<PAGE> 1
As filed with the Securities and Exchange Commission on December 30, 1998.
Registration No. 333 -
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
(Exact name of trust)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(Name of depositor)
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, NY 10580
(Address of depositor's principal executive offices)
A. Scott Logan
President
The Manufacturers Life Insurance Company Copy to:
of New York J. Sumner Jones
Corporate Center at Rye Jones & Blouch, L.L.P.
555 Theodore Fremd Avenue 1025 Thomas Jefferson Street, N.W
Rye, NY 10580 Washington, D.C. 20007-0805
(Name and Address of Agent for Service)
Title of Securities Being Registered: Variable Life Insurance Contracts
Approximate date of commencement of proposed public offering: As soon after the
effective date of this registration statement as is practicable.
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 the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
Registration Statement on Form S-6
Cross-Reference Sheet
Form N-8B-2
Item No. Caption in Prospectus
1 ----- Cover Page; General Information About The Manufacturers Life
Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and
Manufacturers Investment Trust
2 ----- Cover Page; General Information About The Manufacturers Life
Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and
Manufacturers Investment Trust
3 ----- *
4 ----- Miscellaneous Matters (Distribution of the Policy)
5 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
6 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
7 ----- *
8 ----- *
9 ----- Miscellaneous Matters (Pending Litigation)
10 ----- Detailed Information About The Policies
11 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
12 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
13 ----- Detailed Information About The Policies (Charges and
Deductions)
14 ----- Detailed Information About the Policies (Premium Provisions --
Policy Issue and Initial Premium); Miscellaneous Matters
(Responsibilities Assumed By The Manufacturers Life Insurance
Company of New York)
15 ----- Detailed Information About The Policies (Premium Provisions --
Policy Issue and Initial Premium)
16 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
17 ----- Detailed Information About The Policies (Policy Values --
Partial Withdrawals and Surrenders); Other Provisions --
Payment of Proceeds)
18 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
19 ----- Detailed Information About The Policies (Other Provisions --
Reports To Policyowners); Miscellaneous Matters
(Responsibilities Assumed By The Manufacturers Life Insurance
Company of New York)
20 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust; Miscellaneous Matters (Responsibilities Assumed By The
Manufacturers Life Insurance Company of New York)
21 ----- Detailed Information About The Policies (Policy Values --
Policy Loans)
22 ----- *
<PAGE> 3
23 ----- **
24 ----- Detailed Information About the Policies (Other General Policy
Provisions)
25 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
26 ----- *
27 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
28 ----- Miscellaneous Matters (Directors And Officers of The
Manufacturers Life Insurance Company of New York)
29 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
30 ----- *
31 ----- *
32 ----- *
33 ----- *
34 ----- *
<PAGE> 4
35 ----- Miscellaneous Matters (State Regulations)
36 ----- *
37 ----- *
38 ----- Miscellaneous Matters (Distribution of the Policy;
Responsibilities Assumed By The Manufacturers Life Insurance
Company of New York)
39 ----- Miscellaneous Matters (Distribution of the Policy)
40 ----- *
41(a)--- Miscellaneous Matters (Distribution of the Policy)
41(b)--- **
41(c)--- **
42 ----- *
43 ----- *
44 ----- Detailed Information About The Policies (Policy Values --
Policy Value)
45 ----- *
46 ----- Detailed Information About The Policies (Policy Values --
Partial Withdrawals and Surrenders; Other Provisions --
Payment of Proceeds)
47 ----- General Information About The Manufacturers Life Insurance
Company of New York, The Manufacturers Life Insurance Company
of New York Separate Account B and Manufacturers Investment
Trust
48 ----- *
49 ----- *
50 ----- *
51 ----- Detailed Information About The Policies
52 ----- Detailed Information About The Policies (Miscellaneous Matters
-- Portfolio Share Substitution)
53 ----- **
54 ----- *
55 ----- *
56 ----- *
57 ----- *
58 ----- *
59 ----- Financial Statements
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> 5
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE> 6
COVER PAGE
This prospectus describes Survivorship VUL, a flexible premium survivorship
variable universal life insurance policy (the "Policy") offered by The
Manufacturers Life Insurance Company of New York (the "Company" or "Manulife New
York"), a stock life insurance company that is an indirect wholly-owned
subsidiary of The Manufacturers Life Insurance Company ("Manufacturers Life").
The Policy is designed to provide lifetime insurance protection together with
flexibility as to the timing and amount of premium payments, the investments
underlying the Policy Value, and the amount of insurance coverage. This
flexibility allows the policyowner to pay premiums and adjust insurance coverage
in light of his or her current financial circumstances and insurance needs.
The Policy provides for:
(1) a Net Cash Surrender Value that can be obtained by surrendering the Policy;
(2) policy loans and partial withdrawals; and
(3) an insurance benefit payable at the death of the last-to-die of the Lives
Insured.
Unless the No-Lapse Guarantee is in effect, the Policy will remain in force so
long as the Net Cash Surrender Value is sufficient to cover charges assessed
against the Policy. If the No-Lapse Guarantee is in effect, the Policy will
remain in force as long as the No-Lapse Guarantee Cumulative Premium Test has
been met.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of Manufacturer Life of New York's Separate
Account B (the "Separate Account") to which the policyowner allocates net
premiums. The assets of each sub-account will be used to purchase shares of a
particular investment portfolio (a "Portfolio") of Manufacturers Investment
Trust (the "Trust"). The accompanying prospectus for the Trust, and the
corresponding statement of additional information, describe the investment
objectives of the Portfolios. The Portfolios available for allocation of Net
Premiums are shown in the Policy Summary under "Investment Options and
Investment Advisers." Other sub-accounts and Portfolios may be added in the
future.
BECAUSE OF THE SUBSTANTIAL NATURE OF THE SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT-TERM INVESTMENT PURPOSES. ALSO, PROSPECTIVE PURCHASERS SHOULD
NOTE THAT IT MAY NOT BE ADVISABLE TO PURCHASE A POLICY AS A REPLACEMENT FOR
EXISTING INSURANCE.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains material incorporated by reference and other information regarding
registrants that file electronically with the Commission.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TRUST.
THESE POLICIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC. NEITHER THE SEC
NOR ANY STATE HAS DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Home Office: Service Office Mailing Address:
The Manufacturers Life Insurance The Manufacturers Life Insurance Company
Company of New York of New York
Corporate Center at Rye P.O. Box 633
555 Theodore Fremd Avenue, Niagara Square Station
Suite C-209 Buffalo, New York 14210--0633
Rye, New York 10580-9966 Telephone: 1-888-267-7784
<PAGE> 7
The date of this Prospectus is _____, 1999.
2
<PAGE> 8
TABLE OF CONTENTS
Cover Page......................................................................
Table of Contents...............................................................
Definitions.....................................................................
Policy Summary..................................................................
General......................................................................
Death Benefits...............................................................
Premiums.....................................................................
Policy Value.................................................................
Policy Loans.................................................................
Surrender and Partial Withdrawals............................................
Lapse and Reinstatement......................................................
Charges and Deductions.......................................................
Investment Options and Investment Advisers...................................
Table of Charges and Deductions..............................................
Table of Investment Management Fees and Expenses.............................
Table of Investment Options and Investment Advisers..........................
General Information about Manufacturers.........................................
Manulife New York............................................................
Separate Account B...........................................................
Manufacturers Investment Trust...............................................
Investment Objectives of the Portfolios......................................
Issuing A Policy................................................................
Requirements.................................................................
Temporary Insurance Agreement................................................
Underwriting.................................................................
Right to Examine the Policy..................................................
Death Benefits..................................................................
Life Insurance Qualification.................................................
Death Benefit Options........................................................
Changing the Face Amount.....................................................
Premium Payments................................................................
Initial Premiums.............................................................
Subsequent Premiums..........................................................
Maximum Premium Limitation...................................................
Premium Allocation...........................................................
Charges and Deductions..........................................................
Premium Load.................................................................
Surrender Charges............................................................
Monthly Charges..............................................................
Charges Assessed Against Assets of the Investment Accounts...................
Charges for Transfers........................................................
Reduction in Charges.........................................................
Special Provisions for Exchanges................................................
Company Tax Considerations......................................................
Policy Value....................................................................
Determination of the Policy Value............................................
Units and Unit Values........................................................
Transfers of Policy Value....................................................
Policy Loans....................................................................
Effect of Policy Loan........................................................
Interest Charged on Policy Loans.............................................
Loan Account.................................................................
3
<PAGE> 9
Policy Surrender and Partial Withdrawals........................................
Policy Surrender.............................................................
Partial Withdrawals..........................................................
Lapse and Reinstatement.........................................................
Lapse........................................................................
No-Lapse Guarantee...........................................................
No-Lapse Guarantee Cumulative Premium Test...................................
Reinstatement................................................................
The General Account.............................................................
Fixed Account................................................................
Other Provisions of the Policy..................................................
Policyowner Rights...........................................................
Beneficiary..................................................................
Incontestability.............................................................
Misstatement of Age or Sex...................................................
Suicide Exclusion............................................................
Supplementary Benefits.......................................................
Conversion Privilege.........................................................
Tax Treatment of the Policy.....................................................
Life Insurance Qualification.................................................
Tax Treatment of Policy Benefits.............................................
Alternate Minimum Tax........................................................
Income Tax Reporting.........................................................
Other Information...............................................................
Payment of Proceeds..........................................................
Reports to Policyowners......................................................
Distribution of the Policies.................................................
Responsibilities of Manufacturers Life.......................................
Voting Rights................................................................
Substitution of Portfolio Shares.............................................
Records and Accounts.........................................................
State Regulations............................................................
Litigation...................................................................
Accountants..................................................................
Further Information..........................................................
Officers and Directors.......................................................
Impact of Year 2000..........................................................
Illustrations................................................................
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE
STATEMENT OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
4
<PAGE> 10
DEFINITIONS
Additional Rating
is an increase to the Cost of Insurance Rate for any of the Lives Insured who do
not meet, at a minimum, the Company's underwriting requirements for the standard
Risk Classification.
Age
on any date is each of the Lives Insured's age on their birthday closest to the
policy date.
Attained Age
is the Age plus the number of whole years that have elapsed since the Policy
Date.
Business Day
is any day that the New York Stock Exchange is open for trading, and trading is
not restricted. The net asset value of the underlying shares of a Sub-Account
will be determined as of the end of each Business Day. The Company will deem
each Business Day to end at the close of regularly scheduled trading of the New
York Stock Exchange (currently 4:00 p.m. Eastern Time) on that day.
Cash Surrender Value
is the Policy Value less the Surrender Charge and any outstanding Monthly
Deductions due.
Effective Date
is the date the Company becomes obligated under the Policy. It is the date the
underwriters approve issuance of the policy. If the policy is approved without
the initial premium, the Effective Date will be the date the Company receives at
least the minimum initial premium at our Service Office. In either case, the
Company will take the first Monthly Deduction on the Effective Date.
Gross Withdrawal
is the amount of partial Net Cash Surrender Value the policyowner requests plus
any Surrender Charge applicable to the withdrawal.
Fixed Account
is that part of the Policy Value which reflects the value the policyowner has in
the general account of the Company.
Investment Account
is that part of the Policy Value which reflects the value the policyowner has in
one of the sub-accounts of the Separate Account.
Issue Date
is the date the Company issued the Policy. The Issue Date is also the date from
which the Suicide and Validity provisions of the Policy are measured.
Life Insured
is the last-to-die of the Lives Insured.
5
<PAGE> 11
Lives Insured
are the persons whose lives are insured under this policy. References to the
youngest of the Lives Insured means the youngest person insured under this
policy when it is first issued.
Loan Account
is that part of the Policy Value which reflects the value transferred from the
Fixed Account or the Investment Accounts as collateral for a policy loan.
Maturity Date
is the Policy Anniversary nearest the date on which the youngest of the Lives
Insured reached Attained Age 100, or the date such person would have reached
Attained Age 100 if living.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
Net Policy Value
is the Policy Value less the value in the Loan Account.
Net Premium
is the gross premium paid less the Premium Load. It is the amount of premium
allocated to the Fixed Account and/or Investment Accounts.
No-Lapse Guarantee
When the Policy is in the No-Lapse Guarantee Period, as long as the No-Lapse
Guarantee Cumulative Premium Test is met, the Policy will not lapse, even when
the Net Cash Surrender Value falls to or below zero.
No-Lapse Guarantee Period
is set at issue and is fixed at five years.
No-Lapse Guarantee Premium
is set at issue and is recalculated whenever there is a policy change.
No-Lapse Guarantee Cumulative Premium
is the minimum amount due to satisfy the No-Lapse Guarantee Cumulative Premium
Test. This amount will change if any of the following changes occur under the
Policy:
- - the face amount of insurance changes.
- - a Supplementary Benefit is added, changed or terminated.
- - the risk classification of any of the Lives Insured changes because of
a change in smoking status.
- - a temporary Additional Rating is added (due to a face amount increase),
or terminated.
- - the Death Benefit Option Changes.
No-Lapse Guarantee Cumulative Premium Test
is a test that is satisfied if the sum of all premiums paid, less any gross
partial withdrawals and less any Policy Debt, is greater than or equal to the
sum of the monthly No-Lapse Guarantee Premiums due since the Policy Date.
Policy Date
is the date from which charges for the first monthly deduction are calculated,
and the date from which Policy Years, Policy Months, and Policy Anniversaries
are determined.
Policy Debt
6
<PAGE> 12
as of any date equals (a) plus (b) plus (c) minus (d), where:
(a) is the total amount of loans borrowed as of such date;
(b) is the total amount of any unpaid loan interest charges which have been
borrowed against the policy on a Policy Anniversary;
(c) is any interest charges accrued from the last Policy Anniversary to the
current date; and
(d) is the total amount of loan repayments as of such date.
Policy Value
is the sum of the values in the Loan Account, the Fixed Account, and the
Investment Accounts.
Service Office Address
is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
Surrender Charge Period
is the period following the Issue Date or following any increase in Face Amount
during which the Company will assess surrender charges. Surrender charges will
apply during this period if the policy terminates due to default, if the
policyowner surrenders the policy or makes a partial withdrawal.
Written Request
is the policyowner's request to the Company which must be in a form satisfactory
to the Company, signed and dated by the policyowner, and received at the Service
Office.
POLICY SUMMARY
GENERAL
The Policy is a flexible premium survivorship variable universal life insurance
policy. The following summary is intended to provide a general description of
the most important features of the Policy. It is not comprehensive and is
qualified in its entirety by the more detailed information contained in this
prospectus. Unless otherwise indicated or required by the context, the
discussion throughout this prospectus assumes that the Policy has not gone into
default, there is no outstanding Policy Debt, and the death benefit is not
determined by the minimum death benefit percentage. The Policy's provisions may
vary in some states.
DEATH BENEFITS
The Policy provides a death benefit in the event of the death of the last-to-die
of the Lives Insured. There are two death benefit options. Under Option 1 the
death benefit is the Face Amount of the Policy at the date of death or, if
greater, the Minimum Death Benefit. Under Option 2 the death benefit is the Face
Amount plus the Policy Value of the Policy at the date of death or, if greater,
the Minimum Death Benefit. The policyowner may change the death benefit option
and increase or decrease the Face Amount.
PREMIUMS
Premium payments may be made at any time and in any amount, subject to certain
limitations as described under "Premium Payments - Subsequent Premiums." Net
Premiums will be allocated, according to the policyowner's instructions, to one
or more of the general account and the sub-accounts
7
<PAGE> 13
of Manulife New York's Separate Account B. Allocation instructions may be
changed at any time and transfers among the accounts may be made.
POLICY VALUE
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which the policyowner has allocated premiums. The policyowner may obtain a
portion of the Policy Value by taking a policy loan or a partial withdrawal, or
by full surrender of the Policy.
POLICY LOANS
The policyowner may borrow against the Cash Surrender Value of the Policy. Loan
interest at a rate of 5.75% is due and payable in arrears on each Policy
Anniversary. All outstanding Policy Debt will be deducted from proceeds payable
at the insured's death, or upon surrender.
SURRENDER AND PARTIAL WITHDRAWALS
The policyowner may make a partial withdrawal of the Policy Value. A partial
withdrawal may result in a reduction in the Face Amount of the Policy and an
assessment of a portion of the surrender charges to which the Policy is subject.
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the Life Insured is living. The Net Cash Surrender Value is equal to the Policy
Value less Surrender Charges and outstanding Monthly Deductions due minus the
Policy Debt.
LAPSE AND REINSTATEMENT
Unless the No-Lapse Guarantee is in effect, a Policy will lapse (and terminate
without value) when the Net Cash Surrender Value is insufficient to pay the next
monthly deduction and a grace period of 61 days expires without an adequate
payment being made by the policyowner. If the No-Lapse Guarantee is in effect,
the Policy will lapse if the No-Lapse Guarantee Cumulative Premium Test (see
definition) has not been met.
The Policies, therefore, differ in two important respects from conventional life
insurance policies. First, the failure to make planned premium payments will not
itself cause a Policy to lapse. Second, a Policy can lapse even if planned
premiums have been paid.
A lapsed Policy may be reinstated by the policyowner at any time within the five
year period following lapse provided none of the Lives Insured dies after the
policy termination and the Policy was not surrendered for its Net Cash Surrender
Value. Evidence of insurability is required, along with a certain amount of
premium as described under "Reinstatement."
CHARGES AND DEDUCTIONS
The Company assesses certain charges and deductions in connection with the
Policy. These include: (i) charges assessed monthly for mortality and expense
risks, cost of insurance, administration expenses, (ii) loads deducted from
premiums paid (iii) and charges assessed on surrender or lapse. These charges
are summarized in the Table of Charges and Deductions.
In addition, there are charges deducted from each Portfolio of the Trust. These
charges are summarized in the Table of Investment Management Fees and Expenses.
INVESTMENT OPTIONS AND INVESTMENT ADVISERS
Net Premiums may be allocated to the general account or to one or more of the
sub-accounts of Manulife New York's Separate Account B. Each of the sub-accounts
invests in the shares of one of the
8
<PAGE> 14
Portfolios of the Trust. The Trust receives investment advisory services from
Manufacturers Securities Services, LLC ("MSS"). MSS is a registered investment
adviser under the Investment Advisers Act of 1940. The Trust also employs
subadvisers. The Table of Investment Options and Investment Advisers shows the
subadvisers that provide investment subadvisory services to the indicated
Portfolios.
INVESTMENT MANAGEMENT FEES AND EXPENSES
The Separate Account purchases shares of the Portfolios at net asset value. The
net asset value of those shares reflects investment management fees and certain
expenses. The fees and expenses for each Portfolio for the Trust's last fiscal
year are shown in the Table of Investment Management Fees and Expenses. These
fees and expenses are described in detail in the accompanying Trust prospectus
to which reference should be made.
9
<PAGE> 15
TABLE OF CHARGES AND DEDUCTIONS
Premium Load 7.50% of each premium paid.
Surrender Charges A Surrender Charge is applicable during the
first 15 Policy Years. The Surrender Charge
is determined by the following formula:
Surrender Charge = (Surrender Charge Rate)x
(Surrender Face Amount)x(Grading Percentage)
The Grading Percentage is based on the issue
age of the youngest insured and the policy
year in which the transaction causing the
assessment of the charge occurs and is set
forth in the table under "Surrender
Charges."
The Surrender Charge Rate is calculated as
follows:
Surrender Charge Rate = (8.75 / 1000) +
(82.5%)x(Surrender Charge Premium)
The Surrender Charge Premium is the lesser
of:
(a) the premiums paid during the first
policy year,
(b) the Target Commission Premium
specified in the Policy divided by
1000, and
(c) the Net Level Premium specified in
the Policy divided by 1000.
A portion of this charge may be assessed on
a partial withdrawal.
Monthly Deductions An administration charge of $30 plus $0.08
per $1,000 of current face amount per policy
month will be deducted in the first policy
year. In subsequent years, the
administration charge will not exceed $15
plus $0.02 per $1,000 of current Face Amount
per policy month.
The cost of insurance charge.
Any additional charges for supplementary
benefits.
A mortality and expense risks charge. This
charge varies by Policy Year as follows:
Current and Equivalent
Policy Years Guaranteed Annual
Monthly Mortality and
Mortality and Expense Risk
Expense Risks Charge
Charge
1-20 0.063% 0.75%
21+ 0.033% 0.40%
All of the above charges are deducted from
the Net Policy
10
<PAGE> 16
Value.
Loan Charges A fixed loan interest rate of 5.75%.
Interest credited to amounts in the Loan
Account will be equal to the 5.75% rate
charged to the loan less the current (and
maximum loan spread of 1.25%.
Transfer Charge A charge of $25 per transfer for each
transfer in excess of 12 in a Policy Year.
11
<PAGE> 17
TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
ANNUAL EXPENSES OF EACH PORTFOLIO
(as a percentage of a Portfolio's average net assets)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
PORTFOLIO FEES REIMBURSEMENT)*** ANNUAL EXPENSES
- --------- ---- ----------------- ---------------
<S> <C> <C> <C>
Aggressive Growth
Pacific Rim Emerging Markets........ 0.850% 0.570% 1.420%
Science & Technology................ 1.100% 0.160% 1.260%
International Small Cap............. 1.100% 0.210% 1.310%
Emerging Small Company.............. 1.050% 0.060% 1.110%
Pilgrim Baxter Growth............... 1.050% 0.130% 1.180%
Small/Mid Cap....................... 1.000% 0.050% 1.050%
International Stock................. 1.050% 0.330% 1.380%
Growth
Worldwide Growth.................... 1.000% 0.320% 1.320%
Global Equity....................... 0.900% 0.110% 1.010%
Small Company Value................. 1.050% 0.100%* 1.150%
Equity.............................. 0.750% 0.050% 0.800%
Growth.............................. 0.850% 0.100% 0.950%
Quantitative Equity................. 0.700% 0.070% 0.770%***
Blue Chip Growth.................... 0.925% 0.050% 0.975%
Equity Index........................ 0.250% 0.15%**** 0.40%****
Real Estate Securities.............. 0.700% 0.070% 0.770%***
Value............................... 0.800% 0.160% 0.960%
International Growth and Income..... 0.950% 0.170% 1.120%
Growth and Income
Growth and Income................... 0.750% 0.040% 0.790%
Equity-Income....................... 0.800% 0.050% 0.850%
Balanced
Balanced............................ 0.800% 0.080% 0.880%
Aggressive Asset Allocation......... 0.750% 0.150% 0.900%
Bond
High Yield.......................... 0.775% 0.110% 0.885%
Moderate Asset Allocation........... 0.750% 0.100% 0.850%
Conservative Asset Allocation....... 0.750% 0.140% 0.890%
Strategic Bond...................... 0.775% 0.100% 0.875%
Global Government Bond.............. 0.800% 0.130% 0.930%
Capital Growth Bond................. 0.650% 0.080% 0.730%***
Investment Quality Bond............. 0.650% 0.090% 0.740%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market
Money Market........................ 0.500% 0.040% 0.540%
Lifestyle
Lifestyle Aggressive 1000#.......... 0% 1.116%** 1.116%
Lifestyle Growth 820#............... 0% 1.048%** 1.048%
Lifestyle Balanced 640#............. 0% 0.944%** 0.944%
Lifestyle Moderate 460#............. 0% 0.850%** 0.850%
Lifestyle Conservative 280#......... 0% 0.708%** 0.708%
</TABLE>
12
<PAGE> 18
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its pro rata share of the fees and
expenses incurred by the Underlying Portfolios and the investment return of each
Lifestyle Trust will be net of the Underlying Portfolio expenses. Each Lifestyle
Portfolio must also bear its own expenses. However, the Adviser is currently
paying these expenses as described in footnote ** below.
*Based on estimates of payments to be made during the current fiscal year.
** Reflects expenses of the other portfolios of the Trust in which the Lifestyle
Trust invests ("Underlying Portfolios"). MSS has voluntarily agreed to pay the
expenses of each Lifestyle Trust (excluding the expenses of the Underlying
Portfolios). This voluntary expense reimbursement may be terminated at any time.
If such expense reimbursement was not in effect, Total Trust Annual Expenses
would be .04% higher (based on expenses of the Lifestyle Trusts for the fiscal
year ended December 31, 1997) as noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
- --------------- ---- -------- ---------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000........... 0% 1.156% 1.156%
Lifestyle Growth 820................ 0% 1.088% 1.088%
Lifestyle Balanced 640.............. 0% 0.984% 0.984%
Lifestyle Moderate 460.............. 0% 0.890% 0.890%
Lifestyle Conservative 280.......... 0% 0.748% 0.748%
</TABLE>
***During the one year period ended December 31, 1997, MSS voluntarily waived
fees payable to it and/or reimbursed expenses to the extent necessary to prevent
"Total Trust Annual Expenses" for the Quantitative Equity, Real Estate and
Capital Growth Bond Trusts from exceeding .50% of the Trust's average net
assets. This voluntary fee waiver was terminated effective January 1, 1998.
