1
As Filed with the Securities and Exchange Commission on June 18, 1997
Registration No. 333-
811-
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. [ ]
Variable Account J
(Exact Name of Registrant)
Liberty Life Assurance Company of Boston
(Name of Depositor)
175 Berkeley Street, Boston, Massachusetts 02117
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: 617-357-9500
Lee W. Rabkin, Esq.
Liberty Life Assurance Company of Boston
175 Berkeley Street
Boston, MA 02117
(Name and Address of Agent for Service)
Copies to:
James J. Klopper, Esq. Joan E. Boros, Esq.
Keyport Life Insurance Company and Katten Muchin & Zavis
125 High Street, 13th Floor 1025 Thomas Jefferson Street,
N.W.
Boston, MA 02110 Washington, DC 20007
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on [date] pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a)(1) of Rule 485
( ) on [date] pursuant to paragraph (a)(1) of Rule 485
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, an
indefinite number or amount of securities is being registered by this
Registration Statement.
=============================================================================
=
Exhibit List on Page ____
CONTENTS OF REGISTRATION STATEMENT
The Facing Sheet
The Contents Page
Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
Items 24 - 32
The Signatures
Exhibits
VARIABLE ACCOUNT - J
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-4
N-4 Item Caption in Prospectus
1. Cover Page
2. Glossary of Special Terms
3. Summary of Expenses
4. Performance Information
5. Liberty Life and the Variable Account
Eligible Funds
6. Deductions
7. Allocations of Purchase Payments
Transfer of Variable Account Value
Substitution of Eligible Funds and Other Variable Account
Changes
Modification of the Certificate
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Certificate Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Benefits
Suspension of Payments
Inquiries by Certificate Owners
8. Annuity Provisions
9. Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Annuity Options
10. Purchase Payments and Applications
Variable Account Value
Valuation Periods
Net Investment Factor
Sales of the Certificates
11. Partial Withdrawals and Surrender
Option A: Income For a Fixed Number of Years
Right to Revoke
12. Tax Status
13. Legal Proceedings
14. Table of Contents - Statement of Additional Information
Caption in Statement of Additional Information
15. Cover Page
16. Table of Contents
17. Liberty Life Assurance Company of Boston
18. Safekeeping of Assets, Experts
19. Not applicable
20. Principal Underwriter
21. Investment Performance
22. Variable Annuity Benefits
23. Financial Statements
PART A
**************************************************************
**************************************************************
The information contained within double rows of asterisks is
provided at the request of the staff of the Securities and Exchange
Commission. It is not and will not be part of any documents
delivered to purchasers or existing owners, and is included solely
for purposes of clarifying the content of this registration
statement. In addition, throughout the prospectus and statement of
additional information ("SAI") that follow there are similar
inserts that specifically summarize the parameters of change for
the particular design feature.
This registration statement includes a prospectus and SAI that
describes a generic form of the Group Flexible Premium Deferred
Annuity Contracts (the "Contracts") that are the subject of the
registration statement. The prospectus and SAI contain numerous
bracketed portions to indicate those portions which may be included
or eliminated in any particular form of the Contracts, including
but not limited to those, as follows:
death benefits;
funding media;
withdrawal rights;
transfer privileges;
annuity options;
other features
such as dollar cost averaging,
asset allocation,
systematic withdrawals, and
Account rebalancing.
In all cases variations in other bracketed features, such as issue and
annuity ages and interest rates, will be in conformity with state
insurance law. Bracketed features representing maximum limits for which
a range is not provided will not exceed, but may be less than, the
amount shown. Bracketed features representing minimum limits for which
a range is not provided will not be less than, but may exceed, the
amount shown.
The prospectus and SAI also include bracketed references to the fees and
charges to be imposed under the particular form of the Contract. Of
course, in each case, Liberty Life only will impose such charges in a
manner and subject to the conditions of applicable rules. In connection
with the various charges under the Contracts, Liberty Life and its
separate accounts will comply with the requirements of Section 26(e) and
will rely upon and be limited by such rules as 0-1(e), 6c-8, and 22d-2
under the Investment Company Act of 1940, as amended, and in compliance
with their respective requirements. Any descriptions of the potential
range of fees and charges should be read in the context of such rules
requirements.
Each form of the Contracts will be offered pursuant to a separate
prospectus and a separate or combined SAI, as appropriate. The content
of all prospectuses and SAIs will be identical with respect to
contractual and securities law related features to those contained in
this registration statement, except for provisions that are bracketed
and which will vary within the parameters established herein, and except
for non-material changes consistent with the requirements of Rule 485(b)
under the 1933 Act ("Rule 485(b)").
Except as provided for by Rule 485(b), each prospectus and SAI and
related exhibits will be filed pursuant to Rule 485(a) with a request
for expedited or selective review consistent with precedent and the fact
that all relevant disclosure is included in this registration statement.
******************************************************************
******************************************************************
GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
Variable Account J
OF
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
This prospectus offers Group Variable Annuity Contracts (the "Contracts") and
the related Certificates (the "Certificates") that are designed to fund
benefits under certain group arrangements including those that qualify for
special tax treatment under the Internal Revenue Code of 1986 (the "Code").
As required by certain states, the Certificates may be offered as individual
contracts. Unless otherwise noted or the context so requires all references
to the Certificates include the Contracts and the individual Contracts. The
Certificates are offered on a flexible payment basis.
The variable annuity Contract (form number DVA(1)NY) and the Certificates
described in this prospectus provide for accumulation of Certificate Values
on a variable basis, [and also on a fixed basis], and payments of periodic
annuity payments [on either a variable or/a] fixed basis. The Certificates
are designed for use by individuals for retirement planning purposes.
This prospectus generally describes only the variable features of the
Certificate [(for a summary of the fixed features, see Appendix A on Page
xx)]. If the Certificate Owner elects to have Certificate Values accumulated
on a variable basis, Purchase Payments will be allocated to a segregated
investment account of Liberty Life Assurance Company of Boston ("Liberty
Life"), designated Variable Account J ("Variable Account").
*****************************************************************
*****************************************************************
The terms XXXXX Trust, YYYYY Fund, and XX-1 Sub-Account are
included to indicate that disclosure relevant to an actual Eligible
Fund will be provided. The actual names of the Eligible Funds and
corresponding Sub-Accounts will be included in the subsequent forms
of the prospectus and SAI.
******************************************************************
******************************************************************
The Variable Account invests in shares of the following Eligible Funds of
[The XXXXX Trust ("XXXXX Trust")] at their net asset value: [X-1, X-2 and X-
3]. The Variable Account also invests in shares of the following Eligible
Funds of [The YYYYY Fund ("YYYYY Fund")] at their net asset value: [Y-1, Y-2,
Y-3].
The Variable Account may offer other forms of the Contracts and Certificates
with features, and fees and charges which vary from the Certificates, and
provide for investment in other Sub-Accounts which may invest in different or
additional mutual funds. Other Contracts and Certificates will be described
in separate prospectuses and statements of additional information.
A Statement of Additional Information dated the same as this prospectus has
been filed with the Securities and Exchange Commission and is herein
incorporated by reference. It is available, at no charge, by writing the
Principal Underwriter, Keyport Financial Services Corp., at 125 High Street,
Boston, MA 02110, by calling Liberty Life's Service Office at (800) 437-4466,
or by returning the postcard on the back cover of this prospectus. A table
of contents for the Statement of Additional Information is on Page xx.
The Certificates may be sold by or through banks or other depository
institutions. The Contract and Certificates: are not insured by the FDIC;
are not a deposit or other obligation of, or guaranteed by, the depository
institution; and are subject to investment risks, including the possible loss
of principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH THE INFORMATION A PROSPECTIVE INVESTOR SHOULD KNOW
BEFORE INVESTING. THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE OR JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED BY
LIBERTY LIFE TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THIS OFFERING,
AND IF GIVEN OR MADE, SUCH UNAUTHORIZED INFORMATION OR REPRESENTATIONS SHOULD
NOT BE RELIED UPON.
The date of this prospectus is _______________,1997
TABLE OF CONTENTS
Page
Glossary of Special Terms
Summary of Expenses
Synopsis
Performance Information
Liberty Life and the Variable Account
Purchase Payments and Applications
Investments of the Variable Account
Allocations of Purchase Payments
Eligible Funds
Transfer of Variable Account Value
Substitution of Eligible Funds and
Other Variable Account Changes
Deductions
[Deductions for Certificate Maintenance Charge]
Deductions for Mortality and Expense Risk Charge
[Deductions for Daily Distribution Charge]
[Deductions for Daily Administrative Charge]
[Deductions for Contingent Deferred Sales Charge]
[Deductions for Transfers of Variable Account Value]
Deductions for Premium Taxes
Deductions for Income Taxes
Total Variable Account Expenses
Other Services
The Certificates
Variable Account Value
Valuation Periods
Net Investment Factor
Modification of the Certificate
Right to Revoke
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Provisions
Annuity Benefits
Income Date and Annuity Option
Change in Income Date and Annuity Option
Annuity Options
Variable Annuity Payment Values
Proof of Age, Sex, and Survival of Annuitant
Suspension of Payments
Tax Status
Introduction
Taxation of Annuities in General
Qualified Plans
Tax-Sheltered Annuities
Individual Retirement Annuities
Corporate Pension and Profit-Sharing Plans
Deferred Compensation Plans with Respect to
Service for State and Local Governments
Variable Account Voting Privileges
Sales of the Certificates
Legal Proceedings
Inquiries by Certificate Owners
Table of Contents_Statement of Additional Information
[Appendix A_The Fixed Account (also known as the Modified
Guaranteed Annuity Account)]
[Appendix B_Telephone Instructions]
GLOSSARY OF SPECIAL TERMS
Accumulation Unit: An accounting unit of measure used to calculate Variable
Account Value.
Annuitant: The Annuitant is the natural person to whom any annuity payments
will be made starting on the Income Date. The Annuitant may not be over age
[80] on the Certificate Date (age [75] for Qualified Certificates).
Certificate Anniversary: The same month and day as the Certificate Date in
each subsequent year of the Certificate.
Certificate Date: The effective date of the Certificate; it is shown on the
Certificate Schedule.
Certificate Owner: The person (or persons in the case of joint ownership) who
possesses all the ownership rights under the Certificate. The primary
Certificate Owner may not be over age [80] on the Certificate Date (age [75]
for Qualified Certificates and age [85] for a joint Owner).
Certificate Value: The [sum of the] Variable Account Value [and the Fixed
Account Value].
Certificate Withdrawal Value: The Certificate Value [increased or decreased
by a limited Market Value Adjustment] less any premium taxes [and]
[Certificate Maintenance Charge] [and] [applicable Contingent Deferred Sales
Charges].
Certificate Year: Any period of 12 months commencing with the Certificate
Date and each Certificate Anniversary thereafter shall be a Certificate Year.
[Covered Person: The person(s) identified on the Certificate Schedule whose
death may result in an Adjustment of Certificate Value [and waiver of any
Contingent Deferred Sales Charges] [and a waiver of any Market Value
Adjustment] [or whose medically necessary stay in a hospital or nursing
facility may allow the Certificate Owner to be eligible for either a total or
partial waiver of the Contingent Deferred Sales Charge].]
Designated Beneficiary: The person who may be entitled to receive benefits
following the death of the Annuitant, Certificate Owner, or joint Certificate
Owner. The Designated Beneficiary will be the first person among the
following who is alive on the date of death: primary Certificate Owner; joint
Certificate Owner; primary beneficiary; contingent beneficiary; and if none
of the above is alive, the primary Certificate Owner's estate. If the
primary Certificate Owner and joint Certificate Owner are both alive, they
will be the Designated Beneficiary together.
Eligible Funds: The mutual funds that are eligible investments for the
Variable Account under the Certificates.
[Fixed Account: Part of Liberty Life's general account to which Purchase
Payments may be allocated or Certificate Values may be transferred.]
[Fixed Account Value: The value of all Fixed Account amounts accumulated
under the Certificate prior to the Income Date.]
[Guarantee Period Anniversary: An anniversary of a Guarantee Period's Start
Date.]
[Guarantee Period Month: The first Guarantee Period Month is the monthly
period which begins on the Start Date. Subsequent Guarantee Period Months
begin on the same day in the ensuing months.]
[Guarantee Period Year: The first Guarantee Period Year is the annual period
which begins on the Start Date. Subsequent Guarantee Period Years begin on
each Guaranteed Period Anniversary.]
In Force: The status of the Certificate before the Income Date so long as it
is not totally surrendered, the Certificate Value under a Certificate does
not go to zero, and there has not been a death of the Annuitant or any
Certificate Owner that will cause the Certificate to end within at most five
years of the date of death.
Income Date: The date on which annuity payments are to begin.
Non-Qualified Certificate: Any Certificate that is not issued under a
Qualified Plan.
Office: Liberty Life's executive office, which is 175 Berkeley Street,
Boston, Massachusetts 02117.
Qualified Certificate: Certificates issued under Qualified Plans.
Qualified Plan: A retirement plan established pursuant to the provisions of
Sections 401, 403(b) or 408(b) of the Internal Revenue Code. Liberty Life
treats Section 457 plans as Qualified Plans.
Service Office: Liberty Life's Service Office which is 125 High Street,
Boston, Massachusetts 02110.
[Start Date: The date an amount is first allocated to a Guarantee Period].
Variable Account: A separate investment account of Liberty Life into which
Purchase Payments under the Certificates may be allocated. The Variable
Account is divided into Sub-Accounts ("Sub-Account") that correspond to the
Eligible Funds in which they invest.
Variable Account Value: The value of all Variable Account amounts accumulated
under the Certificate prior to the Income Date.
Written Request: A request written on a form satisfactory to Liberty Life,
signed by the Certificate Owner and a disinterested witness, and filed at
Liberty Life's Service Office.
SUMMARY OF EXPENSES
*****************************************************************
*****************************************************************
Summary of Expenses will be completed in each Rule 485(a) filing.
*****************************************************************
*****************************************************************
The expense summary format below, including the examples, was adopted by the
Securities and Exchange Commission to assist the owner of a variable annuity
certificate in understanding the transaction and operating expenses the owner
will directly or indirectly bear under a certificate. The values reflect
expenses of the Variable Account as well as the Eligible Funds under the
Certificates. The expenses shown for the Eligible Funds and the examples
should not be considered a representation of future expenses.
Certificate Owner Transaction Expenses
Sales Load Imposed on Purchases: 0%
Maximum Contingent Deferred Sales Charge
(as a percentage of Purchase Payments): [7%1
Years from Date of Payment Sales Charge
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or later 0%]
Maximum Total Certificate Owner Transaction Expenses
(as a percentage of purchase payments): [7%]
Annual Certificate Maintenance Charge2 $[36]
[The Certificate Maintenance Charge will be waived before the Income Date if:
(i) the Certificate Value is greater than or equal to $40,000 on the
Certificate Anniversary date this charge is imposed, or
(ii) Purchase Payments of at least [$2,500] have been made in the prior
Certificate Year and there has been no partial withdrawal in the prior
Certificate Year.]
[The Certificate Maintenance Charge will be waived on or after the Income
Date for the current year if:
(i) variable annuity Option A (income for a Fixed Number of Years) is
applicable; and
(ii) at the time of the first payment of the year, the present value of
all remaining payments (See "Option a" on Page xx) is greater than or equal
to $40,000.]
Variable Account Annual Expenses
(as a percentage of average net assets)
Mortality and Expense Risk Charge: [1.25%]
[Distribution Charge:] [ .15%]
[Administrative Charge:] [ .15%]
Total Variable Account Annual Expenses: [1.55%]
_______________________________
[XXXXX Trust and YYYYY Fund] Annual Expenses3
(as a percentage of average net assets)
Management Other Total Fund
Fund Fees Expenses Operating Expenses[4]
[After Expense
Reimbursements]
The above expenses for the Eligible Funds were provided by the Funds. Liberty
Life has not independently verified the accuracy of the information.
Example #1 _ Assuming surrender of the Certificate at the end of the periods
shown.5
A $1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
Example #2 _ Assuming annuitization of the Certificate at the end of the
periods shown.5
A $1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
Example #3 _ Assuming the Certificate stays in force through the periods
shown.
A $1,000 investment in each Sub-Account listed would be subject to the same
expenses shown in Example #2, assuming 5% annual return on assets.
[1Contingent Deferred Sales Charges are deducted only if the Certificate is
totally or partially surrendered. A surrender will not incur the Charge
percentage shown as follows:
1. In any Certificate Year, Certificate Owners may withdraw an
aggregate amount, not to exceed, at the time of withdrawal, the
Certificate's earnings, which equal: (a) the Certificate Value, less (b)
the portion of the Purchase Payments not previously withdrawn.
2. In any Certificate Year after the first, Certificate Owners may
withdraw, in addition to the amount available in 1., the amount by which
10% of the Certificate Value as of the preceding Certificate Anniversary
exceeds the amount available in 1.]
2[Liberty Life reserves the right to impose a transfer fee after prior notice
to Certificate Owners, but currently does not impose any charge.] Premium
taxes are not shown. Liberty Life deducts the amount of premium taxes, if
any, when paid unless Liberty Life elects to defer such deduction.
3[The XXXXX Trust] expenses are for 199[ ]. [The YYYYY Fund] expenses are
estimated and reflect the [YYYYY Fund's] Manager's agreement to reimburse
expenses above certain limits (see footnote 4).
[4[YYYYY Fund's] manager has agreed until [a/bb/cc] to reimburse all
expenses, including management fees, in excess of the following percentage of
the average annual net assets of each Fund, so long as such reimbursement
would not result in the Fund's inability to qualify as a regulated investment
company under the Internal Revenue Code. The total percentages shown in the
table for [YY-1, YY-2 and YY-3] are after expense reimbursement. Each
percentage shown in the parentheses is what the total for 199[ ] would be in
the absence of expense reimbursement: for [YY-1 -xxx%; for YY-2 - xxx%; and
for YYY-3 -xxx%].]
5The annuity is designed for retirement planning purposes. Surrenders prior
to the Income Date are not consistent with the long-term purposes of the
Certificate and the applicable tax laws.
The examples should not be considered a representation of past or future
expenses and charges of the Sub-Accounts. Actual expenses may be greater or
less than those shown. Similarly, the assumed 5% annual rate of return is
not an estimate or a guarantee of future investment performance. See
"Deductions" in this prospectus, ["How the Funds are Managed"] in the
prospectus for [XXXXX Trust], and ["Trust Management Organizations"] and
["Expenses of the Funds"] in the prospectus for [YYYYY Fund].
SYNOPSIS
The following Synopsis should be read in conjunction with the detailed
information in this prospectus and the Statement of Additional Information.
Please refer to the Glossary of Special Terms for the meaning of certain
defined terms. Variations from the information appearing in this prospectus
due to individual state requirements are described in supplements which are
attached to this prospectus, or in endorsements to the Certificates, as
appropriate.
The Certificate allows Certificate Owners to allocate Purchase Payments to
the Variable Account [and also to the Fixed Account.] The Variable Account is
a separate investment account maintained by Liberty Life. [The Fixed Account
is part of Liberty Life's "general account", which consists of all Liberty
Life's assets except the Variable Account and the assets of other separate
accounts maintained by Liberty Life.] Certificate Owners may allocate
payments to, and receive annuity payments from the Variable Account [and/or
the Fixed Account]. If the Certificate Owner allocates payments to the
Variable Account, the accumulation values and annuity payments will fluctuate
according to the investment experience of the Sub-Accounts chosen. [If the
Certificate Owner allocates payments to the Fixed Account, the accumulation
values will increase at guaranteed interest rates and annuity payments will
be of a fixed amount. [Fixed Account Values are subject to a limited market
value adjustment]. (See Appendix A on Page xx for more information on the
Fixed Account.)] [If the Certificate Owner allocates payments to both
Accounts, then the accumulation values and annuity payments will be variable
in part and fixed in part.]
The Certificate permits Purchase Payments to be made on a flexible Purchase
Payment basis. The minimum initial payment is $[5,000]. The minimum amount
for each subsequent payment is $[1,000] or such lesser amount as Liberty Life
may permit from time to time [(currently $250)]. (See "Purchase Payments" on
Page x.)
There are no deductions made from Purchase Payments for sales charges at the
time of purchase. [A Contingent Deferred Sales Charge may be deducted in the
event of a total or partial surrender (see "Surrenders" on Page xx). The
Contingent Deferred Sales Charge is based on a graded table of charges. The
charge will not exceed [7]% of that portion of the amount surrendered that
represents Purchase Payments made during the [seven] years immediately
preceding the request for surrender. (See "Deductions for Contingent
Deferred Sales Charge" on Page xx.)]
Liberty Life deducts a Mortality and Expense Risk Charge, which is equal on
an annual basis to [1.25]% of the average daily net asset values in the
Variable Account attributable to the Certificates. (See "Deductions for
Mortality and Expense Risk Charge" on Page xx.) [Liberty Life also deducts a
daily distribution charge which is equal on an annual basis to [.15%] of the
same values. (See "Deductions for Daily Sales Charge" on Page xx.)]
[Liberty Life deducts a Daily Administrative Charge which is equal on an
annual basis to [.15]% of the same values. (See "Deductions for Daily
Administrative Charge" on Page xx.)]
[Liberty Life deducts an annual Certificate Maintenance Charge (currently
$[36.00]) from the Variable Account Value for administrative expenses. Prior
to the Income Date, Liberty Life reserves the right to change this charge for
future years. [Liberty Life will in certain instances waive this charge.]
(See "Deductions for Certificate Maintenance Charge" on Page xx.)]
Liberty Life reserves the right to deduct a charge of [$50] for each transfer
in excess of [12] per Certificate Year.
Premium taxes will be charged against the Certificate Value. Currently such
premium taxes range from 0% to 5.0%. (See "Deductions for Premium Taxes" on
Page xx.)
There are no federal income taxes on increases in the value of a Certificate
until a distribution occurs, in the form of a lump sum payment, annuity
payments, or the making of a gift or assignment of the Certificate. A
federal penalty tax (currently 10%) may also apply. (See "Tax Status" on
Page xx.)
The Certificate allows the Certificate Owner to revoke the Certificate
generally within 10 days of delivery (see "Right to Revoke" on Page xx).
Since Liberty Life will refund the Certificate Value, the Certificate Owner
will bear the investment risk during the revocation period.
The full financial statements for [the Variable Account and] Liberty Life are
in the Statement of Additional Information.
PERFORMANCE INFORMATION
The Variable Account may from time to time advertise certain performance
information concerning its various Sub-Accounts.
[Liberty Life has been offering and certain of the Eligible Funds have been
available for contracts for periods prior to the commencement of the offering
of the Certificates described in this prospectus. The performance
information will be based on historical results of Eligible Funds that apply
to the Certificate for the specified time periods.]
This performance information is not intended to indicate either past
performance under an actual Certificate or future performance.
The Sub-Accounts may advertise total return information for various periods
of time. Total return performance information is based on the overall
percentage change in value of a hypothetical investment in the specific Sub-
Account over a given period of time.
Average annual total return information shows the average percentage change
in the value of an investment in the Sub-Account from the beginning date of
the measuring period to the end of that period. This standardized version of
average annual total return reflects all historical investment results, less
all charges and deductions applied against the Sub-Account and a Certificate
[(including any Contingent Deferred Sales Charge that would apply if a
Certificate Owner surrendered the Certificate at the end of each period
indicated)]. Average total return does not take into account any premium
taxes and would be lower if these taxes were included.
In order to calculate average annual total return, Liberty Life divides the
change in value of a Sub-Account under a Certificate surrendered on a
particular date by a hypothetical $1,000 investment in the Sub-Account made
by the Certificate Owner at the beginning of the period illustrated. The
resulting total rate for the period is then annualized to obtain the average
annual percentage change during the period. Annualization assumes that the
application of a single rate of return each year during the period will
produce the ending value, taking into account the effect of compounding.
The Sub-Accounts may present additional total return information computed on
a different basis.
[First, the Sub-Accounts may present total return information computed on the
same basis as described above, except deductions will not include the
Contingent Deferred Sales Charge. This presentation assumes that the
investment in the Certificate continues beyond the period when the Contingent
Deferred Sales Charge applies, consistent with the long-term investment and
retirement objectives of the Certificate. The total return percentage will
thus be higher under this method than the standard method described above.]
[Second,] the Sub-Accounts may present total return information calculated by
dividing the change in a Sub-Account's Accumulation Unit value over a
specified time period by the Accumulation Unit value of that Sub-Account at
the beginning of the period. This computation results in a 12-month change
rate or, for longer periods, a total rate for the period which Liberty Life
annualizes in order to obtain the average annual percentage change in the
Accumulation Unit value for that period. The change percentages do not take
into account [the Contingent Deferred Sales Charge, the Certificate
Maintenance Charge and] premium tax charges. The percentages would be lower
if these charges were included.
The [XX-1] Sub-Account is a money market Sub-Account that also may advertise
yield and effective yield information. The yield of the Sub-Account refers
to the income generated by an investment in the Sub-Account over a
specifically identified 7-day period. This income is annualized by assuming
that the amount of income generated by the investment during that week is
generated each week over a 52-week period and is shown as a percentage. The
yield reflects the deduction of all charges assessed against the Sub-Account
and a Certificate but does not take into account [Contingent Deferred Sales
Charges and] premium tax charges. The yield would be lower if these charges
were included.
The effective yield of the [XX-1] Sub-Account is calculated in a similar
manner but, when annualizing such yield, income earned by the Sub-Account is
assumed to be reinvested. This compounding effect causes effective yield to
be higher than yield.
LIBERTY LIFE AND THE VARIABLE ACCOUNT
Liberty Life Assurance Company of Boston was incorporated on September 17,
1963 as a stock life insurance company. Its executive and administrative
offices are at 175 Berkeley Street, Boston, Massachusetts 02117.
Liberty Life writes individual life insurance on both a participating and a
non-participating basis and group life and health insurance and individual
and group annuity contracts on a non-participating basis. The variable
annuity contracts described in this prospectus are issued on a non-
participating basis. Liberty Life is licensed to do business in all states
and in the District of Columbia. However, the Certificates described in this
prospectus are currently offered only in New York. Liberty Life has been
rated "A" by A.M. Best and Company, independent analysts of the insurance
industry. The Best's A rating is in the second highest rating category which
also includes a lower rating of A-. Best's Ratings merely reflect Best's
opinion as to the relative financial strength of Liberty Life and Liberty
Life's ability to meet its contractual obligations to its policyholders. Even
though assets in the Variable Account are held separately from Liberty Life's
other assets, ratings of Liberty Life may still be relevant to Certificate
Owners since not all of Liberty Life's contractual obligations relate to
payments based on those segregated assets (e.g., see "Death Provisions" for
Liberty Life's obligations after certain deaths to increase the Certificate
Value if it less than the Death Benefit Amount or otherwise enhance the death
benefit with interest).
Liberty Life is a wholly-owned subsidiary of Liberty Mutual Insurance Company
and Liberty Mutual Fire Insurance Company. Liberty Mutual Insurance Company
is a multi-line insurance and financial services institution.
The Variable Account was established by Liberty Life pursuant to the
provisions of Massachusetts Law on June 2, 1997. The Variable Account meets
the definition of "separate account" under the federal securities laws. The
Variable Account is registered with the Securities and Exchange Commission as
a unit investment trust under the Investment Company Act of 1940. Such
registration does not involve supervision of the management of the Variable
Account or Liberty Life by the Securities and Exchange Commission.
Obligations under the Certificates are the obligations of Liberty Life.
Although the assets of the Variable Account are the property of Liberty Life,
these assets are held separately from the other assets of Liberty Life and
are not chargeable with liabilities arising out of any other business Liberty
Life may conduct. Income, capital gains and/or capital losses, whether or
not realized, from assets allocated to the Variable Account are credited to
or charged against the Variable Account without regard to the income, capital
gains, and/or capital losses arising out of any other business Liberty Life
may conduct. Thus, Liberty Life does not guarantee the investment
performance of the Variable Account. The Variable Account Value and the
amount of variable annuity payments will vary with the investment performance
of the investments in the Variable Account.
PURCHASE PAYMENTS AND APPLICATIONS
******************************************************************
******************************************************************
The minimums and maximums described in the following paragraph may
vary within any limits permitted under state insurance law and
Liberty Life's administrative guidelines in existence at the time
of issuance of the Certificate.
******************************************************************
******************************************************************
The initial Purchase Payment is due on the Certificate Date. The minimum
initial Purchase Payment is $[5,000]. Additional Purchase Payments can be
made at the Certificate Owner's option. Each subsequent Purchase Payment
must be at least $[1,000] or such lesser amount as Liberty Life may permit
from time to time [(currently $250)]. Liberty Life may reject any Purchase
Payment.
If the application for a Certificate is in good order and it calls for
amounts to be allocated to the Variable Account, Liberty Life will apply the
initial Purchase Payment to the Variable Account and credit the Certificate
with Accumulation Units within two business days of receipt. If the
application for a Certificate is not in good order, Liberty Life will attempt
to get it in good order within five business days. If it is not complete at
the end of this period, Liberty Life will inform the applicant of the reason
for the delay and that the Purchase Payment will be returned immediately
unless the applicant specifically consents to Liberty Life's keeping the
Purchase Payment until the application is complete. Once the application is
complete, the Purchase Payment will be applied within two business days of
its completion. Liberty Life has reserved the right to reject any
application.
Liberty Life confirms, in writing, to the Certificate Owner the allocation of
all Purchase Payments and the re-allocation of values after any requested
transfer. Liberty Life must be notified immediately by the Certificate Owner
of any processing error.
Liberty Life will permit others to act on behalf of an applicant in certain
instances, including the following two examples. First, Liberty Life will
accept an application for a Certificate that contains a signature signed
under a power of attorney if a copy of that power of attorney is submitted
with the application. Second, Liberty Life will issue a Certificate that is
replacing an existing life insurance or annuity policy that was issued by
Liberty Life or an affiliated company without having previously received a
signed application from the applicant. Certain dealers or other authorized
persons such as employers and Qualified Plan fiduciaries will inform Liberty
Life of an applicant's answers to the questions in the application by
telephone or by order ticket and cause the initial Purchase Payment to be
paid to Liberty Life. If the information is in good order, Liberty Life will
issue the Certificate with a copy of an application completed with that
information. The Certificate will be delivered to the Certificate Owner with
a letter from Liberty Life that will give the Certificate Owner an
opportunity to respond to Liberty Life if any of the application information
is incorrect. Alternatively, Liberty Life's letter may request the
Certificate Owner to confirm the correctness of the information by signing
either a copy of the application or a Certificate delivery receipt that
ratifies the application in all respects (in either case, a copy of the
signed document would be returned to Liberty Life for its permanent records).
All purchases are confirmed, in writing, to the applicant by Liberty Life.
Liberty Life's liability under a Certificate extends only to amounts so
confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
Allocations of Purchase Payments
******************************************************************
******************************************************************
The percentage of required allocations to each Sub-Account may vary from
1% to 10%.
******************************************************************
******************************************************************
Purchase payments applied to the Variable Account will be invested in one or
more of the Eligible Fund Sub-Accounts designated as permissible investments
in accordance with the selection made by the Certificate Owner in the
application. Any selection must specify the percentage of the Purchase
Payment that is allocated to each Sub-Account [or must specify the asset
allocation model selected. (See Other Services, the Programs on Page xx)].
The percentage for each Sub-Account, if not zero, must be at least [10]% and
must be a whole number. A Certificate Owner may change the allocation
percentages without fee, penalty or other charge. Allocation changes must be
made by Written Request unless the Certificate Owner has by Written Request
authorized Liberty Life to accept telephone allocation instructions from the
Certificate Owner or from a person acting for the Certificate Owner as an
attorney-in-fact under a power of attorney. By authorizing Liberty Life to
accept telephone changes, a Certificate Owner agrees to accept and be bound
by the conditions and procedures established by Liberty Life from time to
time. The current conditions and procedures are in Appendix [B] and
Certificate Owners authorizing telephone allocation instructions will be
notified, in advance, of any changes.
The Variable Account is segmented into Sub-Accounts. Each Sub-Account
contains the shares of one of the Eligible Funds and such shares are
purchased at net asset value. Eligible Funds and Sub-Accounts may be added
or withdrawn as permitted by applicable law. The Sub-Accounts in the Variable
Account and the corresponding Eligible Funds currently are as follows:
******************************************************************
******************************************************************
TEXT HERE WILL DESCRIBE ELIGIBLE FUNDS AND CORRESPONDING SUB-
ACCOUNTS
******************************************************************
******************************************************************
Eligible Funds of [XXXXX Trust] Sub-Accounts
[XX-1] [XX-1 Sub-Account]
[XX-2] [XX-2 Sub-Account]
[XX-3] [XX-3 Sub-Account]
Eligible Funds of [YYYYY Fund] Sub-Accounts
[YY-1] [YY-1 Sub-Account]
[YY-2] [YY-2 Sub-Account]
[YY-3] [YY-3 Sub-Account]
Eligible Funds
The Eligible Funds which are the permissible investments of the Variable
Account are the separate funds of [XXXXX Trust, the separate funds of YYYYY
Fund], and any other mutual funds with which Liberty Life and the Variable
Account may enter into a participation agreement for the purpose of making
such mutual funds available as Eligible Funds under certain Certificates.
****************************************************************
****************************************************************
TEXT HERE WILL DESCRIBE INDIVIDUAL INVESTMENT ADVISERS
****************************************************************
****************************************************************
The investment objectives of the Eligible Funds are briefly described below.
More detailed information, including investor considerations related to the
risks of investing in a particular Eligible Fund, may be found in the current
prospectus for that Fund. An investor should read that prospectus carefully
before selecting a fund for investing. The prospectus is available, at no
charge, from a salesperson or by writing Liberty Life' Service Office at the
address shown on Page 1 or by calling (800) 437-4466.
Eligible Funds of [XXXXX Trust]
and Variable Account Sub-Accounts Investment Objective
****************************************************************
****************************************************************
TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
****************************************************************
****************************************************************
Eligible Funds of [YYYYY Fund]
and Variable Account Sub-Accounts Investment Objective
****************************************************************
****************************************************************
TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
****************************************************************
****************************************************************
There is no assurance that the Eligible Funds will achieve their stated
objectives.
[XXXXX and YYYYY] Funds are funding vehicles for variable annuity contracts
and variable life insurance policies offered by separate accounts of Liberty
Life and of insurance companies affiliated and unaffiliated with Liberty
Life. The risks involved in this "mixed and shared funding" are disclosed in
the Trust's and Fund's prospectus under the caption ["The Trust"] and [SALES
AND REDEMPTIONS,] respectively.
Transfer of Variable Account Value
*****************************************************************
*****************************************************************
The number of transfers will vary between zero (0) and the maximum
number that Liberty Life determines is consistent with
interpretations of applicable tax law restrictions on contract
owner control which may permit an unlimited number of transfers.
The transfer charge, if any, imposed on transfers in excess of the
stipulated number will not exceed the lesser of $50 or the
administrative cost for each transfer in excess of that number. The
maximum number of free transfers, assuming the imposition of a
transfer charge, will be 12. The minimum amount that may be
transferred will range between $0 and $500, and the minimum
required remaining Sub-Account Value ranges between $0 and $100.
*****************************************************************
*****************************************************************
Certificate Owners may transfer Variable Account Value from one Sub-Account
to another Sub-Account [and/or to the Fixed Account]. Currently [x] transfers
are permitted. The minimum amount of Variable Account Value that may be
transferred is [$500] and the remaining Variable Account Value in the Sub-
Account is [$100].
The Certificate allows Liberty Life to charge a transfer fee and to limit the
number of transfers that can be made in a specified time period. Certificate
Owners should be aware that transfer limitations may prevent a Certificate
Owner from making a transfer on the date he or she wants to, with the result
that the Certificate Owner's future Certificate Value may be lower than it
would have been had the transfer been made on the desired date. Currently,
Liberty Life is [not] charging a transfer fee [of [x] for each transfer in
excess of [xx] per Certificate Year.] For transfers under different
Certificates that are being requested under powers of attorney with a common
attorney-in-fact or that are, in Liberty Life's determination, based on the
recommendation of a common investment adviser or broker/dealer, there is a
transfer limitation of one transfer every 30 days.
Liberty Life is also limiting each transfer to a maximum of $500,000. All
transfers requested for a Certificate on the same day will be treated as a
single transfer and the total combined transfer amount will be subject to the
$500,000 limitation. If the $500,000 limitation is exceeded, no amount of
the transfer will be executed by Liberty Life.
In applying the $500,000 limitation, Liberty Life may treat as one transfer
all transfers requested by a Certificate Owner for multiple Certificates he
or she owns. If the $500,000 limitation is exceeded for multiple transfers
requested on the same day that are treated as a single transfer, no amount of
the transfer will be executed by Liberty Life.
In applying the $500,000 limitation to transfers requested by a common
attorney-in-fact or investment adviser, Liberty Life will treat as one
transfer all transfers requested under different Certificates that are being
requested under powers of attorney with a common attorney-in-fact or that
are, in Liberty Life's determination, based on the recommendation of a common
investment adviser or broker/dealer. If the $500,000 limitation is exceeded
for multiple transfers requested on the same day that are treated as a single
transfer, no amount of the transfer will be executed by Liberty Life. If a
transfer is executed under one Certificate and, within the next 30 days, a
transfer request for another Certificate is determined by Liberty Life to be
related to the executed transfer under this paragraph's rules, the transfer
request will not be executed by Liberty Life. In order for it to be executed,
it would need to be requested again after the 30 day period has expired and
it, along with any other transfer requests that are collectively treated as a
single transfer, would need to total less than $500,000.
Liberty Life's interest in applying these limitations is to protect the
interests of both Certificate Owners who are not engaging in significant
transfer activity and Certificate Owners who are engaging in such activity.
Liberty Life has determined that the actions of Certificate Owners engaging
in significant transfer activity among Sub-Accounts may cause an adverse
effect on the performance of the Eligible Fund for the Sub-Account involved.
The movement of Sub-Account values from one Sub-Account to another may
prevent the appropriate Eligible Fund from taking advantage of investment
opportunities because it must maintain a liquid position in order to handle
redemptions. Such movement may also cause a substantial increase in Fund
transaction costs which must be indirectly borne by Certificate Owners.
Certificate Owners will be notified, in advance, of the imposition of any
transfer fee or of a change in the limitation on the number of transfers.
The fee will not exceed the lesser of [$50] and the cost of effecting a
transfer.
Transfers must be made by Written Request unless the Certificate Owner has by
Written Request authorized Liberty Life to accept telephone transfer requests
from the Certificate Owner or from a person acting for the Certificate Owner
as an attorney-in-fact under a power of attorney. By authorizing Liberty
Life to accept telephone transfer instructions, a Certificate Owner agrees to
accept and be bound by the conditions and procedures established by Liberty
Life from time to time. The current conditions and procedures are in
Appendix [B] and Certificate Owners authorizing telephone transfers will be
notified, in advance, of any changes. Written transfer requests may be made
by a person acting for the Certificate Owner as an attorney-in-fact under a
power of attorney.
Transfer requests received by Liberty Life before the close of trading on the
New York Stock Exchange (currently 4:00 PM Eastern Time) will be initiated at
the close of business that day. Any requests received later will be
initiated at the close of the next business day. Each request from a
Certificate Owner to transfer value will be executed by both redeeming and
acquiring Accumulation Units on the day Liberty Life initiates the transfer.
If 100% of any Sub-Account's value is transferred and the allocation formula
for Purchase Payments includes that Sub-Account, then the allocation formula
for future Purchase Payments will automatically change unless the Certificate
Owner instructs otherwise. For example, if the allocation formula is 50% to
Sub-Account A and 50% to Sub-Account B and all of Sub-Account A's value is
transferred to Sub-Account B, the allocation formula will change to 100% to
Sub-Account B unless the Certificate Owner instructs otherwise.
Substitution of Eligible Funds and Other Variable Account Changes
If the shares of any of the Eligible Funds should no longer be available for
investment by the Variable Account or if in the judgment of Liberty Life's
management further investment in such fund shares should become inappropriate
in view of the purpose of the Certificate, Liberty Life may add or substitute
shares of another Eligible Fund or of another mutual fund for Eligible Fund
shares already purchased under the Certificate. No substitution of Fund
shares in any Sub-Account may take place without prior approval of the
Securities and Exchange Commission and notice to Certificate Owners, to the
extent required by the Investment Company Act of 1940.
Liberty Life has also reserved the right, subject to compliance with the law
as currently applicable or subsequently changed: (a) to operate the Variable
Account in any form permitted under the Investment Company Act of 1940 or in
any other form permitted by law; (b) to take any action necessary to comply
with or obtain and continue any exemptions from the Investment Company Act of
1940 or to comply with any other applicable law; (c) to transfer any assets
in any Sub-Account to another Sub-Account, or to one or more separate
investment accounts, or to Liberty Life's general account; or to add, combine
or remove Sub-Accounts in the Variable Account; and (d) to change the way
Liberty Life assesses charges, so long as the aggregate amount is not
increased beyond that currently charged to the Variable Account and the
Eligible Funds in connection with the Certificates.
DEDUCTIONS
[Deductions for Certificate Maintenance Charge
*****************************************************************
*****************************************************************
The Certificate Maintenance Charge will not exceed a maximum dollar
amount of $100. Under certain forms of the Certificate Liberty Life
may not impose any Certificate Maintenance Charge. The amount of
purchase payments necessary to support a waiver of the charge
ranges between $1000 and $5000.
*****************************************************************
*****************************************************************
Liberty Life has responsibility for all administration of the Certificates
and the Variable Account. This administration includes, but is not limited
to, preparation of the Certificates, maintenance of Certificate Owners'
records, and all accounting, valuation, regulatory and reporting
requirements. Liberty Life makes a Certificate Maintenance Charge for such
services during the accumulation and annuity payment periods. At the present
time the Certificate Maintenance Charge is $[36.00] per Certificate Year.
PRIOR TO THE INCOME DATE THE CERTIFICATE MAINTENANCE CHARGE IS NOT GUARANTEED
AND MAY BE CHANGED BY LIBERTY LIFE. [The Certificate Maintenance Charge will
be waived before the Income Date if:
(i) it is the first Certificate Anniversary, or
(ii) the Certificate Value is greater than or equal to $40,000 on the
Certificate Anniversary date this charge is imposed, or
(iii) Purchase Payments of at least $2,000 have been made in the prior
Certificate Year and there has been no partial withdrawal in the prior
Certificate Year.
The Certificate Maintenance Charge will be waived on and after the Income
Date for the current year if:
(i) variable annuity Option A (Income for a Fixed Number of Years) is
applicable; and
(ii) at the time of the first payment of the year, the present value of all
of the remaining payments (see "Option A" on Page 21) is greater than or
equal to $40,000.]
[The Certificate Maintenance Charge will be waived if: (i) the Certificate
Value is greater than $40,000 on the date this charge is imposed, or (ii)
Purchase Payments of at least [$2,500] have been made in the prior
Certificate Year and there has been no partial withdrawal in the prior
Certificate Year.]
Prior to the Income Date, the full amount of the charge will be deducted from
the Variable Account Value on each Certificate Anniversary and on the date of
any total surrender not falling on the Certificate Anniversary. On the
Income Date, a pro-rata portion of the charge due on the next Certificate
Anniversary will be deducted from the Variable Account Value. This pro-rata
charge covers the period from the prior Certificate Anniversary to the Income
Date. For example, if the Income Date occurs 73 days after that prior
anniversary, then one-fifth (i.e., 73 days/365 days) of the annual charge
would be deducted on the Income Date. The charge will be deducted from each
Sub-Account in the proportion that the value of each bears to the Variable
Account Value.
Once annuity payments begin on the Income Date or once they begin after
surrender benefits are applied under a settlement option, the yearly cost of
the Certificate Maintenance Charge for a payee's annuity will be the same as
the yearly amount in effect immediately before the annuity payments begin.
Liberty Life may not later change the amount of the Certificate Maintenance
Charge deducted from the annuity payments. The charge will be deducted on a
pro-rata basis from each annuity payment. For example, if annuity payments
are monthly, then one-twelfth of the annual charge will be deducted from each
payment.]
