<PAGE> 1
As filed with the Securities and Exchange Commission on July 16, 1999.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
(formerly FNAL Variable Life Account I)
(Exact name of trust)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(formerly First North American Life Assurance Company)
(Name of depositor)
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580
(Address of depositor's principal executive offices)
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<S> <C>
A. Scott Logan, President Copy to:
The Manufacturers Life Insurance Company of New York J. Sumner Jones
Corporate Center at Rye Jones & Blouch L.L.P.
555 Theodore Fremd Avenue 1025 Thomas Jefferson St., NW
Rye, New York 10580 Suite 405 West
(Name and Address of Agent for Service) Washington, DC 20007-0805
</TABLE>
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
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<CAPTION>
FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
<S> <C>
1 Cover Page; General Information About Manulife New York, The Separate Account
and The Trust
2 Cover Page; General Information About Manulife New York, The Separate Account
and The Trust
3 *
4 Distribution of the Policies
5 General Information About Manulife New York, The Separate Account and The
Trust
6 General Information About Manulife New York, The Separate Account and The
Trust
7 *
8 *
9 Litigation
10 Policy Summary
11 General Information About Manulife New York, The Separate Account and The
Trust
12 General Information About Manulife New York, The Separate Account and The
Trust
13 Charges and Deductions
14 Premium Payments; Responsibilities Assumed by Manulife New York and MSS
15 Premium Payments
16 **
17 Policy Values; Other Provisions of the Policy
18 General Information About Manulife New York, The Separate Account and The
Trust
19 Other Information - Reports to Policyowners); Responsibilities Assumed by
Manulife New York and MSS
20 *
21 Policy Summary
22 *
23 **
24 Other Provisions of the Policy
25 General Information About Manulife New York, The Separate Account and The
Trust
26 *
27 **
28 Other Information - Directors and Officers
29 General Information About Manulife New York, The Separate Account and The
Trust
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Distribution of the Policies; Responsibilities Assumed by Manulife New York
and MSS
39 Distribution of the Policies
40 *
41 **
42 *
43 *
44 Policy Values
45 *
46 Policy Values; Other Information -- Payment of Proceeds
47 General Information About Manulife New York, The Separate Account and The
Trust
48 *
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
49 *
50 General Information About Manulife New York, The Separate Account and The
Trust
51 Policy Summary
52 Other Information - Substitution of Portfolio Shares
53 **
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
</TABLE>
- --------------
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> 4
PART I
PROSPECTUS
<PAGE> 5
PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
VENTURE VUL
A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes Venture VUL, a flexible premium variable universal
life insurance policy (the "Policy") offered by The Manufacturers Life Insurance
Company of New York ("Manulife New York," "we" or "us").
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 you, the policyowner, to pay premiums and adjust
insurance coverage in light of your current financial circumstances and
insurance needs.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of The Manufacturers Life Insurance Company of
New York Separate Account B (the "Separate Account"). 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 in
which you may invest net premiums. Other sub-accounts and portfolios may be
added in the future.
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 (the "SEC") maintains a web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
Please read this prospectus carefully and keep it for future reference. It is
valid only when accompanied by a current prospectus for the Trust.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Home Office: Service Office Mailing Address:
The Manufacturers Life Insurance Company The Manufacturers Life Insurance Company
of New York of New York
Corporate Center at Rye P.O. Box 633, Niagara Square Station
555 Theodore Fremd Avenue Buffalo, New York 14201-0633
Rye, New York 10580-9966 TELEPHONE: 1-888-267-7784
</TABLE>
THE DATE OF THIS PROSPECTUS IS ______________, 1999
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
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 .................................
Investment Management Fees and Expenses.....................................
Table of Charges and Deductions.............................................
Table of Investment Management Fees and Expenses............................
Table of Investment Options and Investment Advisers.........................
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE
TRUST.........................................................................
Manulife New York...........................................................
The Separate Account........................................................
The Trust...................................................................
Investment Objectives of the Portfolios.....................................
ISSUING A POLICY..............................................................
Requirements................................................................
Temporary Insurance Agreement...............................................
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 Charge..............................................................
Surrender Charges...........................................................
Mortality and Expense Risk Charge...........................................
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..................................................................
Maximum Loanable Amount.....................................................
Effect of Policy Loan.......................................................
Interest Charged on Policy Loans............................................
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Loan Account................................................................
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..........................................................
Assignment of Rights........................................................
Beneficiary.................................................................
Conversion Privlege.........................................................
Flexible Factors............................................................
Incontestability............................................................
Misstatement of Age or Sex..................................................
Suicide Exclusion...........................................................
Supplementary Benefits......................................................
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 Assumed by Manulife New York and MSS.......................
Voting Rights...............................................................
Substitution of Portfolio Shares............................................
Records and Accounts........................................................
State Regulations...........................................................
Litigation..................................................................
Independent Auditors........................................................
Further Information.........................................................
Officers and Directors......................................................
Impact of Year 2000.........................................................
Illustrations...............................................................
Financial Statements........................................................
Appendix A - Sample Illustrations of Policy Values, Cash Surrender values
and Death Benefits..........................................................
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE IT
WOULD NOT BE LAWFUL. YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS, THE PROSPECTUS OF THE TRUST, OR THE STATEMENT OF ADDITIONAL
INFORMATION OF THE TRUST. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
<PAGE> 8
DEFINITIONS
Additional Rating
is an increase to the Cost of Insurance Rate for insureds who do not meet, at a
minimum, our underwriting requirements for the standard Risk Classification.
Age
on any date is the life insured's age on his or her nearest birthday. If no
specific age is mentioned, age means the life insured's age on the Policy
Anniversary nearest to the birthday.
Attained Age
is the age at issue 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 business. A Business Day
ends at the close of regularly scheduled day-time trading of the New York Stock
Exchange 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 underwriters approve issuance of the Policy. If the Policy is
approved without the initial premium, the Effective Date will be the date we
receive at least the minimum initial premium at our Service Office. In either
case, we 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
our general account.
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 we issued the Policy. The Issue Date is also the date from which the
Suicide and Incontestability provisions of the Policy are measured.
Life Insured
is the person whose life is insured under this Policy.
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 life insured's Attained Age 100.
Monthly No-Lapse Guarantee Premium
is one-twelfth of the No-Lapse Guarantee Premium.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
4
<PAGE> 9
Net Policy Value
is the Policy Value less the value in the Loan Account.
Net Premium
is the gross premium paid less the Premium Charge. 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 the period, set at issue, during which the No-Lapse Guarantee is provided.
The No Lapse Guarantee Period is the first five Policy Years for life insureds
with an issue age up to and including age 85. It is not offered to life insureds
whose Issue Age exceeds age 85.
No-Lapse Guarantee Premium
is the annual premium used to determine the Monthly No-Lapse Guarantee Premium.
It is set at issue and is recalculated, prospectively, whenever 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 the life insured changes.
- - a temporary Additional Rating is added (due to a face amount increase)
or terminated.
- - the Death Benefit Option changes.
No-Lapse Guarantee Cumulative Premium
is the minimum amount due to satisfy the No-Lapse Guarantee Cumulative Premium
Test. This amount equals the sum, from issue to the date of the test, of the
Monthly No-Lapse Guarantee Premiums.
No-Lapse Guarantee Cumulative Premium Test
is a test that, if satisfied, during the No Lapse Guarantee Period will keep the
policy in force when the Net Cash Surrender Value is less than zero. The test 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
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 Mailing Address
is P.O. Box 633, Niagara Square Station, Buffalo, New York 14201-0633
5
<PAGE> 10
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 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 us which must be in a form satisfactory to us,
signed and dated by the policyowner, and received at our Service Office.
