received.
12. SETTLEMENT OPTIONS
12.1 OWNER--CHOOSING A SETTLEMENT OPTION
All or part of the proceeds from death, maturity or surrender may be applied to
one or more of the settlement options described below in place of a lump sum
payment.
You may choose a settlement option while the insured is alive.
The minimum amount that may be applied to any one settlement option is $1,000.
12.2 BENEFICIARY--CHOOSING A SETTLEMENT OPTION FOR THE DEATH
PROCEEDS
The beneficiary may choose to receive the death proceeds in a lump sum payment
or under any settlement option, unless the owner has chosen a mandatory method
of payment in the beneficiary designation that does not allow the beneficiary to
change it. AAL will provide a form to use. On lump sum payments, we will pay
interest on the death proceeds at a rate required by law from the date of the
insured's death until the date of payment.
12.3 SETTLEMENT OPTIONS
The minimum amount that may be applied to any one settlement option is $1,000.
Payments may be received on a monthly, quarterly, semiannual, or annual basis
provided each payment is at least $25. The first payment under an option will be
made on the first business day following the end of the payment interval chosen.
The settlement options are as follows:
OPTION 1 - INTEREST
The proceeds are left with AAL to earn interest. Interest earned may be paid in
cash at regular intervals or may be left with AAL to accumulate with interest.
All or part of these proceeds may be withdrawn upon request.
OPTION 2 - SPECIFIED AMOUNT INCOME
The proceeds are used to make payments at regular intervals for a specified
amount until the proceeds with interest have been paid. The payment period may
not exceed 30 years. The unpaid proceeds may be withdrawn upon request.
<PAGE>
OPTION 3 - FIXED PERIOD INCOME
The proceeds are used to make payments at regular intervals for a fixed number
of years, not to exceed 30 years. The unpaid proceeds may be withdrawn upon
request. Guaranteed payments are shown in the table below.
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
Number Number
of Monthly of Monthly
Years Payment Years Payment
2 $42.96 17 $6.24
3 $29.06 18 $5.98
4 $22.12 19 $5.74
5 $17.95 20 $5.53
6 $15.18 21 $5.33
7 $13.20 22 $5.16
8 $11.71 23 $5.00
9 $10.56 24 $4.85
10 $ 9.64 25 $4.72
11 $ 8.88 26 $4.60
12 $ 8.26 27 $4.49
13 $ 7.73 28 $4.38
14 $ 7.28 29 $4.28
15 $ 6.89 30 $4.19
16 $ 6.54
OPTION 4 - LIFE INCOME WITH GUARANTEED PAYMENT PERIOD
The proceeds are used to make payments at regular intervals for the lifetime of
the payee. If the payee dies during the guaranteed period, payments will be
continued to the end of that period. A period of 10 or 20 years may be elected.
The amount of the payments depends on the age and sex of the payee at the time
AAL issues the settlement agreement. Guaranteed payments are shown in the table
below.
<PAGE>
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
10 YEAR 20 YEAR
GUARANTEED GUARANTEED
PAYMENT PAYMENT
PERIOD PERIOD
Age Male Female Male Female
50 $4.53 $4.19 $4.38 $4.13
51 $4.61 $4.26 $4.44 $4.18
52 $4.69 $4.32 $4.50 $4.24
53 $4.77 $4.39 $4.56 $4.29
54 $4.85 $4.45 $4.62 $4.35
55 $4.93 $4.52 $4.68 $4.40
56 $5.03 $4.61 $4.74 $4.46
57 $5.14 $4.70 $4.80 $4.53
58 $5.24 $4.78 $4.87 $4.59
59 $5.35 $4.87 $4.93 $4.66
60 $5.45 $4.96 $4.99 $4.72
61 $5.58 $5.07 $5.05 $4.79
62 $5.71 $5.18 $5.11 $4.86
63 $5.85 $5.30 $5.18 $4.93
64 $5.98 $5.41 $5.24 $5.00
65 $6.11 $5.52 $5.30 $5.07
66 $6.27 $5.67 $5.35 $5.14
67 $6.43 $5.82 $5.40 $5.20
68 $6.59 $5.96 $5.44 $5.27
69 $6.75 $6.11 $5.49 $5.33
70 $6.91 $6.26 $5.54 $5.40
71 $7.09 $6.44 $5.57 $5.44
72 $7.26 $6.63 $5.60 $5.49
73 $7.44 $6.81 $5.62 $5.53
74 $7.61 $7.00 $5.65 $5.58
75 $7.79 $7.18 $5.68 $5.62
76 $7.95 $7.38 $5.69 $5.64
77 $8.12 $7.58 $5.71 $5.66
78 $8.28 $7.78 $5.72 $5.69
79 $8.45 $7.98 $5.74 $5.71
80 $8.61 $8.18 $5.75 $5.73
<PAGE>
OPTION 5 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENT PERIOD
The proceeds are used to make payments at regular intervals for the lifetime of
both payees. Upon the death of one of the payees, payments will be continued for
the lifetime of the surviving payee. If both payees die during the guaranteed
period, payments will be continued to the end of that period. A period of 10 or
20 years may be elected. The amount of the payments depends upon the age and sex
of the payees at the time AAL issues the settlement agreement. Guaranteed
payments are shown in the tables below.
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
PAYMENTS GUARANTEED FOR 10 YEARS
Male Female Ages
Ages 50 55 60 65 70 75 80
- - - ----
50 $3.91 $4.05 $4.18 $4.29 $4.38 $4.45 $4.49
55 $3.99 $4.17 $4.36 $4.53 $4.67 $4.78 $4.86
60 $4.06 $4.28 $4.53 $4.77 $5.00 $5.19 $5.32
65 $4.11 $4.37 $4.67 $5.00 $5.34 $5.64 $5.87
70 $4.14 $4.43 $4.79 $5.20 $5.66 $6.11 $6.48
75 $4.17 $4.48 $4.86 $5.34 $5.91 $6.52 $7.07
80 $4.18 $4.50 $4.91 $5.44 $6.09 $6.83 $7.56
MONTHLY PAYMENTS FOR EACH $1,000 OF
PROCEEDS
PAYMENTS GUARANTEED FOR 20 YEARS
Male Female Ages
Ages 50 55 60 65 70 75 80
- - - ----
50 $3.90 $4.03 $4.16 $4.25 $4.32 $4.36 $4.38
55 $3.98 $4.15 $4.32 $4.47 $4.58 $4.64 $4.67
60 $4.04 $4.25 $4.47 $4.68 $4.84 $4.94 $4.98
65 $4.08 $4.32 $4.59 $4.85 $5.07 $5.21 $5.28
70 $4.11 $4.37 $4.67 $4.97 $5.24 $5.42 $5.50
75 $4.12 $4.39 $4.70 $5.04 $5.34 $5.55 $5.64
80 $4.12 $4.40 $4.72 $5.07 $5.38 $5.60 $5.71
OTHER OPTIONS
AAL also has other settlement options which may be chosen. Information about
these options may be obtained from an AAL district representative or the home
office.
<PAGE>
12.4 GUARANTEED INTEREST RATE ON SETTLEMENT OPTIONS
Options 1, 2, and 3 are based on a guaranteed effective annual interest rate of
3%%. Options 4 and 5 are based on a guaranteed effective annual interest rate of
3 1/2%% using the "1983 Table a" annuitant mortality table.
12.5 SETTLEMENT AGREEMENT
AAL will issue a separate settlement agreement whenever proceeds are applied to
any settlement option. The settlement agreement will be issued to the payee. The
payee is the person named to receive the payments.
If the payee dies on or after the settlement agreement commencement date and
before the entire interest in the settlement agreement has been paid, the
remaining portion of such interest will be paid at least as rapidly as under the
method of payment in effect as of the date of the payee's death.
<PAGE>
FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
Death benefit payable at death of insured before maturity date Maturity proceeds
payable on maturity date Adjustable death benefit Flexible premiums payable
during lifetime of insured until maturity date Death benefit guarantee upon
payment of Death Benefit Guarantee Premiums Return on cash value based on the
investment options selected
FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
Death benefit payable at death of insured before maturity date Maturity proceeds
payable on maturity date Adjustable death benefit Flexible premiums payable
during lifetime of insured until maturity date Death benefit guarantee upon
payment of Death Benefit Guarantee Premiums Return on cash value based on the
investment options selected
<PAGE>
ACCIDENTAL DEATH BENEFIT RIDER
GENERAL
This rider is a part of the Certificate it is attached to. The issue date of
this rider is shown on page 3A.
AMOUNT OF BENEFIT
The amount of the accidental death benefit payable is shown on page 3A.
PAYMENT OF BENEFIT
AAL will pay the accidental death benefit of this rider upon receiving proof
that the death of the insured occurred:
As a direct result of an accidental bodily injury, independent of all other
causes; and
While this rider is in effect.
AAL will provide a claim form and assistance through an AAL district
representative. The benefits payable under this rider will be included in the
total benefits paid under this Certificate.
DEATHS NOT COVERED
AAL will not pay the accidental death benefit if:
The insured commits suicide while sane or insane; or
A physical or mental illness or disease causes or contributes to the insured's
death including situations where an accident accelerates or aggravates a
preexisting disease and is the proximate cause of death; or
The insured's death results from an act of war, declared or undeclared, or any
act attributable to war; or
The insured's death results from injuries received as a consequence of piloting,
serving as a crew member, or descending out of any type of aircraft, including
hang gliders and all other non-engine aircraft and balloons.
MONTHLY CHARGE
The charge for this rider is shown on page 3A. It will be deducted from the cash
value each month on the deduction date.
INCONTESTABILITY
AAL will not contest the validity of this rider after it has been in effect
during the lifetime of the insured for two years from the issue date.
TERMINATION
This rider will terminate at midnight of the day before the Certificate
anniversary date on or after the insured's 70th birthday.
Signed for Aid Association for Lutherans (AAL) at Appleton, Wisconsin.
<PAGE>
APPLICANT WAIVER OF MONTHLY DEDUCTION BENEFIT RIDER
(DEATH OR DISABILITY)
GENERAL
This rider is a part of the Certificate it is attached to. The issue date of
this rider is shown on page 3A.
BENEFIT
AAL will waive the monthly deductions for the Certificate, including any
attached riders, if the person who applied for this rider becomes totally
disabled before age 65 or dies. The death or disability must occur while this
rider is in effect and the disability must last for at least four consecutive
months. The monthly deductions will be waived until the first to occur of:
The date of recovery from total disability; or
The anniversary of the issue date of the Certificate on or after the insured's
21st birthday.