*****************************************************************
*****************************************************************
The Mortality and Expense Risk Charge as stated in the body of the
prospectus will vary between 35 and 125 basis points. The
variations will depend upon the precise combination of features
incorporated into the particular form of the Certificate.
*****************************************************************
*****************************************************************
Deductions for Mortality and Expense Risk Charge
Although variable annuity payments made to Annuitants will vary in accordance
with the investment performance of the investments of the Variable Account,
they will not be affected by the mortality experience (death rate) of persons
receiving such payments or of the general population. Liberty Life
guarantees the Death Benefits described below (see "Death Benefits").
[Liberty Life assumes an expense risk that the asset-based Administrative
Charge will be insufficient to cover the anticipated portion of Liberty
Life's administrative expenses.] [Liberty Life assumes an expense risk since
the Certificate Maintenance Charge after the Income Date will stay the same
and not be affected by variations in expenses.]
To compensate it for assuming these mortality and expense risks, for each
Valuation Period Liberty Life deducts from each Sub-Account a Mortality and
Expense Risk Charge equal on an annual basis to [.35 - 1.25]% of the average
daily net asset value of the Sub-Account. The charge is deducted during both
the accumulation and annuity periods (i.e., both before and after the Income
Date). Less than the full charge will be deducted from Sub-Account values
attributable to Certificates issued to employees of Liberty Life and other
persons specified in "Sales of the Certificate".
[Deductions for Daily Distribution Charge
*****************************************************************
*****************************************************************
A daily Distribution Charge may not apply to all forms of the
Certificate. It will be imposed at a maximum rate of 15 basis
points of net assets when such imposition combined with any
contingent deferred sales charge does not result in the imposition
of sales charges that exceed 9% of Purchase Payments.
*****************************************************************
*****************************************************************
Liberty Life also deducts from each Sub-Account each Valuation Period a daily
Distribution Charge equal on an annual basis to 0.[15]% of the average daily
net asset value of the Sub-Account. This charge compensates Liberty Life for
certain sales distribution expenses relating to the Certificate.
This charge will not be deducted from Sub-Account values attributable to
Certificates that have reached the maximum cumulative distribution charge
limit defined below and to Certificates issued to employees of Liberty Life
and other persons specified in "Sales of the Certificate". The charge is
also not deducted from Sub-Account values attributable to Annuity Units.
Liberty Life may decide not to deduct the charge from Sub-Account values
attributable to a Certificate issued in an internal exchange or transfer of
an annuity contract of Liberty Life's general account.]
[Deductions for Daily Administrative Charge
*****************************************************************
*****************************************************************
A daily Administrative Charge may not apply to all forms of the
Certificate. The maximum daily Administrative Charge will be 15 basis
points. This charge may be adjusted giving consideration to the amount
of the Certificate Maintenance Charge.
*****************************************************************
*****************************************************************
Liberty Life also deducts from each Sub-Account each Valuation Period an
Administrative Charge equal on an annual basis to 0.[15]% of the average
daily net asset value of the Sub-Account. This charge compensates Liberty
Life for a portion of the administrative expenses relating to the Contract
and the Certificate.]
[Deductions for Contingent Deferred Sales Charge
*****************************************************************
*****************************************************************
The Contingent Deferred Sales Charge may not apply to all forms of
the Certificate. The Contingent Deferred Sales Charge, including
any amounts deducted through the daily Sales Charge, will not
exceed 9% of Purchase Payments. The Contingent Deferred Sales
Charge, not including any amount deducted through the daily Sales
Charge, will in no event exceed a duration of 7 years and 7%.
*****************************************************************
*****************************************************************
A sales charge is not deducted from the Certificate's Purchase Payments when
initially received. However, a Contingent Deferred Sales Charge may be
deducted upon a surrender.
In order to determine whether a Contingent Deferred Sales Charge will be due
upon a partial or total surrender, Liberty Life maintains a separate set of
records. These records identify the date and amount of each Purchase Payment
made to the Certificate and the Certificate Value over time.
Certificate Owners will be permitted to make partial surrenders during the
Accumulation Period without incurring a Contingent Deferred Sales Charge, as
follows:
1. In any Certificate Year, Certificate Owners may withdraw an aggregate
amount not to exceed, at the time of the withdrawal, the Certificate's
earnings, which equal: (a) the Certificate Value, less (b) the portion of the
Purchase Payments not previously withdrawn.
2. In any Certificate Year after the first, Certificate Owners may
withdraw, in addition to the amount available in 1., the amount by which 10%
of the Certificate Value as of the preceding Certificate Anniversary exceeds
the amount available in 1.
Contingent Deferred Sales Charges, as discussed below, will be deducted with
respect to withdrawals in excess of these amounts.
In computing the applicable charge amounts, the amount of any surrender in
any Certificate Year after the first as set forth in 2. above, will be
deducted from the Purchase Payments in chronological order from the oldest to
the most recent until the amount is fully deducted. Any amount so deducted
will not be subject to a charge.
The following additional amounts will be deducted from the Purchase Payments
in the same chronological order: the amount of any surrender in the first
Certificate Year in excess of the amount set forth in 1. above and the amount
of any surrender in any later Certificate Year in excess of the combined
amount set forth in 1. and 2. above. The Contingent Deferred Sales Charge for
each Purchase Payment from which a deduction is made will be equal to (a)
multiplied by (b), where:
(a) is the amount so deducted; and
(b) is the applicable percentage for the number of years that have elapsed
from the date of that payment to the date of surrender. Years are
measured from the month and day of payment to the same month and day in
each subsequent calendar year. The percentages applicable to each
Purchase Payment during the [seven] years after the date of its payment
are: [7% during year 1; 6% during year 2; 5% during year 3; 4% during
year 4; 3% during year 5; 2% during year 6; 1% during year 7;] and 0%
thereafter.
The applicable Contingent Deferred Sales Charges for each Purchase Payment
are then totalled. The lesser of this total amount and the Certificate's
maximum cumulative distribution charge will be deducted from the Certificate
Value in the same manner as the surrender amount. The maximum cumulative
distribution charge is equal to (a) less (b), where (a) is 9% of the total
Purchase Payments made to the Certificate and (b) is the sum of all prior
Contingent Deferred Sale Charge deductions from the Certificate Value [and
all prior Variable Account daily distribution charges applicable to the
Certificate from the 0.15% distribution charge factor.] After each
surrender, Liberty Life's records will be adjusted to reflect any deductions
made from the applicable Purchase Payments.
Example: Two Purchase Payments were made one year apart for $5,000 and
$7,000. The Certificate Value has grown to an assumed $13,200 when the
Certificate Owner decides to withdraw $8,000. The Certificate Value at the
beginning of the Certificate Year of surrender was $13,000. The Contingent
Deferred Sales Charge percentages at the time of surrender are an assumed 5%
for the $5,000 payment and 6% for the $7,000 payment. The portion of the
surrender representing the Certificate's earnings ($13,200 less $12,000, or
$1,200) would not be subject to charges. Since $1,200 is less than the
amount guaranteed not to have charges (10% of $13,000, or $1,300), an
additional $100 would not be subject to charges. This $100 would be deducted
from the oldest Purchase Payment, reducing it from $5,000 to $4,900. The
$1,200 increase in value plus the additional $100 leaves $6,700 ($8,000 -
1,200 - 100) to be deducted. This $6,700 would be deducted from the $4,900
of the first payment still left and $1,800 of the second payment. The total
Contingent Deferred Sales Charge would be $4,900 multiplied by the applicable
5% and $1,800 times the applicable 6%, or a total of $353. The distribution
charge records would now reflect $0 for the 1st payment and $5,200 for the
2nd payment. The $8,000 requested plus the $353 charge would be deducted
from Certificate Values under the rules specified in the "Surrenders"
section.
*****************************************************************
*****************************************************************
The maximum compensation payable on the sale of Certificates is 6.50%
*****************************************************************
*****************************************************************
The Contingent Deferred Sales Charge, when it is applicable, will be used to
cover the expenses of selling the Certificate, including compensation paid to
selling dealers and the cost of sales literature. Any expenses not covered
by the charge will be paid from Liberty Life's general account, which may
include monies deducted from the Variable Account for the Mortality and
Expense Risk Charge. A dealer selling the Certificate may receive up to
[6.25%] of Purchase Payments [with additional compensation later based on the
Certificate Value of those payments. During certain time periods selected by
Liberty Life and [KFSC], the percentage may increase to [6.50]%.]
The Contingent Deferred Sales Charge will be waived in the event a Covered
Person is confined in a medical facility in accordance with the provisions
and conditions of an endorsement relating to such confinements.
The Contingent Deferred Sales Charge will be eliminated under Certificates
issued to employees of Liberty Life and other persons specified in "Sales of
the Certificate".
[Liberty Life may reduce or change to 0% any Contingent Deferred Sales Charge
percentage under a Certificate issued in an internal exchange or transfer of
an annuity contract of Liberty Life's general account.]
[Deductions for Transfers of Variable Account Value
*****************************************************************
*****************************************************************
The charge for transfers will range from zero to an amount equal to
the administrative costs of effecting the transfer, as described
below, not to exceed $50.
*****************************************************************
*****************************************************************
The Certificate allows Liberty Life to charge a transfer fee. Currently no
fee is being charged. Certificate Owners will be notified, in advance, of
the imposition of any fee. The fee will not exceed the lesser of $[50] and
the cost of effecting a transfer.]
Deductions for Premium Taxes
Liberty Life deducts the amount of any premium taxes levied by any state or
governmental entity when paid unless Liberty Life elects to defer such
deduction. Such premium taxes depend, among other things, on the type of
Certificate (Qualified or Non-Qualified), on the state of residence of the
Certificate Owner, the state of residence of the Annuitant, the status of
Liberty Life within such states, and the insurance tax laws of such states.
For New York Certificates, the current premium tax rate is 0%.
Deductions for Income Taxes
Liberty Life will deduct from any amount payable under the Certificate any
income taxes that a governmental authority requires Liberty Life to withhold
with respect to that amount. See "Income Tax Withholding" and "Tax-Sheltered
Annuities".
Total Account Expenses
The Variable Account's total expenses in relation to the Certificate will be
[the Certificate Maintenance Charge,] the Mortality and Expense Risk Charge,
[the Daily Sales Charge, and the Daily Administrative Charge.]
The value of the assets in the Variable Account will reflect the value of
Eligible Fund shares and therefore the deductions from and expenses paid out
of the assets of the Eligible Funds. These deductions and expenses are
described in the Eligible Fund prospectus.
OTHER SERVICES
*****************************************************************
*****************************************************************
Each of the following Programs may or may not be offered under any
form of the Certificate. The minimum amount that may be transfered
under the Dollar Cost Averaging Program ranges between $75 and
$750. The required notice period for the Rebalancing Program will
not exceed thirty days. The minimum Purchase Payment for the
Systematic Investment Program ranges between $100 and $1000. The
minimum amount that may be withdrawn under the Systematic
Withdrawal Program ranges between $100 and $250.
*****************************************************************
*****************************************************************
The Programs. Liberty Life offers several investment related programs which
are available only prior to the Income Date: [Asset Allocation]; [Dollar Cost
Averaging]; [Systematic Investment]; and [Systematic Withdrawal] Programs. [A
Rebalancing Program is available prior to and after the Income Date.] Under
each Program, the related transfers between and among Sub-Accounts [and the
Fixed Account] are not counted as one of the [twelve] free transfers. Each
of the Programs has its own requirements, as discussed below. Liberty Life
reserves the right to terminate any Program.
If the Certificate Owner has submitted the required telephone authorization
form, certain changes may be made by telephone. For those Programs involving
transfers, Owners may change instructions by telephone with regard to which
Sub-Accounts [or the Fixed Account] Certificate Value may be transferred.
The current conditions and procedures are described in Appendix [B].
[Dollar Cost Averaging Program. Liberty Life offers a Dollar Cost Averaging
program that Certificate Owners may participate in by Written Request. The
program periodically transfers Accumulation Units from the [XX-1] Sub-Account
[or the One-Year Guarantee Period of the Fixed Account] to other Sub-Accounts
selected by the Certificate Owner. The program allows a Certificate Owner to
invest in Variable Sub-Accounts over time rather than having to invest in
those Sub-Accounts all at once. The program is available for initial and
subsequent Purchase Payments and for Certificate Value transferred into the
[XX-1] Sub-Account [or the One-Year Guarantee Period.] Under the program,
Liberty Life makes automatic transfers on a periodic basis out of the [XX-1]
Sub-Account [or the One-Year Guarantee Period] into one or more of the other
available Sub-Accounts (Liberty Life reserves the right to limit the number
of Sub-Accounts the Certificate Owner may choose but there are currently no
limits).
The Certificate Owner by Written Request must specify the [XX-1] Sub-Account
[or the One-Year Guarantee Period] from which the transfers are to be made,
the monthly amount to be transferred [(minimum $750)] and the Sub-Account(s)
to which the transfers are to be made. The first transfer will occur at the
close of the Valuation Period that includes the 30th day after the receipt of
the Certificate Owner's Written Request. Each succeeding transfer will occur
one month later (e.g., if the 30th day after the receipt date is April 8, the
second transfer will occur at the close of the Valuation Period that includes
May 8). When the remaining value is less than the monthly transfer amount,
that remaining value will be transferred and the program will end. Before
this final transfer, the Certificate Owner may extend the program by
allocating additional Purchase Payments to the [XX-1] Sub-Account [or the One-
Year Guarantee Period] or by transferring Certificate Value to the [XX-1] Sub-
Account [or the One-Year Guarantee Period.] The Certificate Owner may, by
Written Request or by telephone, change the monthly amount to be transferred,
change the Sub-Account(s) to which the transfers are to be made, or end the
program. The program will automatically end if the Income Date occurs.
Liberty Life reserves the right to end the program at any time by sending the
Certificate Owner a notice one month in advance.
Written or telephone instructions must be received by Liberty Life by the end
(currently 4:00 PM Eastern Time) of the business day preceding the next
scheduled transfer in order to be in effect for that transfer. Telephone
instructions are subject to the conditions and procedures established by
Liberty Life from time to time. The current conditions and procedures appear
in Appendix [B], and Certificate Owners in a dollar cost averaging program
will be notified, in advance, of any changes.]
[Asset Allocation Program
Certificate Owners may select from five asset allocation model portfolios
developed by Ibbotoson Associates. (Model A - Capital Preservation, Model B
- - Income and Growth, Model C - Moderate Growth, Model D - Growth, and Model E
- - Aggressive Growth.) If a Certificate Owner elects one of the models,
initial and subsequent Purchase Payments will automatically be allocated
among the Sub-Accounts in the model. Only one model may be used in a
Certificate at a time. Certificate Owners may use a questionnaire and scoring
system to determine the model which corresponds to their risk tolerance and
time horizons.
Periodically Ibbotoson Associates will review the models and may determine
that a reconfiguration of the Sub-Accounts and percentage allocations among
those Sub-Accounts is appropriate. Certificate Owners will receive
notification prior of any reconfiguration.
[The Fixed Account is not available in any asset allocation model. A
Certificate Owner may allocate initial or subsequent Purchase Payments, or
Certificate Value, between an asset allocation model and the Fixed Account.]
[Rebalancing Program. In accordance with the Certificate Owner's election
of the relative Purchase Payments percentage allocations, Liberty Life will
automatically rebalance the Certificate Value of each Sub-Account either
monthly, quarterly, semi-annually, or annually. On the last day of the
period selected, Liberty Life will automatically rebalance the Certificate
Value in each of the Sub-Accounts to match the current Purchase Payments
percentage allocations. The Program may be terminated at any time and the
percentages may be altered by Written Request. The requested change must be
received at the Service Office [thirty (30)] days prior to the end of the
period selected. [Certificate Value allocated to the Fixed Account is not
subject to automatic rebalancing.] After the Income Date, automatic
rebalancing applies only to variable annuity payments and Liberty Life will
rebalance the number of Annuity Units in each Sub-Account. Annuity Units are
used to calculate the amount of each Sub-Account annuity payment; see
"Variable Annuity Benefits") in the Statement of Additional Information.]
[Systematic Investment Program. Purchase Payments may be made by monthly
draft against the bank account of any Certificate Owner that has completed
and returned to Liberty Life a Systematic Investment Program application and
authorization form. The application and authorization form may be obtained
from Liberty Life or from the sales representative. Each Systematic
Investment Program Purchase Payment is subject to a minimum of $250.]
[Systematic Withdrawal Program. To the extent permitted by law, Liberty Life
will make monthly, quarterly, semi-annually or annual distributions of a
predetermined dollar amount to a Certificate Owner that has enrolled in the
Systematic Withdrawal Program. Under the Program, all distributions will be
made directly to the Certificate Owner and will be treated for federal tax
purposes as any other withdrawal or distribution of Certificate Value. (See
"Tax Status".) A Certificate Owner may specify the amount of each partial
withdrawal, subject to a minimum of [$100]. [Systematic withdrawals may only
be made from the Sub-Accounts [and the [One] Year Guarantee Period of the
Fixed Account.]] [In each Certificate Year, portions of Certificate Value may
be withdrawn without the imposition of any Contingent Deferred Sales Charge
("Free Withdrawal Amount"). If withdrawals pursuant to the Program are
greater than the Free Withdrawal Amount, the amount of the withdrawals
greater than the Free Withdrawal Amount will be subject to the applicable
Contingent Deferred Sales Charge. Any unrelated voluntary partial withdrawal
a Certificate Owner makes during a Certificate Year will be aggregated with
withdrawals pursuant to the Program to determine the applicability of any
Contingent Deferred Sales Charge under the Certificate provisions regarding
partial withdrawals.
Unless the Certificate Owner specifies the Sub-Account or Sub-Accounts [or
the Fixed Account] from which withdrawals of Certificate Value shall be made
or if the amount in a specified Sub-Account is less than the predetermined
amount, Liberty Life will make withdrawals under the Program from the Sub-
Accounts [and the Fixed Account] in amounts proportionate to the amounts in
the Sub-Accounts [and the Fixed Account.] All withdrawals under the Program
will be effected by canceling the number of Accumulation Units equal in value
to the amount to be distributed to the Certificate Owner [and any applicable
Contingent Deferred Sales Charge].
[The Program may be combined with all other Programs [except the Systematic
Investment Program].]
[It may not be advisable to participate in the Systematic Withdrawal Program
and incur a Contingent Deferred Sales Charge when making additional Purchase
Payments under the Certificate.]]
THE CERTIFICATES
Variable Account Value
The Variable Account Value for a Certificate is the sum of the value of each
Sub-Account to which values are allocated under a Certificate. The value of
each Sub-Account is determined at any time by multiplying the number of
Accumulation Units attributable to that Sub-Account by the Accumulation Unit
value for that Sub-Account at the time of determination. The Accumulation
Unit value is an accounting unit of measure used to determine the change in
an Accumulation Unit's value from Valuation Period to Valuation Period.
Each Purchase Payment that is made results in additional Accumulation Units
being credited to the Certificate and the appropriate Sub-Account thereunder.
The number of additional units for any Sub-Account will equal the amount
allocated to that Sub-Account divided by the Accumulation Unit value for that
Sub-Account at the time of investment.
Valuation Periods
The Variable Account is valued each Valuation Period using the net asset
value of the Eligible Fund shares. A Valuation Period is the period
commencing at the close of trading on the New York Stock Exchange on each
Valuation Date and ending at the close of trading for the next succeeding
Valuation Date. A Valuation Date is each day that the New York Stock
Exchange is open for business. The New York Stock Exchange is currently
closed on weekends, New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Net Investment Factor
Variable Account Value will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect value, Liberty Life utilizes an Accumulation Unit value.
Each Sub-Account has its own Accumulation Units and value per Unit. The Unit
value applicable during any Valuation Period is determined at the end of that
period.
When Liberty Life first purchased Eligible Fund shares on behalf of the
Variable Account, Liberty Life valued each Accumulation Unit at a specified
dollar amount. The Unit value for each Sub-Account in any Valuation Period
thereafter is determined by multiplying the value for the prior period by a
net investment factor. This factor may be greater or less than 1.0;
therefore, the Accumulation Unit may increase or decrease from Valuation
Period to Valuation Period. Liberty Life calculates a net investment factor
for each Sub-Account by dividing (a) by (b) and then subtracting (c) (i.e.,
(a/b) _ c), where:
(a) is equal to:
(i) the net asset value per share of the Eligible Fund at the end
of the Valuation Period; plus
(ii) the per share amount of any distribution made by the Eligible
Fund if the "ex-dividend" date occurs during that same Valuation
Period.
(b) is the net asset value per share of the Eligible Fund at the end of the
prior Valuation Period.
(c) is equal to:
(i) the Valuation Period equivalent of the Mortality and
Expense Risk Charge; plus
[(ii) the Valuation Period equivalent of the daily
Distribution Charge; plus]
[(iii) the Valuation Period equivalent of the daily
Administrative Charge; plus]
[(iv)] a charge factor, if any, for any tax provision
established by Liberty Life as a result of the operations of
that Sub-Account.
[If a Certificate ever reaches the maximum cumulative sales charge limit
defined in "Deductions for Contingent Deferred Sales Charge", Unit values
without (c)(ii) above will be used thereafter.] For Certificates issued to
employees of Liberty Life and other persons specified in "Sales of the
Certificate", Unit values with [.35]% in (c)(i) above [and without (c)(ii)
above will be used. Unit values without (c)(ii) above may be used for
certain Certificates issued in an internal exchange or transfer (see
"Deductions for Daily Distribution Charges".]
Modification of the Certificate
Only Liberty Life's President or Secretary may agree to alter the Certificate
or waive any of its terms. Any changes must be made in writing and with the
Certificate Owner's consent, except as may be required by applicable law.
Right to Revoke
The Certificate Owner may return the Certificate within 10 days after he or
she receives it by delivering or mailing it to Liberty Life's Service Office.
The return of the Certificate by mail will be effective when the postmark is
affixed to a properly addressed and postage-prepaid envelope. The returned
Certificate will be treated as if Liberty Life never issued it and Liberty
Life will refund the Certificate Value.
DEATH PROVISIONS FOR NON-QUALIFIED CERTIFICATES
Death of Primary Owner, Joint Owner or Certain Non-Owner Annuitant
*****************************************************************
*****************************************************************
One or more of the Death Benefit options described below may be
included under any form of the Certificate.
*****************************************************************
*****************************************************************
These provisions apply if, before the Income Date while the Certificate is In
Force, the primary Certificate Owner or any joint Certificate Owner dies
(whether or not the decedent is also the Annuitant) or the Annuitant dies
under a Certificate with a non-natural Certificate Owner such as a trust.
The Designated Beneficiary will control the Certificate after such a death.
If the decedent's surviving spouse (if any) is the sole Designated
Beneficiary, the surviving spouse will automatically become the new sole
primary Certificate Owner as of the decedent's date of death. And, if the
Annuitant is the decedent, the new Annuitant will be any living contingent
annuitant, otherwise the surviving spouse. The Certificate may continue
until another death occurs (i.e., until the death of the Annuitant, primary
Certificate Owner or joint Certificate Owner). Except for this paragraph, all
of "Death Provisions" will apply to that subsequent death.
In all other cases, the Certificate may continue up to five years from the
date of death. During this period, the Designated Beneficiary may exercise
all ownership rights, including the right to make transfers or partial
surrenders or the right to totally surrender the Certificate for its
Surrender Value. If the Certificate is still in effect at the end of the
five-year period, Liberty Life will automatically end it then by paying the
Certificate Value to the Designated Beneficiary. If the Designated
Beneficiary is not then alive, Liberty Life will pay any person(s) named by
the Designated Beneficiary in a Written Request; otherwise the Designated
Beneficiary's estate.
The Covered Person under this paragraph shall be [the decedent if he or she
is the first to die of] the primary Certificate Owner, [Joint Certificate
Owner], [Annuitant], or, if there is a non-natural Certificate Owner such as
a trust, the Annuitant shall be the Covered Person. If the Covered Person
dies, the Certificate Value will be increased, as provided below, if it is
less than the Death Benefit Amount ("DBA"). The DBA is:
[Death Benefit [1]. The DBA at issue is the initial Purchase Payment.
Thereafter, it is the prior death benefit plus any additional Purchase
Payments, less any partial withdrawals, including any applicable surrender
charge.]
[Death Benefit [2]. The DBA at issue is the initial Purchase Payment.
Thereafter, the DBA is calculated for each Valuation Period by adding any
additional Purchase Payments, and deducting any partial withdrawals,
including any applicable surrender charge. This resulting amount is the "net
Purchase Payment death benefit". The Certificate Value for each Certificate
Anniversary (the "Anniversary Value") before the [81st] birthday of the
Covered Person is determined. Each Anniversary Value is increased by any
Purchase Payments made after that anniversary. This resultant value is then
decreased by an amount calculated at the time of any partial withdrawal made
after that anniversary. The amount is calculated by taking the amount of any
partial withdrawal, and dividing by the Certificate Value immediately
preceding the partial withdrawal, and then multiplying by the Anniversary
Value immediately preceding the withdrawal. The greatest Anniversary Value,
as so adjusted, (the "greatest Anniversary Value") is the DBA unless the net
Purchase Payment death benefit is higher. The net Purchase Payment death
benefit will be the DBA if such amount is higher than the greatest
Anniversary Value.]
[Death Benefit [3]. The DBA at issue is the initial Purchase Payment.
Thereafter, the DBA is calculated for each Valuation Period by applying a
death benefit interest rate to the previously calculated DBA, adding any
Purchase Payments made during the current Valuation Period and deducting any
partial withdrawals, including any applicable surrender charge, taken during
the current Valuation Period. The death benefit interest rate is applied to
each Purchase Payment until it equals the Maximum Guaranteed Death Benefit.
Initially, the Maximum Guaranteed Death Benefit will be a multiple of the
initial and additional Purchase Payments made, each computed separately,
determined as of the date of death based on such factors as the then
stipulated interest rate or the net rate of return of certain Sub-Accounts
[or the Fixed Account], as described below. Thereafter, the Maximum
Guaranteed Death Benefit as of the effective date of a partial withdrawal is
reduced first by the amount of the withdrawal representing earnings and
second in proportion to the reduction in Certificate Value for any partial
withdrawal representing Purchase Payments.
The death benefit interest rate compounded annually will be a stipulated
interest rate, except that with regard to amounts in the Sub-Accounts
investing in money market, short term bond or income Funds or [the General
Account (the "Fixed Account")] the interest rate applied will be the net rate
of return for such Funds, respectively, if it is less than the stipulated
death benefit interest rate.]
*****************************************************************
*****************************************************************
The period of time during which the Surrender Charge may be waived following
death ranges between 60 and 180 days.
*****************************************************************
*****************************************************************
When Liberty Life receives due proof of the Covered Person's death, Liberty
Life will compare, as of the date of death, the Certificate Value to the DBA.
If the Certificate Value was less than the DBA, Liberty Life will increase
the current Certificate Value by the amount of the difference. Note that
while the amount of the difference is determined as of the date of death,
that amount is not added to the Certificate Value until Liberty Life receives
due proof of death. The amount to be credited will be allocated to the
Variable Account [and/or the Fixed Account] based on the Purchase Payment
allocation selection that is in effect when Liberty Life receives due proof
of death. [Whether or not the Certificate Value is increased because of this
minimum death provision, the Designated Beneficiary may surrender the
Certificate within 180 days of the date of the covered person's death for the
Certificate Withdrawal Value without any applicable Contingent Deferred Sales
Charge being deducted. For a surrender after 180 days and for a surrender at
any time after the death of a non-covered person, any applicable Contingent
Deferred Sales Charge would be deducted.] If the Certificate is not
surrendered, it will continue in force for the time period specified above.
Payment of Benefits. Instead of receiving a lump sum, the Certificate Owner
or any Designated Beneficiary may direct by Written Request that Liberty Life
pay any benefit of $5,000 or more under an annuity payment option that meets
the following: (a) the first payment to the Designated Beneficiary must be
made no later than one year after the date of death; (b) payments must be
made over the life of the Designated Beneficiary or over a period not
extending beyond that person's life expectancy; and (c) any payment option
that provides for payments to continue after the death of the Designated
Beneficiary will not allow the successor payee to extend the period of time
over which the remaining payments are to be made.
Death of Certain Non-Certificate Owner Annuitant. These provisions apply if,
before the Income Date while the Certificate is In Force, (a) the Annuitant
dies, (b) the Annuitant is not a Certificate Owner, and (c) the Certificate
Owner is a natural person. The Certificate will continue after the
Annuitant's death. The new Annuitant will be any living contingent
annuitant, otherwise the primary Certificate Owner. If the Annuitant is the
first to die of the Certificate's primary Certificate Owner, Joint
Certificate Owner and Annuitant, then the Annuitant is the Covered Person and
the Certificate Value will be increased, as provided below, if it is less
than the Death Benefit Amount ("DBA"), as defined above. When Liberty Life
receives due proof of the Annuitant's death, Liberty Life will compare, as of
the date of death, the Certificate Value to the DBA. If the Certificate
Value was less than the DBA, Liberty Life will increase the current
Certificate Value by the amount of the difference. Note that while the
amount of the difference is determined as of the date of death, that amount
is not added to the Certificate Value until Liberty Life receives due proof
of death. The amount to be credited will be allocated to the Variable
Account and/or the Fixed Account based on the Purchase Payment allocation
selection that is in effect when Liberty Life receives due proof of death.
Whether or not the Certificate Value is increased because of this minimum
death provision, the Certificate Owner may surrender the Certificate within
90 days of the date of the Annuitant's death for the Certificate Withdrawal
Value without any applicable Contingent Deferred Sales Charge being deducted.
For a surrender after 90 days, any applicable Contingent Deferred Sales
Charge would be deducted.
DEATH PROVISIONS FOR QUALIFIED CERTIFICATES
Death of Annuitant. If the Annuitant dies before the Income Date while the
Certificate is In Force, the Designated Beneficiary will control the
Certificate after such a death. The Certificate Value will be increased, as
provided below, if it is less than the Death Benefit Amount ("DBA") as
defined above. When Liberty Life receives due proof of the Annuitant's
death, Liberty Life will compare, as of the date of death, the Certificate
Value to the DBA. If the Certificate Value was less than the DBA, Liberty
Life will increase the current Certificate Value by the amount of the
difference. Note that while the amount of the difference is determined as of
the date of death, that amount is not added to the Certificate Value until
Liberty Life receives due proof of death. The amount to be credited will be
allocated to the Variable Account [and/or the Fixed Account] based on the
Purchase Payment allocation selection that is in effect when Liberty Life
receives due proof of death. [Whether or not the Certificate Value is
increased because of this minimum death provision, the Designated Beneficiary
may surrender the Certificate within 90 days of the date of the Annuitant's
death for the Certificate Withdrawal Value without any applicable Contingent
Deferred Sales Charge being deducted. For a surrender after 90 days, any
applicable Contingent Deferred Sales Charge would be deducted.]
If the Certificate is not surrendered, it may continue for the time period
permitted by the Internal Revenue Code provisions applicable to the
particular Qualified Plan. During this period, the Designated Beneficiary
may exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to totally surrender the Certificate for its
Certificate Withdrawal Value. If the Certificate is still in effect at the
end of the period, Liberty Life will automatically end it then by paying the
Certificate Withdrawal Value (without the deduction of any applicable
Contingent Deferred Sales Charge) to the Designated Beneficiary. If the
Designated Beneficiary is not alive then, Liberty Life will pay any person(s)
named by the Designated Beneficiary in a Written Request; otherwise the
Designated Beneficiary's estate.
Payment of Benefits. Instead of receiving a lump sum, the Certificate Owner
or any Designated Beneficiary may direct by Written Request that Liberty Life
pay any benefit of $5,000 or more under an annuity payment option that meets
the following: (a) the first payment to the Designated Beneficiary must be
made no later than one year after the date of death; (b) payments must be
made over the life of the Designated Beneficiary or over a period not
extending beyond that person's life expectancy; and (c) any payment option
that provides for payments to continue after the death of the Designated
Beneficiary will not allow the successor payee to extend the period of time
over which the remaining payments are to be made.
CERTIFICATE OWNERSHIP
The Certificate Owner shall be the person designated in the application. The
Certificate Owner may exercise all the rights of the Certificate. Joint
Certificate Owners are permitted but not contingent Certificate Owners.
The Certificate Owner may by Written Request change the Certificate Owner,
primary beneficiary, contingent beneficiary or contingent annuitant. An
irrevocably-named person may be changed only with the written consent of such
person.
Because a change of Certificate Owner by means of a gift (i.e., a transfer
without full and adequate consideration) may be a taxable event, a
Certificate Owner should consult a competent tax adviser as to the tax
consequences resulting from such a transfer.
Any Qualified Certificate may have limitations on transfer of ownership. A
Certificate Owner should consult the Plan Administrator and a competent tax
adviser as to the tax consequences resulting from such a transfer.
ASSIGNMENT
The Certificate Owner may assign the Certificate at any time. A copy of any
assignment must be filed with Liberty Life. The Certificate Owner's rights
and those of any revocably-named person will be subject to the assignment.
Any Qualified Certificate may have limitations on assignability.
Because an assignment may be a taxable event, a Certificate Owner should
consult a competent tax adviser as to the tax consequences resulting from any
such assignment.
PARTIAL WITHDRAWALS AND SURRENDER
*****************************************************************
*****************************************************************
The minimum amount to be withdrawn will range between $100 and $500
and required Certificate Value following a withdrawal will range
between $500 to $2500.
*****************************************************************
*****************************************************************
The Certificate Owner may make partial withdrawals from the Certificate.
Liberty Life must receive a Written Request and the minimum amount to be
withdrawn must be at least [$300] or such lesser amount as Liberty Life may
permit in conjunction with a Systematic Withdrawal Program. If the
Certificate Value after a partial withdrawal would be below $[2,500], Liberty
Life will treat the request as a withdrawal of only the excess amount over
$[2,500]. [The amount withdrawn will include any applicable Contingent
Deferred Sales Charge and therefore the amount actually withdrawn may be
greater than the amount of the surrender check requested.] Unless the
request specifies otherwise, the total amount withdrawn will be deducted from
all Sub-Accounts of the Variable Account in the ratio that the value in each
Sub-Account bears to the total Variable Account Value. [If there is no
value, or insufficient value, in the Variable Account, then the amount
surrendered, or the insufficient portion, will be deducted from the Fixed
Account in the ratio that each Guarantee Period's value bears to the total
Fixed Account Value.]
The Certificate Owner may totally surrender the Certificate by making a
Written Request. Surrendering the Certificate will end it. Upon surrender,
the Certificate Owner will receive the Certificate Withdrawal Value.
Liberty Life will pay the amount of any surrender within seven days of
receipt of such request. Alternatively, the Certificate Owner may purchase
for himself or herself an annuity option with any surrender benefit of at
least $5,000. Liberty Life's consent is needed to choose an option if the
Certificate Owner is not a natural person.
Annuity options based on life contingencies cannot be surrendered after
annuity payments have begun. Option A, which is not based on life
contingencies, may be surrendered if a variable payout has been selected.
Because of the potential tax consequences of a full or partial surrender, a
Certificate Owner should consult a competent tax adviser regarding a
surrender.
ANNUITY PROVISIONS
Annuity Benefits
If the Annuitant is alive on the Income Date and the Certificate is In Force,
payments will begin under the annuity option or options the Certificate
Owner has chosen. The amount of the payments will be determined by applying
the Certificate Value [increased or decreased by a limited Market Value
Adjustment of Fixed Account Value described in Appendix A](less any premium
taxes not previously deducted [and less any applicable Certificate
Maintenance Charge]) on the Income Date in accordance with the option
selected.
Income Date and Annuity Option
The Certificate Owner may select an Income Date and an Annuity Option at the
time of application. If the Certificate Owner does not select a Annuity
Option, Option B will automatically be designated. If the Certificate Owner
does not select an Income Date for the Annuitant, the Income Date will
automatically be the Annuitant's 90th birthday or any maximum date permitted
under state law.
Change in Income Date and Annuity Option
The Certificate Owner may choose or change an Annuity Option or the Income
Date by making a Written Request to Liberty Life at least 30 days prior to
the Income Date. However, any Income Date must be: (a) for fixed annuity
options, not earlier than the first Certificate Anniversary; (b) not later
than the Annuitant's 90th birthday or any maximum date permitted under state
law.
Annuity Options
*****************************************************************
*****************************************************************
Liberty Life does not currently anticipate offering any additional
variable annuity options, but may offer additional fixed annuity
options. Any additional variable annuity options would be limited
to those that could be added by a filing pursuant to Rule 497 or
Rule 485(b).
*****************************************************************
*****************************************************************
The Annuity Options are:
Option A: Income for a Fixed Number of Years;
Option B: Life Income with 10 Years of Payments Guaranteed; and
Option C: Joint and Last Survivor Income.
Other options may be arranged by mutual consent. Each option is available in
two forms--as a variable annuity for use with the Variable Account and as a
fixed annuity for use with [Liberty Life's general account] [Fixed Account].
Variable annuity payments will fluctuate while fixed annuity payments will
not. The dollar amount of each fixed annuity payment will be determined by
deducting from the Certificate Value [increased or decreased by a limited
Market Value Adjustment described in Appendix A] any premium taxes not
previously deducted and any applicable Certificate Maintenance Charge and
then dividing the remainder by $1,000 and multiplying the result by the
greater of: (a) the applicable factor shown in the appropriate table in the
Certificate; or (b) the factor currently offered by Liberty Life at the time
annuity payments begin. This current factor may be based on the sex of the
payee unless to do so would be prohibited by law.]
If no Annuity Option is selected, Option B will automatically be applied.
Unless the Certificate Owner chooses otherwise, Variable Account Value, less
any premium taxes not previously deducted [and less any applicable
Certificate Maintenance Charge] will be applied to a variable annuity option
[and Fixed Account Value [increased or decreased by a limited Market Value
Adjustment described in Appendix A] less any premium taxes not previously
deducted will be applied to a fixed annuity option.] Whether variable or
fixed, the same Certificate Value applied to each option will produce a
different initial annuity payment as well as different subsequent payments.
The payee is the person who will receive the sum payable under an annuity
option. Any annuity option that provides for payments to continue after the
death of the payee will not allow the successor payee to extend the period of
time over which the remaining payments are to be made.
If the amount available to apply under any variable or fixed option is less
than $5,000, Liberty Life has reserved the right to pay such amount in one
sum to the payee in lieu of the payment otherwise provided for.
Annuity payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by Written Request. However, if any payment provided for
would be or becomes less than $100, Liberty Life has the right to reduce the
frequency of payments to such an interval as will result in each payment
being at least $100.
Option A: Income For a Fixed Number of Years. Liberty Life will pay an
annuity for a chosen number of years, not fewer than 5 nor over [50] [(a
period of years over 30 may be chosen only if it does not exceed the
difference between age 100 and the Annuitant's age on the date of the first
payment).] At any time while variable annuity payments are being made, the
payee may elect to receive the following amount: (a) the present value of the
remaining payments, commuted at the interest rate used to create the annuity
factor for this option (this interest rate is [5%] per year, unless [3]% per
year is chosen by Written Request at the time the option is selected); [less
(b) any Contingent Deferred Sales Charge due by treating the value defined in
(a) as a total surrender. (See "Deductions for Contingent Deferred Sales
Charge".] Instead of receiving a lump sum, the payee may elect another
payment option and the amount applied to the option will not be reduced by
the charge defined in (b) above. If, at the death of the payee, Option A
payments have been made for fewer than the chosen number of years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity,
this interest rate is [5%] per year, unless [3]% per year has been
chosen by the payee at the time the option is selected.
The Mortality and Expense Risk Charge is deducted during the Option A payment
period if a variable payout has been selected, but Liberty Life has no
mortality risk during this period.
[If annual payments are chosen for Option A and a variable payout has been
selected, Liberty Life has available a "stabilizing" payment option that can
be chosen. Each annual payment will be determined as described in "Variable
Annuity Payment Values". Each annual payment will then be placed in Liberty
Life's general account, from which it will be paid out in twelve equal
monthly payments. The sum of the twelve monthly payments will exceed the
annual payment amount because of an interest rate factor used by Liberty Life
that will vary from year to year. The commutation method described above for
calculating the present value of remaining payments applies to the annual
payments. Any monthly payments remaining before the next annual payment will
be commuted at the interest rate used to determine that year's monthly
payments.]
See "Annuity Payments" for the manner in which Option A may be taxed.
Option B: Life Income with 10 Years of Payments Guaranteed. Liberty Life
will pay an annuity during the lifetime of the payee. If, at the death of
the payee, payments have been made for less than 10 years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity,
this interest rate is [5%] per year, unless [3]% per year was chosen by
Payee's Written Request.
The amount of the annuity payments will depend on the age of the payee on the
Income Date and it may also depend on the payee's sex.
Option C: Joint and Last Survivor Income. Liberty Life will pay an annuity
for as long as either the payee or a designated second natural person is
alive. The amount of the annuity payments will depend on the age of both
persons on the Income Date and it may also depend on each person's sex. IT
IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF BOTH
PAYEES DIE AFTER THE RECEIPT OF THE FIRST PAYMENT OR TO RECEIVE ONLY TWO
ANNUITY PAYMENTS IF BOTH PAYEES DIE AFTER RECEIPT OF THE SECOND PAYMENT AND
SO ON.
*****************************************************************
*****************************************************************
The frequency with which Certificate Owners may transfer the Sub-Accounts
from which variable annuity payments are made with vary between 0 and an
unlimited number of times during periods varying between 1 and 12 months.
*****************************************************************
*****************************************************************
Variable Annuity Payment Values
The amount of the first variable annuity payment is determined by Liberty
Life using an annuity purchase rate that is based on an assumed annual
investment return of [5%] per year, unless [3]% is chosen by Written Request.
Subsequent variable annuity payments will fluctuate in amount and reflect
whether the actual investment return of the selected Sub-Account(s) (after
deducting the Mortality and Expense Risk Charge) is better or worse than the
assumed investment return. The total dollar amount of each variable annuity
payment will be equal to: (a) the sum of all Sub-Account payments; [less (b)
the pro-rata amount of the annual Certificate Maintenance Charge.]
Currently, a payee may instruct Liberty Life to change the Sub-Account(s)
used to determine the amount of the variable annuity payments [unlimited] [1]
time[s] every [6] months.
Proof of Age, Sex, and Survival of Annuitant
Liberty Life may require proof of age, sex or survival of any payee upon
whose age, sex or survival payments depend. If the age or sex has been
misstated, Liberty Life will compute the amount payable based on the correct
age and sex. If income payments have begun, any underpayments Liberty Life
may have made will be paid in full with the next annuity payment. Any
overpayments, unless repaid in one sum, will be deducted from future annuity
payments until Liberty Life is repaid in full.
SUSPENSION OF PAYMENTS
Liberty Life reserves the right to postpone surrender payments from the Fixed
Account for up to six months. Liberty Life reserves the right to suspend or
postpone any type of payment from the Variable Account for any period when:
(a) the New York Stock Exchange is closed other than customary weekend or
holiday closings; (b) trading on the Exchange is restricted; (c) an emergency
exists as a result of which it is not reasonably practicable to dispose of
securities held in the Variable Account or determine their value; or (d) the
Securities and Exchange Commission permits delay for the protection of
security holders. The applicable rules and regulations of the Securities and
Exchange Commission shall govern as to whether the conditions described in
(b) and (c) exist.
TAX STATUS
Introduction
The Certificate is designed for use by individuals in retirement plans which
may or may not be Qualified Plans under the provisions of the Internal
Revenue Code (the "Code"). The ultimate effect of federal income taxes on
the Certificate Value, on annuity payments, and on the economic benefit to
the Certificate Owner, Annuitant or Designated Beneficiary depends on the
type of retirement plan for which the Certificate is purchased and upon the
tax and employment status of the individual concerned. The discussion
contained herein is general in nature and is not intended as tax advice.
Each person concerned should consult a competent tax adviser. No attempt is
made to consider any applicable state or other tax laws. Moreover, the
discussion herein is based upon Liberty Life's understanding of current
federal income tax laws as they are currently interpreted. No representation
is made regarding the likelihood of continuation of those current federal
income tax laws or of the current interpretations by the Internal Revenue
Service.