POLICY SUMMARY
GENERAL
We have prepared the following summary as a general description of the most
important features of the Policy. It is not comprehensive and you should refer
to 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.
DEATH BENEFITS
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. You may change the death benefit option and increase or decrease the
Face Amount.
PREMIUMS
You may pay premiums 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 your instructions and at our
discretion, to one or more of our general account and the sub-accounts of the
Separate Account. You may change your allocation instructions at any time.
You may also transfer amounts among the accounts.
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 you have allocated premiums.
POLICY LOANS
You may borrow an amount not to exceed 90% of your Policy's Net Cash Surrender
Value. Loan interest at a rate of 5.25% during the first ten Policy Years and 4%
thereafter is due on each Policy Anniversary. We will deduct all outstanding
Policy Debt from proceeds payable at the insured's death, or upon surrender.
SURRENDER AND PARTIAL WITHDRAWALS
You may make a partial withdrawal of your 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.
You may surrender your Policy 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 Cumulative Premium Test has been met, a Policy
will lapse (and terminate without value) when its Net Cash Surrender Value is
insufficient to pay the next monthly deduction and a grace period of 61 days
expires without your having made an adequate payment.
6
<PAGE> 11
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 policyowner may reinstate a lapsed Policy at any time within the five year
period following lapse provided the Policy was not surrendered for its Net Cash
Surrender Value. We will require evidence of insurability along with a certain
amount of premium as described under "Reinstatement."
CHARGES AND DEDUCTIONS
We assess certain charges and deductions in connection with the Policy. These
include:
- - charges assessed monthly for mortality and expense risks, cost of
insurance, administration expenses and supplementary benefits, if
applicable,
- - charges deducted from premiums paid, and
- - charges assessed on surrender or lapse.
These charges are summarized in the Table of Charges and Deductions. We may
allow you to request that the sum of all charges assessed monthly for mortality
and expense risks, cost of insurance and administration expenses be deducted
from the Fixed Account or one or more of the sub-accounts of the Separate
Account.
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
You may allocate Net Premiums to the Fixed Account or to one or more of the
sub-accounts of our Separate Account. Each of the sub-accounts invests in the
shares of one of the 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, as amended.
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
Each sub-account of 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 of the Portfolios. 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 below. These fees and expenses are
described in detail in the accompanying Trust prospectus to which reference
should be made.
7
<PAGE> 12
TABLE OF CHARGES AND DEDUCTIONS
<TABLE>
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Premium Charge: 6.6% of each premium paid during the first 10 Policy Years
and 3.6% thereafter.
Surrender Charge: A Surrender Charge is applicable for 10 Policy Years from the
Issue Date or an increase in Face Amount. The Surrender
Charge is determined by the following formula:
Surrender Charge = (Surrender Charge Rate) x (Face Amount
Associated with the Surrender Charge/1000) x (Grading
Percentage)
The Grading Percentage is based on 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 = (Rate per $1000 of Face Amount) +
((80%) x(Surrender Charge Premium))
The Rate per $1000 of Face Amount is based on the age at
policy issue or face amount increase and is set forth in
a table under "Surrender Charges."
The Surrender Charge Premium is the lesser of:
(a) the premiums paid during the first Policy Year (or
premiums attributable to a Face Amount increase)
per $1000 of Face Amount, and,
(b) the Surrender Charge Premium Limit specified in the
Policy per $1000 Face Amount.
The premiums attributable to a Face Amount increase will
equal a portion of each payment made within one year of
the increase plus a portion of the Policy Value at the
time of the increase. A portion of this charge will be
assessed on a partial withdrawal.
Monthly Deductions: - An administration charge of $30 per Policy Month will
be deducted in the first Policy Year. In subsequent
years, the administration charge will be $15 per Policy
Month.
- The cost of insurance charge.
- Any additional charges for supplementary benefits, if
applicable.
- A mortality and expense risks charge. This charge is
calculated as a percentage of the value of the
Investment Accounts and is assessed against the
Investment Accounts. This charge varies by Policy Year
as follows:
</TABLE>
<TABLE>
<CAPTION>
Guaranteed Monthly Guaranteed Annual
Policy Years Mortality and Expense Mortality and
Risks Charge Expense Risks Charge
---------------------------------------------------------------
<S> <C> <C>
1-10 0.0627% 0.75%
11+ 0.0209% 0.25%
</TABLE>
<TABLE>
<S> <C>
All of the above charges, except the mortality and
expense risks charge, are deducted from the Net Policy
Value.
Loan Charges: A fixed loan interest rate of 5.25% during the
first 10 Policy Years and 4% thereafter. Interest
credited to amounts in the Loan Account is guaranteed not
to be less than 4% at all times. The maximum loan amount
is 90% of the Net Cash Surrender Value.
Transfer Charge: A charge of $25 per transfer for each transfer in excess of
12 in a Policy Year.
</TABLE>
8
<PAGE> 13
TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT)*** ANNUAL EXPENSES
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets.. 0.850% 0.360% 1.210%
Science & Technology.......... 1.100% 0.110% 1.210%
International Small Cap....... 1.100% 0.150% 1.250%
Aggressive Growth............. 1.000%+ 0.090% 1.090%
Emerging Small Company........ 1.050% 0.050% 1.100%
Small Company Blend........... 1.050% 0.150%* 1.200%
Mid Cap Growth................ 0.950%+ 0.040% 0.990%
Mid Cap Stock................. 0.925% 0.000%* 0.925%
Overseas...................... 0.950% 0.210% 1.160%
International Stock........... 1.050% 0.200% 1.250%
International Value........... 1.000% 0.300%* 1.300%
Mid Cap Blend................. 0.850%+ 0.050% 0.900%
Small Company Value........... 1.050% 0.180% 1.230%
Global Equity................. 0.900% 0.110% 1.010%
Growth........................ 0.850% 0.050% 0.900%
Large Cap Growth.............. 0.875%+ 0.130% 1.005%
Quantitative Equity........... 0.700% 0.060% 0.760%
Blue Chip Growth.............. 0.875%+ 0.045% 0.920%
Real Estate Securities........ 0.700% 0.060% 0.760%
Value......................... 0.800% 0.050% 0.850%
Equity Index.................. 0.250% 0.150%** 0.400%**
Growth & Income............... 0.750% 0.040% 0.790%
U.S. Large Cap Value.......... 0.875% 0.100%* 0.975%
Equity-Income................. 0.875%+ 0.050% 0.925%
Income & Value................ 0.800%+ 0.090% 0.890%
Balanced...................... 0.800% 0.070% 0.870%
High Yield.................... 0.775% 0.065% 0.840%
Strategic Bond................ 0.775% 0.075% 0.850%
Global Bond................... 0.800% 0.110% 0.910%
Total Return.................. 0.775% 0.100%* 0.875%
Investment Quality Bond....... 0.650% 0.070% 0.720%
Diversified Bond.............. 0.750% 0.140% 0.890%
U.S. Government Securities.... 0.650% 0.070% 0.720%
Money Market.................. 0.500% 0.120% 0.620%
Lifestyle Aggressive 1000#.... 0% 1.110%*** 1.110%
Lifestyle Growth 820#......... 0% 1.000%*** 1.000%
Lifestyle Balanced 640#....... 0% 0.920%*** 0.920%
Lifestyle Moderate 460#....... 0% 0.830%*** 0.830%
Lifestyle Conservative 280#... 0% 0.720%*** 0.720%
</TABLE>
+Management Fees for the portfolios listed below changed effective May 1, 1999.