INCREASES FROM BENEFIT RIDERS
If your Certificate includes the Cost of Living Benefit Rider or the Guaranteed
Purchase Option Benefit Rider, monthly deductions will also be waived for:
The automatic increases under the Cost of Living Benefit Rider; and
Any increase resulting from your exercise of an option under the Guaranteed
Purchase Option Benefit Rider.
MONTHLY CHARGE
The charge for this rider is shown on page 3A. It will be deducted from the cash
value each month on the deduction date. The charge is the applicant waiver rate
applied to the amount of insurance at risk on the deduction date. The amount of
insurance at risk is:
The death benefit on the deduction date; less
The cash value on the deduction date times 1.0032737.
The applicant waiver rate is shown on page 3A.
MONTHLY DEDUCTIONS TAKEN DURING WAITING PERIOD
The monthly deductions taken from the cash value during the first four months of
total disability will be added back to the cash value at the end of the four
month waiting period.
PREMIUMS RECEIVED DURING WAITING PERIOD
Any premiums received during the first four months of total disability or before
your notifying AAL of total disability will not be returned.
DEATH BENEFIT
During waiver of monthly deductions, the death benefit will be changed to be:
The cash value; plus
The death benefit in effect on the date of the applicant's death or the date
disability started minus the cash value on the date of the applicant's death or
the date disability started.
<PAGE>
TOTAL DISABILITY
Total disability means a disability that results from injury, illness or disease
that prevents the person who applied for this rider from performing any
occupation or employment. During the first 24 months of total disability, the
phrase "any occupation or employment" means regular occupation or employment.
After that, it means any occupation or employment the person who applied for
this rider is qualified for, or reasonably could become qualified for, through
training, education or experience.
NOTICE OF CLAIM AND PROOF OF LOSS
Written notice and proof of death or total disability must be given to AAL at
its home office as soon as possible. Notice should include the insured's name
and the Certificate number.
PROOF OF CONTINUANCE OF TOTAL DISABILITY
AAL has the right to require reasonable proof of continuing total disability. If
proof is not furnished as required, monthly deductions will no longer be waived.
Upon recovery from total disability, immediate notice should be sent to AAL.
INCONTESTABILITY
AAL will not contest the validity of this rider after it has been in effect for
two years from the issue date if the person who applied for this rider has not
died or become totally disabled during that time.
SUICIDE
If the person who applied for this rider commits suicide, while sane or insane,
within one year of the issue date of this rider, AAL will refund, without
interest, the charges deducted for this rider. No other benefit under this rider
will be provided.
TERMINATION
This rider will terminate on the first to occur of:
Midnight of the day before the anniversary of the issue date of this rider on or
after the insured's 21st birthday; or
When control of the Certificate is transferred.
Signed for Aid Association for Lutherans (AAL) at Appleton, Wisconsin.
<PAGE>
DISABILITY WAIVER OF MONTHLY DEDUCTION BENEFIT RIDER
GENERAL
This rider is a part of the Certificate it is attached to. The issue date of
this rider is shown on page 3A.
BENEFIT
AAL will waive the monthly deductions for the Certificate, including any
attached riders, if the insured becomes totally disabled. The disability must
begin while this rider is in effect and last for at least four consecutive
months. The monthly deductions will be waived until the first to occur of:
The date the insured recovers from disability; or
The Certificate maturity date.
INCREASES FROM BENEFIT RIDERS
If your Certificate includes the Cost of Living Benefit Rider or the Guaranteed
Purchase Option Benefit Rider, monthly deductions will also be waived for:
The automatic increases under the Cost of Living Benefit Rider; and
Any increase resulting from your exercise of an option under the Guaranteed
Purchase Option Benefit Rider.
MONTHLY CHARGE
The charge for this rider is shown on page 3C. It will be deducted from the cash
value each month on the deduction date. The charge is the disability waiver rate
applied to the amount of insurance at risk on the deduction date. The amount of
insurance at risk is:
The death benefit on the deduction date; less
The cash value on the deduction date times 1.0032737.
The disability waiver rates for each age are shown in the table on page 3C. The
insured's age on each Certificate anniversary determines the disability waiver
rate to be used for the next 12 months.
MONTHLY DEDUCTIONS TAKEN DURING WAITING PERIOD
The monthly deductions taken from the cash value during the first four months of
total disability will be added back to the cash value at the end of the four
month waiting period.
PREMIUMS RECEIVED DURING WAITING PERIOD
Any premiums received during the first four months of total disability or before
your notifying AAL of total disability will not be returned.
<PAGE>
DEATH BENEFIT
During waiver of monthly deductions, the death benefit will be changed to be:
The cash value; plus
The death benefit in effect on the date disability started minus the cash value
on the date disability started.
TOTAL DISABILITY
Total disability means a disability that results from injury, illness or disease
that prevents the insured from performing any occupation or employment. During
the first 24 months of total disability, the phrase "any occupation or
employment" means the insured's regular occupation or employment. After that, it
means any occupation or employment the insured is qualified for, or reasonably
could become qualified for, through training, education or experience.
NOTICE OF CLAIM AND PROOF OF TOTAL DISABILITY
Written notice and proof of total disability must be given to AAL at its home
office as soon as possible. Notice should include the insured's name and the
Certificate number.
PROOF OF CONTINUANCE OF TOTAL DISABILITY
AAL has the right to require reasonable proof of continuing total disability. If
proof is not furnished as required, monthly deductions will no longer be waived.
Upon recovery from total disability, immediate notice should be sent to AAL.
INCONTESTABILITY
AAL will not contest the validity of this rider after it has been in effect for
two years from the issue date if the insured has not died or become totally
disabled during that time.
TERMINATION
This rider will terminate at midnight of the day before the Certificate
anniversary date on or after the insured's 65th birthday.
Signed for Aid Association for Lutherans (AAL) at Appleton, Wisconsin.
<PAGE>
GUARANTEED PURCHASE OPTION BENEFIT RIDER
GENERAL
This rider is a part of the Certificate it is attached to. The issue date of
this rider is shown on page 3A.
BENEFIT
This rider provides you with options to increase the specified amount of the
Certificate up to the amount shown on page 3A without proof of insurability.
REGULAR OPTION DATES
Regular option dates occur on the anniversary of the issue date of the
Certificate on or after the date the insured reaches the following ages: 18, 22,
25, 28, 31, 34, 37 and 40.
ALTERNATE OPTION DATES
An alternate option date occurs upon each of the following events:
Marriage of the Insured;
Birth of a child of the Insured; or
Legal adoption of a child by the Insured.
Use of an alternate option will cancel the next available regular option.
OPTION CONDITIONS
Options must be taken on, or within 60 days before, an option date. If an option
is not taken within the time allowed, that option will be lost. Future options
will not be affected by the loss of an option. AAL will provide a form to use
for taking an option.
MONTHLY CHARGE
The charge for this rider is shown on page 3A. It will be deducted from the cash
value each month on the deduction date.
COST OF INSURANCE
The cost of insurance rate for each increase in the specified amount will be
based on the rate class established on the issue date of this rider.
ASSIGNMENT AND OWNERSHIP
This rider may not be assigned. If the ownership of the Certificate is
transferred, all rights of ownership of this rider and any future increase in
the specified amount purchased through this rider will remain with the insured.
TERMINATION
This rider will terminate at midnight of the day before the Certificate
anniversary date on or after the insured's 40th birthday.
Signed for Aid Association for Lutherans (AAL) at Appleton, Wisconsin.
<PAGE>
COST OF LIVING BENEFIT RIDER
GENERAL
This rider is a part of the Certificate it is attached to. There is no charge
for this rider. The issue date of this rider is shown on page 3A.
BENEFIT
This rider will increase the specified amount of insurance coverage on your
Certificate without proof of insurability. The increase will automatically occur
and become effective on each Certificate anniversary.
Acceptance of increases in the specified amount through this rider will increase
your monthly deductions.
AMOUNT OF BENEFIT
The amount of the increase is determined on each Certificate anniversary date.
It is equal to:
The specified amount that was issued under a standard risk class only;
multiplied by
The CPI increase for the previous year.
No increase may exceed $25,000.
CPI The Consumer Price Index (CPI) means the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the U.S. Department of
Labor.
If any alteration in the composition, base, or method of computation of the
Consumer Price Index is introduced that makes it inappropriate for this benefit
rider, or if the publication of the Index is discontinued, AAL reserves the
right to choose an appropriate standard, published or unpublished, as a
substitute for the Consumer Price Index.
CPI INCREASE
The CPI increase for any calendar year is the lesser of:
The CPI for June of the previous year divided by the CPI for June of two years
previous, minus one; or
12 percent.
If the CPI stays the same or decreases, the specified amount will not be changed
for the next year. The CPI increase for the next year will be based on the CPI
from the year before the last increase that resulted from this rider, instead of
the CPI of two years previous.
COST OF INSURANCE
The cost of insurance rate for each increase in the specified amount will be
based on the standard risk class established on the issue date of this rider.
REJECTION OF INCREASE
Each increase is automatic, however, you may reject an increase by notifying AAL
in writing no later than 30 days after the Certificate anniversary on which the
increase is made. If you reject an increase, this rider will terminate.
REINSTATEMENT
If this rider terminates because you reject an increase, you may reinstate it by
providing satisfactory evidence of insurability to AAL.
TERMINATION
This rider will terminate on the first to occur of:
The later of age 45 or 20 years from the issue date of this rider;
Midnight of the anniversary of the issue date of the Certificate after the
insured's 65th birthday; or
Your rejection of an increase.
Signed for Aid Association for Lutherans (AAL) at Appleton, Wisconsin.
<PAGE>
APPLICANT WAIVER OF MONTHLY DEDUCTION BENEFIT RIDER
(DEATH OR DISABILITY)
GENERAL
This rider is a part of the Certificate it is attached to. The issue date of
this rider is shown on page 3A.
BENEFIT
AAL will waive the monthly deductions for the Certificate, including any
attached riders, if the person who applied for this rider becomes totally
disabled before age 65 or dies. The death or disability must occur while this
rider is in effect and the disability must last for at least four consecutive
months. The monthly deductions will be waived until the first to occur of:
The date of recovery from total disability; or
The anniversary of the issue date of the Certificate on or after the insured's
21st birthday.
INCREASES FROM BENEFIT RIDERS
If your Certificate includes the Cost of Living Benefit Rider or the Guaranteed
Purchase Option Benefit Rider, monthly deductions will also be waived for:
The automatic increases under the Cost of Living Benefit Rider; and
Any increase resulting from your exercise of an option under the Guaranteed
Purchase Option Benefit Rider.
MONTHLY CHARGE
The charge for this rider is shown on page 3A. It will be deducted from the cash
value each month on the deduction date. The charge is the applicant waiver rate
applied to the amount of insurance at risk on the deduction date. The amount of
insurance at risk is:
The death benefit on the deduction date; less
The cash value on the deduction date times 1.0032737.