Taxation of Annuities in General
Section 72 of the Code governs taxation of annuities in general. There are
no income taxes on increases in the value of a Certificate until a
distribution occurs, in the form of a full surrender, a partial surrender, an
assignment or gift of the Certificate, or annuity payments.
Surrenders, Assignments and Gifts. A Certificate Owner who fully surrenders
his or her Certificate is taxed on the portion of the payment that exceeds
his or her cost basis in the Certificate. For Non-Qualified Certificates,
the cost basis is generally the amount of the Purchase Payments made for the
Certificate and the taxable portion of the surrender payment is taxed as
ordinary income. For Qualified Certificates, the cost basis is generally
zero and the taxable portion of the surrender payment is generally taxed as
ordinary income subject to special 5-year income averaging. A Designated
Beneficiary receiving a lump sum surrender benefit after the death of the
Annuitant or Certificate Owner is taxed on the portion of the amount that
exceeds the Certificate Owner's cost basis in the Certificate. If the
Designated Beneficiary elects to receive annuity payments within 60 days of
the decedent's death, different tax rules apply. See "Annuity Payments"
below. For Non-Qualified Certificates, the tax treatment applicable to
Designated Beneficiaries may be contrasted with the income-tax-free treatment
applicable to persons inheriting and then selling mutual fund shares with a
date-of-death value in excess of their basis.
Partial withdrawals received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Certificate
Value exceeds Purchase Payments. Then, to the extent the Certificate Value
does not exceed Purchase Payments, such withdrawals are treated as a non-
taxable return of principal to the Certificate Owner. For partial
withdrawals under a Qualified Certificate, payments are treated first as a
non-taxable return of principal up to the cost basis and then a taxable
return of income. Since the cost basis of Qualified Certificates is
generally zero, partial surrender amounts will generally be fully taxed as
ordinary income.
A Certificate Owner who assigns or pledges a Non-Qualified Certificate is
treated as if he or she had received the amount assigned or pledged and thus
is subject to taxation under the rules applicable to partial withdrawals or
surrenders. A Certificate Owner who gives away the Certificate (i.e.,
transfers it without full and adequate consideration) to anyone other than
his or her spouse is treated for income tax purposes as if he or she had
fully surrendered the Certificate.
A special computational rule applies if Liberty Life issues to the
Certificate Owner, during any calendar year, (a) two or more Certificates or
(b) one or more Certificates and one or more of Liberty Life's other annuity
contracts. Under this rule, the amount of any distribution includable in the
Certificate Owner's gross income is to be determined under Section 72(e) of
the Code by treating all the Liberty Life contracts as one contract. Liberty
Life believes that this means the amount of any distribution under one
Certificate will be includable in gross income to the extent that at the time
of distribution the sum of the values for all the Certificates or contracts
exceeds the sum of the cost bases for all the contracts.
Annuity Payments. The non-taxable portion of each variable annuity payment
is determined by dividing the cost basis of the Certificate by the total
number of expected payments while the non-taxable portion of each fixed
annuity payment is determined by an "exclusion ratio" formula which
establishes the ratio that the cost basis of the Certificate bears to the
total expected value of annuity payments for the term of the annuity. The
remaining portion of each payment is taxable. Such taxable portion is taxed
at ordinary income rates. For Qualified Certificates, the cost basis is
generally zero. With annuity payments based on life contingencies, the
payments will become fully taxable once the payee lives longer than the life
expectancy used to calculate the non-taxable portion of the prior payments.
Because variable annuity payments can increase over time and because certain
payment options provide for a lump sum right of commutation, it is possible
that the IRS could determine that variable annuity payments should not be
taxed as described above but instead should be taxed as if they were received
under an agreement to pay interest. This determination would result in a
higher amount (up to 100%) of certain payments being taxable.
With respect to the "stabilizing" payment option available under Annuity
Option A, pursuant to which each annual payment is placed in Liberty Life's
general account and paid out with interest in twelve equal monthly payments,
it is possible the IRS could determine that receipt of the first monthly
payout of each annual payment is constructive receipt of the entire annual
payment. Thus, the total taxable amount for each annual payment would be
accelerated to the time of the first monthly payout and reported in the tax
year in which the first monthly payout is received.
Penalty Tax. Payments received by Certificate Owners, Annuitants, and
Designated Beneficiaries under Certificates may be subject to both ordinary
income taxes and a penalty tax equal to 10% of the amount received that is
includable in income. The penalty tax is not imposed on amounts received:
(a) after the taxpayer attains age 59-1/2; (b) in a series of substantially
equal payments made for life or life expectancy; (c) after the death of the
Certificate Owner (or, where the Certificate Owner is not a human being,
after the death of the Annuitant); (d) if the taxpayer becomes totally and
permanently disabled; or (e) under a Non-Qualified Certificate's annuity
payment option that provides for a series of substantially equal payments,
provided only one Purchase Payment is made to the Certificate, the
Certificate is not issued as a result of a Section 1035 exchange, and the
first annuity payment begins in the first Certificate Year.
Income Tax Withholding. Liberty Life is required to withhold federal income
taxes on taxable amounts paid under Certificates unless the recipient elects
not to have withholding apply. Liberty Life will notify recipients of their
right to elect not to have withholding apply. See "Tax-Sheltered Annuities"
(TSAs) for an alternative type of withholding that may apply to
distributions from TSAs that are eligible for rollover to another TSA or an
individual retirement annuity or account (IRA).
Section 1035 Exchanges. A Non-Qualified Certificate may be purchased with
proceeds from the surrender of an existing annuity contract. Such a
transaction may qualify as a tax-free exchange pursuant to Section 1035 of
the Code. It is Liberty Life's understanding that in such an event: (a) the
new Certificate will be subject to the distribution-at-death rules described
in "Death Provisions for Non-Qualified Certificates"; (b) Purchase Payments
made between August 14, 1982 and January 18, 1985 and the income allocable to
them will, following an exchange, no longer be covered by a "grandfathered"
exception to the penalty tax for a distribution of income that is allocable
to an investment made over ten years prior to the distribution; and (c)
Purchase Payments made before August 14, 1982 and the income allocable to
them will, following an exchange, continue to receive the following
"grandfathered" tax treatment under prior law: (i) the penalty tax does not
apply to any distribution; (ii) partial withdrawals are treated first as a
non-taxable return of principal and then a taxable return of income; and
(iii) assignments are not treated as surrenders subject to taxation. Liberty
Life's understanding of the above is principally based on legislative reports
prepared by the Staff of the Congressional Joint Committee on Taxation.
Diversification Standards. The U.S. Secretary of the Treasury has issued
regulations that set standards for diversification of the investments
underlying variable annuity contracts (other than pension plan contracts).
The Eligible Funds are designed to be managed to meet the diversification
requirements for the Certificate as those requirements may change from time
to time. If the diversification requirements are not satisfied, the
Certificate would not be treated as an annuity contract. As a consequence to
the Certificate Owner, income earned on a Certificate would be taxable to the
Certificate Owner in the year in which diversification requirements were not
satisfied, including previously non-taxable income earned in prior years. As
a further consequence, Liberty Life would be subjected to federal income
taxes on assets in the Variable Account.
The Secretary of the Treasury announced in September 1986 that he expects to
issue regulations which will prescribe the circumstances in which a
Certificate Owner's control of the investments of a segregated asset account
may cause the Certificate Owner, rather than the insurance company, to be
treated as the owner of the assets of the account. The regulations could
impose requirements that are not reflected in the Certificate. Liberty Life,
however, has reserved certain rights to alter the Certificate and investment
alternatives so as to comply with such regulations. Since the regulations
have not been issued, there can be no assurance as to the content of such
regulations or even whether application of the regulations will be
prospective. For these reasons, Certificate Owners are urged to consult with
their own tax advisers.
Qualified Plans
The Certificate is designed for use with several types of Qualified Plans.
The tax rules applicable to participants in such Qualified Plans vary
according to the type of plan and the terms and conditions of the plan
itself. Therefore, no attempt is made herein to provide more than general
information about the use of the Certificate with the various types of
Qualified Plans. Participants under such Qualified Plans as well as
Certificate Owners, Annuitants, and Designated Beneficiaries are cautioned
that the rights of any person to any benefits under such Qualified Plans may
be subject to the terms and conditions of the plans themselves regardless of
the terms and conditions of the Certificate issued in connection therewith.
Following are brief descriptions of the various types of Qualified Plans and
of the use of the Certificate in connection therewith. Purchasers of the
Certificate should seek competent advice concerning the terms and conditions
of the particular Qualified Plan and use of the Certificate with that Plan.
Tax-Sheltered Annuities
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts and,
subject to certain contribution limitations, exclude the amount of Purchase
Payments from gross income for tax purposes. However, such Purchase Payments
may be subject to Social Security (FICA) taxes. This type of annuity
contract is commonly referred to as a "Tax-Sheltered Annuity" (TSA).
Section 403(b)(11) of the Code contains distribution restrictions.
Specifically, benefits may be paid, through surrender of the Certificate or
otherwise, only (a) when the employee attains age 59-1/2, separates from
service, dies or becomes totally and permanently disabled (within the meaning
of Section 72(m)(7) of the Code) or (b) in the case of hardship. A hardship
distribution must be of employee contributions only and not of any income
attributable to such contributions. Section 403(b)(11) does not apply to
distributions attributable to assets held as of December 31, 1988. Thus, it
appears that the law's restrictions would apply only to distributions
attributable to contributions made after 1988, to earnings on those
contributions, and to earnings on amounts held as of 12/31/88. The Internal
Revenue Service has indicated that the distribution restrictions of Section
403(b)(11) are not applicable when TSA funds are being transferred tax-free
directly to another TSA issuer, provided the transferred funds continue to be
subject to the Section 403(b)(11) distribution restrictions.
Liberty Life will notify a Certificate Owner who has requested a distribution
from a Certificate if all or part of such distribution is eligible for
rollover to another TSA or to an individual retirement annuity or account
(IRA). Any amount eligible for rollover treatment will be subject to
mandatory federal income tax withholding at a 20% rate if the Certificate
Owner receives the amount rather than directing Liberty Life by Written
Request to transfer the amount as a direct rollover to another TSA or IRA.
Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity."
These Individual Retirement Annuities are subject to limitations on the
amount which may be contributed, the persons who may be eligible, and on the
time when distributions may commence. In addition, distributions from
certain types of Qualified Plans may be placed on a tax-deferred basis into
an Individual Retirement Annuity.
Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. Such retirement
plans may permit the purchase of the Certificate to provide benefits under
the plans.
Deferred Compensation Plans With Respect to Service for State and Local
Governments
Section 457 of the Code, while not actually providing for a Qualified Plan as
that term is normally used, provides for certain deferred compensation plans
that enjoy special income tax treatment with respect to service for tax-
exempt organizations, state governments, local governments, and agencies and
instrumentalities of such governments. The Certificate can be used with such
plans. Under such plans, a participant may specify the form of investment in
which his or her participation will be made. However, all such investments
are owned by and subject to the claims of general creditors of the sponsoring
employer.
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with its view of present applicable law, Liberty Life will vote
the shares of the Eligible Funds held in the Variable Account at regular and
special meetings of the shareholders of the Eligible Funds in accordance with
instructions received from persons having the voting interest in the Variable
Account. Liberty Life will vote shares for which it has not received
instructions in the same proportion as it votes shares for which it has
received instructions.
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended or if the present interpretation thereof should change, and
as a result Liberty Life determines that it is permitted to vote the shares
of the Eligible Funds in its own right, it may elect to do so.
The person having the voting interest under a Certificate prior to the Income
Date shall be the Certificate Owner. The number of shares held in each Sub-
Account which are attributable to each Certificate Owner is determined by
dividing the Certificate Owner's Variable Account Value in each Sub-Account
by the net asset value of the applicable share of the Eligible Fund. The
person having the voting interest after the Income Date under an annuity
payment option shall be the payee. The number of shares held in the Variable
Account which are attributable to each payee is determined by dividing the
reserve for the annuity payments by the net asset value of one share. During
the annuity payment period, the votes attributable to a payee decrease as the
reserves underlying the payments decrease.
The number of shares in which a person has a voting interest will be
determined as of the date coincident with the date established by the
respective Eligible Fund for determining shareholders eligible to vote at the
meeting of the Fund and voting instructions will be solicited by written
communication prior to such meeting in accordance with the procedures
established by the Eligible Fund.
Each person having the voting interest in the Variable Account will receive
periodic reports relating to the Eligible Fund(s) in which he or she has an
interest, proxy material and a form with which to give such voting
instructions with respect to the proportion of the Eligible Fund shares held
in the Variable Account corresponding to his or her interest in the Variable
Account.
SALES OF THE CERTIFICATES
*****************************************************************************
*****************************************************************************
Another registered broker-dealer that is an affiliate of Liberty
Life may serve as the principal underwriter of the Certificates.
*****************************************************************************
*****************************************************************************
[Keyport Financial Services Corp. ("KFSC")] serves as the Principal
Underwriter for the Certificate described in this prospectus. The
Certificate will be sold by salespersons who represent Liberty Life Assurance
Company of Boston, an affiliate of KFSC, as variable annuity agents and who
are registered representatives of broker/dealers who have entered into
distribution agreements with [KFSC]. [KFSC] is registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. It is located at [125 High Street, Boston,
Massachusetts 02110].
Different Certificates may be sold (1) to a person who is an officer,
director, or employee of Liberty Life, or an affiliate of Liberty Life, a
trustee or officer of an Eligible Fund, an employee of the investment adviser
or sub-investment adviser of an Eligible Fund, or an employee or associated
person of an entity which has entered into a sales agreement with the
Principal Underwriter for the distribution of Certificates, or (2) to any
Qualified Plan established for such a person. Such Certificates may be
different from the Certificates sold to others in that [(1) they are not
subject to the deduction for the Certificate Maintenance Charge, the asset-
based Sales charge or the Contingent Deferred Sales Charge and (2)] they have
a Mortality and Expense Risk Charge of 0[.35]% per year.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the Principal
Underwriter are a party. Liberty Life is engaged in various kinds of routine
litigation which in its judgment is not of material importance in relation to
the total capital and surplus of Liberty Life.
INQUIRIES BY CERTIFICATE OWNERS
Certificate Owners with questions about their Certificates may write Liberty
Life's Service Office, 125 High Street, Boston, MA 02110, or call (800) 367-
3653.
TABLE OF CONTENTS_STATEMENT OF ADDITIONAL INFORMATION
Page
Liberty Life Assurance Company of Boston
Variable Annuity Benefits
Variable Annuity Payment Values
Re-Allocating Sub-Account Payments
Safekeeping of Assets
Principal Underwriter
Experts
Investment Performance
Average Annual Total Return for a Certificate
that is Surrendered and for a Certificate that Continues
Change in Accumulation Unit Value
Yields for [XX-1] Sub-Accounts
Financial Statements
Liberty Life Assurance Company of Boston
***************************************************************************
***************************************************************************
The Certificate may or may not provide for a Fixed Account Option.
***************************************************************************
***************************************************************************
[APPENDIX A
THE FIXED ACCOUNT [(ALSO KNOWN AS THE MODIFIED GUARANTEED ANNUITY ACCOUNT)]
Introduction
This Appendix describes the Fixed Account option available under the
Certificate.
[FIXED ACCOUNT VALUES PROVIDED BY THE CERTIFICATE ARE SUBJECT TO A MARKET
VALUE ADJUSTMENT, THE OPERATION OF WHICH MAY RESULT IN UPWARD OR DOWNWARD
ADJUSTMENTS IN AMOUNTS TRANSFERRED AND AMOUNTS PAID (INCLUDING WITHDRAWALS,
SURRENDERS, DEATH BENEFITS, AND AMOUNTS APPLIED TO PURCHASE ANNUITY PAYMENTS)
TO A CERTIFICATE OWNER OR OTHER PAYEE. IN NO EVENT WILL THE DOWNWARD MARKET
VALUE ADJUSTMENT ELIMINATE INTEREST AT THE RATE OF 3% PER YEAR APPLIED TO THE
AMOUNT ALLOCATED TO A GUARANTEED PERIOD. PAYMENTS MADE FROM FIXED ACCOUNT
VALUES AT THE END OF THEIR GUARANTEE PERIOD ARE NOT SUBJECT TO THE MARKET
VALUE ADJUSTMENT.]
Purchase Payments allocated to the Fixed Account option become part of
Liberty Life's general account. Because of applicable exemptive and
exclusionary provisions, interests in the Fixed Account options have not been
registered under the Securities Act of 1933 ("1933 Act"), nor is the general
account an investment company under the Investment Company Act. Accordingly,
neither the general account, the Fixed Account option, nor any interest
therein, are subject to regulation under the 1933 Act or the Investment
Company Act. Liberty Life understands that the Securities and Exchange
Commission has not reviewed the disclosure in the prospectus relating to the
general account and the Fixed Account option.
Investments in the Fixed Account and Capital Protection Plus
Purchase Payments will be allocated to the Fixed Account in accordance with
the selection made by the Certificate Owner in the application. Any
selection must specify that percentage of the Purchase Payment that is to be
allocated to each Guarantee Period of the Fixed Account. The percentage, if
not zero, must be at least 10%. The Certificate Owner may change the
allocation percentages without fee, penalty or other charge. Allocation
changes must be made by Written Request unless the Certificate Owner has by
Written Request authorized Liberty Life to accept telephone allocation
instructions from the Certificate Owner. By authorizing Liberty Life to
accept telephone changes, a Certificate Owner agrees to accept and be bound
by the conditions and procedures established by Liberty Life from time to
time. The current conditions and procedures are in Appendix [B] and
Certificate Owners authorizing telephone allocation instructions will be
notified, in advance, of any changes.
Liberty Life currently offers Guarantee Periods of 1, [3, 5, and 7] years.
Liberty Life may change at any time the number of Guarantee Periods it offers
under newly-issued and in-force Certificates, as well as the length of those
Guarantee Periods. If Liberty Life stops offering a particular Guarantee
Period, existing Fixed Account Value in such Guarantee Period would not be
affected until the end of the Period (at that time, a Period of the same
length would not be a transfer option). Each Guarantee Period currently
offered is available for initial and subsequent Purchase Payments and for
transfers of Certificate Value.
[Liberty Life offers a Capital Protection Plus program that a Certificate
Owner may request. Under this program, Liberty Life will allocate part of
the Purchase Payment to the Guarantee Period selected by the Certificate
Owner so that such part, based on that Guarantee Period's interest rate in
effect on the date of allocation, will equal at the end of the Guarantee
Period the total Purchase Payment. The rest of the Purchase Payment will be
allocated to the Sub-Account(s) of the Variable Account based on the
Certificate Owner's allocation. If any part of the Fixed Account Value is
surrendered or transferred before the end of the Guarantee Period, the Value
at the end of that Period will not equal the original Purchase Payment
amount.
For an example of Capital Protection Plus, assume Liberty Life receives a
Purchase Payment of $10,000 when the interest rate for the 7-year Guarantee
Period is 6.75% per year. Liberty Life will allocate $6,331 to that
Guarantee Period because $6,331 will increase at that interest rate to
$10,000 after 7 years. The remaining $3,669 of the payment will be allocated
to the Sub-Account(s) selected by the Certificate Owner.]
Fixed Account Value
The Fixed Account Value at any time is equal to:
(a) all Purchase Payments allocated to the Fixed Account plus the interest
subsequently credited on those payments; plus
(b) any Variable Account Value transferred to the Fixed Account plus the
interest subsequently credited on the transferred value; less
(c) any prior partial withdrawals from the Fixed Account, including any
charges therefor; less
(d) any Fixed Account Value transferred to the Variable Account.
Interest Credits
Liberty Life will credit interest daily (based on an annual compound interest
rate) to Purchase Payments allocated to the Fixed Account at rates declared
by Liberty Life for Guarantee Periods of one or more years from the month and
day of allocation. Any rate set by Liberty Life will be at least [3%] per
year.
Liberty Life's method of crediting interest means that Fixed Account Value
might be subject to different rates for each Guarantee Period the Certificate
Owner has selected in the Fixed Account. For purposes of this section,
Variable Account Value transferred to the Fixed Account and Fixed Account
Value renewed for another Guarantee Period shall be treated as a Purchase
Payment allocation.
[Application of Market Value Adjustment
Any surrender, withdrawal, transfer, or application to an Annuity Option of
Fixed Account Value from a Guarantee Period of three years or more is subject
to a limited Market Value Adjustment, unless: (1) the effective date of the
transaction is at the end of the Guarantee Period; or (2) the effective date
of a surrender is within 90 days of the date of death of the first Covered
Person to die.
If a Market Value Adjustment applies to either a surrender or the application
to an Annuity Option, then any negative Market Value Adjustment amount will
be deducted from the Certificate Value and any positive Market Value
Adjustment amount will be added to the Certificate Value. If a Market Value
Adjustment applies to either a partial withdrawal or a transfer, then any
negative Market Value Adjustment amount will be deducted from the partial
withdrawal or transfer amount after the withdrawal or transfer amount has
been deducted from the Fixed Account Value, and any positive Market Value
Adjustment amount will be added to the applicable amount after it has been
deducted from the Fixed Account Value.
No Market Value Adjustment is ever applicable to Guarantee Periods of fewer
than three years.
Effect of Market Value Adjustment
A Market Value Adjustment reflects the change in prevailing current interest
rates since the beginning of a Guarantee Period. The Market Value Adjustment
may be positive or negative, but any negative Adjustment may be limited in
amount (see Market Value Adjustment Factor below).
Generally, if the Treasury Rate for the Guarantee Period is lower than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the limited Market
Value Adjustment will result in a reduction of the amount being surrendered,
withdrawn, transferred, or applied to an Annuity Option.
Similarly, if the Treasury Rate for the Guarantee Period is higher than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the Market Value
Adjustment will result in an increase in the amount being surrendered,
withdrawn, transferred, or applied to an Annuity Option.
The Market Value Adjustment will be applied before the deduction of any
applicable surrender charges or applicable taxes.
Market Value Adjustment Factor
The Market Value Adjustment is computed by multiplying the amount being
surrendered, withdrawn, transferred, or applied to a Payment Option, by the
Market Value Adjustment Factor. The Market Value Adjustment Factor is
calculated as the larger of Formula (1) or (2):
(1) [(1+a)/(1+b)](n/12) - 1
where:
"a" is the Treasury Rate for the number of Guarantee Period Years in the
Guarantee Period;
"b" is the Treasury Rate for a period equal to the time remaining (rounded up
to the next whole number of Guarantee Period Years) to the expiration of the
Guarantee Period; and
"n" is the number of complete Guarantee Period Months remaining before the
expiration of the Guarantee Period.
(2) [(1.03)/(1+i)](y+d/#) - 1
where:
"i" is the Guaranteed Interest Rate for the Guarantee Period;
"y" is the number of complete Guarantee Period Years that have elapsed in
Your Guarantee Period;
"d" is the number of days since the last Guarantee Period Anniversary or, if
"y" is zero, the number of days since the start of the Guarantee Period; and
"#" is the number of days in the current Guarantee Period Year (i.e., the sum
of "d" and the number of days until the next Guarantee Period Anniversary).
In Formulas (1) and (2), all references to Guarantee Period, Guarantee Period
Anniversary, Guarantee Period Month, and Guarantee Period Year relate to the
Guarantee Period from which is being taken the amount being surrendered,
withdrawn, transferred, or applied to an Annuity Option.
As stated above, the Formula (2) amount will apply only if it is greater than
the Formula (1) amount. This will occur only when the Formula (1) amount is
negative and the Formula (2) amount is a smaller negative number. Formula (2)
thus ensures that a full (normal) negative Market Value Adjustment of Formula
(1) will not apply to the extent it would decrease the Guarantee Period's
Fixed Account Value (before the deduction of any applicable surrender charges
or any applicable taxes) below the following amount:
(a) the amount allocated to the Guarantee Period; less
(b) any prior systematic or partial withdrawal amounts; less
(c) any prior amounts transferred to the Variable Account or to another
Guarantee Period in the Fixed Account; plus
(d) interest on the above items (a) through (c) credited annually at a
rate of 3% per year.
Treasury Rates
The Treasury Rate for a Guarantee Period is the interest rate in the Treasury
Constant Maturity Series, as published by the Federal Reserve Board, for a
maturity equal to the number of years specified in "a" and "b" in Formula (1)
above. For "a", Liberty Life uses the Treasury Constant Maturity Series for
the week which includes the most recent Determination Date on or preceding
the Reset Date for Your Guarantee Period. For "b", Liberty Life uses the
Treasury Constant Maturity Series for the week which includes the most recent
Determination Date on or preceding the date of calculation of the Market
Value Adjustment Factor. The Determination Dates are the last business day
prior to the first and fifteenth of each calendar month.
If the number of years specified in "a" or "b" is not equal to a maturity in
the Treasury Constant Maturity Series, the Treasury Rate will be determined
by straight line interpolation between the interest rates of the next highest
and next lowest maturities.
If the Treasury Constant Maturity Series becomes unavailable, Liberty Life
will adopt a comparable constant maturity index or, if such a comparable
index also is not available, Liberty Life will replicate calculation of the
Treasury Constant Maturity Series Index based on U.S. Treasury Security
coupon rates.
End of A Guarantee Period
Liberty Life will notify a Certificate Owner in writing at least 30 days
prior to the end of a Guarantee Period. At the end of the Guarantee Period,
Liberty Life will automatically transfer the Guarantee Period's Fixed Account
Value to the Money Market Sub-Account of the Variable Account unless Liberty
Life previously received a Certificate Owner's Written Request of: (1)
election of a new Guarantee Period from among those being offered by Liberty
Life at that time; or (2) instructions to transfer the ending Guarantee
Period's Fixed Account Value to one or more Sub-Accounts of the Variable
Account. A new Guarantee Period cannot be longer than the number of years
remaining until the Income Date.]
Transfers of Fixed Account Value
*****************************************************************************
*****************************************************************************
The limits on the number of transfers will range between unlimited transfers
and 12 per year. The limitations on transfers from the Fixed Account will
range between 10% and 50%.
*****************************************************************************
*****************************************************************************
The Certificate Owner may transfer Fixed Account Value from one Guarantee
Period to another or to one or more Sub-Accounts of the Variable Account
subject to any applicable Market Value Adjustment. If the Fixed Account
Value represents multiple Guarantee Periods, the transfer request must
specify from which values the transfer is to be made.
The Certificate allows Liberty Life to limit the number of transfers that can
be made in a specified time period. Currently, Liberty Life is limiting
Variable Account and Fixed Account transfers to generally [xx] transfers per
calendar year with a $500,000 per transfer dollar limit. See "Transfer of
Variable Account Value". Transfers from the Fixed Account to the Variable
Account are limited to [50%] of the Fixed Account Value at the beginning of
the Certificate Year. This limitation will be waived if a Systematic
Withdrawal Program is in effect. These limitations will not apply to any
transfer made at the end of a Guarantee Period. Certificate Owners will be
notified, in advance, of a change in the limitation on the number of
transfers.
Transfer requests must be by Written Request unless the Certificate Owner has
authorized Liberty Life by Written Request to accept telephone transfer
instructions from the Certificate Owner or from a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney. By
authorizing Liberty Life to accept telephone transfer instructions, a
Certificate Owner agrees to accept and be bound by the conditions and
procedures established by Liberty Life from time to time. The current
conditions and procedures are in Appendix [B] and Certificate Owners
authorizing telephone transfers will be notified, in advance, of any changes.
Written transfer requests may be made by a person acting for the Certificate
Owner as an attorney-in-fact under a power of attorney.
Transfer requests received by Liberty Life before the close of trading on the
New York Stock Exchange (currently 4:00 PM Eastern Time) will be executed at
the close of business that day. Any requests received later will be executed
at the close of the next business day.
The amount of the transfer will be deducted from the specified values in the
manner stated in the next section below.
If 100% of a Guarantee Period's value is transferred and the current
allocation for Purchase Payments includes that Guarantee Period, then the
allocation formula for future Purchase Payments will automatically change
unless the Certificate Owner instructs otherwise. For example, if the
allocation formula is 50% to the one-year Guarantee Period and 50% to Sub-
Account A and all Fixed Account Value is transferred to Sub-Account A, the
allocation formula will change to 100% to Sub-Account A.
[APPENDIX B
TELEPHONE INSTRUCTIONS
Telephone Transfers of Certificate Values
1. If there are joint Certificate Owners, both must authorize Liberty Life
to accept telephone instructions but either Certificate Owner may give
Liberty Life telephone instructions.
2. All callers will be required to identify themselves. Liberty Life
reserves the right to refuse to act upon any telephone instructions in cases
where the caller has not sufficiently identified himself/herself to Liberty
Life's satisfaction.
3. Neither Liberty Life nor any person acting on its behalf shall be
subject to any claim, loss, liability, cost or expense if it or such person
acted in good faith upon a telephone instruction, including one that is
unauthorized or fraudulent; however, Liberty Life will employ reasonable
procedures to confirm that a telephone instruction is genuine and, if Liberty
Life does not, Liberty Life may be liable for losses due to an unauthorized
or fraudulent instruction. The Certificate Owner thus bears the risk that an
unauthorized or fraudulent instruction that is executed may cause the
Certificate Value to be lower than it would be had no instruction been
executed.
4. All conversations will be recorded with disclosure at the time of the
call.
5. The application for the Certificate may allow a Certificate Owner to
create a power of attorney by authorizing another person to give telephone
instructions. Unless prohibited by state law, such power will be treated as
durable in nature and shall not be affected by the subsequent incapacity,
disability or incompetency of the Certificate Owner. Either Liberty Life or
the authorized person may cease to honor the power by sending written notice
to the Certificate Owner at the Certificate Owner's last known address.
Neither Liberty Life nor any person acting on its behalf shall be subject to
liability for any act executed in good faith reliance upon a power of
attorney.
6. Telephone authorization shall continue in force until (a) Liberty Life
receives the Certificate Owner's written revocation, (b) Liberty Life
discontinues the privilege, or (c) Liberty Life receives written evidence
that the Certificate Owner has entered into a market timing or asset
allocation agreement with an investment adviser or with a broker/dealer.
7. Telephone transfer instructions received by Liberty Life at 800-367-3653
before the close of trading on the New York Stock Exchange (currently 4:00
P.M. Eastern Time) will be initiated that day based on the unit value prices
calculated at the close of that day. Instructions received after the close
of trading on the NYSE will be initiated the following business day.
8. Once instructions are accepted by Liberty Life, they may not be
canceled.
9. All transfers must be made in accordance with the terms of the
Certificate and current prospectus. If the transfer instructions are not in
good order, Liberty Life will not execute the transfer and will notify the
caller within 48 hours.
10. If 100% of any Sub-Account's value is transferred and the allocation
formula for Purchase Payments includes that Sub-Account, then the allocation
formula for future Purchase Payments will change accordingly unless Liberty
Life receives telephone instructions to the contrary. For example, if the
allocation formula is 50% to Sub-Account A and 50% to Sub-Account B and all
of Sub-Account A's value is transferred to Sub-Account B, the allocation
formula will change to 100% to Sub-Account B unless Liberty Life is
instructed otherwise.
Telephone Changes to Purchase Payment Allocation Percentages
Numbers 1-6 above are applicable.]
PROSPECTUS
[DATE]
Distributed by:
[Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712]
Issued by:
Liberty Life Assurance Company of Boston
175 Berkeley Street, Boston, MA 02117
Liberty Life Service Office
125 High Street
Boston, MA 02110-2712
Service Hotline 800-367-3653 (Press 3)
Yes.I would like to receive the Liberty Life [NAME OF ANNUITY] Statement of
Additional Information.
Yes.I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Yes.I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Name
Address
City, State Zip
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 6719 BOSTON, MA
POSTAGE WILL BE PAID BY ADDRESSEE
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
125 HIGH STREET
BOSTON, MA 02110-9773
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
PART B
STATEMENT OF ADDITIONAL INFORMATION
GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT J
OF
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON ("Liberty Life")
This Statement of Additional Information (SAI) is not a prospectus but it
relates to, and should be read in conjunction with, the variable annuity
prospectus dated , 1997. The SAI is incorporated by
reference into the prospectus. The prospectus is available, at no charge, by
writing Liberty Life at 125 High Street, Boston, MA 02110 or by calling (800)
437-4466.
TABLE OF CONTENTS
Page
Liberty Life Assurance Company of Boston..........................
Variable Annuity Benefits.........................................
Variable Annuity Payment Values.................................
Re-Allocating Sub-Account Payments..............................
Safekeeping of Assets.............................................
Principal Underwriter.............................................
Experts...........................................................
Investment Performance............................................
Average Annual Total Return for a Contract that is
Surrendered and for a Contract that Continues
Change in Accumulation Unit Value
Yields for [XX-1].Sub-Accounts..................................
Financial Statements..............................................
Liberty Life Assurance Company of Boston........................
The date of this statement of additional information is , 1997
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
Liberty Mutual Insurance Company ("Liberty Mutual") and Liberty Mutual Fire
Insurance Company ("Liberty Mutual Fire") are the ultimate corporate parents
of Liberty Life. Liberty Mutual and Liberty Mutual Fire ultimately control
Liberty Life through the following intervening holding company subsidiary:
Liberty Mutual Property-Casualty Holding Corporation. Liberty Mutual
Insurance Company is a multi-line insurance company. For additional
information about Liberty Life, see page ___ of the prospectus.
VARIABLE ANNUITY BENEFITS
Variable Annuity Payment Values
For each variable payment option, the total dollar amount of each
periodic payment will be equal to: (a) the sum of all Sub-Account payments;
less [(b) the pro-rata amount of the annual Certificate Maintenance Charge.]
The first payment for each Sub-Account will be determined by deducting
[any applicable Certificate Maintenance Charge and] any applicable state
premium taxes and then dividing the remaining value of that Sub-Account by
$1,000 and multiplying the result by the greater of: (a) the applicable
factor from the Certificate's annuity table for the particular payment
option; or (b) the factor currently offered by Liberty Life at the time
annuity payments begin. This current factor may be based on the sex of the
payee unless to do so would be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number of
Annuity Units remains fixed for the annuity payment period. Each Sub-Account
payment after the first one will be determined by multiplying (a) by (b),
where: (a) is the number of Sub-Account Annuity Units; and (b) is the Sub-
Account Annuity Unit value for the Valuation Period that includes the date of
the particular payment.
Variable annuity payments will fluctuate in accordance with the
investment results of the underlying Eligible Funds. In order to determine
how these fluctuations affect annuity payments, Liberty Life uses an Annuity
Unit value. Each Sub-Account has its own Annuity Units and value per Unit.
The Annuity Unit value applicable during any Valuation Period is determined
at the end of such period.
*****************************************************************************
*****************************************************************************
The formula for the net investment factor will vary depending upon
whether certain asset charges are imposed, as explained in the notes in
the Prospectus. With regard to the AIR, the AIR will vary within the
limits permitted under state insurance law, but no less than 3%.
*****************************************************************************
*****************************************************************************
When Liberty Life first purchased the Eligible Fund shares of [XXX Trust
and YYY Fund] on behalf of the Variable Account, Liberty Life valued each
Annuity Unit for each Sub-Account at a specified dollar amount. The Unit
value for each Sub-Account in any Valuation Period thereafter is determined
by multiplying the value for the prior period by a net investment factor.
This factor may be greater or less than 1.0; therefore, the Annuity Unit may
increase or decrease from Valuation Period to Valuation Period. For each
assumed annual investment rate (AIR), Liberty Life calculates a net
investment factor for each Sub-Account by dividing (a) by (b), where:
(a) is equal to the net investment factor as defined in the
prospectus [without any deduction for the sales charge defined in
(c)(ii) of the net investment factor formula]; and
(b) is the assumed investment factor for the current Valuation
Period. The assumed investment factor adjusts for the interest
assumed in determining the first variable annuity payment. Such
factor for any Valuation Period shall be the accumulated value, at
the end of such period, of $1.00 deposited at the beginning of such
period at the assumed annual investment rate (AIR). The AIR for
Annuity Units based on the Contract's annuity tables is [5]% per
year. [An AIR of 3% per year is also currently available upon
Written Request.]
With a particular AIR, payments after the first one will increase or
decrease from month to month based on whether the actual annualized
investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed AIR
percentage. If a given amount of Sub-Account value is applied to a
particular payment option, the initial payment will be smaller if a [3]% AIR
is selected instead of a [5]% AIR but, all other things being equal, the
subsequent [3]% AIR payments have the potential for increasing in amount by a
larger percentage and for decreasing in amount by a smaller percentage. For
example, consider what would happen if the actual annualized investment
return (see the first sentence of this paragraph) is 9%, 5%, 3%, or 0%
between the time of the first and second payments. With an actual [9]%
return, the [3]% AIR and [5]% AIR payments would both increase in amount but
the [3]% AIR payment would increase by a larger percentage. With an actual
[5]% return, the [3]% AIR payment would increase in amount while the [5]% AIR
payment would stay the same. With an actual return of [3]%, the [3]% AIR
payment would stay the same while the [6]% AIR payment would decrease in
amount. Finally, with an actual return of 0%, the [3]% AIR and [5]% AIR
payments would both decrease in amount but the [3]% AIR payment would
decrease by a smaller percentage. Note that the changes in payment amounts
described above are on a percentage basis and thus do not illustrate when, if
ever, the [3]% AIR payment amount might become larger than the [5]% AIR
payment amount. Note though that if Option A (Income for a Fixed Number of
Years) is selected and payments continue for the entire period, the [3]% AIR
payment amount will start out being smaller than the [5]% AIR payment amount
but eventually the [3]% AIR payment amount will become larger than the [5]%
AIR payment amount.
Re-Allocating Sub-Account Payments
*****************************************************************************
*****************************************************************************
The number of times that Sub-Account(s) used to determine the amount of
variable annuity payments will range between unlimited times to once every
twelve months. The minimum percentage per Sub-Account will range between 1%
and 10%.
*****************************************************************************
*****************************************************************************
The number of Annuity Units for each Sub-Account under any variable
annuity option will remain fixed during the entire annuity payment period
unless the payee makes a written request for a change. Currently, a payee
can instruct Liberty Life to change the Sub-Account(s) used to determine the
amount of the variable annuity payments [1] time[s] every [12] months. The
payee's request must specify the percentage of the annuity payment that is to
be based on the investment performance of each Sub-Account. The percentage
for each Sub-Account, if not zero, must be at least [10]% and must be a whole
number. At the end of the Valuation Period during which Liberty Life
receives the request, Liberty Life will: (a) value the Annuity Units for each
Sub-Account to create a total annuity value; (b) apply the new percentages
the payee has selected to this total value; and (c) recompute the number of
Annuity Units for each Sub-Account. This new number of units will remain
fixed for the remainder of the payment period unless the payee requests
another change.
SAFEKEEPING OF ASSETS
Liberty Life is responsible for the safekeeping of the assets of the Variable
Account.
Liberty Life has responsibility for providing all administration of the
Certificates and the Variable Account. This administration includes, but is
not limited to, preparation of the Contracts and Certificates, maintenance of
Certificate Owners' records, and all accounting, valuation, regulatory and
reporting requirements. Liberty Life has contracted with Keyport Life
Insurance Company, an affiliate, to provide all administration for the
Contracts and Certificates, as its agent. Keyport Life Insurance Company's
compensation is based on the number of Certificates and on the Certificate
Value of these Certificates.
PRINCIPAL UNDERWRITER
The Contract and Certificates, which are offered continuously, is
distributed by [Keyport Financial Services Corp. ("KFSC")], an affiliate.
EXPERTS
The financial statements of Liberty Life as of December 31, 199[5] and
199[4] and for each of the years in the three-year period ended December 31,
199[5] included herein, have been included herein in reliance on the reports
of [KPMG Peat Marwick LLP], independent certified public accountants, and
upon authority of said firm as experts in accounting and auditing.
INVESTMENT PERFORMANCE
The Variable Account may from time to time quote performance information
concerning its various Sub-Accounts. A Sub-Account's performance may also be
compared to the performance of sub-accounts used with variable annuities
offered by other insurance companies. This comparative information may be
expressed as a ranking prepared by Financial Planning Resources, Inc. of
Miami, FL (The VARDS Report), Lipper Analytical Services, Inc., or by
Morningstar, Inc. of Chicago, IL (Morningstar's Variable Annuity Performance
Report), which are independent services that compare the performance of
variable annuity sub-accounts. The rankings are done on the basis of changes
in accumulation unit values over time and do not take into account any
charges (such as sales charges or administrative charges) that are deducted
directly from contract values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926
on capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term performance
of capital markets in order to illustrate general long-term risk versus
reward investment scenarios. Capital markets tracked by Ibbotson Associates
include common stocks, small company stocks, long-term corporate bonds, long-
term government bonds, U.S. Treasury Bills, and the U.S. inflation rate.
Historical total returns are determined by Ibbotson Associates for: Common
Stocks, represented by the Standard and Poor's Composite Price Index (an
unmanaged weighted index of 90 stocks prior to March 1957 and 500 stocks
thereafter of industrial, transportation, utility and financial companies
widely regarded by investors as representative of the stock market); Small
Company Stocks, represented by the fifth capitalization quintile (i.e., the
ninth and tenth deciles) of stocks on the New York Stock Exchange for 1926-
1981 and by the performance of the Dimensional Fund Advisors Small Company
9/10 (for ninth and tenth deciles) Fund thereafter; Long Term Corporate
Bonds, represented beginning in 1969 by the Salomon Brothers Long-Term High-
Grade Corporate Bond Index, which is an unmanaged index of nearly all Aaa and
Aa rated bonds, represented for 1946-1968 by backdating the Salomon Brothers
Index using Salomon Brothers' monthly yield data with a methodology similar
to that used by Salomon Brothers in computing its Index, and represented for
1925-1945 through the use of the Standard and Poor's monthly High-Grade
Corporate Composite yield data, assuming a 4% coupon and a 20-year maturity.
Long-Term Government Bonds, measured each year using a portfolio containing
one U.S. government bond with a term of approximately twenty years and a
reasonably current coupon; U.S. Treasury Bills, measured by rolling over each
month a one-bill portfolio containing, at the beginning of each month, the
shortest-term bill having not less than one month to maturity; Inflation,
measured by the Consumer Price Index for all Urban Consumers, not seasonably
adjusted, since January, 1978 and by the Consumer Price Index before then.
The stock capital markets may be contrasted with the corporate bond and U.S.
government securities capital markets. Unlike an investment in stock, an
investment in a bond that is held to maturity provides a fixed rate of
return. Bonds have a senior priority to common stocks in the event the
issuer is liquidated and interest on bonds is generally paid by the issuer
before it makes any distributions to common stock owners. Bonds rated in the
two highest rating categories are considered high quality and present minimal
risk of default. An additional advantage of investing in U.S. government
bonds and Treasury bills is that they are backed by the full faith and credit
of the U.S. government and thus have virtually no risk of default. Although
government securities fluctuate in price, they are highly liquid.
*****************************************************************************
*****************************************************************************
**
Information regarding the Performance of the Certificates will be
included in the subsequent filings.
*****************************************************************************
*****************************************************************************
[Average annual Total Return for A Certificate that is surrendered and for a
Certificate that Continues]
[Change in Accumulation Unit Value]
Yields for [XX-1 Sub-Account]
Yield and effective yield percentages for the [XX-1 Sub-Account] are
calculated using the method prescribed by the Securities and Exchange
Commission. Both yields reflect the deduction of the annual [1.25]% asset-
based Certificate charges. [Both yields also reflect, on an allocated basis,
the Certificate's annual $[36] Certificate Maintenance Charge.] Both yields
do not reflect [Contingent Deferred Sales Charges and] premium tax charges.