Expenses shown in the table for these three Trusts do not reflect the fee
waiver.
****Under the Advisory Agreement, MSS has agreed to reduce its advisory fee or
reimburse the Equity Index Trust if the total of all expenses (excluding
advisory fees, taxes, portfolio brokerage commissions, interest, litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business) exceed an annual rate of 0.15% of the
average annual net assets of the Equity Index Trust. The expense limitation will
continue in effect from year to year unless otherwise terminated at any year end
by MSS on 30 days' notice to the Trust. If this expense reimbursement had not
been in effect, Total Trust Annual Expenses would have been 0.57%, and Other
Expenses would have been 0.32%, of the average annual net assets of the Equity
Index Trust.
13
<PAGE> 19
TABLE OF INVESTMENT OPTIONS AND INVESTMENT ADVISERS
<TABLE>
<CAPTION>
Portfolio Subadviser
<S> <C>
Aggressive Growth
Pacific Rim Emerging Market Trust Manufacturers Adviser Corporation*
Science and Technology Trust T. Rowe Price Associates, Inc
International Small Cap Trust Founders Asset Management, Inc.
Emerging Small Company Trust Warburg, Pincus Counsellors, Inc.
Pilgrim Baxter Growth Trust Pilgrim, Baxter & Associates, Ltd.
Small/Mid Cap Trust Fred Alger Management, Inc.
International Stock Trust Rowe Price-Fleming International, Inc.
Growth
Worldwide Growth Trust Founders Asset Management LLC
Global Equity Trust Morgan Stanley Asset Management, Inc.
Small Company Value Trust Rosenberg Institutional Equity Management
Equity Trust Fidelity Management Trust Company
Growth Trust Founders Asset Management, Inc.
Quantitative Equity Trust Manufacturers Adviser Corporation*
Equity Index Trust Manufacturers Adviser Corporation*
Blue Chip Growth Trust T. Rowe Price Associates, Inc.
Real Estate Securities Trust Manufacturers Adviser Corporation*
Growth and Income
Value Trust Miller Anderson & Sherrerd, LLP
International Growth and Income Trust J.P. Morgan Investment Management, Inc.
Growth and Income Trust Wellington Management Company
Equity Income Trust T. Rowe Price Associates, Inc.
Balanced
Balanced Trust Founders Asset Management LLC
Aggressive Asset Allocation Trust Fidelity Management Trust Company
Moderate Asset Allocation Trust Fidelity Management Trust Company
Conservative Asset Allocation Trust Fidelity Management Trust Company
Bond
High Yield Trust Miller Anderson & Sherrerd, LLP
Strategic Bond Trust Salomon Brothers Asset Management, Inc.
Global Government Bond Trust Oechsle International Advisors, LLC
Capital Growth Bond Trust Manufacturers Adviser Corporation*
Investment Quality Bond Trust Wellington Management Company
U.S. Government Securities Trust Salomon Brothers Asset Management, Inc.
Money Market
Money Market Trust Manufacturers Adviser Corporation*
Lifestyle
Lifestyle Aggressive Growth 1000 Trust Manufacturers Adviser Corporation*
Lifestyle Growth 820 Trust Manufacturers Adviser Corporation*
Lifestyle Balanced 640 Trust Manufacturers Adviser Corporation*
Lifestyle Moderate 460 Trust Manufacturers Adviser Corporation*
Lifestyle Conservative 280 Trust Manufacturers Adviser Corporation*
</TABLE>
*Manufacturers Adviser Corporation is an indirect wholly-owned subsidiary of
Manufacturers Life.
14
<PAGE> 20
GENERAL INFORMATION ABOUT MANUFACTURERS
MANULIFE NEW YORK
Manulife New York, (the "Company") is a stock life insurance company
organized in 1992 under the laws of the state of New York. The Company's
principal office is located at Corporate Center at Rye, 555 Theodore Fremd
Avenue, Suite C-209, Rye, New York 10580-9966.
The Company is a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of North America, formerly North American Security Life
Insurance Company ("Manulife North America"). Manulife North America is a stock
life insurance company organized under the laws of Delaware in 1979 with its
principal office located at 116 Huntington Avenue, Boston, Massachusetts 02116.
Manulife North America's principal business is offering a variable annuity
contract, similar to that offered by the Company in New York, in 48 other
states, the District of Columbia and Puerto Rico.
The ultimate parent of Manulife North America is The Manufacturers Life
Insurance Company ("Manulife"), a Canadian mutual life insurance company based
in Toronto, Canada. Prior to January 1, 1996, Manulife North America was a
wholly owned subsidiary of North American Life Assurance Company ("NAL"), a
Canadian mutual life insurance company. On January 1, 1996, NAL and Manulife
merged with the combined company retaining the name Manulife.
On January 19, 1998, the Board of Directors of Manulife asked the
management of Manulife to prepare a plan for conversion of Manulife from a
mutual life insurance company to an investor-owned, publicly traded stock
company. Any demutualization plan for Manulife is subject to the approval of the
Manulife Board of Directors and policy owners as well as regulatory approval.
RATINGS
Manulife New York has received the following ratings from independent rating
agencies:
Standard and Poor's Insurance Ratings Service: AA+ (for claims paying ability)
A.M.Best Company: A++ (for financial strength)
Duff & Phelps Credit Rating Co.: AAA (for claims paying ability)
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned to The Manufacturers Life Insurance Company of
New York as a measure of the Company's ability to honor the death benefit but
not specifically to its products, the performance (return) of these products,
the value of any investment in these products upon withdrawal or to individual
securities held in any portfolio.
SEPARATE ACCOUNT B
Manulife New York established its Separate Account B on May 6, 1997 as a
separate account under New York Law. The Separate Account holds assets that are
segregated from all of Manulife New York's other assets. The Separate Account is
currently used only to support variable life insurance policies.
ASSETS OF THE SEPARATE ACCOUNT
Manulife New York is the legal owner of the assets in the Separate Account. The
income, gains, and losses of the Separate Account, whether or not realized, are,
in accordance with applicable contracts, credited to or charged against the
Account without regard to the other income, gains, or losses of Manulife New
York. Manulife New York will at all times maintain assets in the Separate
Account with a
15
<PAGE> 21
total market value at least equal to the reserves and other liabilities relating
to variable benefits under all policies participating in the Separate Account.
These assets may not be charged with liabilities which arise from any other
business Manulife New York conducts. However, all obligations under the variable
life insurance policies are general corporate obligations of Manulife New York.
REGISTRATION
The Separate Account is registered with the Securities and Exchange Commission
("S.E.C.") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. A unit investment trust is a type of investment company which
invests its assets in specified securities, such as the shares of one or more
investment companies, rather than in a portfolio of unspecified securities.
Registration under the 1940 Act does not involve any supervision by the S.E.C.
of the management or investment policies or practices of the Separate Account.
For state law purposes the Separate Account is treated as a part or division of
Manulife New York.
MANUFACTURERS INVESTMENT TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Portfolio. The Trust is registered under the 1940 Act as an open-end
management investment company. The Separate Account will purchase and redeem
shares of the Portfolios at net asset value. Shares will be redeemed to the
extent necessary for Manulife New York to provide benefits under the Policies,
to transfer assets from one sub-account to another or to the general account as
requested by policyowners, and for other purposes not inconsistent with the
Policies. Any dividend or capital gain distribution received from a Portfolio
with respect to the Policies will be reinvested immediately at net asset value
in shares of that Portfolio and retained as assets of the corresponding
sub-account.
The Trust shares are issued to fund benefits under both variable annuity
contracts and variable life insurance policies issued by the Company or life
insurance companies affiliated with the Company. Manulife New York may also
purchase shares through its general account for certain limited purposes
including initial portfolio seed money. For a description of the procedures for
handling potential conflicts of interest arising from the funding of such
benefits see the accompanying Trust prospectus.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyowners through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met. A
full description of the Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Trust prospectus, which should be
read together with this prospectus.
AGGRESSIVE GROWTH PORTFOLIOS
PACIFIC RIM EMERGING MARKETS TRUST.
The investment objective of the Pacific Rim Emerging Markets Trust is to achieve
long-term growth of capital. Manufacturers Adviser Corporation ("MAC") manages
the Pacific Rim Emerging Markets Trust and seeks to achieve this investment
objective by investing in a diversified portfolio that is comprised primarily of
common stocks and equity-related securities of corporations domiciled in
countries of the Pacific Rim region.
SCIENCE & TECHNOLOGY TRUST
The investment objective of the Science and Technology Trust is long-term growth
of capital. Current income is incidental to the portfolio's objective. T. Rowe
Price Associates, Inc. manages the Science & Technology Trust.
16
<PAGE> 22
INTERNATIONAL SMALL CAP TRUST
The investment objective of the International Small Cap Trust is to seek
long-term capital appreciation. Founders Asset Management LLC ("Founders")
manages the International Small Cap Trust and will pursue this objective by
investing primarily in securities issued by foreign companies which have total
market capitalizations or annual revenues of $1 billion or less. These
securities may represent companies in both established and emerging economies
throughout the world.
EMERGING SMALL COMPANY TRUST
The investment objective of the Emerging Small Company Trust (prior to November
2, 1998, the "Emerging Growth Trust") is maximum capital appreciation. Warburg,
Pincus Counsellors, Inc. manages the Emerging Small Company Trust and will
pursue this objective by investing primarily in a portfolio of equity securities
of domestic companies. The Emerging Small Company Trust ordinarily will invest
at least 65% of its total assets in common stocks or warrants of emerging small
companies that represent attractive opportunities for maximum capital
appreciation.
PILGRIM BAXTER GROWTH TRUST
The investment objective of the Pilgrim Baxter Growth Trust is capital
appreciation. Pilgrim, Baxter & Associates, Ltd. ("PBHG") manages the Pilgrim
Baxter Growth Trust and seeks to achieve its objective by investing in companies
believed by PBHG to have an outlook for strong earnings growth and potential for
significant capital appreciation.
SMALL/MID CAP TRUST
The investment objective of the Small/Mid Cap Trust is to seek long-term capital
appreciation. Fred Alger Management, Inc. manages the Small/Mid Cap Trust and
will pursue this objective by investing at least 65% of the portfolio's total
assets (except during temporary defensive periods) in small/mid cap equity
securities.
INTERNATIONAL STOCK TRUST
The investment objective of the International Stock Trust is to achieve
long-term growth of capital. Rowe Price-Fleming International, Inc. manages the
International Stock Trust and seeks to obtain this objective by investing
primarily in common stocks of established, non-U.S. companies.
GROWTH PORTFOLIOS
WORLDWIDE GROWTH TRUST
The investment objective of the Worldwide Growth Trust is long-term growth of
capital. Founders manages the Worldwide Growth Trust and seeks to attain this
objective by normally investing at least 65% of its total assets in equity
securities of growth companies in a variety of markets throughout the world.
GLOBAL EQUITY TRUST
The investment objective of the Global Equity Trust is long-term capital
appreciation. Morgan Stanley Asset Management Inc. manages the Global Equity
Trust and intends to pursue this objective by investing primarily in equity
securities throughout the world, including U.S. issuers.
SMALL COMPANY VALUE TRUST
The investment objective of the Small Company Value Trust is to seek long-term
growth of capital. Rosenberg Institutional Equity Management ("Rosenberg")
manages the Small Company Value Trust and intends to pursue this objective by
investing in equity securities of smaller companies which are traded principally
in the markets of the United States.
17
<PAGE> 23
EQUITY TRUST
The principal investment objective of the Equity Trust is growth of capital.
Current income is a secondary consideration although growth of income may
accompany growth of capital. Fidelity Management Trust Company manages the
Equity Trust and seeks to attain the foregoing objective by investing primarily
in common stocks of United States issuers or securities convertible into or
which carry the right to buy common stocks.
GROWTH TRUST
The investment objective of the Growth Trust is to seek long-term growth of
capital. Founders manages the Growth Trust and will pursue this objective by
investing, under normal market conditions, at least 65% of its total assets in
common stocks of well-established, high-quality growth companies that Founders
believes have the potential to increase earnings faster than the rest of the
market.
QUANTITATIVE EQUITY TRUST
The investment objective of the Quantitative Equity Trust (formerly the "Common
Stock Fund") is to achieve intermediate and long-term growth through capital
appreciation and current income by investing in common stocks and other equity
securities of well established companies with promising prospects for providing
an above-average rate of return. MAC manages the Quantitative Equity Trust.
EQUITY INDEX TRUST
The investment objective of the Equity Index Trust is to achieve investment
results which approximate the total return of publicly traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index. MAC manages the Equity Index Trust.
BLUE CHIP GROWTH TRUST
The primary investment objective of the Blue Chip Growth Trust is to provide
long-term growth of capital. Current income is a secondary objective, and many
of the stocks in the Portfolio are expected to pay dividends. T. Rowe Price
Associates, Inc. manages the Blue Chip Growth Trust.
REAL ESTATE SECURITIES TRUST
The investment objective of the Real Estate Securities Trust is to achieve a
combination of long-term capital appreciation and satisfactory current income by
investing in real estate related equity and debt securities. MAC manages the
Real Estate Securities Trust.
GROWTH & INCOME PORTFOLIOS
VALUE TRUST
The investment objective of the Value Trust is to realize an above-average total
return over a market cycle of three to five years, consistent with reasonable
risk. Miller Anderson & Sherrerd, LLP ("MAS") manages the Value Trust and seeks
to attain this objective by investing primarily in common and preferred stocks,
convertible securities, rights and warrants to purchase common stocks, ADRs and
other equity securities of companies with equity capitalizations usually greater
than $300 million.
INTERNATIONAL GROWTH AND INCOME TRUST
The investment objective of the International Growth and Income Trust is to seek
long-term growth of capital and income. The portfolio is designed for investors
with a long-term investment horizon who want to take advantage of investment
opportunities outside the United States. J.P. Morgan Investment Management Inc.
manages the International Growth and Income Trust.
GROWTH AND INCOME TRUST
The investment objective of the Growth and Income Trust is to provide long-term
growth of capital and income consistent with prudent investment risk. Wellington
Management Company manages the Growth
18
<PAGE> 24
and Income Trust and seeks to achieve the Trust's objective by investing
primarily in a diversified portfolio of common stocks of U.S. issuers which
Wellington Management Company believes are of high quality.
EQUITY-INCOME TRUST
The investment objective of the Equity-Income Trust (prior to December 31, 1996,
the "Value Equity Trust") is to provide substantial dividend income and also
long-term capital appreciation. T. Rowe Price Associates, Inc. manages the
Equity-Income Trust and seeks to attain this objective by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital appreciation.
BALANCED PORTFOLIOS
BALANCED TRUST
The investment objective of the Balanced Trust is current income and capital
appreciation. Founders is the manager of the Balanced Trust and seeks to attain
this objective by investing in a balanced portfolio of common stocks, U.S. and
foreign government obligations and a variety of corporate fixed-income
securities.
AUTOMATIC ASSET ALLOCATION TRUSTS (AGGRESSIVE, MODERATE, AND CONSERVATIVE)
The investment objective of each of the Automatic Asset Allocation Trusts is to
realize the highest potential total return consistent with a specified level of
risk tolerance - conservative, moderate, or aggressive. The amount of each
Portfolio's assets invested in each category of securities - debt, equity, and
money market - is dependent upon the judgment of Fidelity Management Trust
Company as to what percentages of each Portfolio's assets in each category will
contribute to the limitation of risk and the achievement of its investment
objective.
BOND PORTFOLIOS
HIGH YIELD TRUST
The investment objective of High Yield Trust is to realize an above-average
total return over a market cycle of three to five years, consistent with
reasonable risk. MAS manages the High Yield Trust and seeks to attain this
objective by investing primarily in high yield debt securities, including
corporate bonds and other fixed-income securities.
STRATEGIC BOND TRUST
The investment objective of the Strategic Bond Trust is to seek a high level of
total return consistent with preservation of capital. The Strategic Bond Trust
seeks to achieve its objective by giving its Subadviser, Salomon Brothers Asset
Management Inc ("SBAM") broad discretion to deploy the Strategic Bond Trust's
assets among certain segments of the fixed-income market as SBAM believes will
best contribute to the achievement of the portfolio's objective.
GLOBAL GOVERNMENT BOND TRUST
The investment objective of the Global Government Bond Trust is to seek a high
level of total return by placing primary emphasis on high current income and the
preservation of capital. Oechsle International Advisors, LLC manages the Global
Government Bond Trust and intends to pursue this objective by investing
primarily in a selected global portfolio of high-quality, fixed-income
securities of foreign and U.S. governmental entities and supranational issuers.
CAPITAL GROWTH BOND TRUST
The investment objective of the Capital Growth Bond Trust is to achieve growth
of capital by investing in medium-grade or better debt securities, with income
as a secondary consideration. MAC manages the
19
<PAGE> 25
Capital Growth Bond Trust. The Capital Growth Bond Trust differs from most
"bond" funds in that its primary objective is capital appreciation, not income.
INVESTMENT QUALITY BOND TRUST
The investment objective of the Investment Quality Bond Trust is to provide a
high level of current income consistent with the maintenance of principal and
liquidity. Wellington Management Company manages the Investment Quality Bond
Trust and seeks to achieve the Trust's objective by investing primarily in a
diversified portfolio of investment grade corporate bonds and U.S. Government
bonds with intermediate to longer term maturities.
U.S. GOVERNMENT SECURITIES TRUST
The investment objective of the U.S. Government Securities Trust is to obtain a
high level of current income consistent with preservation of capital and
maintenance of liquidity. SBAM manages the U.S. Government Securities Trust and
seeks to attain its objective by investing a substantial portion of its assets
in debt obligations and mortgage-backed securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities and derivative securities
such as collateralized mortgage obligations backed by such securities.
MONEY MARKET PORTFOLIO
MONEY MARKET TRUST
The investment objective of the Money Market Trust is to obtain maximum current
income consistent with preservation of principal and liquidity. MAC manages the
Money Market Trust and seeks to achieve this objective by investing in high
quality, U.S. dollar denominated money market instruments.
LIFESTYLE PORTFOLIOS
LIFESTYLE AGGRESSIVE 1000 TRUST
The investment objective of the Lifestyle Aggressive 1000 Trust is to provide
long-term growth of capital. Current income is not a consideration. MAC manages
the Lifestyle Aggressive 1000 Trust and seeks to achieve this objective by
investing approximately 100% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE GROWTH 820 TRUST
The investment objective of the Lifestyle Growth 820 Trust is to provide
long-term growth of capital with consideration also given to current income. MAC
manages the Lifestyle Growth 820 Trust and seeks to achieve this objective by
investing approximately 20% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed-income securities and approximately
80% of the assets in Underlying Portfolios which invest primarily in equity
securities.
LIFESTYLE BALANCED 640 TRUST
The investment objective of the Lifestyle Balanced 640 Trust is to provide a
balance between high level of current income and growth of capital with a
greater emphasis given to capital growth. MAC manages the Lifestyle Balanced 640
Trust and seeks to achieve this objective by investing approximately 40% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed-income securities and approximately 60% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE MODERATE 460 TRUST
The investment objective of the Lifestyle Moderate 460 Trust is to provide a
balance between high level of current income and growth of capital with a
greater emphasis given to high income. MAC manages the Lifestyle Moderate 460
Trust and seeks to achieve this objective by investing approximately 60% of
20
<PAGE> 26
the Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed-income securities and approximately 40% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE CONSERVATIVE 280 TRUST
The investment objective of the Lifestyle Conservative 280 Trust is to provide a
high level of current income with some consideration also given to growth of
capital. MAC manages the Lifestyle Conservative 280 Trust and seeks to achieve
this objective by investing approximately 80% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed-income securities and
approximately 20% of its assets in Underlying Portfolios which invest primarily
in equity securities.
ISSUING A POLICY
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. A Policy
will not be issued until the underwriting process has been completed to the
Company's satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex and/or smoking status, with prior approval from the Company. A
Policy will generally be issued only on the lives of insureds from ages 0
through 90.
Each Policy is issued with a Policy Date, an Effective Date and an Issue Date
(see Definitions).
If an application is accompanied by a check for the initial premium and the
application is accepted:
(i) the Policy Date will be the date the application and check were
received at the Service Office (unless a special Policy Date is
requested (See "Backdating a Policy" below));
(ii) the Effective Date will be the date the Company's underwriters approve
issuance of the Policy; and
(iii) the Issue Date will be the date the Company issues the Policy.
If an application accepted by the Company is not accompanied by a check for the
initial premium:
(i) the Policy Date will be the date the Company issues the Policy (unless
a special Policy Date is requested (See "Backdating a Policy" below);
(ii) the Effective Date will be the date the Service Office receives the
initial premium; and
(iii) the Issue Date will be the date the Company issues the Policy.
The initial premium must be received within 60 days after the Policy Date. If
the premium is not paid or if the application is rejected, the Policy will be
canceled and any partial premiums paid will be returned to the applicant.
MINIMUM INITIAL FACE AMOUNT
Manulife New York will generally issue a Policy only if it has a Face Amount of
at least $250,000.
BACKDATING A POLICY
Under limited circumstances, the Company may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
However, in no event will a Policy be backdated more than six months before the
date of the application for the Policy. Monthly deductions will be made for the
period the Policy Date is backdated. Regardless of whether or not a policy is
backdated, Net
21
<PAGE> 27
Premiums received prior to the Effective Date of a Policy will be credited with
interest from the date of receipt at the rate of return then being earned on
amounts allocated to the Money Market portfolio.
TEMPORARY INSURANCE AGREEMENT
In accordance with the Company's underwriting practices, temporary insurance
coverage may be provided under the terms of a Temporary Insurance Agreement.
Generally, temporary life insurance may not exceed $5,000,000 and may not be in
effect for more than 90 days. This temporary insurance coverage will be issued
on a conditional receipt basis, which means that any benefits under such
temporary coverage will only be paid if the Lives Insured meet the Company's
usual and customary underwriting standards for the coverage applied for.
The acceptance of an application is subject to the Company's underwriting rules,
and the Company reserves the right to request additional information or to
reject an application for any reason.
Persons failing to meet standard underwriting classification may be eligible for
a Policy with an additional rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund within 10 days after it is received. The
Policy can be mailed or delivered to the Manulife New York agent who sold it or
to the Service Office. Immediately on such delivery or mailing, the Policy shall
be deemed void from the beginning. Within seven days after receipt of the
returned Policy at its Service Office, the Company will refund in full the
payment made.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If canceled, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place. A policyowner may request a refund of all or any portion of
premiums paid during the free look period, and the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the premiums not been paid.
If the Policy is purchased in connection with a replacement of an existing life
insurance policy (as defined below), the policyowner may also cancel the
contract by returning it the Service Office or the policyowner's insurance
representative at any time within 60 days after receipt of the Policy. Within 10
days of receipt of the Policy by the Company, the Company will pay the
policyowner the Policy Value, computed at the end of the valuation period during
which the Policy is received by the Company. In the case of a replacement of a
Policy issued by a New York insurance company, the policyowner may have the
right to reinstate the prior policy. The policyowner should consult with his or
her insurance agent or attorney regarding this matter prior to purchasing the
new Policy.
Replacement of an existing life insurance policy generally is defined
as the purchase of a new life insurance policy in connection with (a) the lapse,
surrender or change of, or borrowing from, an existing life insurance policy or
(b) the assignment to a new issuer of an existing life insurance policy. This
description, however, does not neccesarily cover all situations which could be
considered a replacement of an existing life insurance policy. Therefore, a
policyowner should consult with his or her insurance agent or attorney regarding
whether the purchase of a new life insurance policy is a replacement of an
existing life insurance policy.
The Company reserves the right to delay the refund of any premium paid by check
until the check has cleared.
DEATH BENEFITS
If the Policy is in force at the time of the death of the last-to-die of the
Lives Insured, the Company will pay an insurance benefit. The amount payable
will be the death benefit under the selected death benefit option, plus any
amounts payable under any supplementary benefits added to the Policy, less the
Policy
22
<PAGE> 28
Debt and less any outstanding monthly deductions due. The insurance
benefit will be paid in one lump sum unless another form of settlement option is
agreed to by the beneficiary and the Company. If the insurance benefit is paid
in one sum, the Company will pay interest from the date of death to the date of
payment. If the Life Insured should die after the Company's receipt of a request
for surrender, no insurance benefit will be payable, and the Company will pay
only the Net Cash Surrender Value.
LIFE INSURANCE QUALIFICATION
This product uses the Guideline Premium Test to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended.
