As filed with the Securities and Exchange Commission on July 31, 1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST OF
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
(Exact Name of Trust)
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
(Name of Depositor)
One American Square
P.O. Box 368
Indianapolis, Indiana 46206-0368
(Address of Depositor's Principal Executive Office)
John C. Swhear, Esq.
Counsel
American United Life Insurance Company(R)
One American Square
P.O. Box 368
Indianapolis, Indiana 46206-0368
(Name and Address of Agent for Service of Process)
Copies to:
Jeffrey S. Puretz
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
Title of securities being registered: Interests in the Separate
Account under Flexible Premium Adjustable Variable Life Insurance
Policies.
Proposed maximum aggregate offering price to the public of the
securities being registered: The Registrant is registering an
indefinite number of securities under the Securities Act of 1933
pursuant to Rule 24f-2 under the Investment Company Act of 1940 and
will file its Rule 24f-2 Notice for the fiscal year ending December
31, 1997 on or before March 31, 1998.
Amount of filing fee: None.
Approximate date of proposed public offering: As soon as practicable
after the effective date of the Registration Statement. 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
Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
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AUL American Individual Variable Life Unit Trust of
American United Life Insurance Company(R)
Flexible Premium Adjustable
Variable Life Insurance Policies
RECONCILIATION AND TIE
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<S> <C> <C>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
1. (a) Name of trust............................ Prospectus front cover
(b) Title of securities issued.............. Prospectus front cover
2. Name and address of each depositor.......... Prospectus front cover
3. Name and address of trustee................. N/A
4. Name and address of each principal
underwriter............................... Sale of the Policies
5. State of organization of trust.............. Separate Account
6. Execution and termination of trust
agreement................................. Separate Account
9. Litigation................................. Other Information About the
Policies and AUL - Litigation
II. General Description of the Trust
and Securities of the Trust
10. (a) Registered or bearer Summary and Diagram
securities........................ of the Policy
(b) Cumulative or distributive Summary and Diagram
securities......................... of the Policy
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(c) Withdrawal or Redemption............... Cash Benefits - Policy Loans; Cash
Benefits - Surrendering the Policy for
Net Cash Value
(d) Conversion, transfer, etc................ Premium Payments and Allocations -
Transfer Privilege; Premium Payments and Allocations
- Dollar Cost Averaging Program;
Premium Payments and Allocations -
Portfolio Rebalancing Program; Cash Benefits
- Policy Loans; Cash Benefits - Partial
Surrenders; Other Policy Benefits and
Provisions Exchange for Paid-Up Policy
(e) Lapse or Default.......................... Premium Payments and Allocations - Premium Payments to Prevent Lapse;
Other Policy Benefits and Provisions - Reinstatement
(f) Voting rights............................. Other Information About the Policies and AUL - Voting Rights
(g) Notice to security holders............... Other Policy Benefits and Provisions -
Changes in the Policy or Benefits;
Other Policy Benefits and Provisions
Reports to Policy Owners; Other
Information About the Policies and
AUL - Addition, Deletion or
Substitution of Investments
(h) Consents required........................ Other Information About the
Policies and AUL - Voting Rights;
Other Policy Benefits and Provisions
- Changes in the Policy or
Benefits; Other Information About
the Policies and AUL - Voting
Rights; Other Information About
the Policies and AUL - Addition,
Deletion or Substitution of Investments
ii
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(i) Other provisions......................... Premium Payments and Allocations; Charges and Deductions;
Death Benefits and Changes in Face Amount; Cash
Benefits; Summary and Diagram of the
Policy; Fixed Account
11. Type of securities comprising units........... Prospectus front cover; General
Information About AUL, the Separate
Account and the Funds
12. Certain information regarding periodic
payment plan certificates.................... General Information About AUL, the
Separate Account and the Funds- The Funds
13. (a) Load, fees, expenses, etc............. Charges and Deductions
(b) Certain information regarding
periodic payment plan
certificates........................ N/A
(c) Certain percentages................... Charges and Deductions
(d) Certain other fees, etc............... Charges and Deductions
(e) Certain other profits or benefits..... Premium Payments and Allocations
- Transfer Privilege; Fixed Account
Transfers from Fixed Account; Illustrations
of Account Values, Cash Values,
Death Benefits and Accumulated
Premium Payments
(f) Other benefits.......................... General Information About AUL, the
Separate Account and the Funds - The Funds
(g) Ratio of annual charges to
income.................................. N/A
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14. Issuance of trust's securities................ Summary and Diagram of the Policy; Premium Payments
and Allocations
15. Receipt and handling of payments Premium Payments and
from purchasers............................. Allocations
16. Acquisition and disposition of General Information About AUL,
underlying securities ...................... the Separate Account and the Funds; Charges and
Deductions- Fund Expenses
17. Withdrawal or redemption...................... Premium Payments and Allocations-Transfer
Privilege; Fixed Account Transfers from
Fixed Account; Fixed Account - Payment
Deferral; Charges and Deductions -
Surrender Charge; Cash Benefits -
Surrendering the Policy for Net Cash Value;
Cash Benefits - Policy Loans; Cash Benefits
- Partial Surrenders; Cash Benefits -
Settlement Options; Other Information
About the Policies and AUL - Reinstatement
18. (a) Receipt, custody and General Information About AUL,
disposition of income ............... the Separate Account and the
Funds - Separate Account; Other
Policy Benefits and Provisions -
Dividends; Tax Considerations
(b) Reinvestment of
distributions...................... N/A
(c) Reserves or special funds............ N/A
(d) Schedule of distributions............ N/A
19. Records, accounts and reports................. Other Policy Benefits and Provisions - Reports to Policy Owners
iv
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20. Certain miscellaneous provisions
of trust agreement:
(a) Amendment............................ N/A
(b) Termination.......................... N/A
(c) and (d) Trustee, removal and
successor.......................... N/A
(e) and (f) Depositors, removal
and successor...................... N/A
21. Loans to security holders..................... Cash Benefits - Policy Loans
22. Limitations on liability...................... N/A
23. Bonding arrangements.......................... N/A
24. Other material provisions of
trust agreement.............................. Other Information About the
Policies and AUL
III. Organizations, Personnel and
Affiliated Persons of Depositor
25. Organization of depositor..................... AUL
26. Fees received by depositor
(a) Under the policies................... N/A
(b) From the Funds....................... General Information About AUL, the
Separate Account and the Funds - The Funds
27. Business of depositor......................... General Information About AUL, the
Separate Account and the Funds - AUL
28. Certain information as to officials
and affiliated persons of depositor.......... Other Information About the
Policies and AUL - AUL Directors and
Executive Officers
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29. Voting securities of depositor................ N/A
30. Persons controlling depositor................. N/A
31. Payments by depositor for certain
services rendered to trust.................. N/A
32. Payments by depositor for certain
other services rendered to
trust....................................... N/A
33. Remuneration of employees of
depositor for certain services
rendered to trust........................... N/A
34. Remuneration of other persons
for certain services rendered
to trust.................................... N/A
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities
by states................................... N/A
37. Revocation of authority to
distribute.................................. N/A
38. (a) Method of distribution.................. Other Information About the Policies
and AUL - Sale of the Policies
(b) Underwriting agreements................. Other Information About the Policies
and AUL - Sale of the Policies
(c) Selling agreements...................... Other Information About the Policies
and AUL - Sale of the Policies
39. (a) Organization of principal
underwriters....................... See Item 25
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(b) N.A.S.D. membership of
principal underwriters.............. Other Information About the Policies
and AUL - Sale of the Policies
40. Certain fees received by principal
underwriters................................ See Item 26
41. (a) Business of each principal
underwriter........................ See Item 27
42. Ownership of trust's securities
by certain persons.......................... N/A
43. Certain brokerage commissions
received by principal
underwriters................................ N/A
44. (a) Method of valuation.................. How Your Account Values Vary
(b) Schedule as to offering
price.............................. Charges and Deductions
(c) Variation in offering price
to certain persons................. Charges and Deductions
45. Suspension of redemption rights............... N/A
46. (a) Redemption Valuation..................... How Your Account Value Varies; Cash
Benefits - Surrender Charge
(b) Schedule as to redemption
price.................................... Cash Benefits - Surrender Charge
47. Maintenance of position in
underlying securities........................ General Information About AUL,
the Separate Account and the
Funds Separate Account; General
Information About AUL, the
Separate Account and the Funds
- The Funds; Premium Payments
and Allocations - Premium Allocations
and Crediting
vii
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V. Information Concerning the Trustee or Custodian
48. Organization and regulation of
trustee..................................... N/A
49. Fees and expenses of trustees................. N/A
50. Trustee's lien................................ N/A
VI. Information Concerning Insurance of
Holders of Securities
51. Insurance of holders of trust's Summary and Diagram of the
securities................................... Policy; General Information
About AUL, the Separate Account and the
Funds; Death Benefit and Changes in
Face Amount; Cash Benefits; Other
Policy Benefits and Provisions; Other
Information About the Policies and AUL;
Premium Payments and Allocations
52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities......................... Other Information About the Policies
and AUL - Addition, Deletion or
Substitution of Investments; General
Information About AUL, the Separate
Account and the Funds
(b) Transactions involving elimination
of underlying securities........... N/A
(c) Policy regarding substitution
or elimination of under-
lying securities................... See Item 52(a)
(d) Fundamental policy not other-
wise covered....................... N/A
53. Tax status of trust........................... Tax Considerations
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VIII. Financial and Statistical Information
54. Trust's securities during last
ten years................................... N/A
55. Trust's securities during last
ten years................................... N/A
</TABLE>
<PAGE>
PROSPECTUS
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE POLICY
American United Life Insurance Company(R)
One American Square
P.O. Box 368
Indianapolis, Indiana 46206-0368
This Prospectus describes a flexible premium adjustable variable life insurance
policy (the "Policy") offered by American United Life Insurance Company(R)
("AUL," "we," "us" or "our"). The Policy is designed to provide insurance
protection on the Insured (or Insureds if you choose the Last Survivor Rider)
named in the Policy, and at the same time provide you with the flexibility to
vary the amount and timing of premium payments and to change the amount of death
benefits payable under the Policy. This flexibility allows you to provide for
your changing insurance needs under a single insurance Policy.
You also have the opportunity to allocate Net Premiums and Account Value to one
or more Investment Accounts of the AUL American Individual Variable Life Unit
Trust (the "Separate Account") and to AUL's general account (the "Fixed
Account"), within limits. This Prospectus generally describes only that portion
of the Account Value allocated to the Separate Account. For a brief summary of
the Fixed Account, see "Fixed Account." The assets of each Investment Account
are invested in a corresponding mutual fund portfolio (each, a "Portfolio") of
AUL American Series Fund, Inc., Alger American Portfolio, American Century
Variable Portfolios, Inc., Fidelity Variable Insurance Products Fund, Fidelity
Variable Insurance Products Fund II, and T. Rowe Price Equity Series, Inc. (each
a "Fund"). Each Fund, and its Portfolio(s), is managed by the investment adviser
shown below:
<TABLE>
<S> <C>
Fund Investment Adviser
AUL American Series Fund, Inc. AUL
AUL American Equity Portfolio
AUL American Bond Portfolio
AUL American Money Market Portfolio
AUL American Managed Portfolio
Alger American Fund Fred Alger & Company
Alger American Growth Portfolio
American Century Variable Portfolios, Inc. American Century Investment Management, Inc.
VP Capital Appreciation
VP International
Fidelity Variable Insurance Products Fund Fidelity Management & Research Company
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Overseas Portfolio
<PAGE>
Fidelity Variable Insurance Products Fund II Fidelity Management & Research Company
Asset Manager Portfolio
Contrafund
Index 500 Portfolio
Money Market Portfolio
T. Rowe Price Equity Series, Inc. T. Rowe Price Associates, Inc.
T. Rowe Price Equity Income Portfolio
</TABLE>
The prospectuses for the Funds describe their respective Portfolios, including
the risks of investing in the Portfolios, and provide other information on the
Funds.
You can select from two death benefit options available under the Policy: a
level death benefit ("Option 1") and a death benefit that fluctuates with the
Account Value ("Option 2"). AUL guarantees that the Death Benefit Proceeds will
never be less than the specified Death Benefit in force (less any outstanding
loan and loan interest and plus any benefits provided by rider) so long as
sufficient premiums are paid to keep the Policy in force.
The Policy provides for a Net Cash Value that can be obtained by surrendering
the Policy. Because this value is based on the performance of the Portfolios of
the Funds, to the extent of allocations to the Separate Account, there is no
guaranteed minimum Net Cash Value.
If the Net Cash Value is insufficient to cover the Monthly Deduction under the
Policy, the Policy will lapse without value. However, AUL guarantees to keep the
Policy in force during the Guarantee Period, so long as we receive from you the
Required Premium for the Guarantee Period, and so long as certain other
conditions are met. The Policy also permits loans and Partial Surrenders, within
limits.
It may not be advantageous to replace existing insurance with this Policy.
Within certain limits, you may return the Policy, or exchange it for a paid-up
policy for a reduced Death Benefit that provides benefits that do not vary with
the investment results of a separate account.
THIS PROSPECTUS PRESENTS INFORMATION YOU SHOULD KNOW BEFORE DECIDING TO PURCHASE
A POLICY. IT SHOULD BE RETAINED FOR FUTURE REFERENCE. PROSPECTUSES FOR THE FUNDS
SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.
AN INVESTMENT IN THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, NOR IS THE POLICY FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN
THE POLICY INVOLVES CERTAIN RISKS, INCLUDING THE LOSS OF PREMIUM PAYMENTS
(PRINCIPAL).
2
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is __________, 1997.
3
<PAGE>
PROSPECTUS CONTENTS
Page
DEFINITIONS OF TERMS........................................... ..............7
SUMMARY AND DIAGRAM OF THE POLICY............................................11
GENERAL INFORMATION ABOUT AUL, THE SEPARATE ACCOUNT AND THE FUNDS............15
AUL.................................................................15
Separate Account....................................................15
The Funds...........................................................15
PREMIUM PAYMENTS AND ALLOCATIONS.............................................18
Applying for a Policy................................... ...........18
Right to Examine Policy.............................................19
Premiums............................................................19
Premium Payments to Prevent Lapse...................................20
Premium Allocations and Crediting...................................21
Transfer Privilege..................................................22
Dollar Cost Averaging Program.......................................23
Portfolio Rebalancing Program.......................................23
FIXED ACCOUNT................................................................24
Minimum Guaranteed and Current Interest Rates.......................24
Calculation of the Fixed Account Value..............................25
Transfers from the Fixed Account....................................25
Payment Deferral....................................................25
CHARGES AND DEDUCTIONS.......................................................25
Premium Expense Charges.............................................25
Monthly Deduction...................................................25
Mortality and Expense Risk Charge...................................27
Surrender Charge....................................................27
Taxes...............................................................28
Special Uses........................................................28
Fund Expenses.......................................................28
HOW YOUR ACCOUNT VALUES VARY.................................................28
Determining the Account Value.......................................29
Cash Value and Net Cash Value.......................................30
DEATH BENEFIT AND CHANGES IN FACE AMOUNT.................................. ..30
Amount of Death Benefit Proceeds....................................31
Initial Face Amount and Death Benefit Option..................... ..31
Changes in Death Benefit Option.....................................31
Changes in Face Amount..............................................32
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Selecting and Changing the Beneficiary...............................33
CASH BENEFITS................................................................33
Policy Loans........................................................33
Surrendering the Policy for Net Cash Value..........................34
Partial Surrenders..................................................35
Settlement Options..................................................35
Specialized Uses of the Policy......................................36
Life Insurance Retirement Plans.....................................36
Risks of Life Insurance Retirement Plans............................37
ILLUSTRATIONS OF ACCOUNT VALUES, CASH VALUES, DEATH BENEFITS AND ACCUMULATED
PREMIUM PAYMENTS............................................................38
OTHER POLICY BENEFITS AND PROVISIONS.........................................47
Limits on Rights to Contest the Policy..............................47
Changes in the Policy or Benefits...................................48
Change of Insured...................................................48
Exchange for Paid-Up Policy.........................................48
When Proceeds Are Paid..............................................48
Dividends...........................................................49
Reports to Policy Owners............................................49
Assignment..........................................................49
Reinstatement.......................................................49
Rider Benefits......................................................49
TAX CONSIDERATIONS...........................................................52
Tax Status of the Policy............................................52
Tax Treatment of Policy Benefits....................................53
Estate and Generation Skipping Taxes................................55
Life Insurance Purchased for Use in Split Dollar Arrangements.......56
Non-Individual Ownership of Contracts...............................56
Possible Charge for AUL's Taxes.....................................56
OTHER INFORMATION ABOUT THE POLICIES AND AUL.................................57
Policy Termination..................................................57
Resolving Material Conflicts........................................57
Addition, Deletion or Substitution of Investments...................57
Voting Rights.......................................................58
Sale of the Policies................................................59
AUL Directors and Executive Officers................................59
State Regulation....................................................64
Additional Information..............................................64
Independent Auditors................................................64
Litigation..........................................................64
Legal Matters.......................................................64
Financial Statements................................................64
5
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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUSES OF THE FUNDS, OR THE STATEMENTS OF ADDITIONAL
INFORMATION OF THE FUNDS.
6
<PAGE>
DEFINITIONS OF TERMS
ACCOUNT VALUE
The Account Value is the sum of your interest in the Variable Account,
the Fixed Account, and the Loan Account.
AGE
Issue Age means the Insured's age as of the Contract Date. Attained
Age means the Issue Age increased by one for each complete Policy
Year.
CASH VALUE
The Cash Value is the Account Value less the Surrender Charge.
CONTRACT DATE
The date from which Monthiversaries, Policy Years, and Policy
Anniversaries are measured. Suicide and incontestability periods are
measured from the Contract Date.
DEATH BENEFIT AND DEATH BENEFIT PROCEEDS
This Policy has two death benefit options. The Death Benefit Proceeds
are the Death Benefit less any outstanding loan and loan interest,
plus any benefits provided by rider.
FACE AMOUNT
The Face Amount shown on the Policy Data Page of the Policy, or as
subsequently changed.
FIXED ACCOUNT
An account which is part of our general account, and is not part of or
dependent on the investment performance of the Variable Account.
GUARANTEE PERIOD
The period shown on the Policy Data Page during which the Policy will
remain in force if cumulative premiums less any outstanding loan and
loan interest and Partial Surrenders equal or exceed the Required
Premium for the Guarantee Period. The Guarantee Period terminates on
any Monthiversary that the test fails.
HOME OFFICE
One American Square, P.O. Box 368, Indianapolis, Indiana 46206-0368.
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INSURED
The insured named on the Policy Data Page of the Policy. The Insured
may or may not be the Owner. An available rider provides for coverage
on the lives of two Insureds.
INVESTMENT ACCOUNTS
One or more of the subdivisions of the Separate Account. Each
Investment Account is invested in a different Portfolio.
ISSUE DATE
The date the Policy is issued.
LOAN ACCOUNT
A portion of the Account Value which is collateral for loan amounts.
MINIMUM INSURANCE PERCENTAGE
The minimum percentage of insurance required to qualify the Policy
under the Internal Revenue Code. A table of these amounts is on the
Policy Data Page of your Policy.
MODIFIED ENDOWMENT
A classification of policies determined under the Internal Revenue
Code to be modified endowment contracts, which affects the tax status
of distributions from the Policy.
MONTHIVERSARY
The same date of each month as the Contract Date. If a Monthiversary
falls on a day which is not a Valuation Date, the processing of the
Monthiversary will be the next Valuation Date.
NET CASH VALUE
Cash Value less outstanding loans and loan interest.
NET PREMIUM
The total premium paid reduced by premium expense charges.
OWNER
The owner named in the application for a Policy, unless changed.
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PARTIAL SURRENDER
A withdrawal of a portion of the Account Value.
POLICY ANNIVERSARY
The same date each year as the Contract Date.
POLICY DATA PAGE
The Policy Data Page in your Policy, or the supplemental Policy Data
Page most recently sent to you by us.
POLICY YEAR
One year from the Contract Date and from each Policy Anniversary.
PORTFOLIO
A separate investment fund in which the Separate Account invests.
PROPER NOTICE
Notice that is received at our Home Office in a form acceptable to us.
REQUIRED PREMIUM FOR THE GUARANTEE PERIOD
The amount that must be paid on a cumulative basis to keep this Policy
in force during the Guarantee Period.
RISK AMOUNT
The Death Benefit divided by 1.00246627 less the Account Value.
SEPARATE ACCOUNT
AUL American Individual Variable Life Unit Trust. The Separate Account
is segregated into several Investment Accounts.
VALUATION DATE
Valuation Dates are the dates on which the Investment Accounts are
valued. A Valuation Date is any date on which the New York Stock
Exchange is open for trading and we are open for business.
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VALUATION PERIOD
A Valuation Period begins at the close of one Valuation Date and ends
at the close of the next succeeding Valuation Date.
VARIABLE ACCOUNT
The Account Value of this Policy which is invested in one or more
Investment Accounts.
WE
"We", "us" or "our" means AUL.
YOU
"You" or "your" means the Owner of this Policy.
10
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SUMMARY AND DIAGRAM OF THE POLICY
The following summary of Prospectus information and diagram of the Policy should
be read in conjunction with the detailed information appearing elsewhere in this
Prospectus. Unless otherwise indicated, the description of the Policy in this
Prospectus assumes that the Policy is in force, that the Last Survivor Rider is
not in force, and that there are no outstanding loans and loan interest.
The Policy is similar in many ways to fixed-benefit life insurance. As with
fixed-benefit life insurance, the Owner of a Policy pays premium payments for
insurance coverage on the Insured. Also, like fixed-benefit life insurance, the
Policy provides for accumulation of Net Premiums and a Net Cash Value that is
payable if the Policy is surrendered during the Insured's lifetime. As with
fixed-benefit life insurance, the Net Cash Value during the early Policy Years
is likely to be lower than the premium payments paid.
However, the Policy differs from fixed-benefit life insurance in several
important respects. Unlike fixed-benefit life insurance, the Death Benefit may
and the Account Value will increase or decrease to reflect the investment
performance of the Investment Accounts to which Account Value is allocated.
Also, there is no guaranteed minimum Net Cash Value. Nonetheless, AUL guarantees
to keep the Policy in force during the Guarantee Period shown on the Policy Data
Page of your Policy if, on each Monthiversary, the sum of the premiums paid to
date, less any Partial Surrenders, loans and loan interest, equals or exceeds
the Required Premium for the Guarantee Period (shown on the Policy Data Page of
your Policy) multiplied by the number of Policy Months since the Policy Date.
Otherwise, if the Net Cash Value is insufficient to pay the Monthly Deduction,
the Policy will lapse without value after a grace period. See "Premium Payments
to Prevent Lapse." If a Policy lapses while loans are outstanding, adverse tax
consequences may result. See "Tax Considerations."
The most important features of the Policy, such as charges, cash surrender
benefits, Death Benefits, and calculation of Cash Values, are summarized in the
diagram on the following pages.
Purpose of the Policy. The Policy is designed to provide long-term
insurance benefits, and may also provide long-term accumulation of Cash Value.
The Policy should be evaluated in conjunction with other insurance policies that
you own, as well as the need for insurance and the Policy's long-term potential
for growth. It may not be advantageous to replace existing insurance coverage
with this Policy. In particular, replacement should be carefully considered if
the decision to replace existing coverage is based solely on a comparison of
Policy illustrations. See "Illustrations" and "Specialized Uses of the Policy."
Illustrations. Illustrations included in this Prospectus or used in
connection with the purchase of a Policy that illustrate Policy Cash Values and
Death Benefit Proceeds for prototype insureds are based on hypothetical rates of
return.
The illustrations show Policy values based on current charges and,
alternatively, guaranteed charges. See "Illustrations of Account Values, Cash
Values, Death Benefits and Accumulated Premium Payments."
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<PAGE>
Policy Tax Compliance. AUL intends for the Policy to satisfy the definition
of a life insurance policy under Section 7702 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"). Under certain circumstances, a
Policy will be treated as a Modified Endowment under federal tax law. AUL will
monitor the Policies and will attempt to notify you on a timely basis if your
Policy is in jeopardy of violating the federal tax definition of life insurance
or becoming a Modified Endowment. However, we do not undertake to give you such
notice or take any corrective action. We reserve the right to refund any
premiums that may cause the Policy to become a Modified Endowment. For further
discussion of the tax status of a Policy and the tax consequences of being
treated as a life insurance contract or a Modified Endowment, see "Tax
Considerations."
Right to Examine Policy and Policy Exchange. For a limited time, you have
the right to cancel your Policy and receive a refund. See "Right to Examine
Policy." Net Premiums are generally allocated to the Fixed Account and
Investment Accounts on the later of the day the "right to examine" period
expires, or the date we receive the premium at our Home Office. See "Premium
Allocations and Crediting."
You may exchange the Policy for a paid-up whole life policy with a level face
amount, not greater than the Policy's Face Amount, that can be purchased by the
Policy's Net Cash Value. See "Exchange for Paid-Up Policy."
Owner Inquiries. If you have any questions, you may write or call our Home
Office at One American Square, P.O. Box 368, Indianapolis, Indiana 46206-0368,
1-317-263-1877.
Diagram of Contract
Premium Payments
. You select a payment plan but are not required to pay premium payments
according to the plan. You can vary the amount and frequency.
. The Policy's minimum initial premium payment depends on the Insured's age, sex
and risk class, Initial Face Amount selected, any supplemental and/or rider
benefits, and any planned periodic premiums.
. Unplanned premium payments may be made, within limits.
. Extra premium payments may be necessary to prevent lapse.
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Deductions from Premium Payments
. For state and local premium taxes (2.5% of premium payments)
. For sales charges (3.5% of each premium paid during the first ten Policy
Years; 1.5% of each premium paid thereafter).
Net Premium Payments
. You direct the allocation of Net Premium payments among 16 Investment Accounts
of the Separate Account and the Fixed Account. (See rules and limits on Net
Premium payment allocations.)
. Each Investment Account invests in a corresponding portfolio of a mutual fund:
<TABLE>
<S> <C>
Mutual Fund Portfolio
AUL American Series Fund, Inc. Equity Portfolio
Bond Portfolio
Managed Portfolio
Money Market Portfolio
Alger American Fund Alger American Growth Portfolio
American Century Variable Portfolios, Inc. VP Capital Appreciation
VP International
Fidelity Variable Insurance Products Fund Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Overseas Portfolio
Fidelity Variable Insurance Products Fund II Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Money Market Portfolio
T. Rowe Price Equity Series, Inc. T. Rowe Price Equity Income
. Interest is credited on amounts allocated to the Fixed Account at a minimum
guaranteed rate of 3%. (See rules and limits on transfers from the Fixed
Account allocation).
</TABLE>
Deductions
From Account Value
. Monthly deduction for cost of insurance, administration fees and charges for
any supplemental and/or rider benefits. Administration fees are currently
$30.00 per month for the first Policy Year and $5.00 per month thereafter.
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<PAGE>
From Investment Accounts
. Monthly charge at a guaranteed annual rate of 0.75% from the Investment
Accounts during the first 10 Policy Years and 0.25% thereafter. This charge is
not deducted from the Fixed Account value.
. Investment advisory fees and operating expenses are deducted from the assets
of each Portfolio.
Account Value
. Account Value is equal to Net Premiums, as adjusted each Valuation Date to
reflect Investment Account investment experience, interest credited on Fixed
Account value, charges deducted and other Policy transactions (such as
transfers, loans and surrenders).
. Varies from day to day. There is no minimum guaranteed Account Value. The
Policy may lapse if the Net Cash Value is insufficient to cover a Monthly
Deduction due.
. Can be transferred among the Investment Accounts and Fixed Account. A transfer
fee of $25.00 may apply if more than 12 transfers are made in a Policy Year.
. Is the starting point for calculating certain values under a Contract, such as
the Cash Value, Net Cash Value and the Death Benefit used to determine Death
Benefit Proceeds.
<TABLE>
<S> <C>
Cash Benefits Death Benefits
. Loans may be taken for amounts up to 90% of the . Income tax free to beneficiary.
Account Value, less loan interest due on the next
Policy Anniversary and any surrender charges. . Available as lump sum or under a variety of
settlement options.
. Partial Surrenders generally can be made provided
there is sufficient remaining Net Cash Value. . For all policies, the minimum Face Amount of $50,000.
. The policy may be surrendered in full at any time . Two death benefit options available: Option 1,
for its Net Cash Value. A surrender charge will equal to the Face Amount, and Option 2, equal to the
apply during the first fifteen Policy Years after Face Amount plus Account Value.
issue and after any increase in Face Amount.
. Settlement options are available. . Flexibility to change the death benefit option and Face Amount.
. Loans, Partial Surrenders, and Full Surrenders . Any outstanding loan and loan interest is deducted
may have adverse tax consequences. from the amount payable.
. Supplemental and/or rider benefits may be available.
</TABLE>
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<PAGE>
GENERAL INFORMATION ABOUT AUL, THE SEPARATE ACCOUNT AND THE FUNDS
AUL
The Policies are issued by AUL which is a mutual life insurance company
organized under the laws of the State of Indiana. It was originally incorporated
as a fraternal society in 1877 under the laws of the federal government, and
reincorporated under the laws of the State of Indiana in 1933. AUL is currently
licensed to transact life insurance business in 48 states and the District of
Columbia. AUL conducts a conventional life insurance, reinsurance, and annuity
business. At December 31, 1996, AUL had admitted assets of $7,852,292,848 and a
policy owners' surplus of $572,825,650.
AUL is subject to regulation by the Department of Insurance of the State of
Indiana as well as by the insurance departments of all other states and
jurisdictions in which it does business. We submit annual statements on our
operations and finances to insurance officials in such states and jurisdictions.
The forms for the Policy described in this Prospectus are filed with and (where
required) approved by insurance officials in each state and jurisdiction in
which Policies are sold.
Separate Account
The Separate Account was established as a segregated investment account under
Indiana law on July 10, 1997. It is used to support the Policies and may be used
to support other variable life insurance contracts, and for other purposes
permitted by law. The Separate Account is registered with the Securities and
Exchange Commission ("SEC") as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act"). AUL has established other segregated
investment accounts, some of which also are registered with the SEC.