The yields would be lower if these charges were included. The following are
the standardized formulas:
Yield equals: (A - B - 1) X 365
C 7
Effective Yield Equals: (A - B)365/7 - 1
C
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = [hypothetical Certificate Maintenance Charge for the 7-day
period. The assumed annual [XX-1] Sub-Account charge is equal to
the $[36] Certificate charge multiplied by a fraction equal to the
average number of Certificates with [XX-1] Sub-Account value during
the 7-day period divided by the average total number of
Certificates during the 7-day period. This annual amount is
converted to a 7-day charge by multiplying it by 7/365. It is then
equated to an Accumulation Unit size basis by multiplying it by a
fraction equal to the average value of one [XX-1] Sub-Account
Accumulation Unit during the 7-day period divided by the average
Certificate Value in [XX-1] Sub-Account during the 7-day period.]
C = the Accumulation Unit value at the beginning of the 7-day
period.
The yield formula assumes that the weekly net income generated by an
investment in the [XX-1] Sub-Account will continue over an entire year. The
effective yield formula also annualizes seven days of net income but it
assumes that the net income is reinvested over the year. This compounding
effect causes effective yield to be higher than the yield.
FINANCIAL STATEMENTS
The Variable Account has not yet commenced operations and therefore no
financial statements are included. The Financial Statements of Liberty Life
are provided as relevant to its ability to meet its financial obligations
under the Certificates.
FINANCIAL STATEMENTS
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
[To Be Filed by Amendment]
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part B:
* Liberty Life Assurance Company of Boston:
Balance Sheets for the years ended December 31, 1996
and 1995.
Statements of Income for the years ended December
31, 1996, 1995 and 1994.
Statements of Stockholders' Equity for the years
ended December 31, 1996 and 1995.
Statements of Cash Flows for the years ended
December 31, 1996 and 1995.
Notes to Financial Statements
(b) Exhibits:
(1) Resolution of the Board of Directors establishing
Variable Account J
(2) Not applicable
(3a) Principal Underwriter's Agreement
(3b) Specimen Agreement between Principal Underwriter and
Dealer
(4a) Form of Group Variable Annuity Contract of Liberty
Assurance Company of Boston
(4b) Form of Variable Annuity Certificate of Liberty Life
Assurance Company of Boston
(4c) Form of Tax-Sheltered Annuity Endorsement
(4d) Form of Individual Retirement Annuity Endorsement
(4e) Form of Corporate/Keogh 401(a) Plan Endorsement
(4f) Form of Unisex Endorsement
(5a) Form of Application for a Group Variable Annuity
Contract
(5b) Form of Application for a Group Variable Annuity
Certificate
* (6a) Articles of Incorporation of Liberty Life Assurance
Company of Boston
(6b) By-Laws of Liberty Life Assurance Company of Boston
(7) Not applicable
(8) Form of Participation Agreement
(9) Opinion and Consent of Counsel
* (10) Consents of Independent Auditors
(11) Not applicable
(12) Not applicable
* (13) Schedule for Computations of Performance Quotations
(15) Chart of Affiliations
(16) Powers of Attorney
(17) Specimen Tax-Sheltered Annuity Acknowledgement
(18) Administrative Services Agreement
* (27) Financial Data Schedule
* To be Filed by Amendment.
Item 25. Officers and Directors of the Depositor.
Name and Position and Offices
Business Address* with Depositor
Gary L. Countryman Chairman of the Board & Chief Exec. Officer
Edmund F. Kelly President and CAO
Morton E. Spitzer Exec. VP and COO-Individual
Jean M. Scarrow Exec. VP and COO-Group
J. Phillip Bruen Vice President
Edwin J. Campbell Vice President
J. Paul Condrin, III Vice President
A. Alexander Fontanes Vice President
Andrew M. Girdwood, Jr. Vice President
Richard W. Hadley Vice President
Elizabeth P. Jefferson Vice President
Richard B. Lassow Vice President
Merrill J. Mack Vice President
Douglas T. Maines Vice President
John S. O'Donnell Vice President
Gerard A. Paolino Vice President
Steven M. Sentler Vice President
John A. Tymochko Vice President
Barry S. Gilvar Secretary
Elliot J. Williams Treasurer
Gerald H. Dolan Assistant Treasurer
Bernard Gillen Assistant Treasurer
James W. Jakobek Assistant Treasurer
Diane S. Bainton Assistant Secretary
Katherine Desiderio Assistant Secretary
Christine T. Devine Assistant Secretary
James R. Pugh Assistant Secretary
Directors
John B. Conners J. Paul Condrin, III Morton E. Spitzer
Gary L. Countryman Edmund F. Kelly Jean M. Scarrow
A. Alexander Fontanes Christopher C. Mansfield
*175 Berkeley Street, Boston, Massachusetts 02117, unless noted otherwise
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant.
The Depositor controls the Registrant, and is an affiliate of Keyport
Financial Services Corp. (KFSC), a Massachusetts corporation functioning
as a broker/dealer of securities. KFSC files separate financial
statements. Both are ultimately owned by Liberty Mutual Insurance
Company.
The Depositor is an affiliate of Keyport Advisory Services Corp. (KASC),
a Massachusetts corporation functioning as an investment adviser. KASC
files separate financial statements and is ultimately owned by Liberty
Mutual Insurance Company.
Chart for the affiliations of the Depositor is Exhibit 15.
Item 27. Number of Contract Owners.
None.
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter
are covered persons under Directors and Officers/Errors and Omissions
liability insurance policies. Insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to directors and
officers under such insurance policies, or otherwise, the Depositor 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 Depositor of expenses
incurred or paid by a director or officer in the successful defense of any
action, suit or proceeding) is asserted by such director or officer in
connection with the variable annuity contracts, the Depositor 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.
Item 29. Principal Underwriters.
Keyport Financial Services Corp. (KFSC) is principal underwriter of the
SteinRoe Variable Investment Trust and the Keyport Variable Investment Trust,
which offer eligible funds for variable annuity and variable life insurance
contracts. KFSC is also principal underwriter for Variable Account K of
Liberty Life Assurance Company of Boston and for the KMA Variable Account,
Variable Account A and Keyport Variable Account-I of Keyport Life Insurance
Company and for the Independence Variable Annuity Account and Independence
Variable Life Account of Independence Life and Annuity Company, both are
affiliated companies of Liberty Life.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
John W. Rosensteel Chairman of the Board and President
John E. Arant III Director and Vice President and Sales Officer
William L. Dixon Vice President-Compliance Officer
Francis E. Reinhart Director and Vice President-Administration
Rogelio P. Japlit Treasurer
James J. Klopper Clerk
Donald A. Truman Assistant Clerk
*125 High Street, Boston, Massachusetts 02110.
Item 30. Location of Accounts and Records.
Liberty Life Assurance Company of Boston, 175 Berkeley St., Boston, MA
02117
Keyport Life Insurance Company, 125 High St., Boston, MA 02110
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2)
a post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of
Additional Information.
The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
Registrant represents that it is relying on the November 28, 1988 no-
action letter (Ref. No. IP-6-88) relating to variable annuity contracts
offered as funding vehicles for retirement plans meeting the requirements of
Section 403(b) of the Internal Revenue Code. Registrant further represents
that it has complied with the provisions of paragraphs (1) - (4) of that
letter. Specimen of acknowledgement form used to comply with paragraph (4)
is included as Exhibit 17 in this Registration Statement.
Representation
Depositor represents that the fees and charges deducted under the
contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
Depositor. Further, this representation applies to each form of the contract
described in a prospectus and statement of additional information included in
this Registration Statement.
SIGNATURES
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant certifies that it has duly caused this Registration
Statement to be signed on its behalf, in the City of Boston and Commonwealth
of Massachusetts, on this 18th day of June, l997.
Variable Account J
(Registrant)
By: Liberty Life Assurance Company of Boston
(Depositor)
By: /s/Elliot J. Williams
Elliot J. Williams, Treasurer
As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
/s/GARY L. COUNTRYMAN* /s/EDMUND F. KELLY*
GARY L. COUNTRYMAN EDMUND F. KELLY
Chairman of the Board President
/s/J. PAUL CONDRIN,III* /s/ELLIOT J. WILLIAMS June 18, 1997
J. PAUL CONDRIN, III ELLIOT J. WILLIAMS DATE
Director Treasurer
/s/JOHN B. CONNERS*
JOHN B. CONNERS
Director
/s/A. ALEXANDER FONTANES*
A. ALEXANDER FONTANES
Director
/s/EDMUND F. KELLY*
EDMUND F. KELLY
Director
/s/CHRISTOPHER C. MANSFIELD*
CHRISTOPHER C. MANSFIELD
Director
*BY: /s/Elliot J. Williams June 18, 1997
/s/JEAN M. SCARROW* Elliot J. Williams Date
JEAN M. SCARROW Attorney-in-Fact
Director
/s/MORTON E. SPITZER*
MORTON E. SPITZER
Director
*Elliot J. Williams has signed this document on the indicated date on behalf
of each of the above Directors and Officers of the Depositor pursuant to
powers of attorney duly executed by such persons and included herein as
Exhibit 16.
EXHIBIT INDEX
Exhibit Page
(1) Resolution of Board of Directors establishing Variable Account J
(3a) Principal Underwriter's Agreement
(3b) Specimen Agreement between Principal Underwriter and Dealer
(4a) Form of Group Variable Annuity Contract of Liberty Life Assurance
Company of Boston
(4b) Form of Variable Annuity Certificate of Liberty Life Assurance
Company of Boston
(4c) Form of Tax-Sheltered Annuity Endorsement
(4d) Form of Individual Retirement Annuity Endorsement
(4e) Form of Corporate/Keogh 401(a) Plan Endorsement
(4f) Form of Unisex Endorsement
(5a) Form of Application for a Group Variable Annuity Contract
(5b) Form of Application for a Group Variable Annuity Certificate
(6b) By-Laws of Liberty Life Assurance Company of Boston
(8) Form of Participation Agreement
(9) Opinion and Consent of Counsel
(15) Chart of Affiliations
(16) Powers of Attorney
(17) Specimen Tax-Sheltered Annuity Acknowledgement
(18) Administrative Services Agreement
EXHIBIT 1
EXCERPT FROM MINUTES OF MEETING OF
BOARD OF DIRECTORS OF
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
Chairman Countryman referred to the March 9, 1988 vote of the Board of
Directors which authorized the management of the Company to establish
Separate Investment Accounts for the purposes of marketing individual
variable life insurance and individual variable annuity products. He said
that the Company may also be called upon to offer variable life and variable
annuity products of a group basis, and suggested that the March 9, 1988 vote
be revised to provide for the group capability.
Upon motion duly made and seconded, it was
VOTED that the March 9, 1988 vote relative to the marketing of variable
life and variable annuity products be restated as follows, to
include these products on a group basis:
1. That the Chairman and the President, either jointly or severally,
are hereby granted the authority to establish such individual and
pooled Separate Investment Accounts in accordance with the
provisions of Chapter 175 of the Massachusetts General Laws,
Section 132G and the applicable Federal Securities Laws as may be
required or desirable to enable the Company to issue individual
or group variable life insurance and/or individual or group
variable annuity policies.
2. That the Chairman and the President, either jointly or severally,
are hereby granted the authority to invest such Separate Investment
Account assets in one or more mutual funds managed by Stein Roe &
Farnham Incorporated or any other duly-qualified mutual fund
manager.
3. That the Chairman and the President, either jointly or severally
are hereby granted the authority to execute any documents and take
such other steps as may be required, upon the advice of the
Company's attorney, to enable the Company to issue such variable
products.
4. That amounts paid in connection with the individual or group
variable life insurance and individual or group variable annuity
contracts issued by the Company may be allocated to one or more of
such Separate Investment Accounts in accordance with the terms of
the governing contracts.
5. That the income, if any, and gains and losses, realized or
unrealized, of any Separate Investment Account shall be credited
to or charges against the amounts so allocated to such Account in
accordance with the terms and conditions of the governing contract
without regard to other income, gains or losses of the Company and
the assets of the Separate Investment Account shall not be
chargeable with any liabilities arising out of any other Separate
Investment Account or any other business of the Company.
This vote rescinds the vote of March 9, 1988.
[SEAL]
CERTIFIED: /s/Barry S. Gilvar
Secretary
EXHIBIT 3(a)
PRINCIPAL UNDERWRITER'S AGREEMENT
IT IS HEREBY AGREED by and between LIBERTY LIFE ASSURANCE COMPANY OF
BOSTON ("INSURANCE COMPANY"), a Massachusetts corporation, on behalf of
Variable Account J (the "Variable Account") and KEYPORT FINANCIAL SERVICES
CORP. ("PRINCIPAL UNDERWRITER"), a Massachusetts corporation, as follows:
I
INSURANCE COMPANY has established, pursuant to Massachusetts Insurance
Law, a separate account designated as the Variable Account J. INSURANCE
COMPANY proposes to issue and sell flexible premium variable annuity
contracts and certificates designated by form number DVA(1)NY ("Contracts")
to the public through PRINCIPAL UNDERWRITER. Contracts to be sold are more
fully described in the Registration Statement (including the Prospectus and
Statement of Additional Information) hereinafter mentioned.
II
INSURANCE COMPANY appoints PRINCIPAL UNDERWRITER, during the term of
this Agreement, to be the principal underwriter and distributor of Contracts,
subject to the registration requirements of the Securities Act of 1933 and
the Investment Company Act of 1940 applicable to INSURANCE COMPANY and the
Variable Account, and to the provisions of the Securities Exchange Act of
1934 applicable to PRINCIPAL UNDERWRITER. PRINCIPAL UNDERWRITER will sell
and cause to be sold Contracts under such terms as are agreed to by INSURANCE
COMPANY and PRINCIPAL UNDERWRITER and will make direct sales in its own right
to purchasers permitted to buy such Contracts as specified in the Prospectus,
as well as arrange for the sale of Contracts through other qualified broker-
dealers in its capacity as principal underwriter of such Contracts.
III
PRINCIPAL UNDERWRITER shall be compensated for its distribution services
with respect to Contracts as set forth in the attached Compensation Schedule.
PRINCIPAL UNDERWRITER shall pay all broker/dealers out of the compensation it
receives from INSURANCE COMPANY. INSURANCE COMPANY has the right to charge
back any such compensation under the conditions stated in such Schedule. Any
Compensation Schedule may be changed by INSURANCE COMPANY as of a specified
date, provided such date is at least 30 days after the date notice of the
change is received by PRINCIPAL UNDERWRITER. Any such change will apply only
to purchase payments received by INSURANCE COMPANY on or after the effective
date of the change.
IV
PRINCIPAL UNDERWRITER shall maintain or cause to be maintained all such
required books and records which shall: (a) be maintained in conformity with
all applicable requirements of the Securities Exchange Act of 1934, any other
applicable federal or state laws, and the National Association of Securities
Dealers, Inc. ("NASD"), and, to the extent of such requirements, shall remain
property of PRINCIPAL UNDERWRITER; and (b) be subject to inspection at all
times by duly authorized officers, auditors or representatives of the
INSURANCE COMPANY, Securities and Exchange Commission, NASD and applicable
state regulatory agencies.
V
On behalf of the Variable Account, INSURANCE COMPANY shall furnish
PRINCIPAL UNDERWRITER with copies of all Prospectuses, Statements of
Additional Information, sales literature and other documents which PRINCIPAL
UNDERWRITER reasonably requests for use in connection with the distribution
of the Contracts.
VI
PRINCIPAL UNDERWRITER is not authorized to give any information or to
make any representations concerning the Variable Account, INSURANCE COMPANY
or the Contracts other than those contained in the current Registration
Statement (including the Prospectus and Statement of Additional Information)
filed with the Securities and Exchange Commission or in such sales literature
as is authorized by INSURANCE COMPANY.
VII
The parties to this Agreement agree to work together to make certain
that the necessary records, as enumerated in Section IV, above, are
maintained and to render the necessary assistance to one another for the
accurate and timely preparation of such records.
VIII
This Agreement shall be effective upon its execution and shall replace
in all respects the parties' Principal Underwriter's Agreement of May 15,
1992. This Agreement shall remain in effect unless terminated as hereinafter
provided. This Agreement shall be automatically terminated in the event of
its assignment by PRINCIPAL UNDERWRITER.
This Agreement may be terminated at any time by either party hereto upon
not less than 60 days written notice to the other party.
IX
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given on the
date of service if served personally on the party to whom notice is to be
given, or on the date of mailing if sent by certified mail, postage prepaid
and properly addressed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf on February 16, 1996 by their respective officers
thereunto duly authorized.
LIBERTY LIFE ASSURANCE COMPANY
OF BOSTON
("INSURANCE COMPANY")
ATTEST: /s/Lee W. Rabkin BY: /s/Edmund F. Kelly
President
KEYPORT FINANCIAL SERVICES
CORP.
("PRINCIPAL UNDERWRITER")
ATTEST: /s/Elizabeth B. Love BY: /s/John W. Rosensteel
President
LIB.AGR
EXHIBIT 3(b)
LIBERTY LIFE ASSURANCE COMPANY BROKER/DEALER'S
OF BOSTON AGREEMENT
Liberty Life Assurance Company of Boston ("Liberty Life"), a Massachusetts
corporation, Keyport Financial Services Corp. ("KFSC"), a Massachusetts
corporation, and Broker/Dealer hereby agree as follows:
1. KFSC is the principal underwriter for variable annuity contracts and
certificates DVA(1)NY (hereafter "Contract") issued by Liberty Life and
the separate account of Liberty Life designated Variable Account J.
2. Broker/Dealer desires to enter into a distribution agreement with KFSC
and to have its registered representatives appointed as agents of
Liberty Life for the purpose of selling the Contract to New York
residents.
3. Broker/Dealer certifies that it is a registered broker/dealer under the
Securities Exchange Act of 1934 and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD").
Broker/Dealer agrees to abide by all applicable rules and regulations of
the NASD and to comply with all applicable state and federal laws and
rules and regulations of authorized regulatory agencies affecting the
sale of the Contracts.
4. Broker/Dealer will select persons associated with it who are to be
appointed as agents of Liberty Life to solicit applications for the
Contracts in conformance with applicable state and federal laws. No
agent will be permitted to solicit sales of the Contracts in any state
other than New York.
5. All solicitations for the Contracts will be made only by duly authorized
agents who possess the required licenses and appointments and
Broker/Dealer will pay compensation only to such agents. Continued
solicitation for the Contracts shall be contingent upon the continued
qualification of such agents by possession of the required licenses and
appointments.
6. Broker/Dealer shall have the responsibility to supervise all agents
appointed under this Agreement and shall indemnify and hold harmless the
separate account, the eligible mutual funds and their directors and
trustees, KFSC, and Liberty Life from any damage or expenses on account
of any wrongful act by Broker/Dealer, its representatives, and agents in
connection with the solicitation of Contracts.
7. Broker/Dealer shall review all applications for the Contracts, accept
them on Broker/Dealer's behalf, and promptly forward them to Liberty
Life (at the address shown on the then current prospectus for the
Contracts) together with any purchase payments received with such
applications without deduction for any compensation. Liberty Life has
the right to reject any application for a Contract and return any
purchase payment made in connection therewith.
8. Broker/Dealer will offer and sell the Contract only in accordance with
the terms and conditions of the then current prospectus applicable to
the Contracts and the eligible mutual funds and will make no
representations not included in the prospectus or in any authorized
supplemental material approved by KFSC and Liberty Life. Broker/Dealer
shall not use or permit to be used supplemental material or advertising
media with regard to the Contracts other than with the prior written
approval of KFSC and Liberty Life.
9. Broker/Dealer is performing the acts covered by this Agreement in the
capacity of independent contractor and not as an agent or employee of
either KFSC or Liberty Life. Neither KFSC nor Liberty Life shall be
liable for any obligation, act or omission of Broker/Dealer.
10. Broker/Dealer shall be paid by Liberty Life (on behalf of KFSC)
compensation for the sale of Contracts as set forth in the attached
Compensation Schedules(s). Liberty Life has the right to charge back
any such compensation under the conditions stated in such Schedule(s).
Any Compensation Schedule can be changed by KFSC and Liberty Life as of
a specified date, provided such date is at least 10 days after the date
the change is mailed to Broker/Dealer's last known address. Any such
change will apply only to purchase payments received by Liberty Life
after the effective date of the change.
11. Liberty Life may offset against any claim for compensation herein any
debts now due or which may become due Liberty Life from Broker/Dealer or
from a General Agent affiliated with Broker/Dealer, and such debts shall
be a first lien against any compensation due Broker/Dealer hereunder.
Broker/Dealer may not offset against any such debts any compensation
accrued or to accrue hereunder but not yet payable to Broker/Dealer.
12. This Agreement shall take effect as of the date it is signed by Liberty
Life, which date is shown below. It shall continue in force from year
to year unless it is terminated. This Agreement may be terminated for
any reason by any party; such termination will become effective 60 days
after the mailing of a notice of termination to the other parties last
known address. This Agreement may be terminated by KFSC or Liberty Life
for cause (i.e. Broker/Dealer's violation of any of the terms of this
Agreement); such termination will become effective upon the mailing of a
notice of termination to the Broker/Dealer's last known address.
Failure of KFSC or Liberty Life to terminate this Agreement upon
knowledge of a cause shall not constitute a waiver of the right to
terminate at a later time for such cause. This Agreement shall
immediately terminate automatically if Broker/Dealer shall cease to be a
member of the NASD or to possess the requisite licenses and
appointments, and Broker/Dealer agrees to immediately notify KFSC and
Liberty Life of such an occurrence. No provisions of this Agreement
other than numbers 6, 9, 10, 11 and 13 shall continue in force after any
termination and the provisions of number 10 shall be subject to any
limitations contained in the Compensation Schedule(s).
13. This Agreement may not be assigned by Broker/Dealer except with the
written consent of KFSC and Liberty Life. This Agreement shall be
construed in accordance with the laws of the Commonwealth of
Massachusetts.
Keyport Financial Services Corp.
(Name of Broker/Dealer)
BY: BY:
TITLE: TITLE:
DATE: DATE:
Liberty Life Assurance
Company of Boston STATE OF INCORPORATION:
BY:
TITLE:
DATE:
EXHIBIT 4(a)
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
Read this Contract carefully. This document is a description of the
legal contract between the Group Contract Owner and Us.
A Certificate Owner may return a Certificate to Us within 10 days after
receipt by delivering or mailing it to Our Office. The return of the
Certificate by mail will be effective when the postmark is affixed to a
properly addressed and postage prepaid envelope. This returned Certificate
will be treated as if We never issued it and We will refund the Certificate
Value plus any amount deducted from the purchase payment before it was
allocated to the Variable Account. The Certificate Value will be determined
as of the date of surrender (i.e., for a mailed contract, the postmark date).
The Group Contract, as issued to the Group Contract Owner by Us with any
riders or endorsements, alone makes up the agreement under which benefits are
paid. The Group Contract may be inspected at the office of the Group
Contract Owner. In consideration of any application for a Certificate and
the payment of purchase payments, We agree, subject to the terms and
conditions of the Group Contract, to provide the benefits described in the
Certificate to the Certificate Owner. If a Certificate is In Force on the
Income Date, We will begin making income payments to the Annuitant. We will
make such payments according to the terms of the Certificate and Group
Contract.
Signed for the Company on the Issue Date at Our Home Office, 175
Berkeley Street, Boston, Massachusetts 02117:
_________________________ _________________________
Secretary President
POLICY DESCRIPTION
This is a GROUP VARIABLE ANNUITY CONTRACT with limited purchase payment
flexibility. This contract is nonparticipating with no dividends.
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE
OVER TIME IF THE SEPARATE ACCOUNT (AFTER DEDUCTION OF THE ANNUAL [1.55%]
ASSET CHARGE) HAS AN ANNUALIZED INVESTMENT RETURN OF AT LEAST 5.0%. SEE PAGES
12-13 AND 19 FOR FURTHER EXPLANATION. CONTRACT ASSETS ALLOCATED TO THE
SEPARATE ACCOUNT INCUR CHARGES OF [1.55%] BEFORE ANNUITY PAYMENTS BEGIN AND
[1.40%] ONCE ANNUITY PAYMENTS BEGIN. INCOME, CAPITAL GAINS, AND/OR LOSSES
WHETHER OR NOT REALIZED, FROM ASSETS ALLOCATED TO THE SEPARATE ACCOUNT ARE
CREDITED TO OR CHARGED AGAINST THE SEPARATE ACCOUNT WITHOUT REGARD TO INCOME,
CAPITAL GAINS, AND/OR LOSSES ARISING OUT OF ANY OTHER BUSINESS THE COMPANY
MAY CONDUCT.
Table of Contents
Page
Right to Examine Certificate 1
Definitions 2
Contract Schedule 3
General Provisions 5
Variable Account Provisions 10
Transfers 13
Partial Withdrawals and Total Surrender 14
Death Provisions 15
Annuity Provisions 16
Endorsements (if any) are before page 22
Definitions
Accumulation Period: The period prior to the Income Date during which
Purchase Payments may be made by a Certificate Owner.
Accumulation Unit: An accounting unit used to calculate a Certificate Owner's
interest in a Sub-account of the Variable Account during the Accumulation
Period.
Adjusted Certificate Value: The Certificate Value less any applicable taxes
relating to a Certificate and Certificate Maintenance Charge. This amount is
applied to the applicable Annuity Tables to determine Annuity Payments.
Annuitant: The natural person on whose life Annuity Payments are based, and
to whom any Annuity Payments will be made starting on the Income Date.
Annuity Options: Options available for Annuity Payments.
Annuity Payments: The series of payments made to the Annuitant, starting on
the Income Date, under the Annuity Option selected.
Annuity Period: The period after the Income Date during which Annuity
Payments are made.
Annuity Unit: An accounting unit used to calculate Variable Annuity Payments
during the Annuity Period.
Beneficiary: The person(s) or entity(ies) who controls the Certificate if
any Certificate Owner dies before the Income Date.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
125 High Street, Boston, MA 02110
Service Office
125 High Street, 11th Floor
Boston, MA 02110
Contract Schedule
GROUP CONTRACT OWNER [Liberty Insurance Trust]
GROUP CONTRACT NUMBER [678999]
GROUP CONTRACT ISSUE DATE [6/30/96]
MINIMUM INITIAL PAYMENT [$5,000]
MINIMUM ADDITIONAL PAYMENT [$1,000]
Charges
Distribution Charge [We deduct [0.000411%] of the assets in each Variable
Account Sub-Account on a daily basis (equivalent to an annual rate of
[0.15%]) to compensate Us for a portion of Our distribution costs.]
Administrative Charge [We deduct [0.000411%] of the assets in each Variable
Account Sub-account on a daily basis (equivalent to an annual rate of
[0.15%]) to compensate Us for a portion of Our administrative expenses.]
Mortality and Expense Risk Charge [We deduct [0.003403%] of the assets in
each Variable Account Sub-account on a daily basis (equivalent to an annual
rate of [1.25%]) for Our mortality and expense risks.]
Certificate Maintenance Charge [We charge [$36] to cover a portion of Our
ongoing Certificate maintenance expenses. The charge is incurred at the
beginning of the Certificate Year and is deducted from the assets of the
Variable Account on each Certificate Anniversary and at the time of total
surrender. We reserve the right to charge up from the assets of the Variable
Account $100 per year.]
Transfer Charge [Currently none, however, We reserve the right to charge
[$25] for a transfer if a Certificate Owner makes more than [12] transfers
per Certificate Year.]
Surrender Charge [At the time of each partial withdrawal or at total
surrender a contingent deferred sales charge is imposed as a percentage of
each Purchase Payment during the [seven] years after the date of its payment,
as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
7% 6% 5% 4% 3% 2% 1%
Thereafter 0%].
Initial Purchase Payment Allocation
Currently, Certificate Owners can select [7] Sub-accounts [and the Fixed
Account]. We reserve the right to increase or decrease the number of
available Sub-accounts. The minimum a Certificate Owner may allocate to any
Sub-account [or the Fixed Account] is [10%] of any Purchase Payment. An
initial Purchase Payment may be invested as follows:
[Manning & Napier Moderate Growth
Manning & Napier Growth
Manning & Napier Maximum Horizon
Manning & Napier Equity
Manning & Napier Small Cap
Manning & Napier Bond
SteinRoe Cash Income Fund
Interest Rate at Issue
Fixed Account - 1 Year x% ____%
3 Year x% ____%
5 Year x% ____%
7 Year x% ____%
Transfer Guidelines
Number of Transfers and Transfer Charge: [Currently, Certificate Owners are
permitted [12] transfers per Certificate Year during the Accumulation Period
and [1] transfer every [6] months during the Annuity Period. We reserve the
right to change, upon notice, the frequency of transfers a Certificate Owner
can make. We also reserve the right to impose a charge for any transfer in
excess of [12] per Certificate Year. The transfer charge is shown in the
Charges section of the Schedule.]
Minimum amount to be transferred: [None]
Minimum amount which must remain in a Sub-account after transfer: [None]
[Limitations on transfers from Fixed Account: Transfers during a Certificate
Year from the Fixed Account to the Variable Account are limited to [25%] of
the Fixed Account Value at the beginning of the Certificate Year. This
limitation will be waived if a systematic program of monthly transfers has
been established.]
Partial Withdrawals
A Certificate Owner may make partial withdrawals during the Accumulation
Period without incurring a Surrender Charge[, as follows:
(1) In any Certificate Year a Certificate Owner may withdraw an
aggregate amount not to exceed, at the time of withdrawal:
(a) the Certificate Value, less
(b) the portion of the Purchase Payments not previously
withdrawn by that Certificate Owner; and
(2) In any Certificate Year after the first, a Certificate Owner may
also withdraw the positive difference, if any, between the
amount withdrawn pursuant to (1) above in any such subsequent year
and 10% of the Certificate Value as of the preceding Certificate
Anniversary.We will collect the Surrender Charge shown on the
Schedule with respect to partial withdrawals in excess of the
amounts described in (1) and (2) above].
Minimum withdrawal amount: [$300], [unless the withdrawal is made pursuant to
Our Systematic Withdrawal Program described below, in which case the minimum
withdrawal is [$100].]
Minimum Certificate Value which must remain after a partial withdrawal:
[$2,500].
Death Benefits
Adjustment of Certificate Value
When We receive due proof of death of the Certificate Owner, [any Joint
Certificate Owner,] or the Annuitant if the Certificate Owner is a non-
natural Person, We will compare, as of the date of death, the Certificate
Value to the Death Benefit amount defined in the Certificate Schedule. If
the Certificate Value is less than the Death Benefit, We will increase the
current Certificate Value by the amount of the difference. Any amount
credited will be allocated to the Variable Account [and/or the Fixed Account]
based on the Purchase Payment allocation selection that is in effect when We
receive due proof of death.
[Waiver of Surrender Charges
If the Certificate is surrendered within [90] days of the date of death of
the Certificate Owner, [any Joint Certificate Owner,] or the Annuitant if the
Certificate Owner is a non-natural Person, any applicable Surrender Charges
will not be deducted from the Certificate Withdrawal Value.]
Death Benefit Amount
A Certificate Schedule will contain one [or more] of the following Death
Benefit provisions.
[Purchase Payment Death Benefit
On the Certificate Date the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) Start with the Death Benefit from the prior Valuation Date;
(2) Add to (1) any additional Purchase Payments paid during the current
Valuation Period and subtract from (1) any partial withdrawals
(including any associated Surrender Charge incurred) made during the
current Valuation Period.]
[Certificate Anniversary Death Benefit
On the Certificate Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Certificate Date;
(b) Add to (a) any additional Purchase Payments paid since the
Certificate Date and subtract from (a) any partial withdrawals
(including any associated Surrender Charge incurred) made since
the Certificate Date;
(2) (a) Determine the Certificate Value for each Certificate
Anniversary (the "Anniversary Value") before the [81st]
birthday of the Certificate Owner or, if the Certificate Owner
is a non-natural Person, the Annuitant;
(b) Increase each "Anniversary Value" by any Purchase Payments made
after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following amount
calculated at the time of each partial withdrawal made after
that Value's Anniversary: (i) the partial withdrawal amount
(including any associated Surrender Charge incurred) divided by
the Certificate Value immediately preceding the withdrawal,
(ii) multiplied by the "Anniversary Value" immediately
preceding the withdrawal;
(d) Select the highest "Anniversary Value" after the adjustments in
(b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).]
[If there is a change of Certificate Owner, the new Certificate Owner's age
will be used to determine the amount in (2) above.]
The Variable Separate Account[s]
Sub-accounts investing in shares of mutual funds
[Variable Account [J] is a unit investment trust variable separate account,
organized in and governed by the laws of the State of Massachusetts, Our
state of domicile. Variable Account [J] is divided into Sub-accounts. Each
Sub-account listed below invests in shares of the corresponding Portfolio of
the Eligible Fund shown.
Sub-account Eligible Fund and Portfolio
[Manning & Napier Insurance Fund, Inc.
Moderate Growt Manning & Napier Moderate Growth Portfolio
Sub-account seeks with equal emphasis long-term growth
and preservation of capital.
Growth Sub-account Manning & Napier Growth Portfolio -
seeks long term growth of
capital. The secondary objective is the
preservation of capital.
Maximum Horizon Manning & Napier Maximum Horizon Portfolio -
Sub-account seeks to achieve the high level
of long-term capital growth typically
associated with the stock market.
Equity Sub-account Manning & Napier Equity Portfolio- seeks long-
term growth of capital.
Small Cap Sub- Manning & Napier Small Cap Portfolio - seeks to
account achieve long term growth of
capital by investing principally in the equity
securities of small issuers.
Bond Sub-account Manning & Napier Bond Portfolio -
seeks to maximize total return in the form of
both income and capital appreciation by
investing in fixed income securities without
regard to maturity.
The Alger American Fund
Alger Growth Alger American Growth Portfolio - seeks
Sub-account long-term capital appreciation.
Alger Small Cap Alger American Small Capitalization
Sub-account Portfolio - seeks long-term capital
appreciation.
Alliance Variable Products Series Fund, Inc.
Alliance Global Bond Global Bond Portfolio - seeks a high level of
Sub-account return from a combination of current income and
capital appreciation by investing in a globally
diversified portfolio of high quality debt
securities denominated in the U.S. Dollar and a
range of foreign currencies.
Alliance Premier Growth Premier Growth Portfolio - seeks growth of
Sub-account capital rather than current income.
Keyport Variable Investment Trust
Colonial Growth & Income Colonial-Keyport Growth and Income
Sub-account Fund - seeks primarily income
and long-
term capital growth and, secondarily,
preservation of capital.
Colonial Strategic Income Colonial-Keyport Strategic Income Fund -
Sub-account seeks a high level of current income, as
is
consistent with prudent risk and maximizing
total return, by diversifying investments
primarily in U.S. and foreign government and
high yield, high risk corporate debt
securities.
Colonial Int'l Fund for Colonial-Keyport International Fund for Growth-
Growth Sub-account seeks long-term capital growth, by investing
primarily in non-U.S. equity securities.
Colonial U.S. Fund for Colonial-Keyport U.S. Fund for Growth -
Growth Sub-account seeks growth exceeding over time the
S&P
500 Index (Standard &
Poor's Corporation Composite Price Index)
performance.
Colonial Utilities Colonial-Keyport Utilities Fund - seeks
Sub-account primarily current income and,
secondarily,
long-term capital
growth.
Newport Tiger Newport-Keyport Tiger Fund - seeks long-
Sub-account term capital growth by investing primarily
in equity securities
of companies located in
the four Tigers of Asia (Hong Kong, Singapore,
South Korea and Taiwan) and the other mini-
Tigers of East Asia (Malaysia, Thailand,
Indonesia, China and the Philippines).
MFS Variable Insurance Trust
MFS Emerging Growth MFS Emerging Growth Series - seeks to provide
Sub-account long-term growth of capital.
MFS Research MFS Research Series - seeks to provide long-
Sub-Account term growth of capital and future income.
SteinRoe Variable Investment Trust
SteinRoe Cap Appreciation Capital Appreciation Fund - seeks capital
Sub-account growth by investing primarily in common stocks,
convertible securities, and other securities
selected for prospective capital growth.
SteinRoe Cash Income Cash Income Fund - seeks high current income
Sub-account from short-term money market instruments
("Money Market" Sub-account) while emphasizing preservation of capital and
maintaining excellent liquidity.
SteinRoe Managed Assets Managed Assets Fund - seeks high total inves-
Sub-account tment return through investment in a changing
mix of securities.
SteinRoe Managed Growth Managed Growth Stock Fund - seeks long-term
Stock Sub-account growth of capital through investment primarily
in common stocks.
SteinRoe Mortgage Securities Mortgage Securities Income Fund - seeks highest
Income Sub-account possible level of current income consistent
with safety of principal and maintenance of
liquidity through investment primarily in
mortgage-backed securities.
[Variable Account [M] is an investment company variable separate account
which invests directly in securities, organized in and governed by the laws
of the State of Massachusetts, Our state of domicile. Variable Account [M]
is divided into Sub-accounts. The investment advisor to each Sub-account is
set forth opposite each Sub-account shown below:
Sub-account Investment Advisor
Currently, none] [Currently, none] ]
The Fixed Account
[The Fixed Account is part of Our General Account, which consists of all of
Our assets except the assets of the Variable Account and the assets of other
separate accounts that We maintain. Subject to applicable law, We have sole
discretion over investments of the assets of the Fixed Account. If a
Certificate Owner allocates assets to the Fixed Account, the Certificate
Owner's accumulation values and annuity payments will have guaranteed
minimums.
Before the Income Date, a Certificate Owner's interest in the Fixed Account
is measured by the Fixed Account Value. When annuity payments begin, the
payee's interest in the Fixed Account is measured by the amount of each
periodic payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Certificate is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with a
Certificate Owner's selection at the Certificate Date. A Certificate Owner
may change such selection by Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus the interest
subsequently credited on those payments; plus
(2) any Variable Account value transferred to the Fixed Account plus the
interest subsequently credited on the transferred value; less
(3) any prior partial withdrawals from the Fixed Account;less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account
at rates declared by Us for Guarantee Periods of one [or more] year[s] from
the month and day of allocation. The minimum Guaranteed Interest Rate is
[3%] per year.]
Certificate Owner Services
The Programs. [Liberty Life offers [the following] investment related
program[s] which [is] are available only prior to the Income Date: [Dollar
Cost Averaging;] [Capital Protection Plus]; [and] [Systematic Withdrawal
Programs]. [A Rebalancing Program is available prior to and after the Income
Date.] Under [each] [this] Program, the related transfers between and among
Sub-Accounts and the Fixed Account are not counted as one of the [twelve]
free transfers. Each Program[s] has its own requirements, as discussed
below. Liberty Life reserves the right to terminate any Program.]
[Dollar Cost Averaging Program. The program periodically transfers
Accumulation Units from the SteinRoe Cash Income Sub-Account or the One-Year
Guarantee Period of the Fixed Account to other Sub-Accounts selected by the
Certificate Owner. The program allows a Certificate Owner to invest in
Variable Sub-Accounts over time rather than having to invest in those Sub-
Accounts all at once. The program is available for initial and subsequent
Purchase Payments and for Certificate Value transferred into the SteinRoe
Cash Income Sub-Account or the One-Year Guarantee Period. Under the program,
Liberty Life makes automatic transfers on a periodic basis out of the
SteinRoe Cash Income Sub-Account or the One-Year Guarantee Period into one or
more of the other available Sub-Accounts (Liberty Life reserves the right to
limit the number of Sub-Accounts the Certificate Owner may choose but there
are currently no limits). The program will automatically end if the Income
Date occurs. Liberty Life reserves the right to end the program at any time
by sending the Certificate Owner a notice one month in advance.]
[Rebalancing Program. In accordance with the Certificate Owner's election
of the relative Purchase Payment percentage allocations, Liberty Life will
automatically rebalance the Certificate Value of each Sub-Account either
monthly, quarterly, semi-annually, or annually. On the last day of the
period selected, Liberty Life will automatically rebalance the Certificate
Value in each of the Sub-Accounts to match the current Purchase Payment
percentage allocations. The Program may be terminated at any time and the
percentages may be altered by Written Request. Certificate Value allocated to
the Fixed Account is not subject to automatic rebalancing. After the Income
Date, automatic rebalancing applies only to variable annuity payments and
Liberty Life will rebalance the number of Annuity Units in each Sub-Account.]
[Systematic Withdrawal Program. Liberty Life will make monthly, quarterly,
semi-annually or annual distributions of a predetermined dollar amount to the
Certificate Owner that has enrolled in the Systematic Withdrawal Program. The
Certificate Owner may specify the amount of each partial withdrawal, subject
to a minimum of $100. Systematic withdrawals may only be made from the Sub-
Accounts and the One Year Guarantee Period of the Fixed Account. In each
Certificate Year, portions of Certificate Value may be withdrawn without the
imposition of any Contingent Deferred Sales Charge ("Free Withdrawal
Amount"). If withdrawals pursuant to the Program are greater than the Free
Withdrawal Amount, the amount of the withdrawals greater than the Free
Withdrawal Amount will be subject to the applicable Contingent Deferred Sales
Charge. Any unrelated voluntary partial withdrawal a Certificate Owner makes
during a Certificate Year will be aggregated with withdrawals pursuant to the
Program to determine the applicability of any Contingent Deferred Sales
Charge under the Certificate provisions regarding partial withdrawals.]
[Capital Protection Plus Under this program, Liberty Life will allocate part
of the Purchase Payment to the Guarantee Period selected by the Certificate
Owner so that such part, based on that Guarantee Period's interest rate in
effect on the date of allocation, will equal at the end of the Guarantee
Period the total Purchase Payment. The rest of the Purchase Payment will be
allocated to the Sub-Account(s) of the Variable Account based on the
Certificate Owner's allocation. If any part of the Fixed Account Value is
surrendered or transferred before the end of the Guarantee Period, the Value
at the end of that Period will not equal the original Purchase Payment
amount.]
Definitions (continued)
Certificate: The document issued to a Certificate Owner to evidence a
Certificate Owner's participation under the Group Contract. The Certificate
summarizes the benefits and provisions of the Group Contract.
Certificate Anniversary: An anniversary of the Certificate Date.
Certificate Date: The date a Certificate is issued to a Certificate Owner.
The Certificate Date is shown on the Certificate Schedule.
Certificate Owner: The person who owns a Certificate under the Group
Contract. Any Joint Certificate Owners and the Certificate Owner own the
Certificate equally with rights of survivorship. All Owners must exercise
ownership rights and privileges together, including the signing of Written
Requests.
Certificate Value: The sum of the Certificate Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account during the
Accumulation Period.
Certificate Year: The first Certificate Year is the annual period which
begins on the Certificate Date. Subsequent Certificate Years begin on each
Certificate Anniversary.
Eligible Fund: An investment entity shown on the Certificate Schedule.
Fixed Account: The account We establish to support Fixed Allocations. The
Contract Schedule shows whether the Fixed Account is available under the
Certificates.
Fixed Account Value: The value of all Fixed Account amounts accumulated
under a Certificate prior to the Income Date.
Fixed Allocation: An amount allocated to the Fixed Account that is credited
with a Guaranteed Interest Rate for a specified Guarantee Period.
Fixed Annuity: An annuity with a series of payments made during the Annuity
Period which are guaranteed as to dollar amount by Us.
General Account: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate accounts.
Group Contract Owner: The person or entity to which the Group Contract is
issued.
Guaranteed Interest Rate: The effective annual interest rate which We will
credit for a specified Guarantee Period.
Guarantee Period: The period of year(s) a rate of interest is guaranteed to
be credited within the Fixed Account.
Income Date: The date on which Annuity Payments begin. The Income Date is
shown on the Certificate Schedule.
In Force: The status of a Certificate before the Income Date so long as it
has not been totally surrendered and there has not been a death of a
Certificate Owner or Joint Certificate Owner that will cause the Certificate
to end within five years of the date of death.
Office: Our service office shown on the Certificate Schedule.
Person: A human being, trust, corporation, or any other legally recognized
entity.
Portfolio: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
Purchase Payment: A payment made by or on behalf of a Certificate Owner with
respect to a Certificate.
Sub-account: Variable Account assets are divided into Sub-accounts. Assets
of each Sub-account will be invested in shares of a Portfolio of an Eligible
Fund, or directly in portfolio securities.
Valuation Date: Each day on which We and the New York Stock Exchange
("NYSE") are open for business, or any other day that the Securities and
Exchange Commission requires that mutual funds, unit investment trusts or
other investment portfolios be valued.