The applicant waiver rate is shown on page 3A.
MONTHLY DEDUCTIONS TAKEN DURING WAITING PERIOD
The monthly deductions taken from the cash value during the first four months of
total disability will be added back to the cash value at the end of the four
month waiting period.
PREMIUMS RECEIVED DURING WAITING PERIOD
Any premiums received during the first four months of total disability or before
your notifying AAL of total disability will not be returned.
DEATH BENEFIT
During waiver of monthly deductions, the death benefit will be changed to be:
The cash value; plus
The death benefit in effect on the date of the applicant's death or the date
disability started minus the cash value on the date of the applicant's death or
the date disability started.
TOTAL DISABILITY
Total disability means a disability that results from injury, illness or disease
that prevents the person who applied for this rider from performing any
occupation or employment. During the first 24 months of total disability, the
phrase "any occupation or employment" means regular occupation or employment.
After that, it means any occupation or employment the person who applied for
this rider is qualified for, or reasonably could become qualified for, through
training, education or experience.
NOTICE OF CLAIM AND PROOF OF LOSS
Written notice and proof of death or total disability must be given to AAL at
its home office as soon as possible. Notice should include the insured's name
and the Certificate number.
PROOF OF CONTINUANCE OF TOTAL DISABILITY
AAL has the right to require reasonable proof of continuing total disability. If
proof is not furnished as required, monthly deductions will no longer be waived.
Upon recovery from total disability, immediate notice should be sent to AAL.
INCONTESTABILITY
AAL will not contest the validity of this rider after it has been in effect for
two years from the issue date if the person who applied for this rider has not
died or become totally disabled during that time.
SUICIDE
If the person who applied for this rider commits suicide, while sane or insane,
within one year of the issue date of this rider, AAL will refund, without
interest, the charges deducted for this rider. No other benefit under this rider
will be provided.
TERMINATION
This rider will terminate on the first to occur of:
Midnight of the day before the anniversary of the issue date of this rider on or
after the insured's 21st birthday; or
When control of the Certificate is transferred.
Signed for Aid Association for Lutherans (AAL) at Appleton, Wisconsin.
Articles of Incorporation of Aid Association for Lutherans
The Articles of Incorporation, as amended, Aid Association for Lutherans, a
fraternal benefit society, organized under the laws of the State of Wisconsin,
are as follows:
ARTICLES OF INCORPORATION OF Aid Association for Lutherans
as amended January 1, 1986
I. Name
The name of this fraternal benefit society shall be "Aid Association for
Lutherans."
II. Place of Business
The principal office of this fraternal benefit society shall be at Appleton,
Wisconsin.
III. Powers
For the purposes set forth in these articles, Aid Association for Lutherans, a
Wisconsin corporation organized and operating under the laws governing
Fraternals, shall have all the powers granted by law.
IV. Purpose
The purpose of Aid Association for Lutherans is to associate Lutherans and their
families and thereby enable them through membership in this fraternal benefit
society to aid themselves and others with programs of-.
1. Insurance and other benefits permissible under the laws governing Fraternals;
and
2. Fraternal and benevolent activities 'm local branches; and
3. Assistance to Lutheran congregations and their institutions; and
4. Assistance to such other lawful social, intellectual, educational,
charitable, benevolent, moral, fraternal, patriotic or religious endeavors as
the board of directors may determine,
Supreme Governing Body
The supreme governing body shall be a board of directors made up of benefit
members of this fraternal benefit society. The board shall consist of 12
elective directors, such appointive directors as the board may appoint in a
manner proscribed in the bylaws and not more than two principal officers of the
society designated by the board from time to time. The elective directors shall
be elected by the benefit members in a manner proscribed by the bylaws and shall
constitute a majority of the board in number.
<PAGE>
VI. Membership
1. Classes of members. There shall be the following classes of members:
A. Benefit member. A benefit member is a person of age 16 or more who has been
accepted for membership in accordance with eligibility rules as determined by
resolution of the board of directors and who is issued a by virtue of such
Certificate of membership and insurance, or who receives a settlement agreement
benefit by virtue of insurance. When more than one person in a family is covered
in a single Certificate only the applicant is a benefit member. Benefit members
may participate in the affairs and activities of the local branch in which they
are members and may also hold office therein. Benefit members shall also have
the right to vote in the corporate and insurance affairs of this fraternal
benefit society according to the articles and bylaws.
B. Associate member. An associate member is a person age 16 or more who has been
accepted for membership in accordance with eligibility rules as determined by
resolution of the board of directors and who has been issued a Certificate of
membership. Associate members may participate in the affairs and activities of
the local branch in which they are members, and may hold office therein, but
shall not have the right to vote in the corporate and insurance affairs of this
fraternal benefit society.
2. Juveniles. This fraternal benefit society. may insure the lives or disability
of children younger than the minimum age for benefit membership but otherwise
eligible for benefit membership. Such insurance shall be issued upon the
application of some adult person who shall not by reason thereof, nor by reason
of any benefit providing waiver of premium become a benefit member, At age 16
the insured juvenile shall become a benefit member.
VII
Branches
Local branches may be chartered by the board of directors in a manner prescribed
in the bylaws, and shall have such powers as the board of directors shall
determine.
VII
Bylaws
The board of directors shall have power to make bylaws, and to repeal or amend
them, Notice of changes to the bylaws shall be given to benefit members and
applicants for juvenile insurance in a manner prescribed in the bylaws.
lX
Amendments
These articles may be amended or repeated in whole or in part by a majority of
the votes cast by benefit members. Before submitting such changes to a vote of
the benefit members, the board of directors shall approve such changes by an
affirmative vote of a majority of the full board. upon adoption by the benefit
members such changes shall be filed with the Commissioner of Insurance of die
state of Wisconsin and shall be published in the official publication in a
manner prescribed in the bylaws.
Bylaws of Aid Association for Lutherans
Bylaws
As amended November 7, 1996
Definitions
Section 1. Wherever the term "the Association" appears in these bylaws, it means
'Aid Association for Lutherans." Wherever the term 'board" appears in these
bylaws, it means 'board of directors."
Wherever the term 'home office" appears in these bylaws, it means 'principal
office."
Application for Membership
Section 2. Application for benefit membership shall he upon a form in use by the
Association. It shall be accompanied by evidence of insurability (if required)
which is acceptable to the Association under its rules and regulations.
Application for associate membership, if such be authorized by the board, shall
be upon a form in use by the Association.
INSURANCE
Section 3. Application for juvenile insurance shall be upon a form in use by the
Association and shall be accompanied by evidence of insurability (if required)
which is acceptable to the Association under its rules and regulations. Juvenile
Certificates shall be under the control of the applicant for the period provided
in the Certificate. If it be in the best interest of the juvenile as determined
by the Association, the applicant may be divested of control of a juvenile
Certificate. If the applicant has been divested of control of the juvenile
Certificate or if the applicant has died, control shall be vested in the legally
.appointed guardian of the juvenile. If a guardian is not appointed, control
shall he vested in some person who shall appear to the Association to be
equitably entitled to it by reason of being responsible for the support and
maintenance of such juvenile, or by reason of relationship.
FRATERNAL CONTRACT
Section 4. The Certificate of membership and insurance, together with any riders
or endorsements attached to it, the application, the declaration of insurability
(if any) signed by the applicant, the articles of incorporation and bylaws and
all amendments to them, constitute the entire contract when it is issued. Any
subsequent changes to the articles of incorporation or bylaws shall be binding
upon the member, beneficiaries or other persons affected, and shall govern and
control in all respects, except that no changes shall destroy or diminish
benefits promised in the Certificate when it was issued.
Beneficiaries
Section 5. Any of the following persons may be designated as beneficiary: the
applicant benefit member, wife, husband, child, parent or other person related
to the benefit member by blood, marriage or legal adoption, foster parents of
the benefit member; betrothed of the benefit member; dependents of the benefit
member; or, where not prohibited by law, the estate of the benefit member. With
the consent of the Association, any of the following may also be designated as
beneficiary: a charitable institution; church or church organization;
educational institution; a nonprofit corporation-, any corporation, community
chest, fund or foundation described in section 501(c)(,3) of the Internal
Revenue Code of 1954 and its subsequent amendments, and operated exclusively for
religious, charitable, scientific, literary or educational purposes; or a
person, corporation, partnership or other legal entity which has an interest in
the benefit member, provided that the proceeds are for the benefit, direct or
indirect, of the benefit member or the benefit member's family or dependents.
Wherever the applicable laws conflict with the above, only beneficiaries
permitted by state laws may be designated.
<PAGE>
Section 6. Unless the beneficiary designation calls for some other method of
distribution, if some beneficiaries of the same class die before the insured,
the death benefit proceeds shall be paid in full to the surviving beneficiaries
of the same class. Each shall share equally the portion of the death benefit
proceeds not otherwise disposed of in the Certificate. If all beneficiaries,
however designated, are dead when the insured die, the death benefit proceeds
where not otherwise required by law shall be paid to the owner or to the owner's
estate. A beneficiary shall not have or acquire any claim against the
Association whatever until the insured dies unless otherwise provided by law.
Section 7. No beneficiary change shall take effect unless received by the
Association at its home office. When it is received, any change shall take
effect as of the date the request for beneficiary change was signed, as long as
the request for change was mailed or actually delivered to the Association while
the insured was alive. Such beneficiary change shall be null and void where the
Association has made a good faith payment of the proceeds or has taken other
action before receiving the change.
Settlement Options
Section 8. In addition to the settlement options offered in the Certificate, the
Association may offer any other manner of settlement made available by the
Association at the time Certificate proceeds are to be paid.
Maintenance of Solvency
Section 9. If the Association's reserves for any class of Certificates become
impaired, the board may require that benefit members pay the Association an
equitable amount to eliminate the deficiency. If the amount is not paid, it
shall be charged as an indebtedness against the Certificate and shall draw
interest at the lower rate of either what is specified in the Certificate for
Certificate loans or what is specified in the Certificate under the maintenance
of solvency provision. if the owner of the Certificate agrees, an equivalent
reduction in benefits can be chosen instead of the payment or indebtedness
charged against the Certificate.
Separate Accounts and Variable Contract
Section 10. The board of directors may provide for the establishment and
operation of one or more separate accounts in accordance with applicable law.
AAL may issue contracts on a variable basis that provide for the dollar amount
of benefits or other contractual payments or .,values to vary so as to reflect
the investment results of such separate accounts. The board of directors may
adopt special procedures or create legal entities necessary or appropriate for
the conduct of the business and affairs of any variable contract and separate
account. Any provisions of the AAL Bylaws that are inconsistent with the
provisions of this bylaw shall not apply to any variable contract or separate
account.