The Separate Account is divided into Investment Accounts. The Investment
Accounts available under the Policies invest in shares of Portfolios of the
Funds. The Separate Account may include other Investment Accounts that are not
available under the Policies and are not otherwise discussed in this Prospectus.
The assets in the Separate Account are owned by AUL.
Income, gains and losses, realized or unrealized, of an Investment Account are
credited to or charged against the Investment Account without regard to any
other income, gains or losses of AUL. Applicable insurance law provides that
assets equal to the reserves and other contract liabilities of the Separate
Account are not chargeable with liabilities arising out of any other business of
AUL. AUL is obligated to pay all benefits provided under the Policies.
The Funds
Each Fund is registered with the SEC as a diversified, open-end management
investment company under the 1940 Act, although the SEC does not supervise their
management or investment practices and policies. Each of the Funds comprises one
or more of the Portfolios and other series that are not available under the
Policies. The investment objectives of each of the Portfolios is described
below.
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<PAGE>
AUL American Series Fund, Inc.
AUL American Equity Portfolio. The primary investment objective of the AUL
American Equity Portfolio is long-term capital appreciation. The Portfolio seeks
current investment income as a secondary objective. The Portfolio attempts to
achieve these objectives by investing primarily in equity securities selected on
the basis of fundamental investment research for their long-term growth
prospects.
AUL American Bond Portfolio. The primary investment objective of the AUL
American Bond Portfolio is to provide a high level of income consistent with
prudent investment risk. As a secondary objective, the Portfolio seeks to
provide capital appreciation to the extent consistent with the primary
objective. The Portfolio attempts to achieve these objectives by investing
primarily in corporate bonds and other debt securities.
AUL American Money Market Portfolio. The investment objective of the AUL
American Money Market Portfolio is to provide a high level of current income
while preserving assets and maintaining liquidity and investment quality. The
Portfolio attempts to achieve this objective by investing in short-term money
market instruments that are of the highest quality.
AUL American Managed Portfolio. The investment objective of the AUL
American Managed Portfolio is to provide a high total return consistent with
prudent investment risk. The Portfolio attempts to achieve this objective
through a fully managed investment policy utilizing publicly traded common
stock, debt securities (including convertible debentures), and money market
securities.
Alger American Fund
Alger American Growth Portfolio. The Alger American Growth Portfolio is a
growth portfolio that seeks to obtain long-term capital appreciation by
investing in a diversified, actively managed portfolio of equity securities.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of companies that, at the time of
purchase, have a total market capitalization of one billion dollars or greater.
American Century Variable Portfolios, Inc.
VP Capital Appreciation. The VP Capital Appreciation Portfolio seeks
capital growth by investing primarily in common stocks (including securities
convertible into common stocks and other equity equivalents) and other
securities that meet certain fundamental and technical standards of selection
and have, in the opinion of the Portfolio's investment manager, better than
average potential for appreciation. The Portfolio tries to stay fully invested
in such securities, regardless of the movement of prices generally.
VP International. The VP International Portfolio seeks to achieve its
investment objective of capital growth by investing primarily in securities of
foreign companies that meet certain fundamental and technical standards of
selection and have, in the opinion of the investment manager, potential for
appreciation. The Portfolio will invest primarily in common stocks (defined to
include depository receipts for common stock and other equity equivalents) of
such companies. Investment in securities of foreign issuers typically involves a
greater degree of risk than investment in domestic securities.
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<PAGE>
Fidelity Variable Insurance Products Fund
Equity-Income Portfolio. The Equity-Income Portfolio seeks reasonable
income by investing primarily in income-producing equity securities; the
Portfolio will also consider the potential for capital appreciation.
Growth Portfolio. The Growth Portfolio seeks to achieve capital
appreciation. The Portfolio normally purchases common stocks, although the
Portfolio's investments are not restricted to any one type of security. Capital
appreciation may also be found in other types of securities, including bonds and
preferred stocks.
High Income Portfolio. The High Income Portfolio seeks to obtain a high
level of current income by investing primarily in high-yielding, lower-rated,
fixed-income securities, while also considering growth of capital. These include
securities commonly referred to as junk bonds, the risks of which are described
in the prospectus for the Fund.
Overseas Portfolio. The Overseas Portfolio seeks long-term growth of
capital primarily through investments in foreign securities. The Overseas
Portfolio provides a means for investors to diversify their own portfolios by
participating in companies and economies outside of the United States.
Fidelity Variable Insurance Products Fund II
Asset Manager Portfolio. The Asset Manager Portfolio seeks high total
return with reduced risk over the long-term by allocating its assets among
domestic and foreign stocks, bonds and short-term fixed income instruments.
Contrafund. The Contrafund Portfolio seeks capital appreciation by
investing primarily in companies that the investment adviser believes to be
undervalued due to an overly pessimistic appraisal by the public.
Index 500 Portfolio. The Index 500 Portfolio seeks to provide investment
results that correspond to the total return (i.e., the combination of capital
changes and income) of common stocks publicly traded in the United States. In
seeking this objective, the Portfolio attempts to duplicate the composition and
total return of the Standard & Poor's Composite Index of 500 Stocks.
Money Market Portfolio. The Money Market Portfolio seeks to maintain a
stable $1.00 share price and a high level of current income while preserving
capital and liquidity. The Portfolio invests its assets in high-quality, U.S.
dollar-denominated money market securities of domestic and foreign issuers.
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<PAGE>
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Income Portfolio. The T. Rowe Price Equity Income
Portfolio seeks to provide substantial dividend income as well as long-term
capital appreciation through investments in common stocks of established
companies.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
FUNDS WILL BE ACHIEVED.
More detailed information concerning the investment objectives, policies, and
restrictions pertaining to the Funds and Portfolios and their expenses,
investment advisory services and charges and the risks involved with investing
in the Portfolios and other aspects of their operations can be found in the
current prospectus for each Fund or Portfolio and the current Statement of
Additional Information for each Fund or Portfolio. The prospectuses for the
Funds or Portfolios should be read carefully before any decision is made
concerning the allocation of Net Premium payments or transfers among the
Investment Accounts.
AUL has entered into agreements with the Distributors/Advisers of Alger American
Fund, American Century Variable Portfolios, Inc. and Fidelity Investments and
under which AUL has agreed to render certain services and to provide information
about these Funds to Owners who invest in these Funds. Under these agreements
and for providing these services, AUL receives compensation from the
Distributor/Advisor of these Funds ranging from zero basis points until a
certain level of Fund assets have been purchased to fifteen basis points on the
net average aggregate deposits made.
AUL cannot guarantee that each Fund or Portfolio will always be available for
the Policies; but, in the unlikely event that a Fund or Portfolio is not
available, AUL will take reasonable steps to secure the availability of a
comparable fund. Shares of each Portfolio are purchased and redeemed at net
asset value, without a sales charge.
PREMIUM PAYMENTS AND ALLOCATIONS
Applying for a Policy
AUL requires satisfactory evidence of the proposed Insured's insurability, which
may include a medical examination of the proposed Insured. The available Issue
Ages are 0 through 85 on a standard non-tobacco user and tobacco user basis, and
20 through 85 on a preferred non-tobacco user and tobacco user basis. Issue Age
is determined based on the Insured's age as of the Contract Date. Acceptance of
an application depends on AUL's underwriting rules, and AUL reserves the right
to reject an application. Coverage under the Policy is effective as of the later
of the date the initial premium is paid or the Issue Date.
As the Owner of the Policy, you may exercise all rights provided under the
Policy while the Insured is living, subject to the interests of any assignee or
irrevocable beneficiary. The Insured is the Owner, unless a different Owner is
named in the application. In accordance with the terms of the Policy, the Owner
may in the application or by Proper Notice name a contingent Owner or a new
Owner while the Insured is living. The Policy may be jointly owned by more than
one Owner. The consent of both joint Owners is required for all transactions
except when proper forms have been executed to allow one Owner to make changes.
Unless a contingent Owner has been named, on the death of the last surviving
Owner, ownership of the Policy passes to the estate of the last surviving Owner,
which then will become the Owner. A change in Owner may have tax consequences.
See "Tax Considerations."
18
<PAGE>
Right to Examine Policy
You may cancel your Policy for a refund during your "right to examine" period.
In most states, this period expires 10 days after you receive your Policy. We
assume you receive your Policy within 5 days after the Issue Date. If you decide
to cancel the Policy, you must return it by mail or other delivery method to the
Home Office or to the authorized AUL representative who sold it. Immediately
after mailing or delivery, the Policy will be deemed void from the beginning.
Within seven calendar days after AUL receives the returned Policy, AUL will
refund the greater of premiums paid or the Account Value.
In addition, you may cancel an increase in Face Amount that you have requested
within 10 days after you receive the adjusted Policy, which we assume to occur 5
days after the adjusted Policy is mailed. If you decide to cancel the increase
in Face Amount, you must return the adjusted Policy by mail or other delivery
method to the Home Office or to the authorized AUL representative who sold it.
Immediately after mailing or delivery, the increase will be deemed void from the
beginning. Within seven calendar days after AUL receives the adjusted Policy,
any charges attributable to the increase will be returned to your Cash Value.
Premiums
The minimum initial premium payment required depends on a number of factors,
such as the Age, sex and risk class of the proposed Insured, the initial Face
Amount, any supplemental and/or rider benefits and the planned premium payments
you propose to make. Consult your AUL representative for information about the
initial premium required for the coverage you desire.
The initial premium is due on or before delivery of the Policy. There will be no
coverage until this premium is paid or until the Issue Date, whichever is later.
You may make other premium payments at any time and in any amount, subject to
the limits described in this section. The actual amount of premium payments will
affect the Account Value and the period of time the Policy remains in force.
Premium payments after the initial payment must be made to our Home Office. Each
payment must be at least equal to the minimum payment shown on the Policy Data
Page in your Policy. All premiums combined may not be more than $1,000,000,
unless a higher amount is agreed to by us.
The planned premium is the amount for which we will bill you or, in the case of
our automatic premium plan, the amount for which we will charge your account.
The amount and frequency of the planned premium are shown on the Policy Data
Page in your Policy. You may change the amount and the frequency of the planned
premium by proper notice. We reserve the right to change the planned premium to
comply with our rules for billing amount and frequency.
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<PAGE>
If the payment of any premium would cause an increase in Risk Amount because of
the Minimum Insurance Percentage, we may require satisfactory evidence of
insurability before accepting it. If we accept the premium, we will allocate the
Net Premium to your Account Value on the date of our acceptance. If we do not
accept the premium, we will refund it to you.
If the payment of any premium would cause this Policy to fail to meet the
federal tax definition of a life insurance contract in accordance with the
Internal Revenue Code, we reserve the right to refund the amount to you with
interest no later than 60 days after the end of the Policy Year in which we
receive the premium, but we assume no obligation to do so.
If the payment of any premium would cause the Policy to become a Modified
Endowment, we will attempt to so notify you upon allocating the premium, but we
assume no obligation to do so. In the event that we notify you, consistent with
the terms of the notice, you may choose whether you want the premium refunded to
you. We reserve the right to refund any premiums that cause the Policy to become
a Modified Endowment. Upon request, we will refund the premium, with interest,
to you no later than 60 days after the end of the Policy Year in which we
receive the premium.
Planned Premiums. When applying for a Policy, you may select a plan for
paying level premium payments semi-annually or annually. If you elect, AUL will
also arrange for payment of planned premiums on a monthly basis under a
pre-authorized payment arrangement. You are not required to pay premium payments
in accordance with these plans; rather, you can pay more or less than planned,
or skip a planned premium entirely. (See, however, "Premium Payments to Prevent
Lapse" and "Guarantee Period and Required Premium for the Guarantee Period."
Each premium after the initial premium must be at least $50. AUL may increase
this minimum 90 days after we send you a written notice of such increase.
Subject to the limits described above, you can change the amount and frequency
of planned premiums whenever you want by sending Proper Notice to the Home
Office. However AUL reserves the right to limit the amount of a premium payment
or the total premium payments paid.
Premium Payments to Prevent Lapse
Failure to pay planned premiums will not necessarily cause a Policy to lapse.
Conversely, paying all planned premiums will not guarantee that a Policy will
not lapse. The conditions that will result in your Policy lapsing will vary
depending on whether a Guarantee Period is in effect, as follows:
Grace Period. The Policy goes into default at the start of the grace period,
which is a period to make a premium payment sufficient to prevent lapse. AUL
will send notice of the grace period and the amount required to be paid during
the grace period to your last known address. The grace period shall terminate as
of the date indicated in the notice, which shall comply with any applicable
state law. Your Policy will remain in force during the grace period. If the
Insured should die during the grace period, the Death Benefit proceeds will
still be payable to the beneficiary, although the amount paid will be equal to
the Death Benefit immediately prior to the start of the grace period, plus any
benefits provided by rider, and less any outstanding loan and loan interest and
overdue Monthly Deductions as of the date of death. See "Amount of Death Benefit
Proceeds." If the grace period premium payment has not been paid before the
grace period ends, your Policy will lapse. It will have no value, and no
benefits will be payable. See "Reinstatement."
A grace period also may begin if any outstanding loan and loan interest becomes
excessive. See "Policy Loans."
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<PAGE>
Guarantee Period and Required Premium for the Guarantee Period. The
Guarantee Period is the period shown in the Policy during which the Policy will
remain in force and will not begin the grace period, if on each Monthiversary,
the sum of the premiums paid to date, less any Partial Surrenders, loans and
loan interest, equals or exceeds the Required Premium for the Guarantee Period
multiplied by the number of Policy Months since the Contract Date. If this test
fails on any Monthiversary, the continuation of insurance guarantee terminates.
The guarantee will not be reinstated.
The Required Premium for the Guarantee Period is shown on the Policy Data Page.
If you make changes to the Policy after issue, the Required Premium for
subsequent months may change. We will send you notice of the new Required
Premium. The Required Premium per $1,000 factors for the Face Amount vary by
risk class, Issue Age, and sex. Additional premiums for substandard ratings and
rider benefits are included in the Required Premium.
After the Guarantee Period. A grace period starts if the Net Cash Value
on a Monthiversary will not cover the Monthly Deduction. A premium sufficient to
keep the Contract in force must be submitted during the grace period.
Premium Allocations and Crediting
In the Policy application, you specify the percentage of a Net Premium to be
allocated to each Investment Account and to the Fixed Account. The sum of your
allocations must equal 100%, with at least 1% of the Net Premium payment
allocated to each account selected by you. All Net Premium allocations must be
in whole percentages. AUL reserves the right to limit the number of Investment
Accounts to which premiums may be allocated. You can change the allocation
percentages at any time, subject to these rules, by sending Proper Notice to the
Home Office, or by telephone if written authorization is on file with us. The
change will apply to the premium payments received with or after receipt of your
notice.
The initial Net Premium generally is allocated to the Fixed Account and the
Investment Accounts in accordance with your allocation instructions on the later
of the day the "right to examine" period expires, or the date we receive the
premium at our Home Office. Subsequent Net Premiums are allocated as of the end
of the Valuation Period during which we receive the premium at our Home Office.
We generally allocate all Net Premiums received prior to the Issue Date to our
general account prior to the end of the "right to examine" period. We will
credit interest daily on Net Premiums so allocated. However, we reserve the
right to allocate Net Premiums to the Fixed Account and the Investment Accounts
of the Separate Account in accordance with your allocation instructions prior to
the expiration of the "right to examine" period. If you exercise your right to
examine the Policy and cancel it by returning it to us, we will refund to you
the greater of any premiums paid or the Account Value. At the end of the "right
to examine" period, we transfer the Net Premium and interest to the Fixed
Account and the Investment Accounts of the Separate Account based on the
percentages you have selected in the application. For purposes of determining
the end of the "right to examine" period, solely as it applies to this transfer,
we assume that receipt of this Policy occurs 5 days after the Issue Date.
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<PAGE>
Premium payments requiring satisfactory evidence of insurability will not be
credited to the Policy until underwriting has been completed and the premium
payment has been accepted. If the additional premium payment is rejected, AUL
will return the premium payment immediately, without any adjustment for
investment experience.
Transfer Privilege
You may transfer amounts between the Fixed Account and Investment Accounts or
among Investment Accounts at any time after the "right to examine" period.
There currently is no minimum transfer amount, although we reserve the right to
require a $100 minimum transfer. You must transfer the minimum amount, or, if
less, the entire amount in the account from which you are transferring each time
a transfer is made. If after the transfer the amount remaining in any account is
less than $25, we have the right to transfer the entire amount. Any applicable
transfer charge will be assessed. The charge will be deducted from the
account(s) from which the transfer is made on a prorata basis.
Transfers are made such that the Account Value on the date of transfer will not
be affected by the transfer, except for the deduction of any transfer charge.
Currently, all transfers are free. On a guaranteed basis, we reserve the right
to limit the number of transfers to 12 per year, or to restrict transfers from
being made on consecutive Valuation Dates.
If we determine that the transfers made by or on behalf of one or more Owners
are to the disadvantage of other Owners, we may restrict the rights of certain
Owners. We also reserve the right to limit the size of transfers and remaining
balances, to limit the number and frequency of transfers, and to discontinue
telephone transfers.
The first 12 transfers during each Policy Year are free. Any unused free
transfers do not carry over to the next Policy Year. We will assess a $25 charge
for the thirteenth and each subsequent transfer during a Policy Year. For the
purpose of assessing the charge, each request (or telephone request described
below) is considered to be one transfer, regardless of the number of Investment
Accounts or the Fixed Account affected by the transfer. The charge will be
deducted from the Investment Account(s) from which the transfers are made.
There is no limit on the number of transfers that can be made between Investment
Accounts or to the Fixed Account. There is a limit on the amount transferred
from the Fixed Account each Policy Year. See "Transfers from Fixed Account" for
restrictions.
Telephone Transfers. Telephone transfers will be based upon instructions
given by telephone, provided the appropriate election has been made at the time
of application or proper authorization has been provided to us. We reserve the
right to suspend telephone transfer privileges at any time, for any reason, if
we deem such suspension to be in the best interests of Owners.
We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine, and if we follow those procedures, we will not be
liable for any losses due to unauthorized or fraudulent instructions. We may be
liable for such losses if we do not follow those reasonable procedures. The
procedures we will follow for telephone transfers include requiring some form of
personal identification prior to acting on instructions received by telephone,
providing written confirmation of the transaction, and making a tape recording
of the instructions given by telephone.
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<PAGE>
Dollar Cost Averaging Program
The Dollar Cost Averaging Program, if elected, enables you to transfer
systemically and automatically, on a monthly basis, specified dollar amounts
from the AUL American Money Market Investment Account to other Investment
Accounts. By allocating on a regularly scheduled basis, as opposed to allocating
the total amount at one particular time, you may be less susceptible to the
impact of market fluctuations. However, we make no guarantee that the Dollar
Cost Averaging Program will result in a gain.
You specify the fixed dollar amount to be transferred automatically from the AUL
American Money Market Investment Account. At the time that you elect the Dollar
Cost Averaging Program, the Account Value in the AUL American Money Market
account from which transfers will be made must be at least $2,000.
You may elect this program at the time of application by completing the
authorization on the application or at any time after the Policy is issued by
properly completing and returning the election form to us. Transfers made under
the Dollar Cost Averaging Program will commence on the Monthiversary on or next
following the election.
Once elected, transfers from the AUL American Money Market Investment Account
will be processed until the value of the Investment Account is completely
depleted, or you send us Proper Notice instructing us to cancel the transfers.
Currently, transfers made under the Dollar Cost Averaging Program will not be
subject to any transfer charge and will not count against the number of free
transfers permitted in a Policy Year. We reserve the right to impose a $25
transfer charge for each transfer effected under a Dollar Cost Averaging
Program. We also reserve the right to alter the terms or suspend or eliminate
the availability of the Dollar Cost Averaging Program at any time.
Portfolio Rebalancing Program
You may elect to have the accumulated balance of each Investment Account
redistributed to equal a specified percentage of the Variable Account. This will
be done on an annual basis from the Monthiversary on which the Portfolio
Rebalancing Program commences. If elected, this program automatically adjusts
your Portfolio mix to be consistent with the allocation most recently requested.
The redistribution will not count toward the 12 free transfers permitted each
Policy Year. If the Dollar Cost Averaging Program has been elected and has not
been completed, the Portfolio Rebalancing Program will commence on the
Monthiversary following the termination of the Dollar Cost Averaging Program.
You may elect this program at the time of application by completing the
authorization on the application or at any time after the Policy is issued by
properly completing the election form and returning it to us. Portfolio
rebalancing will terminate when you request any transfer or the day we receive
Proper Notice instructing us to cancel the Portfolio Rebalancing Program. We
reserve the right to alter the terms or suspend or eliminate the availability of
portfolio rebalancing at any time.
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<PAGE>
FIXED ACCOUNT
Because of exemptive and exclusionary provisions, interests in the Fixed Account
have not been registered under the Securities Act of 1933, nor has the Fixed
Account been registered as an investment company under the 1940 Act.
Accordingly, neither the Fixed Account nor any interests therein are subject to
the provisions of these Acts and, as a result, the staff of the SEC has not
reviewed the disclosure in this Prospectus relating to the Fixed Account. The
disclosure regarding the Fixed Account, may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
You may allocate some or all of the Net Premiums and transfer some or all of the
Variable Account value to the Fixed Account, which is part of our general
account and pays interest at declared rates (subject to a minimum interest rate
we guarantee to be 3%). Our general account supports our insurance and annuity
obligations.
The portion of the Account Value allocated to the Fixed Account will be credited
with rates of interest, as described below. Since the Fixed Account is part of
our general account, we benefit from investment gain and assume the risk of
investment loss on this amount. All assets in the general account are subject to
our general liabilities from business operations.
Minimum Guaranteed and Current Interest Rates
The Account Value in the Fixed Account earns interest at one or more interest
rates determined by AUL at its discretion and declared in advance ("Current
Rate"), which are guaranteed to be at least an annual effective rate of 3%
("Guaranteed Rate"). AUL will determine a Current Rate from time to time, and
any Current Rate that exceeds the Guaranteed Rate will be in effect for a period
of at least one year. If AUL determines a Current Rate in excess of the
Guaranteed Rate, premiums allocated or transfers to the Fixed Account under a
Policy during the time the Current Rate is in effect are guaranteed to earn
interest at that particular Current Rate for at least one year.
Amounts contributed or transferred to the Fixed Account earn interest at the
Current Rate then in effect. If AUL changes the Current Rate, such amounts
contributed or transferred on or after the effective date of the change earn
interest at the new Current Rate; however, amounts contributed or transferred
prior to the effective date of the change may earn interest at the prior Current
Rate or other Current Rate determined by AUL. Therefore, at any given time,
various portions of an Owner's Fixed Account value may be earning interest at
different Current Rates for different periods of time, depending upon when such
portions were originally contributed or transferred to the Fixed Account. AUL
bears the investment risk for Owner's Fixed Account values and for paying
interest at the Current Rate on amounts allocated to the Fixed Account.
Amounts deducted from the Fixed Account for the Monthly Deduction, Partial
Surrenders, transfers to the Investment Accounts, or charges are currently, for
the purpose of crediting interest, accounted for on a last-in, first-out
("LIFO") method. We reserve the right to change the method of crediting from
time to time, provided that such changes do not have the effect of reducing the
guaranteed rate of interest or shorten the period for which the interest rate
applies to less than a year (except for the year in which such amount is
received or transferred).
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<PAGE>
Calculation of the Fixed Account Value
Fixed Account value at any time is equal to amounts allocated or transferred to
it, plus interest credited to it, minus amounts deducted, transferred, or
surrendered from it.
Transfers from the Fixed Account
The amount transferred from the Fixed Account in any Policy Year may not exceed
20% of the amount in the Fixed Account at the beginning of the Policy Year, less
any Partial Surrenders made from the Fixed Account since that date, unless the
balance after the transfer is less than $25, in which case we reserve the right
to transfer the entire amount.
Payment Deferral
We reserve the right to defer payment of any surrender, Partial Surrender, or
transfer from the Fixed Account for up to six months from the date of receipt of
the Proper Notice for the partial or full surrender or transfer. In this case,
interest on Fixed Account assets will continue to accrue at the then-current
rates of interest.
CHARGES AND DEDUCTIONS
Premium Expense Charges
Premium Tax Charge. A 2.5% charge for state and local premium taxes and
administrative expenses is deducted from each premium payment. The state and
local premium tax charge reimburses AUL for premium taxes and related
administrative expenses associated with the Policies. AUL expects to pay an
average state and local premium tax rate (including related administrative
expenses) of approximately 2.5% of premium payments for all states.
Sales Charge. AUL deducts a sales charge from each premium payment. The
sales charge is 3.5% of each premium paid during the first 10 Policy Years, and
1.5% of each premium paid thereafter.
Monthly Deduction
AUL will deduct Monthly Deductions for the Contract Date and each Monthiversary.
Monthly Deductions due on the Contract Date and any Monthiversaries prior to the
Issue Date are deducted on the Issue Date. Your Contract Date is the date used
to determine your Monthiversary. The Monthly Deduction consists of (1) cost of
insurance charge, (2) monthly administrative charge, and (3) any charges for
rider benefits, as described below. The Monthly Deduction is deducted from the
Variable Account (and each Investment Account) and Fixed Account prorata on the
basis of the portion of Account Value in each account.
Cost of Insurance Charge. This charge compensates AUL for the expense of
providing insurance coverage. The charge depends on a number of variables and
therefore will vary between Policies and from Monthiversary to Monthiversary.
The Policy contains guaranteed cost of insurance rates that may not be
increased. The guaranteed rates are no greater than the 1980 Commissioners
Standard Ordinary Mortality Tables (the "1980 CSO Tables") (and where unisex
cost of insurance rates apply, the 1980 CSO-C Tables). The guaranteed rates for
substandard classes are based on multiples of or additives to the 1980 CSO
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<PAGE>
Tables. These rates are based on the Attained Age and underwriting class of the
Insured. They are also based on the sex of the Insured, except that unisex rates
are used where appropriate under applicable law, including in the state of
Montana, and in Policies purchased by employers and employee organizations in
connection with employment-related insurance or benefit programs. The cost of
insurance rate generally increases with the Attained Age of the Insured. As of
the date of this Prospectus, we charge "current rates" that are generally lower
(i.e., less expensive) than the guaranteed rates, and we may also charge current
rates in the future. The current rates may also vary with the Attained Age,
gender, where permissible, duration, policy size and underwriting class of the
Insured. For any Policy, the cost of insurance on a Monthiversary is calculated
by multiplying the current cost of insurance rate for the Insured by the Risk
Amount for that Monthiversary. The Risk Amount on a Monthiversary is the
difference between the Death Benefit divided by 1.00246627 and the Account
Value. The Account Value will first be considered part of the initial Face
Amount, then part of any additional Face Amounts in the order of the increases.
The cost of insurance rate for an increase in Face Amount will be determined on
each Monthiversary. AUL currently places Insureds in the following classes,
based on underwriting: Standard Tobacco User, Standard Non-Tobacco User,
Preferred Tobacco User, Preferred Non-Tobacco User. An Insured may be placed in
a substandard risk class, which involves a higher mortality risk than the
Standard Tobacco User or Standard Non-Tobacco User classes. Standard Non-Tobacco
User rates are available for Issue Ages 0-85. Preferred Non-Tobacco and
Preferred Tobacco User rates are available for Issue Ages 20-85. The guaranteed
maximum cost of insurance rate is set forth on the Policy Data Page of your
Policy.
AUL places the Insured in a risk class when the Policy is given underwriting
approval, based on AUL's underwriting of the application. When an increase in
Face Amount is requested, AUL conducts underwriting before approving the
increase (except as noted below), and a separate risk class may apply to the
increase. If the risk class for the increase has higher cost of insurance rates
than the existing class, the higher rates will apply only to the increase in
Face Amount, and the existing risk class will continue to apply to the existing
Face Amount. If the risk class for the increase has lower cost of insurance
rates than the existing class, the lower rates will apply to both the increase
and the existing Face Amount.
Monthly Administrative Charge. The monthly administrative charge is a level
monthly charge, currently $30 during the first Policy Year, and $5 thereafter,
which applies in all years. It is guaranteed not to exceed $10. This charge
reimburses AUL for expenses incurred in the administration of the Policies and
the Separate Account. Such expenses include, but are not limited to:
underwriting and issuing the Policy, confirmations, annual reports and account
statements, maintenance of Policy records, maintenance of Separate Account
records, administrative personnel costs, mailing costs, data processing costs,
legal fees, accounting fees, filing fees, the costs of other services necessary
for Owner servicing and all accounting, valuation, regulatory and updating
requirements.
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<PAGE>
Cost of Additional Benefits Provided by Riders. The cost of additional
benefits provided by riders is charged to the Account Value on the
Monthiversary.
Mortality and Expense Risk Charge
AUL deducts this monthly charge from the Investment Accounts prorata based on
your amounts in each account. The current charge is at an annual rate of 0.75%
of Variable Account value during the first 10 Policy Years, and 0.25%
thereafter, and is guaranteed not to increase for the duration of a Policy. AUL
may realize a profit from this charge.
The mortality risk assumed is that Insureds, as a group, may live for a shorter
period of time than estimated and, therefore, the cost of insurance charges
specified in the Policy will be insufficient to meet actual claims. AUL also
assumes the mortality risk associated with guaranteeing the Death Benefit during
the Guarantee Period. The expense risk AUL assumes is that expenses incurred in
issuing and administering the Policies and the Separate Account will exceed the
amounts realized from the monthly administrative charges assessed against the
Policies.
Surrender Charge
During the first fifteen Policy Years, a surrender charge will be deducted from
the Account Value if the Policy is completely surrendered for cash. The total
surrender charge will not exceed the maximum surrender charge set forth in the
Policy. The surrender charge is equivalent to 100% of target premium for Policy
Years 1 through 5, reducing thereafter by 10% annually through Policy Year 15.