Prior to May 1, 1999, management fees were as follows:
<TABLE>
<S> <C>
Aggressive Growth Trust 1.050%
Mid Cap Growth Trust 1.000%
Mid Cap Blend Trust 0.750%
Large Cap Growth Trust 0.750%
Blue Chip Growth Trust 0.925%
Equity-Income Trust 0.800%
Income & Value Trust 0.750%
</TABLE>
9
<PAGE> 14
*Based on estimates of payments to be made during the current fiscal year.
**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 0.55%, and Other
Expenses would have been 0.30%, of the average annual net assets of the Equity
Index Trust.
***Reflects expenses of the 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 0.02% higher, except for the Lifestyle Conservative 280 Trust,
which would be 0.03% higher (based on expenses of the Lifestyle Trusts for the
fiscal year ended December 31, 1998) as noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT TOTAL TRUST
TRUST PORTFOLIO FEES OTHER EXPENSES ANNUAL EXPENSES
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000..... 0% 1.130% 1.130%
Lifestyle Growth 820.......... 0% 1.020% 1.020%
Lifestyle Balanced 640........ 0% 0.940% 0.940%
Lifestyle Moderate 460........ 0% 0.850% 0.850%
Lifestyle Conservative 280.... 0% 0.750% 0.750%
</TABLE>
# Each Lifestyle Trust will bear its own pro rata share of the fees and expenses
incurred by the Underlying Portfolios in which it invests, 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, MSS is
currently paying those expenses as described in footnote (***) above.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT ADVISERS
<TABLE>
<CAPTION>
SUBADVISER PORTFOLIO
<S> <C>
A I M Capital Management, Inc. Mid Cap Growth Trust
Aggressive Growth Trust
AXA Rosenberg Investment Management LLC Small Company Value Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Fidelity Management Trust Company Mid Cap Blend Trust
Large Cap Growth Trust
Overseas Trust
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Manufacturers Adviser Corporation Pacific Rim
Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Equity Index Trust
Money Market Trust
Lifestyle Trusts
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
SUBADVISER PORTFOLIO
<S> <C>
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
State Street Global Advisors Growth Trust
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Growth & Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
</TABLE>
Each of the Trust's Subadvisers, except Capital Guardian Trust Company, Fidelity
Management Trust Company and State Street Global Advisors, is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE TRUST
MANULIFE NEW YORK
We are a stock life insurance company organized under the laws of New York on
March 4, 1992. Our principal office is located at Corporate Center at Rye, 555
Theodore Fremd Avenue, Rye, New York 10580. We are a wholly-owned subsidiary of
The Manufacturers Life Insurance Company of North America ("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.
Our ultimate parent is The Manufacturers Life Insurance Company ("Manulife
Financial"), 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 Financial merged with the
combined company retaining the Manulife Financial name.
Effective January 1, 1996, immediately following the merger of NAL and
Manulife Financial, Manulife North America experienced a corporate
restructuring which resulted in the formation of a newly organized holding
corporation, Manulife-Wood Logan Holding Co., Inc., formerly NAWL Holding
Co., Inc. ("MWL"). MWL holds all of the outstanding shares of Manulife North
America and Wood Logan Associates, Inc. ("WLA"). As of June 1, 1999, MWL is
owned 77.5% by The Manufacturers Life Insurance Company (U.S.A.) and 22.5% by
MRL Holding, LLC.
On January 20, 1998, the Board of Directors of Manulife Financial announced that
it had asked the management of Manulife Financial to prepare a plan for
conversion of Manulife Financial from a mutual life insurance company to an
investor-owned, publicly traded stock company. Any demutualization plan for
Manulife Financial is subject to the approval of the Manulife Financial Board of
Directors and participating policy holders as well as regulatory approval.
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<PAGE> 16
RATINGS
Manulife New York's financial ratings are as follows:
A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Very strong in financial strength; 2nd category of 21
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned as a measure of Manulife New York's ability to
honor the death benefit and life annuitization guarantees 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.
THE SEPARATE ACCOUNT
We established the Separate Account on May 6, 1997, subject to approval by the
Superintendent of Insurance of New York. The Separate Account holds assets that
are segregated from all of our other assets. The Separate Account is currently
used only to support variable life insurance policies.
ASSETS OF THE SEPARATE ACCOUNT
We are 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 Separate Account
without regard to our other income, gains or losses. We will at all times
maintain assets in the Separate Account with a 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 we conduct. However, our
obligations under the policies are part of our general corporate obligations.
REGISTRATION
The Separate Account is registered with the SEC under the Investment Company Act
of 1940, as amended (the "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 SEC 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.
THE 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 us or life insurance
companies affiliated with us. We may also purchase shares through our 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.
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<PAGE> 17
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.
ELIGIBLE PORTFOLIOS
The Portfolios of the Trust available under the Policies are as follows:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of capital by
investing in a diversified portfolio that is comprised primarily of common
stocks and equity-related securities of corporations domiciled in countries in
the Pacific Rim region.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital. Current income
is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total market
capitalization or annual revenues of $1 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
The AGGRESSIVE GROWTH TRUST (formerly, the Pilgrim Baxter Growth Trust) seeks
long-term capital appreciation by investing the portfolio's asset principally in
common stocks, convertible bonds, convertible preferred stocks and warrants of
companies which in the opinion of the subadviser are expected to achieve
earnings growth over time at a rate in excess of 15% per year. Many of these
companies are in the small and medium-sized category.
The EMERGING SMALL COMPANY TRUST (formerly, the Emerging Growth Trust) seeks
long-term growth of capital by investing, under normal market conditions, at
least 65% of the portfolio's total assets in common stock equity securities of
small capitalization ("small cap") growth companies. In general, companies in
which the portfolios invests will have market cap values of less than $1.5
billion at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
between $50 million and $1 billion.
The MID CAP GROWTH TRUST (formerly, the Small/Mid Cap Trust) seeks long-term
capital appreciation by investing the portfolio's assets principally in common
stocks, with emphasis on medium-sized and smaller emerging growth companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities of companies with market capitalizations that approximately
match the range of capitalization of the Wilshire Mid Cap 750 Index.
The OVERSEAS TRUST (formerly, the International Growth & Income Trust) seeks
growth of capital by investing, under normal market conditions, at least 65% of
the portfolio's assets in foreign securities (including American Depositary
Receipts (ADRs) and European Depositary Receipts (EDRs). The portfolio expects
to invest primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by investing
primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in equity securities of companies
located outside the U.S., including emerging markets.
The MID CAP BLEND TRUST (formerly, the Equity Trust) seeks growth of capital by
investing primarily in common stocks of United States issuers and securities
convertible into or carrying the right to buy common stocks.
The SMALL COMPANY VALUE TRUST seeks long term growth of capital by investing in
equity securities of smaller companies which are traded principally in the
markets of the United States.
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<PAGE> 18
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing
primarily in equity securities throughout the world, including U.S. issuers and
emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing primarily in
large capitalization growth securities (market capitalizations of approximately
$1 billion or greater).
The LARGE CAP GROWTH TRUST (formerly, the Aggressive Asset Allocation Trust)
seeks long-term growth of capital by investing, under normal market conditions,
at least 65% of the portfolio's assets in equity securities of companies with
large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks 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.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital (current
income is a secondary objective) and many of the stocks in the portfolio are
expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and satisfactory current income by investing in real estate
related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a market
cycle of three to five years, consistent with reasonable risk, 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.