Valuation Period: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business on the
next succeeding Valuation Date.
Variable Account: Our Variable Account(s) shown on the Certificate Schedule.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-accounts of the
Variable Account.
We, Us, Our: Liberty Life Assurance Company of Boston.
Written Request: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
General Provisions
Purchase Payments
The initial Purchase Payment is due on the Certificate Date. It must be paid
at Our Office in United States currency. Coverage under a Certificate does
not take effect until We have accepted the initial Purchase Payment during a
Certificate Owner's lifetime. Each Purchase Payment after the Certificate
Date must be at least the amount shown on the Certificate Schedule. Provided
the Certificate Value under a Certificate does not go to zero, a Certificate
will stay in force until the Income Date even if a Certificate Owner make no
payments after the initial one. We reserve the right to reject any
subsequent Purchase Payment.
Allocation of Purchase Payments
An initial Purchase Payment is allocated to the Sub-accounts of the Variable
Account, and to the Fixed Account if available, in accordance with the
selections made by a Certificate Owner at the Certificate Date. Unless
otherwise changed by a Certificate Owner, subsequent Purchase Payments are
allocated in the same manner as the initial Purchase Payment. Allocation of
Purchase Payments is subject to the terms and conditions imposed by Us. We
reserve the right to allocate initial Purchase Payments to the Money Market
Sub-account until the expiration of the Right to Examine Certificate period
set forth on the first page of the Group Contract and the Certificate.
The Contract
The Group Contract, including the application, if any, and any attached rider
or endorsement constitute the entire contract between the Group Contract
Owner and Us. All statements made by the Group Contract Owner, any
Certificate Owner or any Annuitant will be deemed representations and not
warranties. No such statement will be used in any contest unless it is
contained in the application signed by the Group Contract Owner or in a
written instrument signed by the Certificate Owner, a copy of which has been
furnished to the Certificate Owner, the Beneficiary or to the Group Contract
Owner.
Only Our President or Secretary may agree to change any of the terms of the
Group Contract. Any changes must be in writing. Any change to the terms of
a Certificate must be in writing and with Certificate Owner's consent,
unless provided otherwise by the Group Contract and the Certificate.
To assure that the Group Contract and the Certificate will maintain their
status as a variable annuity under the Internal Revenue Code, We reserve the
right to change the Group Contract and any Certificate issued thereunder to
comply with future changes in the Internal Revenue Code, any regulations or
rulings issued thereunder, and any requirements otherwise imposed by the
Internal Revenue Service. The Group Contract Owner and the affected
Certificate Owner will be sent a copy of any such amendment.
We reserve the right, subject to the approval of the New York Superintendent
of Insurance and compliance with U.S. Laws as currently applicable or
subsequently changed, to: (a) operate the Variable Account in any form
permitted under the Investment Company Act of 1940, as amended, (the "1940
Act"), or in any other form permitted by law; (b) take any action necessary
to comply with or obtain and continue any exemptions from the 1940 Act, or to
comply with any other applicable law; (c) transfer any assets in any Sub-
account to another Sub-account, or to one or more separate investment
accounts, or the General Account; or to add, combine or remove Sub-accounts
in the Variable Account; and (d) change the way We assess charges, so long as
We do not increase the aggregate amount beyond that currently charged to the
Variable Account and the Eligible Funds in connection with a Certificate. If
the shares of any of the Eligible Funds should become unavailable for
investment by the Variable Account or if in Our judgment further investment
in such Portfolio shares should become inappropriate in view of the purpose
of the Certificate, We may add or substitute shares of another mutual fund
for the Portfolio shares already purchased under the Certificate. No
substitution of Portfolio shares in any Sub-account may take place without
prior approval of the Securities and Exchange Commission and notice to the
affected Certificate Owners, to the extent required by the 1940 Act.
Certificate Owner
A Certificate Owner has all rights and may receive all benefits under a
Certificate. A Certificate Owner is the person designated as such on the
Certificate Date, unless changed. A Certificate Owner may exercise all
rights of a Certificate while it is In Force, subject to the rights of (a)
any assignee under an assignment filed with Us, and (b) any irrevocably named
Beneficiary.
Joint Certificate Owner
A Certificate can be owned by Joint Certificate Owners. Upon the death of
any Certificate Owner or Joint Certificate Owner, the surviving owner(s) will
be the primary Beneficiary(ies). Any other beneficiary designation will be
treated as a Contingent Beneficiary unless otherwise indicated in a Written
Request filed with Us.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by a Certificate Owner at the Certificate
Date, unless changed prior to the Income Date. Any change of Annuitant is
subject to Our underwriting rules then in effect. The Annuitant may not be
changed in a Certificate which is owned by a non-natural person. A
Certificate Owner may name a Contingent Annuitant. The Contingent Annuitant
becomes the Annuitant if the Annuitant dies while a Certificate is In Force.
If the Annuitant dies and no Contingent Annuitant has been named, We will
allow a Certificate Owner sixty days to designate someone other than the
Certificate Owner as Annuitant. The Certificate Owner will be the Contingent
Annuitant unless the Certificate Owner names someone else. If the Certificate
is owned by a non-natural person, the death of the Annuitant will be treated
as the death of the Certificate Owner and a new Annuitant may not be
designated.
Beneficiary
The Beneficiary is the person who controls the Certificate if any Certificate
Owner dies prior to the Income Date. If the Certificate is owned by Joint
Certificate Owners, upon the death of any Certificate Owner or Joint
Certificate Owner, the surviving owner(s) will become the primary
Beneficiary. Any other beneficiary designation will be treated as a
Contingent Beneficiary unless otherwise indicated in a Written Request filed
with Us. If a Certificate Owner names more than one Person as Primary
Beneficiary or as Contingent Beneficiary, and does not state otherwise on an
application or in a Written Request to Us, any non-survivors will not receive
a benefit. The survivors will receive equal shares. Subject to the rights
of any irrevocable Beneficiary(ies), a Certificate Owner may change primary
or contingent Beneficiary(ies). A change must be made by Written Request and
will be effective as of the date the Written Request is signed. We will not
be liable for any payment We make or action We take before We receive the
Written Request.
Group Contract Owner
The Group Contract Owner has title to the Group Contract. The Group Contract
and any amount accumulated under any Certificate are not subject to the
claims of the Group Contract Owner or any of its creditors. The Group
Contract Owner may transfer ownership of this Group Contract. Any transfer
of ownership terminates the interest of any existing Group Contract Owner.
It does not change the rights of any Certificate Owner. Nothing in the Group
Contract shall invalidate or impair any rights granted to the Certificate
Owner by the Certificate or New York law.
Change of Certificate Owner, Beneficiary or Contingent Annuitant
While a Certificate is In Force, a Certificate Owner may by Written Request
change the primary Certificate Owner, Joint Certificate Owner, primary
Beneficiary, Contingent Beneficiary, Contingent Annuitant, or in certain
instances, the Annuitant. An irrevocably named Person may be changed only
with the written consent of such Person. The change will be effective,
following Our receipt of the Written Request, as of the date the Written
Request is signed. The change will not affect any payments We make or
actions We take prior to the time We receive the Written Request.
Assignment of the Certificate
A Certificate Owner may assign a Certificate at any time while it is In
Force. The assignment must be in writing and a copy must be filed at Our
Office. A Certificate Owner's rights and those of any revocably named Person
will be subject to the assignment. An assignment will not affect any
payments We make or actions We take before We receive the assignment. We are
not responsible for the validity of any assignment.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Annuity
Payments have begun, any underpayment(s) that have been made plus interest at
a rate of 5% per year will be paid in full with the next Annuity Payment.
Any overpayment plus interest at a rate of 5% per year, unless repaid to Us
in one sum, will be deducted from future Annuity Payments otherwise due until
We are repaid in full.
Non-Participating
A Certificate does not participate in Our divisible surplus.
Evidence of Death, Age, Sex or Survival
If a Certificate provision relates to the death of a natural Person, We will
require proof of death before We will act under that provision. Proof of
death shall be: (a) a certified death certificate; or (b) a certified decree
of a court of competent jurisdiction as to the finding of death; or (c) a
written statement by a medical doctor who attended the deceased; or (d) any
other document constituting due proof of death under applicable state law.
If Our action under a Certificate provision is based on the age, sex, or
survival of any Person, We may require evidence of the particular fact before
We act under that provision.
Protection of Proceeds
No Beneficiary or payee may commute or assign any payments under a
Certificate before they are due. To the extent permitted by law, no payments
shall be subject to the debts of any Beneficiary or payee or to any judicial
process for payment of those debts.
Reports
We will send Certificate Owners a report that shows the Certificate Value at
least once each Certificate Year. We will send any other reports that may be
required by law.
Taxes
Any taxes paid to any governmental entity relating to a Certificate will be
deducted from the Purchase Payments or Certificate Value. We may, in Our
sole discretion, delay the deduction until a later date. By not deducting
tax payments at the time of Our payment, We do not waive any right We may
have to deduct amounts at a later date. We will, in Our sole discretion,
determine when taxes relate to a Certificate or to the operation of the
Variable Account. We reserve the right to establish a provision for federal
income taxes if We determine, in Our sole discretion, that We will incur a
tax as a result of the operation of the Variable Account. Such a provision
will be reflected in the Accumulation and Annuity Unit Values. We will
deduct for any income taxes incurred by Us as a result of the operation of
the Variable Account whether or not there was a provision for taxes and
whether or not it was sufficient. We will deduct from any payment under a
Certificate any withholding taxes required by applicable law.
Regulatory Requirements
All values payable under a Certificate will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Certificate is delivered.
Suspension or Deferral of Payments
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal
of the assets and securities of the Variable Account is not
reasonably practicable; or
(4) the Securities and Exchange Commission, by order or
pronouncement, so permits for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission govern as to whether the conditions described in (2) and (3) above
exist.
We reserve the right to delay payment of amounts allocated to the Fixed
Account for up to six months.
Variable Account Provisions
The Variable Account
The Variable Account(s) is designated on the Certificate Schedule and
consists of assets set aside by Us, which are kept separate from Our general
assets and all other variable account assets We maintain. We own the assets
of the Variable Account. Variable Account assets equal to reserves and other
contract liabilities will not be chargeable with liabilities arising out of
any other business We may conduct. We may transfer to Our General Account
assets which exceed the reserves and other liabilities of the Variable
Account. Income and realized and unrealized gains or losses from assets in
the Variable Account are credited to or charged against the account without
regard to other income, gains or losses in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-accounts
which are available under the Certificate are shown on the Certificate
Schedule. The assets of the Sub-accounts of the unit investment trust
variable separate account are allocated to the Eligible Fund(s) and the
Portfolio(s), if applicable, within an Eligible Fund shown on the Certificate
Schedule. The assets of the Sub-accounts of the investment company variable
separate account, if applicable, are invested in portfolios of securities
designed to meet the objectives of the Sub-Account shown on the Certificate
Schedule. We may, from time to time, add additional Sub-accounts, Eligible
Funds or Portfolios to those shown on the Certificate Schedule. A
Certificate Owner may be permitted to transfer Certificate Values or allocate
Purchase Payments to the additional Sub-Accounts, Eligible Funds or
Portfolios. However, the right to make such transfers or allocations will be
limited by the terms and conditions imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account,
to combine two or more Sub-accounts or to substitute a new Portfolio for the
Portfolio in which a Sub-account invests. A substitution may become
necessary if, in Our discretion, a Portfolio or Sub-account no longer suits
the purposes of the Group Contract. This may happen: due to a change in
laws or regulations or a change in a Portfolio's investment objectives or
restrictions; because the Portfolio or Sub-account is no longer available for
investment; or for some other reason. We will obtain any prior approvals
that may be required from the insurance department of Our state of domicile,
the New york Superintendent of Insurance and from the SEC or any other
governmental entity before making such a substitution.
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
(2) Operate a Variable Account as a management company under the 1940
Act, if
it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the
1940 Act,
if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
Valuation of Assets
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
Accumulation Units
A Certificate Owner's Variable Account value will fluctuate in accordance
with the investment results of the Sub-accounts to which the Certificate
Owner has allocated his or her Purchase Payments or Certificate Value. In
order to determine how these fluctuations affect a Certificate Owner's
Certificate Value, We use an Accumulation Unit value. Accumulation Units are
used to account for all amounts allocated to or withdrawn from the Sub-
accounts of the Variable Account as a result of Purchase Payments, partial
withdrawals, transfers, or charges deducted from the Certificate Value. We
determine the number of Accumulation Units of a Sub-account purchased or
canceled by dividing the amount allocated to, or withdrawn from, the Sub-
account by the dollar value of one Accumulation Unit of the Sub-account as of
the end of the Valuation Period during which We receive the request for the
transaction.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-account was initially set at $10.
Subsequent Accumulation Unit Values for each Sub-account are determined by
multiplying the Accumulation Unit Value for the immediately preceding
Valuation Period by a net investment factor for the Sub-account for the
current period. This factor may be greater or less than 1.0; therefore, the
Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
We calculate the net investment factor for each Sub-account investing in
shares of mutual funds by dividing (a) by (b) and then subtracting (c) where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which the
Sub-account
invests at the end of the Valuation Period; plus
(ii) any dividend per share declared for the Portfolio that has an ex-
dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual rate
for the Mortality and Expense Risk Charge, for the Administrative
Charge, and for the Distribution Charge, if any, which are shown
on the Certificate Schedule; plus
(ii) a charge factor, if any, for any tax provision established by
Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing
directly in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the
end of the preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current
Valuation Period; less
(iii) any capital losses, realized or unrealized,
charged against the assets during the current Valuation
Period; less
(iv) all operating and investment expenses relating to
the assets that are incurred during the current Valuation
Period.
(b) is the value of the assets in the Sub-account at the end of
the preceding Valuation Period.
Mortality and Expense Risk Charge
Each Valuation Period We deduct a Mortality and Expense Risk Charge from each
Sub-account of the Variable Account which is equal, on an annual basis, to
the amount shown on the Certificate Schedule. The Mortality and Expense Risk
Charge compensates Us for assuming the mortality and expense risks with
respect to the Certificates We issue. We guarantee the dollar amount of each
Annuity Payment after the first Annuity Payment will not be affected by
variations in mortality or expense experience.
Administrative Charge
Each Valuation Period We deduct an Administrative Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Administrative Charge compensates Us for the costs
associated with administration of the Variable Account and the Certificates
We issue.
Distribution Charge
Each Valuation Period We deduct a Distribution Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Distribution Charge compensates Us for the costs
associated with the distribution of the Certificates We issue.
Certificate Maintenance Charge
We deduct a Certificate Maintenance Charge from the Certificate Value by
canceling Accumulation Units from each applicable Sub-account to reimburse
Us for expenses relating to the maintenance of the Certificate. We will
deduct the Certificate Maintenance Charge from the Sub-accounts of the
Variable Account in the same proportion that the amount of Certificate Value
in each Sub-account bears to the Certificate Value. The Certificate
Maintenance Charge is shown on the Certificate Schedule. The Certificate
Maintenance Charge will be deducted from the Certificate Value on each
Certificate Anniversary during the Accumulation Period.
If a total surrender is made on a date other than a Certificate Anniversary,
the Certificate Maintenance Charge will be deducted at the time of surrender.
During the Annuity Period, the Certificate Maintenance Charge will be
deducted on a pro-rata basis from each Annuity Payment.
Transfers
Transfers: Subject to any limitation We impose on the number of transfers
permitted in a Certificate Year, a Certificate Owner may transfer all or part
of Certificate Owner's Certificate Value among the Sub-accounts and the Fixed
Account, if any, by Written Request or by telephone without the imposition of
any fees or charges. Transfers among the Sub-accounts and the Fixed Account
are permitted only during the Accumulation Period. The number of permitted
transfers, and the charge for transfers in excess of that number, are shown
on the Certificate Schedule. All transfers are subject to the following:
(1) If more than the number of free transfers, shown on the Certificate
Schedule, are made in a Certificate Year, We will deduct a transfer charge,
shown on the Certificate Schedule, for each subsequent transfer. The
transfer fee will be deducted from the Sub-account from which the transfer is
made. However, if Certificate Owner transfers his or her entire interest in
a Sub-account, the transfer fee will be deducted from the amount transferred.
If a Certificate Owner makes a transfer from more than one Sub-account, any
transfer fee will be allocated pro-rata among such Sub-accounts in proportion
to the amount transferred from each. The deduction of any fees We impose on
such transfers will not exceed the maximum listed on page 3.
(2) During the Annuity Period, transfers of values between Sub-accounts
will be made by converting the number of Annuity Units being transferred to
the number of Annuity Units in the Sub-account to which a transfer is made,
so that the next Annuity Payment, if it were made at that time, would be the
same amount that it would have been without the transfer. Thereafter,
Annuity Payments will reflect changes in the value of the new Annuity Units.
(3) The minimum amount which can be transferred is shown on the
Certificate Schedule. The minimum amount which must remain in a Sub-account
after a transfer is shown on the Certificate Schedule.
(4) If 100% of the value of any Sub-account is transferred and the
current allocation for Purchase Payments includes that Sub-account, the
allocation for future Purchase Payments will change to reflect a Certificate
Owner's allocation of Certificate Value following the transfer.
(5) We reserve the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privileges described
above.
We will not be liable for transfers made in accordance with a Certificate
Owner's instructions. All amounts and Accumulation Units will be determined
as of the end of the Valuation Period in which We receive the request for
transfer.
Partial Withdrawals and Total Surrender
Partial Withdrawals
During the Accumulation Period while the Certificate is In Force, a
Certificate Owner may, upon Written Request, make a partial withdrawal,
subject to the provisions and limitations shown on the Certificate Schedule.
For purposes of determining whether a Surrender Charge is applicable to a
partial withdrawal:
(1) A partial withdrawal will first be taken from the portion of a
Certificate Owner's Certificate Value which is in excess of
Purchase Payments, and then from Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in the
order in which the Purchase Payments were made, starting with the
first.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-account in the ratio that a Certificate Owner's interest in
the Sub-account bears to his or her Certificate Value in all the Sub-
accounts. A Certificate Owner must specify by Written Request in advance if
he or she wants Accumulation Units to be canceled in a manner other than the
method described above. If there is no value or insufficient value in the
Variable Account, then the amount withdrawn, or the insufficient portion,
will be deducted from the Fixed Account. If a Certificate Owner has multiple
Guarantee Periods, We will deduct such amount from each Guarantee Period's
values in the ratio that each Period's values bears to the total Fixed
Account Value. A Certificate Owner must specify by Written Request in
advance if he or she wants multiple Guarantee Periods to be reduced in a
manner other than the method described above. Any amount deducted from the
fixed account value may be subject to a market value adjustment, if
applicable.
Each partial withdrawal must be for an amount not less than the amount shown
on the Certificate Schedule. The Certificate Value which must remain in a
Certificate is shown on the Certificate Schedule. The Certificate Schedule
also shows any charge.
Total Surrender
During the Accumulation Period while the Certificate is In Force, a
Certificate Owner may, upon Written Request, make a total surrender of the
Certificate Withdrawal Value. The Certificate Withdrawal Value is:
(1) the Certificate Value as of the end of the Valuation Period during
which We receive a Written Request for a withdrawal or
surrender; less
(2) any applicable taxes not previously deducted; less
(3) any Surrender Charge; less
(4) any Certificate Maintenance Charge.
The Fixed Account Value, which is a component of the Certificate Value, may
be subject to a market value adjustment, if applicable.
We will pay the amount of any withdrawal or surrender within seven days
unless the Suspension or Deferral of Payments Provision is in effect.
Death Provisions
Death of Certificate Owner
These provisions apply if, during the Accumulation Period while the
Certificate is In Force, the Certificate Owner or any Joint Certificate Owner
dies (whether or not the decedent is also the Annuitant) or the Annuitant
dies under a Certificate owned by a non-natural Person. The "designated
beneficiary" will control the Certificate after such a death. This
"designated beneficiary" will be the first Person among the following who is
alive on the date of death: Certificate Owner; Joint Certificate Owner;
primary Beneficiary; Contingent Beneficiary; and Certificate Owner's estate.
If the Certificate Owner and Joint Certificate Owner are both alive, they
shall be the "designated beneficiary" together.
If the decedent's surviving spouse (if any) is the sole "designated
beneficiary", the surviving spouse will automatically become the new sole
Certificate Owner as of the date of the death. And, if the Annuitant is the
decedent, the new Annuitant will be any living Contingent Annuitant,
otherwise the surviving spouse. The Certificate may stay in force until
another death occurs (i.e., until the death of the Certificate Owner or Joint
Certificate Owner). Except for this paragraph, all of "Death Provisions" will
apply to that subsequent death.
In all other cases, the Certificate may stay in force up to five years from
the date of death. During this period, the "designated beneficiary" may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to surrender the Certificate for its
Certificate Withdrawal Value. If this Certificate is still in force at the
end of the five-year period, We will automatically end it then by paying to
the "designated beneficiary" the Certificate Withdrawal Value without the
deduction of any applicable Surrender Charges. If the "designated
beneficiary" is not alive then, We will pay any Person(s) named by the
"designated beneficiary" in a Written Request; otherwise the "designated
beneficiary's" estate.
Death of Annuitant
These provisions apply if during the Accumulation Period while the
Certificate is In Force, (a) the Annuitant dies, (b) the Annuitant is not an
Owner, and (c) the Owner is a natural person. The Certificate will continue
In Force after the Annuitant's death. The new Annuitant will be any living
Contingent Annuitant, otherwise the Certificate Owner.
Payment of Benefits
Instead of receiving a lump sum, a Certificate Owner or any "designated
beneficiary" may by Written Request direct that We pay any benefit of $2,000
or more under an Annuity Option that meets the following: (a) the first
payment to the "designated beneficiary" must be made no later than one year
after the date of death; (b) payments must be made over the life of the
"designated beneficiary" or over a period not extending beyond that person's
life expectancy; and (c) any Annuity Option that provides for payments to
continue after the death of the "designated beneficiary" will not allow the
successor payee to extend the period of time over which the remaining
payments are to be made.
Annuity Provisions
General
If the Certificate is In Force on the Income Date, the Adjusted Certificate
Value will be applied under the Annuity Option selected by a Certificate
Owner. Annuity Payments may be made on a fixed or variable basis or both.
Income Date
The Income Date may be selected by a Certificate Owner. It is shown on the
Certificate Schedule. The Income Date can be any time after the Certificate
Date for variable payments and any time after the first Certificate
Anniversary for fixed payments. The Income Date may not be later than the
earlier of when the Annuitant reaches attained age 90 or that required under
state law. If no Income Date is selected, it will be the earlier of when the
Annuitant reaches attained age 90 or the maximum date permitted under state
law, if any.
Prior to the Income Date, a Certificate Owner may change the Income Date by
Written Request. Any change must be requested at least 30 days prior to the
new Income Date.
Selection of an Annuity Option
An Annuity Option may be selected by a Certificate Owner. If no Annuity
Option is selected, Option B will automatically be applied. Prior to the
Income Date, a Certificate Owner can change the Annuity Option selected by
Written Request. Any change must be requested at least 30 days prior to the
Income Date.
Frequency and Amount of Annuity Payments
Annuity Payments are paid in monthly installments unless quarterly, semi-
annual or annual payments are chosen. The Adjusted Certificate Value is
applied to the Annuity Table for the Annuity Option selected. If the
Adjusted Certificate Value to be applied under an Annuity Option is less than
$2,000, We reserve the right to make a lump sum payment in lieu of Annuity
Payments. If the Annuity Payment would be or becomes less than $100, We will
reduce the frequency of payments to a longer interval which will result in
each payment being at least $100.
Annuity Options
The following Annuity Options or any other Annuity Option acceptable to Us
may be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Annuity Payments for a
chosen number of years, not less than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to continue
for the remainder of the period, he/she may elect to have the present
value of the remaining payments commuted and paid in a lump sum. During
the payment period of a Variable Annuity, the payee may elect by Written
Request to receive the following amount: (a) the present value of the
remaining payments commuted; less (b) any Surrender Charge that may be
due by treating the value defined in (a) as a surrender. Instead of
receiving a lump sum, the payee may elect another Annuity Option. The
amount applied to that Option would not be reduced by the charge defined
in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Annuity Payments
during the lifetime of the payee and in any event for 10 years certain.
If the payee dies during the guaranteed payment period and the
Beneficiary does not desire payments to continue for the remainder of
the guaranteed period, he/she may elect to have the present value of the
guaranteed payments remaining commuted and paid in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Annuity Payments payable during
the joint lifetime of the payee and a designated second natural person
and then during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee may
not withdraw or otherwise end an Annuity Option after it begins. Payments
will end upon the payee's death unless the Annuity Option provides for
payments continuing to a successor payee. No successor payee may extend the
period of time over which the remaining payments are to be made.
Annuity
If a Certificate Owner selects a Fixed Annuity, the Adjusted Certificate
Value is allocated to the General Account and the Annuity is paid as a Fixed
Annuity. If the Certificate Owner selects a Variable Annuity, the Adjusted
Certificate Value will be allocated to the Sub-accounts of the Separate
Account in accordance with the selection he or she makes, and the Annuity
will be paid as a Variable Annuity. A Certificate Owner can also select a
combination of a Fixed and Variable Annuity and the Adjusted Certificate
Value will be allocated accordingly. If a Certificate Owner does not select
between a Fixed Annuity and a Variable Annuity, any Adjusted Certificate
Value in the Variable Account will be applied to a Variable Annuity and any
Adjusted Certificate Value in the Fixed Account will be applied to a Fixed
Annuity.
The Adjusted Certificate Value will be applied to the applicable Annuity
Table contained in the Certificate based upon the Annuity Option a
Certificate Owner selects. If, as of the Income Date, the current Annuity
Option rates applicable to the class of Certificates issued under the Group
Contract provide an initial Annuity Payment greater than the initial Annuity
Payment guaranteed under the applicable Annuity Table in the Certificate, the
greater payment will be made.
Fixed Annuity
The minimum dollar amount of each Fixed Annuity Payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. After the initial
Fixed Annuity payment, the payments will not change regardless of investment,
mortality or expense experience.
Variable Annuity
Variable Annuity Payments reflect the investment performance of the Variable
Account in accordance with the allocation of the Adjusted Certificate Value
to the Sub-accounts during the Annuity Period. Variable Annuity payments are
not guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. The dollar amount
of Variable Annuity payments for each applicable Sub-account after the first
Variable Annuity Payment is determined as follows:
(1) the dollar amount of the first Variable Annuity payment is
divided by the value of an Annuity Unit for each applicable Sub-
account as of the Income Date. This sets the number of Annuity
Units for each monthly payment for the applicable Sub-account. The
number of Annuity Units for each applicable Sub-account remains
fixed during the Annuity Period;
(2) the fixed number of Annuity Units per payment in each Sub-
account is multiplied by the Annuity Unit Value for that Sub-
account for the Valuation Period for which the payment is due.
This result is the dollar amount of the payment for each applicable
Sub-account.
The total dollar amount of each Variable Annuity payment is the sum of all
Sub-account Variable Annuity payments reduced by the applicable portion of
the Certificate Maintenance Charge.
Annuity Unit
The value of any Annuity Unit for each Sub-Account of the Separate Account
was initially set at $10.
The Sub-account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
(1) the net investment factor calculated as set forth on pages 11-
12 (but without the Distribution Charge, if any) for the current
Valuation Period is multiplied by the value of the Annuity Unit for
the Sub-account for the immediately preceding Valuation Period.
(2) the result in (1) is then divided by the Assumed Investment
Rate Factor which equals 1.00 plus the Valuation Period equivalent
of the Assumed Investment Rate for the number of days in the
current Valuation Period. The Assumed Investment Rate is equal to
6% per year.
The value of an Annuity Unit may increase or decrease from Valuation Period
to Valuation Period.
Using the Tables
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first annuity
payment will be based on an age a specified number of years younger than the
person's then-attained age (i.e., age last birthday). This age setback is as
follows:
Date of First Payment Age Setback
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next
section. Upon request, We will tell a Certificate Owner any such amount.
Basis of Calculation
Tables 1 and 4 are based on interest at 5% and 3%, respectively. Tables 2,
3, 5, and 6 are based on the 1983 Individual Annuity Valuation Tables (sex
distinct), with interest at 5% (Tables 2 and 3) and 3% (Tables 5 and 6),
projected dynamically with Projection Scale G.
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION 1 FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $18.74 12 $9.16 19 $6.71 25 $5.76
6 15.99 13 8.64 20 6.51 26 5.65
7 14.02 14 8.20 21 6.33 27 5.54
8 12.56 15 7.82 22 6.17 28 5.45
9 11.42 16 7.49 23 6.02 29 5.36
10 10.51 17 7.20 24 5.88 30 5.28
11 9.77 18 6.94
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION 2 FOR EACH
$1,000 APPLIED
Age Male Female Age Male Female Age Male Female Age Male Female
30 $4.45 $4.34 47 $5.05 $4.78 64 $6.54 $5.98 80 $9.14 $8.67
31 4.47 4.35 48 5.11 4.82 65 6.68 6.10 81 9.29 8.86
32 4.50 4.37 49 5.17 4.87 66 6.82 6.22 82 9.44 9.05
33 4.52 4.39 50 5.23 4.92 67 6.97 6.35 83 9.57 9.23
34 4.55 4.41 51 5.29 4.97 68 7.12 6.49 84 9.69 9.40
35 4.57 4.43 52 5.36 5.02 69 7.28 6.63 85 9.81 9.55
36 4.60 4.45 53 5.43 5.08 70 7.44 6.79 86 9.91 9.69
37 4.63 4.47 54 5.50 5.13 71 7.61 6.95 87 10.01 9.82
38 4.67 4.49 55 5.58 5.20 72 7.78 7.12 88 10.10 9.94
39 4.70 4.52 56 5.67 5.27 73 7.95 7.30 89 10.17 10.04
40 4.74 4.55 57 5.76 5.34 74 8.12 7.48 90 10.24 10.13
41 4.78 4.57 58 5.85 5.41 75 8.30 7.67 91 10.30 10.21
42 4.82 4.60 59 5.95 5.49 76 8.47 7.87 92 10.35 10.27
43 4.86 4.64 60 6.06 5.58 77 8.65 8.07 93 10.39 10.33
44 4.91 4.67 61 6.17 5.67 78 8.82 8.27 94 10.43 10.37
45 4.95 4.70 62 6.29 5.77 79 8.98 8.47 96 10.45 10.41
46 5.00 4.74 63 6.41 5.87
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION 3 FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
FEMALE AGE
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $4.24$4.28$4.31$4.34$4.36$4.38$4.40$4.42$4.43$4.44$4.45 $4.45 $4.45
$4.46
35 4.26 4.30 4.35 4.39 4.43 4.47 4.50 4.52 4.54 4.56 4.57 4.57 4.58
4.58
40 4.28 4.33 4.39 4.45 4.51 4.56 4.61 4.65 4.68 4.71 4.73 4.74 4.75
4.75
M 45 4.29 4.35 4.42 4.50 4.58 4.66 4.74 4.80 4.86 4.90 4.93 4.96 4.97
4.98
A 50 4.30 4.37 4.46 4.55 4.66 4.77 4.88 4.98 5.07 5.14 5.20 5.23 5.25
5.27
L 55 4.31 4.39 4.48 4.59 4.73 4.87 5.03 5.18 5.32 5.44 5.53 5.59 5.63
5.65
E 60 4.32 4.40 4.50 4.63 4.78 4.97 5.18 5.40 5.61 5.80 5.96 6.07 6.13
6.17
65 4.33 4.41 4.52 4.65 4.83 5.05 5.31 5.61 5.92 6.23 6.50 6.70 6.83
6.90
A 70 4.33 4.42 4.53 4.68 4.87 5.11 5.42 5.80 6.23 6.70 7.14 7.50 7.75
7.90
G 75 4.34 4.42 4.54 4.69 4.89 5.16 5.50 5.95 6.50 7.15 7.83 8.45 8.92
9.23
E 80 4.34 4.43 4.54 4.70 4.91 5.19 5.56 6.06 6.71 7.55 8.52 9.50 10.34
10.93
85 4.34 4.43 4.55 4.71 4.92 5.21 5.60 6.13 6.86 7.85 9.10 10.52 11.87
12.93
90 4.34 4.43 4.55 4.71 4.93 5.22 5.62 6.18 6.96 8.06 9.55 11.39 13.34
15.05
95 4.34 4.43 4.55 4.71 4.93 5.23 5.64 6.21 7.02 8.20 9.86 12.09 14.69
17.20
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH $1,000
APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH $1,000
APPLIED
Age Male Female Age Male Female Age Male Female Age Male Female
30 $3.12 $2.99 47 $3.82 $3.53 64 $5.40 $4.83 80 $8.15 $7.66
31 3.15 3.01 48 3.88 3.58 65 5.55 4.96 81 8.32 7.86
32 3.18 3.03 49 3.94 3.63 66 5.69 5.08 82 8.47 8.06
33 3.21 3.06 50 4.01 3.68 67 5.85 5.22 83 8.61 8.25
34 3.24 3.08 51 4.08 3.74 68 6.01 5.37 84 8.75 8.43
35 3.27 3.11 52 4.15 3.80 69 6.18 5.52 85 8.87 8.60
36 3.31 3.13 53 4.23 3.86 70 6.35 5.68 86 8.98 8.75
37 3.34 3.16 54 4.31 3.93 71 6.52 5.85 87 9.08 8.88
38 3.38 3.19 55 4.39 4.00 72 6.70 6.03 88 9.18 9.01
39 3.42 3.22 56 4.48 4.07 73 6.89 6.21 89 9.26 9.12
40 3.46 3.25 57 4.58 4.15 74 7.07 6.41 90 9.33 9.21
41 3.51 3.29 58 4.68 4.23 75 7.26 6.61 91 9.40 9.30
42 3.55 3.32 59 4.78 4.32 76 7.44 6.81 92 9.45 9.37
43 3.60 3.36 60 4.89 4.41 77 7.63 7.02 93 9.49 9.43
44 3.65 3.40 61 5.01 4.50 78 7.81 7.23 94 9.53 9.47
45 3.71 3.44 62 5.14 4.61 79 7.98 7.45 95 9.55 9.51
46 3.76 3.49 63 5.27 4.72
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH $1,000
APPLIED
COMBINATION OF AGES
FEMALE AGE
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $2.88$2.93$2.97$3.01$3.04$3.07$3.08$3.10$3.11$3.12$3.12 $3.12 $3.13
$3.13
35 2.91 2.97 3.03 3.09 3.14 3.18 3.21 3.23 3.25 3.26 3.27 3.27 3.28
3.28
40 2.93 3.01 3.09 3.17 3.24 3.30 3.35 3.39 3.42 3.44 3.46 3.46 3.47
3.47
45 2.95 3.04 3.14 3.24 3.34 3.43 3.51 3.58 3.63 3.66 3.69 3.71 3.72
3.72
M 50 2.96 3.06 3.17 3.30 3.43 3.56 3.68 3.79 3.87 3.94 3.98 4.01 4.03
4.03
A 55 2.97 3.07 3.20 3.34 3.50 3.68 3.85 4.02 4.16 4.27 4.34 4.39 4.42
4.44
L 60 2.98 3.09 3.22 3.38 3.56 3.78 4.01 4.25 4.47 4.66 4.80 4.89 4.95
4.98
E 65 2.98 3.09 3.23 3.40 3.61 3.86 4.15 4.48 4.81 5.12 5.37 5.55 5.66
5.72
70 2.99 3.10 3.24 3.42 3.64 3.92 4.26 4.67 5.13 5.60 6.04 6.38 6.60
6.73
A 75 2.99 3.10 3.25 3.43 3.66 3.96 4.34 4.81 5.39 6.06 6.75 7.35 7.79
8.07
G 80 2.99 3.11 3.25 3.44 3.68 3.99 4.39 4.92 5.60 6.45 7.44 8.42 9.23
9.79
E 85 2.99 3.11 3.26 3.44 3.69 4.00 4.42 4.98 5.73 6.74 8.01 9.44 10.77
11.81
90 2.99 3.11 3.26 3.45 3.69 4.01 4.44 5.02 5.82 6.93 8.43 10.29 12.25
13.95
95 2.99 3.11 3.26 3.45 3.70 4.02 4.45 5.04 5.87 7.05 8.73 10.97 13.58
16.11
<PAGE>
Endorsements
To be inserted only by Us
<PAGE>
POLICY DESCRIPTION
This is a GROUP VARIABLE ANNUITY CONTRACT with limited purchase payment
flexibility. This Contract is non participating with no dividends.
EXHIBIT 4(b)
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
Read this Certificate carefully. This document is a description of
the legal contract between the Group Contract Owner and Us.
You may return this Certificate within 10 days after You receive it
by delivering or mailing it to Our Office. The return of this Certificate by
mail will be effective when the postmark is affixed to a properly addressed
and postage prepaid envelope. This returned Certificate will be treated as if
We never issued it and We will refund the Certificate Value plus any amount
deducted from Your purchase payment before it was allocated to the Variable
Account. The Certificate Value will be determined as of the date of surrender
(i.e., for a mailed contract, the postmark date).
This Certificate describes the benefits and provisions of the Group
Contract. The Group Contract, as issued to the Group Contract Owner by Us
with any riders or endorsements, alone makes up the agreement under which
benefits are paid. The Group Contract may be inspected at the office of the
Group Contract Owner. In consideration of any application for this
Certificate and the payment of purchase payments, We agree, subject to the
terms and conditions of the Group Contract, to provide the benefits described
in this Certificate to the Certificate Owner.
If this Certificate is In Force on the Income Date, We will begin
making income payments to the Annuitant. We will make such payments
according to the terms of the Certificate and Group Contract.
Signed for the Company on the Issue Date at Our Home Office, 175
Berkeley Street, Boston, Massachusetts 02117:
_________________________ _________________________
Secretary President
POLICY DESCRIPTION
This is a GROUP VARIABLE ANNUITY CERTIFICATE with limited purchase
payment flexibility. This contract is nonparticipating with no
dividends.
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND
ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. VARIABLE ANNUITY PAYMENTS WILL NOT
DECREASE OVER TIME IF THE SEPARATE ACCOUNT (AFTER DEDUCTION OF THE ANNUAL
[1.55%] ASSET CHARGE) HAS AN ANNUALIZED INVESTMENT RETURN OF AT LEAST 5.0%.
SEE PAGES 12-13 AND 19 FOR FURTHER EXPLANATION. CERTIFICATE ASSETS ALLOCATED
TO THE SEPARATE ACCOUNT INCUR CHARGES OF [1.55%] BEFORE ANNUITY PAYMENTS
BEGIN AND [1.40%] ONCE ANNUITY PAYMENTS BEGIN. INCOME, CAPITAL GAINS, AND/OR
LOSSES WHETHER OR NOT REALIZED, FROM ASSETS ALLOCATED TO THE SEPARATE ACCOUNT
ARE CREDITED TO OR CHARGED AGAINST THE SEPARATE ACCOUNT WITHOUT REGARD TO
INCOME, CAPITAL GAINS, AND/OR LOSSES ARISING OUT OF ANY OTHER BUSINESS THE
COMPANY MAY CONDUCT.
Table of Contents
Page
Right to Examine Certificate 1
Certificate Schedule 2
Definitions 3
General Provisions 5
Variable Account Provisions 10
Transfers 13
Partial Withdrawals and Total Surrender 14
Death Provisions 15
Annuity Provisions 16
Endorsements (if any) are before page 22
Definitions
Accumulation Period: The period prior to the Income Date during which
Purchase Payments may be made by a Certificate Owner.
Accumulation Unit: An accounting unit used to calculate a Certificate Owner's
interest in a Sub-account of the Variable Account during the Accumulation
Period.
Adjusted Certificate Value: The Certificate Value less any applicable taxes
relating to a Certificate and Certificate Maintenance Charge. This amount is
applied to the applicable Annuity Tables to determine Annuity Payments.
Annuitant: The natural person on whose life Annuity Payments are based, and
to whom any Annuity Payments will be made starting on the Income Date.
Annuity Options: Options available for Annuity Payments.
Annuity Payments: The series of payments made to the Annuitant, starting on
the Income Date, under the Annuity Option selected.
Annuity Period: The period after the Income Date during which Annuity
Payments are made.
Annuity Unit: An accounting unit used to calculate Variable Annuity Payments
during the Annuity Period.
Beneficiary: The person(s) or entity(ies) who controls the Certificate if
any Certificate Owner dies before the Income Date.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
175 Berkeley Street, Boston, MA 02117
Service Office
125 High Street, 11th Floor
Boston, MA 02110
Certificate Schedule
GROUP CONTRACT OWNER [Liberty Insurance Trust]
GROUP CONTRACT NUMBER [678999]
CERTIFICATE NUMBER [123455]
CERTIFICATE OWNER [John Q. Public]
JOINT CERTIFICATE OWNER [Jane Q. Public]
CERTIFICATE OWNER DOB [January 1, 1940]
JOINT CERTIFICATE OWNER DOB [February 29, 1940]
ANNUITANT [Thomas Doe]
ANNUITANT DOB [November 22, 1960]
[COVERED PERSON[(S)]] [John Q. Public, [, Jane Q. Public]
[,Thomas Doe]]
CERTIFICATE DATE [November 1, 1995]
INCOME DATE [November 1, 2010]
INITIAL PURCHASE PAYMENT [$10,000]
MINIMUM INITIAL PAYMENT [$5,000]
MINIMUM ADDITIONAL PAYMENT [$1,000]
Charges
Distribution Charge [We deduct [0.000411%] of the assets in each Variable
Account Sub-Account on a daily basis (equivalent to an annual rate of
[0.15%]) to compensate Us for a portion of Our distribution costs.]
Administrative Charge [We deduct [0.000411%] of the assets in each Variable
Account Sub-account on a daily basis (equivalent to an annual rate of
[0.15%]) to compensate Us for a portion of Our administrative expenses.]
Mortality and Expense Risk Charge [We deduct [0.003403%] of the assets in
each Variable Account Sub-account on a daily basis (equivalent to an annual
rate of [1.25%]) for Our mortality and expense risks.]
Certificate Maintenance Charge [We charge [$36] to cover a portion of Our
ongoing Certificate maintenance expenses. The charge is incurred at the
beginning of the Certificate Year and is deducted from the assets in the
Variable Account on each Certificate Anniversary and at the time of total
surrender. We reserve the right to charge up to $100 per year.]
Transfer Charge [Currently none, however, We reserve the right to charge
[$25] for a transfer if You make more than [12] transfers per Certificate
Year.]
Surrender Charge [At the time of each partial withdrawal or at total
surrender a contingent deferred sales charge is imposed as a percentage of
each Purchase Payment during the [seven] years after the date of its payment,
as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
7% 6% 5% 4% 3% 2% 1%
Thereafter 0%].
Initial Purchase Payment Allocation
Currently, Certificate Owners can select [7] Sub-accounts [and the Fixed
Account]. We reserve the right to increase or decrease the number of
available Sub-accounts. The minimum You may allocate to any Sub-account [or
the Fixed Account] is [10%] of any Purchase Payment. Your initial Purchase
Payment has been invested as follows:
[Manning & Napier Moderate Growth x%
Manning & Napier Growth x%
Manning & Napier Maximum Horizon x%
Manning & Napier Equity x%
Manning & Napier Small Cap x%
Manning & Napier Bond x%
SteinRoe Cash Income Fund x%
Interest Rate at Issue
Fixed Account - 1 Year x% ____%
3 Year x% ____%
5 Year x% ____%
7 Year x% ____%
Transfer Guidelines
Number of Transfers and Transfer Charge: [Currently, Certificate Owners are
permitted [12] transfers per Certificate Year during the Accumulation Period
and [1] transfer every [6] months during the Annuity Period. We reserve the
right to change, upon notice, the frequency of transfers You can make. We
also reserve the right to impose a charge for any transfer in excess of [12]
per Certificate Year. The transfer charge is shown in the Charges section of
the Schedule.]
Minimum amount to be transferred: [None]
Minimum amount which must remain in a Sub-account after transfer: [None]
[Limitations on transfers from Fixed Account: Transfers during a Certificate
Year from the Fixed Account to the Variable Account are limited to [25%] of
the Fixed Account Value at the beginning of the Certificate Year. This
limitation will be waived if a systematic program of monthly transfers has
been established.]