GUIDELINE PREMIUM TEST
The Guideline Premium Test restricts the maximum premiums that may be paid into
a life insurance policy for a given death benefit. The policy's death benefit
must also be at least equal to the Minimum Death Benefit (described below).
Changes to the Policy may affect the maximum amount of premiums, such as:
- - A change in the policy's Face Amount.
- - A change in the death benefit option.
- - Partial Withdrawals.
- - Addition or deletion of supplementary benefits.
Any of the above changes could cause the total premiums paid to exceed the new
maximum limit. In this situation, the Company will require the policyowner to
take a partial withdrawal. In addition, these changes could reduce the future
premium limitations.
MINIMUM DEATH BENEFIT
The Guideline Premium Test requires a life insurance policy to meet minimum
ratios of life insurance coverage to policy value. This is achieved by ensuring
that the death benefit is at all times at least equal to the Minimum Death
Benefit. The Minimum Death Benefit on any date is defined as the Policy Value on
that date times the applicable Minimum Death Benefit Percentage for the Attained
Age of the youngest of the Lives Insured would have reached if living. The
Minimum Death Benefit Percentages are shown in the Table of Minimum Death
Benefit Percentages.
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
Attained Age Applicable Percentage
------------ ---------------------
<S> <C>
40 and under 250%
45 215%
50 185%
55 150%
60 130%
65 120%
70 115%
75 105%
90 105%
95 and above 100%
</TABLE>
To determine the Applicable Percentage in the above table, use the Attained Age
of the youngest of the Lives Insured, or the Attained Age such person would have
reached if living. For ages not shown, the Applicable Percentage can be found by
reducing the values proportionately
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<PAGE> 29
DEATH BENEFIT OPTIONS
There are two death benefit options, described below.
DEATH BENEFIT OPTION 1
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death or, if greater, the Minimum Death Benefit.
DEATH BENEFIT OPTION 2
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death or, if greater, the Minimum Death Benefit.
CHANGING THE DEATH BENEFIT OPTION
The death benefit option may be changed on the first day of any policy month
once each Policy Year after the first Policy Year. The change will occur on the
first day of the next Policy Month after a written request for a change is
received at the Service Office. The Company reserves the right to limit a
request for a change if the change would cause the Policy to fail to qualify as
life insurance for tax purposes.
A change in the death benefit option will result in a change in the Policy's
Face Amount, in order to avoid any change in the amount of the death benefit, as
follows:
CHANGE FROM OPTION 1 TO OPTION 2
The new Face Amount will be equal to the Face Amount prior to the change minus
the Policy Value as of the date of the change. The Policy will not be assessed a
Surrender Charge for a reduction in Face Amount solely due to a change in the
death benefit option.
CHANGE FROM OPTION 2 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change plus
the Policy Value as of the date of the change. No new Surrender Charges will
apply to an increase in Face Amount solely due to a change in the death benefit
option.
CHANGING THE FACE AMOUNT
Subject to the limitations stated in this Prospectus, a policyowner may, upon
written request, increase or decrease the Face Amount of the Policy. The Company
reserves the right to limit a change in Face Amount so as to prevent the Policy
from failing to qualify as life insurance for tax purposes.
INCREASE IN FACE AMOUNT
Increases in Face Amount may be made once each Policy Year after the first
Policy Year. Any increase in Face Amount must be at least $50,000. An increase
will become effective at the beginning of the policy month following the date
Manulife New York approves the requested increase. Increases in Face Amount are
subject to satisfactory evidence of insurability. The Company reserves the right
to refuse a requested increase if any of the Lives Insureds' Attained Age at the
effective date of the increase would be greater than the maximum issue age for
new Policies at that time.
NEW SURRENDER CHARGES FOR AN INCREASE
An increase in face amount will usually result in the Policy being subject to
new surrender charges. The new surrender charges will be computed as if a new
Policy were being purchased for the increase in face amount. There will be no
new surrender charges associated with restoration of a prior decrease in Face
Amount. As with the purchase of a Policy, a policyowner will have free look
right with respect to any increase resulting in new surrender charges.
An additional premium may be required for a face amount increase, and a new
No-Lapse Guarantee Premium will be determined, if the No-Lapse Guarantee is in
effect at the time of the face amount
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<PAGE> 30
increase.
INCREASE WITH PRIOR DECREASES
If, at the time of the increase, there have been prior decreases in Face Amount,
these prior decreases will be restored first. The insurance coverage eliminated
by the decrease of the oldest face amount will be deemed to be restored first.
DECREASE IN FACE AMOUNT
Decreases in Face Amount may be made once each Policy Year after the first
Policy Year. Any decrease in Face Amount must be at least $50,000. A written
request from a policy owner for a decrease in the Face Amount will be effective
at the beginning of the Policy Month following the date Manulife New York
approves the requested decrease. If there have been previous increases in Face
Amount, the decrease will be applied to the most recent increase first and
thereafter to the next most recent increases successively.
PREMIUM PAYMENTS
INITIAL PREMIUMS
No premiums will be accepted prior to receipt of a completed application by the
Company. All premiums received prior to the Effective Date of the Policy will be
held in the general account and credited with interest from the date of receipt
at the rate of return then being earned on amounts allocated to the Money Market
Trust.
The minimum initial premium is one-twelfth of the No-Lapse Guarantee Premium.
On the Effective Date, the Net Premiums paid plus interest credited will be
allocated among the Investment Accounts or the Fixed Account in accordance with
the policyowner's instructions.
SUBSEQUENT PREMIUMS
After the payment of the initial premium, premiums may be paid at any time and
in any amount until the Maturity Date, subject to the limitations on premium
amount described below.
A Policy will be issued with a planned premium, which is based on the amount of
premium the policyowner wishes to pay. Manulife New York will send notices to
the policyowner setting forth the planned premium at the payment interval
selected by the policyowner. However, the policyowner is under no obligation to
make the indicated payment.
The Company may refuse any premium payment that would cause the Policy to fail
to qualify as life insurance under the Internal Revenue Code. The Company also
reserves the right to request evidence of insurability if a premium payment
would result in an increase in the Death Benefit that is greater than the
increase in Policy Value.
Payment of premiums will not guarantee that the Policy will stay in force.
Conversely, failure to pay premiums will not necessarily cause the Policy to
lapse.
All Net Premiums received on or after the Effective Date will be allocated among
Investment Accounts or the Fixed Account as of the Business Day the premiums
were received at the Service Office. Monthly deductions are due on the Policy
Date and at the beginning of each Policy Month thereafter. However, if due prior
to the Effective Date, they will be taken on the Effective Date instead of the
dates they were due.
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<PAGE> 31
MAXIMUM PREMIUM LIMITATION
In no event may the total of all premiums paid exceed the then current maximum
premium limitations established by federal income tax law for a Policy to
qualify as life insurance.
If, at any time, a premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company will only accept
that portion of the premium which will make the total premiums equal to the
maximum. Any part of the premium in excess of that amount will be returned and
no further premiums will be accepted until allowed by the then current maximum
premium limitation.
PREMIUM ALLOCATION
Premiums may be allocated to either the Fixed Account for accumulation at a rate
of interest equal to at least 4% or to one or more of the Investment Accounts
for investment in the Portfolio shares held by the corresponding sub-account of
the Separate Account. Allocations among the Investment Accounts and the Fixed
Account are made as a percentage of the premium. The percentage allocation to
any account may be any number between zero and 100, provided the total
allocation equals 100. A policyowner may change the way in which premiums are
allocated at any time without charge. The change will take effect on the date a
written request for change satisfactory to the Company is received at the
Service Office.
CHARGES AND DEDUCTIONS
PREMIUM LOAD
Manulife New York deducts a premium load from each premium payment, equal to
7.50% of the premium.
SURRENDER CHARGES
The Company will deduct a Surrender Charge if during the first 15 years
following the Policy Date, or the effective date of a Face Amount increase:
- - the Policy is surrendered for its Net Cash Surrender Value,
- - a partial withdrawal is made in excess of the Withdrawal Tier Amount
(see below for a description of this amount),
- - An increase in Face Amount is canceled within two years of the increase
or
- - the Policy lapses.
SURRENDER CHARGE CALCULATION
The Surrender Charge for the initial Face Amount or for the amount of any
increase in Face Amount is determined by the following formula (the calculation
is also described in words below):
Surrender Charge = (Surrender Charge Rate)x(Grading Percentage)
Surrender Charge Rate (the calculation is also described in words
below)
Surrender Charge Rate = (Factor)x(Surrender Face Amount / 1000) +
(82.5%)x(Surrender Charge Premium)
Definitions of the Formula Factors Above
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<PAGE> 32
Surrender Face Amount
If the Face Amount at the time of surrender is equal to or less than the initial
Face Amount, then the Surrender Face Amount is equal to the Face Amount at the
time of surrender. However, if the Face Amount has increased, then the surrender
charge is calculated separately on (a) the initial Face Amount and (b) on the
amount of Face Amount above the initial Face Amount. In the case of (a), the
Surrender Face Amount is equal to the initial Face Amount and in the case of (b)
the Surrender Face Amount is equal to the Face Amount above the initial Face
Amount.
The Factor is set forth in the following chart:
<TABLE>
<CAPTION>
Issue Age Factor
--------- ------
<S> <C>
38 or younger 3.75
39 4.25
40 4.75
41 5.25
42 5.75
43 6.25
44 6.75
45 7.25
46 7.75
47 8.25
48 or older 8.75
</TABLE>
The Surrender Charge Premium is the lesser of:
(a) the premiums paid during the first policy year, and
(b) the Target Commission Premium specified in the Policy, and
(c) the Net Level Premium specified in the Policy.
Grading Percentage
The grading percentage is based on the issue age of the youngest insured and the
policy year in which the transaction causing the assessment of the charge occurs
as set forth in the table below:
SURRENDER CHARGE GRADING PERCENTAGE
<TABLE>
<CAPTION>
ISSUE AGES OF YOUNGER INSURED 0-75 76 77 78 79 80+
- ----------------------------- ---- -- -- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
AT ISSUE 100% 100% 100% 100% 100% 100%
POLICY YEAR 1 93% 92% 92% 91% 90% 90%
POLICY YEAR 2 86% 85% 84% 83% 81% 80%
POLICY YEAR 3 80% 78% 76% 75% 72% 70%
POLICY YEAR 4 73% 71% 69% 66% 63% 60%
POLICY YEAR 5 66% 64% 61% 58% 54% 50%
POLICY YEAR 6 60% 57% 53% 50% 45% 40%
POLICY YEAR 7 53% 50% 46% 41% 36% 30%
POLICY YEAR 8 46% 42% 38% 33% 27% 20%
POLICY YEAR 9 40% 35% 30% 25% 18% 10%
POLICY YEAR 10 33% 28% 23% 16% 9% 0%
POLICY YEAR 11 26% 21% 15% 8% 0%
POLICY YEAR 12 20% 14% 7% 0%
POLICY YEAR 13 13% 7% 0%
POLICY YEAR 14 6% 0%
POLICY YEAR 15 0%
</TABLE>
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<PAGE> 33
Formulas Described in Words
Surrender Charge
The Surrender Charge is determined by multiplying the Surrender Charge Rate by
the Grading Percentage, a percent which starts at 100% and grades down each
policy year to zero over a period not to exceed 15 years.
Surrender Charge Rate
The Surrender Charge Rate is equal to the sum of (a) plus (b) where (a) equals
the Factor multiplied by the Surrender Face Amount divided by 1000 and (b)
equals 82.5% times the Surrender Charge Premium.
Illustration of Surrender Charge Calculation
Assumptions
- - 50 year old male and 40 year old female (standard risks and nonsmoker
status)
- - Policy issued 7 years ago
- - $904 in premiums have been paid on the Policy in equal annual
installments over the 7 year period
- - Target Commission Premium for the Policy is $2,188
- - Net Level Premium for the Policy is $2,541
- - Face Amount of the Policy is $250,000
- - Policy is surrendered during the last month of the seventh policy year
Surrender Charge
The Surrender Charge to be assessed would be $1,933.30 determined as follows:
First, the Surrender Charge Rate is determined by applying the Surrender Charge
Rate formula as set forth below.
Surrender Charge Rate = (Factor) x (Surrender Face Amount / 1000) + (82.5%) x
(Surrender Charge Premium)
1933.30 = (4.75)x ($250,000 /1000) + (82.5%) x (904 )
The Surrender Charge Rate is equal to 1933.30.
Second, the Surrender Charge Rate is entered into the Surrender Charge formula
and the Surrender Charge is determined as set forth below.
Surrender Charge = (Surrender Charge Rate)x(Grading Percentage)
$1,025 = (1933.30) x (53%)
The Surrender Charge is equal to $1,025.
Manulife New York may reduce the surrender charge as described above on policies
where the anticipated annual premium is $100,000 or greater and the Policy is
issued as part of an employer sponsored split dollar or keyman arrangement; 80%
of the Surrender Charge will be waived during the
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<PAGE> 34
first year of the Policy, 60% during the second year and 40% during the third
year. The full Surrender Charge will be imposed if the surrender takes place in
a fourth or subsequent Policy Year.
SURRENDER CHARGES ON A PARTIAL WITHDRAWAL
A partial withdrawal will result in the assessment of a portion of the Surrender
Charges to which the Policy is subject. The portion of the Surrender Charges
assessed will be based on the ratio of the amount of the withdrawal which
exceeds the Withdrawal Tier Amount to the Net Cash Surrender Value of the Policy
immediately prior to the withdrawal. The Surrender Charges will be deducted from
the Policy Value at the time of the partial withdrawal on a pro-rata basis from
each of the Investment Accounts and the Fixed Account. If the amount in the
accounts is not sufficient to pay the Surrender Charges assessed, then the
amount of the withdrawal will be reduced.
Whenever a portion of the surrender charges is deducted as a result of a partial
withdrawal, the Policy's remaining surrender charges will be reduced in the same
proportion that the surrender charge deducted bears to the total surrender
charge immediately before the partial withdrawal.
WITHDRAWAL TIER AMOUNT
The Withdrawal Tier Amount is equal to 10% of the Net Cash Surrender Value as at
the last Policy Anniversary. In determining what, if any, portion of a partial
withdrawal is in excess of the Withdrawal Tier Amount, all previous partial
withdrawals that have occurred in the current Policy Year are included.
MONTHLY CHARGES
On the Policy Date and at the beginning of each Policy Month, a deduction is due
from the Net Policy Value to cover certain charges in connection with the Policy
until the Maturity Date. If there is a Policy Debt under the Policy, loan
interest and principal will continue to be payable at the beginning of each
Policy Month. Monthly deductions due prior to the Effective Date will be taken
on the Effective Date instead of the dates they were due. The charges consist
of:
(i) a monthly administration charge;
(ii) a monthly charge for the cost of insurance;
(iii) a monthly mortality and expense risk charge;
(iv) a monthly charge for any supplementary benefits added to the Policy.
Unless otherwise allowed by the Company and specified by the policyowner, the
Monthly Deduction will be allocated among the Investment Accounts and the Fixed
Account in the same proportion as the Policy value in each bears to the Net
Policy Value.
ADMINISTRATION CHARGE
This charge will be equal to $30 plus $0.08 per $1,000 of current face amount
per Policy Month in the first Policy Year. For all subsequent Policy Years, the
administration charge will not exceed $15 plus $0.02 per $1,000 of current face
amount per Policy Month. The charge is designed to cover certain administrative
expenses associated with the Policy, including maintaining policy records,
collecting premiums and processing death claims, surrender and withdrawal
requests and various changes permitted under the Policy.
COST OF INSURANCE CHARGE
The monthly charge for the cost of insurance is determined by multiplying the
applicable cost of insurance rate times the net amount at risk at the beginning
of each Policy Month. The cost of insurance rate and the net amount at risk are
determined separately for the initial Face Amount and for each increase in Face
Amount. In determining the net amount at risk, if there have been increases in
the Face Amount, the Policy Value shall first be considered a part of the
initial Face Amount. If the Policy Value exceeds the initial Face Amount, it
shall then be considered a part of the additional increases in Face Amount
resulting from the increases, in the order the increases occurred.
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<PAGE> 35
The net amount at risk is equal to the greater of zero, or the result of (a)
minus (b) where:
(a) is the death benefit as of the first day of the Policy Month, divided by
1.0032737; and
(b) is the Policy Value as of the first day of the Policy Month prior to
deduction of monthly cost of insurance.
The rates for the cost of insurance are blended and based upon the Attained Age,
sex, and Risk Classification of the Lives Insured.
Cost of insurance rates will generally increase with the age of each of the
Lives Insured. The first year cost of insurance rate is guaranteed.
The cost of insurance rates reflect the Company's expectations as to future
mortality experience. The rates may be re-determined from time to time on a
basis which does not unfairly discriminate within the class of Lives Insured. In
no event will the cost of insurance rates exceed the guaranteed rates set forth
in the Policy except to the extent that an extra charge is imposed because of an
additional rating applicable to the Lives Insured. After the first Policy Year,
the cost of insurance will generally increase on each Policy Anniversary. The
guaranteed rates are based on the 1980 Commissioners Standard Ordinary
Smoker/Non-Smoker Mortality Tables.
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge will be made applicable
to such Supplementary Benefit.
MORTALITY AND EXPENSE RISK CHARGE
A monthly charge is assessed against the Policy Value equal to a percentage of
the Policy Value. This charge is to compensate the Company for the mortality and
expense risks it assumes under the Policy. The mortality risk assumed is that
Lives Insured may live for a shorter period of time than the Company estimated.
The expense risk assumed is that expenses incurred in issuing and administering
the Policy will be greater than the Company estimated. The Company will realize
a gain from this charge to the extent it is not needed to provide benefits and
pay expenses under the Policy.
The charge varies by Policy Year as follows:
<TABLE>
<CAPTION>
Equivalent Annual
Current and Guaranteed Monthly Mortality and Expense
Policy Year Mortality and Risks Charge
Expense Risks Charge
<S> <C> <C>
1-20 0.063% 0.75%
21+ 0.033% 0.40%
</TABLE>
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a Policy
Year.
REDUCTION IN CHARGES
The Policy is available for purchase by corporations and other groups or
sponsoring organizations. Group or sponsored arrangements may include reduction
or elimination of withdrawal charges and deductions for employees, officers,
directors, agents, immediate family members of the foregoing, and
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<PAGE> 36
employees or agents of Manufacturers Life and its subsidiaries. Manulife New
York reserves the right to reduce any of the Policy's loads or charges on
certain cases where it is expected that the amount or nature of such cases will
result in savings of sales, underwriting, administrative, commissions or other
costs. Eligibility for these reductions and the amount of reductions will be
determined by a number of factors, including the number of lives to be insured,
the total premiums expected to be paid, total assets under management for the
policyowner, the nature of the relationship among the insured individuals, the
purpose for which the policies are being purchased, expected persistency of the
individual policies, and any other circumstances which Manulife New York
believes to be relevant to the expected reduction of its expenses. Some of these
reductions may be guaranteed and others may be subject to withdrawal or
modification, on a uniform case basis. Reductions in charges will not be
unfairly discriminatory to any policyowners. Manulife New York may modify from
time to time, on a uniform basis, both the amounts of reductions and the
criteria for qualification.
In addition, groups and persons purchasing under a sponsored arrangement may
apply for simplified underwriting. If simplified underwriting is granted, the
cost of insurance charge may increase as a result of higher anticipated
mortality experience.
SPECIAL PROVISIONS FOR EXCHANGES
The Company will permit owners of certain fixed life insurance policies issued
either by the Company or Manufacturers Life Insurance Company (U.S.A.) to
exchange their policies for the Policies described in this prospectus (and
likewise, owners of policies described in this Prospectus may also exchange
their Policies for certain fixed policies issued either by the Company or by
Manufacturers Life Insurance Company (U.S.A)). Policyowners considering an
exchange should consult their tax advisers as to the tax consequences of an
exchange.
COMPANY TAX CONSIDERATIONS
At the present time, the Company makes no charge to the Separate Account for any
federal, state, or local taxes that the Company incurs that may be attributable
to such Account or to the Policies. The Company, however, reserves the right in
the future to make a charge for any such tax or other economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policies.
POLICY VALUE
DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the policyowner
by making a policy loan or partial withdrawal, or upon surrender of the Policy.
The Policy Value may also affect the amount of the death benefit. The Policy
Value at any time is equal to the sum of the values in the Investment Accounts,
the Fixed Account, and the Loan Account.
INVESTMENT ACCOUNTS
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
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<PAGE> 37
FIXED ACCOUNT
Amounts in the Fixed Account do not vary with the investment performance of any
sub-account. Instead, these amounts are credited with interest at a rate
determined by Manulife New York. For a detailed description of the Fixed
Account, see "The General Account - Fixed Account".
LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account. Amounts in
the Loan Account do not vary with the investment performance of any sub-account.
Instead, these amounts are credited with interest at a rate which is equal to
the amount charged on the outstanding Policy Debt less the Loan Spread. For a
detailed description of the Loan Account, see "Policy Loans - Loan Account".
UNITS AND UNIT VALUES
CREDITING AND CANCELING UNITS
Units of a particular sub-account are credited to a Policy when net premiums are
allocated to that sub-account or amounts are transferred to that sub-account.
Units of a sub-account are canceled whenever amounts are deducted, transferred
or withdrawn from the sub-account. The number of units credited or canceled for
a specific transaction is based on the dollar amount of the transaction divided
by the value of the unit on the Business Day on which the transaction occurs.
The number of units credited with respect to a premium payment will be based on
the applicable unit values for the Business Day on which the premium is received
at the Service Office, except for any premiums received before the Effective
Date. For premiums received before the Effective Date, the values will be
determined on the Effective Date.
Units are valued at the end of each Business Day. When an order involving the
crediting or cancelling of units is received after the end of a Business Day, or
on a day which is not a Business Day, the order will be processed on the basis
of unit values determined on the next Business Day. Similarly, any determination
of Policy Value, Investment Account value or death benefit to be made on a day
which is not a Business Day will be made on the next Business Day.
UNIT VALUES
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value for that sub-account is determined by
multiplying the unit value for the immediately preceding Business Day by the net
investment factor for the that sub-account on such subsequent Business Day.
The net investment factor for a sub-account on any Business Day is equal to (a)
divided by (b) where:
(a) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of such Business Day before any policy transactions
are made on that day; and
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of the immediately preceding Business Day after all
policy transactions were made for that day;
The value of a unit may increase, decrease, or remain the same, depending on the
investment performance of a sub-account from one Business Day to the next.
TRANSFERS OF POLICY VALUE
At any time, a policyowner may transfer Policy Value from one sub-account to
another or to the Fixed Account. Transfer requests must be in writing in a
format satisfactory to the Company.
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<PAGE> 38
The Company reserves the right to impose limitations on transfers, including the
maximum amount that may be transferred. In addition, transfer privileges are
subject to any restrictions that may be imposed by the Trust.
While the Policy is in force, the policyowner may transfer the Policy Value from
any of the Investment Accounts to the Fixed Account without incurring transfer
charges:
(a) within eighteen months after the Issue Date; or
(b) within 60 days of the effective date of a material change in the
investment objectives of any of the sub-accounts or within 60 days of
the date of notification of such change, whichever is later.
TRANSFER CHARGES
A policyowner may make up to twelve transfers each Policy Year free of charge.
Additional transfers in each Policy Year may be made at a cost of $25 per
transfer. This charge will be deducted from the Investment Account or the Fixed
Account to which the transfer is being made. All transfer requests received by
the Company on the same Business Day are treated as a single transfer request.
TRANSFERS INVOLVING FIXED ACCOUNT
The maximum amount that may be transferred from the Fixed Account in any one
Policy Year is the greater of $500 or 15% of the Fixed Account Value at the
previous Policy Anniversary. Any transfer which involves a transfer out of the
Fixed Account may not involve a transfer to the Investment Account for the Money
Market Trust.
DOLLAR COST AVERAGING
The Company will offer policyowners a Dollar Cost Averaging program. Under the
Dollar Cost Averaging program the policyowner will designate an amount which
will be transferred at predetermined intervals from one Investment Account into
any other Investment Account(s) or the Fixed Account. Currently, no charge will
be made for this program. If insufficient funds exist to effect a Dollar Cost
Averaging transfer, the transfer will not be effected and the policyowner will
be so notified.
The Company reserves the right to cease to offer this program as of 90 days
after written notice is sent to the policyowner.