TAXES
Section 11. If any jurisdiction requires the Association to pay any sum as a tax
on its operations, the board may determine an equitable apportionment of the
full amount of the taxes paid and make a levy of such amount upon the benefit
members and insureds residing in that jurisdiction. Notice of the levy including
the manner in which it is to be paid, shall be given to those affected. If the
amount levied not paid ,after 60 days from the date of the notice, the amount
shall be charged is an indebtedness against the Certificate and accrue interest
at 5 percent per annum compounded annually.
<PAGE>
RIGHT OF ACTION
Section 12. No court action may be started on any claim arising out of a
Certificate of insurance unless the action is started within the time allowed by
the laws of the jurisdiction in which the cause of action arises. In the absence
of any such laws, the court action must be started within three years from the
date the claim arises.
RECEIPT OF PAYMENT NOT A WAIVER
Section 13. If the Association receives and temporarily holds a payment or
premium, this shall not constitute a waiver of any of its defenses. if a
Certificate has lapsed or been forfeited, or if the Association has received a
notice of cancellation, the payment of any premium for the Certificate shall not
revive or continue the Certificate, whether made on notice of premium due or
otherwise, and tile payment shall he returned to the person making it. BOARD OF
DIRECTORS
Section 14. The affairs of the Association shall be, managed under the direction
of the board. The board shall meet quarterly at times to be set by the board.
All meetings shall be held at the home office of the Association unless some
other piece is designated by the executive officer or board. Regular or special
meetings of the board of directors, or it:, committees may also be conducted by
other means of communication, as prescribed by Wisconsin law, if so designated
by the board, the chairman of the board, the chief executive officer, or
chairman of a committee of the board with respect to committee meetings. Special
meetings may be called by the chief executive officer or upon written request to
the secretary by at least five members of the board. The chief executive officer
or secretary shall notify board members, in writing or by personal delivery, of
the purpose, time and place of special meetings at least seven calendar days
before the date of the meetings. Except in the case of removal of a director
from office for cause, board members may waive their right to receive notice
individually and the board, by unanimous vote of the full board, may suspend the
requirement to give such notice.
Section 15. The board shall elect a chairman of the board and vice chairman of
the board from among its members for a term of up to one year. The chairman
shall preside at all meetings of the board and perform such other duties as may
be designated by the board. if the chairman of the board is a principal officer
of the Association, he or she shall be responsible only to the board. The vice
chairman shall preside at meetings of the board in the absence of the chairman.
Section 16. A majority of the members of the board shall constitute a quorum to
transact all business unless otherwise required in the articles of incorporation
or bylaws of the Association.
<PAGE>
Election or Appointment of Directors
Section 17. Twelve benefit members shall be elected to the board for terms of
office of four years each, three members being elected each year in the
following manner: 'Me board, as well as each branch, shall have the right to
nominate benefit members as candidates for director. All nominations must be
reported to the secretary of the Association at the home office within the-time
specified by the board. The secretary shall report the nominations to the board.
The board shall then direct the secretary to prepare the ballot and give notice
of the election, specifying the time and Procedures for election. Each branch
shall conduct an election meeting within the time specified at which a vote
shall he taken on the candidates and shall be reported in the manner and within
the time specified in the notice of election. Those elective directors whose
terms do not expire with the current election shall constitute the Election
Committee. The tabulation of results of the election shall be. done by an
independent certified public accounting firm selected by the board to report to
the Election Committee. The Election Committee shall declare three candidates
receiving the highest number of valid votes to be duly elected for a term
beginning with the first quarterly meeting of the board in the beginning with
the first year following election.
Section 18. Vacancies in elective directorship positions shall be filled is soon
as possible by an affirmative vote of a majority of the remaining elective
director,. Such directors shall fill the unexpired terms and shall be considered
elective directors.
Section 19. Except as provided in Section 20, benefit members of the Association
shall not be eligible for election to the board for an initial term if they
shall have passed their 60th birthday on the first day of January of the year in
which their term would begin. No employee of the Association shall be eligible
for election to the board nor shall any former employee be eligible for election
to the board until the expiration of two years from the date of termination of
employment.
Section 20. The board may appoint up to three benefit members of the Association
to serve as appointive directors for a term of office of one year. The board may
also appoint not more than two principal officers of the Association to serve as
directors as the board shall from little to time determine to be in the
Association's best interest. Any appointment or reappointment shall require the
affirmative vote of a majority of the elective directors. An appointive director
shall be eligible for election pursuant to Section 17 or appointment pursuant to
Section 18 if the date of initial appointment as an appointive director preceded
such director's 60th birthday.
Section 21. No elective, ,appointive or principal officer director shall serve
beyond December 31 of the year in which age 70 is attained. A director may be
removed from office for cause by an affirmative vote of a majority of the full
board at a meeting of the board called for that purpose.
<PAGE>
Committees of Directors
Section 22. Tile board by resolution adopted by a majority of the full board may
designate an executive committee and one or more additional committees of
directors. Each committee shall consist of three or more directors who serve by
appointment of the board. Each committee shall have such authority as delegated
to it by the board. A majority of the members of each committee of directors
shall constitute a quorum for the transaction of all committee business.
Vacancies occurring on committees of directors shall be filled by the board as
soon as possible.
Officers of the Association
Section 23. The principal officers of the Association shall be the chairman of
the board, the chief executive officer, president, secretary, treasurer and all
vice presidents except second vice presidents and assistant vice presidents.
Principal officers shall be elected by the board and shall serve at the pleasure
of the board. Officers other than principal officers shall be appointed by the
chief executive officer.
Section 24. The board shall elect the person who shall serve as chief executive
officer of the Association. The chief executive officer shall be responsible
only to the board, All other officers and employees of the Association shall be
under the chief executive officer's supervision and control. Subject to the
control and direction of the board, all activities and operations of the
Association shall be under the chief executive officer's supervision and
control.
Section 25. The board shall fix reasonable compensation for director-, and
principal officers. The chief executive officer shall fix compensation for
officers other than principal officers, in accordance with policies established
by the board.
Official Publication
Section 26. The official publication of the Association shall be called
Correspondent. Any notice, report or statement required by law, including notice
of election, may be published in Correspondent. If Association records show that
two or more benefit members or applicants for juvenile insurance have the same
mailing address, a Correspondent mailed to one of them is deemed mailed to all
of them at the same address unless a specific copy is requested. All amendments
to the Articles of Incorporation and Bylaws of the Association shall be
published in Correspondent not later than four months after the date of filing
such amendments with the Commissioner of Insurance of the state of Wisconsin. An
affidavit by the secretary of the Association certifying that Correspondent was
mailed in accordance with this section shall be submitted to the board at its
next meeting after publication of any notice, report or statement required by
law. The affidavits shall be filed in the records of the secretary's office.
Fiscal year
Section 27. The fiscal year of the Association shall begin on the first day of
January and end on the last day of December.
Annual Report
Section 28. An annual statement of the transactions of each fiscal year shall be
prepared and published in Correspondent within six months following the close of
each fiscal year.
<PAGE>
Local Branches
Section 29. Branches shall be created and maintained to foster voluntary
activity for aiding such lawful social, intellectual, educational, charitable,
benevolent, moral, fraternal, patriotic or religious endeavors as the branch
determines in accord with policies of the board; to provide members with the
opportunity to take part in benevolent and charitable activities of the
Association; and to provide benefit members with the opportunity to exercise
their right to vote in the corporate and insurance affairs of the Association.
Section 30. Branches shall be chartered by resolution of the board upon petition
to it, of 10 benefit members who live in the same general locality. The petition
shall indicate acceptance of the Articles of Incorporation and Bylaws of the
Association and the constitution for local branches. Petitions for branch
charters by groups of less than 10 benefit members may be specially considered
by the board, and charters may be issued pursuant to such petitions when the
board finds that the circumstances are justified. Charters may be withdrawn when
the board determines it to be in the best interests of the Association. The form
of petition, charter and constitution for local branches shall be adopted by the
board.
Section 31. Regular meetings of the branches shall be held at least monthly,
Meetings for election of directors and branch officers shall be held according
to procedures and during the time prescribed by the board.
Section 32. Branches may voluntarily join together to form regional groupings of
branches to assist each other in the performance of their fraternal and
benevolent activities, subject to the supervision and control of the board.
Indemnification and Fidelity Bonds
Section 33. The Association shall indemnify any person who is or was a director,
officer or employee against liability for acts or omissions in the performance
of their duties. The Association shall also indemnify any person who is or was
serving at the request of the Association is a director, officer or trustee of
another corporation, partnership, joint venture, trust or other enterprise, or
any director, officer or employee who is or was serving in a fiduciary capacity
with regard to any employee benefit plan, against liability for acts or
omissions in the performance of their duties, The Association may purchase and
maintain insurance on behalf of an individual who is an employee, agent,
director or officer of the corporation against liability asserted against and
incurred by the individual in his or her capacity as an employee, agent,
director or officer, or arising from his or her status as an employee, agent,
director or officer, regardless of whether the Association is required or
authorized to indemnify or allow expenses to the individual against the same
liability. If such insurance is purchased, the amounts shall be as determined by
resolution of the board. The Association shall maintain fidelity bonds on the
officers and employees as determined by resolution of the board.
<PAGE>
Amendment
Section 34. These bylaws may be repealed or amended, or new bylaws may be
adopted, at any regular meeting of the board or at any special meeting called
for that purpose. Notice of the proposed change shall be mailed or personally
delivered to board members at least 30 calendar days before the date of the
meeting. Board members may waive their right to receive notice individually and
the board, by unanimous vote of the full board, may suspend the requirement to
give such notice. The number of votes required to repeal or amend these bylaws,
or adopt new bylaws, shall be an affirmative vote of a majority of the full
board. Such changes shall be, effective from the date of passage or at such
other date as stipulated by the board and shall be filed promptly after adoption
with the Commissioner of Insurance of the state of Wisconsin. After filing, the
changes shall be published in the official publication as prescribed in these
bylaws.