Partial Withdrawals
You may make partial withdrawals during the Accumulation Period without
incurring a surrender charge[, as follows:
(1) In any Certificate Year You may withdraw an aggregate amount not to
exceed,
at the time of withdrawal:
(a) the Certificate Value, less
(b) the portion of Your Purchase Payments not previously
withdrawn;
and
(2) In any Certificate Year after the first, You may also withdraw the
positive difference, if any, between the amount withdrawn pursuant
to (1) above in any such subsequent year and 10% of Your
Certificate
Value as of the preceding Certificate Anniversary.
We will collect the surrender charge shown on the Schedule with respect to
partial withdrawals in excess of the amounts described in (1) and (2) above].
Minimum withdrawal amount: [$300], [unless the withdrawal is made pursuant to
Our Systematic Withdrawal Program described below, in which case the minimum
withdrawal is [$100].]
Minimum Certificate Value which must remain after a partial withdrawal:
[$2,500].
Death Benefits
Adjustment of Certificate Value
When We receive due proof of death of the [first to die of the Covered
Person(s) identified on the Certificate Schedule hereinafter "Covered
Person"] [Certificate Owner], [any Joint Certificate Owner,] or the
Annuitant if the Certificate Owner is a non-natural Person, We will compare,
as of the date of death, the Certificate Value to the Death Benefit amount
defined in this Schedule. If the Certificate Value is less than the Death
Benefit, We will increase the current Certificate Value by the amount of the
difference. Any amount credited will be allocated to the Variable Account
[and/or the Fixed Account] based on the Purchase Payment allocation selection
that is in effect when We receive due proof of death.
[Waiver of Surrender Charges
If the Certificate is surrendered within [90] days of the date of death of
the [Covered Person(s)], [Certificate Owner], [any Joint Certificate Owner,]
or the Annuitant if the Certificate Owner is a non-natural Person, any
applicable surrender charges will not be deducted from the Certificate
Withdrawal Value.]
Death Benefit Amount
[Purchase Payment Death Benefit
On the Certificate Date the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) Start with the Death Benefit from the prior Valuation Date;
(2) Add to (1) any additional Purchase Payments paid during the current
Valuation Period and subtract from (1) any partial withdrawals (including any
associated surrender charge incurred) made during the current
Valuation Period.]
[Certificate Anniversary Death Benefit
On the Certificate Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Certificate Date;
(b) Add to (a) any additional Purchase Payments paid since the
Certificate Date and subtract from (a) any partial withdrawals
(including any associated surrender charge incurred)made since
the Certificate Date;
(2) (a) Determine the Certificate Value for each Certificate
Anniversary (the "Anniversary Value") before the [81st]
birthday of the [Certificate Owner] [Covered Person] or, if
the
Certificate Owner is a non-natural Person, the Annuitant;
(b) Increase each "Anniversary Value" by any Purchase Payments
made
after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following amount
calculated at the time of each partial withdrawal made after
that Value's Anniversary: (i) the partial withdrawal amount
(including any associated surrender charge incurred) divided
by
the Certificate Value immediately preceding the withdrawal,
(ii) multiplied by the "Anniversary Value" immediately
preceding the withdrawal;
(d) Select the highest "Anniversary Value" after the adjustments
in
(b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).]
[If there is a change of [Certificate Owner,] [Covered Person] the new
[Certificate Owner's] [Covered Person's] age will be used to determine the
amount in (2) above.]
[If there is a change of [Certificate Owner,] [Covered Person] and the new
[Certificate Owner's] [Covered Person] age is less than or equal to 75, the
Death Benefit described above will remain in effect. If the new Certificate
Owner's age is greater than 75, the Death Benefit in effect will not apply;
the Death Benefit will be the sum of the Purchase Payments less any partial
withdrawals (including any associated surrender charge incurred) made since
the Certificate Date.]
The Variable Separate Account[s]
Sub-accounts investing in shares of mutual funds
[Variable Account [J] is a unit investment trust variable separate account,
organized in and
governed by the laws of the State of Massachusetts, Our state of domicile.
Variable Account [J] is divided into Sub-accounts. Each Sub-account listed
below invests in shares of the corresponding Portfolio of the Eligible Fund
shown.
Sub-account Eligible Fund and Portfolio
[Manning & Napier Insurance Fund, Inc.
Moderate Growth Manning & Napier Moderate Growth Portfolio
Sub-account seeks with equal emphasis long-term growth
and preservation of capital.
Growth Sub-account Manning & Napier Growth Portfolio - seeks
long-term growth of capital. The secondary
objective is the preservation of capital.
Maximum Horizon Manning & Napier Maximum Horizon Portfolio -
Sub-account seeks to achieve the high level of long-term
capital growth typically associated with the
stock market.
Equity Sub-account Manning & Napier Equity Portfolio- seeks long-
term growth of capital.
Small Cap Sub- Manning & Napier Small Cap Portfolio - seeks to
account achieve long term growth of capital by investing
principally in the equity securities of small
issuers.
Bond Sub-account Manning & Napier Bond Portfolio - seeks to
maximize total return in the form of both
income and capital appreciation by investing
in fixed income securities without regard to
maturity.
The Alger American Fund
Alger Growth Alger American Growth Portfolio - seeks
Sub-account long-term capital appreciation.
Alger Small Cap Alger American Small Capitalization
Sub-account Portfolio - seeks long-term capital
appreciation.
Alliance Variable Products Series Fund, Inc.
Alliance Global Bond Global Bond Portfolio - seeks a high level of
Sub-account return from a combination of current income and
capital appreciation by investing in a globally
diversified portfolio of high quality debt
securities denominated in the U.S. Dollar and a
range of foreign currencies.
Alliance Premier Growth Premier Growth Portfolio - seeks growth of
Sub-account capital rather than current income.
Keyport Variable Investment Trust
Colonial Growth & Income Colonial-Keyport Growth and Income
Sub-account Fund - seeks primarily income and long-
term capital growth and, secondarily,
preservation of capital.
Colonial Strategic Income Colonial-Keyport Strategic Income Fund -
Sub-account seeks a high level of current income, as is
consistent with prudent risk and maximizing
total return, by diversifying investments
primarily in U.S. and foreign government and
high yield, high risk corporate debt securities.
Colonial Int'l Fund for Colonial-Keyport International Fund for Growth -
Growth Sub-account seeks long-term capital growth, by investing
primarily in non-U.S. equity securities.
Colonial U.S. Fund for Colonial-Keyport U.S. Fund for Growth -
Growth Sub-account seeks growth exceeding over time the S&P
500 Index (Standard & Poor's Corporation
Composite Price Index) performance.
Colonial Utilities Colonial-Keyport Utilities Fund - seeks
Sub-account primarily current income and, secondarily,
long-term capital growth.
Newport Tiger Newport-Keyport Tiger Fund - seeks long-
Sub-account term capital growth by investing primarily
in equity securities of companies located in
the four Tigers of Asia (Hong Kong, Singapore,
South Korea and Taiwan) and the other mini-
Tigers of East Asia (Malaysia, Thailand,
Indonesia, China and the Philippines).
MFS Variable Insurance Trust
MFS Emerging Growth MFS Emerging Growth Series - seeks to provide
Sub-account long-term growth of capital.
MFS Research MFS Research Series - seeks to provide long-term
Sub-account growth of capital and future income.
SteinRoe Variable Investment Trust
SteinRoe Cap Appreciation Capital Appreciation Fund - seeks capital growth
Sub-account by investing primarily in common stocks,
convertible securities, and other securities
selected for prospective capital growth.
SteinRoe Cash Income Cash Income Fund - seeks high current income
Sub-account from short-term money market instruments
("Money Market" Sub-account) while emphasizing preservation of capital and
maintaining excellent liquidity.
SteinRoe Managed Assets Managed Assets Fund - seeks high total inves-
Sub-account tment return through investment in a changing
mix of securities.
SteinRoe Managed Growth Managed Growth Stock Fund - seeks long-term
Stock Sub-account growth of capital through investment primarily
in common stocks.
SteinRoe Mortgage Securities Mortgage Securities Income Fund - seeks highest
Income Sub-account possible level of current income consistent with
safety of principal and maintenance of liquidity
through investment primarily in mortgage-backed
securities.
Sub-accounts investing directly in securities - None.
[Variable Account [M] is an investment company variable separate account
which invests directly in securities, organized in and governed by the laws
of the State of Massachusetts, Our state of domicile. Variable Account [M]
is divided into Sub-accounts. The investment advisor to each Sub-account is
set forth opposite each Sub-account shown below:
Sub-account Investment Advisor
[Currently, none] [Currently, none] ]
The Fixed Account
[The Fixed Account is part of Our General Account, which consists of all of
Our assets except the assets of the Variable Account and the assets of other
separate accounts that We maintain. Subject to applicable law, We have sole
discretion over investments of the assets of the Fixed Account. If You
allocate assets to the Fixed Account, Your accumulation values and annuity
payments will have guaranteed minimums.
Before the Income Date, Your interest in the Fixed Account is measured by the
Fixed Account Value. When annuity payments begin, the payee's interest in
the Fixed Account is measured by the amount of each periodic payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Certificate is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with
Your selection at the Certificate Date. You may change such selection by
Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus the
interest subsequently credited on those payments; plus
(2) any Variable Account value transferred to the Fixed Account plus
the
interest subsequently credited on the transferred value; less
(3) any prior partial withdrawals from the Fixed Account;less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account
at rates declared by Us for Guarantee Periods of one [or more] year[s] from
the month and day of allocation. The minimum Guaranteed Interest Rate is
[3%] per year.]
[Certificate Owner Services
The Programs. [Liberty Life offers [the following] investment related
program[s] which [is] are available only prior to the Income Date: [Dollar
Cost Averaging;] [Capital Protection Plus]; [and] [Systematic Withdrawal
Programs]. [A Rebalancing Program is available prior to and after the Income
Date.] Under [each] [this] Program, the related transfers between and among
Sub-Accounts and the Fixed Account are not counted as one of the [twelve]
free transfers. Each Program[s] has its own requirements, as discussed
below. Liberty Life reserves the right to terminate any Program.]
[Dollar Cost Averaging Program. The program periodically transfers
Accumulation Units from the SteinRoe Cash Income Sub-Account or the One-Year
Guarantee Period of the Fixed Account to other Sub-Accounts selected by the
Certificate Owner. The program allows a Certificate Owner to invest in
Variable Sub-Accounts over time rather than having to invest in those Sub-
Accounts all at once. The program is available for initial and subsequent
Purchase Payments and for Certificate Value transferred into the SteinRoe
Cash Income Sub-Account or the One-Year Guarantee Period. Under the program,
Liberty Life makes automatic transfers on a periodic basis out of the
SteinRoe Cash Income Sub-Account or the One-Year Guarantee Period into one or
more of the other available Sub-Accounts (Liberty Life reserves the right to
limit the number of Sub-Accounts the Certificate Owner may choose but there
are currently no limits). The program will automatically end if the Income
Date occurs. Liberty Life reserves the right to end the program at any time
by sending the Certificate Owner a notice one month in advance.]
[Rebalancing Program. In accordance with the Certificate Owner's election
of the relative Purchase Payment percentage allocations, Liberty Life will
automatically rebalance the Certificate Value of each Sub-Account either
monthly, quarterly, semi-annually, or annually. On the last day of the
period selected, Liberty Life will automatically rebalance the Certificate
Value in each of the Sub-Accounts to match the current Purchase Payment
percentage allocations. The Program may be terminated at any time and the
percentages may be altered by Written Request. Certificate Value allocated to
the Fixed Account is not subject to automatic rebalancing. After the Income
Date, automatic rebalancing applies only to variable annuity payments and
Liberty Life will rebalance the number of Annuity Units in each Sub-Account.]
[Systematic Withdrawal Program. Liberty Life will make monthly, quarterly,
semi-annually or annual distributions of a predetermined dollar amount to the
Certificate Owner that has enrolled in the Systematic Withdrawal Program. The
Certificate Owner may specify the amount of each partial withdrawal, subject
to a minimum of $100. Systematic withdrawals may only be made from the Sub-
Accounts and the One Year Guarantee Period of the Fixed Account. In each
Certificate Year, portions of Certificate Value may be withdrawn without the
imposition of any Contingent Deferred Sales Charge ("Free Withdrawal
Amount"). If withdrawals pursuant to the Program are greater than the Free
Withdrawal Amount, the amount of the withdrawals greater than the Free
Withdrawal Amount will be subject to the applicable Contingent Deferred Sales
Charge. Any unrelated voluntary partial withdrawal a Certificate Owner makes
during a Certificate Year will be aggregated with withdrawals pursuant to the
Program to determine the applicability of any Contingent Deferred Sales
Charge under the Certificate provisions regarding partial withdrawals.]
[Capital Protection Plus Under this program, Liberty Life will allocate part
of the Purchase Payment to the Guarantee Period selected by the Certificate
Owner so that such part, based on that Guarantee Period's interest rate in
effect on the date of allocation, will equal at the end of the Guarantee
Period the total Purchase Payment. The rest of the Purchase Payment will be
allocated to the Sub-Account(s) of the Variable Account based on the
Certificate Owner's allocation. If any part of the Fixed Account Value is
surrendered or transferred before the end of the Guarantee Period, the Value
at the end of that Period will not equal the original Purchase Payment
amount.]
Definitions (continued)
Certificate: The document issued to a Certificate Owner to evidence a
Certificate Owner's participation under the Group Contract. The Certificate
summarizes the benefits and provisions of the Group Contract.
Certificate Anniversary: An anniversary of the Certificate Date.
Certificate Date: The date a Certificate is issued to a Certificate Owner.
The Certificate Date is shown on the Certificate Schedule.
Certificate Owner: The person who owns a Certificate under the Group
Contract. Any Joint Certificate Owners and the Certificate Owner own the
Certificate equally with rights of survivorship.
Certificate Value: The sum of the Certificate Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account during the
Accumulation Period.
Certificate Year: The first Certificate Year is the annual period which
begins on the Certificate Date. Subsequent Certificate Years begin on each
Certificate Anniversary.
Eligible Fund: An investment entity shown on the Certificate Schedule.
Fixed Account: The account We establish to support Fixed Allocations. The
Certificate Schedule shows whether the Fixed Account is available under the
Certificate.
Fixed Account Value: The value of all Fixed Account amounts accumulated
under this Certificate prior to the Income Date.
Fixed Allocation: An amount allocated to the Fixed Account that is credited
with a Guaranteed Interest Rate for a specified Guarantee Period.
Fixed Annuity: An annuity with a series of payments made during the Annuity
Period which are guaranteed as to dollar amount by Us.
General Account: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate accounts.
Group Contract Owner: The person or entity to which the Group Contract is
issued.
Guaranteed Interest Rate: The effective annual interest rate which We will
credit for a specified Guarantee Period.
Guarantee Period: The period of year(s) a rate of interest is guaranteed to
be credited within the Fixed Account.
Income Date: The date on which Annuity Payments begin. The Income Date is
shown on the Certificate Schedule.
In Force: The status of a Certificate before the Income Date so long as it
has not been totally surrendered and there has not been a death of a
Certificate Owner or Joint Certificate Owner that will cause the Certificate
to end within five years of the date of death.
Office: Our service office shown on the Certificate Schedule.
Person: A human being, trust, corporation, or any other legally recognized
entity.
Portfolio: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
Purchase Payment: A payment made by or on behalf of a Certificate Owner with
respect to a Certificate.
Sub-account: Variable Account assets are divided into Sub-accounts. Assets
of each Sub-account will be invested in shares of a Portfolio of an Eligible
Fund, or directly in portfolio securities.
Valuation Date: Each day on which We and the New York Stock Exchange
("NYSE") are open for business, or any other day that the Securities and
Exchange Commission requires that mutual funds, unit investment trusts or
other investment portfolios be valued.
Valuation Period: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business on the
next succeeding Valuation Date.
Variable Account: Our Variable Account(s) shown on the Certificate Schedule.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-accounts of the
Variable Account.
We, Us, Our: Liberty Life Assurance Company of Boston.
Written Request: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
You, Your: The Certificate Owner and any Joint Certificate Owners.
General Provisions
Purchase Payments
The initial Purchase Payment is due on the Certificate Date. It must be paid
at Our Office in United States currency. Coverage under a Certificate does
not take effect until We have accepted the initial Purchase Payment during
Your lifetime. Each Purchase Payment after the Certificate Date must be at
least the amount shown on the Certificate Schedule. Provided the Certificate
Value under a Certificate does not go to zero, a Certificate will stay in
force until the Income Date even if You make no payments after the initial
one. We reserve the right to reject any subsequent Purchase Payment.
Allocation of Purchase Payments
Your initial Purchase Payment is allocated to the Sub-accounts of the
Variable Account, and to the Fixed Account if available, in accordance with
the selections made by You at the Certificate Date. Unless otherwise changed
by You, subsequent Purchase Payments are allocated in the same manner as the
initial Purchase Payment. Allocation of Purchase Payments is subject to the
terms and conditions imposed by Us. We reserve the right to allocate initial
Purchase Payments to the Money Market Sub-account until the expiration of the
Right to Examine Certificate period set forth on the first page of the
Certificate.
The Contract
The Group Contract, including the application, if any, and any attached rider
or endorsement constitute the entire contract between the Group Contract
Owner and Us. All statements made by the Group Contract Owner, any
Certificate Owner or any Annuitant will be deemed representations and not
warranties. No such statement will be used in any contest unless it is
contained in the application signed by the Group Contract Owner or in a
written instrument signed by the Certificate Owner, a copy of which has been
furnished to the Certificate Owner, the Beneficiary or to the Group Contract
Owner.
Only Our President or Secretary may agree to change any of the terms of the
Group Contract. Any changes must be in writing. Any change to the terms of
a Certificate must be in writing and with Your consent, unless provided
otherwise by the Group Contract and the Certificate.
To assure that the Group Contract and the Certificate will maintain their
status as a variable annuity under the Internal Revenue Code, We reserve the
right to change the Group Contract and any Certificate issued thereunder to
comply with future changes in the Internal Revenue Code, any regulations or
rulings issued thereunder, and any requirements otherwise imposed by the
Internal Revenue Service. The Group Contract Owner and the affected
Certificate Owner will be sent a copy of any such amendment.
We reserve the right, subject to the approval of the New York Superintendent
of Insurance and compliance with U.S. laws as currently applicable or
subsequently changed, to: (a) operate the Variable Account in any form
permitted under the Investment Company Act of 1940, as amended, (the "1940
Act"), or in any other form permitted by law; (b) take any action necessary
to comply with or obtain and continue any exemptions from the 1940 Act, or to
comply with any other applicable law; (c) transfer any assets in any Sub-
account to another Sub-account, or to one or more separate investment
accounts, or the General Account; or to add, combine or remove Sub-accounts
in the Variable Account; and (d) change the way We assess charges, so long as
We do not increase the aggregate amount beyond that currently charged to the
Variable Account and the Eligible Funds in connection with this Certificate.
If the shares of any of the Eligible Funds should become unavailable for
investment by the Variable Account or if in Our judgment further investment
in such Portfolio shares should become inappropriate in view of the purpose
of the Certificate, We may add or substitute shares of another mutual fund
for the Portfolio shares already purchased under the Certificate. No
substitution of Portfolio shares in any Sub-account may take place without
prior approval of the Securities and Exchange Commission and notice to the
affected Certificate Owners, to the extent required by the 1940 Act.
Certificate Owner
You are the Certificate Owner of this Certificate. You have all rights and
may receive all benefits under a Certificate. A Certificate Owner is the
person designated as such on the Certificate Date, unless changed. You may
exercise all rights of this Certificate while it is In Force, subject to the
rights of (a) any assignee under an assignment filed with Us, and (b) any
irrevocably named Beneficiary.
Joint Certificate Owner
A Certificate can be owned by Joint Certificate Owners. Upon the death of
any Certificate Owner or Joint Certificate Owner, the surviving owner(s) will
be the primary Beneficiary(ies). Any other beneficiary designation will be
treated as a Contingent Beneficiary unless otherwise indicated in a Written
Request filed with Us.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by You at the Certificate Date, unless
changed prior to the Income Date. Any change of Annuitant is subject to Our
underwriting rules then in effect. The Annuitant may not be changed in a
Certificate which is owned by a non-natural person. You may name a
Contingent Annuitant. The Contingent Annuitant becomes the Annuitant if the
Annuitant dies while this Certificate is In Force. If the Annuitant dies
and no Contingent Annuitant has been named, We will allow You sixty days to
designate someone other than Yourself as Annuitant. You will be the
Contingent Annuitant unless You name someone else. If the Certificate is
owned by a non-natural person, the death of the Annuitant will be treated as
the death of the Certificate Owner and a new Annuitant may not be designated.
Beneficiary
The Beneficiary is the person who controls the Certificate if any Certificate
Owner dies prior to the Income Date. If the Certificate is owned by Joint
Certificate Owners, upon the death of any Certificate Owner or Joint
Certificate Owner, the surviving owner(s) will become the primary
Beneficiary. Any other beneficiary designation will be treated as a
Contingent Beneficiary unless otherwise indicated in a Written Request filed
with Us. If You name more than one Person as Primary Beneficiary or as
Contingent Beneficiary, and do not state otherwise on an application or in a
Written Request to Us, any non-survivors will not receive a benefit. The
survivors will receive equal shares. Subject to the rights of any
irrevocable Beneficiary(ies), You may change primary or contingent
Beneficiary(ies). A change must be made by Written Request and will be
effective as of the date the Written Request is signed. We will not be
liable for any payment We make or action We take before We receive the
Written Request.
Group Contract Owner
The Group Contract Owner has title to the Group Contract. The Group Contract
and any amount accumulated under any Certificate are not subject to the
claims of the Group Contract Owner or any of its creditors. The Group
Contract Owner may transfer ownership of this Group Contract. Any transfer
of ownership terminates the interest of any existing Group Contract Owner.
It does not change the rights of any Certificate Owner. Nothing in the Group
Contract shall invalidate or impair any right granted to the Certificate
Owner by the Certificate or New York law.
Change of Certificate Owner, Beneficiary or Contingent Annuitant
While this Certificate is In Force, You may by Written Request change the
primary Certificate Owner, Joint Certificate Owner, primary Beneficiary,
Contingent Beneficiary, Contingent Annuitant, or in certain instances, the
Annuitant. An irrevocably named Person may be changed only with the written
consent of such Person. The change will be effective, following Our receipt
of the Written Request, as of the date the Written Request is signed. The
change will not affect any payments We make or actions We take prior to the
time We receive the Written Request.
Assignment of the Certificate
You may assign this Certificate at any time while it is In Force. The
assignment must be in writing and a copy must be filed at Our Office. Your
rights and those of any revocably named Person will be subject to the
assignment. An assignment will not affect any payments We make or actions We
take before We receive the assignment. We are not responsible for the
validity of any assignment.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Annuity
Payments have begun, any underpayment(s) that have been made plus interest
thereon at a rate of 5% per year will be paid in full with the next Annuity
Payment. Any overpayment plus interest thereon at a rate of 5% per year,
unless repaid to Us in one sum, will be deducted from future Annuity Payments
otherwise due until We are repaid in full.
Non-Participating
This Certificate does not participate in Our divisible surplus.
Evidence of Death, Age, Sex or Survival
If a Certificate provision relates to the death of a natural Person, We will
require proof of death before We will act under that provision. Proof of
death shall be: (a) a certified death certificate; or (b) a certified decree
of a court of competent jurisdiction as to the finding of death; or (c) a
written statement by a medical doctor who attended the deceased; or (d) any
other document constituting due proof of death under applicable state law.
If Our action under a Certificate provision is based on the age, sex, or
survival of any Person, We may require evidence of the particular fact before
We act under that provision.
Protection of Proceeds
No Beneficiary or payee may commute or assign any payments under a
Certificate before they are due. To the extent permitted by law, no payments
shall be subject to the debts of any Beneficiary or payee or to any judicial
process for payment of those debts.
Reports
We will send Certificate Owners a report that shows the Certificate Value at
least once each Certificate Year. We will send any other reports that may be
required by law.
Taxes
Any taxes paid to any governmental entity relating to a Certificate will be
deducted from the Purchase Payments or Certificate Value. We may, in Our
sole discretion, delay the deduction until a later date. By not deducting
tax payments at the time of Our payment, We do not waive any right We may
have to deduct amounts at a later date. We will, in Our sole discretion,
determine when taxes relate to a Certificate or to the operation of the
Variable Account. We reserve the right to establish a provision for federal
income taxes if We determine, in Our sole discretion, that We will incur a
tax as a result of the operation of the Variable Account. Such a provision
will be reflected in the Accumulation and Annuity Unit Values. We will
deduct for any income taxes incurred by Us as a result of the operation of
the Variable Account whether or not there was a provision for taxes and
whether or not it was sufficient. We will deduct from any payment under this
Certificate any withholding taxes required by applicable law.
Regulatory Requirements
All values payable under a Certificate will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Certificate is delivered.
Suspension or Deferral of Payments
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal of
the assets and securities of the Variable Account is not reasonably
practicable; or
(4) the Securities and Exchange Commission, by order or pronouncement,
so permits for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission govern as to whether the conditions described in (2) and (3) above
exist.
We reserve the right to delay payment of amounts allocated to the Fixed
Account for up to six months.
Variable Account Provisions
The Variable Account
The Variable Account(s) is designated on the Certificate Schedule and
consists of assets set aside by Us, which are kept separate from Our general
assets and all other variable account assets We maintain. We own the assets
of the Variable Account. Variable Account assets equal to reserves and other
contract liabilities will not be chargeable with liabilities arising out of
any other business We may conduct. We may transfer to Our General Account
assets which exceed the reserves and other liabilities of the Variable
Account. Income and realized and unrealized gains or losses from assets in
the Variable Account are credited to or charged against the account without
regard to other income, gains or losses in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-accounts
which are available under the Certificate are shown on the Certificate
Schedule. The assets of the Sub-accounts of the unit investment trust
variable separate account are allocated to the Eligible Fund(s) and the
Portfolio(s), if applicable, within an Eligible Fund shown on the Certificate
Schedule. The assets of the Sub-accounts of the investment company variable
separate account, if applicable, are invested in portfolios of securities
designed to meet the objectives of the Sub-Account shown on the Certificate
Schedule. We may, from time to time, add additional Sub-accounts, Eligible
Funds or Portfolios to those shown on the Certificate Schedule. You may be
permitted to transfer Certificate Values or allocate Purchase Payments to the
additional Sub-Accounts, Eligible Funds or Portfolios. However, the right to
make such transfers or allocations will be limited by the terms and
conditions imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account,
to combine two or more Sub-accounts or to substitute a new Portfolio for the
Portfolio in which a Sub-account invests. A substitution may become
necessary if, in Our discretion, a Portfolio or Sub-account no longer suits
the purposes of the Group Contract. This may happen: due to a change in
laws or regulations or a change in a Portfolio's investment objectives or
restrictions; because the Portfolio or Sub-account is no longer available for
investment; or for some other reason. We will obtain any prior approvals
that may be required from the insurance department of Our state of domicile,
the New York Superintendent of Insurance and from the SEC or any other
governmental entity before making such a substitution.
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
(2) Operate a Variable Account as a management company under the 1940
Act, if it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the
1940
Act, if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
Valuation of Assets
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
Accumulation Units
Your Variable Account value will fluctuate in accordance with the investment
results of the Sub-accounts to which You have allocated Your Purchase
Payments or Certificate Value. In order to determine how these fluctuations
affect Your Certificate Value, We use an Accumulation Unit value.
Accumulation Units are used to account for all amounts allocated to or
withdrawn from the Sub-accounts of the Variable Account as a result of
Purchase Payments, partial withdrawals, transfers, or charges deducted from
the Certificate Value. We determine the number of Accumulation Units of a
Sub-account purchased or canceled by dividing the amount allocated to, or
withdrawn from, the Sub-account by the dollar value of one Accumulation Unit
of the Sub-account as of the end of the Valuation Period during which We
receive the request for the transaction.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-account was initially set at $10.
Subsequent Accumulation Unit Values for each Sub-account are determined by
multiplying the Accumulation Unit Value for the immediately preceding
Valuation Period by a net investment factor for the Sub-account for the
current period. This factor may be greater or less than 1.0; therefore, the
Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
We calculate the net investment factor for each Sub-account investing in
shares of mutual funds by dividing (a) by (b) and then subtracting (c) where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which the
Sub-account invests at the end of the Valuation Period; plus
(ii) any dividend per share declared for the Portfolio that has an
ex-dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual rate
for the Mortality and Expense Risk Charge, for the
Administrative Charge, and for the Distribution Charge, if any,
which are shown on the Certificate Schedule; plus
(ii) a charge factor, if any, for any tax provision established by
Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing
directly in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the end of the
preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current Valuation
Period; less
(iii) any capital losses, realized or unrealized, charged against the
assets during the current Valuation Period; less
(iv) all operating and investment expenses relating to the assets
that are incurred during the current Valuation Period.
(b) is the value of the assets in the Sub-account at the end of the
preceding Valuation Period.
Mortality and Expense Risk Charge
Each Valuation Period We deduct a Mortality and Expense Risk Charge from each
Sub-account of the Variable Account which is equal, on an annual basis, to
the amount shown on the Certificate Schedule. The Mortality and Expense Risk
Charge compensates Us for assuming the mortality and expense risks with
respect to the Certificates We issue. We guarantee the dollar amount of each
Annuity Payment after the first Annuity Payment will not be affected by
variations in mortality or expense experience.
Administrative Charge
Each Valuation Period We deduct an Administrative Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Administrative Charge compensates Us for the costs
associated with administration of the Variable Account and the Certificates
We issue.
Distribution Charge
Each Valuation Period We deduct a Distribution Charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The Distribution Charge compensates Us for the costs
associated with the distribution of the Certificates We issue.
Certificate Maintenance Charge
We deduct a Certificate Maintenance Charge from the Certificate Value by
canceling Accumulation Units from each applicable Sub-account to reimburse
Us for expenses relating to the maintenance of the Certificate. We will
deduct the Certificate Maintenance Charge from the Sub-accounts of the
Variable Account in the same proportion that the amount of Certificate Value
in each Sub-account bears to the Certificate Value. The Certificate
Maintenance Charge is shown on the Certificate Schedule. The Certificate
Maintenance Charge will be deducted from the Certificate Value on each
Certificate Anniversary during the Accumulation Period.
If a total surrender is made on a date other than a Certificate Anniversary,
the Certificate Maintenance Charge will be deducted at the time of surrender.
During the Annuity Period, the Certificate Maintenance Charge will be
deducted on a pro-rata basis from each Annuity Payment.
Transfers
Subject to any limitation We impose on the number of transfers permitted in a
Certificate Year, You may transfer all or part of Your Certificate Value
among the Sub-accounts and the Fixed Account, if any, by Written Request or
by telephone without the imposition of any fees or charges. Transfers among
the Sub-accounts and the Fixed Account are permitted only during the
Accumulation Period. The number of permitted transfers, and the charge for
transfers in excess of that number, are shown on the Certificate Schedule.
All transfers are subject to the following:
(1) If more than the number of free transfers, shown on the Certificate
Schedule, are made in a Certificate Year, We will deduct a transfer charge,
shown on the Certificate Schedule, for each subsequent transfer. The
transfer fee will be deducted from the Sub-account from which the transfer is
made. However, if You transfer Your entire interest in a Sub-account, the
transfer fee will be deducted from the amount transferred. If You make a
transfer from more than one Sub-account, any transfer fee will be allocated
pro-rata among such Sub-accounts in proportion to the amount transferred from
each. The deduction of any fees We impose on such transfers will not exceed
the maximum listed on page 3.
(2) During the Annuity Period, transfers of values between Sub-accounts
will be made by converting the number of Annuity Units being transferred to
the number of Annuity Units in the Sub-account to which a transfer is made,
so that the next Annuity Payment, if it were made at that time, would be the
same amount that it would have been without the transfer. Thereafter,
Annuity Payments will reflect changes in the value of the new Annuity Units.
(3) The minimum amount which can be transferred is shown on the
Certificate Schedule. The minimum amount which must remain in a Sub-account
after a transfer is shown on the Certificate Schedule.
(4) If 100% of the value of any Sub-account is transferred and the
current allocation for Purchase Payments includes that Sub-account, the
allocation for future Purchase Payments will change to reflect Your
allocation of Certificate Value following the transfer.
(5) We reserve the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privileges described
above.
We will not be liable for transfers made in accordance with Your
instructions. All amounts and Accumulation Units will be determined as of
the end of the Valuation Period in which We receive the request for
transfer.
Partial Withdrawals and Total Surrender
Partial Withdrawals
During the Accumulation Period while the Certificate is In Force, You may,
upon Written Request, make a partial withdrawal, subject to the provisions
and limitations shown on the Certificate Schedule. For purposes of
determining whether a surrender charge is applicable to Your partial
withdrawal:
(1) Your partial withdrawal will first be taken from the portion of
Your
Certificate Value which is in excess of Your Purchase Payments, and
then from Your Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in the
order in which the Purchase Payments were made, starting with the
first.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-account in the ratio that Your interest in the Sub-account
bears to Your Certificate Value in all the Sub-accounts. You must specify by
Written Request in advance if You want Accumulation Units to be canceled in a
manner other than the method described above. If there is no value or
insufficient value in the Variable Account, then the amount withdrawn, or the
insufficient portion, will be deducted from the Fixed Account. If You have
multiple Guarantee Periods, We will deduct such amount from each Guarantee
Period's values in the ratio that each Period's values bears to the total
Fixed Account Value. You must specify by Written Request in advance if You
want multiple Guarantee Periods to be reduced in a manner other than the
method described above. Any amount deducted from the Fixed Account Value may
be subject to a market value adjustment, if applicable.
Each partial withdrawal must be for an amount not less than the amount shown
on the Certificate Schedule. The Certificate Value which must remain in a
Certificate is shown on the Certificate Schedule. The Certificate Schedule
also shows any charge.
Total Surrender
During the Accumulation Period while the Certificate is In Force, You may,
upon Written Request, make a total surrender of the Certificate Withdrawal
Value. The Certificate Withdrawal Value is:
(1) the Certificate Value as of the end of the Valuation Period during
which We receive a Written Request for a withdrawal or surrender;
less
(2) any applicable taxes not previously deducted; less
(3) any Surrender Charge; less
(4) any Certificate Maintenance Charge.
The Fixed Account Value, which is a component of the Certificate Value, may
be subject to a market value adjustment, if applicable.
We will pay the amount of any withdrawal or surrender within seven days
unless the Suspension or Deferral of Payments Provision is in effect.
Death Provisions
Death of Certificate Owner
These provisions apply if, during the Accumulation Period while the
Certificate is In Force, the Certificate Owner or any Joint Certificate Owner
dies (whether or not the decedent is also the Annuitant) or the Annuitant
dies under a Certificate owned by a non-natural Person. The "designated
beneficiary" will control the Certificate after such a death. This
"designated beneficiary" will be the first Person among the following who is
alive on the date of death: Certificate Owner; Joint Certificate Owner;
primary Beneficiary; Contingent Beneficiary; and Certificate Owner's estate.
If the Certificate Owner and Joint Certificate Owner are both alive, they
shall be the "designated beneficiary" together.
If the decedent's surviving spouse (if any) is the sole "designated
beneficiary", the surviving spouse will automatically become the new sole
Certificate Owner as of the date of the death. And, if the Annuitant is the
decedent, the new Annuitant will be any living Contingent Annuitant,
otherwise the surviving spouse. The Certificate may stay in force until
another death occurs (i.e., until the death of the Certificate Owner or Joint
Certificate Owner). Except for this paragraph, all of "Death Provisions" will
apply to that subsequent death.
In all other cases, the Certificate may stay in force up to five years from
the date of death. During this period, the "designated beneficiary" may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to surrender the Certificate for its
Certificate Withdrawal Value. If this Certificate is still in force at the
end of the five-year period, We will automatically end it then by paying to
the "designated beneficiary" the Certificate Withdrawal Value without the
deduction of any applicable surrender charges. If the "designated
beneficiary" is not alive then, We will pay any Person(s) named by the
"designated beneficiary" in a Written Request; otherwise the "designated
beneficiary's" estate.
Death of Annuitant
These provisions apply if during the Accumulation Period while the
Certificate is In Force, (a) the Annuitant dies, (b) the Annuitant is not an
Owner, and (c) the Owner is a natural person. The Certificate will continue
In Force after the Annuitant's death. The new Annuitant will be any living
Contingent Annuitant, otherwise the Certificate Owner.
Payment of Benefits
Instead of receiving a lump sum, You or any "designated beneficiary" may by
Written Request direct that We pay any benefit of $2,000 or more under an
Annuity Option that meets the following: (a) the first payment to the
"designated beneficiary" must be made no later than one year after the date
of death; (b) payments must be made over the life of the "designated
beneficiary" or over a period not extending beyond that person's life
expectancy; and (c) any Annuity Option that provides for payments to continue
after the death of the "designated beneficiary" will not allow the successor
payee to extend the period of time over which the remaining payments are to
be made.
Annuity Provisions
General
If the Certificate is In Force on the Income Date, the Adjusted Certificate
Value will be applied under the Annuity Option selected by You. Annuity
Payments may be made on a fixed or variable basis or both.
Income Date
The Income Date may be selected by You. It is shown on the Certificate
Schedule. The Income Date can be any time after the Certificate Date for
variable payments and any time after the first Certificate Anniversary for
fixed payments. The Income Date may not be later than the earlier of when
the Annuitant reaches attained age 90 or that required under state law. If
no Income Date is selected, it will be the earlier of when the Annuitant
reaches attained age 90 or the maximum date permitted under state law, if
any.
Prior to the Income Date, You may change the Income Date by Written Request.
Any change must be requested at least 30 days prior to the new Income Date.
Selection of an Annuity Option
An Annuity Option may be selected by You. If no Annuity Option is selected,
Option B will automatically be applied. Prior to the Income Date, You may
change the Annuity Option selected by Written Request. Any change must be
requested at least 30 days prior to the Income Date.
Frequency and Amount of Annuity Payments
Annuity Payments are paid in monthly installments unless quarterly, semi-
annual or annual payments are chosen. The Adjusted Certificate Value is
applied to the Annuity Table for the Annuity Option selected. If the
Adjusted Certificate Value to be applied under an Annuity Option is less than
$2,000, We reserve the right to make a lump sum payment in lieu of Annuity
Payments. If the Annuity Payment would be or becomes less than $100, We will
reduce the frequency of payments to a longer interval which will result in
each payment being at least $100.
Annuity Options
The following Annuity Options or any other Annuity Option acceptable to Us
may be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Annuity Payments for a
chosen number of years, not less than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to continue for
the remainder of the period, he/she may elect to have the present value of
the remaining payments commuted and paid in a lump sum. During the payment
period of a Variable Annuity, the payee may elect by Written Request to
receive the following amount: (a) the present value of the remaining payments
commuted; less (b) any surrender charge that may be due by treating the value
defined in (a) as a surrender. Instead of receiving a lump sum, the payee
may elect another Annuity Option. The amount applied to that Option would
not be reduced by the charge defined in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Annuity Payments
during the lifetime of the payee and in any event for 10 years certain. If
the payee dies during the guaranteed payment period and the Beneficiary does
not desire payments to continue for the remainder of the guaranteed period,
he/she may elect to have the present value of the guaranteed payments
remaining commuted and paid in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Annuity Payments payable during
the joint lifetime of the payee and a designated second natural person and
then during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee may
not withdraw or otherwise end an Annuity Option after it begins. Payments
will end upon the payee's death unless the Annuity Option provides for
payments continuing to a successor payee. No successor payee may extend the
period of time over which the remaining payments are to be made.
Annuity
If You select a Fixed Annuity, the Adjusted Certificate Value is allocated to
the General Account and the Annuity is paid as a Fixed Annuity. If You
select a Variable Annuity, the Adjusted Certificate Value will be allocated
to the Sub-accounts of the Separate Account in accordance with the selection
You make, and the Annuity will be paid as a Variable Annuity. You can also
select a combination of a Fixed and Variable Annuity and the Adjusted
Certificate Value will be allocated accordingly. If You don't select between
a Fixed Annuity and a Variable Annuity, any Adjusted Certificate Value in the
Variable Account will be applied to a Variable Annuity and any Adjusted
Certificate Value in the Fixed Account will be applied to a Fixed Annuity.
The Adjusted Certificate Value will be applied to the applicable Annuity
Table contained in the Certificate based upon the Annuity Option You select.
If, as of the Income Date, the current Annuity Option rates applicable to the
class of Certificates issued under the Group Contract provide an initial
Annuity Payment greater than the initial Annuity Payment guaranteed under the
applicable Annuity Table in the Certificate, the greater payment will be
made.
Fixed Annuity
The minimum dollar amount of each Fixed Annuity Payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. After the initial
Fixed Annuity payment, the payments will not change regardless of investment,
mortality or expense experience.
Variable Annuity
Variable Annuity Payments reflect the investment performance of the Variable
Account in accordance with the allocation of the Adjusted Certificate Value
to the Sub-accounts during the Annuity Period. Variable Annuity payments are
not guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. The dollar amount
of Variable Annuity payments for each applicable Sub-account after the first
Variable Annuity Payment is determined as follows:
(1) the dollar amount of the first Variable Annuity payment is divided
by the value of an Annuity Unit for each applicable Sub-account as of the
Income Date. This sets the number of Annuity Units for each monthly payment
for the applicable Sub-account. The number of Annuity Units for each
applicable Sub-account remains fixed during the Annuity Period;
(2) the fixed number of Annuity Units per payment in each Sub-account
is multiplied by the Annuity Unit Value for that Sub-account for the
Valuation Period for which the payment is due. This result is the dollar
amount of the payment for each applicable Sub-account.
The total dollar amount of each Variable Annuity payment is the sum of all
Sub-account Variable Annuity payments reduced by the applicable portion of
the Certificate Maintenance Charge.
Annuity Unit
The value of any Annuity Unit for each Sub-Account of the Separate Account
was initially set at $10.
The Sub-account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
(1) the net investment factor calculated as set forth on pages 11-12
(but without the Distribution Charge, if any) for the current Valuation
Period is multiplied by the value of the Annuity Unit for the Sub-account for
the immediately preceding Valuation Period.
(2) the result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Valuation Period equivalent of the Assumed
Investment Rate for the number of days in the current Valuation Period. The
Assumed Investment Rate is equal to 5% per year.
The value of an Annuity Unit may increase or decrease from Valuation Period
to Valuation Period.
Using the Tables
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first annuity
payment will be based on an age a specified number of years younger than the
person's then-attained age (i.e., age last birthday). This age setback is as
follows:
Date of First Payment Age Setback
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next
section. Upon request, We will tell You any such amount.
Basis of Calculation
Tables 1 and 4 are based on interest at 5% and 3%, respectively. Tables 2,
3, 5, and 6 are based on the 1983 Individual Annuity Valuation Tables (sex
distinct) with interest at 5% (Tables 2 and 3) and 3% (Tables 5 and 6),
projected dynamically with Projection Scale G.