An additional surrender charge and surrender charge period will apply to each
portion of the Policy resulting from a Face Amount increase, starting with the
effective date of the increase.
The surrender charge on the date of reinstatement of a Policy will be based on
the number of Policy Years from the original Contract Date. For purposes of
determining the surrender charge on any date after reinstatement, the period the
Policy was lapsed will count.
The table below shows the surrender charge deducted if the Policy is completely
surrendered during the first fifteen Policy Years or during the fifteen years
following an increase in Face Amount.
Table of Surrender Charges
Policy Year Surrender Charge
1 100%
2 100%
3 100%
4 100%
5 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 0%
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Taxes
AUL does not currently assess a charge for any taxes other than state premium
taxes incurred as a result of the establishment, maintenance, or operation of
the Investment Accounts of the Separate Account. We reserve the right, however,
to assess a charge for such taxes against the Investment Accounts if we
determine that such taxes will be incurred.
Special Uses
We may agree to reduce or waive the surrender charge or the Monthly Deduction,
or credit additional amounts under the Policies in situations where selling
and/or maintenance costs associated with the Policies are reduced, such as the
sale of several Policies to the same Owner(s), sales of large Policies, sales of
Policies in connection with a group or sponsored arrangement or mass
transactions over multiple Policies.
In addition, we may agree to reduce or waive some or all of these charges and/or
credit additional amounts under the Policies for those Policies sold to person
who meet criteria established by us, who may include current and retired
officers, directors and employees of us and our affiliates. We may also agree to
waive minimum premium requirements for such persons.
We will only reduce or waive such charges or credit additional amounts on any
Policies where expenses associated with the sale of the Policy and/or costs
associated with administering and maintaining the Policy are reduced. We reserve
the right to terminate waiver/reduced charge and crediting programs at any time,
including for issued Policies.
Fund Expenses
Each Investment Account of the Separate Account purchases shares at the net
asset value of the corresponding Portfolio. The net asset value reflects the
investment advisory fee and other expenses that are deducted from the assets of
the Portfolio. The advisory fees and other expenses are not fixed or specified
under the terms of the Policy and are described in the Funds' prospectuses.
HOW YOUR ACCOUNT VALUES VARY
There is no minimum guaranteed Account Value, Cash Value or Net Cash Value.
These values will vary with the investment experience of the Investment Accounts
and/or the crediting of interest in the Fixed Account, and will depend on the
allocation of Account Value. If the Net Cash Value on a Monthiversary is less
than the amount of the Monthly Deduction to be deducted on that date and the
Guarantee Period is not then in effect, the Policy will be in default and a
grace period will begin. See "Premium Payments to Prevent Lapse."
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<PAGE>
Determining the Account Value
On the Contract Date, the Account Value is equal to the initial Net Premium less
the Monthly Deductions deducted as of the Contract Date. On each Valuation Day
thereafter, the Account Value is the aggregate of the Variable Account value,
the Fixed Account value, and the Loan Account value. The Account Value will vary
to reflect the performance of the Investment Accounts to which amounts have been
allocated, interest credited on amounts allocated to the Fixed Account, interest
credited on amounts in the Loan Account, charges, transfers, Partial Surrenders,
loans and loan repayments.
Variable Account Value. When you allocate an amount to an Investment
Account, either by Net Premium payment allocation or transfer, your Policy is
credited with accumulation units in that Investment Account. The number of
accumulation units is determined by dividing the amount allocated to the
Investment Account by the Investment Account's accumulation unit value at the
end of the Valuation Period during which the allocation is effected. The
Variable Account value of the Policy equals the sum, for all Investment
Accounts, of the accumulation units credited to an Investment Account multiplied
by that Investment Account's accumulation unit value.
The number of Investment Account accumulation units credited to your Policy will
increase when Net Premium payments are allocated to the Investment Account and
when amounts are transferred to the Investment Account. The number of Investment
Account accumulation units credited to a Policy will decrease when the allocated
portion of the Monthly Deduction and mortality and expense charge are taken from
the Investment Account, a loan is made, an amount is transferred from the
Investment Account, or a Partial Surrender is taken from the Investment Account.
Accumulation Unit Values. An Investment Account's accumulation unit value
is determined on each Valuation Date and varies to reflect the investment
experience of the underlying Portfolio. It may increase, decrease, or remain in
the same from Valuation Period to Valuation Period. The accumulation unit value
for the Money Market Investment Account was initially set at $1, and the
accumulation unit value for each of the other Investment Accounts was
arbitrarily set at $5 when each Investment Account was established. For each
Valuation Period after the date of establishment, the accumulation unit value is
determined by multiplying the value of an accumulation unit for an Investment
Account for the prior Valuation Period by the net investment factor for the
Investment Account for the current Valuation Period.
Net Investment Factor. The net investment factor is used to measure the
investment performance of an Investment Account from one Valuation Period to the
next. For any Investment Account, the net investment factor for a Valuation
Period is determined by dividing (a) by (b), where:
(a) is equal to:
1. the net asset value per share of the Portfolio held in the
Investment Account determined at the end of the current Valuation
Period; plus
2. the per share amount of any dividend or capital gain distribution
paid by the Portfolio during the Valuation Period; plus 3. the
per share credit or charge with respect to taxes, if any, paid or
reserved for by AUL during the Valuation Period that are
determined by AUL to be attributable to the operation of the
Investment Account; and
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<PAGE>
(b) is equal to:
1. the net asset value per share of the Portfolio held in the
Investment Account determined at the end of the preceding
Valuation Period; plus 2. the per share credit or charge for any
taxes reserved for the immediately preceding Valuation Period.
Fixed Account Value. On any Valuation Date, the Fixed Account value of a
Policy is the total of all Net Premium payments allocated to the Fixed Account,
plus any amounts transferred to the Fixed Account, plus interest credited on
such Net Premium payments and amounts transferred, less the amount of any
transfers from the Fixed Account, less the amount of any Partial Surrenders
taken from the Fixed Account, and less the prorata portion of the Monthly
Deduction charged against the Fixed Account.
Loan Account Value. On any Valuation Date, if there have been any Policy loans,
the Loan Account value is equal to amounts transferred to the Loan Account from
the Investment Accounts and from the Fixed Account as collateral for Policy
loans and for due and unpaid loan interest, less amounts transferred from the
Loan Account to the Investment Accounts and the Fixed Account as outstanding
loans and loan interest are repaid, and plus interest credited to the Loan
Account.
Cash Value and Net Cash Value
The Cash Value on a Valuation Date is the Account Value less any applicable
surrender charges. The Net Cash Value on a Valuation Date is the Cash Value
reduced by any outstanding loans and loan interest. Net Cash Value is used to
determine whether a grace period starts. See "Premium Payments to Prevent
Lapse." It is also the amount that is available upon full surrender of the
Policy. See "Surrendering the Policy for Net Cash Value."
DEATH BENEFIT AND CHANGES IN FACE AMOUNT
As long as the Policy remains in force, AUL will pay the Death Benefit Proceeds
upon receipt at the Home Office of satisfactory proof of the Insured's death.
AUL may require return of the Policy. The Death Benefit Proceeds may be paid in
a lump sum, generally within seven calendar days of receipt of satisfactory
proof (see "When Proceeds Are Paid"), or in any other way agreeable to you and
us. Before the Insured dies, you may choose how the proceeds are to be paid. If
you have not made a choice before the Insured dies, the beneficiary may choose
how the proceeds are paid. The Death Benefit Proceeds will be paid to the
beneficiary. See "Selecting and Changing the Beneficiary."
Amount of Death Benefit Proceeds
The Death Benefit Proceeds are equal to the sum of the Death Benefit in force as
of the end of the Valuation Period during which death occurs, plus any rider
benefits, minus any outstanding loan and loan interest on that date. If the date
of death occurred during a grace period, the Death Benefit will still be payable
to the beneficiary, although the amount will be equal to the Death Benefit
immediately prior to the start of the grace period, plus any benefits provided
by rider, and less any outstanding loan and loan interest and overdue Monthly
Deductions as of the date of death. Under certain circumstances, the amount of
the Death Benefit may be further adjusted. See "Limits on Rights to Contest the
Policy" and "Changes in the Policy or Benefits."
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<PAGE>
If part or all of the Death Benefit Proceeds is paid in one sum, AUL will pay
interest on this sum as required by applicable state law from the date of the
Insured's death to the date of payment.
Death Benefit Options
The Owner may choose one of two Death Benefit options. Under Option 1, the Death
Benefit is the greater of the Face Amount or the Applicable Percentage (as
described below) of Account Value on the date of the Insured's death. Under
Option 2, the Death Benefit is the greater of the Face Amount plus the Account
Value on the date of death, or the Applicable Percentage of the Account Value on
the date of the Insured's death.
If investment performance is favorable, the amount of the Death Benefit may
increase. However, under Option 1, the Death Benefit ordinarily will not change
for several years to reflect any favorable investment performance and may not
change at all. Under Option 2, the Death Benefit will vary directly with the
investment performance of the Account Value. To see how and when investment
performance may begin to affect the Death Benefit, see "Illustrations of Account
Values, Cash Values, Death Benefits and Accumulated Premium Payments."
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Applicable Percentages of Account Value
Attained Age Percentage Attained Age Percentage Attained Age Percentage Attained Age Percentage
0-40 250% 50 185% 60 130% 70 115%
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 94 101
95+ 100
</TABLE>
Initial Face Amount and Death Benefit Option
The initial Face Amount is set at the time the Policy is issued. You may change
the Face Amount from time to time, as discussed below. You select the Death
Benefit option when you apply for the Policy. You also may change the Death
Benefit option, as discussed below. We reserve the right, however, to decline
any change which might disqualify the Policy as life insurance under federal tax
law.
Changes in Death Benefit Option
Beginning one year after the Contract Date, as long as the Policy is not in the
grace period, you may change the Death Benefit option on your Policy subject to
the following rules. If you request a change from Death Benefit Option 2 to
Death Benefit Option 1, the Face Amount will be increased by the amount of the
Account Value on the date of change. The change will be effective on the
Monthiversary following our receipt of Proper Notice.
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<PAGE>
If you request a change from Death Benefit Option 1 to Death Benefit Option 2,
the Face Amount will be decreased by the amount of the Account Value on the date
of change. We may require satisfactory evidence of insurability. The change will
be effective on the Monthiversary following our approval of the change. We will
not permit a change which would decrease the Face Amount below $50,000.
Changes in Face Amount
Beginning one year after the Contract Date, as long as the Policy is not in the
grace period, you may request a change in the Face Amount. If a change in the
Face Amount would result in total premiums paid exceeding the premium
limitations prescribed under current tax law to qualify your Policy as a life
insurance contract, AUL will refund, after the next Monthiversary, the amount of
such excess above the premium limitations. Changes in Face Amount may cause the
Policy to be treated as a Modified Endowment for federal tax purposes.
AUL reserves the right to decline a requested decrease in the Face Amount if
compliance with the guideline premium limitations under current tax law would
result in immediate termination of the Policy, payments would have to be made
from the Cash Value for compliance with the guideline premium limitations, and
the amount of such payments would exceed the Net Cash Value under the Policy.
The Face Amount after any decrease must be at least $50,000. A decrease in Face
Amount will become effective on the Monthiversary that next follows receipt of
Proper Notice of a request.
Decreasing the Face Amount of the Policy may have the effect of decreasing
monthly cost of insurance charges. If you have made any increases to the Face
Amount, the decrease will first be applied to reduce those increases, starting
with the most recent. The decrease will not cause a decrease in either the
Required Premium for the Guarantee Period or the surrender charge.
Any increase in the Face Amount must be at least $5,000 (unless otherwise
provided by rider), and an application must be submitted. AUL reserves the right
to require satisfactory evidence of insurability. In addition, the Insured's
Attained Age must be less than the current maximum Issue Age for the Policies,
as determined by AUL from time to time. A change in planned premiums may be
advisable. See "Premiums." The increase in Face Amount will become effective on
the Monthiversary on or next following our approval of the increase.
A new surrender charge and surrender charge period will apply to each portion of
the Policy resulting from an increase in Face Amount, starting with the
effective date of the increase. See "Surrender Charge."
For purposes of calculating cost of insurance charges, any Face Amount decrease
will be used to reduce any previous Face Amount increase then in effect,
starting with the latest increase and continuing in the reverse order in which
the increases were made. If any portion of the decrease is left after all Face
Amount increases have been reduced, it will be used to reduce the initial Face
Amount.
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Selecting and Changing the Beneficiary
You select the beneficiary in your application. You may select more than one
beneficiary. You may later change the beneficiary in accordance with the terms
of the Policy. The primary beneficiary, or, if the primary beneficiary is not
living, the contingent beneficiary, is the person entitled to receive the Death
Benefit Proceeds under the Policy. If the Insured dies and there is no surviving
beneficiary, the Owner (or the Owner's estate if the Owner is the Insured) will
be the beneficiary. If a beneficiary is designated as irrevocable, then the
beneficiary's consent must be obtained to change the beneficiary.
CASH BENEFITS
Policy Loans
Prior to the death of the Insured, you may borrow against your Policy by
submitting Proper Notice to the Home Office at any time after the end of the
"right to examine" period while the Policy is not in the grace period. The
Policy is assigned to us as the sole security for the loan. The minimum amount
of a new loan is $500. The maximum amount of a new loan is:
1. 90% of the Account Value; less
2. any loan interest due on the next Policy Anniversary; less
3. any applicable surrender charges; less
4. any existing loans and accrued loan interest
Outstanding loans reduce the amount available for new loans. Policy loans will
be processed as of the date your written request is received and approved. Loan
proceeds generally will be sent to you within seven calendar days. See "When
Proceeds Are Paid."
Interest. AUL will charge interest on any outstanding loan at an annual
rate of 6.0%. Interest is due and payable on each Policy Anniversary while a
loan is outstanding. If interest is not paid when due, the amount of the
interest is added to the loan and becomes part of the loan.
Loan Collateral. When a Policy loan is made, an amount sufficient to secure
the loan is transferred out of the Investment Accounts and the Fixed Account and
into the Policy's Loan Account. Thus, a loan will have no immediate effect on
the Account Value, but the Net Cash Value will be reduced immediately by the
amount transferred to the Loan Account. The Owner can specify the Investment
Accounts from which collateral will be transferred. If no allocation is
specified, collateral will be transferred from each Investment Account and from
the Fixed Account in the same proportion that the Account Value in each
Investment Account and the Fixed Account bears to the total Account Value in
those accounts on the date that the loan is made. Due and unpaid interest will
be transferred each Policy Anniversary from each Investment Account and the
Fixed Account to the Loan Account in the same proportion that each Investment
Account value and the Fixed Account bears to the total unloaned Account Value.
The amount we transfer will be the amount by which the interest due exceeds the
interest which has been credited on the Loan Account.
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<PAGE>
The Loan Account will be credited with interest daily at an effective annual
rate of not less than 4.0%. Thus, the maximum net cost of a loan is 2.0% per
year (the net cost of a loan is the difference between the rate of interest
charged on indebtedness and the amount credited to the Loan Account). Beginning
in the eleventh Policy Year, the amount in the Loan Account securing the loan
will be credited with interest at an effective annual rate in excess of the
minimum guaranteed rate (currently, 5.0%). Thus, the current net cost of the
loan is 1.0% per year. The loan provision is not guaranteed.
Loan Repayment; Effect if Not Repaid. You may repay all or part of your loan at
any time while the Insured is living and the Policy is in force. Loan repayments
must be sent to the Home Office and will be credited as of the date received. A
loan repayment must be clearly marked as "loan repayment" or it will be credited
as a premium, unless the premium would cause the Policy to fail to meet the
federal tax definition of a life insurance contract in accordance with the
Internal Revenue Code. (Loan repayments, unlike premium payments, are not
subject to premium expense charges.) When a loan repayment is made, Account
Value in the Loan Account in an amount equivalent to the repayment is
transferred from the Loan Account to the Investment Accounts and the Fixed
Account. Thus, a loan repayment will have no immediate effect on the Policy
Value, but the Net Cash Value will be increased immediately by the amount
transferred from the Loan Account. Loan repayment amounts will be transferred to
the Investment Accounts and the Fixed Account according to the premium
allocation instructions in effect at that time.
If the Death Benefit becomes payable while a loan is outstanding, any
outstanding loan and loan interest will be deducted in calculating the Death
Benefit Proceeds. See "Amount of Death Benefit Proceeds."
If the Monthly Deduction exceeds the Net Cash Value on any Monthiversary when
the Guarantee Period is not in force, the Policy will be in default. You will be
sent notice of the default. You will have a grace period to submit a sufficient
payment to avoid termination of coverage under the Policy. The notice will
specify the amount that must be repaid to prevent termination. See "Premium
Payments to Prevent Lapse."
Effect of Policy Loan. A loan, whether or not repaid, will have a permanent
effect on the Death Benefit and Policy values because the investment results of
the Investment Accounts of the Separate Account and current interest rates
credited on Account Value in the Fixed Account will apply only to the non-loaned
portion of the Account Value. The longer the loan is outstanding, the greater
the effect is likely to be. Depending on the investment results of the
Investment Accounts while the loan is outstanding, the effect could be favorable
or unfavorable. Policy loans may increase the potential for lapse if investment
results of the Investment Accounts are less than anticipated. Also, loans could,
particularly if not repaid, make it more likely than otherwise for a Policy to
terminate. See "Tax Considerations" for a discussion of the tax treatment of
Policy loans, and the adverse tax consequences if a Policy lapses with loans
outstanding. In particular, if your Policy is a Modified Endowment, loans may be
currently taxable and subject to a 10% penalty tax.
Surrendering the Policy for Net Cash Value
You may surrender your Policy at any time for its Net Cash Value by
submitting Proper Notice to us. AUL may require return of the Policy. A
surrender charge may apply. See "Surrender Charge." A surrender request will be
processed as of the date your written request and all required documents are
received. Payment will generally be made within seven calendar days. See "When
Proceeds are Paid." The Net Cash Value may be taken in one lump sum or it may be
applied to a settlement option. See "Settlement Options." The Policy will
terminate and cease to be in force if it is surrendered for one lump sum or
applied to a settlement option. It cannot later be reinstated. Surrenders may
have adverse tax consequences. See "Tax Considerations."
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<PAGE>
Partial Surrenders
You may make Partial Surrenders under your Policy of at least $500 at any time
after the end of the "right to examine" period by submitting Proper Notice to
us. As of the date AUL receives Proper Notice for a Partial Surrender, the
Account Value and, therefore, the Cash Value will be reduced by the Partial
Surrender.
When you request a Partial Surrender, you can direct how the Partial Surrender
will be deducted from the Investment Accounts. If you provide no directions, the
Partial Surrender will be deducted from your Cash Value in the Investment
Accounts and Fixed Account on a prorata basis. Partial Surrenders may have
adverse tax consequences. See "Tax Considerations."
If Death Benefit Option 1 is in effect, AUL will reduce the Face Amount by an
amount equal to the Partial Surrender. AUL will reject a Partial Surrender
request if the Partial Surrender would reduce the Face Amount below $50,000, or
if the Partial Surrender would cause the Policy to fail to qualify as a life
insurance contract under applicable tax laws, as interpreted by AUL.
Partial Surrender requests will be processed as of the date your written request
is received, and generally will be paid within seven calendar days. See "When
Proceeds Are Paid."
Settlement Options
The Policy offers various options of receiving proceeds payable under the
Policy, such as on surrender or death, other than in a lump sum. These
settlement options are summarized below. All of these options are forms of
fixed-benefit annuities which do not vary with the investment performance of a
separate account. Any representative authorized to sell this Policy can further
explain these options upon request.
You may apply proceeds of $2,000 or more which are payable under this Policy to
any of the following options:
Option 1 - Income for a Fixed Period. Proceeds are payable in equal monthly
installments for a specified number of years, not to exceed 20.
Option 2 - Life Annuity. Proceeds are paid in equal monthly installments
for as long as the payee lives. A number of payments can be guaranteed, such as
120, or the number of payments required to refund the proceeds applied.
Option 3 -Survivorship Annuity. Proceeds are paid in monthly installments
for as long as either the first payee or surviving payee lives. A number of
payments equal to the initial payment can be guaranteed, such as 120. A
different monthly installment payable to the surviving payee can be specified.
Any other method or frequency of payment we agree to may be used to pay the
proceeds of this Policy.
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<PAGE>
Policy proceeds payable in one sum will accumulate at interest from the date of
death or surrender to the payment date at the rate of interest then paid by us
or at the rate specified by statute, whichever is greater. We will determine the
amount payable under any option. The minimum interest rate used in computing
payments under all options will be 3% per year.
You may select or change an option by giving Proper Notice prior to the
settlement date. If no option is in effect on the settlement date, the payee may
select an option. If this Policy is assigned or if the payee is a corporation,
association, partnership, trustee or estate, a settlement option will be
available only with our consent.
If a payee dies and there is no surviving payee, we will pay a single sum to
such payee's estate. The final payment will be the commuted value of any
remaining guaranteed payments.
Settlement option payments will be exempt from the claims of creditors to the
maximum extent permitted by law.
Minimum Amounts. AUL reserves the right to pay the total amount of the
Policy in one lump sum, if less than $2,000. If monthly payments are less than
$100, payments may be made less frequently at AUL's option.
The proceeds of this Policy may be paid in any other method or frequency of
payment acceptable to us.
Specialized Uses of the Policy
Because the Policy provides for an accumulation of Cash Value as well as a Death
Benefit, the Policy can be used for various individual and business financial
planning purposes. Purchasing the Policy in part for such purposes entails
certain risks. For example, if the investment performance of Investment Accounts
to which Variable Account value is allocated is poorer than expected or if
sufficient premiums are not paid, the Policy may lapse or may not accumulate
sufficient Variable Account value to fund the purpose for which the Policy was
purchased. Partial Surrenders and Policy loans may significantly affect current
and future Account Value, Net Cash Value, or Death Benefit Proceeds. Depending
upon Investment Account investment performance and the amount of a Policy loan,
the loan may cause a Policy to lapse. Because the Policy is designed to provide
benefits on a long-term basis, before purchasing a Policy for a specialized
purpose a purchaser should consider whether the long-term nature of the Policy
is consistent with the purpose for which it is being considered. Using a Policy
for a specialized purpose may have tax consequences. See "Tax Considerations."
Life Insurance Retirement Plans
Any Owners or applicants who wish to consider using the Policy as a funding
vehicle for (non-qualified) retirement purposes may obtain additional
information from us. An Owner could pay premiums under a Policy for a number of
years, and upon retirement, could utilize a Policy's loan and partial withdrawal
features to access Account Value as a source of retirement income for a period
of time. This use of a Policy does not alter an Owner's rights or our
obligations under a Policy; the Policy would remain a life insurance contract
that, so long as it remains in force, provides for a Death Benefit payable when
the Insured dies.
36
<PAGE>
Illustrations are available upon request that portray how the Policy can be used
as a funding mechanism for (non-qualified) retirement plans, referred to herein
as "life insurance retirement plans," for individuals. Illustrations provided
upon request show the effect on Account Value, Cash Value, and the net Death
Benefit of premiums paid under a Policy and partial withdrawals and loans taken
for retirement income; or reflecting allocation of premiums to specified
Investment Accounts. This information will be portrayed at hypothetical rates of
return that are requested. Charts and graphs presenting the results of the
illustrations or a comparison of retirement strategies will also be furnished
upon request. Any graphic presentations and retirement strategy charts must be
accompanied by a corresponding illustration; illustrations must always include
or be accompanied by comparable information that is based on guaranteed cost of
insurance rates and that presents a hypothetical gross rate of return of 0%.
Retirement illustrations will not be furnished with a hypothetical gross rate of
return in excess of 12%.
The hypothetical rates of return in illustrations are illustrative only and
should not be interpreted as a representation of past or future investment
results. Policy values and benefits shown in the illustrations would be
different if the gross annual investment rates of return were different from the
hypothetical rates portrayed, if premiums were not paid when due, and loan
interest was paid when due. Withdrawals or loans may have an adverse effect on
Policy benefits.
Risks of Life Insurance Retirement Plans
Using your Policy as a funding vehicle for retirement income purposes presents
several risks, including the risk that if your Policy is insufficiently funded
in relation to the income stream from your Policy, your Policy can lapse
prematurely and result in significant income tax liability to you in the year in
which the lapse occurs. Other risks associated with borrowing from your Policy
also apply. Loans will be automatically repaid from the gross Death Benefit at
the death of the Insured, resulting in the estimated payment to the beneficiary
of the net Death Benefit, which will be less than the gross Death Benefit and
may be less than the Face Amount. Upon surrender, the loan will be automatically
repaid, resulting in the payment to you of the Net Cash Value. Similarly, upon
lapse, the loan will be automatically repaid, and the Policy will terminate
without value. The automatic repayment of the loan upon lapse or surrender will
cause the recognition of taxable income to the extent that Net Cash Value plus
the amount of the repaid loan exceeds your basis in the Policy. Thus, under
certain circumstances, surrender or lapse of your Policy could result in tax
liability to you. In addition, to reinstate a lapsed Policy, you would be
required to make certain payments. Thus, you should be careful to fashion a life
insurance retirement plan so that your Policy will not lapse prematurely under
various market scenarios as a result of withdrawals and loans taken from your
Policy.
To avoid lapse of your Policy, it is important to fashion a payment stream that
does not leave your Policy with insufficient Net Cash Value. Determinations as
to the amount to withdraw or borrow each year warrant careful consideration.
Careful consideration should also be given to any assumptions respecting the
hypothetical rate of return, to the duration of withdrawals and loans, and to
the amount of Account Value that should remain in your Policy upon its maturity.
Poor investment performance can contribute to the risk that your Policy may
lapse. In addition, the cost of insurance generally increases with the age of
the Insured, which can further erode existing Net Cash Value and contribute to
the risk of lapse.
37
<PAGE>
Further, interest on a Policy loan is due to us for any Policy Year on the
Policy Anniversary. If this interest is not paid when due, it is added to the
amount of the outstanding loans and loan interest, and interest will begin
accruing thereon from that date. This can have a compounding effect, and to the
extent that the outstanding loan balance exceeds your basis in the Policy, the
amounts attributable to interest due on the loans can add to your federal (and
possibly state) income tax liability.
You should consult with your financial and tax advisers in designing a life
insurance retirement plan that is suitable. Further, you should continue to
monitor the Net Cash Value remaining in a Policy to assure that the Policy is
sufficiently funded to continue to support the desired income stream and so that
it will not lapse. In this regard, you should consult your periodic statements
to determine the amount of the remaining Net Cash Value. Illustrations showing
the effect of charges under the Policy upon existing Account Value or the effect
of future withdrawals or loans upon the Policy's Account Value and Death Benefit
are available from your representative. Consideration should be given
periodically to whether the Policy is sufficiently funded so that it will not
lapse prematurely.
Because of the potential risks associated with borrowing from a Policy, use of
the Policy in connection with a life insurance retirement plan may not be
suitable for all Owners. These risks should be carefully considered before
borrowing from the Policy to provide an income stream.
ILLUSTRATIONS OF ACCOUNT VALUES, CASH VALUES, DEATH BENEFITS
AND ACCUMULATED PREMIUM PAYMENTS
The following tables have been prepared to illustrate hypothetically how certain
values under a Policy change with investment performance over an extended period
of time. The tables illustrate how Account Values, Cash Values and Death
Benefits under a Policy covering an Insured of a given age on the Policy Date
would vary over time if planned premium payments were paid annually and the
return on the assets in each of the Funds were an assumed uniform gross annual
rate of 0%, 6% and 12%. The values would be different from those shown if the
returns averaged 0%, 6% or 12% but fluctuated over and under those averages
throughout the years shown. The tables also show planned premiums accumulated at
5% interest compounded annually. The hypothetical investment rates of return are
illustrative only and should not be deemed a representation of past or future
investment rates of return. The tables may be deemed to be "forward looking
statements," and are based on certain assumptions. Actual performance under the
Policy may differ materially from performance described in the tables. Actual
rates of return for a particular Policy may be more or less than the
hypothetical investment rates of return and will depend on a number of factors,
including the investment allocations made by an Owner and prevailing interest
rates and rates of inflation. These illustrations assume that Net Premiums are
allocated equally among the 16 Investment Accounts available under the Policy,
and that no amounts are allocated to the Fixed Account. These illustrations also
assume that no Policy loans have been made and that the premium is paid at the
beginning of each Policy Year. Values would be different if the premiums are
paid with a different frequency or in different amounts.
38
<PAGE>
The illustrations reflect the fact that the net investment return on the assets
held in the Investment Accounts is lower than the gross return of the selected
Portfolios. The tables assume an average annual expense ratio of 0.76% of the
average daily net assets of the Portfolios available under the Policies. This
average annual expense ratio is based on the expense ratios of each of the
Portfolios for the last fiscal year, adjusted, as appropriate, for any material
changes in expenses effective for the current fiscal year of a Portfolio. For
information on the Portfolios' expenses, see the prospectuses for the Funds and
Portfolios.
The illustrations also reflect the deduction of the premium expense charge and
the Monthly Deduction. AUL has the contractual right to charge the guaranteed
maximum charges. The current cost of insurance charges and, alternatively, the
guaranteed cost of insurance charges are reflected in separate illustrations
tjat follow. All the illustrations reflect the fact that no tax charges other
than the premium tax charge are currently made against the Separate Account and
assume no outstanding loans and loan interest or charges for rider benefits.
The illustrations are based on AUL's sex distinct rates. Upon request, an Owner
will be furnished with a comparable illustration based upon the proposed
Insured's individual circumstances. Such illustrations may assume different
hypothetical rates of return than those illustrated in the following tables. We
may make a reasonable charge to provide such illustrations.