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
BY AND BETWEEN
AID ASSOCIATION FOR LUTHERANS
AND
AAL VARIABLE PRODUCT ACCOUNTS
AND
AAL VARIABLE PRODUCT SERIES FUND, INC.,
DATED _____, 1994, AS AMENDED JULY 10, 1997
<PAGE>
TABLE OF CONTENTS
Page
1. Sale of FUND Shares.................................................. 3
2. Representations and Warranties....................................... 4
3. Prospectus and Proxy Statements: Voting.............................. 5
4. Sales Material and Information....................................... 6
5. Fees and Expenses.................................................... 7
6. Diversification...................................................... 8
7. Indemnification...................................................... 8
8. Term and Termination Of This Agreement............................... 11
9. Notices.............................................................. 13
10. Miscellaneous........................................................ 13
<PAGE>
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT, is made and entered into as of this
______day of _____________, 1997, by and among AID ASSOCIATION FOR LUTHERANS
("AAL"), on its own behalf and on behalf of AAL VARIABLE ANNUITY ACCOUNT I and
AAL VARIABLE LIFE ACCOUNT I (the "ACCOUNTS"), and AAL VARIABLE PRODUCT SERIES
FUND, INC. (the "FUND"), (collectively the "Parties").
WITNESSETH:
WHEREAS, AAL is a fraternal benefit society organized under the laws of
the State of Wisconsin engaged in the writing of life insurance, annuity
contracts, and other insurance products, and serves as sponsor and depositor of
the ACCOUNTS and as investment adviser of the FUND registered under the
Investment Advisers Act of 1940;
WHEREAS, the ACCOUNTS are legally segregated asset accounts of AAL,
established pursuant to the laws of the State of Wisconsin, and currently
consists of five subaccounts (the "Subaccounts"), for the purpose of funding
certain variable universal life insurance contracts (the "Certificates");
WHEREAS, the FUND, which currently consists of five Portfolios (the
"Portfolios"), is registered with the Securities and Exchange Commission (the
"SEC"), as a diversified, open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"), and its shares are registered
with the SEC under the Securities Act of 1933 (the "1933 Act"); and
WHEREAS, to the extent permitted by applicable insurance, tax and other
laws and regulations, AAL intends to purchase shares in the FUND on behalf of
the ACCOUNTS to fund the Certificates and on behalf of the ACCOUNTS [or on its
own behalf for related purposes,] and the FUND is authorized to sell such shares
to the ACCOUNTS and to AAL at net asset value;
WHEREAS, the FUND has entered into an Investment Advisory Agreement with
AAL, dated the twenty-seventh day of September, 1994, wherein AAL has agreed to
serve as investment adviser to the FUND, and to accept certain obligations of
the FUND as set forth herein, i.e., to compute the daily net asset value and the
net asset value per share for each Portfolio and to comply with Subchapter M and
Section 817(h) of the Internal Revenue Code of 1986 (the "Code");
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein, and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the Parties agree as follows:
<PAGE>
1. Sale of FUND Shares
1.1 The Certificates funded through the ACCOUNTS will provide for the
allocation of net amounts among certain Subaccounts for investment in
such shares of the Portfolios as may be offered from time to time in the
prospectus of the ACCOUNTS for the Certificates. The selection of the
particular Subaccount is to be made by the Certificate owner, and such
selection may be changed in accordance with the terms of the
Certificates.
1.2 The FUND will sell to AAL those shares of each available Portfolio
that AAL orders based on transactions under Certificates, effecting such
orders on a daily basis at the Portfolio's net asset value per share
computed as provided in the FUND prospectus.
1.3 The Board of Directors of the FUND (the "Board") may refuse to sell
shares of any Portfolio to AAL, or suspend or terminate the offering of
shares of any Portfolio, if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion
of the Board, acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of the FUND.
1.4 The FUND agrees that its shares will be sold only to AAL. No shares
of any Portfolio will be sold to the general public or to any life
insurance company other than AAL.
1.5 The FUND will redeem for cash from AAL those full or fractional
shares of each Portfolio that AAL requests based on transactions under
Certificates, effecting such requests on a daily basis at the
Portfolio's net asset value per share computed as provided in the FUND
prospectus
1.6 Issuance and transfer of the FUND's shares will be by book entry
only. Stock certificates will not be issued to AAL. Shares ordered from
the FUND will be recorded in an appropriate title for AAL.
1.7 The FUND shall furnish notice promptly to AAL of any income,
dividends or capital gain distributions payable on the shares of any
Portfolio. AAL hereby elects to receive all such income, dividends and
capital gain distributions as are payable on FUND shares in additional
shares of that Portfolio. AAL reserves the right to revoke this election
and to receive all such income, dividends and capital gain distributions
in cash. The FUND shall notify AAL of the number of shares so issued as
payment of such income, dividends and distributions.
1.8 The FUND shall make the net asset value per share for each Portfolio
available to AAL on a daily basis, as soon as reasonably practical after
the net asset value per share is calculated.
1.9 The FUND may establish additional Portfolios to provide additional
funding media for the Certificates, or delete, combine, or modify
existing Portfolios. The shares of any additional Portfolio may be made
available to the ACCOUNTS by the FUND, pursuant to the terms of this
Agreement, and any applicable reference to any Portfolio, the FUND or
its shares herein shall include a reference to any such Portfolio.
<PAGE>
2. Representations and Warranties
2.1 AAL represents and warrants that interests in the ACCOUNTS under the
Certificates are or will be registered under the 1933 Act to the extent
required by the 1933 Act, that the Certificates will be issued and sold
in compliance in all material respects with all applicable federal and
state laws and that the sale of the Certificates will comply in all
material respects with state insurance and federal securities law
suitability requirements. AAL further represents and warrants that it is
a fraternal benefit society organized under the laws of the State of
Wisconsin and engaged in the writing of life insurance, annuity
contracts, and other insurance products; that it has legally and validly
established its ACCOUNTS as segregated asset accounts under Wisconsin
insurance law; and that it has registered or will register the ACCOUNTS
as a unit investment trust in accordance with the provisions of the 1940
Act to serve as segregated investment accounts for the Certificates, to
the extent required by the 1940 Act.
2.2 AAL represents and warrants that any interests in the ACCOUNTS being
offered for sale under the Certificates are or will be registered under
the 1933 Act to the extent required by the 1933 Act, that the
Certificates will be issued and sold in compliance in all material
respects with all applicable federal and state laws, and that the sale
of the Certificates will comply in all material respects with state
insurance law, and federal securities laws, including the rules of the
National Association of Securities Dealers, Inc. ("NASD").
2.3 The FUND represents and warrants that its shares sold pursuant to
this Agreement are or will be registered under the 1933 Act to the
extent required by the 1933 Act, duly authorized for issuance and sold
in compliance with the laws of the state of Maryland and all applicable
federal securities laws and that the FUND is or will be registered under
the 1940 Act to the extent required by the 1940 Act. The FUND will amend
the registration statement for its shares under the 1933 Act, as well as
its registration statement under the 1940 Act, as required in order to
effect the continuous offering of its shares. The FUND will register and
qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the FUND.
2.4 AAL represents and warrants that its Certificates are currently
treated as annuity contracts under applicable provisions of the Code and
that it will make every effort to maintain such treatment.
2.5 The FUND makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses) complies
with the insurance laws or regulations of the various states. The FUND
intends to comply with the insurance laws of any relevant state
regarding any Portfolio's investment objectives, policies and
restrictions to the extent that AAL advises the FUND, in writing, of
such laws or any change in such laws.
2.6 The FUND represents and warrants that each of its Portfolios will
qualify as a regulated investment company under Subchapter M of the Code
and that the investments of each of its Portfolios will comply with the
diversification requirements of Section 817(h) of the Code and the
regulations thereunder, and that it will notify AAL immediately upon
having a reasonable basis for believing that it has ceased to so qualify
or that it might not so qualify in the future.
<PAGE>
3. Prospectus and Proxy Statements: Voting
3.1 The FUND will provide such documentation (including a final copy of
any new prospectus, statement of additional information ("SAI"), or
supplement) and other assistance as is reasonably necessary in order for
AAL or its designee to timely distribute the current FUND prospectus,
SAI and any supplement thereto, or, in the alternative, to have the
prospectus of the ACCOUNTS for the Certificates and the FUND's
prospectus printed together in one document once each year (or more
frequently if the prospectus for the FUND is amended) (such printing to
be at the FUND's expense, as provided in Section 5.1).
3.2 The FUND will provide such documentation (including a final copy of
any proxy material, report to shareholders, and other communication to
shareholders) and other assistance as is reasonably necessary for AAL or
its designee to timely distribute the proxy material, report to
shareholders, and other communication (such printing and distribution to
be at AAL's expense, as provided in Section 5.2).
3.3 If, and to the extent required by law, AAL shall, at AAL's expense,
as provided in Section 5.2:
(a) solicit voting instructions from Certificate owners;
(b) vote Portfolio shares in accordance with instructions received from
Certificate owners;
(c) vote Portfolio shares for which no instructions have been received,
as well as Portfolio shares attributable to AAL other than under
Certificates, in the same proportion as shares of such Portfolio for
which instructions have been received, so long as and to the extent that
the SEC continues to interpret the 1940 Act to require pass-through
voting privileges. AAL reserves the right to vote Portfolio shares held
in any segregated asset accounts or in general accounts in its own
right, to the extent permitted by law.
3.4 The FUND reserves the right to take all actions, including but not
limited to the dissolution, merger, and sale of all assets of the FUND
solely upon the authorization of its Board.
4. Sales Material and Information
4.1 AAL or its designee will furnish, or will cause to be furnished, to
the FUND or its designee, each piece of sales literature or other
promotional material in which the FUND or AAL is named, at least fifteen
(15) days prior to its intended use. No such material will be used if
the FUND or its designee objects to such intended use within fifteen
(15) days after receipt of such material.
4.2 AAL will not give any information or make any representation or
statement, or cause such information to be given or representation to be
made, on behalf of the FUND or concerning any Portfolio in connection
with the sale of the Certificates other than the information or
representations contained in the registration statement, prospectus, and
SAI for FUND shares, as such registration statement, prospectus, and SAI
may be amended or supplemented from time to time, or in reports or proxy
materials for the FUND, or in sales literature or other promotional
material approved by the FUND or its designee, except with the
permission of the FUND or its designee.
<PAGE>
4.3 The FUND or its designee will furnish, or will cause to be
furnished, to AAL or its designee, each piece of sales literature or
other promotional material of the FUND in which AAL and/or its ACCOUNTS
is named, at least fifteen (15) days prior to its intended use. No such
material will be used if AAL or its designee objects to such intended
use within fifteen (15) days after receipt of such material.
4.4 The FUND will not give any information or make any representations
or statements, or cause such information to be given or representations
to be made, on behalf of AAL or concerning AAL, its ACCOUNTS or its
Certificates other than the information or representations contained in
a registration statement or prospectus for such Certificates, as such
registration statement and prospectus may be amended or supplemented
from time to time, or in published reports for the ACCOUNTS that are in
the public domain or approved by AAL for distribution to owners, or in
sales literature or other promotional material approved by AAL or its
designee, except with the permission of AAL or its designee .