The EQUITY INDEX TRUST seeks to achieve investment results which approximate the
aggregate total return of publicly traded common stocks which are included in
the Standard & Poor's 500 Composite Stock Price Index.
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of United States issuers which the subadviser
believes are of high quality.
The U.S. LARGE CAP VALUE TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
greater than $500 million.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income and also
long-term capital appreciation by investing primarily in dividend-paying common
stocks, particularly of established companies with favorable prospects for both
increasing dividends and capital appreciation.
The INCOME & VALUE TRUST (formerly, the Moderate Asset Allocation Trust) seeks
the balanced accomplishment of (a) conservation of principal and (b) long-term
growth of capital and income by investing the portfolio's assets in both equity
and fixed-income securities. The subadviser has full discretion to determine the
allocation between equity and fixed-income securities.
The BALANCED TRUST seeks current income and capital appreciation by investing in
a balanced portfolio of common stocks, U.S. and foreign government obligations
and a variety of corporate fixed-income securities.
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, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent with
preservation of capital by giving its subadviser broad discretion to deploy the
portfolio's assets among certain segments of the fixed-income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
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<PAGE> 19
The GLOBAL BOND TRUST (formerly, the Global Government Bond Trust) seeks to
realize maximum total return, consistent with preservation of capital and
prudent investment management by investing the portfolio's asset primarily in
fixed income securities denominated in major foreign currencies, baskets of
foreign currencies (such as the ECU), and the U.S. dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing, under
normal market conditions, at least 65% of the portfolio's assets in a
diversified portfolio of fixed income securities of varying maturities. The
average portfolio duration will normally vary within a three- to six-year time
frame based on the subadviser's forecast for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST (formerly, the Conservative Asset Allocation Trust)
seeks high total return as is consistent with the conservation of capital by
investing at least 75% of the portfolio's assets in fixed-income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current income
consistent with preservation of capital and maintenance of liquidity, by
investing 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.
The MONEY MARKET TRUST seeks maximum current income consistent with preservation
of principal and liquidity by investing in high quality money market instruments
with maturities of 397 days or less issued primarily by United States entities.
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth of capital
(current income is not a consideration) by investing 100% of the Lifestyle
Trust's assets in other portfolios of the Trust ("Underlying Portfolios") which
invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of capital with
consideration also given to current income by investing approximately 20% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed income securities and approximately 80% of its assets in Underlying
Portfolios which invest primarily in equity securities.
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 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.
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 current
income by investing approximately 60% of 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.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of current
income with some consideration also given to growth of capital 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.
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<PAGE> 20
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 our
satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex, with prior approval from Manulife New York. A Policy will
generally be issued only on the lives of insureds from ages 0 through 90.
Each Policy has a Policy Date, an Effective Date, an Issue Date, and a Maturity
Date (See "Definitions" above).
The Policy Date is the date from which the first monthly deductions are
calculated and from which Policy Years, Policy Months and Policy Anniversaries
are determined. The Effective Date is the date we become obligated under the
Policy and when the first monthly deductions are deducted from the Policy Value.
The Issue Date is the date from which Suicide and Incontestability are measured.
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 our underwriters approve issuance of
the Policy; and
(iii) the Issue Date will be the date we issue the Policy.
If an application accepted by Manulife New York is not accompanied by a check
for the initial premium:
(i) the Policy Date will be the date we issue 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 we issue 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 $100,000.
BACKDATING A POLICY
Under limited circumstances, we 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 earlier 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 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.
As of the Effective Date, the premiums paid plus interest credited, net of the
premium charge, will be allocated among the Investment Accounts and/or Fixed
Account in accordance with the policyowner's instructions unless such amount is
first allocated to the Money Market portfolio for the duration of the Right to
Examine period.
TEMPORARY INSURANCE AGREEMENT
In accordance with Manulife New York's underwriting practices, temporary
insurance coverage may be provided under the terms of a Temporary Insurance
Agreement. Generally, temporary life insurance may not exceed $1,000,000 and
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<PAGE> 21
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 life insured meets our
usual and customary underwriting standards for the coverage applied for.
The acceptance of an application is subject to our underwriting rules, and we
reserve 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 risk rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund of the premium within 10 days after it is
received. This ten day period is known as the "free look" period. The Policy can
be mailed or delivered to the Manulife New York agent who sold it or to the
Manulife New York 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, Manulife New York will refund any
premium paid. Manulife New York reserves the right to delay the refund of any
premium paid by check until the check has cleared.
If the Policy is purchased in connection with a replacement of an existing
policy (as defined below), the policyowner may also cancel the Policy by
returning it to the Service Office or the Manulife New York agent who sold it at
any time within 60 days after receipt of the Policy. Within 10 days of receipt
of the Policy by Manulife New York, it will pay the policyowner the Policy
Value, computed at the end of the valuation period during which the Policy is
received by Manulife New York. 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 attorney or the
Manulife New York agent 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 or an existing life insurance policy. This
description, however, does not necessarily cover all situations which could be
considered a replacement of an existing life insurance policy. Therefore, a
policyowner should consult with his or her attorney or Manulife New York agent
regarding whether the purchase of a new life insurance policy is a replacement
of an existing life insurance policy.
If you request an increase in face amount which results in new surrender
charges, you 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. You 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.
LIFE INSURANCE QUALIFICATION
A Policy must satisfy either one of two tests to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended (the "Code"). At the time of application, the policyowner must choose
either the Cash Value Accumulation Test or the Guideline Premium Test. The test
cannot be changed once the Policy is issued.
CASH VALUE ACCUMULATION TEST
Under the Cash Value Accumulation Test ("CVAT"), the Policy Value must be less
than the Net Single Premium necessary to fund future Policy benefits, assuming
guaranteed charges and 4% net interest. To ensure that a Policy meets the CVAT,
we will generally increase the death benefit, temporarily, to the required
minimum amount. However, we reserve the right to require evidence of
insurability should a premium payment cause the death benefit to increase by
more than the premium payment amount. Any excess premiums will be refunded.
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).
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<PAGE> 22
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, we may refund any excess premiums paid. In
addition, these changes could reduce the future premium limitations.
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 life insured. The Minimum Death Benefit Percentages for this test
appear in the Policy.
DEATH BENEFITS
If the Policy is in force at the time of the death of the life insured, we 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 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
Manulife New York. If the insurance benefit is paid in one sum, we will pay
interest from the date of death to the date of payment. If the life insured
should die after our receipt of a request for surrender, no insurance benefit
will be payable, and we will pay only the Net Cash Surrender Value.
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 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. We
reserve 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. We will not allow
a change in death benefit option if it would cause the Face Amount to decrease
below $100,000.
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.
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.
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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. We reserve
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 we
approve the requested increase. Increases in Face Amount are subject to
satisfactory evidence of insurability. We reserve the right to refuse a
requested increase if the life insured's Attained Age at the effective date of
the increase would be greater than 90.
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. The premiums
attributable to the new Face Amount will not exceed the surrender charge premium
limit associated with that increase. 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 a 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 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.
CHANGING BOTH THE FACE AMOUNT AND THE DEATH BENEFIT OPTION
If a policyowner requests to change both the Face Amount and the Death Benefit
Option in the same month, the Death Benefit Option change shall be deemed to
occur 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 policyowner 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. We will not allow a
decrease in the Face Amount if it is for the reduction or termination of a prior
Face Amount increase which has been in force for less than one year. Under no
circumstances should the sum of all decreases cause the policy to fall below the
minimum Face Amount of $100,000. Decreases in Face Amount will not result in a
decrease in surrender charges.