39
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM ADJUSTABLE
VARIABLE LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 40 $500,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 1
VARIABLE INVESTMENT $_____ ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- -------------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $5.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years, and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
40
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 40 $500,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 1
VARIABLE INVESTMENT $5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- --------------------------------- ----------------------------------- --------------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $10.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
41
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 40 $500,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 2
VARIABLE INVESTMENT $5,000 ANNUAL PREMIUM USING CURRENT CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- -------------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $5.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
42
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 40 $500,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 2
VARIABLE INVESTMENT $5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- ------------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $10.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
43
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 55 $500,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 1
VARIABLE INVESTMENT $_____ ANNUAL PREMIUM USING CURRENT CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- ------------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $5.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
44
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 55 $250,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 1
VARIABLE INVESTMENT $5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- -----------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $10.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
45
<PAGE>
AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 55 $250,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 2
VARIABLE INVESTMENT $5,300 ANNUAL PREMIUM USING CURRENT CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- -------------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $5.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
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AMERICAN UNITED LIFE INSURANCE COMPANY
VARIABLE UNIVERSAL LIFE INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
MALE ISSUE AGE: 55 $250,000 FACE AMOUNT
PREFERRED, NON-TOBACCO USER DEATH BENEFIT OPTION 2
VARIABLE INVESTMENT $5,000 ANNUAL PREMIUM USING GUARANTEED CHARGES
DEATH BENEFIT ACCOUNT VALUE CASH VALUE
Assuming Hypothetical Assuming Hypothetical Assuming Hypothetical
PREMIUMS Gross Annual Gross Annual Gross Annual
ACCUM. Investment Return of Investment Return of Investment Return of
END AT 5% ________________________________ ________________________________ ________________________________
OF INTEREST
YEAR PER YEAR 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------------ --------------- ---------------------------------- ----------------------------------- -----------------------------
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
25
30
</TABLE>
(1) Assumes that no Policy loans have been made.
(2) Current values reflect applicable premium expenses charges, current cost of
insurance rates, a monthly administrative charge of $30.00 per month in
year 1 and $10.00 per month thereafter, and a mortality and expense risk
charge of 0.75% of assets during the first ten Policy Years , and 0.25%
thereafter.
(3) Net investment returns are calculated as the hypothetical gross investment
returns less all charges and deductions shown in the Prospectus.
(4) Assumes that the planned periodic premium is paid at the beginning of each
Policy Year. Values would be different if the premiums are paid with
different frequency or in different amounts.
(5) The illustrated gross annual investment rates of return of 0%, 6%, and 12%
would correspond to approximate net annual rates of ___%, ____%, and ____%
respectively, during the first ten Policy Years, and ___%, ___%, and ____%
respectively thereafter.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAT THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND PREVAILING RATES. THE DEATH BENEFIT
AND ACCOUNT VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED 0%, 6%, OR 12% OVER A PERIOD OF YEARS BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY AUL OR THE PORTFOLIOS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
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OTHER POLICY BENEFITS AND PROVISIONS
Limits on Rights to Contest the Policy
Incontestability. In the absence of fraud, after the Policy has been in
force during the Insured's lifetime for two years from the Contract Date, AUL
may not contest the Contract. Any increase in the Face Amount will not be
contested after the increase has been in force during the Insured's lifetime for
two years following the effective date of the increase. If you did not request
the Face Amount increase or if evidence of insurability was not required, we
will not contest the increase.
If a Policy lapses and it is reinstated, we can contest the reinstated Policy
during the first two years after the effective date of the reinstatement, but
only for statements made in the application for reinstatement.
Suicide Exclusion. If the Insured dies by suicide, while sane or insane,
within two years of the Contract Date or the effective date of any reinstatement
(or less if required by state law), the amount payable by AUL will be equal to
the premiums paid less any loan, loan interest, and any Partial Surrender.
If the Insured dies by suicide, while sane or insane, within two years after the
effective date of any increase in the Face Amount (or less if required by state
law), the amount payable by AUL on such increase will be limited to the Monthly
Deduction associated with the increase.
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Changes in the Policy or Benefits
Misstatement of Age or Sex. If it is determined the age or sex of the
Insured as stated in the Policy is not correct, the Death Benefit will be the
greater of: (1) the amount which would have been purchased at the Insured's
correct age and sex by the most recent cost of insurance charge assessed prior
to the date we receive proof of death; or (2) the Account Value as of the date
we receive proof of death, multiplied by the Minimum Insurance Percentage for
the correct age.
Other Changes. Upon notice, AUL may modify the Policy, but only if such
modification is necessary to: (1) make the Policy or the Separate Account comply
with any applicable law or regulation issued by a governmental agency to which
AUL is subject; (2) assure continued qualification of the Policy under the
Internal Revenue Code or other federal or state laws relating to variable life
contracts; (3) reflect a change in the operation of the Separate Account; or (4)
provide additional Separate Account and/or fixed accumulation options. AUL
reserves the right to modify the Policy as necessary to attempt to prevent the
Owner from being considered the owner of the assets of the Separate Account. In
the event of any such modification, AUL will issue an appropriate endorsement to
the Policy, if required. AUL will exercise these rights in accordance with
applicable law, including approval of Owners, if required.
Any change of the Policy must be approved by AUL's President, Vice President or
Secretary. No representative is authorized to change or waive any provision of
the Policy.
Change of Insured
While the Policy is in force, it may be exchanged for a new Policy on the life
of a substitute Insured. The exercise of this exchange is subject to
satisfactory evidence of insurability for the substitute Insured. The Contract
Date of the new Policy will generally be the same as the Contract Date of the
exchanged Policy. The Issue Date of the new Policy will be the date of the
exchange. The initial Cash Value of the new Policy will be the same as the Cash
Value of the exchanged Policy on the date of the exchange. Exercise of the
Change of Insured provision will result in a taxable exchange.
Exchange for Paid-Up Policy
You may exchange the Policy for a paid-up whole life policy by Proper Notice and
upon returning the Policy to the Home Office. The new policy will be for the
level face amount, not greater than the Policy's Face Amount, which can be
purchased by the Policy's Net Cash Value. The new policy will be purchased using
the continuous net single premium for the Insured's age upon the Insured's
nearest birthday at the time of the exchange. We will pay you any remaining Net
Cash Value that was not used to purchase the new policy.
At any time after this option is elected, the cash value of the new policy will
be its net single premium at the Insured's then attained age. All net single
premiums will be based on 3% interest and the guaranteed cost of insurance rates
of the Policy. No riders may be attached to the new policy.
When Proceeds Are Paid
AUL will ordinarily pay any Death Benefit Proceeds, loan proceeds, Partial
Surrender proceeds, or Full Surrender proceeds within seven calendar days after
receipt at the Home Office of all the documents required for such a payment.
Other than the Death Benefit, which is determined as of the date of death, the
amount will be determined as of the date of receipt of required documents.
However, AUL may delay making a payment or processing a transfer request if (1)
the New York Stock Exchange is closed for other than a regular holiday or
weekend, trading is restricted by the SEC, or the SEC declares that an emergency
exists as a result of which the disposal or valuation of Separate Account assets
is not reasonably practicable; or (2) the SEC by order permits postponement of
payment to protect Owners.
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Dividends
You will receive any dividends declared by us as long as the Policy is in force.
Dividend payments will be applied to increase the Account Value in the
Investment Accounts and Fixed Account on a prorata basis unless you request cash
payment. We do not anticipate declaring any dividends.
Reports to Policy Owners
At least once a year, you will be sent a report at your last known address
showing, as of the end of the current report period: Account Value, Cash Value,
Death Benefit, amount of interest credited to amounts in the Fixed Account,
change in value of amounts in the Separate Account, premiums paid, loans,
Partial Surrenders, expense charges, and cost of insurance charges since the
prior report. You will also be sent an annual and a semiannual report for each
Fund or Portfolio underlying an Investment Account to which you have allocated
Account Value, including a list of the securities held in each Fund, as required
by the 1940 Act. In addition, when you pay premiums (except for premiums
deducted automatically), or if you take out a loan, transfer amounts among the
Investment Accounts and Fixed Account or take surrenders, you will receive a
written confirmation of these transactions.
Assignment
The Policy may be assigned in accordance with its terms. In order for any
assignment to be binding upon AUL, it must be in writing and filed at the Home
Office. Once AUL has received a signed copy of the assignment, the Owner's
rights and the interest of any beneficiary (or any other person) will be subject
to the assignment. If there are any irrevocable beneficiaries, you must obtain
their consent before assigning the Policy. AUL assumes no responsibility for the
validity or sufficiency of any assignment. An assignment is subject to any loan
on the Policy.
Reinstatement
The Policy may be reinstated within five years (or such longer period if
required by state law) after lapse, subject to compliance with certain
conditions, including the payment of a necessary premium and submission of
satisfactory evidence of insurability. See your Policy for further information.
Rider Benefits
The following rider benefits are available and may be added to your Policy. If
applicable, monthly charges for these riders will be deducted from your Account
Value as part of the Monthly Deduction. All of these riders may not be available
in all states.
Waiver of Monthly Deduction Disability (WMDD)
Issue Ages: 20-55
This rider waives the Monthly Deduction during a period of total disability.
WMDD cannot be attached to Policies with Face Amounts in excess of
$3,000,000 or rated higher than Table H.
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<PAGE>
Monthly Deductions are waived for total disability following a six month
waiting period. Monthly Deductions made during this waiting period are
re-credited to the Account Value upon the actual waiver of the Monthly
Deductions. If disability occurs before age 60, Monthly Deductions are
waived as long as total disability continues. If disability occurs between
ages 60-65, Monthly Deductions are waived as long as the Insured remains
totally disabled but not beyond age 65.
Guaranteed Insurance Option (GIO)
Issue ages: 20-39 (standard risks only)
This rider allows the Face Amount of the Policy to be increased by the
option amount or less, without evidence of insurability on the Insured.
These increases may occur on regular option dates or alternate option dates.
See the rider contract for the specific dates.
Children's Benefit Rider (CBR)
Issue Ages: 14 Days - 20 Years (Children's ages)
This rider provides level term insurance on each child of the Insured. At
issue, each child must be at least 14 days old and less than 20 years of
age, and the Insured must be less than 56 years old and not have a
substandard rating greater than table F. Once CBR is in force, children born
to the Insured are covered automatically after they are 14 days old.
Children are covered under CBR until they reach age 22, when they may
purchase, without evidence of insurability, a separate policy with up to
five times the expiring face amount of the rider's coverage.
Other Insured Rider (OIR)
Issue Ages: 20-85 (Other Insured's age)
The Other Insured Rider is level term life insurance on someone other than
the Insured. The minimum issue amount is $10,000, and there is no maximum
issue amount. A maximum of two OIRs may be added to the Policy. The OIR
amount of coverage may be changed in the future, but increases are subject
to evidence of insurability.
Prior to the Other Insured's age 70, the OIR may be converted to a permanent
individual policy without evidence of insurability. The OIR may be converted
to permanent coverage on the Monthiversary following the date of the
Insured's death.
Same Insured Rider (SIR)
Issue Ages: 0-85
This rider provides level term life insurance on the Insured. The minimum
issue amount is $10,000; the maximum issue is equal to the Face Amount of
the Policy. Only one SIR may be added to the Policy. The SIR face amount may
be changed (increases are subject to evidence of insurability). Prior to age
70 (55 for substandard risks), the Insured may convert the SIR to permanent
coverage without evidence of insurability.
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<PAGE>
Waiver of Premium Disability (WPD)
Issue Ages: 20-55
This rider pays a designated premium into the Account Value during a period
of total disability. The minimum designated premium is $100. WPD may not be
added to a policy unless WMDD is already added. If disability occurs before
age 60, the designated premium benefit is paid as long as total disability
continues. If disability occurs between ages 60-65, the designated premium
benefit is paid as long as the Insured remains totally disabled but not
beyond age 65.
Last Survivor Rider (LS)
Issue Ages: 20-85
This rider modifies the terms of the Policy to provide insurance on the
lives of two Insureds rather than one. When the LS Rider is attached, the
Death Benefit Proceeds are paid to the beneficiary upon the death of the
last surviving Insured. The cost of insurance charges reflect the
anticipated mortality of the two Insureds and the fact that the Death
Benefit is not paid until the death of the surviving Insured. For a Policy
containing the LS Rider to be reinstated, either both Insureds must be alive
on the date of the reinstatement; or the surviving Insured must be alive and
the lapse occurred after the death of the first Insured. The
Incontestability, Suicide, and Misstatement of Age or Sex provisions of the
Policy apply to either Insured.
LS Rider also provides a Policy Split Option, allowing the Policy on two
Insureds to be split into two separate Policies, one on the life of each
Insured. The LS Rider also includes an Estate Preservation Benefit which
increases the Face Amount of the Policy under certain conditions. The Estate
Preservation Benefit is only available to standard risks.
Joint First-to-Die Level Term Insurance Rider
Issue Ages: 20-85
This rider may be attached to a Policy in conjunction with the Last Survivor
Rider. The Joint First-to-Die Rider provides a death benefit to the
beneficiary on the death of the first of the Insureds to die. The cost of
insurance charges reflect the anticipated joint mortality of the two
Insureds. The Incontestability, Suicide, and Misstatement of Age or Sex
provisions of the Policy apply to either Insured.
Automatic Increase Rider (AIR)
Issue Ages: 20-55 (standard risks only)
This rider increases the Insured's base coverage by 5% each year, without
evidence of insurability. The 5% increase is compounded annually and is
based on the base coverage Face Amount on Policy Anniversaries. No increases
are made during any period in which the Monthly Deduction is being waived.
Insured's initial base coverage must be at least $100,000.
AIR terminates on the earliest of the following dates: the date an automatic
increase is rejected, the date the Face Amount is decreased, the date
requested in writing by the Owner, the date of Policy termination, or the
anniversary date 20 years after issue of this rider. There is no charge for
AIR. New coverage generated by the rider results in an increase in the
target premium and establishes an additional surrender charge. All charges
for any new coverage are based on the Insured's nearest age at the time of
increase.
Guaranteed Minimum Death Benefit Rider (GMDB)
This rider extends the Guarantee Period beyond that listed on the Policy
Data Page. While the GMDB rider is in force, the Policy will remain in force
and will not begin the grace period if on each Monthiversary, the sum of the
premiums paid to date, less any Partial Surrenders, any outstanding loan and
loan interest, equals or exceeds the Required Premium for the Guarantee
Period multiplied by the number of Policy months since the Contract Date.
The guarantee provided by this rider terminates if this test is failed on
any Monthiversary. The guarantee will not be reinstated.
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<PAGE>
Accelerated Death Benefit Rider (ABR)
This rider allows for a prepayment of a portion of the Policy's Death
Benefit while the Insured is still alive, if the Insured has been diagnosed
as terminally ill, and has 12 months or less to live. The minimum amount
available is $5,000. The maximum benefit payable (in most states) is the
lesser of $500,000 or 50% of the Face Amount. ABR may be added to the Policy
at any time while it is still in force. There is no charge for ABR.
Your determination as to how to purchase a desired level of insurance coverage
should be based on your specific insurance needs. Consult your sales
represenative for further information.
Additional rules and limits apply to these rider benefits. Not all such benefits
may be available at any time, and rider benefits in addition to those listed
above may be made available. Please ask your AUL representative for further
information, or contact the Home Office.
TAX CONSIDERATIONS
The following summary provides a general description of the federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisers should be consulted for more complete
information. This discussion is based upon AUL's understanding of the present
federal tax laws as they currently are interpreted by the Internal Revenue
Service (the "IRS").
Tax Status of the Policy
In order to attain the tax benefits normally associated with life insurance, the
Policy must be classified for federal income tax purposes as a life insurance
contract. Section 7702 of the Internal Revenue Code sets forth a definition of a
life insurance contract for federal income tax purposes. The U.S Treasury
Department (the "Treasury") is authorized to prescribe regulations implementing
Section 7702. While proposed regulations and other interim guidance has been
issued, final regulations have not been adopted. In short, guidance as to how
Section 7702 is to be applied is limited. If a Policy were determined not to be
a life insurance contract for purposes of Section 7702, such Policy would not
provide the tax advantages normally provided by a life insurance contract.
With respect to a Policy issued on a standard basis, AUL believes that such a
Policy should meet the Section 7702 definition of a life insurance contract.
With respect to a Policy that is issued on a substandard basis (i.e., a premium
class with extra rating involving higher than standard mortality risk) or one
involving joint Insureds, there is less guidance, in particular as to how the
mortality and other expense requirements of Section 7702 are to be applied, in
determining whether such a Policy meets the Section 7702 definition of a life
insurance contract. If the requirements of Section 7702 were deemed not to have
been met, the Policy would not provide the tax benefits normally associated with
life insurance and the tax status of all contracts invested in the Investment
Account to which premiums were allocated under the non-qualifying contract might
be affected.
If it is subsequently determined that a Policy does not satisfy Section 7702,
AUL may take whatever steps are appropriate and reasonable to attempt to cause
such a Policy to comply with Section 7702. For these reasons, AUL reserves the
right to modify the Policy as it deems necessary in its sole discretion to
attempt to qualify it as a life insurance contract under Section 7702.
Section 817(h) of the Internal Revenue Code requires that the investments of
each of the Investment Accounts must be "adequately diversified" in accordance
with Treasury regulations in order for the Policy to qualify as a life insurance
contract under Section 7702 of the Internal Revenue Code. The Investment
Accounts, through the Portfolios, intend to comply with the diversification
requirements prescribed in Treas. Reg. Section 1.817-5, which affect how the
Portfolio's assets are to be invested. AUL believes that the Investment Accounts
will, thus, meet the diversification requirements, and AUL will monitor
continued compliance with this requirement.
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In certain circumstances, owners of variable life insurance contracts may be
considered the owners, for federal income tax purposes, of the assets of the
investment accounts used to support their contracts. In those circumstances,
income and gains from the investment account assets would be includable in the
variable contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of investment
account assets if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets. The
Treasury has also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor (i.e., the Owner), rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which contract holders may direct their
investments to particular investment accounts without being treated as owners of
the underlying assets."
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that contract owners were not owners of investment account assets. For example,
an Owner has additional flexibility in allocating Net Premium payments and
Account Value. These differences could result in an Owner being treated as the
owner of a prorata portion of the assets of the Investment Accounts. In
addition, AUL does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury has stated it expects to issue. AUL
therefore reserves the right to modify the Policy as necessary to attempt to
prevent an Owner from being considered the Owner of a prorata share of the
assets of the Investment Accounts.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes.
Tax Treatment of Policy Benefits
In General. AUL believes that the proceeds and Account Value increases of a
Policy should be treated in a manner consistent with a fixed-benefit life
insurance contract for federal income tax purposes. Thus, the Death Benefit
under the Policy should be excludable from the gross income of the beneficiary
under Section 101(a)(1) of the Internal Revenue Code. However, if you elect a
settlement option for a Death Benefit other than in a lump sum, a portion of the
payment made to you may be taxable.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's Death Benefit option, a Policy loan, a Partial Surrender, a surrender,
a change in ownership, or an assignment of the Policy may have federal income
tax consequences. In addition, federal, state and local transfer, and other tax
consequences of ownership or receipt of Policy proceeds depends on the
circumstances of each Owner or beneficiary.
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The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Policy in any arrangement the value of which depends
in part on its tax consequences, you should consult a qualified tax adviser
regarding the tax attributes of the particular arrangement.
Generally, the Owner will not be deemed to be in constructive receipt of the
Account Value, including increments thereof, until there is a distribution. The
tax consequences of distributions from, and loans taken from or secured by, a
Policy depend on whether the Policy is classified as a Modified Endowment. Upon
a complete surrender or lapse of a Policy, whether or not a Modified Endowment,
the excess of the amount received plus the amount of any outstanding loans and
loan interest over the total investment in the Policy will generally be treated
as ordinary income subject to tax.
Modified Endowments. Section 7702A establishes a class of life insurance
Policies designated as "Modified Endowment Contracts." The rules relating to
whether a Policy will be treated as a Modified Endowment are extremely complex
and cannot be adequately described in the limited confines of this summary. In
general, a Policy will be a Modified Endowment if the accumulated premiums paid
at any time during the first seven Policy Years exceed the sum of the net level
premiums which would have been paid on or before such time if the Policy
provided for paid-up future benefits after the payment of seven level annual
premiums. A Policy may also become a Modified Endowment after a material change.
The determination of whether a Policy will be a Modified Endowment after a
material change generally depends upon the relationship of the Death Benefit and
Account Value at the time of such change and the additional premiums paid in the
seven years following the material change.
Due to the Policy's flexibility, classification as a Modified Endowment will
depend on the individual circumstances of each Policy. In view of the foregoing,
a current or prospective Owner should consult with a tax adviser to determine
whether a Policy transaction will cause the Policy to be treated as a Modified
Endowment. However, at the time a premium is credited which in AUL's view would
cause the Policy to become a Modified Endowment, AUL will attempt to notify the
Owner that unless a refund of the excess premium (with any appropriate interest)
is requested by the Owner, the Policy will become a Modified Endowment. However,
we do not undertake to provide such notice. The Owner will have 30 days after
receiving such notification to request the refund.
Policies classified as Modified Endowments will be subject to the following:
First, all distributions, including distributions upon surrender and Partial
Surrender, from such a Policy are treated as ordinary income subject to tax up
to the amount equal to the excess (if any) of the Account Value immediately
before the distribution over the investment in the Policy (described below) at
such time. Second, loans taken from or secured by such a Policy, are treated as
distributions from the Policy and taxed accordingly. Past due loan interest that
is added to the loan amount will be treated as a loan. Third, a 10 percent
additional income tax is imposed on the portion of any distribution from, or
loan taken from or secured by, such a Policy that is included in income except
where the distribution or loan is made on or after the Owner attains age 59 1/2,
is attributable to the Owner's becoming disabled, or is part of a series of
substantially equal periodic payments for the life (or life expectancy) of the
Owner or the joint lives (or joint life expectancies) of the Owner and the
Owner's beneficiary.
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If a Policy becomes a Modified Endowment after it is issued, distributions made
during the Policy Year in which it becomes a Modified Endowment, distributions
in any subsequent Policy Year and distributions within two years before the
Policy becomes a Modified Endowment will be subject to the tax treatment
described above. This means that a distribution from a Policy that is not a
Modified Endowment could later become taxable as a distribution from a Modified
Endowment.
All Modified Endowments that are issued by AUL (or its affiliates) to the same
Owner during any calendar year are treated as one Modified Endowment for
purposes of determining the amount includable in an Owner's gross income under
Section 72(e) of the Internal Revenue Code.
Distributions from a Policy that is not a Modified Endowment are generally
treated as first recovering the investment in the Policy (described below) and
then, only after the return of all such investment in the Policy, as
distributing taxable income. An exception to this general rule occurs in the
case of a decrease in the Policy's Death Benefit or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in a cash distribution to the Owner in order for the
Policy to continue complying with the Section 7702 definitional limits. Such a
cash distribution will be taxed in whole or in part as ordinary income (to the
extent of any gain in the Policy) under rules prescribed in Section 7702.
Loans from, or secured by, a Policy that is not a Modified Endowment are not
treated as distributions. Instead, such loans are treated as indebtedness of the
Owner.
Finally, neither distributions (including distributions upon surrender) nor
loans from, or secured by, a Policy that is not a Modified Endowment are subject
to the 10 percent additional income tax.
Policy Loan Interest. Generally, consumer interest paid on any loan under a
Policy which is owned by an individual is not deductible. The deduction of other
forms of interest paid on Policy loans may also be subject to other restrictions
under the Internal Revenue Code. A qualified tax adviser should be consulted
before deducting any Policy loan interest.
Investment in the Policy. Investment in the Policy means: (i) the aggregate
amount of any premiums or other consideration paid for a Policy, minus (ii) the
aggregate amount received under the Policy which is excluded from gross income
of the Owner (except that the amount of any loan from, or secured by, a Policy
that is a Modified Endowment, to the extent such amount is excluded from gross
income, will be disregarded), plus (iii) the amount of any loan from, or secured
by, a Policy that is a Modified Endowment to the extent that such amount is
included in the gross income of the Owner.
Estate and Generation Skipping Taxes
When the Insured dies, the Death Benefits will generally be includable in the
Owner's estate for purposes of federal estate tax if the Insured owned the
Policy. If the Owner was not the Insured, the fair market value of the Policy
would be included in the Owner's estate upon the Owner's death. Nothing would be
includable in the Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
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Federal estate tax is integrated with federal gift tax under a unified rate
schedule. In general, estates less than $600,000 will not incur a federal estate
tax liability. In addition, an unlimited marital deduction may be available for
federal estate and gift tax purposes. The unlimited marital deduction permits
the deferral of taxes until the death of the surviving spouse.
If the Owner (whether or not he or she is the Insured) transfers ownership of
the Policy to someone two or more generations younger, the transfer may be
subject to the generation-skipping transfer tax, the taxable amount being the
value of the Policy. The generation-skipping transfer tax provisions generally
apply to transfers which would be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping transfer
exemption of $1 million. Because these rules are complex, the Owner should
consult with a qualified tax adviser for specific information if ownership is
passing to younger generations.
Life Insurance Purchased for Use in Split Dollar Arrangements
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
Non-Individual Ownership of Contracts
If the Owner of a Policy is an entity rather than an individual, the tax
treatment may differ from that described above. Accordingly, prospective Owners
that are entities should consult a qualified tax adviser.
Possible Charge for AUL's Taxes
At the present time, AUL makes no charge for any federal, state or local taxes
(other than the charge for state and local premium taxes) that it incurs that
may be attributable to the Investment Accounts or to the Policies. However, AUL
reserves the right to make additional charges for any such tax or other economic
burden resulting from the application of the tax laws that it determines to be
properly attributable to the Investment Accounts or to the Policies.
56
<PAGE>
OTHER INFORMATION ABOUT THE POLICIES AND AUL
Policy Termination
The Policy will terminate, and insurance coverage will cease, as of: (1) the end
of the Valuation Period during which we receive a notice in good order from you
to surrender the Policy; (2) the expiration of a grace period; or (3) the death
of the Insured. See "Surrendering the Policy for Net Cash Value," "Premium
Payments to Prevent Lapse," and "Death Benefit and Changes in Face Amount."
Resolving Material Conflicts
The Funds presently serve as the investment medium for the Policies. In
addition, the Funds have advised us that they are available to registered
separate accounts of insurance companies, other than AUL, offering variable
annuity and variable life insurance policies.
We do not currently foresee any disadvantages to you resulting from the Funds
selling shares as an investment medium for products other than the Policies.
However, there is a theoretical possibility that a material conflict of interest
may arise between Owners whose Cash Values are allocated to the Separate Account
and the owners of variable life insurance policies and variable annuity
contracts issued by other companies whose values are allocated to one or more
other separate accounts investing in any one of the Funds. Shares of some of the
Funds may also be sold to certain qualified pension and retirement plans
qualifying under Section 401 of the Internal Revenue Code. As a result, there is
a possibility that a material conflict may arise between the interests of Owners
or owners of other contracts (including contracts issued by other companies),
and such retirement plans or participants in such retirement plans. In the event
of a material conflict, we will take any necessary steps, including removing the
Separate Account from that Fund, to resolve the matter. The Board of
Directors/Trustees of each Fund will monitor events in order to identify any
material conflicts that may arise and determine what action, if any, should be
taken in response to those events or conflicts.
Addition, Deletion or Substitution of Investments
We reserve the right, subject to applicable law, to make additions to, deletions
from, or substitutions for the shares that are held in the Separate Account or
that the Separate Account may purchase. If the shares of a Portfolio are no
longer available for investment or if, in our judgment, further investment in
any Portfolio should become inappropriate in view of the purposes of the
Separate Account, we may redeem the shares, if any, of that Portfolio and
substitute shares of another registered open-end management investment company.
We will not substitute any shares attributable to a Policy's interest in an
Investment Account of the Separate Account without notice to you and prior
approval of the SEC and state insurance authorities, to the extent required by
the 1940 Act or other applicable law.
We also reserve the right to establish additional Investment Accounts of the
Separate Account, each of which would invest in shares corresponding to a
Portfolio of a Fund or in shares of another investment company having a
specified investment objective. Any new Investment Accounts may be made
available to existing Owners on a basis to be determined by AUL. Subject to
applicable law and any required SEC approval, we may, in our sole discretion,
eliminate one or more Investment Accounts if marketing needs, tax considerations
or investment conditions warrant.
57
<PAGE>
If any of these substitutions or changes are made, we may, by appropriate
endorsement, change the Policy to reflect the substitution or change.
If we deem it to be in the best interests of persons having voting rights under
the Policies (subject to any approvals that may be required under applicable
law), the Separate Account may be operated as a management investment company
under the 1940 Act, it may be deregistered under that Act if registration is no
longer required, or it may be combined with other AUL separate accounts.
Voting Rights
AUL is the legal owner of the shares of the Portfolios held by the Investment
Accounts of the Separate Account. In accordance with its view of present
applicable law, AUL will exercise voting rights attributable to the shares of
each Portfolio held in the Investment Accounts at any regular and special
meetings of the shareholders of the Funds or Portfolios on matters requiring
shareholder voting under the 1940 Act. AUL will exercise these voting rights
based on instructions received from persons having the voting interest in
corresponding Investment Accounts of the Separate Account and consistent with
any requirements imposed on AUL under contracts with any of the Funds, or under
applicable law. However, if the 1940 Act or any regulations thereunder should be
amended, or if the present interpretation thereof should change, and as a result
AUL determines that it is permitted to vote the shares of the Portfolios in its
own right, it may elect to do so.
The person having the voting interest under a Policy is the Owner. AUL or the
pertinent Fund shall send to each Owner a Fund's proxy materials and forms of
instruction by means of which instructions may be given to AUL on how to
exercise voting rights attributable to the Portfolio's shares.
Unless otherwise required by applicable law or under a contract with any of the
Funds, with respect to each of the Portfolios, the number of Portfolio shares as
to which voting instructions may be given to AUL is determined by dividing the
value of all of the Accumulation Units of the corresponding Investment Account
attributable to a Policy on a particular date by the net asset value per share
of that Portfolio as of the same date. Fractional votes will be counted. The
number of votes as to which voting instructions may be given will be determined
as of the date coincident with the date established by a Fund for determining
shareholders eligible to vote at the meeting of the Fund or Portfolio. If
required by the SEC or under a contract with any of the Funds, AUL reserves the
right to determine in a different fashion the voting rights attributable to the
shares of the Portfolio. Voting instructions may be cast in person or by proxy.