4.5 The FUND will provide to AAL one complete copy of all registration
statements, prospectuses, SAIs, reports, proxy material, sales
literature and other promotional material, applications for exemptions,
requests for no-action letters, and all amendments to any of the above,
that relate to the FUND or its shares, contemporaneously with the filing
of such document with the SEC or other regulatory authorities.
4.6 AAL will provide to the FUND one complete copy of all registration
statements, prospectuses, SAIs, reports, solicitations for voting
instructions, sales literature and other promotional material,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the ACCOUNTS or its
Certificates, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
5. Fees and Expenses
5.1 The FUND will pay all expenses incident to the FUND's performance
under this Agreement. In addition to the investment advisory fee,
subject to the expense reimbursement arrangement discussed below, each
Portfolio will bear all of its operating expenses that are not
specifically assumed by AAL, including the following: (i) interest and
taxes (ii) brokerage commissions; (iii) insurance premiums; (iv)
compensation and expenses for those Directors who are not "interested"
persons under Section 2(a)(19) of the Act; (v) independent legal and
audit expenses; (vi) fees and expenses of the FUND's custodian,
shareholder servicing or transfer agent and accounting services agent;
(vii) expenses incident to the issuance of its shares, including stock
certificates and issuance of shares on the payment of, or reinvestment
of dividends; (viii) fees and expenses incident to the registration
under Federal or state securities laws of the FUND or its shares; (ix)
FUND or portfolio organizational expenses; (x) fund expenses of
preparing, printing and mailing reports and notices, proxy material and
prospectuses to shareholders of the FUND; (xi) all other expenses
incidental to holding meetings of the FUND's shareholders; (xii) dues or
assessments of or contributions to the Investment Company Institute or
any successor or other industry association; (xiii) such non-recurring
expenses as may arise, including litigation affecting the FUND and the
legal obligations which the FUND may have to indemnify its officers and
Directors with respect thereto; and (xiv) cost of daily evaluation of
each of the Portfolio's securities and net asset value per share.
<PAGE>
5.2 AAL will pay all expenses incident to AAL's performance under this
Agreement. In addition, AAL will bear the expenses of printing and
distributing to its Certificate owners the FUND proxy materials, proxy
cards and voting instruction forms (collectively "proxy information"),
tabulating the results of proxy solicitations to its Certificate owners,
printing and distributing to its Certificate owners the FUND prospectus,
SAI, supplement, proxy material, report to shareholders, and other
communication to shareholders, and any expenses associated with
administration of its Certificates.
6. Diversification
6.1 The Portfolios will at all times invest money from the Certificates
in such a manner as to ensure that the Certificates will be treated as
variable life insurance contracts under the Code and the regulations
thereunder insofar as such investment is required for such treatment.
Without limiting the scope of the foregoing, the Portfolios will at all
times comply with Section 817(h) of the Code and Treasury Regulations
Section 1.817-5 relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any
amendments or other modifications to such Section or Regulations.
6.2 The FUND shall furnish to AAL on a regular basis reports of all of
the investments of each Portfolio in a form sufficient to permit AAL to
determine whether each Portfolio is in compliance with the
diversification requirements of Section 817(h) of the Code and the
Regulations thereunder and shall take immediate action, on learning
through its own monitoring, or on advice from AAL, that any Portfolio is
not in compliance with such requirements, to return to compliance with
such requirements.
6.3 If any Portfolio is found not to comply with the diversification
requirements at the end of a calendar quarter and the 30-day grace
period allowed under the Regulations, the FUND shall take all
appropriate efforts immediately to restore any such Portfolio to
compliance and shall fully cooperate with AAL in any effort to correct
such diversification failure under procedures established by the
Internal Revenue Service, including those set forth in Revenue Procedure
92-25.
7. Indemnification
7.1 Indemnification By AAL
(a) AAL will indemnify and hold harmless the FUND and each of its
directors, officers, and employees and each person, if any, who controls
the FUND within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 7.1) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of AAL) or litigation (including
legal and other expenses), to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, and
which:
<PAGE>
(i) arise out of or are based upon any failure by AAL to perform the
duties or assume the general business responsibilities of AAL with
respect to the design, drafting, state approvals, issuance, servicing
and administration of the Certificates, or the establishment and
maintenance of the ACCOUNTS; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement, prospectus, or SAI for the Certificates, or the ACCOUNTS, or
contained in the Certificates or sales literature for the Certificates
(or any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this Agreement
to indemnify will not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in writing to
AAL by or on behalf of the FUND for use in the registration statement,
prospectus, or SAI for the Certificates or the ACCOUNTS or in the
Certificates or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Certificates or
FUND shares; or
(iii) arise out of or are based upon statements or representations
(other than statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the FUND not supplied
by AAL, or persons under its control) or wrongful conduct of AAL or
persons under its control, or failure to supervise persons under AAL's
control or entities or individuals with which AAL contracts, with
respect to the sale or distribution of the Certificates or FUND shares;
or
(iv) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature of the FUND or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon information furnished in writing to the FUND by or on
behalf of AAL; or
(v) arise out of or result from any failure by AAL to provide the
services and furnish the materials contemplated by this Agreement; or
(vi) arise out of or result from any material breach of any
representation and/or warranty made by AAL in this Agreement or arise
out of or result from any other material breach of this Agreement by
AAL, as limited by and in accordance with the provisions of Sections
7.1(b). and 7.1(c) hereof.
(b) AAL will not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to the Fund, whichever is applicable.
<PAGE>
(c) AAL will not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified AAL in writing within a reasonable
time after the summons or other first legal process giving information
of the nature of the claim shall have been served upon such Indemnified
Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify AAL of any
such claim will not relieve AAL from any liability that it may have to
the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, AAL shall be entitled to
participate, at its own expense, in the defense thereof. AAL also will
be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from AAL to such party of
AAL's election to assume the defense thereof, the Indemnified Party will
bear the fees and expenses of any additional counsel retained by it, and
AAL will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(d) The Indemnified Party will promptly notify AAL of the commencement
of any litigation or proceeding against it or any of its respective
officers or directors in connection with transactions that are the
subject of this Agreement whether or not indemnification is being sought
hereunder.
7.2 Indemnification By the FUND
(a) The FUND will indemnify and hold harmless AAL and each of its
directors, officers and employees and each person, if any, who controls
AAL within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.2) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of FUND) or litigation (including
legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation at common law or otherwise, which:
(i) arise out of or are based upon any failure by the FUND to perform
the duties or assume the general business responsibilities with respect
to the sale of shares of the FUND to AAL; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the sales literature
for the FUND and/or the Certificates, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify will
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to the FUND by or on
behalf of AAL for use in the registration statement, prospectus, or SAI
for use in the sales literature or otherwise for use in connection with
the sale of Portfolio shares; or
<PAGE>
(iii) arise out of or are based upon statements or representations
(other than statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the FUND not supplied
by the FUND, or persons under its control) or wrongful conduct of the
FUND or persons under its control, or failure to supervise persons under
the FUND's control or entities or individuals with which the FUND
contracts, with respect to the sale or distribution of the Certificates
or FUND shares; or
(iv) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature of the FUND or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon information furnished in writing to AAL by or on behalf of
AAL; or
(v) arise out of or result from any failure by the FUND to provide the
services and furnish the materials contemplated by this Agreement; or
(vi) arise out of or result from any material breach of any
representation and/or warranty made by the FUND in this Agreement or
arise out of or result from any other material breach of this Agreement
by the FUND, except to the extent provided in Section 7.2(b) and 7.2(c)
hereof.
(b) The FUND will not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to the FUND, whichever is applicable.
(c) The FUND will not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the FUND in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify
the FUND of any such claim will not relieve the FUND from any liability
that it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
FUND shall be entitled to participate, at its own expense, in the
defense thereof. The FUND also will be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action.
After notice from the FUND to such party of the FUND's election to
assume the defense thereof, the Indemnified Party will bear the fees and
expenses of any additional counsel retained by it, and the FUND will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
<PAGE>
(d) The Indemnified Party will promptly notify the FUND of the
commencement of any litigation or proceeding against it or any of its
respective officers or directors in connection with transactions that
are the subject of this Agreement whether or not indemnification is
being sought hereunder.
8. Term and Termination Of This Agreement
8.1 This Agreement will terminate:
(a) as to any party hereto, at the option of that party, upon prior
written notice to the other party as provided in Section 8.3 herein; or
(b) at the option of the FUND in the event that formal administrative
proceedings are instituted against AAL by the NASD, the SEC, any state
securities or insurance commissioner or any other regulatory body
regarding AAL's duties under this Agreement or related to the sale of
the Certificates, the operation of the ACCOUNTS, or the purchase of FUND
shares, provided, however, that the FUND determines, in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of AAL
to perform its obligations under this Agreement; or
(c) at the option of AAL in the event that formal administrative
proceedings are instituted against the FUND by the NASD, the SEC, or any
state securities or insurance commission or any other regulatory body,
regarding the FUND's duties under this Agreement or related to the sale
of FUND shares or the operation of the FUND, provided, however, that AAL
determines, in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the
ability of the FUND to perform its obligations under this Agreement; or
(d) at the option of AAL with respect to the ACCOUNTS, upon requisite
authority to substitute the shares of another investment company for
shares of the FUND in accordance with the terms of the Certificates or
in accordance with the ACCOUNTS investment policy or standards of
conduct; or
(e) at the option of AAL, in the event any of the FUND's shares are not
registered, issued, or sold in accordance with applicable federal and
any state law or such law precludes the use of such shares as the
underlying investment media of the Certificates issued or to be issued
by AAL; or
(f) at the option of AAL, if the FUND fails to meet the requirements
specified in Section 2.6 hereof; or
(g) at the option of the FUND, if the investments of the ACCOUNTS fail
to satisfy the diversification requirements of the Code and the
regulations thereunder, or
<PAGE>
(h) at the option of AAL, if the FUND dissolves or becomes otherwise
unable to sell shares to fund the Accounts.
8.2 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 8.1(a) may be exercised for
any reason or for no reason.