ASSET ALLOCATION BALANCER TRANSFERS
Under the Asset Allocation Balancer program the policyowner will designate an
allocation of Policy Value among Investment Accounts. At six-month intervals
beginning six months after the Policy Date, the Company will move amounts among
the Investment Accounts as necessary to maintain the policyowner's chosen
allocation. A change to the policyowner premium allocation instructions will
automatically result in a change in Asset Allocation Balancer instructions so
that the two are identical unless the policyowner either instructs Manulife New
York otherwise or has elected the Dollar Cost Averaging program. Currently,
there is no charge for this program; however, the Company reserves the right to
institute a charge on 90 days' written notice to the policyowner.
The Company reserves the right to cease to offer this program as of 90 days
after written notice is sent to the policyowner.
POLICY LOANS
At any time while this Policy is in force, a policyowner may borrow against the
Policy Value of the Policy. The amount of any loan cannot exceed 90% of the
Policy's Net Cash Surrender Value. The Policy serves as the only security for
the loan. Policy loans may have tax consequences, see "Tax Treatment of Policy
Benefits - Policy Loan Interest."
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<PAGE> 39
LOAN VALUE
The Loan Value is equal to the Policy's Net Cash Surrender Value less the
monthly deductions due to the next Policy Anniversary.
EFFECT OF POLICY LOAN
A policy loan will have an effect on future Policy Values, since that portion of
the Policy Value in the Loan Account will increase in value at the crediting
interest rate rather than varying with the performance of the underlying
Portfolios or increasing in value at the rate of interest credited for amounts
allocated to the Fixed Account. A policy loan may cause a Policy to be more
susceptible to going into default since a policy loan will be reflected in the
Net Cash Surrender Value. See "Lapse and Reinstatement." In addition, a policy
loan may result in a Policy's failing to satisfy the No-Lapse Guarantee
Cumulative Premium Test since the Policy Debt is subtracted from the sum of the
premiums paid in determining whether this test is satisfied. Finally, a policy
loan will affect the amount payable on the death of the last-to-die of the Lives
Insured, since the death benefit is reduced by the Policy Debt at the date of
death in arriving at the insurance benefit.
INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually on the
Policy Anniversary. The rate of interest charged will be an effective annual
rate of 5.75%. If the interest due on a Policy Anniversary is not paid by the
policyowner, the interest will be borrowed against the Policy.
The Policy will go into default at any time the Policy Debt exceeds the Policy
Value. At least 61 days prior to termination, the Company will send the
policyowner a notice of the pending termination. Payment of interest on the
Policy Debt during the 61 day grace period will bring the policy out of default.
LOAN ACCOUNT
When a loan is made, an amount equal to the loan will be deducted from the
Investment Accounts or the Fixed Account and transferred to the Loan Account.
The policyowner may designate how the amount to be transferred to the Loan
Account is allocated among the accounts from which the transfer is to be made.
In the absence of instructions, the amount to be transferred will be allocated
to each account in the same proportion as the value in each Investment Account
and the Fixed Account bears to the Net Policy Value. A transfer from an
Investment Account will result in the cancellation of units of the underlying
sub-account equal in value to the amount transferred from the Investment
Account. However, since the Loan Account is part of the Policy Value, transfers
made in connection with a loan will not change the Policy Value.
INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an effective annual
rate of at least 4.00%. The actual rate credited is equal to the rate of
interest charged on the policy loan less the Loan Interest Credited
Differential, which is currently 1.25% and guaranteed not to exceed this
percentage.
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the death of
the last-to-die of the Lives Insured, provided that the Policy is in force. When
a repayment is made, the amount is credited to the Loan Account and transferred
to the Fixed Account or the Investment Accounts. Loan repayments will be
allocated first to the Fixed Account until the associated Loan sub-account is
reduced to zero and then to each Investment Account in the same proportion as
the value in the corresponding Loan Sub-Account bears to the value of the Loan
Account.
Amounts paid to the Company not specifically designated in writing as loan
repayments will be treated as premiums.
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<PAGE> 40
POLICY SURRENDER AND PARTIAL WITHDRAWALS
POLICY SURRENDER
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the Life Insured is living. The Net Cash Surrender Value is equal to the Policy
Value less any surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value") minus the Policy Debt. If there have been any prior Face
Amount increases, the Surrender Charge will be the sum of the Surrender Charge
for the Initial Face Amount plus the Surrender Charge for each increase. The Net
Cash Surrender Value will be determined as of the end of the Business Day on
which Manulife New York receives the Policy and a written request for surrender
at its Service Office. After a Policy is surrendered, the insurance coverage and
all other benefits under the Policy will terminate.
PARTIAL WITHDRAWALS
A policyowner may make a partial withdrawal of the Net Cash Surrender Value once
each Policy Month after the first Policy Anniversary. The policyowner may
specify the portion of the withdrawal to be taken from each Investment Account
and the Fixed Account. In the absence of instructions, the withdrawal will be
allocated among such accounts in the same proportion as the Policy Value in each
account bears to the Net Policy Value. For information on Surrender Charges on a
Partial Withdrawal see "Charges and Deductions - Surrender Charges."
REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
If Death Benefit Option 1 is in effect when a partial withdrawal is made, the
Face Amount of the Policy will be reduced by the amount of the withdrawal plus
any applicable Surrender Charges.
If the death benefit is based upon the Policy Value times the minimum death
benefit percentage set forth under "Death Benefit - Minimum Death Benefit," the
Face Amount will be reduced only to the extent that the amount of the withdrawal
plus the portion of the Surrender Charge assessed exceeds the difference between
the death benefit and the Face Amount. When the Face Amount of a Policy is based
on one or more increases subsequent to issuance of the Policy, a reduction
resulting from a partial withdrawal will be applied in the same manner as a
requested decrease in Face Amount, i.e., against the Face Amount provided by the
most recent increase, then against the next most recent increases successively
and finally against the initial Face Amount.
LAPSE AND REINSTATEMENT
LAPSE
Unless the No-Lapse Guarantee is in effect, a Policy will go into default if at
the beginning of any Policy Month the Policy's Net Cash Surrender Value would be
zero or below after deducting the monthly deduction then due. Therefore, a
Policy could lapse eventually if increases in Policy Value (prior to deduction
of Policy charges) are not sufficient to cover Policy charges. A lapse could
have adverse tax consequences as described under "Tax Treatment of the Policy -
Tax Treatment of Policy Benefits - Surrender or Lapse." Manulife New York will
notify the policyowner of the default and will allow a 61 day grace period in
which the policyowner may make a premium payment sufficient to bring the Policy
out of default. The required payment will be equal to the amount necessary to
bring the Net Cash Surrender Value to zero, if it was less than zero on the date
of default, plus the monthly deductions due at the date of default and payable
at the beginning of each of the two Policy Months thereafter, plus any
applicable premium load. If the required payment is not received by the end of
the grace period, the Policy will terminate with no value.
NO-LAPSE GUARANTEE
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As long as the No-Lapse Guarantee Cumulative Premium Test is satisfied during
the No-Lapse Guarantee Period, as described below, the Company will guarantee
that the Policy will not go into default, even if adverse investment experience
or other factors should cause the Policy's Net Cash Surrender Value to be
insufficient to meet the monthly deductions due at the beginning of a Policy
Month.
The Monthly No-Lapse Guarantee Premium is one-twelfth of the No-Lapse Guarantee
Premium.
The No-Lapse Guarantee Premium is set at issue and reflects any Additional
Rating and Supplementary Benefits, if applicable. It is subject to change if the
face amount of the Policy is changed, if there is a Death Benefit Option change,
or if there is any change in the supplementary benefits added to the Policy or
in the risk classification of any Lives Insured because of a change in smoking
status.
The No-Lapse Guarantee Period is fixed at five years.
While the No-Lapse Guarantee is in effect, the Company will determine at the
beginning of the Policy Month that your policy would otherwise be in default,
whether the No-Lapse Guarantee Cumulative Premium Test, described below, has
been met. If it has not been satisfied, the Company will notify the policyowner
of that fact and allow a 61-day grace period in which the policyowner may make a
premium payment sufficient to keep the policy from going into default. This
required payment, as described in the notification to the policyowner, will be
equal to the lesser of:
(a) the outstanding premium requirement to satisfy the No-Lapse Guarantee
Cumulative Premium Test at the date of default, plus the Monthly
No-Lapse Guarantee Premium due for the next two Policy Months, or
(b) the amount necessary to bring the Net Cash Surrender Value to zero plus
the monthly deductions due, plus the next two monthly deductions plus
the applicable premium load.
If the required payment is not received by the end of the grace period, the
No-Lapse Guarantee and the Policy will terminate.
NO-LAPSE GUARANTEE CUMULATIVE PREMIUM TEST
The No-Lapse Guarantee Cumulative Premium Test is satisfied if, as of the
beginning of the Policy Month that your policy would otherwise be in default,
the sum of all premiums paid to date less any gross withdrawals and less any
policy debt, is at least equal to the sum of the Monthly No-Lapse Guarantee
Premiums due from the Policy Date to the date of the test.
DEATH DURING GRACE PERIOD
If the Life Insured should die during the grace period, the Policy Value used in
the calculation of the death benefit will be the Policy Value as of the date of
default and the insurance benefit will be reduced by any outstanding Monthly
Deductions due at the time of death.
REINSTATEMENT
A policyowner can reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination without
furnishing evidence of insurability, subject to the following conditions:
(a) All Lives Insured's risk classifications are standard or preferred, and
(b) All Lives Insured's Attained Ages are less than 46.
A policyowner can reinstate a Policy which has terminated after going into
default at any time within the
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five-year period following the date of termination subject to the following
conditions:
(a) Evidence of all Lives Insured's insurability, or on the survivor(s) who were
insured at the end of the grace period, satisfactory to the Company is provided
to the Company;
(b) A premium equal to the amount that was required to bring the Policy out of
default immediately prior to termination, plus the next two monthly deductions;
(c) The Policy cannot be reinstated if any of the Lives Insured die after the
Policy has terminated.
If the reinstatement is approved, the date of reinstatement will be the later of
the date the Company approves the policyowner's request or the date the required
payment is received at the Company's Service Office. In addition, any surrender
charges will be reinstated to the amount they were at the date of default. The
Policy Value on the date of reinstatement, prior to the crediting of any Net
Premium paid on the reinstatement, will be equal to the Policy Value on the date
the Policy terminated.
THE GENERAL ACCOUNT
The general account of Manulife New York consists of all assets owned by the
Company other than those in the Separate Account and other separate accounts of
the Company. Subject to applicable law, Manulife New York has sole discretion
over the investment of the assets of the general account.
By virtue of exclusionary provisions, interests in the general account of
Manulife New York have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the general account nor any
interests therein are subject to the provisions of these acts, and as a result
the staff of the S.E.C. has not reviewed the disclosures in this prospectus
relating to the general account. Disclosures regarding the general 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
a prospectus.
FIXED ACCOUNT
A policyowner may elect to allocate net premiums to the Fixed Account or to
transfer all or a portion of the Policy Value to the Fixed Account from the
Investment Accounts. Manulife New York will hold the reserves required for any
portion of the Policy Value allocated to the Fixed Account in its general
account. Transfers from the Fixed Account to the Investment Accounts are subject
to restrictions.
POLICY VALUE IN THE FIXED ACCOUNT
The Policy Value in the Fixed Account is equal to:
(a) the portion of the net premiums allocated to it; plus
(b) any amounts transferred to it; plus
(c) interest credited to it; less
(d) any charges deducted from it; less
(e) any partial withdrawals from it; less
(f) any amounts transferred from it.
INTEREST ON THE FIXED ACCOUNT
An allocation of Policy Value to the Fixed Account does not entitle the
policyowner to share in the investment experience of the general account.
Instead, Manulife New York guarantees that the Policy Value in the Fixed Account
will accrue interest daily at an effective annual rate of at least 4%, without
regard to the actual investment experience of the general account. Consequently,
if a policyowner pays the planned premiums, allocates all net premiums only to
the general account and makes no transfers,
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partial withdrawals, or policy loans, the minimum amount and duration of the
death benefit of the Policy will be determinable and guaranteed.
OTHER PROVISIONS OF THE POLICY
POLICYOWNER RIGHTS
Unless otherwise restricted by a separate agreement, the policyowner may:
- - Vary the premiums paid under the Policy.
- - Change the death benefit option.
- - Change the premium allocation for future premiums.
- - Transfer amounts between sub-accounts.
- - Take loans and/or partial withdrawals.
- - Surrender the contract.
- - Transfer ownership to a new owner.
- - Name a contingent owner that will automatically become owner if the
policyowner dies before the insured.
- - Change or revoke a contingent owner.
- - Change or revoke a beneficiary.
ASSIGNMENT OF RIGHTS
Manulife New York will not be bound by an assignment until it receives a copy of
the assignment at its Service Office. Manulife New York assumes no
responsibility for the validity or effects of any assignment.
BENEFICIARY
One or more beneficiaries of the Policy may be appointed by the policyowner by
naming them in the application. Beneficiaries may be appointed in three classes
- - primary, secondary, and final. Beneficiaries may also be revocable or
irrevocable. Unless an irrevocable designation has been elected, the beneficiary
may be changed by the policyowner during the Lives Insured lifetime by giving
written notice to Manulife New York in a form satisfactory to the Company. The
change will take effect as of the date such notice is signed. If the Life
Insured dies and there is no surviving beneficiary, the policyowner, or the
policyowner's estate if the policyowner is the Life Insured, will be the
beneficiary. If a beneficiary dies before the seventh day after the death of the
Life Insured, the Company will pay the insurance benefit as if the beneficiary
had died before the Life Insured.
INCONTESTABILITY
Manulife New York will not contest the validity of a Policy after it has been in
force during any Lives Insured's lifetime for two years from the Issue Date. It
will not contest the validity of an increase in Face Amount, after such increase
or addition has been in force during the lifetime of the Lives Insured for two
years. If a Policy has been reinstated and been in force during the lifetime of
the Lives Insured for less than two years from the reinstatement date, the
Company can contest any misrepresentation of a fact material to the
reinstatement.
MISSTATEMENT OF AGE OR SEX
If the stated age or sex or both of any of the Lives Insured in the Policy are
incorrect, Manulife New York will change the Face Amount so that the death
benefit will be that which the most recent monthly charge for the cost of
insurance would have purchased for the correct age and sex.
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SUICIDE EXCLUSION
If any of the Lives Insured dies by suicide within two years after the Issue
Date, the Policy will terminate and the Company will pay only the premiums paid
less any partial Net Cash Surrender Value withdrawal and less any Policy Debt.
If any of the Lives Insured dies by suicide within two years after the effective
date of an applied for increase in Face Amount, the Company will credit the
amount of any Monthly Deductions taken for the increase and reduce the Face
Amount to what it was prior to the increase. If the last death is by suicide,
the Death Benefit for that increase will be limited to the Monthly Deductions
taken for the increase.
The Company reserve the right to obtain evidence of the manner and cause of
death of the Lives Insured.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including the Estate Preservation Rider which provides additional
term insurance at no extra charge during the first four Policy Years to protect
against application of the "three year contemplation of death" rule and an
option to split the Policy into two individual policies upon divorce, or certain
federal tax law changes without evidence of insurability (the "Policy Split
Option"). More detailed information concerning these supplementary benefits may
be obtained from an authorized agent of the Company. The cost of any
supplementary benefits will be deducted as part of the monthly deduction.
CONVERSION PRIVILEGE
The Policy may be converted to a fixed paid-up benefit at any Policy
Anniversary, without evidence of insurability. This conversion privilege is
subject to the following conditions:
(a) no further Monthly Deductions will be taken from the Policy Value after
the date of conversion,
(b) the Investment Account values as well as the the Death Benefit, Policy
Value and any other values based on Policy Value will be determined as
of the Business Day on which the Company receives a written request for
conversion of the Policy,
(c) the basis for determining the amount of paid-up life insurance will be
the Commissioners 1980 Standard Ordinary Smoker or Non-Smoker Mortality
Table and an interest rate of 4% per year,
(d) the Policy may not be reinstated after the date of the conversion.
TAX TREATMENT OF THE POLICY
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 the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax laws nor of the
current interpretations by the Service. MANULIFE NEW YORK DOES NOT MAKE ANY
GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY OR ANY TRANSACTION REGARDING
THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuation 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
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circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on the tax
consequences, is contemplated, a qualified tax adviser should be consulted for
advice on the tax attributes of the particular arrangement.
LIFE INSURANCE QUALIFICATION
There are several requirements that must be met for a Policy to be considered a
Life Insurance Contract under the Internal Revenue Code, and thereby to enjoy
the tax benefits of such a contract:
1. The Policy must satisfy the definition of life insurance under Section
7702 of the Internal Revenue Code of 1986 (the "Code").
2. The investments of the Separate Account must be "adequately
diversified" in accordance with Section 817(h) of the Code and Treasury
Regulations.
3. The Policy must be a valid life insurance contract under applicable
state law.
4. The Policyowner must not possess "incidents of ownership" in the assets
of the Separate Account.
These four items are discussed in detail below.
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance contract
for federal tax purposes. For a Policy to be a life insurance contract, it must
satisfy either the Cash Value Accumulation Test or the Guideline Premium Test.
The Cash Value Accumulation Test requires a minimum death benefit for a given
Policy Value. The Guideline Premium Test also requires a minimum death benefit,
but in addition limits the total premiums that can be paid into a Policy for a
given amount of death benefit.
With respect to a Policy which is issued on the basis of a standard rate class,
the Company believes (largely in reliance on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702, issued on July 5, 1991) 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 rate
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how 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. Thus it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyowner pays
the full amount of premiums permitted under the Policy.
The Secretary of the Treasury (the "Treasury") is authorized to prescribe
regulations implementing Section 7702. However, while proposed regulations and
other interim guidance have been issued, final regulations have not been adopted
and 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 a Policy would not provide the tax advantages normally provided by a
life insurance policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt to
cause such a Policy to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as necessary to attempt to
qualify it as a life insurance contract under Section 7702.
DIVERSIFICATION
Section 817(h) of the Code requires that the investments of the Separate Account
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
Code (discussed above). The Separate Account, through the Trust, intends to
comply with the diversification requirements prescribed in Treas. Reg. Sec.
1.817-5, which affect how the Trust's assets are to be invested. The Company
believes that the Separate Account will
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thus meet the diversification requirement, and the Company will monitor
continued compliance with the requirement.
STATE LAW
State regulations require that the policyowner have appropriate insurable
interest in the Life Insured. Failure to establish an insurable interest may
result in the Policy not qualifying as a life insurance contract for federal tax
purposes.
INVESTOR CONTROL
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the policyowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
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 policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyowners may direct their
investments to particular sub-accounts without being treated as owners of the
underlying assets". As of the date of this prospectus, no such guidance has been
issued.
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 policyowners were not owners of separate account assets. For example, the
policyowner has additional flexibility in allocating premium payments and Policy
Values. These differences could result in an owner being treated as the owner of
a pro-rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
TAX TREATMENT OF POLICY BENEFITS
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes. The Company believes that
the proceeds and cash value increases of a Policy should be treated in a manner
consistent with a fixed-benefit life insurance policy for federal income tax
purposes.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, partial withdrawal, surrender,
change in ownership, the addition of an accelerated death benefit rider, 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 depend on the circumstances of each policyowner or
beneficiary.
DEATH BENEFIT
The death benefit under the Policy should be excludible from the gross income of
the beneficiary under Section 101(a)(1) of the Code.
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CASH VALUES
Generally, the policyowner will not be deemed to be in constructive receipt of
the Policy Value until there is a distribution. This includes additions
attributable to interest, dividends, appreciation or gains realized on transfers
among sub-accounts.
INVESTMENT IN THE POLICY
Investment in the Policy means:
(a) the aggregate amount of any premiums or other consideration paid for a
Policy; minus
(b) the aggregate amount, other than loan amounts, received under the
Policy which has been excluded from the gross income of the policyowner
(except that the amount of any loan from, or secured by, a Policy that
is a MEC, to the extent such amount has been excluded from gross
income, will be disregarded); plus
(c) the amount of any loan from, or secured by a Policy that is a MEC to
the extent that such amount has been included in the gross income of
the policyowner.
The repayment of a policy loan, or the payment of interest on a loan, does not
affect the Investment in the Policy.
SURRENDER OR LAPSE
Upon a complete surrender or lapse of a Policy or when benefits are paid at a
Policy's Maturity Date, if the amount received plus the amount of Policy Debt
exceeds the total investment in the Policy, the excess will generally be treated
as ordinary income subject to tax.
If, at the time of lapse, a Policy has a loan, the loan is extinguished and the
amount of the loan is a deemed payment to the policyholder. If the amount of
this deemed payment exceeds the investment in the contract, the excess is
taxable income and is subject to Internal Revenue Service reporting
requirements."
DISTRIBUTIONS
The tax consequences of distributions from, and loans taken from or secured by,
a Policy depend on whether the Policy is classified as a "Modified Endowment
Contract" or "MEC".
DISTRIBUTIONS FROM NON-MEC'S
A distribution from a non-MEC is generally treated as a tax-free recovery by the
policyowner of the Investment in the Policy to the extent of such Investment in
the Policy, and as a distribution of taxable income only to the extent the
distribution exceeds the Investment in the Policy. Loans from, or secured by, a
non-MEC are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyowner.
Force Outs
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 policyowner in order for the Policy to continue to
comply 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. Changes include partial
withdrawals and death benefit option changes.
DISTRIBUTIONS FROM MEC'S
Policies classified as MEC's will be subject to the following tax rules:
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(a) First, all partial withdrawals from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess (if
any) of the Policy Value immediately before the distribution over the
Investment in the Policy at such time.
(b) Second, loans taken from or secured by such a Policy are treated as
partial withdrawals from the Policy and taxed accordingly. Past-due
loan interest that is added to the loan amount is treated as a loan.
(c) Third, a 10% additional income tax is imposed on the portion of any
distribution (including distributions on surrender) from, or loan taken
from or secured by, such a policy that is included in income except
where the distribution or loan:
(i) is made on or after the policyowner attains age 59 1/2;
(ii) is attributable to the policyowner becoming disabled; or
(iii) is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the policyowner or the
joint lives (or joint life expectancies) of the policyowner
and the policyowner's beneficiary.
These exceptions are not likely to apply in situations where the Policy is not
owned by an individual.
Definition of Modified Endowment Contracts
Section 7702A establishes a class of life insurance contracts designated as
"Modified Endowment Contracts," which applies to Policies entered into or
materially changed after June 20, 1988.
In general, a Policy will be a Modified Endowment Contract if the accumulated
premiums paid at any time during the first seven Policy Years exceed the
"seven-pay premium limit". The seven-pay premium limit on any date is equal to
the sum of the net level premiums that would have been paid on or before such
date if the policy provided for paid-up future benefits after the payment of
seven level annual premiums (the "seven-pay premium").
The rules relating to whether a Policy will be treated as a MEC are extremely
complex and cannot be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyowner should consult with a
competent adviser to determine whether a transaction will cause the Policy to be
treated as a MEC.
Material Changes
A policy that is not a MEC may become a MEC if it is "materially changed". If
there is a material change to the policy, the seven year testing period for MEC
status is restarted. The material change rules for determining whether a Policy
is a MEC are complex. In general, however, the determination of whether a Policy
will be a MEC after a material change generally depends upon the relationship
among the death benefit of the Policy at the time of such change, the Policy
Value at the time of the change, and the additional premiums paid into the
Policy during the seven years starting with the date on which the material
change occurs.
Reductions in Face Amount
If there is a reduction in benefits during any Policy Year, the seven-pay
premium limit is recalculated as if the policy had been originally issued at the
reduced benefit level. Failure to comply would result in classification as a MEC
regardless of any efforts by the Company to provide a payment schedule that will
not violate the seven pay test.
Exchanges
A life insurance contract received in exchange for a MEC will also be treated as
a MEC.
Processing of Premiums
If a premium is received which would cause the Policy to become a MEC within 23
days of the next Policy Anniversary, the Company will not apply the portion of
the premium which would cause MEC status ("excess premium") to the Policy when
received. The excess premium will be placed in a
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suspense account until the next anniversary date, at which point the excess
premium, along with interest, earned on the excess premium at a rate of 3.5%
from the date the premium was received, will be applied to the Policy. The
policyowner will be advised of this action and will be offered the opportunity
to have the premium credited as of the original date received or to have the
premium returned. If the policyowner does not respond, the premium and interest
will be applied to the Policy as of the first day of the next anniversary.
If a premium is received which would cause the Policy to become a MEC more than
23 days prior to the next Policy Anniversary, the Company will refund any excess
premium to the policyowner. The portion of the premium which is not excess will
be applied as of the date received. The policyowner will be advised of this
action and will be offered the opportunity to return the premium and have it
credited to the account as of the original date received.