Voting rights attributable to the Policies for which no timely voting
instructions are received will be voted by AUL in the same proportion as the
voting instructions which are received in a timely manner for all Policies
participating in that Investment Account. AUL will vote shares of any Investment
Account, if any, that it owns beneficially in its own discretion, except that if
a Fund offers its shares to any insurance company separate account that funds
variable annuity contracts or if otherwise required by applicable law or
contract, AUL will vote its own shares in the same proportion as the voting
instructions that are received in timely manner for Policies participating in
the Investment Account.
58
<PAGE>
Neither the Separate Account nor AUL is under any duty to inquire as to the
instructions received or the authority of Owners or others to instruct the
voting of shares of any of the Portfolios.
If required by state insurance officials, AUL may disregard Owner voting
instructions if such instructions would require shares to be voted so as to
cause a change in sub-classification or investment objectives of one or more of
the Portfolios, or to approve or disapprove an investment advisory agreement. In
addition, AUL may under certain circumstances disregard voting instructions that
would require changes in the investment advisory contract or investment adviser
of one or more of the Portfolios, provided that AUL reasonably disapproves of
such changes in accordance with applicable federal regulations. If AUL ever
disregards voting instructions, Owners will be advised of that action and of the
reasons for such action in the next semiannual report. Finally, AUL reserves the
right to modify the manner in which the weight to be given to pass-through
voting instructions is calculated when such a change is necessary to comply with
current federal regulations or the current interpretation thereof.
Sale of the Policies
The Policies will be offered to the public on a continuous basis, and we do not
anticipate discontinuing the offering of the Policies. However, we reserve the
right to discontinue the offering. Applications for Policies are solicited by
representatives who are licensed by applicable state insurance authorities to
sell our variable life contracts and who are also registered representatives of
AUL. AUL is registered with the SEC under the Securities Exchange Act of 1934 as
a broker-dealer and is a member of the National Association of Securities
Dealers, Inc.
AUL acts as the "principal underwriter," as defined in the 1940 Act, of the
Policies for the Separate Account. We are not obligated to sell any specific
number of Policies.
Registered representatives may be paid commissions on Policies they sell.
Representatives generally will be paid 50% of planned premiums paid in the first
year for premiums up to target premium. For planned premiums paid in excess of
target premium, registered representatives will also receive 3% of that excess.
Additional commissions may be paid in certain circumstances. Other allowances
and overrides also may be paid.
AUL Directors and Executive Officers
The following table sets forth the name and principal occupations during the
past five years of each of AUL's directors and executive officers. Unless
otherwise indicated, the address of each of the following individuals is One
American Square, P.O. Box 368, Indianapolis, Indiana 46206-0368, and the
indicated position is with AUL.
59
<PAGE>
<TABLE>
<S> <C>
NAME Principal Occupation During Past Five Years
Jerry D. Semler President and Chief Operating Officer, 1980-1989;
President & Chief Exec. Officer, 1989-8/91; Chairman of
the Board, Pres. & CEO, 9/91-present; Mental Health
Board, State of Indiana, 10/87-10/91; Dir. Jenn
Foundation Board, 5/92-present; IWC Resources Corp.,
4/96-present
John H. Barbre Sr. Vice Pres., Individual Div., 5/80-present
William R. Brown General Counsel & Secretary, 1/85-present; Dir., Health
& Hospital Corp. of Marion County Board, 1/84-1/92;
Member, Metro Development Com. of Indpls., 1/92-10/93
Dir., NOLHGA Board, 1/95-present
Charles D. Lineback Sr. Vice Pres. Reinsurance Div., 12/87-present
James W. Murphy Sr. Vice Pres., Corporate Finance, 8/69-present
Jerry L. Plummer Sr. Vice Pres., Human Resources, 1/93-present; V.P.
Human Res., 1/81-1/93
R. Stephen Radcliffe Executive Vice Pres., 8/94-present; Sr. V.P.,
Chief Actuary, 5/83-8/94; Director, 2/91-present
G. David Sapp Sr. Vice Pres., Investments, 1/92-Present; V.P.,
Securities, 8/75-1/92
James P. Shanahan Sr. Vice Pres., Pension Div., 1/83-Present
Gerald T. Walker Sr. Vice Pres., Group Life & Health Div., 10/89-present
Kent R. Adams Vice Pres., Fixed Income Securities, 1/92-present;
Asst. V.P., Securities, 1/77-1/92
Catherine B. Husman V.P. and Chief Actuary, 7/97-present; V.P. and
Corporate Actuary, 1/84-7/97
60
<PAGE>
Scott A. Kincaid V.P. & Chief Information Officer, 1/95-present; V.P.
Data Center, 9/91-1/95; Asst. V.P. Data Center, 8/83-9/91
Steven C. Berring, M.D. Director, 2/90-present; Director, NIPSCO Industries,
575 McCormick Rd. Inc., 2/86-present; Director, Arvin Industries, Inc.,
West Lafayette, IN 47906 11/83-present; Director, Eli Lilly, 4/83-present;
President, Purdue University, 2/83-present, Director,
Guidant Corp., 12/94-8/95; Dir., State Life Ins. Co.,
11/94-present
Arthur L. Bryant Director, 11/94-present; President, The State Life
11817 Sand Dollar Ct. Insurance Company, 9/83-present; Chairman of Board, The
Indianapolis, IN 46256 State Life Ins., 2/85-11/94
James M. Cornelius Director, 2/96-present; V.P. & CFO, Eli Lilly & Co.,
1055 Park Place 1/83-1995; Chairman, Guidant Corp., 10/95-present; Dir.
Zionsville, IN 46077 State Life Ins. Co, 11/94-present; Dir., National Bank
of Indpls., 11/93-present; Dir. Lilly Industries, Inc.,
4/96-present
James A. Dora Director, 2/89-present; Chairman/CEO and Owner, General
5121 Green Braes, E. Dr. Hotels Corp., 1/90-present; President and Owner, General
Indianapolis, IN 46234 Hotels Corp., 1967-1989; Dir., Indiana National Bank, 4/83-10/93
Div., NBD Bank, N.A. (formely Indiana National Bank),
10/93-present; Dir., State Life, 11/94-present
Otto N. Frenzel Director, 2/71-present (Chairman of Audit Comm.);
11330 Templin Rd. Chairman,, Executive Comm., National City Bank Indiana,
Zionsville, IN 46077 1/96-present; Chrmn. National City Bank Indiana,
10/92-1/96; Dir., National City Corp., 10/92-present;
Chairman, Merchants National Corp. 4/79-1/93; Vice
Chrmn., Merchants National Bank & Trust Co. of Indpls.,
4/86-10/92; Director, Indpls. Water Co., 4/63-present;
Dir., Indiana Gas Co., Inc., 1/67-present; Dir. Indpls.
Power & Lights Cop. 4/77-present; Dir. Baldwin & Lyons,
Inc., 5/79-present; Dir., IPALCO Enterprises, Inc.,
9/83-present; Dir., IWC Resources Corp., 3/86-present;
Dir. Indiana Energy, Inc., 10/85-present; Dir., State
Life Ins. Co., 11/94-present
David W. Goodrich Director, 2/95-present; Exec. Vice Pres., F.C. Tucker
6060 Sunset Ln. Co., 1/86-present; Chrmn., Methodist Hosp. of Indiana
Indianapolis, IN 46228 1/93-6/96; Director, The State Life Ins. Co.,
7/90-present; Director, Irwin Financial Corp.,
1/88-present; Director, Citizens Gas & Coke Utility,
9/94-present; Vice Chairman, Clarian Health Partners,
6/96-present
61
<PAGE>
William P. Johnson Director, 7/78-present; Chairman of the Board & CEO,
19448 Rio Verde Dr. Goshen Rubber Co., 7/91-present, Pres. & Treas., Goshen
Goshen, IN 46526 Rubber Co., 9/76-7/91; Pres. & Dir., GNC Corp.,
9/76-7/91; Pres. & Dir., GSH Corp., 7/91-present; Pres.
& Dir. GRN Corp., 9/76-7/91; Chrmn., GRN Corp.,
7/91-present; Pres. & Dir., Goshen Rubber of Canada,
Ltd., 9/76-7/91; Chrmn., Goshen Rubber of Canada, Ltd.,
7/91-present; Dir., Society Bank Ind. (formely
Trustcorp Inc.) So. Bend, IN, 2/88-12/95; Member of
Advisory Comm., Society Bank Ind. Goshen, IN,
2/88-12/95; Dir., Coachman Industries, 1978-present;
Chrmn. & CEO, Syracuse Rubber Co., 1981-present; Chrmn.
& CEO, Bond-Flex Rubber Co., 4/86-present; Dir., Peetro
Go, Inc., 4/86-5/96; Dir., Flair Inc., 3/86 present;
Dir., Lightfoot Enterprises, 4/86-present; Chrmn.,
Palmer Plastics, 10/87-present; Chrmn.,Dayton
Polymrics, 10/89-present; Chrmn., GR Plastics,
10/89-present; Chrmn. & CEO, ETI Inc., 9/92-present;
Chrmn. & CEO, GKI Inc., 7/91-present; Chrmn. & CEO,
Prolon, Inc., 10/92-present; Chrmn. & CEO, Yeasel, Inc.,
1/90-present; Chrmn. & CEO, Bower Mfg., 7/91-present;
Dir., State Life Ins. Co., 11/94-present
James T. Morris Director, 2/87-presnet; Chairman & CEO, Indianapolis
8191 N. Pennsylvania Water Co., 1/92-present; Pres., Indianapolis Water Co.,
Indianapolis, IN 46240 1/89-1/92; Pres., Chrmn. & CEO, IWC Resources Corp.,
1/89-present; Director, MSA Realty Corp., 11/84-9/94;
Dir., National City Bank Corp, 7/89-present; Advisor,
Logo 7, Inc., 9/90-12/91; Dir., Paul Harris,
12/96-present; Dir., State Life Ins. Co., 11/94-present
Thomas E. Reilly, Jr. Director, 2/90-present; Chairman, Reilly Industries,
8877 Pickwick Dr. Inc., 1/90-present; President, Reilly Indus., 1963-1/90;
Indianapolis, IN 46260 Director, Lilly Indus. Inc., 4/81-present; Director,
INB National Bank, 4/84-10/93; Dir. NBD Indiana,
subsid. of NBD Bancorp, 4/84-1994; Dir., NBD Bancorp,
3/94-2/95; Dir,. First Chicago NBD Corp., 2/95-present;
Dir., Herff Jones Corp., 10/95-present; Dir., State Life
Ins. Co., 11/94-present
62
<PAGE>
William R. Riggs Director, 2/92-present; Attorney (Partner), Ice Miller
7614 Silver Pine Ct. Donadio & Ryan, 6/63-present; Dir, State Life Ins. Co.,
Indianapolis, IN 46250 11/94-present
Yvonne H. Shaheen Director, 8/93-present; Utility
Pres. & CEO, Bright Sheet 11808
Rolling Springs Dr. Metal,
2/87-1/95; Pres. & CEO, Long Elec.
Co., Indianapolis, IN 46032
2/87-present; Dir., Corporate
Community Council, 1/93-1/95;
Director, Community Hospital
Foundation, 1/92-2/96; Dir., Junior
Achievement, 4/90-present; Dir.,
National Elec. Contractors Assoc.,
1/91-present; Dir., Indianapolis
Chamber of Commerce, 1/90-present;
Dir., Greater Indianapolis Progress
Committee, 12/88-present; Dir., Boy
Scouts of America, 10/91-present,
Director, State Life Ins. Co.,
11/94-present
Frank D. Walker Director, 11/94-present; Chairman of the Board & CEO,
3613 Bay Rd. N. Dr. Walker Information, Inc., 6/60-present; Managing
Indianapolis, IN 46240 Partner, W.R. Properties, 6/84-present; Dir., Citizens
Gas & Coke Utility, 10/87-present; Dir., NBD Bank N.A.
Indiana, 4/88-present; Dir., State Life Ins. Co.,
8/88-present; Advisor, Wild Birds Unlimited, Inc.,
8/95-present
</TABLE>
63
<PAGE>
State Regulation
AUL is subject to regulation by the Department of Insurance of the State of
Indiana, which periodically examines the financial condition and operations of
AUL. AUL is also subject to the insurance laws and regulations of all
jurisdictions where it does business. The Policy described in this Prospectus
has been filed with and, where required, approved by, insurance officials in
those jurisdictions where it is sold.
AUL is required to submit annual statements of operations, including financial
statements, to the insurance departments of the various jurisdictions where it
does business to determine solvency and compliance with applicable insurance
laws and regulations.
Additional Information
A registration statement under the Securities Act of 1933 has been filed with
the SEC relating to the offering described in this Prospectus. This Prospectus
does not include all the information set forth in the registration statement.
The omitted information may be obtained at the SEC's principal office in
Washington, D.C. by paying the SEC's prescribed fees.
Independent Auditors
The consolidated balance sheets for AUL at December 31, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended December 31, 1996 appearing herein have been audited by Coopers &
Lybrand LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Stephen J.
Pearson, FSA, MAAA, Assistant Vice President and Individual Product Actuary of
AUL.
Litigation
The Separate Account is not a party to any litigation. Its depositor, AUL, as an
insurance company, ordinarily is involved in litigation. AUL is of the opinion
that such litigation is not material to the Owners of the Policies.
Legal Matters
Dechert Price & Rhoads of Washington, D.C. has provided advice on certain
matters relating to the federal securities laws. Matters of Indiana law
pertaining to the Policies, including AUL's right to issue the Policies and its
qualification to do so under applicable laws and regulations issued thereunder,
have been passed upon by Richard A. Wacker, Associate General Counsel of AUL.
Financial Statements
AUL's financial statements as of December 31, 1996 for the year ended December
31, 1996 are included in this Prospectus. The financial statements of AUL should
be distinguished from financial statements of the Separate Account and should be
considered only as bearing upon AUL's ability to meet its obligations under the
Policies. They should not be considered as bearing on the investment performance
of the assets held in the Separate Account. Because the Separate Account has not
commenced operations before the date of this Prospectus, no financial statements
of the Separate Account are included in this Prospectus.
[To be provided]
64
<PAGE>
PART II
Undertaking to File Reports
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any regulation of
the Commission heretofore or hereafter duly adopted pursuant to authority
conferred in that section.
Rule 484 Undertaking
Article IX, Section 1 of the by-laws of American United Life Insurance
Company(R) ("AUL") provides as follows:
The corporation shall indemnify any director or officer or former
director or officer of the corporation against expenses actually and
reasonably incurred by him (and for which he is not covered by
insurance) in connection with the defense of any action, suit or
proceeding (unless such action, suit or proceeding is settled) in which
he is made a party by reason of being or having been such director or
officer, except in relation to matters as to which he shall be adjudged
in such action, suit or proceeding, to be liable for negligence or
misconduct in the performance of his duties. The corporation may also
reimburse any director or officer or former director or officer of the
corporation for the reasonable costs of settlement of any such action,
suit or proceeding, if it shall be found by a majority of the directors
not involved in the matter in controversy (whether or not a quorum)
that it was to the interest of the corporation that such settlement be
made and that such director or officer was not guilty of negligence or
misconduct. Such rights of indemnification and reimbursement shall not
be exclusive of any other rights to which such director or officer may
be entitled under any By-law, agreement, vote of members or otherwise.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the foregoing provisions, 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, officer or controlling person of the Depositor in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the 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.
Section 26(e)(2) Representation
AUL, the sponsoring insurance company of the AUL American Individual
Variable Life Unit Trust, hereby represents that the fees and charges deducted
under the Policies are reasonable in relation to the services rendered, the
expenses expected to be incurred and the risks assumed by AUL.
<PAGE>
Contents of Registration Statement
This Registration Statement on Form S-6 comprises the following papers
and documents:
The facing sheet.
Reconciliation and tie.
The Prospectus consisting of 64 pages (including
illustrations).
The undertaking to file reports.
The undertaking pursuant to Rule 484.
The representation pursuant to Section 26(e)(2).
The signatures.
Written consent of the following persons (included
in the exhibits shown below):
Independent Public Accountants
Dechert Price & Rhoads
Actuary
The following exhibits:
1. (1) Resolution of the Board of Directors of the Depositor
dated July 10, 1997 concerning AUL American
Individual Variable Life Unit Trust
(2) Inapplicable
(3) (a) Inapplicable
(b) Inapplicable
(c) Schedule of Sales Commissions(*)
(4) Inapplicable
(5) (a) Form of Flexible Premium Adjustable Variable Life
Insurance Policy
(b) Form of Last Survivor Rider
(c) Form of Waiver of Monthly Deduction Disability
(d) Form of Guaranteed Insurance Option
2
<PAGE>
(e) Form of Children's Benefit Rider
(f) Form of Other Insured/Same Insured Rider
(g) Form of Waiver of Premium Disability
(h) Form of Automatic Increase Rider
(i) Form of Guaranteed Minimum Death Benefit Rider
(j) Form of Accelerated Death Benefit Rider
(k) Form of Joint First-to-Die Level Term Insurance
Rider
(6) (a) Articles of Incorporation of American United Life
Insurance Company(R) (1)
(b) By-laws of American United Life Insurance
Company(R) (1)
(7) Inapplicable
(8) (a) Form of Participation Agreement between American
United Life Insurance Company(R) and Alger
American Fund (2)
(b) Form of Participation Agreement between American
United Life Insurance Company(R) and American
Century Variable Portfolios, Inc. (2)
(c) Form of Participation Agreement between American
United Life Insurance Company(R) and Fidelity
Variable Insurance Products Fund (1)
(d) Form of Participation Agreement between American
United Life Insurance Company(R) and Fidelity
Variable Insurance Products Fund II (1)
(e) Form of Participation Agreement between American
United Life Insurance Company(R) and T. Rowe
Price Equity Series, Inc. (2)
(9) Inapplicable
(10) Form of Application for Flexible Premium
Adjustable Variable Life Insurance Policy(*)
3
<PAGE>
2. Opinion and consent of legal officer of American United Life
Insurance Company(R) as to legality of Policies being
registered(*)
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. Consent of Independent Accountants(*)
7. Consent of Dechert Price & Rhoads(*)
8. Opinion of Actuary(*)
9. Memorandum Describing Issuance, Transfer, and Redemption
Procedures
10. Powers of Attorney
- ---------------
(1) Incorporated herein by reference to the registration statement of AUL
Unit Trust (File No. 33-31375) on Form N-4.
(2) Incorporated herein by reference to the registration statement of AUL
American Individual Unit Trust (File No. 33-79562) on Form N-4.
(*) To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
AUL American Individual Variable Life Unit Trust, has duly caused this
registration statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the city of Indianapolis, and the state of Indiana, on the
31st day of July, 1997.
AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST
(Registrant)
By: American United Life Insurance Company
By: Jerry D. Semler*
Name: Jerry D. Semler
Title: Chairman of the Board, President,
and Chief Executive Officer
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
(Depositor)
By: Jerry D. Semler*
Name: Jerry D. Semler
Title: Chairman of the Board, President,
and Chief Executive Officer
* By: /s/ Richard A. Wacker
______________________
Richard A. Wacker as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Name Capacity Date
Jerry D. Semler* Director, President, and Chief Executive Officer July 31, 1997
James W. Murphy* Principal Financial and Accounting Officer July 31, 1997
Arthur L. Bryant* Director July 31, 1997
James E. Cornelius* Director July 31, 1997
James E. Dora* Director July 31, 1997
Otto N. Frenzel III* Director July 31, 1997
William P. Johnson* Director July 31, 1997
R. Stephen Radcliffe* Director July 31, 1997
Yvonne H. Shaheen* Director July 31, 1997
Frank D. Walker* Director July 31, 1997
</TABLE>
* By: /s/ Richard A. Wacker
_______________________________
Richard A. Wacker as attorney-in-fact
* Powers of Attorney included herein.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS FILED WITH
FORM S-6
For Registration Under the Securities Act of 1933
of Securities of Unit Investment Trust
Registered on Form N-8B-2
AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST
OF AMERICAN UNITED LIFE INSURANCE COMPANY(R)
<TABLE>
<S> <C>
Exhibit Number Name of Exhibit
1.(1) Resolution of the Board of
Directors of the Depositor
dated July 10, 1997
concerning AUL American
Individual Variable Life
Unit Trust
1.(5)(a) Form of Flexible Premium Adjustable Variable Life Insurance
Policy
1.(5)(b) Form of Last Survivor Rider
1.(5)(c) Form of Waiver of Monthly Deduction Disability
1.(5)(d) Form of Guaranteed Insurance Option
1.(5)(e) Form of Children's Benefit Rider
1.(5)(f) Form of Other Insured/Same Insured Rider
1.(5)(g) Form of Waiver of Premium Disability
1.(5)(h) Form of Automatic Increase Rider
<PAGE>
1.(5)(i) Form of Guaranteed Minimum Death Benefit Rider
1.(5)(j) Form of Accelerated Death Benefit Rider
1.(5)(k) Form of Joint First-to-Die Level Term Insurance
Rider
9 Memorandum Describing Issuance, Transfer, and Redemption
Procedures
10 Powers of Attorney
</TABLE>
AMERICAN UNITED LIFE INSURANCE COMPANY
CERTIFICATE OF RESOLUTIONS - Separate Account
I, WILLIAM R. BROWN, do hereby certify that I am the duly elected and qualified
Secretary of American United Life Insurance Company and the keeper of the
records and corporate seal of said corporation and that the following is a true
and correct copy of resolutions adopted at a duly convened meeting held July 10,
1997, at which a quorum was present, of the Executive Committee of the Board of
Directors of said corporation:
BE IT RESOLVED, that American United Life Insurance Company (the
"Company"), pursuant to the provisions of Section 27-1-5-1 Class 1(c) of the
Indiana Insurance Code, hereby establishes a separate account which shall be
known as the AUL American Individual Variable Life Separate Account (hereinafter
"Separate Account") as hereinafter set forth:
FURTHER RESOLVED, that the Separate Account is established for the
purpose of providing for the funding of individual variable life contracts
("Contracts") to be issued by the Company and shall constitute a separate
account into which allocated amounts are paid to or held by the Company under
such Contracts; and
FURTHER RESOLVED, that the income, gains, and losses, whether or not
realized, from assets allocated to the Separate Account shall, in accordance
with the Contracts, be credited to or charged against such Separate Account
without regard to other income, gains, or losses of the Company; and
FURTHER RESOLVED, that the Separate Account may be divided into a
number of Variable Accounts to which net payments under the Contracts will be
allocated in accordance with instructions received from contract owners, and
that the President or a Senior Vice President be, and hereby is, authorized to
establish, increase, or decrease the number of Variable Accounts in the Separate
Account as such officer may deem necessary or appropriate; and
FURTHER RESOLVED, that each such Variable Account shall invest only in
the shares of an open-end management investment company, a single portfolio of
an open-end management investment company organized as a series fund, or other
investment vehicle designated in the Contract; and
FURTHER RESOLVED, that the appropriate officers of the Company, with
the assistance of counsel, be, and they hereby are, authorized to take any and
all actions necessary to sponsor and promote an open-end management investment
company that will serve as the investment vehicle for the Contracts and will be
eligible for investment by the Separate Account; and
FURTHER RESOLVED, that the President or a Senior Vice President of the
Company be, and hereby is, authorized to establish and change the designation of
the Separate Account and any Variable Account thereof to such designation as
such officer may deem appropriate; and
<PAGE>
FURTHER RESOLVED, that the appropriate officers of the Company, with
such assistance from the Company's auditors, legal counsel, or others as such
officers may determine are appropriate, be, and they hereby are, authorized and
directed to take all action necessary to: (a) register the Separate Account as a
unit investment trust under the Investment Company Act of 1940, as amended; (b)
register the Contracts or interests therein in such amounts, which may be an
indefinite amount, as the officers of the Company shall from time to time deem
appropriate under the Securities Act of 1933; and (c) take all other actions
which are necessary in connection with the offering of said Contracts for sale
and the operation of the Separate Account in order to comply with the Investment
Company Act of 1940, the Securities Exchange Act of 1934, the Securities Act of
1933, and other applicable federal laws, including the filing of any amendments
to registration statements, the seeking of any interpretations that are
necessary or advisable from the Securities and Exchange Commission or any other
agency of the U.S. government, the provision of any undertakings, and seeking of
any applications for orders or exemptions from the Investment Company Act of
1940 or other applicable federal laws as the officers of the Company shall deem
necessary or appropriate; and
FURTHER RESOLVED, that the appropriate officers of the Company be, and
they hereby are, authorized on behalf of the Separate Account and on behalf of
the Company to take any and all action that they may deem necessary or advisable
to register, file, or qualify the Contracts for sale, including the preparation
and filing of any registrations or filings, and seeking the qualification of the
Company, its officers, agents, and employees, and the Contracts under any
applicable insurance, securities, or other laws of any of the states of the
United States or other jurisdictions, and in connection therewith to prepare,
execute, deliver, and file all such applications, reports, covenants,
resolutions, applications for orders or exemptions, consents to service or
process, surety bonds, and other papers and instruments as may be required under
such laws, to pay all necessary fees and expenses, and to take any and all
further action which said officers or counsel of the Company may deem necessary
or desirable (including entering into whatever agreements and contracts may be
necessary) in order to maintain such registrations or qualifications for as long
as said officers deem it to be appropriate; and
FURTHER RESOLVED, that the President or any Senior Vice President of
the Company is hereby authorized to execute such agreement or agreements as are
deemed necessary and appropriate (a) with any qualified entity under which such
entity will be appointed principal underwriter and distributor for the Contracts
and (b) with one or more qualified banks or other qualified entities to provide
administrative and/or custodial services in connection with the establishment
and maintenance of the Separate Account and the design, issuance, and
administration of the Contracts; and
FURTHER RESOLVED, that, since it is expected that the Separate Account
will invest in the securities issued by one or more registered investment
companies, the President or any Senior Vice President of the Company is hereby
authorized to execute whatever agreement or agreements as may be necessary or
appropriate to enable such investments to be made; and
FURTHER RESOLVED, that, the assets of the Separate Account shall be
insulated from the creditors of AUL's general account to the extent permitted by
Indiana law; and
FINALLY RESOLVED, that the appropriate officers of the Company are
hereby authorized and directed, on behalf of the Company and the Separate
Account, to take whatever action may be necessary or advisable to do or cause to
be done all such acts and things to carry out the foregoing resolutions and the
intent and purposes thereof, to execute and file all requisite papers and
documents, including but not limited to registration statements, notifications
of registration, agreements, applications, reports, surety bonds, irrevocable
consents, powers of attorneys, and appointment of agents for service of process,
and to pay all necessary fees and expenses as in such officer's judgment may be
necessary or advisable.
2
<PAGE>
I further certify that the foregoing resolutions have not been rescinded or
modified and are in full force and effect.
IN WITNESS WHEREOF, I have hereunto affixed my name as Secretary and have caused
the corporate seal of said corporation to be hereto affixed this ____ day
of_____________, 19____.
/s/ William R. Brown
----------------------
Secretary
Seal
American United Life Insurance Company
One American Square, P.O. Box 368, Indianapolis, Indiana 46206-0368
American United Life Insurance Company (AUL)(R) will pay the Death Benefit
Proceeds to the beneficiary if the Insured dies while this policy is in force,
subject to the terms of this policy.
10-DAY RIGHT TO EXAMINE THE POLICY
THIS POLICY MAY BE SENT BACK TO AUL OR ITS REPRESENTATIVE WITHIN 10
DAYS AFTER IT IS RECEIVED. IN SUCH CASE, THIS POLICY WILL BE VOID FROM
THE BEGINNING. AUL WILL REFUND THE GREATER OF ANY PREMIUMS PAID OR THE
ACCOUNT VALUE WITHIN SEVEN DAYS AFTER THIS POLICY IS RETURNED.
NOTIFICATION OF THE RIGHT TO EXAMINE PERIOD WILL BE SENT WITH THE
POLICY WHEN ISSUED.
THE DURATION OR AMOUNT OF THE DEATH BENEFIT MAY BE FIXED OR MAY VARY DEPENDING
ON THE INVESTMENT EXPERIENCE AND THE DEATH BENEFIT OPTION SELECTED. THE DEATH
BENEFIT IS DESCRIBED IN THE DEATH BENEFIT SECTION.
THE CASH VALUE, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT,
IS VARIABLE AND MAY INCREASE OR DECREASE. NO MINIMUM CASH VALUE IS GUARANTEED.
------------------------------------------------------------------------
READ YOUR POLICY CAREFULLY
FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE
PARTICIPATING
PERIOD OF COVERAGE NOT GUARANTEED
This policy is a legal contract between the owner and AUL.