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION 1 FOR EACH
$1,000 APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $18.74 12 $9.16 19 $6.71 25 $5.76
6 15.99 13 8.64 20 6.51 26 5.65
7 14.02 14 8.20 21 6.33 27 5.54
8 12.56 15 7.82 22 6.17 28 5.45
9 11.42 16 7.49 23 6.02 29 5.36
10 10.51 17 7.20 24 5.88 30 5.28
11 9.77 18 6.94
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION 2 FOR EACH
$1,000 APPLIED
Age Male Female Age Male Female Age Male Female Age Male Female
30 $4.45 $4.34 47 $5.05 $4.78 64 $6.54 $5.98 80 $9.14 $8.67
31 4.47 4.35 48 5.11 4.82 65 6.68 6.10 81 9.29 8.86
32 4.50 4.37 49 5.17 4.87 66 6.82 6.22 82 9.44 9.05
33 4.52 4.39 50 5.23 4.92 67 6.97 6.35 83 9.57 9.23
34 4.55 4.41 51 5.29 4.97 68 7.12 6.49 84 9.69 9.40
35 4.57 4.43 52 5.36 5.02 69 7.28 6.63 85 9.81 9.55
36 4.60 4.45 53 5.43 5.08 70 7.44 6.79 86 9.91 9.69
37 4.63 4.47 54 5.50 5.13 71 7.61 6.95 87 10.01 9.82
38 4.67 4.49 55 5.58 5.20 72 7.78 7.12 88 10.10 9.94
39 4.70 4.52 56 5.67 5.27 73 7.95 7.30 89 10.17 10.04
40 4.74 4.55 57 5.76 5.34 74 8.12 7.48 90 10.24 10.13
41 4.78 4.57 58 5.85 5.41 75 8.30 7.67 91 10.30 10.21
42 4.82 4.60 59 5.95 5.49 76 8.47 7.87 92 10.35 10.27
43 4.86 4.64 60 6.06 5.58 77 8.65 8.07 93 10.39 10.33
44 4.91 4.67 61 6.17 5.67 78 8.82 8.27 94 10.43 10.37
45 4.95 4.70 62 6.29 5.77 79 8.98 8.47 96 10.45 10.41
46 5.00 4.74 63 6.41 5.87
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION 3 FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
FEMALE AGE
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $4.24$4.28$4.31$4.34$4.36$4.38$4.40$4.42$4.43$4.44$4.45 $4.45 $4.45
$4.46
35 4.26 4.30 4.35 4.39 4.43 4.47 4.50 4.52 4.54 4.56 4.57 4.57 4.58
4.58
40 4.28 4.33 4.39 4.45 4.51 4.56 4.61 4.65 4.68 4.71 4.73 4.74 4.75
4.75
M 45 4.29 4.35 4.42 4.50 4.58 4.66 4.74 4.80 4.86 4.90 4.93 4.96 4.97
4.98
A 50 4.30 4.37 4.46 4.55 4.66 4.77 4.88 4.98 5.07 5.14 5.20 5.23 5.25
5.27
L 55 4.31 4.39 4.48 4.59 4.73 4.87 5.03 5.18 5.32 5.44 5.53 5.59 5.63
5.65
E 60 4.32 4.40 4.50 4.63 4.78 4.97 5.18 5.40 5.61 5.80 5.96 6.07 6.13
6.17
65 4.33 4.41 4.52 4.65 4.83 5.05 5.31 5.61 5.92 6.23 6.50 6.70 6.83
6.90
A 70 4.33 4.42 4.53 4.68 4.87 5.11 5.42 5.80 6.23 6.70 7.14 7.50 7.75
7.90
G 75 4.34 4.42 4.54 4.69 4.89 5.16 5.50 5.95 6.50 7.15 7.83 8.45 8.92
9.23
E 80 4.34 4.43 4.54 4.70 4.91 5.19 5.56 6.06 6.71 7.55 8.52 9.50 10.34
10.93
85 4.34 4.43 4.55 4.71 4.92 5.21 5.60 6.13 6.86 7.85 9.10 10.52 11.87
12.93
90 4.34 4.43 4.55 4.71 4.93 5.22 5.62 6.18 6.96 8.06 9.55 11.39 13.34
15.05
95 4.34 4.43 4.55 4.71 4.93 5.23 5.64 6.21 7.02 8.20 9.86 12.09 14.69
17.20
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH $1,000
APPLIED
Years Payment Years Payment Years Payment Years Payment
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH $1,000
APPLIED
Age Male Female Age Male Female Age Male Female Age Male Female
30 $3.12 $2.99 47 $3.82 $3.53 64 $5.40 $4.83 80 $8.15 $7.66
31 3.15 3.01 48 3.88 3.58 65 5.55 4.96 81 8.32 7.86
32 3.18 3.03 49 3.94 3.63 66 5.69 5.08 82 8.47 8.06
33 3.21 3.06 50 4.01 3.68 67 5.85 5.22 83 8.61 8.25
34 3.24 3.08 51 4.08 3.74 68 6.01 5.37 84 8.75 8.43
35 3.27 3.11 52 4.15 3.80 69 6.18 5.52 85 8.87 8.60
36 3.31 3.13 53 4.23 3.86 70 6.35 5.68 86 8.98 8.75
37 3.34 3.16 54 4.31 3.93 71 6.52 5.85 87 9.08 8.88
38 3.38 3.19 55 4.39 4.00 72 6.70 6.03 88 9.18 9.01
39 3.42 3.22 56 4.48 4.07 73 6.89 6.21 89 9.26 9.12
40 3.46 3.25 57 4.58 4.15 74 7.07 6.41 90 9.33 9.21
41 3.51 3.29 58 4.68 4.23 75 7.26 6.61 91 9.40 9.30
42 3.55 3.32 59 4.78 4.32 76 7.44 6.81 92 9.45 9.37
43 3.60 3.36 60 4.89 4.41 77 7.63 7.02 93 9.49 9.43
44 3.65 3.40 61 5.01 4.50 78 7.81 7.23 94 9.53 9.47
45 3.71 3.44 62 5.14 4.61 79 7.98 7.45 95 9.55 9.51
46 3.76 3.49 63 5.27 4.72
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH $1,000
APPLIED
COMBINATION OF AGES
FEMALE AGE
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30$2.88$2.93$2.97$3.01$3.04$3.07$3.08$3.10$3.12$3.12$3.12 $3.12 $3.13$ 3.13
35 2.91 2.97 3.03 3.09 3.14 3.18 3.21 3.23 3.25 3.26 3.27 3.27 3.28 3.28
40 2.93 3.01 3.09 3.17 3.24 3.30 3.35 3.39 3.42 3.44 3.46 3.46 3.47 3.47
M 45 2.95 3.04 3.14 3.24 3.34 3.43 3.51 3.58 3.63 3.66 3.69 3.71 3.72 3.72
A 50 2.96 3.06 3.17 3.30 3.43 3.56 3.68 3.79 3.87 3.94 3.98 4.01 4.03 4.03
L 55 2.97 3.07 3.20 3.34 3.50 3.68 3.85 4.02 4.16 4.27 4.34 4.39 4.42 4.44
E 60 2.98 3.09 3.22 3.38 3.56 3.78 4.01 4.25 4.47 4.66 4.80 4.89 4.95 4.98
65 2.98 3.09 3.23 3.40 3.61 3.86 4.15 4.48 4.81 5.12 5.37 5.55 5.66 5.72
A 70 2.99 3.10 3.24 3.42 3.64 3.92 4.26 4.67 5.13 5.60 6.04 6.38 6.60 6.73
G 75 2.99 3.10 3.25 3.43 3.66 3.96 4.34 4.81 5.39 6.06 6.75 7.35 7.79 8.07
E 80 2.99 3.11 3.25 3.44 3.68 3.99 4.39 4.92 5.60 6.45 7.44 8.42 9.23 9.79
85 2.99 3.11 3.26 3.44 3.69 4.00 4.42 4.98 5.73 6.74 8.01 9.44 10.77 11.81
90 2.99 3.11 3.26 3.45 3.69 4.01 4.44 5.02 5.82 6.93 8.43 10.29 12.25 13.95
95 2.99 3.11 3.26 3.45 3.70 4.02 4.45 5.04 5.87 7.05 8.73 10.97 13.58 16.11
<PAGE>
Endorsements
To be inserted only by Us
<PAGE>
POLICY DESCRIPTION
This is a GROUP VARIABLE ANNUITY CERTIFICATE with limited purchase payment
flexibility. This certificate is nonparticipating with no dividends.
EXHIBIT 4(c)
TAX-SHELTERED
LIBERTY LIFE ASSURANCE ANNUITY (TSA)
COMPANY OF BOSTON ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached to be effective on the later of the Certificate Issue Date or the
following date (if any):
Notwithstanding any provision in the Certificate to the contrary:
(a) The Certificate is intended to be a tax-sheltered annuity (TSA) created
for the exclusive benefit of You and Your Beneficiary and qualified
under Section 403(b) of the Internal Revenue Code ("Code"). Any
Purchase Payment must be a rollover or transfer contribution from
another qualified TSA. Your entire interest in the Certificate is
nonforfeitable. You and the Annuitant must be the same person. You may
not designate a Contingent Annuitant or a Joint Certificate Owner. You
may not transfer ownership of the Certificate.
(b) Section 403(b)(11) of the Code provides that distributions from the
Certificate can occur only under the following circumstances: (1) the
amount is being distributed after You attain age 59 1/2, separate from
service, die, or become permanently and totally disabled; (2) the amount
is being distributed in the case of hardship but such amount may not
include any income attributable to Your TSA contributions; or (3) the
amount to be distributed, when added to (i) any amounts previously
distributed from the Certificate and (ii) any amounts distributed after
December 31, 1988 from the TSA(s) that is a predecessor of the
Certificate, does not exceed the value of the predecessor TSA(s) on
December 31, 1988.
(c) You must begin taking distributions no later than the later of April 1
of the calendar year after You attain age 70 1/2 or April 1 of the
calendar year after you retire (the required beginning date). You may
elect to have the Certificate Value distributed in equal or
substantially equal amounts over (1) Your life or the lives of You and
Your designated Beneficiary or (2) a period certain not extending beyond
Your life expectancy or the joint and last survivor expectancy of You
and Your designated Beneficiary. Periodic payments will be made at
intervals of no longer than one year and will fluctuate in accordance
with the investment results of the underlying Sub-account(s) You have
chosen for variable payments but will otherwise be nonincreasing.
Unless You elect otherwise by Written Request, You must apply the
Adjusted Certificate Value to annuity payments that begin on or before
the required beginning date under an annuity payment option that
complies with minimum distribution regulations adopted under Section
403(b)(10) of the Code. You may elect that We pay You the Certificate
Withdrawal Value on or before the required beginning date or, if offered
by Us, that payments begin on or before that date under a partial
withdrawal option that complies with the regulations previously referred
to. If You elect to meet Your distribution requirements through
variable income payments under "Option A: Annuity for a Fixed Number of
Years", the following additional requirements apply. If You are under
age 59 1/2 on the Income Date, the payment period will be equal to Your
life expectancy. If You are 59 1/2 or older on the Income Date, but
under age 70 1/2, the payment period will be for the period You have
specified, which may not extend beyond Your life expectancy or the joint
and last survivor expectancy of You and Your designated Beneficiary. If
You are over age 70 1/2 on the Income Date, the payment period will be
for the period You have specified, which may not exceed Your remaining
life expectancy or the remaining joint and last survivor expectancy of
You and Your designated Beneficiary.
(d) All distributions made hereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code, including the incidental-
death-benefit requirements of Section 401(a)(9)(G) of the Code, and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
(e) In the event of Your death, Your entire interest in the Certificate must
be distributed in conformity with regulations adopted under Section
403(b)(10) of the Code, which regulations contain rules similar to the
after-death-distribution rules of Section 401(a)(9)(G) of the Code and
to the incidental-death-benefit requirements of Section 401(a)(9)(G) of
the Code. These regulations provide that TSAs are subject to the
distribution rules provided in those Sections and in Regulation
1.401(a)(9)-1 and 1.401(a)(9)-2.
If You die after distributions have begun, the remaining portion of Your
interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to Your death. If You die
before distributions have begun, Your entire interest must be
distributed within five years of the date of death. Distributions are
considered to have begun if payments are made on account of Your
reaching Your required beginning date or, if prior to that date, annuity
payments begin to You under (c) above.
The Certificate's provisions relating to the death of the Annuitant are
changed to the extent necessary to conform with the regulations and
statutory rules referred to in this paragraph (e).
(f) Life expectancy and joint and last survivor expectancy will be
calculated by use of the return multiples in Tables V and VI of
Regulation 1.72-9. If We offer a partial withdrawal option, (1) the
life expectancy factor used by us will be based on the joint life
expectancy of You and Your designated Beneficiary unless You make a
Written Request that it be based on just Your life expectancy, (2)
neither Your life expectancy nor the life expectancy of any Beneficiary
will be annually recalculated, and (3) instead, the original life
expectancy factor will be reduced by 1.0 in each succeeding year.
IN THIS EVENT, PAYMENTS MAY NOT CONTINUE FOR YOU AND/OR YOUR
BENEFICIARIES LIFE.
(g) Nothwithstanding any provision of the Certificate to the contrary that
would otherwise limit a distributee's election, a "distributee" may
elect, at the time and in the manner prescribed by Us, to have any
portion of an "eligible rollover distribution" paid directly to an
"eligible retirement plan" specified by the distributee in a "direct
rollover".
The "distributee" is You. In addition, Your surviving spouse and Your
spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated Beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income.
An "eligible retirement plan" is an individual retirement account
described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, or a TSA described in
Section 403(b) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
A "direct rollover" is a payment by Us to the eligible retirement plan
specified by the distributee.
(h) In the event of any conflict between the terms of the Certificate and
these TSA provisions or any sections of the Code applicable to annuities
described in Section 403(b) of the Code, those TSA provisions or
sections will govern. Any distribution options in the Certificate that
are inconsistent with Section 401(a)(9) or are inconsistent with other
provisions reflecting Section 401(a)(9) as are prescribed by the
Commissioner of Internal Revenue, are overridden and that Section or
provision reflecting that Section shall govern.
Signed for the Company by: ____________________________________
Secretary
EXHIBIT 4(d)
INDIVIDUAL RETIREMENT
LIBERTY LIFE ASSURANCE ANNUITY (IRA)
COMPANY OF BOSTON ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached to be effective on the later of the Certificate Issue Date or the
following date (if any):
Notwithstanding any provision in the Certificate to the contrary:
(a) The Certificate is intended to be an individual retirement annuity (IRA)
plan created for the exclusive benefit of You and Your Beneficiary and
qualified under Section 408 of the Internal Revenue Code ("Code"). Your
entire interest in the Certificate is nonforfeitable. You and the Annuitant
must be the same person. You may not designate a Contingent Annuitant or a
Joint Certificate Owner. You may not transfer ownership of the Certificate
nor may You pledge, collaterally assign, or otherwise use it as security for
a loan.
(b) Except in the case of a rollover or transfer contribution as described
in Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code, (1) the
payments made to an IRA for any taxable year must be in cash and may not
exceed $2,000 or such higher amount as may be permitted under the Code (e.g.,
for a contribution made in accordance with the terms of a Simplified Employee
Pension Plan (SEP) as described in Section 408(k)), and (2) You may not make
additional payments beginning with the calendar year in which You attain age
70 1/2. If the Certificate Schedule requires that any minimum payment be
over $2,000, the actual payment will generally have to be paid, at least in
part, by a rollover or transfer.
(c) You must begin taking distributions no later than April 1 of the
calendar year after You attain age 70 1/2 (the required beginning date). You
may elect to have the Certificate Value distributed in equal or substantially
equal amounts over (1) Your life or the lives of You and Your designated
Beneficiary or (2) a period certain not extending beyond Your life expectancy
or the joint and last survivor expectancy of You and Your designated
Beneficiary. Periodic payments will be made at intervals of no longer than
one year and will fluctuate in accordance with the investment results of the
underlying Sub-account(s) You have chosen for variable payments but will
otherwise be nonincreasing. Unless You elect otherwise by Written Request,
You must apply the Adjusted Certificate Value to annuity payments that begin
on or before the April 1st date under an annuity payment option that complies
with minimum distribution regulations adopted under Section 408(b)(3) of the
Code. You may elect that We pay You the Certificate Withdrawal Value on or
before the April 1st date or, if offered by Us, that payments begin on or
before that date under a partial withdrawal option that complies with the
regulations previously referred to. If You elect to meet Your distribution
requirements through variable income payments under "Option A: Annuity for a
Fixed Number of Years", the following additional requirements apply. If You
are under age 59 1/2 on the Income Date, the payment period will be equal to
Your life expectancy. If You are 59 1/2 or older on the Income Date, but
under age 70 1/2, the payment period will be for the period You have
specified, which may not extend beyond Your life expectancy or the joint and
last survivor expectancy of You and Your designated Beneficiary. If You are
over age 70 1/2 on the Income Date, the payment period will be for the
period You have specified, which may not exceed Your remaining life
expectancy or the remaining joint and last survivor expectancy of You and
Your designated Beneficiary.
(d) All distributions made hereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code, including the incidental-death-
benefit requirements of Section 401(a)(9)(G) of the Code, and the regulations
thereunder, including the minimum distribution incidental benefit requirement
of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
(e) In the event of Your death, Your entire interest in the Certificate must
be distributed in conformity with regulations adopted under Section 408(b)(3)
of the Code, which regulations contain rules similar to the after-death-
distribution rules of Section 401(a)(9)(G) of the Code and to the incidental-
death-benefit requirements of Section 401(a)(9)(G) of the Code. These
regulations provide that IRAs are subject to the distribution rules provided
in those Sections and in Regulation 1.401(a)(9)-1 and 1.401(a)(9)-2.
If You die after distributions have begun, the remaining portion of Your
interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to Your death. If You die before
distributions have begun, Your entire interest must be distributed within
five years of the date of death. Distributions are considered to have begun
if payments are made on account of Your reaching Your required beginning date
or, if prior to that date, annuity payments begin to You under (c) above.
If the designated Beneficiary is Your surviving spouse, the surviving
spouse may treat the Certificate as his or her own IRA. This election will
be deemed to have been made if such surviving spouse fails to elect a
distribution acceptable under Regulation 1.401(a)(9). The Certificate's
provisions relating to the death of the Annuitant are changed to the extent
necessary to conform with the regulations and statutory rules referred to in
this paragraph.
(f) Life expectancy and joint and last survivor expectancy will be
calculated by use of the return multiples in Tables V and VI of Regulation
1.72-9. If We offer a partial withdrawal option, (1) the life expectancy
factor used by us will be based on the joint life expectancy of You and Your
designated Beneficiary unless You make a Written Request that it be based on
just Your life expectancy, (2) neither Your life expectancy nor the life
expectancy of any Beneficiary will be annually recalculated, and (3) instead,
the original life expectancy factor will be reduced by 1.0 in each succeeding
year. IN THIS EVENT, PAYMENTS MAY NOT CONTINUE FOR YOU AND/OR YOUR
BENEFICIARIES LIFE.
(g) We will send You annually a report concerning the status of the annuity.
(h) In the event of any conflict between the terms of the Certificate and
these IRA provisions or any sections of the Code applicable to annuities
described in Section 408(b) of the Internal Revenue Code, those IRA
provisions or sections will govern. Any distribution options in the
Certificate that are inconsistent with Section 401(a)(9) or are inconsistent
with other provisions reflecting Section 401(a)(9) as are prescribed by the
Commissioner of Internal Revenue, are overridden and that Section or
provision reflecting that Section shall govern.
Signed for the Company by: /s/James J. Klopper
Secretary
END.IRA(8)/NY
EXHIBIT 4(e)
CORPORATE/KEOGH
LIBERTY LIFE ASSURANCE 401(a) PLAN
COMPANY OF BOSTON ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached to be effective on the later of the Certificate Issue Date or the
following date (if any):
Notwithstanding any provisions in the Certificate to the contrary:
(a) The Certificate is issued to a trust or custodial account forming
part of an employer's pension or profit-sharing plan qualified under Section
401 of the Internal Revenue Code. While the Certificate is in effect, You
must continue to maintain the tax-qualified status of the plan. The
Certificate does not reflect any plan provisions; it is simply an asset of
the plan.
(b) You may not designate a Contingent Annuitant, a Joint Certificate
Owner, or a Beneficiary. You are the Beneficiary. If You do not designate
an Annuitant because the initial payment to the Certificate represents the
unallocated interests of multiple participants under the plan, then You may
apply a partial withdrawal amount either to a non-transferable Annuity Option
payable to a participant or to a non-transferable Joint and Survivor Annuity
Option payable to a participant and his or her spouse.
(c) The provisions of Section 401 of the Internal Revenue Code will
apply in the event of any conflict with the provisions of this Certificate.
Signed for the Company by: /s/James J. Klopper
Secretary
END.C/K(8)
EXHIBIT 4(f)
LIBERTY LIFE ASSURANCE UNISEX
COMPANY OF BOSTON ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached as of the Issue Date.
The "Misstatement of Age or Sex" and "Basis of Calculation" sections are
changed to eliminate all references to the sex of the payee so that no
annuity payment will be calculated using the sex of the payee. The reference
in the "Basis of Calculation" section to "(sex distinct)" is changed to
"weighted 40% male and 60% female".
The "Evidence of Death, Age, Sex or Survival" section is changed to eliminate
evidence of sex as a requirement.
Tables 2, 3, 5, and 6 on Pages 21 and 22 are changed to read:
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH
$1,000 APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $4.39 43 $4.73 56 $5.43 69 $6.90 82 $9.22
31 4.40 44 4.77 57 5.51 70 7.06 83 9.38
32 4.42 45 4.81 58 5.59 71 7.22 84 9.52
33 4.44 46 4.85 59 5.68 72 7.39 85 9.66
34 4.46 47 4.89 60 5.78 73 7.57 86 9.79
35 4.49 48 4.94 61 5.88 74 7.75 87 9.90
36 4.51 49 4.99 62 5.98 75 7.94 88 10.01
37 4.54 50 5.04 63 6.09 76 8.12 89 10.10
38 4.57 51 5.10 64 6.21 77 8.31 90 10.18
39 4.59 52 5.16 65 6.34 78 8.50 91 10.25
40 4.63 53 5.22 66 6.47 79 8.69 92 10.31
41 4.66 54 5.29 67 6.60 80 8.87 93 10.36
42 4.69 55 5.36 68 6.75 81 9.05 94 10.40
95 10.43
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH
$1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $4.24$4.27$4.29$4.31$4.33$4.34$4.36$4.37$4.37$4.38$4.38 $4.39 $4.39 $4.39
35 4.30 4.34 4.37 4.40 4.42 4.44 4.46 4.47 4.48 4.48 4.49 4.49 4.49
40 4.39 4.44 4.48 4.52 4.55 4.57 4.59 4.61 4.62 4.63 4.63 4.63
45 4.50 4.57 4.62 4.68 4.72 4.75 4.78 4.80 4.81 4.82 4.82
50 4.66 4.75 4.83 4.90 4.95 5.00 5.03 5.05 5.06 5.07
55 4.87 4.99 5.11 5.20 5.28 5.33 5.37 5.39 5.40
60 5.17 5.34 5.50 5.63 5.73 5.79 5.83 5.85
65 5.60 5.85 6.07 6.24 6.37 6.44 6.49
70 6.22 6.58 6.89 7.12 7.28 7.37
75 7.13 7.66 8.10 8.41 8.61
80 8.48 9.25 9.86 10.29
85 10.47 11.56 12.42
90 13.27 14.78
95 17.11
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH $1,000
APPLIED
Age Payment Age Payment Age Payment Age Payment Age Payment
30 $3.05 43 $3.46 56 $4.24 69 $5.79 82 $8.24
31 3.07 44 3.50 57 4.32 70 5.96 83 8.41
32 3.09 45 3.55 58 4.41 71 6.13 84 8.57
33 3.12 46 3.60 59 4.51 72 6.31 85 8.72
34 3.15 47 3.65 60 4.61 73 6.50 86 8.85
35 3.18 48 3.70 61 4.71 74 6.69 87 8.97
36 3.21 49 3.76 62 4.82 75 6.88 88 9.08
37 3.24 50 3.82 63 4.94 76 7.08 89 9.18
38 3.27 51 3.88 64 5.07 77 7.28 90 9.27
39 3.31 52 3.94 65 5.20 78 7.48 91 9.34
40 3.34 53 4.01 66 5.34 79 7.68 92 9.40
41 3.38 54 4.08 67 5.48 80 7.87 93 9.46
42 3.42 55 4.16 68 5.63 81 8.06 94 9.50
95 9.53
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH $1,000
APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
30 $2.88$2.92$2.95$2.98$3.00$3.01$3.02$3.03$3.04$3.04$3.04$3.05 $3.05 $3.05
35 2.97 3.02 3.06 3.09 3.12 3.14 3.15 3.16 3.17 3.17 3.18 3.18 3.18
40 3.09 3.15 3.20 3.24 3.27 3.30 3.32 3.33 3.34 3.34 3.34 3.35
45 3.24 3.31 3.38 3.44 3.48 3.51 3.53 3.54 3.55 3.56 3.56
50 3.43 3.53 3.62 3.69 3.74 3.78 3.80 3.82 3.83 3.83
55 3.68 3.81 3.93 4.02 4.09 4.13 4.16 4.18 4.19
60 4.01 4.19 4.35 4.47 4.56 4.61 4.65 4.66
65 4.47 4.73 4.94 5.11 5.21 5.28 5.32
70 5.11 5.48 5.78 6.00 6.13 6.21
75 6.04 6.57 6.99 7.28 7.46
80 7.40 8.16 8.75 9.15
85 9.38 10.46 11.29
90 12.18 13.68
95 16.02
Signed for the Company by: /s/James J. Klopper
Secretary
END.A(138)
EXHIBIT 5(a)
APPLICATION FOR LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
GROUP VARIABLE ANNUITY CONTRACT
Please send application to: Liberty Life Assurance Company of Boston
125 High Street
Boston, MA 02110
1. Contract Owner:
(Name)
(Street) (City) (State) (Zip)
(Telephone) (Name of Person to Contact)
2. Nature of Group:
3. Number of Participants in Group:
4. Special Requests:
*******************************************************************************
Signed At:
(City, State) (Signature of Contract Owner)
By:
(Date) (Name)
(Title)
*******************************************************************************
AGENT'S REPORT
Agent's Name: Agency Phone:
(Print Exact Name on License)
Agency Name:
(Signature of Agent)
Agency Address:
[ ] [ ] [ ] [ ] [ ] - [ ] [ ] [ ] [ ] [ ]
(Home Office Use Only)
AP/DVA-1996(NY) Liberty Contract #
EXHIBIT 5(b)
APPLICATION FOR A GROUP VARIABLE ANNUITY CERTIFICATE
Mail to: Liberty Life Assurance Company of Boston, 125 High Street, Boston,
MA 02110-2712
ANNUITANT 1 First
Middle Last Phone( )
Street Address City State Zip
Social Sec. No: [ ] [ ] [ ] - [ ] [ ] -[ ] [ ] [ ] [ ] Sex: [ ] M [ ]
F Birthdate:
Month / Day / Year
PRIMARY CERTIFICATE OWNER 2
(Only if different from annuitant)
First Middle Last
Street Address City State Zip
Relationship to Annuitant Phone( )
[ ] Social Sec. No. [ ] Taxpayer I.D. No. [ ] [ ] [ ] - [ ] [ ] - [ ] [ ]
[ ] [ ] Birthdate: Month / Day / Year
BENEFICIARY(IES) 3
(Person(s) you want to "own" the annuity if the primary owner and any joint
owner are both dead)
Name Birthdate Relationship to Annuitant
Street Address City State Zip
Name Birthdate Relationship to Annuitant
Street Address City State Zip
JOINT CERTIFICATE OWNER 4
(Optional) (Signature is required on reverse)
First Middle Last Birthdate
Street Address City State Zip
Social Sec. No: [ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ] Phone No: (
)
CONTINGENT BENEFICIARY (Optional) 5
Name Birthdate Relationship to Annuitant
Street Address City State Zip
PURCHASE AMOUNT 6
($5,000 minimum and make check payable to Liberty Life Assurance Company of
Boston; subsequent purchases must be at least $1,000)
$ [ ] Check is attached. [ ] Funds will be
sent later.
ALLOCATION 7
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
Each amount must be at least 10% and a whole number. Amounts must total
100%. Percentages will also be used to allocate subsequent purchase amounts.
TELEPHONE INSTRUCTIONS (Optional) 8
[ ] Check box if certificate owner(s) want the ability to make transfers
and purchase amount allocation changes by telephone. Insert the name of any
other person also authorized to do the same:
(It is agreed this designation is subject to the power of attorney provisions
in the prospectus). It is agreed that telephone instructions will be subject
to the conditions and procedures in the prospectus.
AP/DVA-CER-1996(NY) Liberty Group Contract No. Liberty Certificate
No.
- -OVER-
TYPE OF PLAN 9
[ ] Non-Qualified [ ] Qualified
QUALIFIED PLANS ONLY 10
Complete For All Plans:
This money should be set up as a:
Type:
[ ] IRA [ ] _____________ [ ] _____________
[ ] Custodial IRA [ ] _____________ [ ] _____________
[ ] _____________ _____________
Complete If Applicable:
This money comes from a:
[ ] Trustee Transfer or [ ] Direct Rollover or [ ] Rollover from a:
[ ] IRA [ ] SEP IRA [ ] Keogh [ ] 401(a) [ ] TSA
Complete For IRAs Only:
This money represents: Regular contributions of $
for Tax Year 19 and $ for Tax Year 19 ;
Transfer $ Direct Rollover $ Rollover $
REPLACEMENT 11
Will the certificate applied for replace any existing annuity or insurance
policy?
[ ] Yes [ ] No If yes, list insurance company, policy #, and attach
transfer or exchange forms.
SPECIAL REQUESTS 12
[ ] Check box if owner wants the statement of additional information referred
to in the prospectus.
Other:
AGREEMENT 13
It is agreed that all statements and answers given above are true and
complete to the best of my knowledge and this application shall become part
of the annuity certificate issued by the Company. I understand that annuity
payments and surrender values, when based upon the investment experience of a
separate account, are variable and are not guaranteed as to fixed dollar
amount. Receipt of a current variable annuity prospectus is hereby
acknowledged.
SIGNED AT 14
City State (REQUIRED) Date
Signature of Annuitant (REQUIRED)
Signature of Certificate Owner (if other than Annuitant) (Any representative
capacity, such as trustee, must include the full legal designation.)
Signature of Joint Certificate Owner (if any)
AGENT'S REPORT 15
Do you have any reason to believe that the certificate applied for may
replace an existing annuity or insurance policy?
[ ] Yes [ ] No If yes, list carrier, policy #, whether 1035 exchange,
and attach State Replacement Form if applicable.
Agent's Legal Name (Printed)
Business Address Street City State Zip
Agent's Bus. Phone ( )
Agent's Social Sec. No. [ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
Agency Name
Signature of Agent
(AGENCY/AGENT NO.) [ ] [ ] [ ] [ ] [ ] - [ ] [ ] [ ] [ ] [ ]
508.6/96(NY)
EXHIBIT 6(b)
ARTICLE I
Home Office - Purposes -
Seal - Definitions
SECTION 1. The principal place of business or home office of the
company shall be in the City of Boston, Massachusetts, or at such other
location as may be designated.
SECTION 2. The purposes of the company shall be to transact such kinds
of business as now are or hereafter may be permitted it by its certificate of
incorporation and by law.
SECTION 3. The seal of the company shall bear the name of the company
and the words and figures, OIncorporated 1963, Massachusetts.O
SECTION 4. OPolicyO shall mean any contract of insurance, annuity
contract, pure endowment contract, any binder, and any renewal certificate
issued by the company in the course of business and not terminated.
ARTICLE II
Meetings of Stockholders
SECTION 1. The annual meeting of the stockholders of the company shall
be held at the place, on the date and at the hour designated by vote of the
board, provided that the place shall be in the Commonwealth of Massachusetts
and the date shall be within six months after the end of the fiscal year of
the company.
SECTION 2. Special meetings of the stockholders shall be held at such
times and for such purposes as may be specified in the notice of such
meetings, and shall be called by the secretary or, in the event of his
absence or inability to act, by such officer as the board or the president
shall appoint, whenever requested in writing so to do by the chairman, by the
president, by a majority of the board, by a majority of the executive
committee, or by the holders of at least ten percent in interest of all stock
issued and outstanding and entitled to vote at the meeting.
SECTION 3. A written notice of the place, date and hour of all meetings
of stockholders stating the purposes of the meeting shall be given by the
secretary or an assistant secretary at least seven days before the meeting to
each stockholder entitled to vote at the meeting by leaving such notice with
him or at his residence or usual place of business, or by mailing it, postage
prepaid, and addressed to such stockholder at his address as it appears in
the records of the company.
SECTION 4. Each stockholder may vote at any meeting of the stockholders
either in person or by proxy filed with the secretary at or before such
meeting. Each stockholder shall be entitled to one vote for each share of
stock standing registered in his name on the records of the company.
SECTION 5. The holders of a majority in interest of all stock issued
and outstanding and entitled to vote, when present in person or represented
by proxy, shall constitute a quorum for the transaction of business at any
meeting of the stockholders.
SECTION 6. Any action required or permitted to be taken at any meeting
of the stockholders may be taken without a meeting if all stockholders
entitled to vote on the matter consent to the action in writing and the
written consents are filed with the records of the meetings of stockholders.
Such consents shall be treated for all purposes as a vote at a meeting.
ARTICLE III
SECTION 1. The board shall consist of not less than seven nor more than
fifteen members as determined from time to time by vote of a majority of the
whole board or by vote of the stockholders. The directors elected at each
annual meeting shall hold office until the next annual meeting of the
stockholders shall have elected directors and such directors shall have
qualified.
SECTION 2. Each director shall comply with such qualification
conditions as may be required by law or by the board.
SECTION 3. The board shall manage and control the business and affairs
of the company. The board may in its discretion classify policyholders into
groups on such basis and in such manner as may be permitted by law. At all
meetings of the board a majority of directors then in office shall constitute
a quorum for the transaction of business. The board may create and fill
additional offices and may fill any vacancy in office that may occur. Any
vacancy in the board may be filled by a majority of the remaining directors.
SECTION 4. The board of directors may by vote establish a system of
compensation, including allowances for expenses, of directors for their
services. Directors shall not be precluded from serving the company in any
other capacity and receiving compensation therefor.
SECTION 5. On the day of and after the adjournment of each annual
meeting of the stockholders, the board shall, if a quorum be then present,
without further notice, hold a meeting at which it shall elect by ballot a
president, who shall be a director, one or more vice presidents, a secretary,
a treasurer, who may also be the president or secretary, and a comptroller.
It may also elect a chairman, one or more assistant secretaries, and one or
more assistant treasurers. If a quorum shall not then be present, such
officers shall be elected at the first meeting of the board at which a quorum
is present. The board may at any time remove any officer so elected.
SECTION 6. The board may create, and at any time change the membership
of or terminate, the committees specified in Article IV, and may delegate
powers to such committees as provided in said Article IV.
SECTION 7. Any action required or permitted to be taken at any meeting
of the board may be taken without a meeting if all the directors consent to
the action in writing and the written consents are filed with the records of
the meetings of the board. Such consents shall be treated for all purposes
as a vote at a meeting.
ARTICLE IV
SECTION 1. The board by vote may elect three or more directors, one of
whom shall be the chairman, if any, and one the president, to constitute an
executive committee of the board. By vote the board may delegate to such
executive committee any or all of the powers granted to the board by law and
by these by-laws and not specifically delegated to any other committee or
reserved to the board by law. The executive committee shall report all of
its actions to the board of directors.
SECTION 2. The board by vote may elect three or more directors, one of
whom shall be the chairman, if any, and one the president, to constitute an
investment committee. By vote the board may delegate to such committee any
or all of the powers granted to the board by law or by these by-laws with
respect to the making, management and disposition of investments.
SECTION 3. The board by vote may elect or authorize the chief executive
officer to appoint three or more directors, one of whom shall be the chief
executive officer or such person as he shall designate to represent him, to
constitute a committee for any legal purpose. By vote the board may delegate
to such committee limited authority to exercise in behalf of the board powers
of the board with respect to the duties of such committee. At all meetings
of such committee, a majority of the committee members shall constitute a
quorum for the transaction of business.
ARTICLE V
SECTION 1. Each officer elected by the board shall, unless removed,
hold office for one year or until his successor is elected and qualified.
SECTION 2. If a chairman of the board is elected, the board shall
designate either the chairman, or the president to be the chief executive
officer of the company. If a chairman is not elected or in the absence of
the chairman or his inability to act, the president shall be the chief
executive officer. The chief executive officer shall have general charge and
oversight of the business and affairs of the company and shall enforce and
execute the orders and instructions of the board.
SECTION 3. The chairman of the board, if such officer has been elected,
shall preside at all meetings of the company and of the board and shall
perform such other duties as may be imposed upon him by law, by these by-
laws, and by the board.
SECTION 4. Except when the chairman has been so designated, the
president shall be the chief executive officer of the company. In the
absence or inability to act of the chairman, the president shall preside at
all meetings of the stockholders and of the board. The president shall also
perform such duties as may be imposed upon him by law, by these by-laws, by
the board or by the chairman if the chairman is the chief executive officer
of the company.
SECTION 5. The board or the chief executive officer may designate any
vice-president to exercise the powers and discharge the duties of the chief
executive officer during the absence or inability to act of both the chairman
and the president. A vice-president not specifically designated as aforesaid
shall have such powers and discharge such duties as may be from time to time
conferred or imposed upon him by the board, the chairman or the president.
In the absence of the chairman and of the president from any meeting of the
stockholders or of the board, a vice-president shall preside. The board or
the president may, for and at such times as it or they deem proper, authorize
by written appointment one or more vice-presidents to sign policies.
SECTION 6. The secretary shall give such notice as is required by law
and by these by-laws of all meetings of the stockholders, the board, and the
executive committee. He shall keep such books and records as the board or
the chief executive officer may require. He shall execute all instruments
coming within the jurisdiction of his office. He shall perform such duties
as are or may be required of him by law, by these by-laws, by the board, or
by the chief executive officer. He shall have custody of the corporate seal
and shall furnish copies thereof to such officers and attorneys-in-fact as
shall be authorized to impress the same. During the absence of the secretary
or his inability to act, an assistant secretary, authorized in writing by the
chief executive officer shall exercise the powers and duties of the
secretary.
SECTION 7. The treasurer shall exercise such powers and duties with
respect to the safekeeping of monies, funds, and securities of the company,
the signing endorsing, and acceptance of checks, notes, and drafts in behalf
of the company, and its accounts and records in connection therewith as may
from time to time be prescribed by law, by these by-laws, by the chief
executive officer, or by the board. His books of account and records shall
at all reasonable times be open to the inspection of any director. He shall
furnish to the stockholders at the annual meeting, and to the board, whenever
requested by them, such statements and abstracts of the same as are necessary
to a full exhibition of the financial condition of the company. During the
absence of the treasurer or his inability to act, an assistant treasurer,
authorized in writing by the chief executive officer, shall exercise all
powers and duties of the treasurer.
SECTION 8. The comptroller shall exercise such powers and duties as may
from time to time be prescribed by law, by these by-laws, by the chief
executive officer or by the board. In the absence of the comptroller, his
duties shall be performed by another officer designated by the chief
executive officer.
SECTION 9. The chairman or the president may appoint such subordinate
officials and representatives as he may deem necessary and may at any time
remove any official or representative so appointed. The officer exercising
the appointive power shall determine the duties and the powers of such
officials and representatives.
SECTION 10. The secretary, the treasurer, the comptroller, the
assistant secretaries and the assistant treasurers shall furnish such bond as
may be required by law or by the board. In addition each officer of the
company shall comply with such other qualification conditions as may be
required by law or by the board.
ARTICLE VI
Regular meetings of the board shall be held at such times and places as
the board may from time to time determine. Special meetings of the board
shall be called by the secretary whenever the chairman, the president, or not
less than a majority of directors then in office shall so request. No notice
of the regular meetings of the board shall be necessary. Reasonable notice
shall be given of special meetings of the board. The action of a majority of
the board at any meeting of the board shall be valid notwithstanding any
defect in the notice of such meeting, and every director shall for all
purposes be deemed to have been duly notified of a meeting if he shall be
present at such meeting or shall in writing waive notice thereof either
before or after such meeting.
ARTICLE VII
Regular meetings of the executive committee, if such a committee has
been constituted, and of the investment committee shall be held at such times
and places as the respective committee may determine. Special meetings shall
be called by the secretary whenever the president or a majority of the
members of the committee shall so request. No notice of the regular meetings
shall be necessary. Reasonable notice shall be given of special meetings,
but the action of a majority at any meeting of the board shall be valid,
notwithstanding any defect in the notice of such meeting. A director shall
be deemed to have been notified of a meeting if he shall be present at such
meeting or shall in writing waive notice thereof either before or after such
meeting. At all meetings of the executive committee or the investment
committee a majority of the committee members shall constitute a quorum for
the transaction of business.
ARTICLE VIII
Meetings of the board of directors or of any committee of the board may
be held by conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time.
ARTICLE IX
SECTION 1. Any member of the board, or any officer elected by the
board, may resign by giving written notice to the secretary. Any appointed
official may resign by giving written notice to the officer having the
appointive power. Any member of a committee of the board may resign from the
committee by giving written notice to the secretary.
SECTION 2. The person chosen to fill a vacancy shall hold office for
the unexpired term of his predecessor.
SECTION 3. In the event of vacancy in the board or in any committee,
the remaining directors or members of such committee may act notwithstanding
such vacancy.
SECTION 4. In the event of the temporary absence or inability to act of
any member of a committee of the board, the board, or the executive committee
if so authorized by the board, may appoint a member of the board to act in
his stead during his absence.
ARTICLE X
SECTION 1. Each stockholder shall be entitled to receive a certificate
which shall be signed by the chairman, the president or a vice-president and
by the treasurer or an assistant treasurer and impressed with the seal of the
company, which shall certify the number of shares represented by such
certificate. Such certificate shall be in such form as the board of
directors shall from time to time adopt.
SECTION 2. A new certificate of stock may be issued in place of one
which is claimed to have been lost, destroyed, or mutilated, upon proof of
such claim satisfactory to the company, and, if the company shall so require,
upon the furnishing of an indemnity bond of a corporate surety acceptable to
the company in such penalty and form as the company shall require.
SECTION 3. Certificates of stock may be transferred only by assignment
endorsed thereon, or by means of an instrument or assignment attached
thereto, executed by the stockholder named therein or by his attorney-in fact
duly authorized thereunto in writing. Transfers shall be made on the books
of the company upon surrender of the certificate properly assigned; and upon
such surrender a new certificate shall be issued in lieu thereof to the
assignee.
SECTION 4. The board may order the transfer books of the company closed
and no transfers permitted to be made therein for a period of not more than
thirty days before any annual or special meeting, or for a like period before
the payment of any dividend to stockholders.
ARTICLE XI
SECTION 1. The company may issue participating or non-participating
policies or both participating and non-participating polices.
SECTION 2. The board shall from time to time, as required or permitted
by law, determine the divisible surplus of the company and the share of such
divisible surplus to be apportioned to participating policies of life and
endowment insurance.
SECTION 3. If, in the opinion of the board, the experience and
condition of the company warrant a dividend or refund of premium with respect
to participating policies other than life or endowment insurance, such
dividend or refund may be voted with respect to such classifications and at
such rate or rates, in such amount or amounts, and subject to such conditions
as may at any time be determined by the board. To the extent that the board
may deem proper, such dividend or refund may be paid on account of such
policies canceled during the period for which such dividend or refund is
made.
ARTICLE XII
The board of directors may declare dividends to stockholders from the
surplus of the company at such times as the board may determine.
ARTICLE XIII
The fiscal year of the company shall coincide with the calendar year.
ARTICLE XIV
SECTION 1. All policies entered into by the company shall be signed by,
or bear the facsimile signatures of, the president or a vice-president and
the secretary or an assistant secretary.
SECTION 2. All policies bearing facsimile signatures shall be
countersigned, if required by law or decision of the company, by a duly
empowered representative of the company. The president or the secretary
shall appoint and empower representatives of the company to countersign such
policies.
SECTION 3. The president or the secretary, subject to such limitations
as the board may prescribe, shall execute such powers of attorney as are
necessary to make effective the insurance policies of the company.
SECTION 4. All riders and endorsements which do not form a part of a
policy at the time such policy is issued shall bear the name of the company
and, if required by law or by decision of the company, shall be signed or, if
such riders or endorsements bear the facsimile signature of an officer of the
company, countersigned, if required by law or by decision of the company, by
a duly empowered representative of the company. A facsimile of the signature
or countersignature of such duly empowered representative shall have the same
validity as his written signature or countersignature.