PREMIUM PAYMENTS
INITIAL PREMIUMS
No premiums will be accepted prior to receipt of a completed application by
Manulife New York. 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.
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On the later of the Effective Date or the date a premium is received, 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.
We may refuse any premium payment that would cause the Policy to fail to qualify
as life insurance under the Code. We also reserve 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.
MAXIMUM PREMIUM LIMITATION
If the Policy is issued under the Guideline Premium Test, 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, we 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 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 Manulife New York is received at its
Service Office.
CHARGES AND DEDUCTIONS
PREMIUM CHARGE
During the first 10 Policy Years, we deduct a premium charge from each premium
payment, equal to 6.6% of the premium. Thereafter the premium charge is equal to
3.6% of the premium. The premium charge is designed to cover a portion of our
acquisition and sales expenses and premium taxes.
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<PAGE> 25
SURRENDER CHARGES
We will deduct a Surrender Charge if during the first 10 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, or
- - the Policy lapses.
The surrender charge, together with a portion of the premium charge, is designed
to compensate us for some of the expenses we incur in selling and distributing
the Policies, including agents' commissions, advertising, agent training and the
printing of prospectuses and sales literature.
SURRENDER CHARGE CALCULATION
The Surrender Charge is determined by the following formula (the calculation is
also described in words below):
Surrender Charge = (Surrender Charge Rate) x (Face Amount associated with the
Surrender Charge / 1000) x (Grading Percentage)
Definitions of the Formula Factors Above
Face Amount of the Policy Associated with the Surrender Charge
The Face Amount associated with the Surrender Charge equals the Face Amount for
which the Surrender Charge is being applied.
Surrender Charge Rate (the calculation is also described in words
below)
Surrender Charge Rate = (X) + ((80%) x (Surrender Charge Premium))
Where "X" is equal to:
Table for Rate per $1,000 of Face:
<TABLE>
<CAPTION>
Age at Issue or Age at Issue
Increase Rate per $1,000 of Face or Increase Rate per $1,000 of Face
-------- ----------------------- ----------- -----------------------
<S> <C> <C> <C>
0 $2.00 18 $4.25
1 2.13 19 4.38
2 2.25 20 4.50
3 2.38 21 5.00
4 2.50 22 5.50
5 2.63 23 6.00
6 2.75 24 6.50
7 2.88 25 7.00
8 3.00 26 7.20
9 3.13 27 7.40
10 3.25 28 7.60
11 3.38 29 7.80
12 3.50 30 8.00
13 3.63 31 8.04
14 3.75 32 8.08
15 3.88 33 8.12
16 4.00 34 8.16
17 4.13 35 and over 8.20
</TABLE>
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<PAGE> 26
The Surrender Charge Premium is the lesser of:
a. the premiums paid during the first Policy Year per $1,000 of
Face Amount at issue or following a Face Amount increase, and
b. the Surrender Charge Premium Limit specified in the Policy per
$1,000 of Face Amount.
Grading Percentage
The grading percentages during the Surrender Charge Period and set forth in the
table below apply to the initial Face Amount and to all subsequent Face Amount
increases.
The grading percentage is based on the Policy Year in which the transaction
causing the assessment of the charge occurs as set forth in the table below:
<TABLE>
<CAPTION>
Surrender Surrender Charge
Charge Period Grading Percentage
<S> <C>
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 30%
9 20%
10 10%
11 0%
</TABLE>
Within a Policy Year, grading percentages will be interpolated on a monthly
basis. For example, if the policyowner surrenders the Policy during the fourth
month of Policy Year 4, the grading percentage will be 67.5%.
Formulas Described in Words
Surrender Charge
The Surrender Charge is determined by multiplying the Surrender Charge Rate by
the Face Amount associated with the Surrender Charge divided by 1000. The amount
obtained is then multiplied by the Grading Percentage, a percent which starts at
100% and grades down each policy month to zero over a period not to exceed 10
years.
Surrender Charge Rate
The Surrender Charge Rate is equal to the sum of (a) plus (b) where (a) equals
"X" (see Table above) and (b) equals 80% times the Surrender Charge Premium.
Illustration of Maximum Surrender Charge Calculation
Assumptions
- - 45 year old male (standard risks and nonsmoker status)
- - Policy issued 7 years ago
- - $7,785 in premiums has been paid on the Policy in equal annual
installments over the 7 year period
- - Surrender Charge Premium for the Policy is $15.26
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<PAGE> 27
- - Face Amount of the Policy at issue is $500,000 and no increases have
occurred
- - Policy is surrendered during the first month of the seventh policy year.
Maximum Surrender Charge
The maximum Surrender Charge to be assessed would be $4,082 determined as
follows:
First, the Surrender Charge Rate is determined by applying the Surrender Charge
Rate formula as set forth below.
Surrender Charge Rate = (8.20) + ((80%) x (Surrender Charge Premium))
$20.41 = (8.20) + ((80%) x (15.26))
The Surrender Charge Rate is equal to $20.41
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 (Face Amount of the Policy
associated with the Surrender Charge / 1000)x (Grading Percentage)
$4,082 = (20.41) x ($500,000 /1000) x (40%)
The maximum Surrender Charge is equal to $4,082.
Depending upon the Face Amount of the Policy, the age of the insured at issue,
premiums paid under the Policy and the performance of the underlying investment
options, the Policy may have no Cash Surrender Value and therefore, the
policyowner may receive no surrender proceeds upon surrendering the Policy.
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 to the Net
Cash Surrender Value of the Policy as at the date of 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.
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 is 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. These charges consist of:
- - an administration charge;
- - a charge for the cost of insurance;
- - a mortality and expense risks charge;
- - if applicable, a charge for any supplementary benefits added to the
Policy.
Unless otherwise allowed by us and specified by the policyowner, the Monthly
Deductions 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.
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<PAGE> 28
If the Policy is still in force on the Maturity Date, we will pay the
policyowner the Net Cash Surrender Value as of the Maturity Date of the Policy.
ADMINISTRATION CHARGE
This charge will be equal to $30 per Policy Month in the first Policy Year. For
all subsequent Policy Years, the administration charge will be $15 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.
For Death Benefit Option 1, 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 after the
deduction of monthly cost of insurance.
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 are based upon the issue age, duration of
coverage, sex, and Risk Classification of the life insured. These rates may be
higher in early Policy Years due to recovery of initial acquisition costs.
Cost of insurance rates will generally increase with the age of the life
insured. The first year cost of insurance rate is guaranteed.
The cost of insurance rates reflect our 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 life 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 life 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 Smoker Distinct Mortality
tables.
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge may apply to such
Supplementary Benefits.
MORTALITY AND EXPENSE RISKS CHARGE
A monthly charge equal to a percentage of the value of the Investment Accounts
is assessed against the Investment Accounts. This charge is to compensate us for
the mortality and expense risks we assume under the Policy. The mortality risk
assumed is that the life insured may live for a shorter period of time than we
estimated. The expense risk assumed is that expenses incurred in issuing and
administering the Policy will be greater than we estimated. We will realize a
gain from this charge to the extent it is not needed to provide benefits and pay
expenses under the Policy.