------------------------------------------------------------------------
Signed for American United Life Insurance Company by
------------- -----------------------------
Secretary Chairman of the Board, President, and
Chief Executive Officer
A Mutual Company Established 1877
<PAGE>
Table of Contents
Page
POLICY DATA PAGE...........................................................4
DEFINITIONS................................................................8
BENEFITS AVAILABLE UNDER THE POLICY.......................................10
GENERAL PROVISIONS........................................................10
POLICY 10
RELIANCES........................................................10
INCONTESTABILITY.................................................10
SUICIDE 10
MISSTATEMENT OF AGE OR SEX.......................................11
OWNER AND BENEFICIARY.....................................................11
OWNERSHIP........................................................11
ASSIGNMENT.......................................................11
BENEFICIARY......................................................11
CHANGE OF OWNER OR BENEFICIARY...................................12
DEATH BENEFIT.............................................................12
DEATH BENEFIT....................................................12
DEATH BENEFIT OPTIONS............................................13
DEATH BENEFIT CHANGES............................................13
PREMIUMS 15
PAYMENT OF PREMIUM...............................................15
ALLOCATION OF NET PREMIUM........................................16
POLICY CHARGES............................................................16
PREMIUM EXPENSE CHARGES..........................................16
MONTHLY DEDUCTION................................................16
MONTHLY ADMINISTRATIVE CHARGE....................................17
COST OF INSURANCE................................................17
MORTALITY AND EXPENSE RISK CHARGE................................17
SURRENDER CHARGE.................................................17
TAXES............................................................17
CHANGES IN COST FACTORS..........................................18
POLICY VALUES.............................................................18
ACCOUNT VALUE....................................................18
CASH VALUE.......................................................18
NET CASH VALUE...................................................18
2
<PAGE>
VARIABLE ACCOUNT PROVISIONS...............................................19
SEPARATE ACCOUNT.................................................19
INVESTMENT ACCOUNTS..............................................19
VARIABLE ACCOUNT VALUE...........................................19
CREDITING OF ACCUMULATION UNITS..................................19
ACCUMULATION UNIT VALUE..........................................19
NET INVESTMENT FACTOR............................................20
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS...............20
FIXED ACCOUNT PROVISIONS..................................................21
FIXED ACCOUNT VALUE..............................................21
FIXED ACCOUNT INTEREST RATE......................................21
CASH BENEFITS.............................................................21
TRANSFERS........................................................21
LIMITATION ON TRANSFERS FROM THE FIXED ACCOUNT...................22
LOANS........................................................... 22
INTEREST CHARGED ON LOANS........................................23
LOAN ACCOUNT.....................................................23
REPAYMENT OF LOANS...............................................23
SURRENDER........................................................24
PARTIAL SURRENDER................................................24
FULL SURRENDER...................................................24
TERMINATION OF THE POLICY.................................................24
GRACE PERIOD.....................................................24
TERMINATION......................................................24
CONTINUATION OF INSURANCE GUARANTEE..............................25
REINSTATEMENT....................................................25
OTHER POLICY PROVISIONS...................................................26
DEFERRAL OF PAYMENTS.............................................26
POLICY CHANGES...................................................26
CHANGE OF INSURED................................................26
DIVIDENDS........................................................26
ANNUAL REPORT....................................................26
CONFORMITY WITH LAWS.............................................27
COMPUTATIONS.....................................................27
SETTLEMENT OPTIONS...............................................27
3
<PAGE>
POLICY DATA PAGE
- -------------------------------------------------------------------
ISSUE DATE:....... POLICY NUMBER:
CONTRACT DATE:
NAME OF INSURED:.. INITIAL PREMIUM:
AGE AT ISSUE:..... PLANNED PREMIUM:
SEX:
RATE CLASS:
FACE AMOUNT OF INSURANCE: REQUIRED PREMIUM
FOR THE GUARANTEE PERIOD:
DEATH BENEFIT OPTION:
SEPARATE ACCOUNT:.[ ]
MINIMUM PREMIUM ALLOCATION TO ANY INVESTMENT ACCOUNT OR THE FIXED ACCOUNT:
[1% of the premium payment]
All allocations must be in whole percentages.
MINIMUM PREMIUM PAYMENT SUBSEQUENT TO THE INITIAL PREMIUM:
[$50 ]
GUARANTEED INTEREST RATE ON THE FIXED ACCOUNT: [3%]
PREMIUM EXPENSE CHARGES:
Premium tax charge: [ 2.5%] of each premium paid
Sales charge: [ 3.5%] of each premium paid
during the first ten Policy Years;
[1.5%] of each premium paid thereafter
MONTHLY ADMINISTRATIVE CHARGE:
Current: [$30] per month during first Policy Year
[$5] per month thereafter
Guaranteed: [$10] per month after the first Policy Year
4
<PAGE>
MORTALITY AND EXPENSE RISK CHARGE:
1/12 of the following percentage of the Variable Account Value:
[.75%] during the first [10] Policy Years
[.25%] thereafter
TRANSFER CHARGE:
Current: [0]
Guaranteed: [0] for the first [12] transfers in any Policy Year
[$25] for each subsequent transfer in the Policy Year
SURRENDER CHARGES
Policy Year Surrender Charge
1 .............
2 .............
3
4
5
6
7
8
9
10
11
12
13
14
15 and thereafter 0
INTEREST RATE CHARGED ON LOANS: [6%]
INTEREST RATE CREDITED ON THE LOAN ACCOUNT:
Guaranteed rate: [4%]
Current rate: [4% during the first 10 Policy Years, 5% thereafter]
FIRST DATE AN INCREASE IN THE FACE AMOUNT MAY BE REQUESTED:
[one year after the Contract Date]
FIRST DATE A DECREASE IN THE FACE AMOUNT MAY BE REQUESTED:
[one year after the Contract Date]
5
<PAGE>
FIRST DATE A CHANGE IN THE DEATH BENEFIT OPTION MAY BE REQUESTED:
[one year after the Contract Date]
MINIMUM INCREASE IN FACE AMOUNT: [$5,000], or if less, the amount determined
under any rider provision
MINIMUM DECREASE IN FACE AMOUNT: [$5,000]
MINIMUM FACE AMOUNT: [$50,000]
MINIMUM TRANSFER AMOUNT: [Currently no minimum. AUL may set a minimum of $100.]
MAXIMUM TRANSFER AMOUNT FROM THE FIXED ACCOUNT:
[20%] per Policy Year of the amount in the Fixed Account at the
beginning of the Policy Year, less any partial cash surrenders made
from the Fixed Account since that date.
MINIMUM LOAN AMOUNT: [$500]
MINIMUM PARTIAL SURRENDER AMOUNT: [$500]
ASSUMED DATE OF DELIVERY OF THE POLICY, FOR PURPOSES OF THE TRANSFER AT THE END
OF THE RIGHT TO EXAMINE PERIOD: [5] days after the Issue Date
HOME OFFICE:
American United Life Insurance Company
One American Square, P.O. Box 368, Indianapolis, Indiana 46206-0368
6
<PAGE>
TABLE OF MONTHLY GUARANTEED COST OF INSURANCE RATES PER $1000 OF
RISK AMOUNT, and MINIMUM INSURANCE PERCENTAGES
<TABLE>
<S> <C> <C> <C>
Attained Age Monthly Guaranteed Minimum
......... Cost of Insurance Rate Insurance Percentage
................ ......... ..........
................ ......... ..........
The minimum insurance percentages are determined to comply with Section 7702
of the Internal Revenue Code.
Mortality Table: 1980 Commissioners Standard Ordinary Non-Smoker and Smoker
Mortality Table, age last birthday
</TABLE>
7
<PAGE>
DEFINITIONS
ACCOUNT VALUE
The Account Value is the sum of your interest in the Variable Account,
the Fixed Account, and the Loan Account. Details are on page ___.
AGE
Issue Age means the Insured s age as of the Contract Date. Attained Age
means the Issue Age increased by one for each complete Policy Year.
CASH VALUE
The Cash Value is the Account Value less the Surrender Charge. The Net
Cash Value is the Cash Value less any outstanding loan and loan
interest.
CONTRACT DATE
The date from which Monthiversaries, Policy Years, and Policy
Anniversaries are measured. Suicide and Incontestability periods are
measured from the Contract Date.
DEATH BENEFIT AND DEATH BENEFIT PROCEEDS
This policy has two death benefit options, which are described on page
____. The Death Benefit Proceeds are the Death Benefit less any
outstanding loan and loan interest, plus any benefits provided by
rider.
FACE AMOUNT
The Face Amount shown on the Policy Data Page, or as subsequently
changed.
FIXED ACCOUNT
An account which is part of our General Account, and is not part of or
dependent on the investment performance of the Variable Account.
GUARANTEE PERIOD
The period shown on the Policy Data Page during which the Policy will
remain in force if cumulative premiums, less any outstanding loan and
loan interest and Partial Surrenders, equal or exceed the Required
Premium for the Guarantee Period. The Guarantee Period terminates on
any Monthiversary that the test fails.
HOME OFFICE
AUL's Home Office as shown on the Policy Data Page.
INSURED
The Insured named on the Policy Data Page. The Insured may or may not
be the Owner.
INVESTMENT ACCOUNTS
One or more of the subdivisions of the Separate Account. Each
Investment Account is invested in a different fund Portfolio.
8
<PAGE>
ISSUE DATE
The date this policy is issued and coverage becomes effective.
LOAN ACCOUNT
A portion of the Account Value which is collateral for loan amounts.
The Loan Account is described in the Loans section on page XX.
MINIMUM INSURANCE PERCENTAGE
The minimum percentage of insurance required to qualify the policy
under the Internal Revenue Code. A table of these amounts is on the
Policy Data Page.
MODIFIED ENDOWMENT
A classification of policies determined under the Internal Revenue
Code to be modified endowment contracts, which affects the tax status
of distributions from the policy.
MONTHIVERSARY
The same date of each month as the Contract Date. If a Monthiversary
falls on a day which is not a Valuation Date, the processing of the
Monthiversary will be the next Valuation Date.
NET CASH VALUE
The Net Cash Value is the Cash Value less outstanding loans and loan
interest.
NET PREMIUM
The total premium paid reduced by the Premium Expense Charges shown on
the Policy Data Page.
OWNER
The Owner named in the application, unless changed.
PARTIAL SURRENDER
A withdrawal of a portion of the Account Value
POLICY ANNIVERSARY
The same date each year as the Contract Date.
POLICY DATA PAGE
The Policy Data Page or the supplemental Policy Data Page most
recently sent to You by Us.
POLICY YEAR
One year from the Contract Date and from each Policy Anniversary.
9
<PAGE>
PORTFOLIO
A separate investment fund in which the Separate Account invests.
PROPER NOTICE
Notice that is received at our Home Office in a form acceptable to Us.
REQUIRED PREMIUM FOR THE GUARANTEE PERIOD
The amount that must be paid on a cumulative basis to keep this policy
in force during the Guarantee Period.
RISK AMOUNT
The Death Benefit divided by 1.00246627 less the Account Value.
SEPARATE ACCOUNT
The Separate Account of AUL identified on the Policy Data Page. The
Separate Account is segregated into several Investment Accounts.
VALUATION DATE
Valuation Dates are the dates on which the Investment Accounts are
valued. A Valuation Date is any date on which the New York Stock
Exchange is open for trading and we are open for business.
VALUATION PERIOD
A Valuation Period begins at the close of one Valuation Date and ends
at the close of the next succeeding Valuation Date.
VARIABLE ACCOUNT
The Account Value of this policy which is invested in one or more
Investment Accounts.
WE
We , us or our means AUL.
YOU
You or your means the Owner of this Policy.
10
<PAGE>
BENEFITS AVAILABLE UNDER THE POLICY
This Policy has a Death Benefit, a surrender benefit, and a loan value. The
terms of these benefits are described in the Policy.
GENERAL PROVISIONS
POLICY
The entire policy consists of:
1. the basic policy;
2. riders and endorsements, if any;
3. the attached copy of your application.
This policy is issued in consideration of the application and payment
of the initial premium.
Any change in this policy must be approved by AUL s President, Vice
President or Secretary. No Representative is authorized to change or
waive any policy provision.
RELIANCES
All statements made in the application, in the absence of fraud, are
deemed representations and not warranties. No statement will void this
policy or be used in defense of a claim unless contained in the
application. We are not liable for a request made in accordance with
your instructions.
INCONTESTABILITY
In the absence of fraud, we will not contest this policy after it has
been in force during the lifetime of the Insured for two years from the
Contract Date, or for increases in the Face Amount, two years from the
effective date of the increase. If you did not request the Face Amount
increase or if evidence of insurability was not required, we will not
contest the increase. If this policy is reinstated, the incontestable
period will start over again beginning on the effective date of the
reinstatement, but only for statements made in the application for
reinstatement.
SUICIDE
If the Insured commits suicide, while sane or insane, within two years
from the Contract Date or the effective date of any reinstatement, we
will not pay a death benefit. We will terminate this policy and refund
the premiums paid, less any loan, loan interest, and any Partial
Surrender.
11
<PAGE>
If the Insured commits suicide, while sane or insane, within two years
of the effective date of any increase in the Face Amount that was
subject to evidence of insurability, we will not pay a death benefit
on that increase. We will refund the Monthly Deductions for that
increase.
MISSTATEMENT OF AGE OR SEX
If the Insured's age or sex has been misstated, the amount of the
Death Benefit will be the greater of:
1. the amount which would have been purchased at the Insured s
correct age and sex by the most recent cost of insurance
charge assessed prior to the date we receive proof of death;
or
2. the Account Value as of the date we receive proof of death,
multiplied by the Minimum Insurance Percentage for the
correct age.
OWNER AND BENEFICIARY
OWNERSHIP
You have all rights in this policy while the Insured is living. Your
rights are subject to the interests of any assignee or irrevocable
beneficiary. If you die before the Insured, any contingent Owner named
in the application will be the new Owner. If there is no contingent
Owner, then your estate becomes the new Owner.
ASSIGNMENT
You may assign this policy. Your rights and the rights of any
beneficiary will be secondary to the rights of the assignee. An
assignment will be subject to any loan on this policy. If there are any
irrevocable beneficiaries, you must obtain their consent before
assigning your policy. We assume no responsibility for the validity of
an assignment. Any assignment will not be binding upon us until we
receive Proper Notice.
BENEFICIARY
The beneficiary will receive the Death Benefit Proceeds of this policy
upon the Insured s death. Beneficiaries are as named in the application
unless later changed by you. You can name more than one beneficiary.
12
<PAGE>
The interests of a beneficiary who dies before the Insured will pass to
any surviving beneficiaries unless you specify otherwise. If no
beneficiary survives the Insured, you will be the beneficiary, or your
estate if you are the Insured.
CHANGE OF OWNER OR BENEFICIARY
While the Insured is living, you may transfer ownership or change the
beneficiary of this policy by giving Proper Notice to us. A change will
take effect on the date the notice is signed. The change will not apply
to any payments made or actions taken by us before we receive the
notice. An irrevocable beneficiary may be changed only with the written
consent of that beneficiary.
DEATH BENEFIT
DEATH BENEFIT
We will pay the Death Benefit Proceeds to the beneficiary upon receipt
of proof that the Insured died while this policy was in force. Coverage
under this policy is effective on the later of the date the initial
premium is paid or the Issue Date.
The proceeds may be paid in a lump sum, or in any other way agreeable
to you and us. Before the Insured dies, you may choose how the proceeds
are to be paid. If you have not made a choice before the Insured dies,
the beneficiary may choose how the proceeds are paid. When part or all
of the proceeds are paid in a lump sum, we will include interest from
the date of death to the payment date. The rate will not be less than
required by law.
The Death Benefit Proceeds are:
1. the Death Benefit in force as of the end of the Valuation
Period during which death occurs; less
2. any outstanding loan and loan interest as of the date of
death; plus
3. any benefits provided by rider payable at the Insured s
death.
If the Insured dies during the grace period, the proceeds paid on
death will be equal to:
1. the Death Benefit immediately prior to the start of the
grace period; plus
2. any benefits provided by rider; less
3. any outstanding loan and loan interest and overdue Monthly
Deductions and Mortality and Expense Charge as of the date
of death.
13
<PAGE>
DEATH BENEFIT OPTIONS
OPTION 1
The Death Benefit is the greater of: (1) the Face Amount; or
(2) the Account Value multiplied by appropriate percentage
from the Table of Minimum Insurance Percentages on the Policy
Data Page.
OPTION 2
The Death Benefit is the greater of: (1) the Face Amount plus
the Account Value; or (2) the Account Value multiplied by
appropriate percentage from the Table of Minimum Insurance
Percentages on the Policy Data Page.
The Face Amount and death benefit option you have chosen are shown on
the Policy Data Page.
DEATH BENEFIT CHANGES
You may make the following changes to this policy, as long as the
policy is not in the grace period. We reserve the right, however, to
not accept any change which might disqualify this policy as life
insurance under federal tax law.
Increase the Face Amount of Insurance
You may request an increase of the Face Amount at any time after the
date specified on the Policy Data Page, by providing a proper written
application and satisfactory evidence of insurability. The amount of
the increase must be at least equal to the minimum amount shown on the
Policy Data Page, and is subject to our underwriting limits. The
increase in Face Amount will generate its own Surrender Charge
schedule. If the policy is within the Guarantee Period, the Required
Premium will increase.
The effective date of the increase will be the Monthiversary date
following our approval of the increase.
Decrease the Face Amount of Insurance
You may request a decrease of the Face Amount by Proper Notice at any
time after the date specified on the Policy Data Page. The minimum
amount of any decrease is shown on the Policy Data Page. You may not
make a decrease which reduces the Face Amount of the policy below the
minimum amount shown on the Policy Data Page.
14
<PAGE>
A decrease of the Face Amount will be effective on the Monthiversary
following our receipt of Proper Notice. If you have made any increases
to the policy, the decrease will first be applied to reduce those
increases, starting with the most recent increase. The decrease will
not cause a decrease in either the Required Premium for the Guarantee
Period or the Surrender Charges.
Changing the Insurance Option
You may request a change in the death benefit option by Proper Notice
at any time after the date specified on the Policy Data Page.
If you request a change from Option 2 to Option 1, the Face Amount will
be increased by the amount of the Account Value on the date of change.
The change will be effective on the Monthiversary following our receipt
of Proper Notice.
If you request a change from Option 1 to Option 2, the Face Amount will
be decreased by the amount of the Account Value on the date of change.
We may require satisfactory evidence of insurability. The change will
be effective on the Monthiversary following our approval of the change.
We will not permit a change which would decrease the Face Amount below
the minimum amount shown on the Policy Data Page.
Exchange for Paid-Up Policy
You may exchange this policy for a paid-up whole life policy by Proper
Notice and returning this policy to the Home Office. The new policy
will be for the level face amount, not greater than this policy s Face
Amount, which can be purchased by this policy s Net Cash Value. We will
pay you any Net Cash Value which is not used to purchase the new
policy.
The new policy will be purchased using the continuous net single
premium for the Insured s age nearest birthday at the time of exchange.
At any time after this option is elected, the cash value of the new
policy will be its net single premium at the Insured s then attained
age. All net single premiums will be based on 3% interest and the
guaranteed cost of insurance rates of this policy.
No riders may be attached to the new policy.
15
<PAGE>
PREMIUMS
PAYMENT OF PREMIUM
The initial premium is due on or before delivery of the policy. There
will be no coverage under this policy until the later of the date the
initial premium is paid or the Issue Date.
You may make other premium payments at any time and in any amount,
subject to the limits described in this section. The actual amount of
premium payments will affect the Account Value and the period of time
the policy remains in force.
Premium payments after the initial payment must be made to our Home
Office. Each payment must be at least equal to the minimum payment
shown on the Policy Data Page. We reserve the right to increase this
minimum 90 days after we sent you Proper Notice of each increase. All
premiums combined may not be more than $1,000,000, unless a higher
amount is agreed to by us.
The Planned Premium is the amount for which we will bill you or, in the
case of our automatic premium plan, the amount for which we will charge
your account. The amount and frequency of the Planned Premium at issue
are shown on the Policy Data Page. You may change the amount and
frequency of the Planned Premium by Proper Notice. We reserve the right
to change the Planned Premium to comply with our rules for billing
amounts and frequency.
If the payment of any premium would cause an increase in Risk Amount
because of the Minimum Insurance Percentage, we may require
satisfactory evidence before accepting it. If we accept the premium, we
will allocate the Net Premium to your Account Value on the date of our
acceptance. If we do not accept the premium, we will refund it to you.
If the payment of any premium would cause this policy to fail to meet
the federal tax definition of a life insurance contract in accordance
with the Internal Revenue Code, we reserve the right to refund the
amount to you with interest within 60 days after the end of the Policy
Year in which we receive the premium, but we assume no obligation to do
so.
If the payment of any premium would cause the contract to become a
Modified Endowment, we will make an effort to notify you; however, we
are under no obligation to notify you. If we notify you, consistent
with the terms of the notice, you may to determine if you want the
premium refunded to you. We reserve the right to refund any premiums
which cause the Policy to become a modified endowment.
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<PAGE>
ALLOCATION OF NET PREMIUM
The initial Net Premium is allocated to the Fixed and/or Variable
Accounts on the later of the Contract Date or the date we receive the
premium at our Home Office. Subsequent Net Premiums are allocated as of
the end of the Valuation Period during which we receive the premium at
our Home Office.
All Net Premiums received prior to the Issue Date are allocated to our
General Account until the expiration of the Right to Examine period. We
credit interest daily on these funds, at a rate equal to at least 3%
annually. At the end of the Right to Examine period, we transfer your
Account Value to the Fixed Account of the Variable Account based on the
percentages you have selected in the application. We reserve the right
to allocate Net Premiums to the accounts you have selected prior to the
end of the Right to Examine period. For purposes of determining the end
of the Right to Examine period, solely as it applies to this transfer,
we assume that receipt of this policy occurs on the date shown on the
Policy Data Page.
You may change the allocation of subsequent Net Premiums at any time by
Proper Notice, or by telephone if written authorization is on file with
us.
POLICY CHARGES
PREMIUM EXPENSE CHARGES
The Premium Expense Charges are shown on the Policy Data Page. The
Premium Expense Charges are deducted when the premium is received. The
Net Premium is the premium less the Premium Expense Charges.
MONTHLY DEDUCTION
The Monthly Deduction is a charge made against the Account Value.
The Monthly Deduction is the sum of:
1. the Monthly Administrative Charge; plus
2. the cost of insurance; plus
3. the cost for any policy riders.
The Monthly Deduction is deducted on the Contract Date and each Monthiversary of
the Contract Date. Monthly Deductions due on any Monthiversaries prior to the
Issue Date are deducted on the Issue Date. The Monthly Deduction is deducted
prorata from the Investment Accounts and the Fixed Account based on your amounts
in each account.
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<PAGE>
MONTHLY ADMINISTRATIVE CHARGE
The Monthly administrative charge is shown on the Policy Data Page.
COST OF INSURANCE
The guaranteed maximum cost of insurance rate is shown on the Policy
Data Page. A current cost of insurance rate less than the guaranteed
maximum cost of insurance rate may be used at our option. Current cost
of insurance rates may vary by Attained Age, sex, rate class, Policy
Year, and Face Amount of the policy. If you increase or decrease the
Face Amount after issue, each change may have different applicable cost
of insurance rates.
The cost of insurance is the current cost of insurance rate multiplied
by the Risk Amount determined as of the date of the Monthly Deduction.
The Risk Amount is:
1. the Death Benefit on the Monthiversary divided by 1.00246627;
less
2. the Account Value.
The Account Value will first be considered part of the initial Face
Amount, then part of any additional Face Amounts in the order of the
increases.
MORTALITY AND EXPENSE RISK CHARGE
The Mortality and Expense Risk Charge is compensation for our
assumption of the mortality and expense risks. This charge will be
deducted from the Investment Accounts monthly prorata based on your
amounts in each account. The amount of this charge is shown on the
Policy Data Page.
SURRENDER CHARGE
We will deduct the Surrender Charge from the Account Value on the date
this policy is surrendered for cash. The Surrender Charge is shown on
the Policy Data Page.
TAXES
We reserve the right to deduct any taxes levied by any government
entity which, at our sole discretion, are determined to have resulted
from the establishment or maintenance or operation of the Separate
Account, or from the investment performance of the Separate Account.
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<PAGE>
CHANGES IN COST FACTORS
We bear the mortality and expense risks of this policy. We may change
the cost of insurance rates and monthly administrative charges up to
the maximum guaranteed amounts stated in this policy. Changes will be
made by class and will be based on changes in expectations of future
experience. Policy cost factors will be reviewed as needed.
POLICY VALUES
ACCOUNT VALUE
The Account Value is the sum of your interest in the Fixed Account, the
Variable Account, and the Loan Account.
The Account Value on the Contract Date of this policy is the initial
Net Premium received for this policy as of the Contract Date, less any
Monthly Deduction charged as of the Contract Date.
The Account Value on each Valuation Date After the Contract Date will
be:
1. the Account Value on the prior Valuation Date; plus
2. interest credited to the amounts allocated to the Fixed Account and
the Loan Account; plus
3. the positive or negative investment experience on amounts allocated
to the Variable Account, as reflected by the change in value of the
accumulation units; plus
4. any Net Premium for the policy allocated since the prior Valuation
Date; less
5. any Partial Surrender paid since the prior Valuation Date; less
6. any Monthly Deduction, Mortality and Expense Charge, or transfer
charges assessed.
CASH VALUE
The Cash Value of this policy is:
1. the Account Value of this policy; less
2. the Surrender Charge, if any, shown on the Policy Data Page.
NET CASH VALUE
The Net Cash Value is the Cash Value less any outstanding loan and loan
interest.
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<PAGE>
VARIABLE ACCOUNT PROVISIONS
SEPARATE ACCOUNT
The Separate Account is shown on the Policy Data Page. It is a separate
account established and owned by us. The assets of the Separate Account
will be used to provide values and benefits under this contract and
similar contracts, but the assets of the account equal to the
liabilities may not be charged with liabilities arising from any other
business in which we take part.
INVESTMENT ACCOUNTS
The Separate Account is subdivided into Investment Accounts, each of
which invests in a different Portfolio.
VARIABLE ACCOUNT VALUE
The Variable Account value of this policy equals the sum for all
Investment Accounts of: (a) the number of accumulation units credited
to an Investment Account; multiplied by (b) the appropriate
accumulation unit value.
CREDITING OF ACCUMULATION UNITS
We credit amounts allocated to the Investment Accounts in the form of
accumulation units. The number of accumulation units to be credited is
determined by dividing:
1. the dollar amount allocated to the particular Investment
Account, by
2. the accumulation unit value for the particular Investment
Account at the end of the Valuation Period during which the
allocation is made.
Accumulation units are credited when Net Premiums are allocated or
amounts are transferred into an Investment Account. Accumulation Units
are deducted when the Monthly Deduction and Mortality and Expense
Charge are assessed or when amounts are partially surrendered or
transferred out of an Investment Account.
ACCUMULATION UNIT VALUE
We determine the accumulation unit value for each Investment Account on
each Valuation Date. The accumulation unit value for the Money Market
account was initially set at one dollar ($1) and the value of each of
the other Investment Accounts was set at five dollars ($5) when
operations commenced. The value for any later Valuation Period is found
by multiplying:
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<PAGE>
1. the net investment factor for the particular Investment
Account, by
2. the accumulation unit value for the same Investment Account
for the preceding Valuation Period.
The accumulation unit value may increase or decrease from one Valuation
Period to the next.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance
of an Investment Account from one Valuation Period to the next. For any
Investment Account, the net investment factor for a Valuation Period is
determined by dividing (a) by (b), where:
(a) is equal to:
1. the net asset value per share of the mutual fund
held in the Investment Account determined at the end of
the current Valuation Period; plus
2. the per share amount of any dividend or capital gain
distribution paid by the mutual fund during the
Valuation Period; plus
3. the per share credit or charge with respect to
taxes, if any, paid or reserved for by us during the
Valuation Period that are determined by us to be
attributable to the operation of the Investment
Account.
(b) is equal to:
1. the net asset value per share of the mutual fund
held in the Investment Account determined at the end of
the preceding Valuation Period; plus
2. the per share credit or charge for any taxes
reserved for the immediately preceding Valuation
Period.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the Portfolio shares that are held
by the Separate Account or that the Separate Account may purchase. We
reserve the right to eliminate the shares of any of the eligible
Portfolios and to substitute shares of another Portfolio, or of another
open-end, registered investment company, if the shares of an eligible
Portfolio are no longer available for investment, or if in our judgment
further investment in any eligible Portfolio should become
inappropriate in view of the purposes of the Separate Account. We will
not substitute any shares attributable to your interest in an
Investment Account without written notice to you and prior approval of
the Securities and Exchange Commission, to the extent required by the
Investment Company Act of 1940.
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<PAGE>
We reserve the right to establish additional Investment Accounts, each
of which would invest in a new Portfolio, or in shares of another
open-end registered investment company. We also reserve the right to
eliminate existing Investment Accounts. If deemed by us to be in the
best interest of persons having voting rights under the policies, the
Separate Account may be operated as a management company under the
Investment Company Act of 1940, or it may be deregistered under such
Act in the event such registration is no longer required, or it may be
combined with other AUL Separate Accounts.
We may, by appropriate endorsement, make such changes in this policy as
may be necessary to reflect any substitution or change.
The investment policy of the Separate Account will not be changed
without the approval of the Insurance Commissioner of the State of
Indiana. If required, the approval process is on file with the
Commissioner of the state in which this policy is issued.
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUE
The Fixed Account Value of this policy at any time equals:
(a) the total of all Net Premiums allocated to the Fixed
Account; plus
(b) the total of all amounts transferred to the Fixed
Account from the Variable Account or the Loan Account; plus
(c) interest credited to the Fixed Account; minus
(d) the total of all amounts transferred from the Fixed
Account to the Variable Account or the Loan Account; minus
(e) the total of all Monthly Deductions charged against the
Fixed Account; minus
(f) the total of all Partial Surrenders from the Fixed
Account.
FIXED ACCOUNT INTEREST RATE
The guaranteed interest rate credited to amounts in the Fixed Account
is shown on the Policy Data Page. We may credit interest rates in
excess of the guaranteed rate.
CASH BENEFITS
TRANSFERS
You may transfer amounts between the Fixed Account and Investment
Accounts or among Investment Accounts at any time after the Right to
Examine period. The transfer will be made as of the end of the
Valuation Period during which we receive the request.
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<PAGE>
The minimum transfer amount is shown on the Policy Data Page. The
transfer must be at least for the minimum amount, or, if less, the
entire amount in the Fixed Account or an Investment Account each time
that a transfer is made. If after the transfer the amount remaining in
any account is less than $25, we have the right to transfer the entire
amount. Any applicable transfer charge shown on the Policy Data Page
will be assessed. The charge will be deducted from the account(s) from
which the transfer is made on a prorata basis; and, if those remaining
account values are not sufficient, from account values determined by
us.
Transfers are made such that the Account Value on the date of transfer
will not be affected by the transfer, except for the deduction of any
transfer charge.
We reserve the right to limit the number of transfers to 12 per year,
or to restrict transfers from being made on consecutive Valuation
Dates.
If we determine that the transfers made by or on behalf of one or more
Owners is to the disadvantage of other Owners, we may restrict the
rights of certain Owners. Such restrictions would be applied in any
manner reasonably designed to prevent transfers of some Owners from
being disadvantageous to other Owners. We also reserve the right to
limit the size of transfers and remaining balances, to require a
minimum time period between transfers, to limit the number and
frequency of transfers, and to discontinue telephone transfers.