Multiple Policies
All MEC's that are issued by a Company (or its affiliates) to the same
policyowner during any calendar year are treated as one MEC for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
POLICY LOAN INTEREST
Generally, personal interest paid on any loan under a Policy which is owned by
an individual is not deductible. For policies purchased on or after January 1,
1996, interest on any loan under a Policy owned by a taxpayer and covering the
life of any individual who is an officer or employee of or is financially
interested in the business carried on by the taxpayer will not be tax deductible
unless the employee is a key person within the meaning of Section 264 of the
Code. A deduction will not be permitted for interest on a loan under a Policy
held on the life of a key person to the extent the aggregate of such loans with
respect to contracts covering the key person exceed $50,000. The number of
employees who can qualify as key persons depends in part on the size of the
employer but cannot exceed 20 individuals.
Furthermore, if a non-natural person owns a Policy, or is the direct or indirect
beneficiary under a Policy, section 264(f) of the Code disallows a pro-rata
portion of the taxpayer's interest expense allocable to unborrowed Policy cash
values attributable to insurance held on the lives of individuals who are not
20% (or more) owners of the taxpayer-entity, officers, employees, or former
employees of the taxpayer.
The portion of the interest expense that is allocable to unborrowed Policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed Policy cash values under such life insurance
policies bear to the average adjusted bases for all assets of the taxpayer.
If the taxpayer is not the Policyowner, but is the direct or indirect
beneficiary under the Policy, then the amount of unborrowed cash value of the
Policy taken into account in computing the portion of the taxpayer's interest
expense allocable to unborrowed Policy cash values cannot exceed the benefit to
which the taxpayer is directly or indirectly entitled under the Policy.
POLICY EXCHANGES
A policyowner generally will not recognize gain upon the exchange of a Policy
for another life insurance policy issued by the Company or another insurance
company, except to the extent that the policyowner receives cash in the exchange
or is relieved of Policy indebtedness as a result of the exchange. In no event
will the gain recognized exceed the amount by which the Policy Value (including
any unpaid loans) exceeds the policyowner's Investment in the Policy.
OTHER TRANSACTIONS
A transfer of the Policy, a change in the owner, a change in the beneficiary,
and certain other changes to the Policy, as well as particular uses of the
Policy (including use in a so called "split-dollar" arrangement) may have tax
consequences depending upon the particular circumstances and should not be
undertaken
44
<PAGE> 50
prior to consulting with a qualified tax adviser. For instance, if the owner
transfers the Policy or designates a new owner in return for valuable
consideration (or, in some cases, if the transferor is relieved of a liability
as a result of the transfer), then the Death Benefit payable upon the death of
the Insured may in certain circumstances be includible in taxable income to the
extent that the Death Benefit exceeds the prior consideration paid for the
transfer and any premiums or other amounts subsequently paid by the transferee.
Further, in such a case, if the consideration received exceeds the transferor's
Investment in the Policy, the difference will be taxed to the transferor as
ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the individual
circumstances of each policyowner and beneficiary.
ALTERNATE MINIMUM TAX
Corporate owners may be subject to Alternate Minimum Tax on the annual increases
in Cash Surrender Values and on the Death Benefit proceeds.
INCOME TAX REPORTING
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
(a) the value each year of the life insurance protection provided;
(b) an amount equal to any employer-paid premiums; or
(c) some or all of the amount by which the current value exceeds the
employer's interest in the Policy.
Participants should consult with their tax adviser to determine the tax
consequences of these arrangements.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manulife New York will ordinarily pay any
policy loans, surrenders, partial withdrawals or insurance benefit within seven
days after receipt at its Service Office of all the documents required for such
a payment. The Company may delay for up to six months the payment from the Fixed
Account of any policy loans, surrenders, partial withdrawals, or insurance
benefit. In the case of any such payments from any Investment Account, the
Company may delay payment during any period during which (i) the New York Stock
Exchange is closed for trading (except for normal weekend and holiday closings),
(ii) trading on the New York Stock Exchange is restricted, (iii) an emergency
exists as a result of which disposal of securities held in the Separate Account
is not reasonably practicable or it is not reasonably practicable to determine
the value of the Separate Account's net assets; provided that applicable rules
and regulations of the SEC shall govern as to whether the conditions described
in (ii) and (iii) exist.
REPORTS TO POLICYOWNERS
Within 30 days after each Policy Anniversary, Manulife New York will send the
policyowner a statement showing, among other things:
- - the amount of death benefit;
- - the Policy Value and its allocation among the Investment Accounts, the
Fixed Account and the Loan Account;
- - the value of the units in each Investment Account to which the Policy
Value is allocated;
- - the Policy Debt and any loan interest charged since the last report;
- - the premiums paid and other Policy transactions made during the period
since the last report; and
- - any other information required by law.
45
<PAGE> 51
Each policyowner will also be sent an annual and a semi-annual report for the
Trust which will include a list of the securities held in each Portfolio as
required by the 1940 Act.
DISTRIBUTION OF THE POLICIES
MSS, a Delaware limited liability company organized on October 1, 1997, whose
principal offices are located at 73 Tremont Street, Boston, Massachusetts 02108,
will act as the principal underwriter of, and continuously offer, the Policies
pursuant to a Distribution Agreement with Manulife New York. MSS is a subsidiary
of Manulife North America, the ultimate parent of which is Manulife, a Canadian
mutual life insurance company. MSS is registered as a broker-dealer under the
Securities Exchange Act of 1934, is a member of the National Association of
Securities Dealers and is duly appointed and licensed as an insurance agent of
Manulife New York. The managing member of MSS is Manulife North America.
Manulife North America in its capacity as managing member is authorized to act
on behalf of MSS. The Policies will be sold by registered representatives of
broker-dealers having distribution agreements with MSS who are also licensed by
the New York State Insurance Department and appointed with Manulife New York.
A registered representative will receive commissions not to exceed 105% of
premiums in the first year, 2% of all premiums paid in the second year and
after, and after the second anniversary 0.15% of the Policy Value per year.
Representatives who meet certain productivity standards with regard to the sale
of the Policies and certain other policies issued by Manulife New York or
Manufacturers Life will be eligible for additional compensation.
RESPONSIBILITIES OF MANUFACTURERS LIFE
Manulife New York has entered into an agreement with MSS pursuant to which MSS
will pay selling broker dealers maximum commission and expense allowance
payments pursuant to limitations imposed by New York Insurance Law. Manulife New
York will prepare and maintain all books and records required to be prepared and
maintained by MSS with respect to the Policies and such other policies, and send
all confirmations required to be sent by MSS with respect to the Policies and
such other policies. Manulife New York will pay MSS for expenses incurred and
services performed by MSS under the terms of the agreement in such amounts and
at such times as agreed to by the parties.
Manulife has also entered into a Service Agreement with Manulife New York
pursuant to which Manulife or its designee will provide to Manulife New York all
issue, administrative, general services and recordkeeping functions on behalf of
Manulife New York with respect to all of its insurance policies including the
Policies.
Finally, Manufacturers USA has entered into a reinsurance agreement with
Manulife New York under which Manufacturers USA automatically reinsures policies
issued by Manulife New York, such that total risk to Manulife New York is
limited to $100,000 for the life of the insured.
VOTING RIGHTS
As stated previously, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of the Trust.
Manulife New York is the legal owner of those shares and as such has the right
to vote upon certain matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual fund and to vote upon any other matters
that may be voted upon at a shareholders' meeting. However, Manulife New York
will vote shares held in the sub-accounts in accordance with instructions
received from policyowners having an interest in such sub-accounts. Shares held
in each sub-account for which no timely instructions from policyowners are
received, including shares not attributable to the Policies, will be voted by
Manulife New York in the same proportion as those shares in that sub-account for
which instructions are received. Should the applicable federal securities laws
or regulations change so as to permit Manulife New York to vote shares held in
the Separate Account in its own right, it may elect to do so.
46
<PAGE> 52
The number of shares in each sub-account for which instructions may be given by
a policyowner is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Portfolio. The number will be determined as of a date chosen by
Manulife New York, but not more than 90 days before the shareholders' meeting.
Fractional votes are counted. Voting instructions will be solicited in writing
at least 14 days prior to the meeting.
Manulife New York may, if required by state officials, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment policies of one or more
of the Portfolios, or to approve or disapprove an investment management
contract. In addition, the Company itself may disregard voting instructions that
would require changes in the investment policies or investment adviser, provided
that Manulife New York reasonably disapproves such changes in accordance with
applicable federal regulations. If Manulife New York does disregard voting
instructions, it will advise policyowners of that action and its reasons for
such action in the next communication to policyowners.
SUBSTITUTION OF PORTFOLIO SHARES
It is possible that in the judgment of the management of Manulife New York, one
or more of the Portfolios may become unsuitable for investment by the Separate
Account because of a change in investment policy or a change in the applicable
laws or regulation, because the shares are no longer available for investment,
or for some other reason. In that event, Manulife New York may seek to
substitute the shares of another Portfolio or of an entirely different mutual
fund. Before this can be done, the approval of the S.E.C. and one or more state
insurance departments may be required.
Manulife New York also reserves the right (i) to combine other separate accounts
with the Separate Account, (ii) to create new separate accounts, (iii) to
establish additional sub-accounts within the Separate Account to invest in
additional portfolios of the Trust or another management investment company,
(iv) to eliminate existing sub-accounts and to stop accepting new allocations
and transfers into the corresponding portfolio, (v) to combine sub-accounts or
to transfer assets in one sub-account to another sub-account or (vi) to transfer
assets from the Separate Account to another separate account and from another
separate account to the Separate Account. The Company also reserves the right to
operate the Separate Account as a management investment company or other form
permitted by law, and to de-register the Separate Account under the 1940 Act.
Any such change would be made only if permissible under applicable federal and
state law.
RECORDS AND ACCOUNTS
The Service Office will perform administrative functions, such as decreases,
increases, surrenders and partial withdrawals, and fund transfers on behalf of
the Company.
All records and accounts relating to the Separate Account and the Portfolios
will be maintained by the Company. All financial transactions will be handled by
the Company. All reports required to be made and information required to be
given will be provided by the Company.
STATE REGULATIONS
Manulife New York is subject to the regulation and supervision by the New York
Department of Insurance, which periodically examines its financial condition and
operations. It is also subject to the insurance laws and regulations of all
jurisdictions in which it is authorized to do business. The Policies have been
filed with insurance officials, and meet all standards set by law, in each
jurisdiction where they are sold.
Manulife New York is required to submit annual statements of its operations,
including financial statements, to the insurance departments of the various
jurisdictions in which it does business for the purposes of determining solvency
and compliance with local insurance laws and regulations.
47
<PAGE> 53
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or the Trust.
ACCOUNTANTS
The financial statements of The Manufacturers Life Insurance Company of New York
and Separate Account B of The Manufacturers Life Insurance Company of New York
at December 31, 1997 and for the year then ended appearing in this prospectus
have been audited by Ernst & Young L.L.P., independent auditors to the extent
indicated in their reports thereon also appearing elsewhere herein. Such
financial statements have been included herein in reliance upon such reports
given upon the authority of such firms as experts in auditing and accounting.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the S.E.C. 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 from the SEC's principal
office in Washington D.C. upon payment of the prescribed fee. The Commission
also maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission which is located at http://www.sec.gov.
For further information you may also contact Manulife New York's Home Office,
the address and telephone number of which are on the first page of the
prospectus.
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH THE COMPANY PRINCIPAL OCCUPATION
<S> <C> <C>
Bruce Avedon Director* Consultant (self-employed).
6601 Hitching Post Lane
Cincinnati, OH 45230
Age: 68
John D. DesPrez III Director* Senior Vice President, Annuities, Manulife,
73 Tremont Street September 1996 to present; Director and
Boston, MA 02108 President, Manulife North America, September
Age: 41 1996 to present; Vice President, Mutual
Funds, Manulife, January, 1995 to September
1996; President and Chief Executive Officer,
North American Funds, March 1993 to September
1996; Vice President and General Counsel,
Manulife North America, January 1991 to June
1994.
Ruth Ann Fleming Director* Homemaker.
145 Western Drive
Short Hills, NJ 07078
Age: 39
Bruce Gordon Director* Senior Vice President, North American Group
200 Bloor Street East Pensions, Manulife.
Toronto, Ontario, Canada
M4W 1E5
Age: 53
</TABLE>
48
<PAGE> 54
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH THE COMPANY PRINCIPAL OCCUPATION
<S> <C> <C>
Tracy A. Kane Secretary and Counsel Assistant Vice President and Senior Counsel,
73 Tremont Street Manulife North America, April 1993 to
Boston, MA 02108 present; Counsel, Fidelity Investments, prior
Age: 36 to April 1993.
Theodore Kilkuskie Director* Senior Vice President, U.S. Individual
73 Tremont Street Insurance, Manulife, June 1995 to present;
Boston, MA 02108 Executive Vice President, Mutual Fund Sales &
Age: 42 Marketing, State Street Research &
Management, March 1994 to May 1995; Vice
President, Mutual Fund Sales & Marketing,
MetLife, prior to March 1994.
David W. Libbey Treasurer Vice President, Finance, Manulife North
73 Tremont Street America, June 1997 to present; Vice President
Boston, MA 02108 and Actuary, Second Vice President and
Age: 49 Actuary, Paul Revere Insurance Group, June
1970 to March 1997.
Neil M. Merkl, Esq. Director* Attorney (self-employed), April 1994 to
35-35 161st Street present; Partner, Wilson Elser, Etc., 1979 to
Flushing, NY 11358 1994.
Age: 66
Robert C. Perez, Ph.D. Director* Associate Professor, Iona College, Hagen
715 North Avenue Business School.
New Rochelle, NY 01801
Age: 70
John Richardson Director and Chairman of the Board Executive Vice President and General Manager,
200 Bloor Street East of Directors* U.S. Operations, Manulife, January 1995 to
Toronto, Ontario, Canada present; Senior Vice President and General
M4W 1E5 Manager, Canadian Operations, Manulife, June
Age: 59 1992 to January 1995; Senior Vice President,
Financial Services, Manulife, prior to June
1992.
James K. Robinson Director* Attorney, Assistant Secretary, Eastman Kodak
7 Summit Drive Company.
Rochester, NY 14620
Age: 70
A. Scott Logan Director* and President Director and President, Wood Logan
1455 East Putnam Avenue Associates, Inc. Senior Vice President and
Old Greenwich, CT 06870 National Marketing Director, Massachusetts
Age: 59 Financial Services.
</TABLE>
49
<PAGE> 55
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH THE COMPANY PRINCIPAL OCCUPATION
<S> <C> <C>
John G. Vrysen Vice President and Chief Actuary Vice President and Chief Financial Officer,
73 Tremont Street U.S. Operations, Manulife, January 1996 to
Boston, MA 02108 present; prior to January 1996, Vice
Age: 42 President and Chief Actuary, Manulife North
America.
</TABLE>
50
<PAGE> 56
IMPACT OF YEAR 2000
Preparing computer systems to deal with the Year 2000 risk has become a
major issue for businesses throughout the world. Within Manufacturers Life, a
group-wide program has been underway since 1996 to make all critical systems
compliant by the end of 1998 and other systems compliant by the end of 1999.
Included in this program are all system applicable to and shared by the Company
with Manufacturers Life. Based on a detailed assessment, Manufacturers Life
determined that a portion of its software needs to be modified or replaced so
that its computer systems will function properly into the Year 2000 and beyond.
Like most companies, the Year 2000 issue represents a significant challenge for
Manufacturers Life and extensive resources have been dedicated to modifying
existing software and to converting to new software. However, there can be no
assurances that Manufacturers Life's systems, nor those of other companies on
which Manufacturers Life relies, will be fully converted on a timely basis and
therefore that all adverse effect on the Company due to the Year 2000 risk will
be avoided. Manufacturers Life is presently consulting with vendors, customers,
subsidiaries, third-parties and other businesses with which it deals to ensure
that no material aspect of its, or the Company's, operations will be hindered by
the Year 2000 risk.
The costs of the project and the date on which Manufacturers Life plans
to complete the modifications are based on management's best estimates and are
subject to some uncertainty. Manufacturers Life is using both internal and
external resources to reprogram, or replace, and test the software for Year 2000
modifications. The total cost of this program to Manufacturers Life is estimated
to be $64 million, comprised of $55 million for specifically budgeted programs
and $9 million for general contingencies. Manufacturers Life has incurred $15
million as at December 31, 1997 of which the Company will receive an allocation
due to its shared systems. The costs allocated are not expected to have a
material effect on the net operating income of the Company.
ILLUSTRATIONS
The following tables illustrate the way in which a Policy's Death Benefit,
Policy Value, and Cash Surrender Value could vary over an extended period of
time.
[To Be Provided by Amendment]
51
<PAGE> 57
PART II.
OTHER INFORMATION
UNDERTAKINGS
Undertaking to File Reports.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940, as amended
The Manufacturers Life Insurance Company of New York (the "Corporation") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Corporation.
Rule 484 Undertaking.
Article 10 of the Charter of the Corporation provides as follows:
TENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for damages for any breach of duty as a
director; provided, however, the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to such director established his or her such acts or omissions were in
bad faith or involved intentional misconduct or were acts or omissions (a) which
he or she knew or reasonably should have known violated the New York Insurance
Law or (b) which violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York Insurance Law (or
any regulations promulgated thereunder) or (c) which constituted a knowing
violation of any other law, or establishes that the director personally gained
in fact a financial profit or other advantage to which the director was not
legally entitled or (ii) the liability of a director for any act or omission
prior to the adoption of this Article by the shareholders of the Corporation.
Any repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Article VII of the By-laws of the Corporation provides as follows:
Section VII.1. Indemnification of Directors and Officers. The Corporation may
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she, his or her testator, testatrix or intestate, is or was
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him or her in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Corporation, except that no indemnification under this
Section shall be made in respect of (1) a threatened action, or a pending action
which is settled
<PAGE> 58
or is otherwise disposed of, or (2) any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation, unless and only
to the extent that the court in which the action was brought, or, if no action
was brought, any court of competent jurisdiction, determines upon application
that, in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
The Corporation may indemnify any person made, or threatened to be made, a party
to an action or proceeding (other than one by or in the right of the Corporation
to procure a judgment in its favor), whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that he or
she, his or her testator, testatrix or intestate, was a director or officer of
the Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he or she reasonably believed to be in, or, in the
case of service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the best
interests of the Corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
The termination of any such civil or criminal action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, of its equivalent,
shall not in itself create a presumption that any such director or officer did
not act, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interest of the Corporation or that he or she had reasonable cause to
believe that his or her conduct was unlawful.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
Cross-Reference Sheet;
The Prospectus, consisting of 51 pages;
Undertaking to file reports;
Representation pursuant to Section 26 of the Investment Company Act of
1940, as amended;
Rule 484 Undertaking;
The signatures;
Written consents of the following persons: [to be filed by amendment]
<PAGE> 59
Tracy A. Kane, Esq.
John G. Vrysen
Ernst & Young, LLP
The following exhibits are filed as part of this Registration Statement:
1. Copies of all exhibits required by paragraph A of the instructions as to
exhibits in Form N-8B-2 are set forth below under designations based on such
instructions:
A(1) Resolutions of Board of Directors of First North American Life
Assurance Company establishing FNAL Variable Life Account I.
Incorporated by reference to Exhibit A(1) to the initial
registration statement on Form S-6 filed by FNAL Variable Life
Account I on August 8, 1997 (File No. 333-33351).
A(2) Not applicable.
A(3)(a) Underwriting and Distribution Agreement between The
Manufacturers Life Insurance Company of New York (Depositor)
and Manufacturers Securities Services, LLC (Underwriter).
Incorporated by reference to Exhibit (b)(3)(a) to
post-effective amendment no. 7 to the Registration Statement
on Form N-4 filed by The Manufacturers Life Insurance Company
of New York Separate Account A on February 25, 1998 (File No.
33-46217).
A(3)(b) Selling Agreement between The Manufacturers Life Insurance
Company of New York, Manufacturers Securities Services, LLC,
Selling Broker Dealers and General Agent. Incorporated by
reference to Exhibit (b)(3)(b) to post-effective amendment no.
7 to the Registration Statement on Form N-4 filed by The
Manufacturers Life Insurance Company of New York Separate
Account A on February 25, 1998 (File No. 33-46217).
A(3)(c) Not applicable.
A(4) Not applicable.
A(5) Form of Flexible Premium Variable Life Insurance Policy. Filed
herewith.
A(6)(a)(i) Declaration of Intention and Charter of First North American
Life Assurance Company. Incorporated by reference to Exhibit
(b)(6)(a)(i) to post-effective amendment no. 7 to the
Registration Statement on Form N-4 filed by The Manufacturers
Life Insurance Company of New York Separate Account A on
February 25, 1998 (File No. 33-46217).
A(6)(a)(ii) Certificate of amendment of the Declaration of Intention and
Charter of First North American Life Assurance Company.
Incorporated by reference to Exhibit (b)(6)(a)(ii) to
post-effective amendment no. 7 to the Registration Statement
on Form N-4 filed by The Manufacturers Life Insurance Company
of New York Separate Account A on February 25, 1998 (File No.
33-46217).
A(6)(a)(ii) Certificate of amendment of the Declaration of Intention and
Charter of The Manufacturers Life Insurance Company of New
York. Incorporated by reference to Exhibit (b)(6)(a)(iii) to
post-effective amendment no. 7 to the Registration Statement
on Form N-4 filed by The Manufacturers Life Insurance Company
of New York Separate Account A on February 25, 1998 (File No.
33-46217).
A(6)(b) By-Laws of The Manufacturers Life Insurance Company of New
York. Incorporated by reference to Exhibit (b)(6)(b) to
post-effective amendment no. 7 to the Registration
<PAGE> 60
Statement on Form N-4 filed by The Manufacturers Life
Insurance Company of New York Separate Account A on February
25, 1998 (File No. 33-46217).
A(7) Not applicable.
A(8)(a) Form of Reinsurance Agreement between The Manufacturers Life
Insurance Company of New York and The Manufacturers Life
Insurance Company (USA). Incorporated by reference to Exhibit
A(8)(a) to pre-effective amendment no. 1 to the Registration
Statement on Form S-6 filed by The Manufacturers Life
Insurance Company of New York Separate Account B on March 17,
1998 (File No. 333-33351).
A(8)(b) Administrative Services Agreement between The Manufacturers
Life Insurance Company of New York and The Manufacturers Life
Insurance Company. Incorporated by reference to Exhibit
(b)(8)(a) to post-effective amendment no. 7 to the
Registration Statement on Form N-4 filed by The Manufacturers
Life Insurance Company of New York Separate Account A on
February 25, 1998 (File No. 33-46217).
A(8)(c) Investment Services Agreement between The Manufacturers Life
Insurance Company of New York and The Manufacturers Life
Insurance Company. Incorporated by reference to Exhibit
A(8)(c) to pre-effective amendment no. 1 to the Registration
Statement on Form S-6 filed by The Manufacturers Life
Insurance Company of New York Separate Account B on March 17,
1998 (File No. 333-33351).
A(9) Not applicable.
A(10) Form of Application for Flexible Premium Variable Life
Insurance Policy. [To be Filed by Amendment].
2. Consents of the following: [to be filed by amendment]
A. Opinion and consent of Tracy A. Kane, Esq., Secretary
and Counsel of The Manufacturers Life Insurance
Company of New York
B. Consent of John G. Vrysen, Chief Actuary of The
Manufacturers Life Insurance Company of New York
C. Consent of Ernst & Young, LLP
3. No financial statements are omitted from the prospectus
pursuant to instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable.
6. Memorandum Regarding Issuance, Face Amount Increase,
Redemption and Transfer Procedures for the Policies. [to be
filed by amendment].
7. Power of Attorney. Incorporated by reference to Exhibit
(b)(14) to post-effective amendment no. 7 to the Registration
Statement on Form N-4 filed by The Manufacturers Life
Insurance Company of New York Separate Account A on February
25, 1998 (File No. 33-46217).
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE
ACCOUNT B has duly caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the city of Boston, and Commonwealth of
Massachusetts, on the 30th day of December, 1998.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NEW YORK SEPARATE ACCOUNT B
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK
(Depositor)
By: A. Scott Logan
_______________
A. Scott Logan
President
Attest
Tracy A. Kane
_____________
Tracy A. Kane
Secretary
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, this registration
statement has been signed by the following persons in the capacities indicated
on this 30th day of December, 1998.