24
<PAGE> 29
The charge varies by Policy Year as follows:
<TABLE>
<CAPTION>
Policy Year Guaranteed Monthly Mortality and Equivalent Annual Mortality and
Expense Risk Charge Expense Risk Charge
- --------------------------------------------------------------------------- --------------------------------------
<S> <C> <C>
1-10 0.0627% 0.75%
11 0.0209% 0.25%
</TABLE>
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a Policy
Year. The charge will be deducted from the Investment Account or the Fixed
Account to which the transfer is being made. All transfer requests received by
us on the same Business Day are treated as a single transfer request.
Transfers under the Dollar Cost Averaging and Asset Allocation Balancer programs
do not count against the number of free transfers permitted per 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 and immediate family members of the foregoing. We reserve the
right to reduce any of the Policy's 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 we believe 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. We may modify from time to time, on a uniform basis, both the
amounts of reductions and the criteria for qualification.
SPECIAL PROVISIONS FOR EXCHANGES
We will permit owners of certain fixed life insurance policies issued either by
Manulife New York 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
Manulife New York). Policyowners considering an exchange should consult their
tax advisors as to the tax consequences of an exchange.
COMPANY TAX CONSIDERATIONS
At the present time, we make no charge to the Separate Account for any Federal,
state, or local taxes that we incur that may be attributable to the Separate
Account or to the Policies. We, however, reserve 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
25
<PAGE> 30
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.
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 us. 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.
A Business Day is any day that the New York Stock Exchange is open for business.
A Business Day ends at the close of regularly scheduled day-time trading of the
New York Stock Exchange on that day.
Units are valued at the end of each Business Day. When an order involving the
crediting or canceling 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. (Transfers involving the Fixed Account are
subject to certain limitations noted below under "Transfers Involving Fixed
Account.") Transfer requests must be in writing in a format satisfactory to
Manulife New York.
26
<PAGE> 31
We reserve the right to impose limitations on transfers, including the maximum
amount that may be transferred. We also reserve the right to modify or terminate
the transfer privilege at any time in accordance with applicable law. Transfers
may also be delayed when any of the events described under items (i) through
(iii) in "Payment of Proceeds" occur. Transfer privileges are also subject to
any restrictions that may be imposed by the Trust. In addition, we reserve the
right to defer the transfer privilege at any time when we are unable to purchase
or redeem shares of 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.
Such transfers will not count against the twelve transfers that may be made free
of charge in any Policy Year.
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 ("DCA") program.
Under DCA program, the policyowner will designate an amount which will be
transferred monthly from one Investment Account into any other Investment
Account(s) or the Fixed Account. Currently, no charge will be made for this
program, although we reserve the right to institute a charge on 90 days' written
notice to the policyholder. If insufficient funds exist to effect a DCA
transfer, the transfer will not be effected and the policyowner will be so
notified.
We reserve 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, we 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, we reserve the right to institute
a charge on 90 days' written notice to the policyowner.
We reserve the right to cease to offer this program as of 90 days after written
notice is sent to the policyowner.
POLICY LOANS
While this Policy is in force and has an available loan value, a policyowner may
borrow against the Policy Value of the Policy. The Policy serves as the only
security for the loan. Policy loans may have tax consequences, see "Tax
Treatment of Policy Benefits - Interest on Policy Loans After Ten Years" and
"Tax Treatment of Policy Benefits - Policy Loan Interest."
MAXIMUM LOANABLE AMOUNT
The Maximum Loanable Amount is 90% of the Policy's Net Cash Surrender Value.
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
27
<PAGE> 32
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 life 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. During the first 10 Policy Years, the rate of interest
charged will be an effective annual rate of 5.25%. Thereafter, the rate of
interest charged will be an effective annual rate of 4%, subject to our
reservation of the right to increase the rate as described under the heading
"Tax Treatment of the Policy - Interest on Policy Loans After Year 10." 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 Cash
Surrender Value. At least 61 days prior to termination, we 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 principal, plus interest to the
next Policy Anniversary, will be deducted from the Investment Accounts or the
Fixed Account and transferred to the Loan Account. Amounts transferred into the
Loan Account cover the loan principal plus loan interest due to the next Policy
Anniversary. 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% during the first ten policy years and 0%
thereafter, and is guaranteed not to exceed 1.25%. (The Loan Interest Credited
Differential is the difference between the rate of interest charged on a policy
loan and the rate of interest credited to amounts in the Loan Account.) We may
change the Current Loan Interest Credited Differential as of 90 days after
sending you written notice of such change.
For a Policy that is not a MEC, the tax consequences associated with a loan
interest credited differential of 0% are unclear. A tax advisor should be
consulted before effecting a loan to evaluate the tax consequences that may
arise in such a situation. If we determine, in our sole discretion, that there
is a substantial risk that a loan will be treated as a taxable distribution
under Federal tax law as a result of the differential between the credited
interest rate and the loan interest rate, we retain the right to increase the
loan interest rate to an amount that would result in the transaction being
treated as a loan under Federal tax law. If this amount is not prescribed by any
IRS ruling or regulation or any court decision, the amount of increase will be
that which we consider to be most likely to result in the transaction being
treated as a loan under Federal tax law.
LOAN ACCOUNT ADJUSTMENTS
On the first day of each Policy Anniversary the difference between the Loan
Account and the Policy Debt is transferred to the Loan Account from the
Investment Accounts or the Fixed Account. Amounts transferred to the Loan
Account will be taken from the Investment Accounts and the Fixed Account in the
same proportion as the value in each Investment Account and the Fixed Account
bears to the Net Policy Value.
28
<PAGE> 33
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the death of
the life 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 Manulife New York not specifically designated in writing as loan
repayments will be treated as premiums. However, when a portion of the Loan
Account amount is allocated to the Fixed Account, we reserve the right to
require that premium payments be applied as loan repayments.
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."
Withdrawals will be limited if they would otherwise cause the Face Amount to
fall below $100,000.
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.
Partial withdrawals do not affect the Face Amount of a Policy if Death Benefit
Option 2 is in effect.
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." We 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
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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 charge. If the required payment is not received by the end of
the grace period, the Policy will terminate with no value.
NO-LAPSE GUARANTEE
As long as the No-Lapse Guarantee Cumulative Premium Test is satisfied during
the No-Lapse Guarantee Period, as described below, we 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 fall to zero or
below during such period.
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 (i)
the face amount of the Policy is changed, (ii) there is a Death Benefit Option
change, (iii) there is a decrease in the Face Amount of insurance due to a
partial withdrawal, or (iv) there is any change in the supplementary benefits
added to the Policy or in the risk classification of the life insured.
The No Lapse Guarantee Period is the first five Policy Years for life insureds
with an issue age up to and including age 85. It is not offered to life insureds
whose Issue Age exceeds age 85.
While the No-Lapse Guarantee is in effect, we 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
the test has not been satisfied, we 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 charge.
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 taken on or
before the date of the test and less any policy debt is equal to or exceeds 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) The life insured's risk classification is standard or preferred, and
(b) The life insured's Attained Age is less than 46.
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A policyowner can, by making a written request, reinstate a Policy which has
terminated after going into default at any time within the five-year period
following the date of termination subject to the following conditions:
(a) Evidence of the life insured's insurability, satisfactory to Manulife New
York is provided to Manulife New York; and
(b) A premium equal to the amount that was required during the 61 day grace
period following default plus the next two Monthly Deductions must be paid
to Manulife New York.
If the reinstatement is approved, the date of reinstatement will be the later of
the date we approve the policyowner's request or the date the required payment
is received at our 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.
TERMINATION AND MATURITY BENEFIT
TERMINATION OF THE POLICY
Your Policy will terminate 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.
MATURITY BENEFIT
We will pay you the Net Cash Surrender Value of you Policy as of the Maturity
Date provided the Policy has not terminated and the life insured is alive.