LIMITATION ON TRANSFERS FROM THE FIXED ACCOUNT
Transfers from the Fixed Account are limited in total for any Policy
Year to no more than the amount shown on the Policy Data Page.
LOANS
You may request a loan at any time after the Right to Examine period
while the policy is not in the grace period. This policy is assigned to
us as sole security for the loan.
The minimum amount of a new loan is shown on the Policy Data Page. The
maximum amount of a new loan is:
1. 90% of the Account Value; less
2. any loan interest due on the next Policy Anniversary; less
3. any applicable Surrender Charges; less
4. any existing loans and accrued loan interest.
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<PAGE>
INTEREST CHARGED ON LOANS
Interest accrues daily from the date of the loan at the rate shown on
the Policy Data Page. Interest is due on each Policy Anniversary. If
you do not pay interest when due, we will add that amount to the loan.
LOAN ACCOUNT
At the time any loan is issued, we transfer an amount equal to the loan
from the Investment Accounts and the Fixed Account into a Loan Account
as collateral for the loan. On your loan request, you may specify that
the transfer is to be made from specific Investment Accounts. If you
make no specification, this transfer is made from each account in
proportion to the Account Value in the Investment Accounts and the
Fixed Account.
The Loan Account will be credited with interest daily which will be at
least equal to the rate shown on the Policy Data Page. We may credit a
higher rate.
If you do not pay any loan interest when it is due, we make a transfer
from the Investment Accounts and the Fixed Account into the Loan
Account as collateral for the interest due. The amount we transfer is
the amount by which the interest due exceeds the interest which has
been credited on the Loan Account. The transfer is made from each
account in proportion to the amount in the account.
A loan has a permanent effect on the policy values even if the loan is
repaid, since the Account Value held in the Loan Account as collateral
earns different rates than it might have experienced if it were
invested in the Investment Accounts or the Fixed Account.
REPAYMENT OF LOANS
A loan may be paid in full or in part at any time while this policy is
in force and the Insured is alive. When a loan repayment is made, the
amount of the Loan Account equivalent to the amount of loan repayment
is transferred to the Investment Accounts and the Fixed Account based
on the proportions in your current premium allocation instructions.
Unless you request otherwise at the time you make any payments to us,
all amounts received while a loan is outstanding will be considered as
premium payments.
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<PAGE>
SURRENDER
PARTIAL SURRENDER
At any time after the end of the Right to Examine period, you may
surrender part of this policy for cash by Proper Notice to us. The
minimum amount of any Partial Surrender is shown on the Policy Data
Page. The amount surrendered is deducted from the Account Value, and
therefore also reduces the Cash Value. The deduction will be made from
the Investment Accounts and the Fixed Account in proportion to your
amounts in each account, unless you request deduction from specific
Investment Accounts.
Under Death Benefit Option 1, the Face Amount will be reduced by the
amount surrendered. The remaining Face Amount must be at least equal to
the minimum Face Amount shown on the Policy Data Page.
FULL SURRENDER
At any time after the Right to Examine period, you may surrender this
policy for the Net Cash Value by Proper Notice to us.
TERMINATION OF THE POLICY
GRACE PERIOD
Unless the Continuation of Insurance Guarantee applies, the grace
period begins on the Monthiversary when the Net Cash Value is less than
the Monthly Deduction. This policy goes into default at the start of
the grace period. We will send you written notice of the length of the
grace period and the amount of premium due. The amount of premium due
is the amount which is required to keep the policy in force during the
grace period. This notice will be sent to your last known address. The
grace period shall terminate as of the date indicated in the notice,
which shall comply with any applicable state law.
If the premium due is not paid within the grace period, all insurance
stops and the policy terminates without value.
TERMINATION
This policy will terminate and all insurance will stop:
1. as of the end of the Valuation Period during which we receive
Proper Notice in good order from you to surrender the contract;
or
2. when the Insured dies; or
3. at the end of the grace period if the premium due is not paid.
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<PAGE>
CONTINUATION OF INSURANCE GUARANTEE
During the Guarantee Period shown on the Policy Data Page, the policy
will remain in force and will not begin the grace period if on each
Monthiversary, the sum of the premiums paid to date, less any Partial
Surrenders and any outstanding loan and loan interest, equals or
exceeds the Required Premium for the Guarantee Period multiplied by the
number of policy months since the Contract Date. If this test is failed
on any Monthiversary, the Continuation of Insurance Guarantee
terminates. The guarantee will not be reinstated.
The Required Premium for the Guarantee Period is shown on the Policy
Data Page. If you make changes to the policy within the Guarantee
Period, the Required Premium for subsequent months may change. We will
send you notice of the new Required Premium.
REINSTATEMENT
You may reinstate this policy by Proper Notice to us within 5 years of
the date the policy terminated if:
1. the policy had not been surrendered for its Net Cash Value;
and
2. satisfactory evidence of insurability is provided to us; and
3. payment is made of sufficient premium to cover past due
Monthly Deductions during the grace period and to keep this
policy in force for three months; and
4. interest on any loan amount which is reinstated is paid at the
annual rate applicable to policy loans during the period of
lapse, from the date insurance stopped.
The effective date of the reinstatement is the next Monthiversary
following our approval of the reinstatement.
The Account Value on the effective date of reinstatement is equal to
the Account Value at the time of termination, adjusted for past due
charges during the grace period, plus the premium paid at the time of
reinstatement. The Surrender Charge will be based on the number of
Policy Years from the original Contract Date.
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<PAGE>
OTHER POLICY PROVISIONS
DEFERRAL OF PAYMENTS
For payments from the Fixed Account, we may defer payment for up to six
months. If we do, interest on the Fixed Account will continue to be
earned at the declared rates. We will not defer any amounts needed to
pay premiums for other policies in force with us.
While payments will generally be made within 7 days of a request in
good order, we may suspend or delay withdrawal payments or transfers
from the Variable Account when permitted under applicable federal laws,
rules and regulations.
POLICY CHANGES
This is a flexible life insurance policy. You may make changes in the
death benefit option, Face Amount, premium payments and riders by
sending us Proper Notice.
CHANGE OF INSURED
While the Policy is in force, it may be exchanged for a new Policy on
the life of a substitute Insured. The exercise of this exchange is
subject to satisfactory evidence of insurability for the substitute
Insured. The Contract Date of the new Policy will generally be the same
as the Contract Date of the exchanged Policy. The Issue Date of the new
Policy will be the date of the exchange. The initial Cash Value of the
new Policy will be the same as the Cash Value of the exchanged Policy
on the date of the exchange. Exercise of the Change of Insured
provision will result in a taxable exchange.
DIVIDENDS
As long as this policy is in force, you will receive any dividends
declared by us. It is anticipated that no dividends will be declared.
The amount of any dividend will be applied to increase the Account
Value unless you request it to be paid in cash.
ANNUAL REPORT
At least once a year we will send you a report showing the current
Account Value, Cash Value, Death Benefit, amount of interest credited
to amounts in the Fixed Account, change in value of amounts in the
Variable Account, premiums paid, loans, Partial Surrenders, expense
charges, and cost of insurance charges since the prior report. Any
other information required by the Insurance Department of the state
where the application is signed will also be included in the annual
report.
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<PAGE>
You may request other information about this policy, including a
hypothetical illustration of future policy benefits and values. We may
make a reasonable charge to provide this information.
CONFORMITY WITH LAWS
This policy is subject to the laws of the state where the application
is signed. We reserve the right to make any changes without your
consent which are necessary to comply with any federal or state
statute, rule, or regulation.
COMPUTATIONS
Calculations are based on the mortality table referenced on the Policy
Data Page. Interest on amounts allocated to the Fixed Account is
compounded daily.
All of the values are the same as or more than the minimums set by the
laws of the state where the application was signed. If required, we
have filed a detailed statement with your State Insurance Department.
SETTLEMENT OPTIONS
OPTIONS
All or any part of the proceeds payable at death or upon full surrender
of this policy may be paid in one sum or according to one of the
following options:
1. Income for a Fixed Period. Proceeds are payable in equal
monthly installments for a specified number of years, not to
exceed 20.
2. Life Annuity. Proceeds are paid in equal monthly installments
for as long as the payee lives. A number of payments can be
guaranteed, such as 120, or the number of payments required to
refund the proceeds applied.
3. Survivorship Annuity. Proceeds are paid in monthly
installments for as long as either the first payee or surviving
payee lives. A number of payments equal to the initial payment
can be guaranteed, such as 120. A different monthly installment
payable to the surviving payee can be specified.
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<PAGE>
The proceeds of this policy may be paid in any other method or
frequency of payment acceptable by us.
Policy proceeds payable in one sum will accumulate at interest from the
date of death or surrender to the payment date at the rate of interest
then paid by us or at the rate specified by statute, whichever is
greater.
SELECTION
You may select or change an option by giving us Proper Notice prior to
the settlement date. If no option is in effect on the settlement date,
the payee may select an option. If this policy is assigned or if the
payee is a corporation, association, partnership, trustee or estate, a
settlement option will be available only with our consent.
PAYMENTS
We will determine the amount payable under any option. The minimum
interest rate used in computing payments under all options will be 3%
per year.
The settlement option tables show the guaranteed monthly payments
available under options 1, 2 and 3. The amounts shown are for exact
adjusted ages. The values for other ages and fractional ages not shown
will be calculated on the same basis as those shown and will be
furnished upon request.
If the monthly payment under a chosen settlement option is less than
$100, we may require that payments be made on a less frequent basis.
ADJUSTED AGE
An adjusted age is calculated as follows:
(a) Determine a payee s actual age in years and full months on
the date payments are to begin.
(b) Subtract 1 1/2 months for each year the payee s year of birth
exceeds 1900.
DEATH OF LAST PAYEE
If a payee dies and there is no surviving payee, we will pay a single
sum to such payee s estate. The final payment will be the commuted
value of any remaining guaranteed payments.
CLAIMS OF CREDITORS
Settlement option payments will be exempt from the claims of creditors
to the maximum extent permitted by law.
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<PAGE>
Settlement Option Tables
Guaranteed Monthly Income Per $1,000 of Proceeds
Option 1 - Income for Fixed Period
Number Monthly Number Monthly
of Years Income of Years Income
1 $84.47 11 $8.86
2 42.86 12 8.24
3 28.99 13 7.71
4 22.06 14 7.26
5 17.91 15 6.87
6 15.14 16 6.53
7 13.16 17 6.23
8 11.68 18 5.96
9 10.53 19 5.73
10 9.61 20 5.51
Quarterly Income is 2.993 times the monthly income and annual income is 11.839
Option 2 - Life Annuity
The amount of income is based on the adjusted age of the payee on the date of
the first payment.
Adjusted: Number of Guaranteed Payments
Adjusted: Number of Guaranteed Payments
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Age None 120 Refund* Age None 120 Refund*
55 $4.34 $4.30 $4.17 63 $5.21 $5.10 $4.86
56 4.42 4.38 4.24 64 5.35 5.22 4.96
57 4.52 4.47 4.31 65 5.51 5.35 5.08
58 4.61 4.56 4.39 66 5.67 5.49 5.20
59 4.72 4.65 4.47 67 5.85 5.64 5.33
60 4.83 4.76 4.56 68 6.04 5.80 5.46
61 4.95 4.86 4.66 69 6.24 5.96 5.61
62 5.08 4.98 4.75 70 6.46 6.13 5.76
</TABLE>
*The sum of all guaranteed payments will equal the amount applied under this
option.
Option 3 - Survivorship Annuity
The amount of income is based on the adjusted age of each of the payees on the
date of the first payment.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50% to Survivor 100% to Survivor
120 Guaranteed Payments 120 Guaranteed Payments
Payee #1 Payee #2 Age Payee #1 Payee #2 Age
Age 50 55 60 65 70 Age 50 55 60 65 70
50 $3.95 $4.12 $4.31 $4.55 $4.80 50 $3.56 $3.67 $3.76 $3.83 $3.88
55 4.12 4.30 4.52 4.77 5.05 55 3.67 3.83 3.97 4.08 4.17
60 4.31 4.52 4.76 5.04 5.36 60 3.76 3.97 4.17 4.36 4.51
65 4.55 4.77 5.04 5.35 5.72 65 3.83 4.08 4.36 4.64 4.90
70 4.80 5.05 5.36 5.72 6.13 70 3.88 4.17 4.51 4.90 5.28
</TABLE>
Income for other combinations of ages will be furnished on request.
30
Last Survivor Rider
This rider is a part of your policy. The effective date of this rider is the
Issue Date shown on the Policy Data Page. This rider may only be terminated
based on the termination provisions of the policy to which it is attached.
Benefits or options available with this rider may be terminated as indicated
under the benefit provisions.
This rider provides for coverage payable at the death of the surviving insured
of the two Insureds named on the Policy Data Page.
This rider amends the provisions of this Policy as follows:
General Provisions
Death Benefit Proceeds
The Death Benefit Proceeds will be payable to the beneficiary upon receipt of
due proof that the surviving insured s death occurred while this policy was in
force and will provide all other benefits of this rider. No benefit is payable
on the death of the first insured; however, due proof of death must be given to
us when that death occurs.
Reinstatement
This policy may be reinstated under the provisions outlined in the Policy only
if both Insureds are alive or the surviving insured is alive and the lapse
occurred after the death of the first Insured.
Incontestability, Suicide and Misstatement of Age or Sex
The Incontestability, Suicide, and Misstatement of Age or Sex provisions apply
to either Insured.
Age
All references to the Insured s age are based on the ages of both Insureds.
Surviving Insured
Surviving Insured means the insured who is living upon the death of the other
insured. If both insureds die simultaneously, or under conditions where the
order of death cannot be determined, Surviving Insured will mean the younger of
the two Insureds.
<PAGE>
Change of Owner or Beneficiary
While either insured is living, you may transfer ownership or change the
beneficiary of this policy by giving us written notice.
Policy Split Option
While both insureds on this policy are alive You may exchange this policy, under
certain conditions, for a single life policy on each of the insureds. Exercising
this option may result in a taxable event. Your tax advisor should be consulted
prior to exercising this option.
Policy Split Option may not be available if either insured is issued with a
special class rating. Exclusion of this benefit is based on Insureds of a
similar class and is not determined on an individual basis. Refer to the Policy
Data Page to determine if this option is included on your policy.
Events
If the Insureds on this policy are married to each other, the option to exchange
may be exercised without evidence of insurability on the occurrence of one of
the following events:
1) a change in Section 2056 of the Internal Revenue Code of 1986, or
its successor, to eliminate or reduce the federal estate tax
marital deduction with respect to the Insureds; or
2) a change in the maximum tax rate expressed in Section 2001 of the
Internal Revenue Code of 1986, or its successor, to reduce the
rate to 25% or less.
The option to exchange may be exercised at any other time subject to evidence of
insurability satisfactory to us, while both Insureds are alive and are attained
age 80 or younger.
Election
To elect this option, you must make proper written application to us while this
policy is in force. If the election of this option is a result of events (1) or
(2) above, then such election must take place within one year following the
occurrence of either of the above events. The date we receive your application
will be the effective date of the exchange, provided that other conditions for
the exchange have been met.
2
<PAGE>
New Policy
The exchange must be to a variable universal life insurance policy offered by us
on the date of issue of this policy. The new policies will maintain the same
date of issue of this policy as well as each insured s sex and age at issue for
this policy. The premium class will be the same as that shown on the Policy Data
Page of this policy if the option is exercised as result of events (1) or (2).
Otherwise, the premium class will be determined on the effective date of the
exchange.
The new policies will not take effect and will not provide any insurance until
this policy has terminated.
Policy Adjustments
Loans
Any policy loans and loan interest on this policy will be paid in full
from the Cash Value of the policy prior to the termination of this
policy.
Death Benefit
The maximum amount of each new policy will be one-half the amount of
the current Death Benefit Proceeds.
Cash Value
The Net Cash Value in this policy will be divided proportionately to
each insured based on the death benefit split percentages elected.
Assignment
Any assignment of this policy will apply to each new policy. The
assignee(s) written approval must be received by Us prior to exercising
this option.
New Monthly Deductions
The monthly deductions for each new policy will be based on each insured s sex,
age at issue and premium class. Monthly deductions will be due for each new
policy as of the effective date of exchange.
3
<PAGE>
Other Riders
A Waiver of Monthly Deduction rider may be attached to each new policy if that
insured is issue age 55 or younger and has a similar rider in force on this
policy. A Waiver of Monthly Deduction benefit will apply only if that insured
becomes totally disabled after the effective date of the exchange.
Any other riders attached to this policy will be canceled upon exchange. Such
riders may be added to the new policies according to rules current on the
effective date of exchange.
Termination
This option will terminate on the earliest of the following dates:
1) the expiry date of this option shown on the Policy Data
Page
2) the date of termination of this policy;
3) the date this policy is surrendered for cash;
4) any Monthiversary following receipt of your written
request; or
5) the date of death of the first of the Insureds to die.
Estate Preservation Benefit
Benefit
We will pay the amount of insurance provided by this rider on the date of the
surviving insured s death to the beneficiary, upon receipt of due proof of
death. The amount of insurance is shown on the Policy Data Page. This benefit is
only available if:
1) one or both of the Insureds shown on the Policy Data
Page are owners of this Policy;
2) both Insureds are issued with a standard risk
classification; and
3) their issue ages are between 20 and 67.
4
<PAGE>
Exclusion of this benefit is based on Insureds of a similar class and is not
determined on an individual basis.
Termination
This benefit will terminate on the earliest of the following dates:
1) the expiry date of this benefit shown on the Policy Data Page;
2) the date this policy is surrendered for cash;
3) the date of termination of this policy; or
4) any Monthiversary following receipt of your written request.
American United Life Insurance Company
Secretary
5
Waiver of Monthly Deduction Disability Rider
This rider is part of your policy. The date of issue of this rider is the same
as the date of issue of the policy unless otherwise stated on page 3.
Insured As used in this rider, the insured is the same as the
insured for this policy unless otherwise named on page
3.
Benefit If the insured becomes totally disabled while this
rider is in force and total disability continues
without interruption for 6 months, the monthly
deductions for the policy will be waived as follows.
1. Disability Beginning Before Age 60. If total
disability begins before the policy anniversary nearest
the insured s 60th birthday, we will waive the monthly
deductions becoming due during the continuance of that
disability and prior to the policy maturity date.
2. Disability Beginning Between Ages 60 and 65. If
total disability begins on or after the policy
aniversary nearest the insured s 60th birthday, we will
waive the monthly deductions becoming due during the
continuance of that disability and prior to the policy
anniversary nearest the insured s 65th birthday.
If total disability begins during the grace period, a
premium sufficient to cover the monthly deductions for
the grace period must be paid to us before any monthly
deductions will be waived.
When we begin to waive monthly deductions, we will
increase the account value of the policy by the amount
of any monthly deductions previously subtracted during
a period of total disability.
We will not waive any monthly deductions for periods of
total disability occurring more than 1 year prior to
our receipt of written notice of a claim unless it is
shown that such notice was given as soon as was
reasonably possible.
Total Disability Total disability means disability which results from
accidental bodily injury which occurs or sickness which
first appears after the date of issue of this rider and
which continues while the insured is living.
For the first 24 months of disability, the insured is
considered to be totally disabled if he is not able to
perform substantially all of the material duties of his
regular occupation. Thereafter, the insured is
considered to be totally disabled if he is not engaged
in any gainful occupation for which he has the
necessary training, education or experience.
Notice of Claim and
Proof of Disability Before we waive any monthly deductions, we must receive
written notice of claim and proof of total disability
while the insured is living and totally disabled.
However, this will not prevent any monthly deduction
from being waived if it is shown that such notice and
proof were given as soon as was reasonably possible.
Written notice should be sent to us after the insured
becomes totally disabled. We will then provide claim
forms requesting proof of total disability. Forms
should be completed and returned to us as soon as
possible after the insured has been totally disabled
for 6 months.
Proof of Continuation
of Total Disability We will require proof at reasonable intervals of the
continuation of total disability. Proof may include a
physical examination, at our expense, by a doctor
chosen by us. After total disability has continued for
2 years, we will not ask for proof more often than once
a year. If the proof requested is not furnished, then
we will stop waiving monthly deductions.
Incontestability This rider will not be contested after it has been in
force during the lifetime of the insured for 2 years
from its date of issue.
<PAGE>
Termination This rider will terminate on the earliest of the
following dates:
.the date of termination of the policy;
.the date the insured dies;
.date monthiversary following the date requested by you
in writing; or
. the policy anniversary nearest the insureds 65th
birthday. However, this termintion will not affect any
beneft payable for total disability beginning before
that date.
Cost of Benefit The cost for this rider is determined monthly and
deducted from the account value of the policy on each
moniversary until the rider terminates.
The standard monthly cost factors for this rider are
based on the insured s attained age on the last policy
anniversary and are shown in the table below. The
monthly cost for this rider is the monthly cost factor
times the rating factor shown on page 3 times the
amount of the current monthly deductions excluding the
cost for this rider.
WAIVER OF MONTHLY DEDUCTION DISABILITY
Standard Monthly Cost Factors to be Applied to the Monthly Deductions
<TABLE>
<S> <C> <C> <C> <C> <C>
Insured s Attained Age Monthly Insured's Monthly Insured's Monthly
Cost Factor Attained Age Cost Factor Attained Age Cost Factor
0-15 .0623 32 .0687 49 .0927
16 .0624 33 .0693 50 .0984
17 .0626 34 .0699 51 .1065
18 .0629 35 .0704 52 .1165
19 .0632 36 .0709 53 .1280
20 .0635 37 .0715 54 .1401
21 .0639 38 .0722 55 .1523
22 .0643 39 .0731 56 .1640
23 .0648 40 .0743 57 .1752
24 .0652 41 .0759 58 .1856
25 .0656 42 .0779 59 .1948
26 .0661 43 .0801 60 .0953
27 .0665 44 .0823 61 .0851
28 .0669 45 .0843 62 .0710
29 .0673 46 .0858 63 .0505
30 .0677 47 .0872 64 .0218
31 .0682 48 .0893
</TABLE>
American United Life Insurance Company
Secretary
Guaranteed Insurability Option Rider
This rider is part of your policy. The date of issue of this rider is the same
as the date of issue of the policy unless otherwise stated on page 3.
Insured As used in this rider, the insured is the same as the
insured for this policy unless otherwise named on page 3.
Benefit You have the option to increase the face amount of
insurance under the policy without evidence of
insurability or change in premium class. The option may be
exercised on each option date while this rider is in force
subject to the following conditions.
1. You must send us a written application for the
increase during the 90 days before the option date.
If you exercise an alternative option, proof of the
marriage, birth adoption, or mortgage, giving rise to
the option must accompany the application.
2. The increase in face amount can be any amount not
exceeding the amount of option.
3. The increase will take effect on the option date. If
you exercise an option on an alternative option date,
we will cancel the next regular option date not
previously canceled.
4. If a Waiver of Monthly Deduction Disability Rider is
attached to this policy, it will apply to the
increase in face amount. If we are waiving monthly
deductions for this policy on the option date, we
will automatically increase the face amount by the
amount of option and waive the monthly deductions
applicable to the increase for as long as we waive
the monthly deductions for the policy.
5. Increases in any other benefits will be subject to
our consent and satisfactory evidence of
insurability.
6. If an increase in face amount is effective within the
first 2 years of this rider, it will be incontestable
after it has been in force during the lifetime of the
insured for the balance of the 2 years. If an
increase is effective after the first 2 years of this
rider, it will not be contested.
Option Dates Regular option dates occur on each of the policy
anniversaries on which the insured s attained age nearest
birthday is 22, 25, 28, 31, 34, 37, 40 and 43.
We will allow an alternative option date on the third
monthiversary following the date of:
.the insured s marriage;
.the birth of a living child of the insured s marriage;
.the legal adoption by the insured of a child less than 18
years of age; or
.the obtaining of a new mortgage to purchase a new primary
residence (limit of one option date per lifetime).
Amount of Option The amount of option for this rider is stated on page 3.
If more than one child is adopted or born alive on the
same day, the increase in face amount allowed will be
equal to the amount of option multiplied by the number of
children adopted or born alive on that day.
Automatic Term
Insurance We will provide automatic term insurance, at no additional
cost, on the insured s life beginning on the date of the
event for which an alternative option may be exercised and
expiring on the day before the alternative option date.
The amount of automatic term insurance equals the amount
of option or, in the case of a multiple birth or adoption,
the amount of option multiplied by the number of children
adopted or born alive on the same day.
Incontestability This rider will not be contested after it has been in
force during the lifetime of the insured for 2 years from
its date of issue.
Suicide If the insured commits suicide, while sane or insane,
within 2 years from the date of this rider, any amount of
automatic term insurance in effect on the date of death
will not be payable.
<PAGE>
Reinstatement Reinstatement of the policy will reinstate this rider only
as to option dates occurring after the date of
reinstatement.
Termination This rider will terminate on the earliest of the following
dates:
. the policy anniversary nearest the insureds 43rd
birthday;
. the date of termination of the policy;
. the alternative option date which cancels the last
regular option date; or
. the monthiversary following the date requested by you
in writing.
Cost of Benefit The cost for this rider is determined monthly and deducted
from the account value of the policy on each monthiversary
until the rider terminates.
The monthly cost factors for this rider are based on the
insured s issue age for this rider and are shown in the
table below. The monthly cost for this rider is the
monthly cost factor times the amount of option (in
thousands).
Guaranteed Insurability Option
Monthly Cost Factors Per $1,000 Amount of Option
<TABLE>
<S> <C> <C> <C>
Insured s Monthly Insured's Monthly
Issue Age Cost Factor Issue Age Cost Factor
0-8 $.04 30 $.12
9-13 .05 31 .13
14-16 .06 32 .14
17-19 .07 33 .15
20-22 .08 34 .16
23-25 .09 35 .17
26-28 .10 36-37 .18
29 .11 38-39 .19
</TABLE>
American United Life Insurance Company
Secretary
Children's Insurance Benefit Rider
This rider is part of your policy. The date of issue of this rider is the same
as the date of issue of the policy unless otherwise stated on page 3.
Insured As used in this rider, the insured means the insured for
the policy.
Insured Child Insured child means each child, stepchild, or legally
adopted child of the insured who is older than 14 days and
is either:
o named in the application and under age 20 on the date of
application for this rider, or
o after the date of application, born of a marriage of the
insured or legally adopted by the insured before the
child's 20th birthday. Death must occur while this rider
is in force. The number of units of insurance for this
rider is shown on page 3. The amount of term insurance per
unit on each insured child is $1,000 ($500 before 6 months
of age) expiring on the earlier of:
o the insured child's 22nd birthday, or
o the policy anniversary nearest the insured's 65th
birthday.
Paid-Up Term
Insurance
On Death of Insured If the insured dies while this rider is in force, the term
insurance on each insured child will become fully paid-up.
The paid-up term insurance may be surrendered for its cash
value while an insured child is living. The cash value
will be equal to the net single premium for this insurance
on the date of surrender. Net single premiums are based on
the Commissioners' 1980 Standard Ordinary Mortality Table
with interest at 4% per year and continuous functions.
Beneficiary A beneficiary for the insurance payable on the death of
each insured child may be named or changed as provided in
the policy. If no beneficiary is specifically named, the
beneficiary is the insured, if living, otherwise the
estate of the insured child.
Owner The owner of the policy is the owner of this rider while
the insured is living. Upon the insured's death, each
insured child will be the owner of any insurance on his
own life unless otherwise specified in the policy.
<PAGE>
Conversion Option The term insurance on each insured child may be converted
on its expiry date to a new policy on the same life. The
new policy will be issued without evidence of insurability
subject to the following conditions.
1. You must send us a written application for the new
policy and pay the first premium during the 90 days
immediately preceding the date the term insurance expires.
2. The new policy will take effect when the term insurance
expires.
3. The new policy will be issued for an amount up to 5
times the amount of term insurance expiring on the insured
child's life.
4. Any plan of insurance (except term insurance) offered
by us on the date of issue of the new policy can be
selected.
5. The new policy will be issued at the insured child's
age and at the rates in effect on its date of issue.
6. A disability waiver rider and a guaranteed insurability
rider may be attached to the new policy without evidence
of insurability. A disability benefit in the new policy
will apply only if the total disability begins after its
date of issue. The amount of the guaranteed insurability
rider may not exceed the amount of expiring term
insurance. The inclusion of any other riders in the new
policy will be subject to our consent and satisfactory
evidence of insurability for such benefits.
Incontestability This rider will not be contested as to the insurance
provided on the life of any insured child named on the
application for this rider after it has been in force
during the lifetime of that insured child for 2 years from
the date of issue of this rider.
Suicide If the insured commits suicide, while sane or insane,
within 2 years from the date of issue of this rider, the
amount payable by us under this rider will be limited to
the monthly deductions made for this rider unless
otherwise provided in the suicide provision of the policy.
This rider will terminate without value when that death
occurs.
Cost of Benefit The cost for this rider is determined monthly and deducted
from the account value of the policy on each monthiversary
until the rider terminates.
The standard monthly cost factor for this rider is $.83.
The monthly cost for this rider is the monthly cost factor
times the rating factor shown on page 3 items the number
of units of the insurance for this rider.
Terminations
This rider will terminate on the earliest of the following
dates:
o the policy anniversary nearest the insured's 65th
birthday;
o the date of termination of the policy; or
o the monthiversary following the date requested by you in
writing.
American United Life Insurance Company(R)
Secretary
Other Insured Level Term Insurance Rider
This rider is part of your policy. The date of issue of this rider is the same
as the date of issue of the policy unless otherwise stated on page 3.
Other Insured
Other insured means each person named under this rider on page 3.
Insured
As used in this rider, insured means the insured for the policy.
Benefit
We will pay to the beneficiary the amount of insurance upon receipt of proof of
an other insured s death. Death must occur while this rider is in force prior to
the expiry date of coverage. The amount of insurance on each other insured and
the expiry date of coverage for each other insured is shown on page 3.