SIGNATURE TITLE DATE
A. Scott Logan President and Director **
______________ (Principal Executive ______
A. Scott Logan Officer) (Date)
* Chairman of the Board **
__________________ of Directors ______
John D. Richardson (Date)
* Director **
____________________ ______
John D. DesPrez, III (Date)
* Director **
_________________ ______
Ruth Ann Flemming (Date)
* Director **
_____________ ______
Neil M. Merkl (Date)
* Director **
_______________ ______
Robert C. Perez (Date)
* Director **
_________________ ______
James K. Robinson (Date)
* Director **
__________________ ______
Theodore Kilkuskie (Date)
* Director **
____________ ______
Bruce Avedon (Date)
* Director **
____________ ______
Bruce Gordon (Date)
David W. Libbey Treasurer (Principal **
_______________ Financial and Accounting ______
David W. Libbey Officer) (Date)
*By: Tracy A. Kane **
_____________ ______
Tracy A. Kane (Date)
Attorney-in-Fact Pursuant
to Powers of Attorney
**December 30, 1998
<PAGE> 63
EXHIBIT INDEX
Exhibit No. Description
A(5) Form of Flexible Premium Variable Life Insurance Policy
<PAGE> 1
LIVES INSURED JOHN M. DOE
MARY C. DOE
POLICY NUMBER 12 345 678
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY. PAYABLE ON DEATH
OF THE LAST-TO-DIE OF THE LIVES INSURED. ADJUSTABLE DEATH BENEFIT. FLEXIBLE
PREMIUMS PAYABLE TO THE MATURITY DATE OR UNTIL LAST DEATH, IF EARLIER.
CASH SURRENDER VALUES AND BENEFITS FOR A PORTION OF THE POLICY VALUES ALLOCATED
TO AN INVESTMENT ACCOUNT REFLECT THE INVESTMENT EXPERIENCE OF THE UNDERLYING
SUB-ACCOUNTS. INVESTMENT OPTIONS ARE DESCRIBED IN THE "POLICY VALUE COMPOSITION"
AND THE "INVESTMENT OPTIONS" PROVISIONS. NON-PARTICIPATING (NOT ELIGIBLE FOR
DIVIDENDS).
In this policy "you" and "your" refer to the owner(s) of the policy. "We", "us"
and "our" refer to The Manufacturers Life Insurance Company of New York.
If at least one of the Lives Insured is living on the Maturity Date, we will pay
you the Net Cash Surrender Value of the policy.
If all of the Lives Insured die while the policy is in force, on the last death
we will pay the Insurance Benefit to the beneficiary, subject to the provisions
of the policy. The Lives Insured and the beneficiary are named in the Policy
Information section of this policy and in the application for this policy, a
copy of which is attached to this policy. The death benefit is described in the
"Insurance Benefit" provision.
The Insurance Benefit is payable following the death of the last-to-die of the
Lives Insured. However, you must give us proof of each death as soon as it
occurs. Proof of death for all the Lives Insured is important for us to
accurately determine benefits under the policy.
YOUR NET PREMIUMS ARE ADDED TO YOUR POLICY VALUE. YOU MAY ALLOCATE THEM TO ONE
OR MORE OF THE INVESTMENT ACCOUNTS AND TO THE FIXED ACCOUNT.
THE PORTION OF YOUR POLICY VALUE THAT IS IN AN INVESTMENT ACCOUNT WILL VARY FROM
DAY TO DAY. THE AMOUNT IS NOT GUARANTEED; IT MAY INCREASE OR DECREASE, DEPENDING
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING SUB-ACCOUNTS FOR THE INVESTMENT
ACCOUNTS THAT YOU HAVE CHOSEN.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE FIXED ACCOUNT WILL ACCUMULATE,
AFTER DEDUCTIONS, AT RATES OF INTEREST WE DETERMINE. SUCH RATES WILL NOT BE LESS
THAN AN EFFECTIVE ANNUAL RATE OF 4%.
THE AMOUNT OF THE INSURANCE BENEFIT, OR THE DURATION OF THE INSURANCE COVERAGE,
OR BOTH, MAY BE VARIABLE OR FIXED UNDER SPECIFIED CONDITIONS AND MAY INCREASE OR
DECREASE AS DESCRIBED IN THE "INSURANCE BENEFIT" PROVISION.
READ YOUR POLICY CAREFULLY. IT IS A CONTRACT BETWEEN YOU AND US.
RIGHT TO RETURN POLICY. WITHIN TEN DAYS AFTER YOU RECEIVE YOUR POLICY, YOU CAN
RETURN THE POLICY FOR CANCELLATION BY DELIVERING OR MAILING IT TO US OR THE
AGENT WHO SOLD IT. IMMEDIATELY ON DELIVERY OR MAILING, THE POLICY WILL BE VOID
FROM THE BEGINNING. WE WILL REFUND IN FULL THE PAYMENT MADE.
[MANULIFE LETTERHEAD]
/s/ A. Scott Logan Tracy A. Kane
President Secretary
<PAGE> 2
TABLE OF CONTENTS
PAGE
Policy Information.............................................................3
Table Of Guaranteed Maximum Cost Of Insurance Rates............................4
Definitions....................................................................5
Payment Of Premiums............................................................6
No-Lapse Guarantee.............................................................7
Policy Termination.............................................................7
Reinstatement..................................................................8
Maturity Date..................................................................8
Insurance Benefit..............................................................9
Policy Value..................................................................10
Policy Value Composition......................................................11
Separate Account And Sub-Accounts.............................................12
Investment Options............................................................13
Policy Loan Conditions........................................................14
Changing The Death Benefit Option Or The Face Amount..........................16
Surrender And Withdrawals.....................................................17
Conversion Privilege..........................................................19
Right To Postpone Payment Of Benefits.........................................19
Right To Cancel Increases.....................................................19
Suicide.......................................................................20
Beneficiary...................................................................20
Ownership And Assignment......................................................20
Protection Against Creditors..................................................21
Currency And Place Of Payment.................................................21
Contract......................................................................21
Validity......................................................................21
Non-Participating.............................................................21
Age And Sex...................................................................21
Flexible Factors..............................................................22
How Values Are Computed.......................................................22
Annual Statement..............................................................22
Tax Considerations............................................................22
Any endorsements, any supplementary benefits, and a copy of the application,
follow page 22.
Page 2
<PAGE> 3
POLICY INFORMATION
LIVES INSURED NO. 1 - JOHN M. DOE AGE AT POLICY DATE: 35
NO. 2 - MARY C. DOE AGE AT POLICY DATE: 35
POLICY NUMBER 12 345 678 POLICY DATE: JAN 1, 1998
ISSUE DATE: FEB 1, 1998
MATURITY DATE: JAN 1, 2063
OWNER JOHN M. DOE AND MARY C. DOE, JOINTLY IF LIVING,
OTHERWISE THE SURVIVOR
BENEFICIARY AS DESIGNATED IN THE APPLICATION OR SUBSEQUENTLY
CHANGED
PREMIUM MODE ANNUALLY
BEGINNING ON
MON DAY YEAR PLANNED PREMIUM
JAN 01 1998 $800.00
LIFE INSURANCE COVERAGE MAY EXPIRE PRIOR TO THE MATURITY DATE IF PREMIUMS PAID
ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.
KEEPING THE POLICY AND COVERAGE IN FORCE WILL BE AFFECTED BY FACTORS SUCH AS:
CHANGES IN THE CURRENT COST OF INSURANCE RATES; THE AMOUNT, TIMING AND FREQUENCY
OF PREMIUM PAYMENTS; THE INTEREST RATE BEING CREDITED TO THE FIXED ACCOUNT; THE
INVESTMENT EXPERIENCE OF THE SUB-ACCOUNTS; CHANGES TO THE DEATH BENEFIT OPTION;
CHANGES IN THE FACE AMOUNT; LOAN ACTIVITY; PARTIAL WITHDRAWALS; AND DEDUCTIONS
FOR ANY ATTACHED RIDERS. ALSO REFER TO THE POLICY TERMINATION PROVISION OF YOUR
POLICY.
SUBJECT TO THE GUARANTEES OF THIS POLICY, WE RESERVE THE RIGHT TO CHANGE THE
CURRENT COST OF INSURANCE RATE DEDUCTIONS AND THE CURRENT INTEREST RATE BEING
CREDITED TO THE FIXED ACCOUNT. THESE CHANGES MAY REQUIRE MORE PREMIUM TO BE PAID
THAN THE PLANNED PREMIUM SHOWN, OR CAUSE THE CASH VALUE TO BE LESS THAN WAS
ILLUSTRATED.
PLAN DETAILS, RISK CLASSIFICATION AND ADDITIONAL RATING ARE SHOWN ON THE NEXT
PAGE.
PAGE 3.0A
<PAGE> 4
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
LIVES INSURED NO. 1 - JOHN M. DOE
NO. 2 - MARY C. DOE
POLICY NUMBER 12 345 678
PLAN FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
INSURANCE PAYABLE ON DEATH OF THE
LAST-TO-DIE OF THE LIVES INSURED
NON-PARTICIPATING
FACE AMOUNT $250,000.00
DEATH BENEFIT OPTION 1
SEX NO. 1 - MALE
NO. 2 - FEMALE
RISK
CLASSIFICATION NO. 1 - NON-SMOKER,STANDARD CLASS
NO. 2 - NON-SMOKER,STANDARD CLASS
ADDITIONAL
RATING NO. 1 - NOT APPLICABLE
NO. 2 - NOT APPLICABLE
PAGE 3.0B
<PAGE> 5
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
TABLE OF CHARGES
PREMIUM LOAD:
7.5% OF EACH PREMIUM PAID IN EACH POLICY YEAR.
MONTHLY ADMINISTRATION CHARGE:
FOR THE FIRST POLICY YEAR THE CHARGE IS $30.00 PLUS $0.08 FOR EACH
$1,000 OF CURRENT FACE AMOUNT. THE CURRENT FACE AMOUNT IN ANY POLICY
MONTH IS THE FACE AMOUNT OF INSURANCE INITIALLY PURCHASED, PLUS OR
MINUS ADJUSTMENTS FOR INCREASES AND DECREASES. FOR ALL SUBSEQUENT
POLICY YEARS, A CHARGE NOT TO EXCEED $15.00 PLUS $0.02 FOR EACH $1,000
OF CURRENT FACE AMOUNT WILL APPLY.
MORTALITY AND EXPENSE RISKS CHARGE:
0.063% IS DEDUCTED MONTHLY FROM EACH INVESTMENT ACCOUNT VALUE FOR 20
YEARS AND THEN REDUCES TO 0.033% THEREAFTER. THIS REDUCTION IN THE
CHARGE IS GUARANTEED.
MONTHLY COST OF INSURANCE CHARGE:
SEE THE MONTHLY DEDUCTIONS SECTION OF THE POLICY VALUE PROVISION FOR
DETAILS. THE COST OF ANY SUPPLEMENTARY BENEFIT IS DESCRIBED IN THE
SUPPLEMENTARY BENEFIT PAGE ATTACHED TO THIS POLICY.
PAGE 3.1A
<PAGE> 6
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
TABLE OF CHARGES (CONTINUED)
SURRENDER CHARGE:
A SURRENDER CHARGE WILL BE DEDUCTED FROM YOUR POLICY VALUE UNDER CERTAIN
CONDITIONS AND WILL REDUCE OVER TIME ACCORDING TO THE GRADING PERCENTAGES SHOWN
IN THE TABLE BELOW. SEE THE POLICY VALUE, CHANGING THE DEATH BENEFIT OPTION OR
FACE AMOUNT, SURRENDER AND WITHDRAWALS PROVISIONS FOR DETAILS.
THE SURRENDER CHARGE IS DETERMINED AS FOLLOWS:
FOR THE INITIAL FACE AMOUNT:
(I) 3.75 MULTIPLIED BY EACH $1,000 OF FACE AMOUNT; PLUS
(II) 82.5% OF THE SUM OF PREMIUMS PAID IN THE FIRST POLICY YEAR, UP TO THE
SURRENDER CHARGE PREMIUM LIMIT SHOWN ON PAGE 3.2.
FOR AN INCREASE IN FACE AMOUNT, THE SURRENDER CHARGE WILL BE NO GREATER THAN:
(I) THE FACTOR APPLICABLE TO THE YOUNGEST OF THE LIVES INSURED'S ATTAINED
AGE AT THE DATE OF THE INCREASE AS DETERMINED FROM THE TABLE ON PAGE
3.1C, MULTIPLIED BY EACH $1,000 OF FACE AMOUNT INCREASE; PLUS
(II) THE SURRENDER CHARGE PREMIUM LIMIT FOR THE INCREASE.
TABLE OF GRADING PERCENTAGES DURING THE SURRENDER CHARGE PERIOD
(APPLIES TO THE INITIAL FACE AMOUNT AND SEPARATELY TO EACH SUBSEQUENT
FACE AMOUNT INCREASE)
<TABLE>
<CAPTION>
* POLICY ** AGE AND GRADING PERCENTAGE
YEAR 0-75 76 77 78 79 80+
<S> <C> <C> <C> <C> <C> <C>
1 93% 92% 92% 91% 90% 90%
2 86% 85% 84% 83% 81% 80%
3 80% 78% 76% 75% 72% 70%
4 73% 71% 69% 66% 63% 60%
5 66% 64% 61% 58% 54% 50%
6 60% 57% 53% 50% 45% 40%
7 53% 50% 46% 41% 36% 30%
8 46% 42% 38% 33% 27% 20%
9 40% 35% 30% 25% 18% 10%
10 33% 28% 23% 16% 9% 0%
11 26% 21% 15% 8% 0%
12 20% 14% 7% 0%
13 13% 7% 0%
14 6% 0%
15 0%
</TABLE>
* PERIODS SHOWN ARE AFTER END OF POLICY YEAR.
** AGE FOR THE INITIAL FACE AMOUNT REFERS TO THE ISSUE AGE OF THE
YOUNGEST OF THE LIVES INSURED UNDER THIS POLICY AT ISSUE; OR
FOR A SUBSEQUENT FACE AMOUNT INCREASE, AGE REFERS TO THE
ATTAINED AGE OF THE YOUNGEST OF THE LIVES INSURED AT THE TIME
OF THE INCREASE.
PAGE 3.1B
<PAGE> 7
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
TABLE OF CHARGES (CONTINUED)
TABLE OF GUARANTEED SURRENDER CHARGE FACTORS PER $1,000 OF FACE AMOUNT INCREASE
YOUNGEST OF THE LIVES
INSURED'S ATTAINED AGE FACTOR
38 AND UNDER 3.75
39 4.25
40 4.75
41 5.25
42 5.75
43 6.25
44 6.75
45 7.25
46 7.75
47 8.25
48 AND OLDER 8.75
PAGE 3.1C
<PAGE> 8
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
TABLE OF VALUES
REFER TO YOUR POLICY PROVISIONS FOR DETAILS ON THE TERMS AND VALUES SHOWN IN
THIS TABLE.
SURRENDER CHARGE PREMIUM LIMIT $964.00
NO-LAPSE GUARANTEE PREMIUM $750.00
NO-LAPSE GUARANTEE PERIOD FIRST 5 POLICY
YEARS
GUIDELINE SINGLE PREMIUM $21,979.00
GUIDELINE LEVEL PREMIUM $2,145.25
MINIMUM FACE AMOUNT $250,000.00
MINIMUM FACE AMOUNT INCREASE OR DECREASE $50,000.00
TRANSFER FEE $25.00
(FOR TRANSFERS IN EXCESS OF 12 IN A POLICY YEAR)
ASSET ALLOCATION BALANCER CHARGE
CURRENT $0.00
MAXIMUM $15.00
DOLLAR COST AVERAGING CHARGE
CURRENT $0.00
MAXIMUM $5.00
FIXED ACCOUNT MAXIMUM TRANSFER PERCENTAGE 15%
FIXED ACCOUNT MAXIMUM TRANSFER AMOUNT $500.00
FIXED ACCOUNT RATE 4%
WITHDRAWAL TIER AMOUNT PERCENTAGE 10%
ANNUAL LOAN INTEREST CHARGED RATE 5.25%
MAXIMUM LOAN INTEREST CREDITED DIFFERENTIAL 1.25%
DEATH BENEFIT DISCOUNT FACTOR 1.0032737
FIRST YEAR GUARANTEED MONTHLY COST OF INSURANCE
RATE PER THOUSAND 0.000207
PAGE 3.2
<PAGE> 9
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
LIST OF INVESTMENT FUNDS
THE SEPARATE ACCOUNT IS AUTHORIZED TO INVEST IN SHARES OF MANUFACTURERS
INVESTMENT TRUST OR ANOTHER INVESTMENT COMPANY. EACH SUB-ACCOUNT OF THE SEPARATE
ACCOUNT PURCHASES SHARES IN THE FUNDS LISTED BELOW. WE WILL INFORM YOU OF ANY
CHANGES IN THE AVAILABLE FUNDS.
YOU MAY ALLOCATE NET PREMIUMS TO ANY OF THE FUNDS. YOUR INITIAL INVESTMENT
ALLOCATION IS SHOWN IN THE APPLICATION FOR THE POLICY.
SEE THE FOLLOWING PROVISIONS FOR DETAILS: POLICY VALUE, POLICY VALUE
COMPOSITION, SEPARATE ACCOUNT AND SUB-ACCOUNTS, AND INVESTMENT OPTIONS.
MANUFACTURERS INVESTMENT TRUST PORTFOLIOS AND INVESTMENT OBJECTIVES
(1) THE PACIFIC RIM EMERGING MARKETS TRUST SEEKS TO PROVIDE LONG-TERM
GROWTH OF CAPITAL.
(2) THE SCIENCE AND TECHNOLOGY TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL. CURRENT INCOME IS INCIDENTAL TO THE PORTFOLIO'S OBJECTIVE.
(3) THE INTERNATIONAL SMALL CAP TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
(4) THE EMERGING SMALL COMPANY TRUST SEEKS TO PROVIDE MAXIMUM CAPITAL
APPRECIATION.
(5) THE PILGRIM BAXTER GROWTH TRUST SEEKS TO PROVIDE CAPITAL APPRECIATION.
(6) THE SMALL/MID CAP TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
(7) THE INTERNATIONAL STOCK TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(8) THE WORLDWIDE GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(9) THE GLOBAL EQUITY TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
(10) THE SMALL COMPANY VALUE TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(11) THE EQUITY TRUST SEEKS TO PROVIDE GROWTH OF CAPITAL. CURRENT INCOME IS
A SECONDARY CONSIDERATION ALTHOUGH GROWTH OF INCOME MAY ACCOMPANY
GROWTH OF CAPITAL.
PAGE 3.3A
<PAGE> 10
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
LIST OF INVESTMENT FUNDS
(12) THE GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
(13) THE QUANTITATIVE EQUITY TRUST SEEKS TO ACHIEVE INTERMEDIATE AND
LONG-TERM GROWTH THROUGH CAPITAL APPRECIATION AND CURRENT INCOME.
(14) THE EQUITY INDEX TRUST SEEKS TO ACHIEVE INVESTMENT RESULTS WHICH
APPROXIMATE THE TOTAL RETURN OF PUBLICLY TRADED COMMON STOCKS IN THE
AGGREGATE, AS REPRESENTED BY THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX.
(15) THE BLUE CHIP GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL. CURRENT INCOME IS A SECONDARY OBJECTIVE, AND MANY OF THE
STOCKS IN THE PORTFOLIO ARE EXPECTED TO PAY DIVIDENDS.
(16) THE REAL ESTATE SECURITIES TRUST SEEKS TO ACHIEVE A COMBINATION OF
LONG-TERM CAPITAL APPRECIATION AND SATISFACTORY CURRENT INCOME.
(17) THE VALUE TRUST SEEKS TO PROVIDE AN ABOVE-AVERAGE TOTAL RETURN OVER A
MARKET CYCLE OF THREE TO FIVE YEARS, CONSISTENT WITH REASONABLE RISK.
(18) THE INTERNATIONAL GROWTH AND INCOME TRUST SEEKS TO PROVIDE LONG-TERM
GROWTH OF CAPITAL AND INCOME.
(19) THE GROWTH AND INCOME TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL AND INCOME CONSISTENT WITH PRUDENT INVESTMENT RISK.
(20) THE EQUITY-INCOME TRUST SEEKS TO PROVIDE SUBSTANTIAL DIVIDEND INCOME
AND ALSO LONG-TERM CAPITAL APPRECIATION.
(21) THE BALANCED TRUST SEEKS TO PROVIDE CURRENT INCOME AND CAPITAL
APPRECIATION.
(22-24) THE AUTOMATIC ASSET ALLOCATION TRUSTS (AGGRESSIVE, MODERATE AND
CONSERVATIVE) SEEK TO OBTAIN THE HIGHEST POTENTIAL TOTAL RETURN
CONSISTENT WITH A SPECIFIED LEVEL OF RISK TOLERANCE --AGGRESSIVE,
MODERATE AND CONSERVATIVE.
(25) THE HIGH YIELD TRUST SEEKS TO REALIZE AN ABOVE-AVERAGE TOTAL RETURN
OVER A MARKET CYCLE OF THREE TO FIVE YEARS, CONSISTENT WITH REASONABLE
RISK .
PAGE 3.3B
<PAGE> 11
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
LIST OF INVESTMENT FUNDS
(26) THE STRATEGIC BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF TOTAL RETURN
CONSISTENT WITH PRESERVATION OF CAPITAL.
(27) THE GLOBAL GOVERNMENT BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF TOTAL
RETURN BY PLACING PRIMARY EMPHASIS ON HIGH CURRENT INCOME AND THE
PRESERVATION OF CAPITAL.
(28) THE CAPITAL GROWTH BOND TRUST SEEKS TO ACHIEVE GROWTH OF CAPITAL BY
INVESTING IN MEDIUM-GRADE OR BETTER DEBT SECURITIES, WITH INCOME AS A
SECONDARY CONSIDERATION.
(29) THE INVESTMENT QUALITY BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH THE MAINTENANCE OF PRINCIPAL AND
LIQUIDITY.
(30) THE U.S. GOVERNMENT SECURITIES TRUST SEEKS TO OBTAIN A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH PRESERVATION OF CAPITAL AND MAINTENANCE
OF LIQUIDITY.
(31) THE MONEY MARKET TRUST SEEKS TO OBTAIN MAXIMUM CURRENT INCOME
CONSISTENT WITH PRESERVATION OF PRINCIPAL AND LIQUIDITY.
(32) THE LIFESTYLE AGGRESSIVE 1000 TRUST SEEKS TO PROVIDE LONG-TERM GROWTH
OF CAPITAL. CURRENT INCOME IS NOT A CONSIDERATION.
(33) THE LIFESTYLE GROWTH 820 TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL WITH CONSIDERATION ALSO GIVEN TO CURRENT INCOME.
(34) THE LIFESTYLE BALANCED 640 TRUST SEEKS TO PROVIDE A BALANCE BETWEEN A
HIGH LEVEL OF CURRENT INCOME AND GROWTH OF CAPITAL WITH A GREATER
EMPHASIS GIVEN TO CAPITAL GROWTH.
(35) THE LIFESTYLE MODERATE 460 TRUST SEEKS TO PROVIDE A BALANCE BETWEEN A
HIGH LEVEL OF CURRENT INCOME AND GROWTH OF CAPITAL WITH A GREATER
EMPHASIS GIVEN TO HIGH INCOME.
(36) THE LIFESTYLE CONSERVATIVE 280 TRUST SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME WITH SOME CONSIDERATION ALSO GIVEN TO GROWTH OF CAPITAL.
PAGE 3.3C
<PAGE> 12
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
GUARANTEED MAXIMUM MONTHLY RATES PER $1,000
OF NET AMOUNT AT RISK
FOR THE LIVES INSURED UNDER THIS POLICY
<TABLE>
<CAPTION>
DURATION MONTHLY DURATION MONTHLY DURATION MONTHLY
(POLICY RATE (POLICY RATE (POLICY RATE
YEARS) YEARS) YEARS)
<S> <C> <C> <C> <C> <C>
1 0.000207 23 0.103964 45 3.953521
2 0.000665 24 0.122184 46 4.558705
3 0.001212 25 0.143495 47 5.253161
4 0.001864 26 0.168742 48 6.055917
5 0.002654 27 0.198793 49 6.980966
6 0.003598 28 0.235576 50 8.015102
7 0.004763 29 0.281020 51 9.149825
8 0.006128 30 0.336457 52 10.364422
9 0.007748 31 0.401980 53 11.654835
10 0.009612 32 0.478377 54 13.000300
11 0.011830 33 0.565716 55 14.412617
12 0.014426 34 0.664435 56 15.891977
13 0.017472 35 0.777709 57 17.459834
14 0.021034 36 0.911511 58 19.156860
15 0.025213 37 1.080715 59 21.054761
16 0.030130 38 1.268137 60 23.368153
17 0.036011 39 1.507613 61 26.517002
18 0.043094 40 1.795237 62 31.354662
19 0.051658 41 2.130491 63 39.595173
20 0.061825 42 2.513928 64 54.652603
21 0.073840 43 2.944356 65 83.333333
22 0.087887 44 3.421111
</TABLE>
THE ABOVE RATES HAVE BEEN INCREASED FOR ANY ADDITIONAL RATING SHOWN IN THE
POLICY INFORMATION SECTION.