THE GENERAL ACCOUNT
The general account of Manulife New York consists of all assets owned by it
other than those in the Separate Account and other separate accounts of Manulife
New York. Subject to applicable law, we have 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
1940 Act. 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 SEC
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
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(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, partial withdrawals, or policy
loans, the minimum amount and duration of the death benefit of the Policy will
be determinable and guaranteed.
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.
OTHER PROVISIONS OF THE POLICY
POLICYOWNER RIGHTS
Unless otherwise restricted by a separate agreement, the policyowner may, until
the earlier of life insured's death or when life insured reaches Attained Age
100:
- - 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 life insured's lifetime by giving
written notice to Manulife New York in a form satisfactory to Manulife New York.
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, we will pay the insurance benefit as if the beneficiary had died
before the life insured.
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CONVERSION PRIVILEGE
You may convert your Policy, at any Policy Anniversary, to a fixed paid-up
benefit, without evidence of insurability. The Death Benefit, 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 the written request for
conversion. Thereafter, the basis for determining the Policy Value will be the
Commissioners 1980 Standard Ordinary Smoker or Non-Smoker Mortality Table and an
interest rate of 4% per year. The Flexible Premium Variable Life coverage cannot
be reinstated after the date of the conversion. After the date of the
conversion, no further Monthly Deductions will be taken from Policy Value.
INCONTESTABILITY
Manulife New York will not contest the validity of a Policy after it has been in
force during any life 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 life insured for two
years. If a Policy has been reinstated and been in force during the lifetime of
the life insured for less than two years from the reinstatement date, we 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 the life 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.
SUICIDE EXCLUSION
If the life insured dies by suicide within two years after the Issue Date, the
Policy will terminate and we will pay only the premiums paid less any partial
Net Cash Surrender Value withdrawal and less any Policy Debt.
If the life insured dies by suicide within two years after an applied for
increase in Face Amount takes effect, 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 life insured's 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 to obtain evidence of the manner and cause of death of the
life insured.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including those providing a death benefit guarantee, term insurance
for an additional insured, providing accidental death coverage, waiving monthly
deductions upon disability, and, in the case of corporate-owned policies,
permitting a change of the life insured. More detailed information concerning
these supplementary benefits may be obtained from an authorized agent of
Manulife New York. The cost, if any, for supplementary benefits will be deducted
as part of the monthly deduction.
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 advisors should be consulted for more complete
information. This discussion is based upon our understanding of the present
Federal income tax laws as they are currently interpreted by the Internal
Revenue Service (the "IRS"). No representation is made as to the likelihood of
continuation of the present Federal income tax laws nor of the current
interpretations by the IRS. 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
circumstances of each individual arrangement. Therefore, if the
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use of such Policies in any such arrangement, the value of which depends in part
on the tax consequences, is contemplated, a qualified tax advisor 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 Code, and thereby to enjoy the tax benefits of
such a contract:
- - The Policy must satisfy the definition of life insurance under Section
7702 of the Code.
- - The investments of the Separate Account must be "adequately diversified"
in accordance with Section 817(h) of the Code and Treasury Regulations.
- - The Policy must be a valid life insurance contract under applicable state
law.
- - 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,
we believe (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, we
may take whatever steps are appropriate and reasonable to attempt to cause such
a Policy to comply with Section 7702. For these reasons, we reserve 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. We believe that
the Separate Account will thus meet the diversification requirement, and we 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.
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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 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." 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, we does
not know what standards will be set forth, if any, in the regulations or rulings
which the Treasury has stated it expects to issue. We therefore reserve 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. We believe 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 excludable from the gross income of
the beneficiary under Section 101(a)(1) of the Code.
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:
- - the aggregate amount of any premiums or other consideration paid for a
Policy; minus
- - 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
Modified Endowment Contract ("MEC"), to the extent such amount has been
excluded from gross income, will be disregarded); plus
- - 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.
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INTEREST ON POLICY LOANS AFTER YEAR 10
If we determine, in our sole discretion, that there is a substantial risk that a
loan will be treated as a taxable distribution under Federal tax law as a result
of the differential between the credit interest rate and the loan interest rate,
we retain the right to increase the loan interest rate to an amount that would
result in the transaction being treated as a loan under Federal tax law. If this
amount is not prescribed by any IRS ruling or regulation or any court decision,
the amount will be that which we consider to be most likely to result in the
transaction being treated as a loan under Federal tax law.
The tax consequences associated with a loan interest credited differential of 0%
are unclear. A tax advisor should be consulted before effecting a loan to
evaluate the tax consequences that may arise in such a situation. If we
determine, in our sole discretion, that there is a substantial risk that a loan
will be treated as a taxable distribution under Federal tax law as a result of
the differential between the credited interest rate and the loan interest rate,
we retain the right to increase the loan interest rate to an amount that would
result in the transaction being treated as a loan under Federal tax law. If this
amount is not prescribed by any IRS ruling or regulation or any court decision,
the amount of increase will be that which we consider to be most likely to
result in the transaction being treated as a loan under Federal tax law.
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 IRS 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 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:
- - 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.
- - 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.
- - 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:
- is made on or after the policyowner attains age 59-1/2;
- is attributable to the policyowner becoming disabled; or
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- 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," or "MEC" which applies to Policies entered into
or materially changed after June 20, 1988.
In general, a Policy will be a MEC 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 Manulife New York 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, we 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 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, we 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 Manulife New York (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.
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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 Manulife New York 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 prior to consulting with a qualified tax advisor. 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 life 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:
- - the value each year of the life insurance protection provided;
- - an amount equal to any employer-paid premiums; or
- - some or all of the amount by which the current value exceeds the
employer's interest in the Policy.
38
<PAGE> 43
Participants should consult with their tax advisor 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. We 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 we 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, and (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; 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.
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 is a Delaware limited liability company organized on October 1, 1997, with
its principal offices located at 73 Tremont Street, Boston, Massachusetts 02108.
MSS acts as the principal underwriter of, and continuously offers, the Policies
pursuant to a Underwriting and Distribution Agreement with us. MSS is a
subsidiary of Manulife North America, the ultimate parent of which is Manulife
Financial. We have a 10% equity interest in MSS. 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
our insurance agent. 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 us. A registered
representative will receive commissions not to exceed 99% of premiums in the
first year. A registered representative will receive commissions which are
normally 2% of all premiums paid in the second year and after, and after the
second anniversary 0.15% of the Net 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 will be eligible for
additional compensation.
RESPONSIBILITIES ASSUMED BY MANULIFE NEW YORK AND MSS
We have entered into an agreement with MSS pursuant to which MSS will pay
selling broker-dealers maximum commission and expense allowance payments subject
to limitations imposed by New York Insurance Law. We will prepare and maintain
all books and records required to be prepared and maintained by MSS with respect
to the Policies, and send all confirmations required to be sent by MSS with
respect to the Policies. We will pay MSS for expenses incurred and services
performed under the terms of the agreement in such amounts and at such times as
agreed to by the parties.
39
<PAGE> 44
Manulife Financial has also entered into a Service Agreement with us pursuant to
which Manulife Financial or its designee will provide to us all issue,
administrative, general services and recordkeeping functions on our behalf with
respect to all of our insurance policies including the Policies.
Finally, we may, from time to time at our sole discretion, enter into one or
more reinsurance agreements with other life insurance companies, under which
policies issued by us may be automatically reinsured, such that our total amount
at risk under a policy would be limited 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.