ARTICLE XV
The company shall, except as hereinafter provided, indemnify and
reimburse each director, former director, officer and former officer, and his
heirs and legal representatives, for and against all loss, liability and
expense, whether heretofore or hereafter imposed upon or incurred by him in
connection with any pending or future action, suit, proceeding or claim in
which he may be involved, or with which he may be threatened, by reason of
any alleged act or omission as a director or an officer of the company. Such
loss, liability and expense shall include, but not be limited to, judgments,
court costs, attorneysO fees and the cost of reasonable settlements. Such
indemnification and reimbursement shall not cover (a) judgments, expenses or
liabilities, rendered, imposed or incurred in connection with any item or
matter as to which such director or officer shall have been adjudicated in
any proceeding not to have acted in good faith in the reasonable belief that
his action was in the best interests of the company; or (b) loss, liability
or expense imposed or incurred in connection with any item or matter which
shall be settled without final adjudication unless such settlement shall have
been approved as in the best interests of the company (1) by vote of the
board at a meeting in which no director participates against whom as such
director any suit or proceeding on the same or similar grounds is then
pending or threatened or (2) by vote of the stockholders. The foregoing
rights of indemnification and reimbursement shall be in addition to any
rights to which any director, former director, officer or former officer, and
the heirs and legal representatives of each, may otherwise be entitled as a
matter of law.
ARTICLE XVI
The board may, subject to the restrictions imposed by law and to such
rules that it may adopt, make such contributions of money, securities or
other things of value as it determines to be reasonable for public welfare or
for charitable, scientific, or educational purposes.
ARTICLE XVII
These by-laws are adopted by the directors as emergency by-laws pursuant
to Section 180N of Chapter 175 of the General Laws and shall, subject to the
provisions of this Article, apply to the operation of the company during a
national emergency. During any such emergency three directors shall
constitute a quorum for the transaction of business at all meetings of the
board, any vacancy in the board may be filled by a majority of the remaining
directors, though less than a quorum or though a sole remaining director; if
there are no surviving directors but at least three vice-presidents of
Liberty Mutual Insurance Company survive, the three vice-presidents of
Liberty Mutual Insurance Company with the longest term of service shall be
the directors and shall possess all of the powers of the previous board of
directors and such powers as are granted herein or by subsequently enacted
legislation. By majority vote, such emergency board of directors may elect
other directors.
Notwithstanding any other provision of these by-laws, the board may, at
any time, adopt a resolution in accordance with authority now or hereafter
vested in it under which, to the extent and upon the terms stated therein,
corporate powers may be exercised during the existence of emergency
conditions.
ARTICLE XXI
These by-laws may be amended, altered, or repealed, in whole or in part,
and new by-laws may be adopted by a majority vote, at any annual or special
meeting of the stockholders, provided notice of the substance or character of
the proposed change shall have been given in the notice of such meeting.
EXHIBIT 8
FORM OF
PARTICIPATION AGREEMENT
AMONG
[mutual fund]
[distributor]
[investment adviser]
AND
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
This Agreement, made and entered into this day of , 19[ ] by
and among Liberty Life Assurance Company of Boston, a Massachusetts
corporation, (referred to as the "Company"), each on its own behalf and on
behalf of its Separate Account, which is a segregated asset account of the
Company; [mutual fund] (the "Fund"), a [ ] organized under the laws of
the State of [ ]; [distributor] ("Distributor"), a [ ]
corporation; and [investment adviser] ("Adviser"), a [] corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and
variable annuity contracts ("Variable Insurance Products") to be offered by
insurance companies which have entered into participation agreements with the
Fund and Distributor substantially identical to this Agreement (hereinafter
"Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares (such series being hereinafter referred to individually as a
"Portfolio" or collectively as the "Portfolios") as shown on Schedule A
attached hereto; and
WHEREAS, the Fund currently intends to apply for an order from the
Securities and Exchange Commission ("SEC"), granting Participating Insurance
Companies and variable annuity and variable life insurance separate accounts
exemptions from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of
the Investment Company Act of 1940, as amended (hereinafter the "1940 Act")
and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder to the extent necessary
to permit shares of the Fund to be sold to and held by variable annuity
separate and variable life insurance accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, [investment adviser] (the "Adviser") is duly registered as an
investment adviser under the federal Investment Advisers Act of 1940 and any
applicable state securities law; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, the Company has established duly organized, a validly existing
segregated asset account as shown on Schedule B attached hereto (the
"Separate Account") established by resolution of the Boards of Directors of
the Company, and divided such Separate Account into subaccounts to set aside
and invest assets attributable to aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register the certain
Separate Account as a unit investment trust under the 1940 Act; and
WHEREAS, Distributor is registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, [ ] ([" "]) the underwriter for the individual
variable annuity and the variable life policies, is registered as a broker-
dealer with the SEC under the 1934 Act and is a member in good standing of
the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of the Separate Account to fund certain Variable Insurance Products.
Distributor is authorized to sell such shares to unit investment trusts such
as the Separate Account at net asset value, and acts as distributor of the
Portfolio shares.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Distributor agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 Distributor shall sell to the Company those shares of the Fund
which the Separate Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee
of the order for shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from the
Separate Account and receipt by such designee shall constitute receipt by the
Fund provided that each Company receives the order by [4:00 p.m. New York]
time and the Fund receives notice from the Company, as the Company and Fund
may agree, by [9:00 a.m. New York] time on the next Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for
regular trading and on which the Fund calculates its net asset value pursuant
to the rules of the SEC.
1.2 The Fund agrees subject to the terms of this Agreement, to make its
shares available indefinitely for purchase at the applicable net asset value
per share by the Companies and their Separate Accounts on those days on which
the Fund calculates its net asset value pursuant to rules of the SEC and the
Fund shall use reasonable efforts to calculate such net asset value on each
day on which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter
the "Board") may refuse to sell shares of any Portfolio to any person, 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 its
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts which have
agreed to participate in the Fund to fund their Separate Accounts and/or
certain qualified plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended (hereinafter "Code")
and Treasury Regulation 1.817-5. No shares of any Portfolio will be sold to
the general public.
1.4 The Fund and Distributor will not sell Fund shares to any insurance
company or separate account unless an agreement containing substantially
similar provisions as Articles I, III, V, VI and Sections 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund will redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt by the
Fund or its designee of redemption requests. For purposes of this Section
1.5, the Company shall be the designee of the Fund for receipt of requests
for redemption from the Separate Account, and receipt by such designee should
constitute receipt by the Fund; provided that the Company receives the
request for redemption by [4:00 p.m. New York] time, and the Fund receives
notice from the Company, as the Company and Fund may agree, by [9:00 a.m. New
York] time on the next Business Day.
Subject to the applicable rules and regulations, if any, of the SEC, the
Fund may pay the redemption price for shares of any Portfolio in whole or in
part by a distribution in kind of securities from the Portfolio of the Fund
allocated to such Portfolio in lieu of money, valuing such securities at
their value employed for determining net asset value governing such
redemption price, and selecting such securities in a manner the Board may
determine in good faith to be fair and equitable.
1.6 The Fund may suspend the redemption of any full or fractional
shares of the Fund (1) for any period (a) during which the New York Stock
Exchange is closed (other than customary weekend and holiday closings) or (b)
during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal
by the Fund of securities owned by it is not reasonably practicable or (b) it
is not reasonably practicable for the Fund fairly to determine the value of
its net assets; or (3) for such other periods as the SEC may by order permit
for the protection of shareholders of the Fund.
1.7 The Company will purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund in accordance with the
provisions of such prospectus and statement of additional information ("SAI")
(collectively referred to as "Prospectus," unless otherwise provided). The
Company agrees that all net amounts available under the Variable Insurance
Products with the form number(s) that are listed on Schedule B attached
hereto and incorporated herein by this reference, as such Schedule B may be
amended from time to time hereafter by mutual written agreement of all the
parties hereto (the "Contracts"), shall be invested in the Fund, in such
other Funds advised by Stein, Roe & Farnham Incorporated or the Adviser as
may be mutually agreed to in writing by the parties hereto, or in the
Company's general accounts, or in such other funds as the parties hereto
agree in writing.
1.8 The Company shall pay for Fund shares on the same Business Day as
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire,
or may otherwise be provided by separate agreement. For purpose of Section
2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such
funds shall cease to be the responsibility of the Company and shall become
the responsibility of the Fund.
1.9 Issuance and transfer of the Funds' shares will be by book entry
only. Stock certificates will not be issued to the Company or the Separate
Account. Shares ordered from the Fund will be recorded in an appropriate
title for the Separate Account or the appropriate subaccount of the Separate
Account.
1.10 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the shares of any Portfolio. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and
to receive all such income, dividends and capital gain distributions in cash.
The Fund shall notify the Company of the number of shares so issued as
payment of such income, dividends and capital gains distributions.
1.11 The Fund shall make the net asset value per share for each Series
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by [7 p.m., New
York] time.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act to the extent required by the 1933 Act; that
the Contracts will be issued and distributed in compliance in all material
respects with all applicable federal and state laws and that the sale of the
Contracts shall comply in all material respects with state insurance
suitability requirements. The Company further represents and warrants that
it is an insurance company duly organized and in good standing under
applicable law and that prior to any issuance or sale of any Contract it has
legally and validly established the Separate Account as a segregated asset
account under the applicable state insurance laws and has registered or,
prior to any issuance or sale of the Contracts, will register the Separate
Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2 The Company represents and warrants that [ ], the underwriter
for the individual variable annuity and the variable life policies, is a
member in good standing of the NASD and is a registered broker-dealer with
the SEC. The Company represents and warrants that the Company and [ ]
will issue and distribute such policies in accordance in all material
respects with all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.3 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of [ ] and
all applicable federal and any state securities laws and that the Fund is and
shall remain registered under the 1940 Act. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Fund shall 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 or Distributor.
2.4 The Fund represents that it intends to qualify as a Regulated
Investment Company under Subchapter M of the Code and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company 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. The Fund represents and warrants
that each Portfolio will comply with the diversification requirements set
forth in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817-5, and
will notify the Company immediately upon having a reasonable basis for
believing any Fund has ceased to comply or might not so comply and will
immediately take all reasonable steps to adequately diversify the Fund to
achieve compliance within the grace period afforded by Regulation 1.817-5.
The Fund acknowledges that any failure to qualify as a Regulated Investment
Company will eliminate the ability of the subaccounts to avail themselves of
the "look through" provisions of section 817(h) of the Code, and that as a
result the Contracts will almost certainly fail to qualify as annuity
contracts under section 817(h) of the Code.
2.5 The Company represents that the Contracts are currently treated as
endowment or annuity contracts under applicable provisions of the Code and
that it will make every effort to maintain such treatment and that it will
notify the Fund and Distributor immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states except that the Fund represents that it is currently in compliance and
shall at all times remain in compliance with the applicable insurance laws of
the domiciliary states of the Participating Insurance Companies to the extent
that the Participating Insurance Companies advise the Fund, in writing, of
such laws or any changes in such laws.
2.7 Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
Distributor further represents that it will sell and distribute the Fund's
shares in accordance with applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the State of [ ] and that it does and will comply
in all material respects with the 1940 Act.
2.9 The Fund represents and warrants that the Adviser is and shall
remain duly registered under all applicable federal and state securities laws
and that the Adviser shall perform its obligations for the Fund in compliance
in all material respects with the applicable laws of the State of [ ]
and any applicable state and federal securities laws.
2.10 The Fund represents and warrants that all of its Trustees,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or to securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage in an amount not less than the minimal coverage as required
currently by Rule 17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.11 The Company represents and warrants that all of their directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund, in an amount
not less than ten million dollars ($10,000,000) with no deductible amount.
The aforesaid bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable fidelity insurance company. The Company agrees
to make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Fund and Distributor in the event such coverage no longer applies.
ARTICLE III. Prospectus and Proxy Statements; Voting
3.1 The Fund and the Adviser shall provide the Company with as many
copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request in connection with delivery
of the prospectus to shareholders and purchasers of Variable Insurance
Products. If requested by Company in lieu thereof, the Fund or the Adviser
shall provide such documentation (including a "camera ready" copy of the new
prospectus as set in type or, at the request of Company, as a diskette in the
form sent to the financial printer) and other assistance as is reasonably
necessary in order for the parties hereto once a year (or more frequently if
the prospectus for the shares is supplemented or amended) to have the
prospectus for the Variable Insurance Products and the prospectus for the
Fund shares printed together in one document. The expenses of such printing
will be apportioned between the Company and the Fund as the parties agree to
in writing. In the event that the Company requests that the Fund or the
Adviser provide the Fund's prospectus in a "camera ready" or diskette format,
the Fund shall be responsible for providing the prospectus in the format in
which it is accustomed to formatting prospectuses and shall bear the expense
of providing the prospectus in such format (e.g. typesetting expenses) and
the Company shall bear the expense of adjusting or changing the format to
conform with any of its prospectus.
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from Distributor and the Company, and
at its expense, shall provide final copy of such Statement of Additional
Information to Distributor for duplication and provision to any Owner of a
Variable Insurance Product or prospective owner who requests it.
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy materials, reports to shareholders and other communications (except
for prospectus and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distribution to Owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Owners;
(ii) vote the Fund shares in accordance with instructions
received from Owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular Separate Account in the same proportion
as Fund shares of such Portfolio for which instructions have been
received in that Separate Account,
so long and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of their
Separate Accounts participating in the Fund calculates voting privileges in a
manner consistent with the standards to be provided in writing to the
Participating Insurance Companies.
3.5 The Fund shall comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well
as with Section 16(a) and, if and when applicable, 16(b). Further, the Fund
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, the form of each piece of sales literature or other
promotional material in which the Fund or its investment adviser is named, at
least ten (10) Business Days prior to its use. No such material shall be used
if the Fund or its designee reasonably objects to such use within five (5)
Business Days after receipt of its material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of Variable Insurance Products other than the
information or representations contained in the registration statement or
Prospectus for the Fund shares, as such registration statement and Prospectus
may be amended or supplemented from time to time, or in reports or proxy
statements 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.
4.3 The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its Separate
Account(s), are named at least ten (10) Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects
to such use within five (5) Business Days after receipt of such material.
4.4 The Fund shall not give any information or make any representations
or statements on behalf of the Company or concerning the Company, each
Separate Account, or the Variable Insurance Products other than the
information or representations contained in or accurately derived from a
registration statement or prospectus for such Variable Insurance Products, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in published reports for such Separate Account which
are in the public domain or approved by the Company for distribution to
Owners, or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.5 The Fund shall provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, 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 The Company shall provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to the
Variable Insurance Products or any Separate Account, contemporaneously with
the filing of such document with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the 1933 Act, the 1940 Act
or NASD rules.
ARTICLE V. Fees and Expenses
5.1 The Fund shall pay no fee or other compensation to the Company
under this Agreement (except for items covered in Article III), except that
if the Fund or any Portfolio adopts and implements a plan pursuant to Rule
12b-1 to finance distribution expenses, then Distributor may make payments to
the Company for the Variable Insurance Products if and in amounts agreed to
by Distributor in writing and such payments will be made out of existing fees
payable to Distributor, past profits of Distributor or other resources
available to Distributor. No such payments shall be made directly by the
Fund. Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with
applicable federal law and if and to the extent deemed advisable by the Fund,
in accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement,
proxy materials and reports, setting the prospectus in type, setting in type
and printing the proxy materials and reports to shareholders (including the
costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state
law, and all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of distributing the Fund's
proxy materials and reports to Owners.
ARTICLE VI. Potential Conflicts
6.1 The parties acknowledge that the Fund presently intends to file an
application with the SEC to request an order granting relief from various
provisions of the 1940 Act and the rules thereunder to the extent necessary
to permit the Fund shares to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. It is anticipated that
the Exemptive Order, when and if issued, shall require the Fund and each
Participating Insurance Company to comply with conditions and undertakings
substantially as provided in this Section 6. If the Exemptive Order imposes
conditions materially different from those provided for in this Section 6,
the conditions and undertakings imposed by the Exemptive Order shall govern
this Agreement and the parties hereto agree to amend this Agreement
consistent with the Exemptive Order. The Fund will not enter into a
participation agreement with any other Participating Insurance Company unless
it imposed the same conditions and undertakings as are imposed on the
Company.
6.2 The Board shall monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Owners of separate
accounts of Participating Insurance Companies investing in the Fund. A
material irreconcilable conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance policy Owners; (f) a decision by
an insurer to disregard the voting instructions of Owners; or (g) if
applicable, a decision of a Qualified Plan to disregard the voting
instructions of plan participants. The Board shall promptly inform the
Company if it determines that a material irreconcilable conflict exists and
the implications thereof.
6.3 The Company will report any potential or existing conflicts
(including the occurrence of any event specified in paragraph 6.1 which may
give rise to such a conflict) of which it is aware to the Board. The Company
will assist the Board in carrying out their responsibilities under the Shared
Funding Exemptive Order, by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Board whenever Owner voting instructions are disregarded. The
responsibilities of the Company will be carried out with a view to the
interests of the Owners.
6.4 If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested trustees), take whatever steps are necessary to remedy
or eliminate the material irreconcilable conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts of
Participating Insurance Companies from the Fund or any Portfolio and
reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the question whether
such segregation should be implemented to a vote of all affected Owners and,
as appropriate, segregating the assets of any particular group (i.e., annuity
contract owners, life insurance contract owners, or variable contract owners
of one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Owners the option of making such a
change; and (2) establishing a new registered management investment company
or managed separate account.
6.5 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
shall be required, at the Fund's election, to withdraw the affected Separate
Account's (or subaccount's) investment in the Fund and terminate this
Agreement with respect to such Separate Account (or subaccount); provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. The responsibility to
take such remedial action shall be carried out with a view only to the
interests of the Owners. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision
is being implemented, and until the end of that six (6) month period
Distributor and the Fund shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Fund.
6.6 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Separate Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing that it has determined that such decision has created a
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six (6)
month period, Distributor and the Fund shall continue to accept and implement
orders by the Company for the purchase and redemption of shares of the Fund.
6.7 For purposes of Sections 6.4 through 6.7 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Variable Insurance Products. The Company shall not be
required by Section 6.4 to establish a new funding medium for the Variable
Insurance Products if an offer to do so has been declined by vote of a
majority of Owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then
the Company shall withdraw the affected Separate Account's investment in the
Fund and terminate this Agreement within six (6) months after the Board
informs the Company in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the disinterested Members of the Board.
6.8 If and to the extent that Rule 6e-2 or Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such Rules are applicable; and (b) Sections 3.4, 3.5, 6.2, 6.3,
6.4, 6.5, and 6.6 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VII. Indemnification
7.1 Indemnification By the Company
7.1(a) The Company shall indemnify and hold harmless the Distributor,
the Adviser, the Fund and each member of the Board and officers 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 the
Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale of the Variable Insurance Products and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Variable Insurance
Products or in the sales literature for the Variable Insurance
Products (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 shall 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 Company by or on
behalf of the Fund for use in the registration statement or
prospectus for the Variable Insurance Products or in the sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Insurance Products or Fund
shares; or
(ii) arise out of or are based upon statements or representations (other
than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied
by the Company, or persons under its control) or wrongful conduct
of the Company or persons under its control, with respect to the
sale or distribution of the Variable Insurance Products; or
(iii) 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 to the
Fund by or on behalf of the Company; or
(iv) arise as a result from any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company, as limited by and in accordance
with the provisions of Sections 7.1(b) and 7.1(c) hereof.
7.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from 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.
7.1(c) The Company shall 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 Company 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 Company
of any such claim shall not relieve the Company from any liability which 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 an Indemnified Party, the Company shall be
entitled to participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Company to such party of the election of one or both of the Company to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses
of any additional counsel retained by it, and the Company 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.
7.1(d) The Indemnified Parties shall promptly notify the Company of
the commencement of any litigation or proceeding against them in connection
with the issuance or sale of Variable Insurance Products or the operation of
the Fund. This indemnification shall be in addition to any liability which
the Company may otherwise have.
7.2 Indemnification By the Adviser
7.2(a) The Adviser shall indemnify and hold harmless the Companies,
and each of their directors and officers and each person, if any, who
controls the Companies 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 the Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the operations of the Fund and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus or sales literature for the
Fund (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 shall 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 Advisor, Distributor
or the Fund by or on behalf of the Company for use in the
registration statement or prospectus for the Fund or in the sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of Fund shares;or
(ii) arise out of or are based upon statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the
Variable Insurance Products not supplied by the Adviser,
Distributor or persons under its control) or wrongful conduct of
one or both of the Fund or the Adviser or persons under its
control, with respect to the sale or distribution of Fund shares;
or
(iii) 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 Variable Insurance Products,
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 and in conformity with information furnished to the Company by
or on behalf of the Fund; or
(iv) arise out of or result from any failure by the Adviser to
provide the services and furnish the materials under the terms of
this Agreement (including a failure to comply with the diversifica
tion requirements specified in Article II of this Agreement); or
(v) 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;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from 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 and duties
under this Agreement or to the Company, the Fund, Distributor or each
Separate Account, whichever is applicable.
7.2(c) The Adviser shall 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 Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have 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 Adviser
of any such claim shall not relieve the Adviser from any liability which 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 and Indemnified Party, the Adviser will be
entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Adviser
to such party of the Adviser's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Adviser 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.
7.2(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with this Agreement, the issuance or sale
of the Variable Insurance Products or the operation of the Account. This
indemnification shall be in addition to any liability which the Adviser may
otherwise have.
7.3 Indemnification by the Distributor
7.3(a) The Distributor shall indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 7.3) against any and
all losses, claims, damages, liabilities or litigation (including legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's shares and:
(i) arise out of or are based upon statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Variable Insurance Products not supplied by the Distributor,
Advisor, Fund or persons under its control) or wrongful conduct of
the Distributor or persons under its control, with respect to the
sale or distribution of the Fund shares; or
(ii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in sales literature of the Variable
Insurance Products, 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 and in conformity with information
furnished to the Company by the Distributor, or
(iii) arise out of or result from any failure by the
Distributor to provide the services and furnish the materials under
the terms of this Agreement; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Distributor;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof.
7.3(b) The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise 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 and duties
under this Agreement or to the Company or the Separate Account, whichever is
applicable.
7.3(c) The Distributor shall 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 Distributor in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have 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
Distributor of any such claim shall not relieve the Distributor from any
liability which it may have to the Indemnified Party against and whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against an Indemnified Party,
the Distributor will be entitled to participate, at its own expense, in the
defense thereof. The Distributor also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Distributor to such party of the Distributor's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Distributor 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.
7.3(d) The Company agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against them or any of their
respective officers or directors in connection with this Agreement, the
issuance or sale of the Variable Insurance Products or the operation of
either Account. This indemnification shall be in addition to any liability
which the Distributor may otherwise have.
ARTICLE VIII. Applicable Law
8.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of [ ].
8.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to, the Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE XI. Termination
9.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by six months' advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Distributor with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts or
not consistent with the Company's obligations to Owners; or
(c) termination by the Company by written notice to the Fund and
the Distributor with respect to any Portfolio in the event any of
the Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investments
media of the Variable Insurance Products issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Distributor with respect to any Portfolio in the event that
such Portfolio ceases to qualify as a Regulated Investment Company
under Subchapter M of the Code or any independent or resulting
failure under Section 817 of the Code, or under any successor or
similar provision of either, or if the Company reasonably believe
that the Fund may fail to so qualify; or
(e) termination by either the Fund or the Distributor by written
notice to the Company, if either one or both of the Fund or the
Distributor respectively, shall determine, in their sole judgement
exercised in good faith, that the Company has suffered a material
adverse change in their business, operations, financial condition
or prospects since the date of this Agreement or are the subject of
material adverse publicity; but no termination shall be effective
under this subsection (e) until the Company has been afforded a
reasonable opportunity to respond to a statement by the Fund or the
Distributor concerning the reason for notice of termination
hereunder; or
(f) termination by the Company by written notice to the Fund and
the Distributor, if the Company shall determine, in its sole
judgement exercised in good faith, that either the Fund or the
Distributor has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; but no
termination shall be effective under this subsection (f) until the
Company has been afforded a reasonable opportunity to respond to a
statement by the Fund or the Distributor concerning the reason for
notice of termination hereunder.
(g) At the option of the Fund if the Variable Insurance Products
cease to qualify as annuity contracts or life insurance contracts,
as applicable, under the Code, of if the Fund reasonably believes
that the Variable Insurance Products may fail to so qualify.
Termination shall be effective upon receipt of notice by the
Company.
(h) At the option of the Company, upon the Funds breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of the Company within ten (10) days after
written notice of such breach is delivered to the Funds.
(i) At the option of the Fund, upon the Company's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of the Fund within ten (10) days after
written notice of such breach is delivered to the Company.
(j) At the option of the Company, if the Variable Insurance
Products are not sold in accordance with applicable federal and/or
state law by the Distributor. Termination shall be effective
immediately upon such occurrence without notice.
(k) At the option of the Fund, if the Variable Insurance Products
are not registered and issued in accordance with applicable federal
and/or state law. Termination shall be effective immediately upon
such occurrence without notice.
9.2 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Distributor shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the
terms and conditions of this Agreement, for all Variable Insurance Products
in effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, the
Owners of the Existing Contracts shall be permitted to reallocate investments
in the Fund, redeem investments in the Fund and/or invest in the Fund upon
the making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 9.2 shall not apply to any terminations under
Article VI and the effect of such Article VI terminations shall be governed
by Article VI of this Agreement. However, in no event shall the Fund and
Distributor be required to make additional shares available to Existing
Contracts for more that six (6) months after the date of termination of the
Agreement.
9.3 The Company shall not redeem Fund shares attributable to the
Variable Insurance Products (as opposed to Fund shares attributable to the
Company's assets held in the Separate Account) except (i) as necessary to
implement Owner initiated or approved transactions, or (ii) as required by
state and/or federal laws or regulations or judicial or other legal precedent
of general application (hereinafter referred to as a "Legally Required
Redemption") or (iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the
Fund and the Distributor the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund and the Distributor) to
the effect that any redemption pursuant to the clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Variable Insurance Products, and as may be in the best interests
of Owners, as determined by the Company, the Company shall not prevent Owners
from allocating payments to a Portfolio that was otherwise available under
the Contracts without first giving the Fund or the Distributor ninety (90)
days notice of its intention to do so.
9.4 Notwithstanding any termination of this Agreement for any reason,
the terms and conditions of the following provisions of this Agreement shall
remain in effect with respect to any Existing Contract, for so long as such
Existing Contract has assets invested in the Fund: Section 1.3 to 1.10 of
Article I (governing the pricing and redemption of shares); Article II
(Representations and Warranties); Sections 3.1 through 3.3 and 3.5 of Article
III (Prospectus and Proxy Statements, and Voting); Articles IV and VIII
(Sales Material and Information; Fees and Expenses, Diversification;
Potential Conflicts; Indemnification; and Applicable Law); Article X
(Notices); and Sections 11.1, 11.2, and 11.5 through 11.8 of Article XI
(Miscellaneous). Further, notwithstanding any termination of this Agreement
for any reason, the terms and conditions of the following provisions of this
Agreement shall remain in effect with regard to Variable Insurance Products
previously invested in the Fund: Article II (Representations and Warranties);
and Article VIII (Indemnification).
ARTICLE X. Notices
Any notice shall 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 the Fund:
[ ]
If to the Company:
Liberty Life Assurance Company of Boston
175 Berkeley Street
Boston, MA 02117
Attention: Counsel
If to Distributor:
[ ]
If to Adviser:
[ ]
ARTICLE XI. Miscellaneous
11.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for any
obligations entered into on behalf of the Fund.
11.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the Owners and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come
into the public domain without the express written consent of the affected
party.
11.3 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.
11.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
11.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
11.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
11.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Distributor may assign the Agreement or
any rights or obligations hereunder to any affiliate of or company under
common control with the Distributor (but in such event the Distributor shall
continue to be liable under Article VII of this Agreement for any indemnifi
cation due to the Company, and assignee shall also be liable), if such
assignee is duly licensed and registered to perform the obligations of the
Distributor under this Agreement.
11.9 No provision of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by the
Fund, the Distributor and the Company.
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 date
specified below.
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
By its authorized officer,
By: ________________________________
Title: _____________________________
Date: ______________________________
[distributor]
By its authorized officer,
By: _______________________________
Title: ____________________________
Date: _____________________________
[mutual fund]
By its authorized officer,
By: _______________________________
Title: ____________________________
Date: _____________________________
[investment adviser]
By its authorized officer,
By: _______________________________
Title: ____________________________
Date: _____________________________
Schedule A
[mutual fund]
[ ]
Schedule B
Separate Accounts Selected Funds
Variable Account J [ ]
EXHIBIT 9
June 18, 1997
Edmund F. Kelly, President
Liberty Life Assurance Company
175 Berkeley Street
Boston, MA 02117
RE: OPINION OF COUNSEL - VARIABLE ACCOUNT J
Dear Mr. Kelly:
You have requested my opinion concerning the legality of the variable annuity
contracts being registered with the Securities and Exchange Commission by
this Registration Statement.
I have made such examination of the law and have examined such records and
documents as in my judgment was necessary or appropriate to enable me to
render the opinion expressed below.
I am of the opinion that the contracts will be legally issued and will
represent binding obligations of the depositor (Liberty Life Assurance
Company of Boston).
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
Sincerely,
/s/Lee W. Rabkin
Lee W. Rabkin, Esq.
EXHIBIT 15
Liberty Mutual Insurance Liberty Mutual Fire
Company Insurance Company
100% : :
:----------------: :
: : 90% :10%
: :-----------------------:----------------------------:
: Liberty Mutual Helmsman Management Helmsman Insurance
: Property Casualty Services, Inc. Agency, Inc.
: Holding Corporation :
: : :
: : Helmsman Insurance
: :----------------------: Agency of Illinois,
: : Inc.
: :
: : ---------------------:----------------------------:
: Liberty Northwest Liberty Insurance Liberty Life Assurance
: Insurance Corporation Corporation Company of Boston
: : :
: : :
: :-----------------------------: :
: Liberty Management Liberty Health :
: Services Inc. Plan,Inc. :
: :---------------------------:
:----------: Chickering Benefit Chickering Claims
Liberty Mutual Planning Insurance Administration,
Equity Corporation Agency, Inc. Inc.
:
:
LFC Holdings,Inc.
:
:
Liberty Financial Companies, Inc.
:
:---------------------------------------------------:
The Colonial Group, Inc. SteinRoe Services, Inc.
:
:
:--------------------------------------------------------:
Keyport Life Insurance Stein Roe & Farnham
Company Incorporated
:
:
:---------------------------:---------------------:------------------:
Investors Pool, 9A Keyport Financial Keyport Advisory Independence
Limited Partnership Services Corp. Services Corp. Life and
Annuity
Company
EXHIBIT 16
LIMITED POWER OF ATTORNEY
I, John B. Conners, a Director of Liberty Life Assurance Company of
Boston, a corporation duly organized under the laws of the Commonwealth of
Massachusetts, do hereby appoint Edmund F. Kelly, Barry S. Gilvar and Elliot
J. Williams, and each of them singly, my true and lawful attorneys, with full
power to them and each of them to sign for me and in my name as a director of
this Company all documents required for registration of a security under the
Securities Act of 1933, as amended, all documents required for registration
of an investment company under the Investment Company Act of 1940, as
amended, and all other documents required to be filed with the Securities and
Exchange Commission under those two Acts and the Act regulations.
Date: 6/13/97
/s/Lee W. Rabkin /s/John B. Conners
Signature of Witness Signature of Mr. Conners
LIMITED POWER OF ATTORNEY
I, Gary L. Countryman, Chairman of the Board and Chief Executive Officer
of Liberty Life Assurance Company of Boston, a corporation duly organized
under the laws of the Commonwealth of Massachusetts, do hereby appoint Edmund
F. Kelly, Barry S. Gilvar and Elliot J. Williams, and each of them singly, my
true and lawful attorneys, with full power to them and each of them to sign
for me and in my name as Chairman of the Board and Chief Executive Officer of
this Company all documents required for registration of a security under the
Securities Act of 1933, as amended, all documents required for registration
of an investment company under the Investment Company Act of 1940, as
amended, and all other documents required to be filed with the Securities and
Exchange Commission under those two Acts and the Act regulations.
Date: 6/11/97
/s/Carol F. Renzulki /s/Gary L. Countryman
Signature of Witness Signature of Mr. Countryman
LIMITED POWER OF ATTORNEY
I, Edmund F. Kelly, Director, President and Chief Administrative Officer
of Liberty Life Assurance Company of Boston, a corporation duly organized
under the laws of the Commonwealth of Massachusetts, do hereby appoint Barry
S. Gilvar and Elliot J. Williams, and each of them singly, my true and lawful
attorneys, with full power to sign for me and in my name as director,
President and Chief Administrative Officer of this Company all documents
required for registration of a security under the Securities Act of 1933, as
amended, all documents required for registration of an investment company
under the Investment Company Act of 1940, as amended, and all other documents
required to be filed with the Securities and Exchange Commission under those
two Acts and the Act regulations.
Date: 6/11/97
/s/Lorraine Mascardini /s/Edmund F. Kelly
Signature of Witness Signature of Mr. Kelly
LIMITED POWER OF ATTORNEY
I, A. Alexander Fontanes, Director and Vice President of Liberty Life
Assurance Company of Boston, a corporation duly organized under the laws of
the Commonwealth of Massachusetts, do hereby appoint Edmund F. Kelly, Barry
S. Gilvar and Elliot J. Williams, and each of them singly, my true and lawful
attorneys, with full power to them and each of them to sign for me and in my
name as director and Vice President of this Company all documents required
for registration of a security under the Securities Act of 1933, as amended,
all documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required
to be filed with the Securities and Exchange Commission under those two Acts
and the Act regulations.
Date: June 11, 1997
/s/ Janet Wentworth /s/A. Alexander Fontanes
Signature of Witness Signature of Mr. Fontanes
LIMITED POWER OF ATTORNEY
I, J. Paul Condrin, III, Director and Vice President of Liberty Life
Assurance Company of Boston, a corporation duly organized under the laws of
the Commonwealth of Massachusetts, do hereby appoint Edmund F. Kelly, Barry
S. Gilvar and Elliot J. Williams, and each of them singly, my true and lawful
attorneys, with full power to them and each of them to sign for me and in my
name as director and Vice President of this Company all documents required
for registration of a security under the Securities Act of 1933, as amended,
all documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required
to be filed with the Securities and Exchange Commission under those two Acts
and the Act regulations.
Date: 6/11/97
/s/ M. Moynihan /s/J. Paul Condrin, III
Signature of Witness Signature of Mr. Condrin
LIMITED POWER OF ATTORNEY
I, Elliot J. Williams , Treasurer of Liberty Life Assurance Company of
Boston, a corporation duly organized under the laws of the Commonwealth of
Massachusetts, do hereby appoint Edmund F. Kelly and Barry S. Gilvar, and
each of them singly, my true and lawful attorneys, with full power to sign
for me and in my name as a director and Treasurer of this Company all
documents required for registration of a security under the Securities Act of
1933, as amended, all documents required for registration of an investment
company under the Investment Company Act of 1940, as amended, and all other
documents required to be filed with the Securities and Exchange Commission
under those two Acts and the Act regulations.
Date: 6/17/97
/s/Patricia Smith /s/Elliot J. Williams
Signature of Witness Signature of Mr. Williams
LIMITED POWER OF ATTORNEY
I, Christopher C. Mansfield, a Director of Liberty Life Assurance
Company of Boston, a corporation duly organized under the laws of the
Commonwealth of Massachusetts, do hereby appoint Edmund F. Kelly, Barry S.
Gilvar and Elliot J. Williams, and each of them singly, my true and lawful
attorneys, with full power to them and each of them to sign for me and in my
name as a director of this Company all documents required for registration of
a security under the Securities Act of 1933, as amended, all documents
required for registration of an investment company under the Investment
Company Act of 1940, as amended, and all other documents required to be filed
with the Securities and Exchange Commission under those two Acts and the Act
regulations.
Date: June 11, 1997
/s/Lee Rabkin /s/Christopher C. Mansfield
Signature of Witness Signature of Mr. Mansfield
LIMITED POWER OF ATTORNEY
I, Morton E. Spitzer, Director, Executive Vice President and Chief
Operating Officer-Individual of Liberty Life Assurance Company of Boston, a
corporation duly organized under the laws of the Commonwealth of
Massachusetts, do hereby appoint Edmund F. Kelly, Barry S. Gilvar and Elliot
J. Williams, and each of them singly, my true and lawful attorneys, with full
power to them and each of them to sign for me and in my name as a director
and an Executive Vice President of this Company all documents required for
registration of a security under the Securities Act of 1933, as amended, all
documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required
to be filed with the Securities and Exchange Commission under those two Acts
and the Act regulations.
Date: June 11, 1997
/s/Lee Rabkin /s/Morton E. Spitzer
Signature of Witness Signature of Mr. Spitzer
LIMITED POWER OF ATTORNEY
I, Jean M. Scarrow, Director, Executive Vice President and Chief
Operating Officer-Group of Liberty Life Assurance Company of Boston, a
corporation duly organized under the laws of the Commonwealth of
Massachusetts, do hereby appoint Edmund F. Kelly, Barry S. Gilvar and Elliot
J. Williams, and each of them singly, my true and lawful attorneys, with full
power to them and each of them to sign for me and in my name as a director
and an Executive Vice President of this Company all documents required for
registration of a security under the Securities Act of 1933, as amended, all
documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required
to be filed with the Securities and Exchange Commission under those two Acts
and the Act regulations.
Date: 6/11/97
/s/Rae E. Levisque /s/Jean M. Scarrow
Signature of Witness Signature of Ms. Scarrow
EXHIBIT 17
Tax-Sheltered Annuity ("TSA") Acknowledgement
I am aware that: (a) due to Section 403(b)(11) of the Internal Revenue Code,
there will be restrictions on my right to redeem the varaible annuity
contract to be issued by Liberty Life Assurance Company; (b) these
restrictions are described in the prospectus for such contract; and (c)
subject to the continuation of current IRS policy, there are other investment
alternatives under my employer's 403(b) arrangement to which I may later
elect to transfer the surrender value of my Liberty Life variable annuity
contract.
__________________ ____________________________
Date Signature of TSA Applicant
EXHIBIT 18
ADMINISTRATIVE SERVICES AGREEMENT
IT IS HEREBY AGREED by and between LIBERTY LIFE ASSURANCE COMPANY OF
BOSTON ("INSURANCE COMPANY"), a Massachusetts corporation located at 175
Berkeley Street, Boston, MA, 02117 and KEYPORT LIFE INSURANCE COMPANY
("SERVICING COMPANY"), a Rhode Island corporation located at 125 High Street,
Boston, MA 02110, as follows:
I
INSURANCE COMPANY proposes to issue and sell in New York flexible
premium contracts and certificates designated by form number DVA(1)NY
("Contracts") to the public. Such Contracts provide for accumulation of
values on a variable basis and for payment of periodic annuity payments on
both a variable and a fixed basis.
II
SERVICING COMPANY shall provide administration, electronic data
processing, Contract owner services, and agent services required for the
Contracts and normally associated with the conduct of an insurance business
in accordance with INSURANCE COMPANY's practices and procedures as provided
to SERVICING COMPANY from time to time. SERVICING COMPANY shall initially
provide the services summarized in the attached Schedule of Services and such
modified or additional services as may be agreed upon in writing by the
parties from time to time. INSURANCE COMPANY's initial responsibilities are
summarized in such Schedule of Services and may be modified in similar
fashion.
SERVICING COMPANY shall perform in such a manner so that INSURANCE
COMPANY and its principal underwriter for the Contracts can comply with state
insurance laws and regulations, federal and state securities laws and
regulations, and federal and state tax laws and regulations applicable to the
sale, recordkeeping and administration of the Contracts.
SERVICING COMPANY warrants and represents that the level of performance
of the services it shall provide INSURANCE COMPANY shall be equal to that
provided by SERVICING COMPANY for like administration it provides in
connection with its own contracts that similarly contain both variable and
fixed provisions.
III
SERVICING COMPANY shall be compensated for its services with respect to
Contracts as set forth in the attached Compensation Schedule. Any
Compensation Schedule may be changed by INSURANCE COMPANY as of a specified
date, provided such date is at least six months after the date notice of the
change is received by SERVICING COMPANY. Any such change will apply only to
Contracts issued by INSURANCE COMPANY on or after the effective date of the
change.
IV
Notwithstanding any other provision of this Agreement, it is understood
and agreed that INSURANCE COMPANY has the ultimate legal responsibility for
providing services to Contract owners and for complying with governmental
regulatory requirements applicable to such services. SERVICING COMPANY shall
not be responsible for any claims arising from or relating to the sales or
marketing of the Contracts. However, SERVICING COMPANY shall be responsible
to INSURANCE COMPANY for its failure to perform the services provided
hereunder and shall be liable for all actual and consequential expense and
damages, including the reimbursement of any fine or penalty assessed against
INSURANCE COMPANY, arising from SERVICING COMPANY's failure to perform in a
competent or timely manner.
V
At least once a month, SERVICING COMPANY shall furnish to INSURANCE
COMPANY a report which shall be in a form mutually agreed upon by the parties
and which shall include specific operating data and information necessary to
monitor SERVICING COMPANY's services.
SERVICING COMPANY shall retain, in accessible form, reports and other
records and documents for such time periods and in such form as are mutually
agreed upon by the parties.
Individuals, duly authorized in writing, of INSURANCE COMPANY shall upon
reasonable prior written notice have access to books and records of SERVICING
COMPANY pertaining to its servicing of Contracts. Such access shall be
during normal business hours and subject to reasonable conditions of
SERVICING COMPANY.
On reasonable prior written notice to SERVICING COMPANY, INSURANCE
COMPANY shall have the right to audit SERVICING COMPANY's operations and its
maintenance of records and data pertaining to administration of the
Contracts. Such audits may be performed by internal audit staff or by
outside auditors. Such audits shall be during normal business hours and
subject to reasonable conditions of SERVICING COMPANY.
SERVICING COMPANY agrees that all records and other data pertaining to
the Contracts are the exclusive property of INSURANCE COMPANY and that all
such records and other data whether maintained in written or electronic
format shall be furnished to INSURANCE COMPANY by SERVICING COMPANY upon
termination of this Agreement.
Furthermore, while this Agreement is in effect, SERVICING COMPANY shall
deliver to INSURANCE COMPANY any records and other data pertaining to the
Contracts that are requested by INSURANCE COMPANY. Such records and data
shall be delivered as soon as is practicable and in a form mutually agreed to
by the parties. Such delivery shall not preclude SERVICING COMPANY from
keeping copies of such data or records for its own files while this Agreement
is in effect.
VI
This Agreement shall be effective upon its execution. This Agreement
shall remain in effect unless terminated as hereinafter provided.
This Agreement may be terminated at any time by either party upon not
less than six months written notice to the other party.
During the period between notice of termination and the effective date
of termination, SERVICING COMPANY shall cooperate with INSURANCE COMPANY and
use its best efforts to establish appropriate procedures to effect an orderly
transfer of administration. During the period between notice of termination
and the effective date of termination, this Agreement shall continue to
operate in accordance with its terms except as otherwise agreed to by the
parties.
VII
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given on the
date of service if served personally on the President of the party to whom
notice is to be given, or on the date of mailing if sent by certified mail,
postage prepaid and properly addressed to such President.
VIII
This Agreement and performance hereunder shall be construed in
accordance with and governed by Massachusetts law.
This Agreement and the rights and duties hereunder shall not be
assignable by either party except upon the written consent of the other.
IN WITNESS WHEREOF, the parties have caused this instrument to be signed
on their behalf on February 16, 1996 by their duly authorized respective
officers.
LIBERTY LIFE ASSURANCE COMPANY
OF BOSTON
("INSURANCE COMPANY")
ATTEST: /s/Lee W. Rabkin BY: /s/Edmund F. Kelly
President
KEYPORT LIFE INSURANCE COMPANY
("SERVICING COMPANY")
ATTEST: /s/Elizabeth B. Love BY: /s/John W. Rosensteel
President
lib2.agr