Beneficiary
The beneficiary for each other insured s insurance may be named or changed as
provided in the policy. If no beneficiary is specifically named, the beneficiary
is the owner of the policy.
Conversion Option
On any conversion date, the insurance on an other insured may be converted to a
new policy on that other insured s life. The new policy will be issued without
evidence of insurability or change in premium class subject to the following
conditions.
1. You must send us a written application for the new policy wile the coverage
for that other insured is in force.
2. The date of issue of the new policy will be the conversion date following the
date we receive your application. The coverage being converted under this rider
will end on the conversion date. Coverage under the new policy will begin when
the coverage under this rider ends.
3. The new policy can be issued for any amount not exceeding the amount of
insurance in force on the other insured.
4. Any plan of insurance (except term insurance) offered by us on the date of
issue of the new policy can be selected.
5. The new policy will be issued at the other insured s age and at the rates in
effect on its date of issue.
6. The inclusion of any rider in the new policy will be subject to our consent
and satisfactory evidence of insurability.
Conversion Date
If an other insured is in a standard premium class, conversion dates occur on
each monthiversary prior to his attained age 70. If an other insured is in a
special premium class, conversion dates occur on each monthiversary prior to his
attained age 55 or for 5 years after the date the insurance was effective, if
longer (but not beyond attained age 70).
Incontestability
Except for increases in the amount of insurance, we will not contest the
insurance on another insured after that insurance has been in force during the
lifetime of that person for 2 years from its effective date. We will not contest
any increase in the amount of insurance on another insured after the increase
has been in force during the lifetime of that person for 2 years from its
effective date.
<PAGE>
Suicide
If another insured commits suicide, while sane or insane, within 2 years from
the date of issue of his coverage, the amount payable by us will be limited to
the monthly deductions made for his insurance.
If another insured commits suicide, while sane or insane, 2 or more years after
the date of issue of his coverage, but within 2 years of the date an increase in
his amount of insurance becomes effective, the amount payable by us applicable
to that increase will be limited to the monthly deductions made for the
increase.
Misstatement of Age or Sex
If an other insured s age or sex has been misstated the amount of the insurance
under this rider will be that which would have been purchased by the most recent
cost of insurance at the other insured s correct age and sex.
Cost of Insurance
The cost of insurance for each other insured is determined monthly and deducted
from the account value of the policy on each monthiversary until the expiry date
of coverage. Deductions are determined separately for each increase in the
amount of insurance.
The guaranteed monthly cost of insurance rates per $1,000 of initial amount of
insurance on each other insured are attached to this policy. We can use cost of
insurance rates which are lower than the guaranteed rates, but we can never use
rates greater than the guaranteed rates. Any lower rates will be based on our
expectation of future experience. The rates we use will be on a uniform basis
for persons of the same age, sex and premium class whose insurance has been in
force the same length of time.
The guaranteed monthly cost of insurance rates for any increase in face amount
will be based on the other insured s attained age, sex and premium class at the
time of increase.
The monthly cost of insurance for each other insured is the monthly cost of
insurance rate times his amount of insurance (in thousands).
Termination
This rider will terminate on the earliest of the following dates:
. the last expiry date shown for this rider on page 3;
. the date of termination of the policy;
. the date the insured dies; or
. the monthiversary following the date requested by you in writing.
American United Life Insurance Company
Secretary
Waiver of Premium Disability Benefit
Agreement attached to and made part of the policy when listed by the Company on
Page 3.
Benefit
If, while this agreement is in force and before the policy anniversary nearest
the Insured s 65th birthday, the Insured becomes totally disabled as the result
of accidental bodily injury occurring or sickness beginning after the date of
this agreement, and if the total disability continues without interruption for
at least six months while the Insured is living, the Company, subject to the
terms of this agreement, will waive payment of premiums as follows.
1. Disability Beginning Before Age 60. If the total disability begins before the
policy anniversary nearest the Insured s 60th birthday, any premium becoming due
during the continuance of such total disability will be waived.
2. Disability Beginning Between Ages 60 and 65. If the total disability begins
on or after the policy anniversary nearest the Insured s 60th birthday and
before the policy anniversary nearest the Insured s 65th birthday, any premium
becoming due during the continuance of such total disability and prior to the
policy anniversary nearest the Insured s 65th birthday will be waived.
If total disability begins during the grace period of a premium in default, such
premium must be paid to the Company with interest at 6% per year before any
premium will be waived.
No premium due more than one year prior to receipt of written notice of claim
will be waived unless it is shown that such notice was given as soon as was
reasonably possible.
Any dividends or policy values available under the policy will be the same as if
the waived premiums had been paid in cash.
Total Disability
Until the period of total disability for which the Insured qualifies for
benefits under this agreement exceeds 24 months, total disability means the
complete inability of the Insured to engage in his regular occupation.
Thereafter, total disability means the complete inability of the Insured to
engage for remuneration or profit in any occupation or business for which he is
or becomes reasonably fitted by education, training or experience. Except in the
case of "Specified Disabilities," total disability will not be deemed to exist
while the Insured is actually engaged for remuneration or profit in any
occupation or business.
Specified Disabilities
The entire and irrecoverable loss of the sight of both eyes, or of the use of
both hands, or both feet, or of one hand and one foot, will be considered total
disability for as long as such entire loss may continue.
Notice of Claim and Proof of Total Disability
Before any premium is waived, written notice of claim and proof of total
disability must be received at the Home Office while the Insured is living and
during the continuance of total disability and not later than one year after (a)
the policy anniversary nearest the Insured s 65th birthday, (b) the due date of
a premium in default, and (c) the termination of the policy. However, this
provision will not prevent any premium from being waived if it be shown that
such notice and proof were given as soon as was reasonably possible.
Proof of Continuance of Total Disability
The Company may at reasonable intervals require due proof of the continuance of
total disability, including medical examination of the Insured by a physician
designated by the Company, but not more often than once a year after total
disability has continued for two full years. If such proof is not furnished, no
further premiums will be waived.
<PAGE>
Incontestability
The Incontestability provision of the policy applies to this agreement but only
after this agreement has been in force during the lifetime of the Insured for
two years from the date of this agreement.
Premiums
The premium for this agreement is payable as part of each premium on the policy
in the amount and for the number of years shown on Page 3 of the policy or until
the prior termination of this agreement.
Termination
This agreement will automatically terminate (a) if any premium on the policy is
in default beyond the end of its grace period or (b) if the policy is
surrendered for cash or continued as paid-up or extended term insurance, or may
be terminated on any premium due date by filing written request at the Home
Office and presenting the policy for endorsement.
The date on this agreement is the Date of Issue of the policy unless otherwise
stated on Page 3 of the policy.
American United Life Insurance Company
Secretary
Automatic Increase Rider
This rider is part of your policy. The date of issue of this rider is the same
as the date of issue of the policy .
Insured
As used in this rider, the insured is the same as the insured for the policy.
Benefit
We will automatically increase the face amount of the basic policy once each
policy year without evidence of insurability. The increase will take effect on
the anniversary date of the policy.
The amount of the increase will be 5% of the face amount in effect on the policy
anniversary.
The maximum number of years for automatic increases is 20.
Increase
The increase will be in the same premium class and have the same restrictions as
the initial face amount.
We will send you an endorsement each time the face amount increases prior to the
increase date. It will show the new face amount.
You may reject an increase by sending us a written request and returning the
policy endorsement we send to you. The rejection must be received by us within
30 days from the date of our endorsement.
Any rejection of an automatic increase will terminate the rider.
Limitations Of Benefits
This policy may also contain a rider for waiver of monthly deduction disability
benefits. No increase will be allowed if, on the anniversary the increase is to
take effect, monthly deductions are being waived.
An increase may take place during the 6 month waiting period as provided in the
rider for waiver of monthly deduction disability rider.
An increase may also take place after the waiting period, but before we are
notified of the insured s total disability. In this case, the increase will be
reversed and the face amount will be changed back to the amount of benefit prior
to that increase.
Terminations
This rider will terminate on the earliest of the following dates:
.the date you reject an automatic increase;
.the date you decrease the face amount;
.the date requested by you in writing;
.the date the policy terminates; or
.the anniversary date 20 years after issue of this rider.
Cost Of Benefit
There is no additional cost for this rider. Each increase in face amount will
generate an additional monthly specified premium and its own surrender charge
schedule.
American United Life Insurance Company
Secretary
GUARANTEED DEATH BENEFIT RIDER
This rider is a part of your policy. The effective date of this rider is the
Issue Date shown on the Policy Data Page.
During the Guaranteed Death Benefit Rider Period shown on the Policy Data Page,
this policy will remain in force and will not begin the grace period if:
1. this rider has not terminated; and
2. the sum of the premiums paid to date, less any Partial
Surrenders, outstanding loans and loan interest, equals or
exceeds the Guaranteed Death Benefit Rider Premium multiplied
by the number of policy months since the Contract Date.
The Guaranteed Death Benefit Rider Premium is shown on the Policy Data Page. Any
change to this policy, including changes in death benefit option, Face Amount,
or riders, may result in a revised Guaranteed Death Benefit Rider Premium
applicable for the months following the policy change. We will send you notice
of the revised Guaranteed Death Benefit Rider Premium.
MONTHLY COST
The monthly cost for this rider is shown on the Policy Data Page. We will deduct
the monthly cost as part of this Monthly Deduction, until the rider terminates.
TERMINATION OF RIDER
This rider terminates at the earliest of the following:
1. when the policy terminates; or
2. on any Monthiversary when the sum of the premiums paid to
date, less any partial surrenders, outstanding loans and
loan interest, does not equal ro exceed the Guaranteed Death
Benefit Rider Premium multiplied by the number of policy
months since the Contract Date.
3. at the end of the Guaranteed Death Benefit Rider Period
shown on the Policy Data Page.
This rider may not be reinstated once terminated.
American United Life Insurance Company
Secretary
Accelerated Benefit Rider
NOTE: RECEIPT OF THE ACCELERATED BENEFIT MAY BE TAXABLE. PLEASE SEEK
ASSISTANCE FROM A PERSONAL TAX ADVISOR.
Benefits advanced under the terms of this rider will reduce the amount of the
death benefit payable under the policy.
This rider is attached to and made part of the policy. The effective date of
this rider is the same as the date of issue of the policy unless this rider is
added after issue.
Definitions Eligible Amount means the amount payable at the death of the
insured at the time the first notice of claim is received at
our home office. The eligible amount includes the base
policy, any level term riders which may still be converted
under the terms of the policy, and any paid-up additional
insurance. This benefit extends only to the primary insured
under the base policy and not to any other individual covered
for additional benefits.
Terminal Illness means an incurable medical condition that,
despite appropriate medical care, is reasonably expected to
result in the death of the insured within 12 months from the
date of the physician s statement.
Physician means any licensed practitioner of the healing arts
practicing within the scope of his or her license. Physician
must be a person other than the insured or owner, a member of
the insured s or owner s immediate families or a business
associate. Immediate Family means the spouse, child, brother,
sister, parent or grandparent of the insured or the owner.
Benefit Ratio means the result of dividing (a) by (b) where:
(a) is the requested portion of the eligible amount; and
(b) the eligible amount.
Benefit If the insured is diagnosed with a terminal illness while
covered under the policy to which this rider is attached, the
owner may request payment of the Accelerated Benefit, subject
to the conditions of this rider.
The requested portion of the eligible amount will be subject
to the following adjustments and deductions.
1. An actuarial discount will be deducted from the
requested portion of the eligible amount. This discount
reflects the early payment of amounts held under the
policy. It will be based on an annual interest rate
which has been declared by us and the then current
premium or cost of insurance rate, both of which are in
effect as of the date notice of claim is received at
our home office. The maximum interest rate used shall
be the greater of the yield on 90 day treasury bills or
the maximum statutory adjustable policy loan interest
rate in effect upon the date of request.
2. If, on the date we approve a request, there is a policy
loan outstanding on the policy, the benefit payable to
you will be reduced by an amount equal to: (The
outstanding loan balance) x (Benefit ratio) This
reduction is used to repay a portion of the policy
loan.
3. A deduction will be made for any premiums due within
the policy s grace period that are unpaid at the time
we approve the request for Accelerated Benefit payment.
The minimum Accelerated Benefit payable on the policy is
$5,000. The maximum Accelerated Benefit payable is the lesser
of $500,000 or 50% of the eligible amount.
<PAGE>
Conditions To be eligible to request payment of the Accelerated Benefit:
1. The policy must be in force other than as extended term
or reduced paid-up insurance.
2. The insured must be diagnosed with a terminal illness
while covered under the policy to which this rider is
attached.
3. We will require written consent from all irrevocable
beneficiaries, if any, and all assignees, if any, and
the owner of the policy, if different from the insured.
4. This rider provides for an accelerated payment of the
death beneift of the life insurance policy to which it
is attached. This is not meant to cause involuntarily
access to proceeds ultimately payable to the
beneficiary. Therefore, this benefit is not available
if:
either the insured or the owner is required by law to
use this benefit to meet the claims of creditors,
whether in bankruptcy or otherwise; or
either the insured or the owner is required by a
government agency to use this benefit in order to apply
for, obtain orw therwise keep a government benefit or
entitlement.
Limitations No benefit will be provided by this rider if terminal
illness results from intentionally self-inflicted
injuries.
Adjustments to the
Policy After an Accelerated Benefit payment is made, the
policy and all riders will remain in force subject to
to the Policy the following adjustments:
1. The primary insured s death benefit or current face
amount, its current and guaranteed cash value, if any,
its account value, if any, and the required premium
attributable to the primary insured s coverage, if any,
will be reduced by the benefit ratio.
2. Any outstanding policy loan will be reduced by the
portion of the policy loan repaid as specified under
the Benefit provision.
3. We will provide a new policy Specifications Page
showing the decrease in policy values resulting from
the Accelerated Benefit payment.
Notice of Claim Written notice of claim must be given to us at any time
after the date the insured develops a terminal illness
as defined in this rider. The notice must identify the
insured and be sent to us at our home office.
Claim Forms After we receive the written notice of claim, we will
send claim forms within 10 days. If we do not, proof of
terminal illness requirements will be met if we receive
a written statement from a physician acceptable to us
detailing the nature and extent of the terminal
illness.
<PAGE>
Proof of
Terminal Illness Written proof of the insured s terminal illness must be
received by us before we will make an Terminal
Accelerated Benefit payment. This proof will include a
properly completed claim form and a physicians
statement acceptable to us. We may request additional
medical information from the physician submitting the
statement or any physician or institution we consider
necessary.
Physical
Examination We can have a physician of our choice examine the
insured for a second opinion prior to making any
Examination Accelerated Benefit payment. The physician
selected to provide the second opinion must be
acceptable to both you and us. Any second opinion shall
be done at the company s expense and shall be
conclusive as to whether or not the insured suffers
from a terminal illness.
Payment of
Claims Accelerated Benefit payments will be paid to the owner
of the policy as of the date of the benefit Claims
payment.
Reinstatement If the policy is reinstated, this rider will also be
reinstated provided the maximum Accelerated Benefit has
not been paid under the rider.
Termination
This rider will terminate on the earliest of the
following dates:
1.receipt of written request from the policyowner,
provided there is no outstanding Accelerated
2.terminationin of the policy;
3. the date the maximum Accelerated Benefit is paid; or
4. the death of the insured.
This rider is subject to the terms of the policy unless otherwise provided in
this rider.
American United Life Insurance Company
Secretary
Joint First-To-Die Level Term Insurance Rider
This rider is part of your policy. The date of issue of this rider is the same
as the date of issue of the policy unless this rider is added after issue.
Insured
As used in this rider, the insureds are the same as the insureds for the policy
unless otherwise stated on page 3.
Benefit
We will pay the amount of insurance provided by this rider to the beneficiary
upon receipt of due proof of death of the first of the insureds to die. This
death must occur while this rider was in force. The amount of insurance is shown
on page 3.
Incontestability
We will not contest this rider after it has been in force during the lifetime of
each insured for 2 years from its date of issue.
Misstatement of Age or Sex
If either insured s age or sex has been misstated, any amount payable by us will
be adjusted to the amount the premiums paid would have purchased at the correct
age and sex according to the rates in effect on the date of issue.
Suicide
If either insured commits suicide, while sane or insane, within 2 years from the
date of issue of this rider, the amount we pay under this rider will be limited
to the premiums paid for this rider.
Beneficiary
The beneficiary for this rider will receive the proceeds of this rider upon the
death of the first of the insureds to die. Beneficiaries are named in the
application unless you change them later. You can name more than one
beneficiary. The interests of a beneficiary who dies before the first of the
insureds to die will pass to any surviving beneficiaries unless you specify
otherwise. If no beneficiary survives the first of the insureds to die the
rights to rider proceeds will vest in you.
Premiums
The premium for this rider is payable at our home office as part of each premium
on the policy in the amount and for the number of years shown on page 3 of the
policy, or until prior termination of this rider.
Dividends
We will determine the share of divisible surplus of this rider each year. The
share will be credited as a dividend and will be applied under the same dividend
option as selected for the policy.
<PAGE>
Termination
This rider will automatically terminate on the earliest of the following dates:
1. the expiry date of this rider shown on page 3;
2. the date of termination of the policy;
3. the date the policy is surrendered for cash or continued as paid-up
insurance;
4. the date of death of the first of the insureds to die; or
5. on any premium due date following your written request.
American United Life Insurance Company
Secretary
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
DESCRIPTION OF TRANSFER AND REDEMPTION PROCEDURES
This document sets forth, as required by Rule 63-3(T)(b)(12)(ii), the
administrative procedures that will be followed by American United Life
Insurance Company(R) ("AUL") in connection with the issuance of its Flexible
Premium Adjustable Variable Life Insurance policy (the "Policy"), the transfer
of assets held thereunder, and the redemption by Policy Owners of their
interests in said Policies.
TRANSFER AND REDEMPTION PROCEDURES
I. PURCHASE AND RELATED TRANSACTIONS
A. PREMIUM SCHEDULES AND UNDERWRITING STANDARDS
This Policy is a flexible premium policy. During the Guarantee
Period, if the Minimum Required Premium for the Guarantee Period
is made, the Policy will remain in force. Initial premiums for the
Policies will not be the same for all Policy Owners as the amount
of the minimum initial premium is based upon the Insured's Age,
premium class and the Initial Face Amount of the Policy. The
policy permits the Policy Owner to choose from two Death Benefit
options, option 1 (A level Death Benefit) and option 2 (A Death
Benefit that fluctuates with the Account Value). The Policies will
be offered and sold pursuant to established underwriting standards
and in accordance with state insurance laws, which prohibit unfair
discrimination among Policy Owners, but recognize that premiums
must be based upon factors such as age, health or occupation.
<PAGE>
B. APPLICATION AND INITIAL PREMIUM PROCESSING
Upon receipt of a completed application, AUL will follow certain
insurance underwriting (i.e., evaluation of risks) procedures
designed to determine whether the applicant is insurable. This
process may involve such verification procedures as medical
examinations and may require that further information be provided
by the proposed Insured before a determination can be made. A
policy will not be issued and consequently a Policy Issue Date
established, until this underwriting procedure has been completed.
If an initial premium is submitted with the Policy application,
insurance coverage will begin immediately if the proposed Insured
is insurable at a standard rate under a conditional receipt
agreement. Otherwise, insurance coverage will not begin until the
Policy's Issue date.
If a premium is not paid with the application, insurance coverage
will begin and the Policy will be effective on the later of the
Policy Issue Date or the date the initial premium is received.
C. PREMIUM ALLOCATION
In the application for a Policy, the Policy Owner can allocate the
initial premium among the Fixed Account and Investment Accounts.
AUL will generally allocate all net premiums to our general
account. At a later date, the value of the Policy Owner's interest
in the General Account will be allocated to the Fixed Account and
the Investment Accounts in accordance with the Policy Owner's
instructions in the application for insurance. An allocation to
the Fixed Account or Investment Accounts must be at least 1% in
whole percentages.
D. POLICY LOANS
A Policy Owner may obtain a cash loan from AUL, which is secured
by the Policy, any time after the "Right to Examine" period while
the policy is not in the grace period. The maximum amount of a new
loan is:
1. 90% of the Account Value; less
2. any loan interest due on the next Policy Anniversary; less
3. any applicable Surrender Charges; less
4. any existing loans and accrued loan interest.
2
<PAGE>
The amount of each loan will be transferred on a pro rata basis
from each of the Investment Accounts and the Fixed Account (unless
the Policy Owner specifies otherwise) to the Loan Account. The
Loan Account is a mechanism used to ensure that any outstanding
loans and loan interest remains fully secured by the policy
values.
LOAN INTEREST
Interest will accrue daily on the indebtedness at the Policy Loan
Interest Rate indicated in the Policy . Interest is due on each
Policy Anniversary.
CREDITED INTEREST
During the first ten Policy Years, any amounts in the Loan Account
will be credited with interest at a rate equal to the Policy Loan
Rate, minus 2%, but never less than 4%. For Policy Years 11 and
beyond, the Loan Account will be credited with interest at a rate
equal to the Policy Loan Rate, minus 1%, but never less than 4%.
LOAN REPAYMENTS
If loan interest is not paid when it is due, AUL will make a
transfer from the Investment Accounts and the Fixed Account into
the Loan Account as collateral for the interest due. The amount
transferred is the amount by which the interest due exceeds the
interest which has been credited on the Loan Account. The transfer
is made from each account in proportion to the amount in the
account.
3
<PAGE>
A loan may be paid in full or in part at any time while this
policy is in force and the Insured is alive. When a loan repayment
is made, the amount of the Loan Account equivalent to the amount
of loan repayment is transferred to the Investment Accounts and
the Fixed Account based on the current premium allocation.
TERMINATION DUE TO EXCESSIVE INDEBTEDNESS
A loan may affect the length of time the Policy remains in force.
The Policy will lapse when Net Cash Value is insufficient to cover
the monthly deduction against the Policy and the minimum payment
required is not made during the 61 day grace period.
EFFECT OF LOANS ON ACCOUNT VALUE
A loan, whether or not repaid, will have a permanent effect on the
Death Benefit and Policy values because the investment results of
the Investment Accounts of the Separate Account and current
interest rates credited on Account Value in the Fixed Account will
apply only to the non-loaned portion of the Account Value. The
longer the loan is outstanding, the greater the effect is likely
to be. Depending on the investment results of the Investment
Accounts while the loan is outstanding, the effect could be
favorable or unfavorable. Policy loans may increase the potential
for lapse if investment results of the Investment Accounts are
less than anticipated. Also, loans could, particularly if not
repaid, make it more likely than otherwise for a Policy to
terminate.
4
<PAGE>
II. TRANSFER AMONG INVESTMENT DIVISIONS
The Separate Account currently has 16 Investment Accounts, each of which
invests in shares of an open-end diversified management investment
company registered with the SEC and a Fixed Account. At any time after
the "Right to Examine" period, the Policy Owner may transfer value among
the Investment Accounts and the Fixed Account. AUL reserves the right to
limit the size of transfers, remaining balances, and to limit the number
and frequency of transfers.
A transfer between the Loan Accounts and the Investment Accounts or the
Fixed Account incident to the repayment or making of a loan under the
Policy will not be considered a transfer. A transfer from the general
account at the end of the Right to Examine Period or a transfer arising
because of a substitution of securities by AUL will also not be
considered a transfer. Currently transfers through the Portfolio
Rebalancing Program, or Dollar Cost Averaging Program will not count
against the limited number of transfers.
III. "REDEMPTION" PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
A. SURRENDER FOR NET CASH VALUE
At any time after the end of the Right to Examine period, you may
surrender part of this policy for cash by Proper Notice to us. The
minimum amount of any Partial Surrender is shown in the Policy.
The amount surrendered is deducted from the Account Value, and
therefore also reduces the Cash Value. The deduction will be made
from the Investment Accounts and the Fixed Account in proportion
to the amounts in each account, unless specific accounts are
requested.
5
<PAGE>
Under Death Benefit Option 1, the Face Amount will be reduced by
the amount surrendered. The remaining Face Amount must be at least
equal to the minimum Face Amount shown on the Policy Data Page.
At any time after the Right to Examine Period and while the Policy
is in force, the Policy Owner may completely surrender the Policy
by submitting Proper Notice to us. The surrender payment from the
Investment Accounts will generally be made within seven days after
AUL receives Proper Notice, unless payment is postponed pursuant
to the relevant provision of the Investment Company Act of 1940.
The surrender payment from the Fixed Account may be postponed up
to six months under state law. The surrender payment will equal
the Policy Owner's Net Cash Value.
B. BENEFIT CLAIMS
As long as the Policy remains in force, AUL will generally pay the
Death Proceeds to the named Beneficiary within seven days after
receipt of due proof of death of the Insured unless the Policy is
contested. Payment of the Death Proceeds may be postponed as
permitted pursuant to the relevant provisions of the Investment
Company Act of 1940 and up to six months if the Account Values
were in the Fixed Account.
The Death Benefit Proceeds equal the Death Benefit in force as of
the end of the Valuation Period during which death occurs less all
outstanding loans and loan interest plus any benefits provided by
rider payable at Insured's death.
6
<PAGE>
If the Insured dies during the grace period, the proceeds paid on
death will be equal to the Death Benefit immediately prior to the
start of the grace period, plus any benefits provided by the
rider, less any outstanding loans and loan interest and less
overdue Monthly Deductions as of the date of death.
In lieu of payment of the death proceeds in a single sum, an
election may be made to apply all or a portion of the proceeds
under one of the settlement options described in the Policy or the
election may be made by the Policy Owner during the Insured's
lifetime. The Beneficiary may make or change an election of
settlement option unless the Policy Owner has made an irrevocable
election.
The following changes may be made to this policy, as long as the
policy is not in the grace period. AUL reserves the right,
however, to not accept any change which might disqualify this
policy as life insurance under federal tax law.
Increase the Face Amount of Insurance
An increase of the Face Amount may be requested at any time after
the date specified on the Policy Data Page, by providing a proper
written application and satisfactory evidence of insurability. The
amount of the increase must be at least equal to the minimum
amount shown in the Policy, and is subject to AUL's underwriting
limits. The increase in Face Amount will generate its own
Surrender Charge schedule. If the policy is within the Guarantee
Period, the Required Premium will increase.
7
<PAGE>
The effective date of the increase will be the Monthiversary date
following the approval of the increase.
Decrease the Face Amount of Insurance
A decrease of the Face Amount may be requested by Proper Notice at
any time after the date specified in the Policy. The minimum
amount of any decrease is shown in the Policy. A decrease may not
be made which reduces the Face Amount of the policy below the
minimum amount shown in the Policy.
A decrease of the Face Amount will be effective on the
Monthiversary following receipt of Proper Notice. If there have
been any increases to the policy, the decrease will first be
applied to reduce those increases, starting with the most recent
increase. The decrease will not cause a decrease in either the
Required Premium for the Guarantee Period or the Surrender
Charges.
C. POLICY LAPSATION
Grace Period: Unless the Continuation of Insurance Guarantee
applies, the grace period begins on the Monthiversary when the Net
Cash Value is less than the Monthly Deduction. This policy goes
into default at the start of the grace period. The grace period is
a 61 day period to make a premium payment sufficient to prevent
lapse. AUL will send written notice of the length of the grace
period and the amount of premium due. The amount of premium due is
the amount which is required to keep the policy in force during
the grace period. This notice will be sent to your last known
address. If the premium due is not paid within the grace period,
all insurance stops and the policy terminates without value.
8
<PAGE>
Continuation of Insurance Guarantee: During the Guarantee Period
shown in the Policy, the policy will remain in force and will not
begin the grace period if on each Monthiversary, the sum of the
premiums paid to date, less any Partial Surrenders, any
outstanding loans and loan interest, equals or exceeds the
Required Premium for the Guarantee Period multiplied by the number
of policy months since the Contract Date. If this test is failed
on any Monthiversary, the Continuation of Insurance Guarantee
terminates. The guarantee will not be reinstated.
The Required Premium for the Guarantee period is shown in the
Policy. If changes are made to the policy within the Guarantee
Period, the Required Premium for subsequent months may change. We
will send you notice of the new Required Premium.
D. REINSTATEMENT
You may reinstate this policy by Proper Notice to us within 5
years of the date the policy terminated if:
1. the policy had not been surrendered for its Net Cash
Value; and
2. satisfactory evidence of insurability is provided to
AUL; and
3.payment is made of sufficient premium to cover past
due monthly deductions during the grace period and to
keep this policy in force for three months; and
4. interest on any loan amount which is reinstated is
paid at the annual rate applicable to policy loans
during the period of lapse, from the date insurance
stopped.
The effective date of the reinstatement is the next Monthiversary
following approval of the reinstatement.
E. POLICY LOANS
See "Purchase and Related Transactions," Section I.D. on page 3
of this Exhibit.
9
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:________________________________
--------------------------------------
Steven C. Beering, M.D.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:_________7/28/97________________
___/s/ Arthur L. Bryant___________________
Arthur L. Bryant
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:______7/28/97___________________
___/s/ James M. Cornelius_____________
James M. Cornelius
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:___7/28/97______________________
__/s/ James E. Dora___________________
James E. Dora
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:_________7/28/97________________
___/s/ Otto N. Frenzel III____________
Otto N. Frenzel III
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:________________________________
--------------------------------------
David W. Goodrich
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:___7/28/97______________________
__/s/ William P. Johnson______________
William P. Johnson
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:________________________________
--------------------------------------
James T. Morris
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:_______7/28/97_________________
__/s/ James W. Murphy________________
James W. Murphy
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:_____7/25/97____________________
___/s/ R. Stephen Radcliffe___________
R. Stephen Radcliffe
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:________________________________
--------------------------------------
Thomas E. Reilly Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:________________________________
--------------------------------------
William R. Riggs
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:_______7/25/97__________________
____/s/ Jerry D. Semler_______________
Jerry D. Semler
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:___7/28/97______________________
_/s/ Yvonne H. Shaheen_________________
Yvonne H. Shaheen
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated:________7/28/97___________________
_/s/ Frank D. Walker____________________
Frank D. Walker