Page 4
<PAGE> 13
DEFINITIONS
THE FOLLOWING TERMS HAVE SPECIFIC MEANINGS IN YOUR POLICY. PLEASE REFER TO THESE
DEFINITIONS AS YOU READ YOUR POLICY.
ADDITIONAL RATING is an adjustment to the Cost of Insurance Rate for any of the
Lives Insured who do not meet, at a minimum, our underwriting requirements for
the standard Risk Classification.
AGE means each of the Lives Insured's age on their birthday closer to the Policy
Date.
ATTAINED AGE on any date means the Age plus the number of whole years that have
elapsed since the Policy Date.
BUSINESS DAY is any day that the New York Stock Exchange is open for trading,
and trading is not restricted. The net asset value of the underlying shares of a
Sub-Account will be determined as of the end of each Business Day. We will deem
each Business Day to end at the close of regularly scheduled trading of the New
York Stock Exchange (currently 4:00 p.m. Eastern Time) on that day.
CASH SURRENDER VALUE equals the Policy Value less the Surrender Charge and any
outstanding Monthly Deductions due.
FIXED ACCOUNT is that part of the Policy Value which reflects the value you have
in our general account.
GROSS WITHDRAWAL is the amount of partial Net Cash Surrender Value you request
plus any Surrender Charge applicable to the withdrawal.
INVESTMENT ACCOUNT is that part of the Policy Value that reflects the value you
have in one of the Sub-Accounts.
ISSUE DATE is the date shown in the Policy Information section from which the
Suicide and Validity provisions are applied.
LIFE INSURED is the last-to-die of the Lives Insured.
LIVES INSURED are the persons whose lives are insured under this policy as set
out in the Policy Information section. References to the youngest of the Lives
Insured means the youngest person insured under this policy when it is first
issued.
LOAN ACCOUNT is that part of the Policy Value which reflects the value
transferred from the Fixed Account or the Investment Accounts as collateral for
a policy loan.
MATURITY DATE is the date shown in the Policy Information section. It is the
Policy Anniversary nearest the date on which the youngest of the Lives Insured
reaches Attained Age 100, or the date such person would have reached Attained
Age 100 if living.
NET CASH SURRENDER VALUE is the Cash Surrender Value less the Policy Debt.
NET POLICY VALUE is the Policy Value less the value in the Loan Account.
NET PREMIUM is the gross premium paid less the Premium Load. It is the amount of
premium allocated to the Fixed Account and/or Investment Accounts.
POLICY DATE is the date shown in the Policy Information section from which
charges for the first Monthly Deduction are calculated. The Policy Date is used
to determine POLICY YEARS, POLICY MONTHS AND POLICY ANNIVERSARIES.
(continued)
Page 5
<PAGE> 14
DEFINITIONS (continued)
POLICY DEBT as of any date equals (a) plus (b) plus (c) minus (d), where:
(a) is the total amount of loans borrowed as of such date;
(b) is the total amount of any unpaid loan interest charges which have been
borrowed against the policy on a Policy Anniversary;
(c) is any interest charges accrued from the last Policy Anniversary to the
current date; and
(d) is the total amount of loan repayments as of such date.
POLICY VALUE is the sum of the values in the Loan Account, the Fixed Account and
the Investment Accounts.
SEPARATE ACCOUNT refers to Separate Account B of The Manufacturers Life
Insurance Company of New York.
SERVICE OFFICE is the office that we designate to service this policy. The
Service Office Mailing Address is The Manufacturers Life Insurance Company of
New York, P.O. Box 633, Niagara Square Station, Buffalo, NY 14202-0633. The Home
Office Address is The Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye,
NY, 10580.
SUB-ACCOUNT refers to one of the sub-accounts of the Separate Account.
SURRENDER CHARGE compensates us for some of the expenses of selling and
distributing the policies, such as agent's commissions, advertising, agent
training and the printing of prospectuses and sales material. It also covers
expenses associated with underwriting and issuance of policies, such as
processing applications, conducting medical examinations, determining the risk
classification for the Lives Insured and establishing policy records.
SURRENDER CHARGE PERIOD is the period following the Issue Date of the policy or
following any increase in Face Amount during which we will assess surrender
charges. Surrender charges will apply during this period if you surrender the
policy, make a partial withdrawal, or if it terminates due to default.
SURRENDER CHARGE PREMIUM LIMIT is used to determine the Surrender Charge. The
Surrender Charge Premium Limit for the initial Face Amount is shown in the Table
of Values in the Policy Information section. You will be advised of the
Surrender Charge Premium Limit for any increase in Face Amount.
WITHDRAWAL TIER AMOUNT as of any date is the Net Cash Surrender Value at the
previous Policy Anniversary, multiplied by the Withdrawal Tier Amount Percentage
shown in the Table of Values in the Policy Information Section.
WRITTEN REQUEST is your request to us which must be in a form satisfactory to
us, signed and dated by you, and filed at our Service Office.
PAYMENT OF PREMIUMS
No insurance will take effect under this policy before we approve the
application and receive the initial premium. The initial premium is due as of
the Policy Date. The minimum initial premium is one-twelfth of the No-Lapse
Guarantee Premium shown in the Table of Values in the Policy Information
section.
Subsequent premiums can be paid at any time at our Service Office, and
in any amount subject to the limits described below. On request, we will give
you a receipt signed by one of our officers. The Planned Premium you requested
in the application is shown in the Policy Information section.
You may pay premiums until the Maturity Date.
LIMITS. Each premium payment after the first is subject to the following
limitations under Section 7702 of the Internal Revenue Code of 1986, or any
other equivalent section of the Code:
(a) we have the right to refuse or refund any premium payments that would cause
this policy to fail to qualify as life insurance under the Internal Revenue
Code;
(continued)
Page 6
<PAGE> 15
PAYMENT OF PREMIUMS (continued)
(b) we reserve the right to request that you provide us with satisfactory
evidence of insurability if a premium payment would result in an
increase in the Death Benefit that is greater than the increase in
Policy Value; and
(c) the sum of the premiums paid into this policy at any time may not
exceed the guideline premium limitation as of such time. The guideline
premium limitation is, as of any date, the greater of:
(1) the Guideline Single Premium, or
(2) the sum of the Guideline Level Premiums to such date.
The Guideline Single Premium and the Guideline Level Premium are shown
in the Policy Information section.
NO-LAPSE GUARANTEE
Your policy includes a No-Lapse Guarantee. The guarantee period applicable to
this policy is shown in the Table of Values in the Policy Information section.
During your No-Lapse Guarantee Period, if the Net Cash Surrender Value falls to
zero or below, your policy will not go into default provided it satisfies the
cumulative premium test.
CUMULATIVE PREMIUM TEST. The test will be performed at the beginning of any
Policy Month that your policy would otherwise be in default in the absence of
the No-Lapse Guarantee. Your policy will satisfy the test if the sum of the
premiums paid, less any Policy Debt, and less any Gross Withdrawals taken on or
before the date of the test, is equal to or greater than the sum of the monthly
No-Lapse Guarantee Premiums due from the Policy Date to the date of the test.
The No-Lapse Guarantee Premium is shown as an annualized amount in the Table of
Values in the Policy Information section.
This amount will change if any of the following changes occur under your policy:
(a) you add, terminate or change a Supplementary Benefit;
(b) you change the Death Benefit Option under your policy;
(c) there is a decrease in the Face Amount of insurance due to a partial
withdrawal;
(d) you change the Face Amount of insurance; or
(e) there is a change in the Risk Classification of any of the Lives
Insured.
We will inform you of any change to the No-Lapse Guarantee Premium resulting
from any such change. The revised premium will be effective from the date of the
change. For the purpose of performing the cumulative premium test, we will use
the No-Lapse Guarantee Premium in effect as of the Policy Date up to the date of
the change, including any revised premium in effect as of the date of a prior
change.
POLICY TERMINATION
DEFAULT. Unless the policy has met the No-Lapse Guarantee requirements, it will
go into default if, at the beginning of any Policy Month, the Net Cash Surrender
Value would go to zero or below after we take the Monthly Deduction that is due
for that month.
GRACE PERIOD. We will allow 61 days from the date that the policy goes into
default, for you to pay the amount that is required to bring the policy out of
default. We will send a notice to you and to the Lives Insured at least 15 days,
but not more than 45 days prior to the termination of coverage. This notice will
be sent to the last known address and will specify the required amount. If we
have notice of a policy assignment on file at our Service Office, we will also
mail a copy of the notice of the amount due to the assignee on record.
(continued)
Page 7
<PAGE> 16
POLICY TERMINATION (continued)
The amount required to bring the policy out of default is equal to (a) plus (b)
plus (c) where:
(a) is the amount necessary to bring the Net Cash Surrender Value to zero,
if it is less than zero, at the date of default; and
(b) is the Monthly Deduction due on the date of default, plus the next two
Monthly Deductions; and
(c) is the applicable Premium Load.
If the policy is in the No-Lapse Guarantee Period, then the following amount, if
less than the amount stated above, will bring the policy out of default. This
amount is equal to (a) plus (b), where:
(a) is the amount, if any, necessary to satisfy the No-Lapse Guarantee
cumulative premium test at the date of default; and
(b) is the No-Lapse Guarantee Premium for the next two Policy Months.
If the amount necessary to bring the policy out of default has not been paid by
the end of the grace period, the policy will terminate.
TERMINATION DATE. This policy terminates on the earliest of the following
events:
(a) the end of the grace period for which you have not paid the amount
necessary to bring the policy out of default;
(b) surrender of the policy for its Net Cash Surrender Value;
(c) the death of the Life Insured; or
(d) the Maturity Date.
REINSTATEMENT
You can ask us to reinstate your policy only if it terminates at the end of a
grace period in which you did not make a required payment. The policy cannot be
reinstated if any of the Lives Insured die after the policy has terminated. You
can reinstate the policy if you:
(a) make a Written Request for reinstatement within 5 years after the date
your policy terminates;
(b) provide us with evidence of insurability satisfactory to us on the
Lives Insured or on the survivor(s) who were insured at the end of the
Grace Period; and
(c) pay a premium equal to the amount that was required during the 61-day
grace period following default plus the next two Monthly Deductions.
If we approve your request,
(a) the reinstatement date will be the later of the date we approve your
request or the date we receive the required payment at our Service
Office; and
(b) any Surrender Charges will be reinstated to the amount they were at the
date of default.
The Policy Value on the date of reinstatement, prior to the crediting of any Net
Premium paid on the reinstatement, will be equal to the Policy Value on the date
the policy terminated. If the policy is in a Surrender Charge Period when it
terminates, upon reinstatement the period will be the same as at the date of
default.
MATURITY DATE
We will pay you the Net Cash Surrender Value as of the Maturity Date provided
the policy is in force and at least one of the Lives Insured is alive. The
policy will terminate on the Maturity Date.
Page 8
<PAGE> 17
INSURANCE BENEFIT
The Insurance Benefit is payable when the Life Insured dies, but you must
provide us with proof when any of the Lives Insured die.
If the Life Insured dies while the policy is in force, we will pay the Insurance
Benefit to the beneficiary on receiving due proof of death of the last to die of
the Lives Insured, subject to the Age and Sex, Suicide and Validity provisions.
If the Life Insured dies after we receive a request from you to surrender the
policy, there will be no Insurance Benefit. We will pay the amount payable under
the Surrender For Cash provision instead.
INSURANCE BENEFIT. The Insurance Benefit payable is:
(a) the Death Benefit as described below; plus
(b) any amounts payable under any Supplementary Benefits that form part of
the policy; less
(c) the value of the Policy Debt as of the date of death.
If the Life Insured dies during a grace period, the Insurance Benefit described
above will be modified as follows:
(a) the Insurance Benefit will be reduced by any outstanding Monthly
Deductions due; and
(b) the Policy Value used in the calculation of the Death Benefit will be
the Policy Value as of the default date.
DEATH BENEFIT. The Death Benefit will depend on whether Death Benefit Option 1
or 2 is in effect on the date of death.
Under Option 1, the Death Benefit is the Face Amount of the policy at the date
of the Life Insured's death.
Under Option 2, the Death Benefit is the Face Amount of the policy, plus the
Policy Value at the date of the Life Insured's death.
MINIMUM DEATH BENEFIT. To ensure that the policy continues to qualify as life
insurance under the Internal Revenue Code, the Death Benefit will never be less
than the Minimum Death Benefit. The Minimum Death Benefit is equal to the Policy
Value at the date of death, multiplied by the Minimum Death Benefit Percentage
for the Attained Age of the youngest of the Lives Insured, or the Attained Age
such person would have reached if living. The Minimum Death Benefit Percentages
are shown in the Table of Minimum Death Benefit Percentages shown below.
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
ATTAINED AGE APPLICABLE PERCENTAGE
<S> <C>
40 and under 250%
45 215%
50 185%
55 150%
60 130%
65 120%
70 115%
75 105%
90 105%
95 and above 100%
</TABLE>
To determine the Applicable Percentage, we will use the Attained Age of the
youngest of the Lives Insured, or the Attained Age such person would have
reached if living.
For ages not shown, the Applicable Percentage can be found by reducing the
above Applicable Percentages proportionately.
SIMULTANEOUS DEATH. If the Lives Insured die simultaneously or in circumstances
rendering it uncertain who is the Life Insured, the oldest of the Lives Insured
will be deemed to have been the Life Insured. No payment will be made on the
death of the other Lives Insured.
(continued)
Page 9
<PAGE> 18
INSURANCE BENEFIT (continued)
PAYMENT OF INSURANCE BENEFIT. We will pay the Insurance Benefit in one lump sum
with interest calculated from the date of the Life Insured's death to the date
of payment. The rate will be at the rate prescribed by the state. If the state
does not specify the interest rate, we will use the rate for insurance benefits
left on deposit with us.
POLICY VALUE
INITIAL NET PREMIUMS. We will allocate your initial Net Premium plus any earned
interest on the later of the date our underwriters approve issuance of the
policy or the date we receive the initial premium at our Service Office.
Interest will be credited as of the date we received the initial premium payment
at the rate of return then being earned on allocations to the Money Market
Trust. This initial allocation will become your Policy Value to which subsequent
Net Premiums will be allocated.
SUBSEQUENT NET PREMIUMS. As of the Business Day we receive your subsequent
premium payments at our Service Office, we will add your Net Premium to your
Policy Value. We will do this before we take any deductions due as of that
Business Day.
MONTHLY DEDUCTIONS. At the beginning of each Policy Month, a deduction is taken
from your policy to cover Monthly Administration Charges and the cost to provide
the insurance coverage.
The first Monthly Deduction is taken on the later of the date our underwriters
approve issuance of the policy or the date we receive at least the initial
premium at our Service Office.
The Monthly Deduction for any Policy Month is the sum of the following amounts
determined as of the beginning of that month:
(a) the Monthly Administration Charge shown in the Table Of Expense Charges
in the Policy Information section;
(b) the Mortality and Expense Risks Charge shown in the Table Of Expense
Charges in the Policy Information section;
(c) the monthly cost of any Supplementary Benefits you have added to your
policy; and
(d) the monthly Cost of Insurance for the Lives Insured.
Unless you have requested otherwise, we will take Monthly Deductions from the
Fixed Account and the Investment Accounts in the same proportion that the Policy
Value in each of these accounts bears to the Net Policy Value immediately prior
to the deduction.
The Cost of Insurance for a specific Policy Month is determined as the rate for
the Cost of Insurance for that month, as described below, multiplied by the net
amount at risk.
For Death Benefit Option 1, the net amount at risk is equal to (a) minus (b),
where:
(a) is the Death Benefit as of the first day of the Policy Month, divided
by the Death Benefit Discount Factor shown in the Table of Values in
the Policy Information section; and
(b) is the Policy Value as of the first day of the Policy Month after the
deduction of the monthly Cost of Insurance for the Lives Insured.
For Death Benefit Option 2, the net amount at risk is equal to the Face Amount
of insurance.
The rates for the Cost of Insurance, as of the Policy Date and subsequently for
each Face Amount increase, are blended and based on the Lives Insured's Age,
Sex, Risk Classification and duration that the coverage has been in force. The
Cost of Insurance Rate shown in the Table of Values in the Policy Information
section is payable for the first Policy Year. After the first Policy Year, the
Cost of Insurance will generally increase on each Policy Anniversary. The Cost
of Insurance calculation will reflect any Additional Rating shown in the Policy
Information section.
(continued)
Page 10
<PAGE> 19
POLICY VALUE (continued)
We will re-determine Cost of Insurance rates from time to time. Any adjustments
will be by class and based on changes in expected mortality and persistency
experience, investment earnings and operating expenses.
The rates for the Cost of Insurance are intended to cover future mortality costs
under the policy. These rates may be higher in early Policy Years due to
recovery of initial acquisition costs.
The Cost of Insurance rates will never exceed those shown in the Table of
Guaranteed Maximum Cost of Insurance Rates on Page 4.
OTHER DEDUCTIONS. We will deduct a Surrender Charge if during the Surrender
Charge Period shown in the Policy Information section:
(a) you surrender the policy for its Net Cash Surrender Value;
(b) you make one or more partial withdrawals in a Policy Year totaling more
than the Withdrawal Tier Amount; or
(c) you do not pay an amount due at the end of a grace period, and the
policy terminates.
See the Surrender And Withdrawals provision for details.
POLICY VALUE COMPOSITION
Your Policy Value at any time is equal to the sum of the values you have in the
Loan Account, the Fixed Account and the Investment Accounts.
LOAN ACCOUNT VALUE. The amount you have in the Loan Account at any time equals:
(a) amounts transferred to it for loans or borrowed loan interest; plus
(b) interest credited to it; less
(c) amounts transferred from it for loan repayment.
For the details of the Loan Account see the Policy Loan Conditions provision.
FIXED ACCOUNT VALUE. The amount you have in the Fixed Account at any time
equals:
(a) Net Premiums allocated to it; plus
(b) amounts transferred to it; plus
(c) interest credited to it; less
(d) amounts deducted from it; less
(e) amounts transferred from it; less
(f) amounts withdrawn from it.
Interest will be credited to amounts in the Fixed Account at an effective annual
rate of no less than the Fixed Account Rate shown in the Table of Values in the
Policy Information Section. The actual interest rate used will be set by us from
time to time. For all transactions, interest is calculated from the date of the
transaction.
INVESTMENT ACCOUNT VALUE. The amount you have in an Investment Account at any
time equals the number of units in that Investment Account, multiplied by the
unit value of the corresponding Sub-Account at that time.
The number of units in an Investment Account at any time equals (a) minus (b),
where:
(a) is the number of units credited to the Investment Account because of:
(1) Net Premiums allocated to it; and
(2) amounts transferred to it; and
(b) is the number of units canceled from the Investment Account because of:
(1) amounts deducted from it;
(2) amounts transferred from it; and
(3) amounts withdrawn from it.
(continued)
Page 11
<PAGE> 20
POLICY VALUE COMPOSITION (continued)
The number of units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the unit value as of the Business
Day of the transaction. See the Unit Value Calculation section of this provision
for details on how unit values are determined.
SEPARATE ACCOUNT AND SUB-ACCOUNTS
The Separate Account is authorized to invest in the shares of Manufacturers
Investment Trust, or another management investment company. Each Sub-Account of
the Separate Account purchases shares of a corresponding Fund of Manufacturers
Investment Trust or another management investment company. The Funds are listed
in the Policy Information section.
FUND SUBSTITUTION. A Fund might, in our judgment, become unsuitable for
investment by a Sub-Account. This might happen because of a change of investment
policy; or a change in the applicable laws or regulations; or because the shares
are no longer available for investment; or for some other reason.
If a Fund becomes unsuitable for investment, we have the right to substitute
another Fund or another management investment company. Before doing this, we
would first seek, where required, approval from the Securities and Exchange
Commission and the Superintendent of Insurance of the state of New York.
To the extent permitted by applicable federal and state law, we also have the
right, without your approval, to:
(a) create new separate accounts;
(b) combine any two or more separate accounts including the Separate
Account;
(c) make available additional Sub-Accounts investing in additional Funds of
Manufacturers Investment Trust, or another investment company;
(d) eliminate existing Sub-Accounts and stop accepting new allocations and
transfers into the corresponding Fund;
(e) operate the Separate Account as a management investment company under
the Investment Company Act of 1940 or in any other form permitted by
law;
(f) de-register the Separate Account under the Investment Company Act of
1940;
(g) transfer assets between the Separate Account and other separate
accounts; and
(h) combine Sub-Accounts or to transfer assets in one Sub-Account to
another Sub-Account.
The investment objectives of a Sub-Account within the Separate Account will not
be changed materially without first filing the change with the Insurance
Commissioner of our state of domicile and with the Superintendent of Insurance
of the state of New York. We will inform you of any changes deemed to be
material.
UNIT VALUE CALCULATION. We will determine the unit values for each Sub-Account
as of the end of each Business Day. When we need to determine a Policy Value or
an amount after the end of a Business Day, or on a day that is not a Business
Day, we will do so as of the next Business Day.
The value of a unit of each Sub-Account was initially fixed at $10 for the first
Business Day that an amount was allocated, or transferred to the particular
Sub-Account. For any subsequent Business Day, the unit value for that
Sub-Account is obtained by multiplying the unit value for the immediately
preceding Business Day by the net investment factor for the particular
Sub-Account on such subsequent Business Day.
(continued)
Page 12
<PAGE> 21
SEPARATE ACCOUNT AND SUB-ACCOUNTS (continued)
NET INVESTMENT FACTOR. The net investment factor for a Sub-Account on any
Business Day is equal to (a) divided by (b), where:
(a) is the net asset value of the underlying Fund shares held by that
Sub-Account as of the end of such Business Day before any policy
transactions are made on that day; and
(b) is the net asset value of the underlying Fund shares held by that
Sub-Account as of the end of the immediately preceding Business Day
after all policy transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by us
to be attributable to the operations of the Sub-Account. Before making any such
changes, we will first seek the approval of the Superintendent of Insurance of
the state of New York.
SEPARATE ACCOUNT ASSETS. The assets held in each Sub-Account are used to support
the Policy Values of Single Premium and Flexible Premium Variable Life Insurance
policies. The Separate Account will be used to fund only variable life insurance
benefits.
Income, gains and losses of the Separate Account are credited to, or charged
against, the applicable Sub-Accounts without regard to our other income, gains
and losses.
The assets of the Separate Account are our property. The part of the assets that
is equal to the Investment Account values in respect of all Single Premium and
Flexible Premium Variable Life Insurance policies will not be charged with
liabilities from any other business we conduct. We can transfer to our general
account, Separate Account assets in excess of the liabilities of the Separate
Account arising under the Single Premium and Flexible Premium Variable Life
Insurance policies supported by the Separate Account.
INVESTMENT OPTIONS
ALLOCATIONS. You may allocate Net Premiums to the Fixed Account or any of the
Investment Accounts. Unless you change the initial premium allocation specified
in your application for this policy, it will continue to apply to subsequent
premium payments.
Allocation percentages must be zero or a whole number not greater than 100. The
sum of the allocation percentages must equal 100. You may change the allocation
percentages by Written Request to our Service Office. The change will take
effect as of the date we receive your request at our Service Office.
TRANSFERS. By Written Request you may transfer portions of your Policy Value
among the Investment Accounts and the Fixed Account.
Transfers are subject to the following restrictions:
(a) you can make as many transfers in a Policy Year as you want. There is
no charge for the first twelve transfers in any Policy Year. If you
make more than twelve transfers in any Policy Year, the Transfer Fee
shown in the Table of Values in the Policy Information section will
apply to each subsequent transfer in that Policy Year. We will consider
all transfer requests received on the same Business Day as one
transfer;
(b) you may transfer the Policy Value from any of the Investment Accounts
to the Fixed Account without incurring the transfer charges in (a)
above, provided such transfers occur within:
(1) eighteen months after the Issue Date, as shown in the Policy
Information section of this policy; or
(2) the later of (i) or (ii) below:
(i) 60 days from the effective date of a material change
in the investment objectives of any of the
Sub-Accounts; or
(ii) 60 days from the notification date of any such
change.
(continued)
Page 13
<PAGE> 22
INVESTMENT OPTIONS (continued)
(c) the maximum amount that you can transfer out of the Fixed Account in
any one Policy Year is limited to the greater of:
(1) the Fixed Account Maximum Transfer Percentage shown in the
Policy Information section, multiplied by the value in the
Fixed Account at the previous Policy Anniversary; or
(2) the Fixed Account Maximum Transfer Amount shown in the Policy
Information section.