8.3 Notice Requirement for Termination. No termination of this Agreement
will be effective unless and until the party terminating this Agreement
gives prior written notice to the other party to this Agreement of its
intent to terminate, and such notice shall set forth the basis for such
termination. Furthermore,
(a) in the event that any termination is based upon the provisions of
Section 8.1(a) hereof, such prior written notice shall be given at least
one hundred eighty (180) days in advance of the effective date of
termination as required by such provision;
(b) in the event that any termination is based upon the provisions of
Section 8.1(b) or Section 8.1(c) hereof, such prior written notice shall
be given at least ninety (90) days in advance of the effective date of
termination;
(c) in the event that any termination is based upon the provisions of
Section 8.1(d) hereof, AAL will give at least sixty (60) days prior
written notice to the FUND of the date of any proposed action to
substitute FUND shares, including the filing of any applicable exemptive
application under the 1940 Act relating to the ACCOUNTS; and AAL will
provide the FUND with a copy of any such exemptive application; and
(d) in the event that any termination is based upon the provisions of
Section 8.1(e), Section 8.1(f), or Section 8.1(g) hereof, such prior
written notice shall be given as soon as possible within twenty-four
(24) hours after the terminating party learns of the event causing
termination to be required.
8.4 Partial Termination. It is also understood that this Agreement may
be terminated with regard to a specific Portfolio or Portfolios of the
FUND, or the entire FUND at the discretion of the terminating party.
Notwithstanding any termination of this Agreement, the FUND shall, at
the option of AAL, continue to make available additional shares of the
FUND pursuant to the terms and conditions of this Agreement, for all
Certificates in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Certificates").
Specifically, without limitation, the owners of the Existing
Certificates shall be permitted to transfer or reallocate investments
under the Certificates, redeem investments in the FUND and/or invest in
the FUND upon the making of additional purchase payments under the
Existing Certificates.
<PAGE>
9. Notices
Any notice will be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to AAL: 4321 North Ballard Road
Appleton, Wisconsin 54919-0001
Attention: Woodrow E. Eno
If to the FUND: 4321 North Ballard Road
Appleton, Wisconsin 54919-0001
Attention: Steven A. Weber
10. Miscellaneous
10.1 This Agreement will be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Maryland, where the sale of any FUND share shall be deemed to have been
made; provided, however, that if such laws or any of the provisions of
this Agreement conflict with applicable Provisions of the 1940 Act, the
latter shall control.
10.2 If any provision of this Agreement will be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Agreement will not be effected thereby.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the ________
day of _________________, 1997.
AID ASSOCIATION FOR LUTHERANS and
AAL VARIABLE ANNUITY ACCOUNT I and
AAL VARIABLE LIFE ACCOUNT I
By:
John O. Gilbert
President and Chief Executive Officer
By:
Woodrow E. Eno
Senior Vice President
Secretary and General Counsel
AAL VARIABLE PRODUCT SERIES FUND, INC.
By:
Steven A. Weber
President
By:
Mark J. Mahoney
Secretary
AAL Variable Universal Life Insurance Application (logo)
AID ASSOCIATION FOR LUTHERANS
New Account Information
4321 N. Ballard Road, Appleton WI 54919-0001
The Variable Life Owner / Applicant must provide the following information to
meet securities industry regulatory rules designed for customer protection. This
information is confidential and is only for the use of AAL.
Section A - Personal Information
Name of owner / applicant (print title, first, middle, last, and suffix name, as
applicable)
Birthdate (mo/day/yr) Are you a U.S. citizen? Yes No
Single Divorced
Married Widowed
Number of dependents under age 18 -
Occupation:
Labor/ Trades Office/ Retail
Manager/ Sales Professional
Retired Student
Unemployed
Other -
Do you own a business?
Yes - Number of employees -
No
Other citizenship description
Employer name
Employer street address
City State ZIP Code
Associated with NASD firm?
Yes- Firm -
No
<PAGE>
Section B - Financial Suitability Information
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Prior Investment Experience none less more Annual Household Income Assets - Excluding this purchase
than 5 than 5
years years
Bank Savings, CD's Under $20,000 Cash / CDs $
Money Market Fund $20,001 - $35,000 Stocks / Bonds $
Stocks or Equity $35,001 - $50,000 Mutual Funds $
Bonds or Fixed Income $50,001 - $75,000 Business $
Mutual Funds $75,001 - $100,000 Residence (equity) $
Variable Annuities / Life More than $100,000 Insurance (cash value) $
other Deferred Annuities $
Retirement Plans $
Other $
I decline to disclose financial information for this application. Total Assets $
Liquid Net worth $
</TABLE>
Need For Life Insurance
Estate Planning
Survivor's Need
Other -
Source of Premiums
Current Income
AAL Mutual Fund
Other Company Mutual Fund
Loans
Gift / Inheritance
Death Proceeds
Savings / Checking / CD
AAL Insurance / Annuity
Other Company Insurance/Annuity
Other -
Risk Tolerance
Check the number below that corresponds with the level of risk you are willing
to accept.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Low- 1 2 3 4 5 6 7 8 9 10 -High
CDs Utility and Blue Small Company Precious Metals
Savings Chip Stocks Emerging Growth Oil and Gas
Accounts and Bonds Securities International Drilling
Money Market Funds Global Securities
High Yield Securities
</TABLE>
Section C - Other Information
1. Are you replacing a Variable Life contract?
Yes - Indicate the reason for the exchange of contract and
provide allocation information on the contract being replaced-
No
2. List amount of total non-AAL life insurance that is inforce or pending - $
<PAGE>
Adult Application For Variable Universal Life Insurance AID ASSOCIATION FOR
LUTHERANS
With Aid Association For Lutherans, (AAL), 4321 N. Ballard Road,
A Fraternal Benefit Society, Appleton, WI 54919 Appleton, WI 54919-0001
New Certificate Certificate Change Certificate number
Reinstatement Certificate number
Section 1 - Replacement
Yes No
Is this certificate intended to replace any part of, or all of,
another company's contract? Is this certificate intended to replace
any part of, or all of, an AAL certificate?
Is this a 1035 exchange?
Section 2 - Proposed Insured
Name (print title, first, middle, last, and suffix name, as applicable)
Date of birth (mo/day/yr) Sex Current occupation
Yes No Are you a citizen of the United States of America (USA) or a permanent
resident of the USA?
Section 3 - Proposed Third Party Owner
Type of application-. Third Party Reason-
Advanced Marketing Reason-
Type of Owner Individual Multiple individuals
Other
Name (print title, first, middle, last, and suffix name, as applicable)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Relationship to insured Relationship to member Date of birth Percentage of Residence
(mo/day/yr) common ownership state
Complete additional names if multiple owners.
Multiple owners shall be: Joint owners Common owners
Name (print title, first, middle, last, and suffix name, as applicable)
Relationship to insured Relationship to member Date of birth (mo/day/yr Percentage of common
ownership__%
Name (print title, first, middle, last, and suffix name, as applicable)
Relationship to insured Relationship to member Date of birth (mo/day/yr Percentage of common
ownership__%
Name (print title, first, middle, last, and suffix name, as applicable)
Relationship to insured Relationship to member Date of birth (mo/day/yr Percentage of common
ownership__%
Name (print title, first, middle, last, and suffix name, as applicable)
Relationship to insured Relationship to member Date of birth (mo/day/yr Percentage of common
ownership__%
</TABLE>
If none indicated, percentage will be equal. Joint ownership is always equal.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Time period between Periodic Needs Date of Periodic Needs Review (mo/day/yr)
Review 1 2 3 (if other than certificate anniversary) -
Single Premium Allocation Billed Premium Allocation
Must total 100% and be in whole numbers. Must total 100% and be in whole numbers.
Money Market % Balanced % Money Market % Balanced %
Large Company Stock % Bond % Large Company Stock % Bond %
Small Company Stock % Fixed Account % Small Company Stock % Fixed Account %
- - - -
International Stock % High Yield Bond % International Stock % High Yield Bond %
</TABLE>
Telephone Authorization: Yes No
By checking `Yes' above, the applicant agrees and understands as follows'.
1 .AAL is authorized to accept and act upon telephone instructions from me
for the following purposes', transfer of accumulated values among account
options, address changes, changes in allocation of premiums, premium
payment instructions, and any other transactions made available by AAL for
telephone transfer. Any transfers shall be made on the basis of unit
values next determined following AAL's receipt of instructions in proper
order. 2. AAL may refuse telephone instructions if the caller cannot
provide proper identification of person or account. Without prior
disclosure, AAL may record any telephone conversations containing such
instructions. If AAL acts in good faith upon the telephone instruction,
AAL (and any affiliate or agent) will not be liable for any loss, expense,
or cost arising out of any telephone instruction. 3. AAL may modify,
suspend, or discontinue this privilege at any time without prior notice.
The privilege is subject to terms of the certificate, the current
prospectus, and any other rules enacted by AAL. This authorization is
valid until written cancellation notice signed by the owner is received by
AAL. All terms are binding on my agents, heirs, and assigns.
<PAGE>
Section 6 - Complete For Certificate Change Only
Current Death Benefit Option New Level Death Benefit Option
Level (I) Increasing (II) Level (I) Increasing (II)
Maintain Current Specified Amount
Yes No
Current Specified Amount $ New Specified Amount $
---------
Reason for Specified Amount Change:
Unscheduled Increase
Large Premium Payment
Term Plan / Rider Conversion
Certificate Number(s) Balance Of Term To Continue Amount Of Term Converted
Disability Waiver Benefit
Currently on Certificate Change Requested-.
Yes No Add Cancel
Applicant Waiver Benefit
Currently on Certificate Change Requested:
Yes No Add Change to applicant - Add AW Cancel
Guaranteed Purchase Option Benefit Change Requested:
Current Amount Add $ Cancel
$ increase to $ Decrease to $
Accidental Death Benefit Change Requested:
Current Amount Add $ Cancel
$ increase to $ Decrease to $
<PAGE>
Section 6 - Complete For Certificate Change Only (Continued)
Billed Premium Indexing Change Requested
Current Percentage New value % (type & percentage)
% Cancel
Reduce insured's rating Reduce applicant's rating Time period between
Periodic Needs Date
of Periodic Needs
Review 1 2 3 Review -
Section 7 - Premium / Billing Information
Initial Premium paid by
(check mark) Type Amount
Check / Money Order $
Electronic First Premium (EFT $
Internal 1035 Exchange $
Loan $
Complete Withdrawal / Surrender $
Surplus Refunds $
Partial Withdrawal $
Other- $
None $
Total Initial Premium Amount $
Premium Billing - Type of billing:
Regular Billing - Send to special billing address? Yes No MCA - First MCA
withdrawal expected - ___ Add to existing MCA account- Family Billing - Add to
existing Family Bill account Government Allotment No bill
Frequency of billing-.
Annual Semiannual
Quarterly Monthly
Premium billing amount-. $
EFT withdrawal date -
Draw the EFT from the financial institution for MCA account -
Name And Address For Special Billing / Family Billing
Name (print title, first, middle, last, and suffix name, as applicable) Address
City State ZIP Code
Section 8 - Special Requests
Page 3
<PAGE>
Section 9 - Declaration Of Insurability
Insured:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Height Weight Weight 1 year ago or at birth if under Reason for weight loss
Ft In age 1 - Lbs Oz
Lbs
Name of primary care provider - Indicate if none.