(d) any transfer out of the Fixed Account may not involve a transfer to the
Investment Account for the Money Market Trust; and
(e) transfer privileges are subject to any restrictions that may be imposed
by the Trust.
ASSET ALLOCATION BALANCER TRANSFERS. If you elect this option, we will
automatically transfer amounts among your specified Investment Accounts in order
to maintain your designated percentage in each account. We will effect the
transfers six months after the Policy Date and each six month interval
thereafter.
The current and maximum Asset Allocation Balancer Charge for transfers under
this option are shown in the Policy Information section of this policy. We will
provide you with 90 days written notice of any change in the current amount.
When you change your premium allocation instructions, your Asset Allocation
Balancer will change so the two are identical. This change will automatically
occur unless you instruct us otherwise, or a Dollar Cost Averaging request is in
effect.
We reserve the right to cease to offer this option as of 90 days after we send
you written notice.
DOLLAR COST AVERAGING. If you elect this option, we will automatically transfer
amounts each month from one Investment Account to one or more of the other
Investment Accounts or the Fixed Account. You must select the amount to be
transferred and the accounts.
If the value in the Investment Account from which the transfer is being made is
insufficient to cover the transfer amount, we will not effect the transfer and
we will notify you.
The current and maximum Dollar Cost Averaging Charge for transfers under this
option are shown in the Policy Information section of this policy. We will
provide you with 90 days written notice of any change in the current amount.
We reserve the right to cease to offer this option as of 90 days after we send
you written notice.
POLICY LOAN CONDITIONS
At any time while this policy is in force and has an available loan value, you
can get a loan by Written Request. We may require a loan agreement from you as
the policy is the only security for the loan.
AVAILABLE LOAN VALUE. The available loan value on any date is 90% of the Net
Cash Surrender Value.
You should consult your tax advisor before making a decision to take out a new
loan.
LOAN ACCOUNT. When you take out a loan, or when loan interest charges are
borrowed, we will do a transfer from the Fixed Account and/or one or more of the
Investment Accounts into the Loan Account. Amounts we transfer into the Loan
Account cover the loan principal plus loan interest due to the next Policy
Anniversary.
A Loan Sub-Account exists for each Investment Account and for the Fixed Account.
Amounts transferred to the Loan Account are allocated to the appropriate Loan
Sub-Account to reflect the account from which the transfer was made.
(continued)
Page 14
<PAGE> 23
POLICY LOAN CONDITIONS (continued)
You may tell us how much of the amount to be transferred to the Loan Account you
wish to allocate to your value in the Fixed Account and each of the Investment
Accounts. If you do not tell us, we will allocate the amounts to be transferred
in the same proportion that your value in the Fixed Account and the Investment
Accounts bears to the Net Policy Value.
When an amount to be transferred is allocated to an Investment Account, we will
redeem units of that Investment Account sufficient in value to cover the
allocated amount. These transfers do not count as a transfer for the purposes of
the Transfers section of the Investment Options provision.
Interest is credited to the Loan Account and interest is also charged on the
Policy Debt, as described under the Loan Interest Charged and the Loan Interest
Credited sections of this provision.
LOAN INTEREST CHARGED. Interest will accrue daily on loans. In the event that
you do not pay the Loan Interest Charged in any Policy Year, it will be borrowed
against the policy and added to the Policy Debt in arrears at the Policy
Anniversary. We will allocate the amount borrowed for interest payment in the
same proportion that your value in the Fixed Account and the Investment Accounts
bears to the Net Policy Value as of the Policy Anniversary.
The policy will go into default at any time the Policy Debt exceeds the Policy
Value. At least 61 days prior to termination, we will send a notice to your last
known address. If you had filed a notice of assignment with us, we will also
send a copy of the notice to the last known address of the assignee on record.
Payment of the loan interest during the 61-day grace period will bring the
policy out of default.
The rate of interest charged is fixed at the effective Annual Loan Interest
Charged Rate shown in the Table of Values in the Policy Information section.
LOAN INTEREST CREDITED. Interest will accrue daily to amounts in the Loan
Account. The effective annual Loan Interest Credited Rate is the difference
between the Loan Interest Charged Rate and the Loan Interest Credited
Differential.
The Maximum Loan Interest Credited Differential is shown in the Table of Values
in the Policy Information section.
In no event will the Loan Interest Credited rate be less than the Fixed Account
Rate shown in the Table of Values in the Policy Information section.
LOAN REPAYMENT. You may repay the Policy Debt in whole or in part at any time
prior to the death of the Life Insured, and while the policy is in force.
When you repay a loan, we credit the amount to the Loan Account, and make a
transfer to the Fixed Account and/or the Investment Accounts.
We will allocate loan repayments as follows:
(a) first to the Fixed Account, until the associated Loan Sub-Account is
reduced to zero;
(b) then to each Investment Account in the same proportion that the value
in the corresponding Loan Sub-Account bears to the value of the Loan
Account.
While a loan exists, we will treat the amounts you pay as premiums, unless you
request in writing that they be treated as loan repayments. However, when a
portion of the Loan Account amount is allocated to the Fixed Account, where
permitted by state law, we reserve the right to require that amounts you pay be
treated as loan repayments.
Page 15
<PAGE> 24
CHANGING THE DEATH BENEFIT OPTION OR THE FACE AMOUNT
You may change your Death Benefit Option or your Face Amount of insurance by
Written Request. Such changes are subject to the general conditions of this
provision and the conditions described in the section for each type of change.
The following general conditions apply to changes in Death Benefit Option or
Face Amount of insurance:
(a) changes may be made once in each Policy Year after the first Policy
Anniversary;
(b) changes will take effect as of the beginning of the next Policy Month
following the date we approve the request; and
(c) we reserve the right to limit any changes that would cause this policy
to fail to qualify as life insurance according to Section 7702 of the
Internal Revenue Code of 1986, or any other equivalent of the Code.
A Death Benefit Option Change or a Face Amount Change, will cause a change in
the Guideline Single Premium, Guideline Level Premium, and the No-Lapse
Guarantee Premium. For increases in Face Amount the Surrender Charge Premium
Limit will also change. An additional Surrender Charge Premium Limit will be
associated only with the new Face Amount if it has been added after restoring
prior decreases.
We will inform you of the new premium amounts at the time of the change.
CHANGE FROM DEATH BENEFIT OPTION 1 TO DEATH BENEFIT OPTION 2.
The Face Amount of insurance after the change from Option 1 to Option 2 will be
(a) minus (b), where:
(a) is the Face Amount of insurance immediately before the change; and
(b) is the Policy Value as of the effective date of the change.
We will not allow the change in Death Benefit Option if it would cause the Face
Amount to decrease below the Minimum Face Amount shown in the Table of Values in
the Policy Information section.
CHANGE FROM DEATH BENEFIT OPTION 2 TO DEATH BENEFIT OPTION 1.
The Face Amount of insurance after the change from Option 2 to Option 1 will be
(a) plus (b), where:
(a) is the Face Amount of insurance immediately before the change; and
(b) is the Policy Value as of the effective date of the change.
We will not increase the Surrender Charge because of the increase in the Face
Amount of insurance resulting from this change.
DECREASE IN FACE AMOUNT. The Minimum Face Amount Decrease is shown in the Table
of Values in the Policy Information section. We may change this amount as of 90
days after we send you written notice of the change. We will not allow a
decrease if it would cause the Face Amount to go below the Minimum Face Amount
shown in the Table Of Values in the Policy Information section.
When you request a decrease in the Face Amount of insurance, we will reduce the
Face Amount in the following order:
(a) the amounts of insurance provided by any increases you may have
requested to the policy Face Amount, starting with the most recent
increase until all such increases are reduced; then
(b) the initial Face Amount of the policy.
(continued)
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CHANGING THE DEATH BENEFIT OPTION OR THE FACE AMOUNT (continued)
We will deduct a pro-rata Surrender Charge from the Policy Value if you decrease
the initial Face Amount or a prior increase in Face Amount during the Surrender
Charge period. See the Pro-Rata Charge section of the Surrender Charges
provision for details.
INCREASE IN FACE AMOUNT. The Lives Insured shown in the Policy Information
Section must all be alive when you request an increase in the Face Amount of
insurance. You must provide us with evidence of insurability on the Lives
Insured that is satisfactory to us. The Minimum Face Amount Increase is shown in
the Policy Information section. We may change this amount as of 90 days after we
send you written notice of the change.
We reserve the right to refuse a Face Amount increase if the Attained Age of any
of the Lives Insured at the date the increase would be effective is 90 or more
as of the effective date of the increase.
The Face Amount of insurance will increase in the following order:
(a) we will restore the Face Amount reduced by the most recent decrease
first; followed by
(b) the next most recent decrease until all decreases are restored; then
(c) we will add the new Face Amount of insurance.
There will be no new Surrender Charge associated with the restoration of prior
decreases under (a) or (b) above. However, there will be a new Surrender Charge
associated with the new Face Amount under (c). We will inform you of any new
Surrender Charges at the time of the increase.
You will not necessarily have to pay additional premium with an increase in Face
Amount, but the new Surrender Charge may require an additional premium payment
to prevent the policy from going into default.
For Surrender Charge purposes, the premiums attributable to the new Face Amount
will not exceed the Surrender Charge Premium Limit associated with that
increase.
SURRENDER AND WITHDRAWALS
SURRENDER OF THE POLICY. You may surrender this policy for its Net Cash
Surrender Value at any time prior to the death of the Life Insured. We will
determine the Net Cash Surrender Value as of the end of the Business Day on
which we receive the policy and your Written Request for surrender at our
Service Office. After we receive your surrender request, no insurance will be in
force.
If you surrender your policy during the Surrender Charge Period, we will deduct
a Surrender Charge from your Policy Value in calculating the Net Cash Surrender
Value. If you have increased the Face Amount of insurance, the Surrender Charge
will be the sum of the Surrender Charge for the initial Face Amount plus the
Surrender Charge for each increase as shown in the Policy Update page amending
the policy. No additional Surrender Charge will be imposed on any portion of an
increase in Face Amount that restores a prior decrease.
PARTIAL NET CASH SURRENDER VALUE WITHDRAWAL. You may request a partial Net Cash
Surrender Value withdrawal once each Policy Month after the first Policy
Anniversary. You may make this request provided there is a Net Cash Surrender
Value for the policy. The partial Net Cash Surrender Value withdrawal will be
done as of the end of the Business Day on which we receive your Written Request.
(continued)
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<PAGE> 26
SURRENDER AND WITHDRAWALS (continued)
You may specify the accounts from which we should make the partial Net Cash
Surrender Value withdrawal. If we do not receive such instructions, we will make
the withdrawal in the same proportion that the value in the Fixed Account and
the Investment Accounts bears to the Net Policy Value.
If the sum of partial Net Cash Surrender Value withdrawals in any Policy Year
during the Surrender Charge Period is greater than the Withdrawal Tier Amount
for that year, we will deduct a pro-rata Surrender Charge from the Policy Value.
The portion of a partial Net Cash Surrender Value withdrawal that is considered
above the Withdrawal Tier Amount includes all previous partial Net Cash
Surrender Value withdrawals that have occurred in the current Policy Year.
We will deduct a pro-rata Surrender Charge from the Policy Value if during the
Surrender Charge Period you make a partial Net Cash Surrender Value Withdrawal
in excess of the Withdrawal Tier Amount.
The pro-rata charge deducted will equal the sum of the pro-rata Surrender Charge
for the initial Face Amount and any previous increase in Face Amount. This
amount is (a) divided by (b), multiplied by (c), where:
(a) is the amount of the partial Net Cash Surrender Value withdrawal in
excess of the Withdrawal Tier Amount;
(b) is the Net Cash Surrender Value prior to the withdrawal, in excess of
the Withdrawal Tier Amount; and
(c) is the current total Surrender Charge prior to the withdrawal.
We will allocate the deduction of the pro-rata charges for the withdrawal to the
Fixed Account and the Investment Accounts in the same proportion that the
withdrawal from each account bears to the total withdrawal.
If the withdrawal plus the pro-rata Surrender Charge allocated to a particular
account are greater than the value of that account, we will reduce the portion
of the withdrawal allocated to that account. We will reduce the allocated
portion so that the withdrawal plus the pro-rata charge allocated to the account
equal the value of the account.
If Death Benefit Option 1 is in effect at the time of the withdrawal, the Face
Amount will be reduced by:
(a) the amount of the withdrawal plus the pro-rata Surrender Charge, if at
the time of the withdrawal the Death Benefit equals the Face Amount;
otherwise
(b) the amount, if any, by which the withdrawal plus the pro-rata Surrender
Charge exceeds the difference between the Death Benefit and the Face
Amount.
If there has been a prior increase in Face Amount, then the Face Amount will be
decreased in the same order as if you had requested the decrease. See the
Decrease in Face Amount section of the Changing The Death Benefit Option Or The
Face Amount provision. Withdrawals will be limited if they would otherwise cause
the Face Amount to fall below the Minimum Face Amount shown in the Table of
Values in the Policy Information section.
Partial Net Cash Surrender Value withdrawals do not affect the Face Amount of
your policy if Death Benefit Option 2 is in effect.
(continued)
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<PAGE> 27
SURRENDER AND WITHDRAWALS (continued)
Each time we deduct the pro-rata Surrender Charge for a partial withdrawal, we
will reduce the remaining Surrender Charge in the same proportion that the
Surrender Charge deducted bears to the total Surrender Charge immediately before
the partial withdrawal.
Partial Net Cash Surrender Value withdrawals do not affect the Face Amount of
your policy if Death Benefit Option 2 is in effect.
CONVERSION PRIVILEGE
You may convert your policy to a fixed paid-up benefit at any Policy
Anniversary, without evidence of insurability.
The conversion is subject to the following conditions:
(a) no further Monthly Deductions will be taken from the Policy Value after
the date of conversion;
(b) the Death Benefit, the Policy Value, other values based on the Policy
Value, and the Investment Account values will be determined as of the
Business Day on which we receive your Written Request for conversion;
(c) the basis for determining the Policy Value will be the Commissioners
1980 Standard Ordinary Smoker/Non-Smoker Mortality Table and an
interest rate of 4% per year; and
(d) this Flexible Premium Survivorship Variable Life coverage cannot be
reinstated after the date of the conversion.
RIGHT TO POSTPONE PAYMENT OF BENEFITS
We reserve the right to postpone the payment of Net Cash Surrender Values,
partial Net Cash Surrender Value withdrawals, policy loans and the portion of
the Insurance Benefit that depends on Investment Account values, for any period
during which:
(a) the New York Stock Exchange (Exchange) is closed for trading (other
than customary week-end and holiday closings), or trading on the
Exchange is otherwise restricted; or
(b) an emergency exists as defined by the Securities and Exchange
Commission (SEC), or the SEC requires that trading be restricted.
We also reserve the right to postpone payments for up to six months if such
payments are based on values that do not depend on the investment performance of
the Sub-Accounts.
In addition, we may defer transfers under the circumstances stated in (a) and
(b) above, and in the Transfers section of the Investment Options provision.
RIGHT TO CANCEL INCREASES
If you request an increase in Face Amount which results in a new Surrender
Charge, you have the same rights to cancel the increase as described on the
front cover of this policy, under the Right to Return Policy. If canceled, the
Policy Value and the Surrender Charge will be recalculated to the amounts they
would have been, had the increase not taken place. You may request a refund for
all or a portion of premiums paid during this period. Upon payment of the
refund, we will recalculate the Policy Value and the Surrender Charge to the
amounts they would have been, had the premiums not been paid.
Page 19
<PAGE> 28
SUICIDE
If within two years after the Issue Date any of the Lives Insured die by
suicide, the policy will terminate and our liability will be limited to:
(a) the premiums paid; less
(b) any partial Net Cash Surrender Value withdrawals; and less
(c) the Policy Debt.
If any of the Lives Insured die by suicide, within two years after the effective
date of an applied for increase in Face Amount, we will credit the amount of any
Monthly Deductions taken for the increase and reduce the Face Amount to what it
was prior to the increase. If the last death is by suicide, the Death Benefit
for that increase will be limited to the Monthly Deductions taken for the
increase.
We reserve the right under this provision to obtain evidence of the manner and
cause of death of the Lives Insured.
BENEFICIARY
The following four sections will apply unless there is a beneficiary appointment
in force that provides otherwise.
BENEFICIARY CLASSIFICATION. You can appoint beneficiaries for the Insurance
Benefit in three classes: primary, secondary and final. Beneficiaries in the
same class will share equally in the Insurance Benefit payable to them.
PAYMENT TO BENEFICIARIES. We will pay the Insurance Benefit:
(a) to any primary beneficiaries who are alive when the Life Insured dies;
or
(b) if no primary beneficiary is then alive, to any secondary beneficiaries
who are then alive; or
(c) if no primary or secondary beneficiary is then alive, to any final
beneficiaries who are then alive.
CHANGE OF BENEFICIARY. Until the Life Insured's death you can change the
beneficiary by Written Request unless you make an irrevocable designation. We
are not responsible if the change does not achieve your purpose. The change will
take effect as of the date you signed such request. It will not apply to any
payments we made or any action we may have taken before we received your Written
Request.
DEATH OF BENEFICIARY. If no beneficiary is alive when the Life Insured dies, the
Insurance Benefit will be payable to you; or to your estate if you are the Life
Insured. Unless otherwise provided, if a beneficiary dies before the seventh day
after the death of the Life Insured, we will pay the Insurance Benefit as if the
beneficiary had died before the Life Insured.
OWNERSHIP AND ASSIGNMENT
Until the Life Insured's death, without the consent of any beneficiary, except
an irrevocable beneficiary, you as owner can:
(a) receive any amount payable under your policy;
(b) exercise all rights and privileges granted by the policy; and
(c) assign the policy.
An assignment does not bind us until we receive it in writing at our Service
Office. We are not responsible for its validity or its effects. It should be
filed with us in duplicate. We will return a copy.
CHANGE OF OWNER. Until the Life Insured's death, the owner can change the
ownership of the policy by Written Request. The change will take effect as of
the date you signed the Written Request. It will not apply to any payments we
made or any action we may have taken before we received your Written Request.
TRUSTEE OWNER. Should the owner be a trustee, payment to the trustee(s) of any
amount to which the trustee(s) is (are) entitled under the policy, either by
death or otherwise, will fully discharge us from all liability under the policy
to the extent of the amount so paid.
(continued)
Page 20
<PAGE> 29
OWNERSHIP AND ASSIGNMENT (continued)
JOINT OWNERSHIP. Two or more owners will own the policy as joint tenants with
right of survivorship, unless otherwise requested on the application or in any
subsequent assignment of the policy. On death of any of the owners, the deceased
owner's interest in the policy passes to the surviving owner(s).
Any rights and privileges that may be exercised by the owner, may be exercised
only with the consent of all joint owners.
SUCCESSOR OWNER. Upon the owner's death during the lifetime of the Lives
Insured, a named successor owner will, if then living, have all the owner's
rights and interest in the policy. Until the Life Insured's death, the owner,
without the consent of any revocable beneficiary or any successor owner, can
cancel or change the designation of successor owner. This may be done from time
to time by agreement in writing with us.
PROTECTION AGAINST CREDITORS
If permitted by state law, all payments shall be exempt from the debts and
contracts of the owners and beneficiaries, and from seizure by court order.
CURRENCY AND PLACE OF PAYMENT
All payments to or by us will be in U.S. currency. We will make payments from
our Service Office. We may require proof that the person claiming any payment is
entitled to it.
CONTRACT
The policy, application, supplementary benefits, and any endorsements form your
whole contract. A copy of the application is attached to the policy and deemed a
part of it. We will not be bound by any statement that is not in the application
or the policy.
Only our President or one of our Vice-Presidents can agree to amend or modify
the policy or waive any of its provisions. Any change must be in writing.
Statements made by any of the Lives Insured are representations, not warranties.
We will not use any statement by you or any of the Lives Insured to deny a
claim, unless it is written in the application or any supplement to the
application.
VALIDITY
We have the right to contest the validity of this policy based on material
misstatements made in the initial application or an application for policy
change that requires evidence of insurability. However, we cannot contest the
validity of your policy after it has been in force during the lifetime of the
Lives Insured for two years from the Issue Date.
We cannot contest the validity of an applied for increase in Face Amount or the
addition of a Supplementary Benefit after such increase or addition has been in
force during the lifetime of the Lives Insured for two years from the date of
such increase or addition.
We can contest after two years if the policy has been reinstated and has been in
force during the lifetime of the Lives Insured for less than two years from the
reinstatement date. If this is the case, we can only contest the validity in
respect of any fact material to the reinstatement that was misrepresented.
NON-PARTICIPATING
Your policy is non-participating. It does not earn dividends.
AGE AND SEX
If the Age or Sex of any of the Lives Insured was misstated in the application,
we will change the Face Amount of insurance. The new Face Amount will be
determined so that the Death Benefit will be that which the most recent Cost of
Insurance deduction would have purchased for the correct Age and Sex.
Page 21
<PAGE> 30
FLEXIBLE FACTORS
When determining the rate of interest to be used in crediting interest to the
portion of the Policy Value in the Fixed Account, and any changes in that rate,
we will consider the following factors: expected mortality and persistency
experience; expected investment earnings; and expected operating expenses. We
will consider the same factors when we determine the actual cost of insurance;
the deductions from premiums for premium load; administrative charges; and
whenever changes are made to any of these charges. We will not try to recover
any losses in earlier years by increasing your charges in later years.
Adjustments to flexible factors will be by class and be determined by us from
time to time based on future expectations for such factors. Any change will be
determined in accordance with procedures and standards on file with the
Superintendent of Insurance of the state of New York.
HOW VALUES ARE COMPUTED
We provide Cash Surrender Values that are at least equal to those required by
law. A detailed statement of the method of computing the values of this policy
has been filed with the insurance department of the state in which this policy
is delivered.
We use the Commissioners 1980 Standard Ordinary Smoker/Non-Smoker Mortality
Table in computing reserves, and in determining Maximum Cost of Insurance Rates.
Values relating to amounts in the Fixed Account are computed at the Fixed
Account Rate shown in the Table of Values in the Policy Information section.
ANNUAL STATEMENT
Within 30 days after each Policy Anniversary, we will send you a report showing:
(a) the Death Benefit;
(b) the Policy Value;
(c) the current allocation of money in the Fixed Account, the Loan Account
and each of the Investment Accounts;
(d) the value of the units in each chosen Investment Account;
(e) any Loan Account balance and loan interest charged since the last
report;
(f) the premiums paid and policy transactions for the year; and
(g) any further information required by law.
TAX CONSIDERATIONS
It is the intent that this policy be considered as life insurance for tax
purposes, to comply with Section 7702 of the Internal Revenue Code of 1986, or
any other equivalent section of the code. We reserve the right to limit the
amount of premiums paid for this policy, or to make any other reasonable
adjustments to the terms or conditions of this policy if it becomes necessary to
allow it to qualify as life insurance.
This provision should not be construed to guarantee that the policy will be
treated as life insurance or that the tax treatment of life insurance will never
be changed by the future actions of any tax authority.
Page 22
<PAGE> 31
[MANULIFE LOGO]
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY.
PAYABLE ON DEATH OF THE LAST-TO-DIE OF THE LIVES INSURED.
ADJUSTABLE DEATH BENEFIT.
FLEXIBLE PREMIUMS PAYABLE TO THE MATURITY DATE OR UNTIL LAST DEATH, IF EARLIER.
CASH SURRENDER VALUES AND BENEFITS FOR A PORTION OF THE POLICY VALUES ALLOCATED
TO AN INVESTMENT ACCOUNT REFLECT THE INVESTMENT EXPERIENCE OF THE UNDERLYING
SUB-ACCOUNTS. INVESTMENT OPTIONS ARE DESCRIBED IN THE "POLICY VALUE COMPOSITION"
AND THE "INVESTMENT OPTIONS" PROVISIONS. NON-PARTICIPATING (NOT ELIGIBLE FOR
DIVIDENDS).
IMPORTANT NOTICE
To claim a benefit or request a change in your
policy, contact our nearest representative or
write to our Service Office at the address below.
Please tell us promptly of any change in your
address.
WE STRONGLY URGE THAT, BEFORE YOU TAKE ANY ACTION
TO REPLACE THIS OR ANY OTHER POLICY, YOU ASK THE
ADVICE OF THE COMPANY THAT ISSUED THE POLICY.
Service Office Mailing Address:
The Manufacturers Life Insurance Company of New York
P.O. Box 633
Niagara Square Station
Buffalo, NY 14202-0633
Toll Free Number: 1-888-267-7784
Manulife Financial and the block design are registered service
marks of The Manufacturers Life Insurance Company and are used
by it and its subsidiaries.