Patient ID no. Date last consulted Reason last consulted
Type of treatment Medication prescribed Recovery date
</TABLE>
Yes No Within the past five years has the juvenile
1. Had a life or health application declined, postponed, rated, modified,
or withdrawn? If Yes, list below.
Application action Company name Date
Reason
Application action Company name Date
Reason
Application action Company name Date
Reason
Application action Company name Date
Reason
Application action Company name Date
Reason
Place details for all 'Yes' answers for question two in Juvenile Details
Section.
2. Been diagnosed or been treated by a physician or member of the medical
profession, chiropractor, counselor, or any other professional for:
Yes No
(a)disorder of the heart, circulatory, blood, or immune system (excluding
HIV)?
(b) abnormal growth, cyst, tumor, or cancer?
(c) disorder of the respiratory system?
(d) disorder of the digestive system such as the stomach, intestines,
rectum, liver, gallbladder, esophagus?
(e) disorder of the urinary system, such as kidneys, bladder?
(f) disorder of the endocrine / hormone system? If diabetes: Date of
diagnosis -
Regulated by:
Insulin-. Daily dose (units) - Oral medication Diet
Last blood sugar reading - Fasting Yes No Date of Last Reading
Check all that apply:
Kidney disorder Eye complicationsNeuropathy
Circulatory problems Recurrent infection
Other complications -
Care provider / Facility with records if other than primary care provider -
Page 4
<PAGE>
Yes No
(g) disorder of the nervous system including psychological and psychiatric
care? If seizures: Grand mal Petit mal Other -
(h) disorder of the muscle, skin, bone, or joint?
(i) disorder of the reproductive system?
(J) disorder of the eyes, ears, nose, or throat?
3. Other than reported above, within the past 5 years, has the juvenile:
(a) consulted or been advised to consult a doctor, hospital, chiropractor,
clinic, psychiatrist, psychologist, or counselor for any reason?
(b) been medically treated or evaluated at a hospital, clinic, or other
facility, received special training or special schooling or been medically
advised to have any treatment, test, surgery, biopsy, or hospitalization not yet
completed?
(c) been advised by a physician, chiropractor, or medical therapist to
restrict or avoid normal activities due to illness or injury?
(d) taken any prescription drugs other than those previously listed? If
Yes, list below.
Prescription drug used Date last used
Reason for use
Prescription drug used Date last used
Reason for use
Prescription drug used Date last used
Reason for used
Prescription drug used Date last used
Reason for use
Prescription drug used Date last used
Reason for use
Applicant:
Height Weight Name of primary care provider - Indicate if none.
Ft In Lbs
Date last consulted Reason last consulted Recovery date
Type of treatment Medication prescribed
Yes No Place details for all 'Yes' answers for questions in Applicant Details
Section.
1. Within the last 10 years have you had or do you currently have: cancer,
heart attack, heart trouble, insulin dependent diabetes, rheumatoid arthritis,
disorder of the nervous system, or have you been treated for or been diagnosed
as having HIV infection or Acquired Immune Deficiency Syndrome (AIDS)? 2. Within
the last five years have you been hospitalized for any psychological /
psychiatric condition, or within the last three years have you received
treatment or medication for any psychological / psychiatric condition?
3. Within the last three years have you been disabled for greater than two
months or are you currently disabled?
Page 5
<PAGE>
Section 1OA - Details For Juvenile Questions Answered 'Yes'
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date Last
consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Page 6
<PAGE>
Section 1OA - Details For Juvenile Questions Answered 'Yes' (Continued)
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Additional Underwriting Information
Page 7
<PAGE>
Section 10B - Details For Applicant Questions Answered 'Yes'
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
Question: No/Ltr Type of disorder, injury, test Date of diagnosis
Date of onset Number of occurrences Treatment Date of last hospitalization
nursing home care, or home
health care
Last occurrence date Recovered Yes No Recovery date Surgery date
Last consultation date Time lost from work / school Residuals
Medication(s) currently taking Care provider / Facility with records if other than
primary care provider
Complete for question 2b only - Location Type: Benign Malignant Unknown
</TABLE>
Additional Underwriting Information
Page 8
<PAGE>
Section 11 - Beneficiary If you are completing the application on paper,
Designation complete a beneficiary designation form printed from
the forms package.
If new certificate is result of Term Conversion, beneficiary designation is
for new certificate only. To change designation on existing certificate,
complete separate beneficiary form printed from forms package.
Section 12 - Agreement And Authorization
I understand and agree that:
1 . I have personally read (or have had read to me) and verified all
statements and answers provided to the AAL district representative as part of
this application which includes: a. New Account information, and b. Variable
Life application.
2. 1 have received and reviewed the current prospectus for the AAL Variable
Life insurance contract and underlying mutual funds. I understand the provisions
of the prospectus and agree to its terms.
3. Any false or incomplete statements or answers may result in the loss of
coverage.
4. This application will become part of the Variable Life contract.
5. No change in this application shall be made without my written consent.
6. No representative of AAL except the president or secretary of AAL can
make or alter any contract or waive any of AAL's rights or requirements.
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Section 12 - Agreement And Authorization (Continued)
7. I have received the Notice Of Insurance Information Practices. AAL can
release information to the MIB pursuant to this notice.
8. No coverage shall take effect under the certificate applied for unless
and until: a. the certificate is delivered: b. the first full premium is paid
during the lifetime of the person to be covered- and c. the insurability of the
person to be covered remains as described in this application.
9. AAL reserves the right to allocate premium payments to the money market
subaccount until the expiration of the free look period in those states that
require a full refund of premium during the free lock period. More detailed
information on the allocation of premium payments during the free look period is
contained in the prospectus. 10. Under the life insurance contract applied for,
the Cash Value may increase or decrease in accordance with the experience of the
separate account and is not guaranteed as to dollar amount (except for the 4%
minimum return for any portion of cash value you invest in the Fixed Account).
11. Under the life insurance contract applied for, the Death Benefit will
vary when you select the Variable Death Benefit Option. The Death Benefit will
never be less than the Specified Amount as long as the Certificate is in force.
12. The date of this application is the date the application is signed by
the proposed insured.
Authorization To Obtain Information
I authorize the release of my medical or nonmedical information available on me
or my minor children to AAL from: any provider of health care- a consumer
reporting agency an employer-, an insurance or reinsuring company-, an insurance
agent- a governmental or other organization- the MIB, a family member or other
person. This information includes: diagnosis or medical history'-, psychiatric
history or treatment-. results of genetic tests-. treatment and prognosis of any
physical or mental condition drug or alcohol abuse history or treatment. I also
authorize the release to AAL of test results or information relating to H IV or
confirmed diagnosis of or treatment for any sexually transmitted disease as
required by law in my state. I understand that AAL may use this information to
determine eligibility for benefits under any existing certificate. I further
authorize AAL and the above sources, except the MIB, to provide the information
to any reinsurers any legal agent employed by AAL, or to any insurance company
or broker selected by AAL for the sole purpose of securing insurance coverage
for me. AAL will only release this information to organizations performing
business, insurance, or legal services in connection with this application or
claim or as may be lawfully required. I agree that copies of this authorization
may be used in place of the original. I may also request a copy. This
authorization is valid for two years from the date shown below unless revoked
earlier. I have read (or have had read to me) the statements and answers made on
this application. The signature below applies to all sections and statements on
this application.
Signed at City State
<PAGE>
Signature of parent or guardian / Date signed (mo/day/yr)
Signature of applicant / controller
Date signed (mo/day/yr)
Signature of member / Date signed (mo/day/yr)
Signature of owner / Date signed (mo/day/yr)
Caution: If your answers on this application are incorrect or untrue, AAL
may have the right to deny benefits or rescind your certificate.
I certify that I have asked all questions and recorded all answers as they were
given to me and reviewed these with the proposed insured. To the best of my
knowledge, the certificate applied for is is not intended to replace any part
of, or all of, another contract. Signature of AAL representative
Date signed(mo/day/yr) DR name / Code number / ID
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Section 13 - Representative's Information
1. Requirements arranged for:
Nonmedical only
Paramedical examination (use HO approved only)
Medical examination by MD
Resting 12-lead electrocardiogram
Blood Chemistry Profile (BCP)
Other screening -
Lab code number -
Do you want the home office to electronically order the paramed exam, EKG,
and/or BCP?
Yes-. Facility name -
No (Electronic ordering can only be done with transmitted applications)
Field initiated Attending Physician's Statement -
Doctor / Facility name Facility name
2a. Primary care provider address for juvenile proposed insured
Name
Address City
State ZIP Code Telephone number
2b. Primary care provider address for applicant
Name
Address City
State ZIP Code Telephone number
3. Other care provider addresses for juvenile proposed insured
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
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3. Other care provider addresses for juvenile proposed insured - (Continued)
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
Question-. Name City
No / Ltr Address State ZIP Code Telephone number
4. Your estimate of Annual income (amt) Other income (amt)
proposed insured's: Other income (source) Net worth
Yes No 5. Did you personally see the proposed insured and ask each question?
If no, explain -
Yes No 6. Did the proposed insured or proposed insured's family contact you
for this coverage?
Yes No 7. (a)Do you claim production credit on an assigned congregation basis?
If no, explain -
Complete only if you are the servicing representative but not the DR of the
branch listed.
Service override number reason for override
(b) Should the application credit be split? If Yes, list below.
Agent Identification Number Split Percent
% Note'.
% The total split percent
% must equal 100%.
%
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Yes No 8. (a) Does the proposed insured have any other applications pending or
being submitted other than this application? If Yes, list below.
(b) Does any other family member have applications pending with AAL?
If Yes, list below.
Name Date Applied Plan
9. List amount of total non-AAL life insurance that is inforce or pending
for juvenile- $
10. List amount of total non-AAL life insurance that is inforce or pending
for applicant: $
11. Purpose for insurance?
Estate liquidity (estate taxes, clearance costs)
Business insurance
Family protection (income replacement, survivor, retirement, etc.)
Loan
12. Will this application be electronically transmitted?
Additional Details
To the best of my knowledge and belief.
A. know nothing about the proposed insured's health, habits, or lifestyle
affecting insurability which has not been stated in this application.
B. Required disclosures, outline(s) of coverage, Notice Of Insurance
Information Practices, Buyer's Guide, Prospectus, and Receipt For Payment And
Conditional Temporary Coverage Agreement were left with the proposed insured.
Signature of AAL representative / Date signed (mo/day/yr)
Mail certificate to- District representative Member If no box is checked,
certificate will be mailed to the district representative for delivery.
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