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, Manulife New York 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
Although we believe it to be unlikely, it is possible that in the judgment of
our management, 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 regulations, because the shares are no longer
available for investment, or for some other reason. In that event, we 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 SEC and the Superintendent of
Insurance of the state of New York may be required.
We also reserve the right to create new separate accounts, combine other
separate accounts with the Separate Account, to establish additional
sub-accounts within the Separate Account, to combine sub-accounts or to transfer
assets in one sub-account to another sub-account, to eliminate existing
sub-accounts and stop accepting new allocations and transfers into the
corresponding fund, to operate the Separate Account as a management investment
company or other form permitted by law, to transfer assets from this Separate
Account to another separate account and from another separate account to this
Separate Account, and to de-register the Separate Account under the 1940 Act. We
would make the change only if permissible under applicable Federal and New York
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
Manulife New York.
40
<PAGE> 45
All records and accounts relating to the Separate Account and the Portfolios
will be maintained by us. All financial transactions will be handled by us. All
reports required to be made and information required to be given will be
provided by us.
STATE REGULATIONS
We are subject to the laws of the State of New York governing insurance
companies and to the regulation of the New York Insurance Department. Regulation
by the New York Insurance Department includes periodic examination of our
financial position and operations, including contract liabilities and reserves.
Regulation by supervisory agencies includes licensing to transact business,
overseeing trade practices, licensing agents, approving policy forms,
establishing reserve requirements, fixing maximum interest rates on life
insurance policy loans and minimum rates for accumulation of surrender values,
prescribing the form and content of required financial statements and regulation
of the type and amounts of permitted investments. Our books and accounts are
subject to review by the New York Insurance Department and other supervisory
agencies at all times, and we file annual statements with these agencies.
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or the Trust.
INDEPENDENT AUDITORS
The consolidated financial statements of The Manufacturers Life Insurance
Company of New York and The Manufacturers Life Insurance Company of New York
Separate Account B at December 31, 1998 and 1997, and for each of the three
years in the period ended December 31, 1998, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the SEC relating to the offering described in this prospectus. This prospectus
does not include all the information set forth in the registration statement.
The omitted information may be obtained from the SEC's principal office in
Washington D.C. upon payment of the prescribed fee. The SEC also maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC 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.
DIRECTORS AND OFFICERS
Our Directors and Officers, together with their principal occupations during the
past few years, are as follows:
<TABLE>
<CAPTION>
Position with
Name the Company Principal Occupation
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bruce Avedon Director* Director, Manulife New York, March 1992 to present; Consultant
Age: 70 (self-employed) September 1983 to present.
Thomas Borshoff Director* Director, Manulife New York, February 1999 to present;
Age: 51 Self-employed, Real Estate Owner/Manager; Chief Executive Officer
and Chairman, First Federal Savings and Loan of Rochester, 1983 to
1997.
</TABLE>
41
<PAGE> 46
<TABLE>
<CAPTION>
Position with
Name the Company Principal Occupation
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John D. DesPrez III Director* Executive Vice President, U.S. Operations, Manulife Financial,
Age: 42 January 1999 to present; Director, WLA, October 1996 to present;
Director, September 1996 to present and Chairman of the Board,
January 1999 to present, of Manulife North America; President,
Manulife North America, September 1996 to December 1998;
President, MIT September 1996 to present; Senior Vice President,
U.S. Annuities, Manulife Financial, September 1996 to December
1998; Vice President, Mutual Funds, Manulife Financial, January
1995 to September 1996; Director, MWL, December 1995 to present;
Director, Wood Logan Distributors, March 1993 to present;
President, North American Funds, March 1993 to September 1996;
Director, Manulife New York, March 1992 to present; Vice
President, Secretary and General Counsel, Manulife North America,
January 1991 to June 1994.
Ruth Ann Fleming Director* Director, Manulife New York, March 1992 to present; Attorney,
Age: 40 consulting services and pro bono activities.
Tracy A. Kane Secretary and Secretary and Counsel, Manulife New York, May 1994 to present;
Age: 37 Counsel Assistant Vice President and Senior Counsel, Manulife North
America, April 1993 to present; Counsel, Fidelity Investments,
prior to April 1993.
Theodore F. Kilkuskie Director* Senior Vice President, U.S. Annuities, Manulife Financial, January
Age: 43 1999 to present; President, Manulife North America, January 1999
to present; Director, Manulife New York, November 1997 to present;
Senior Vice President, U.S. Individual Insurance, Manulife
Financial, August 1998 to December 1998; Director, The
Manufacturers Life Insurance Company of America ("ManAmerica"),
May 1996 to present; Director, MWL, April 1996 to present; Vice
President, U.S. Individual Insurance, Manulife Financial, June
1995 to February 1998; Executive Vice President, Mutual Fund Sales
& Marketing, State Street Research & Management, March 1994 to
June 1995.
David W. Libbey Treasurer Vice President, Treasurer and Chief Financial Officer, Manulife
Age: 52 North America, December 1997 to present; Treasurer, Manulife New
York, November 1997 to present; Vice President, Finance, Manulife
North America, June 1997 to December 1997; Vice President,
Finance, Annuities, Manulife Financial, June 1997 to present; Vice
President & Actuary, Paul Revere Insurance Group, June 1970 to
March 1997.
A. Scott Logan Director* and Director and President, Manulife New York, February 1998 to
Age: 59 President present; Director, MWL, December 1995 to present; Director, Wood
Logan Distributors, July 1990 to present; Director and President,
WLA, August 1986 to present.
James O'Malley Director* Senior Vice President, U.S. Pensions, Manulife Financial, January
Age: 52 1999 to present; Director, Manulife New York, November 1998 to
present; Director, ManAmerica, November 1998 to present; Vice
President, Systems New Business Pensions, Manulife Financial,
1984 to December 1998.
</TABLE>
42
<PAGE> 47
<TABLE>
<CAPTION>
Position with
Name the Company Principal Occupation
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Neil M. Merkl, Esq. Director* Director, Manulife New York, December 1995 to present; Attorney
Age: 67 (self-employed), April 1994 to present; Attorney, Wilson Elser,
1979 to 1994.
John Richardson Director and Senior Executive Vice President, Manulife Financial, January 1999
Age: 61 Chairman of the to present; Executive Vice President, U.S. Operations, Manulife
Board of Financial, November 1997 to December 1998; Chairman of the Board,
Directors* MWL, April 1997 to present; Director, March 1997 to present and
Chairman of the Board, March 1997 to December 1998, Manulife
North America; Director and Chairman of the Board, Manulife New
York, November 1996 to present; Director, MWL, December 1995 to
present; Director and Chairman of the Board, ManAmerica, January
1995 to present; Senior Vice President and General Manager, U.S.
Operations, Manulife Financial, January 1995 to October 1997;
Senior Vice President and General Manager, Canadian Operations,
Manulife Financial, June 1992 to December 1994.
James K. Robinson Director* Director, Manulife New York, March 1992 to present; Retired;
Age: 71 Attorney and Assistant Secretary, Eastman Kodak Company, 1958 to
1991.
Paige Sabine Chief Assistant Vice President and Chief Administrative Officer,
Age: 32 Administrative Manulife New York, August 1998 to present; Director - Divisional
Officer Compliance, Manulife Financial, August 1998 to November 1998;
Manager - US Market Conduct and Compliance, Manulife Financial,
June 1996 to August 1998; Paralegal Manager, Manulife Financial,
April 1995 to June 1996; Paralegal, Manulife Financial, November
1992 to April 1995.
John G. Vrysen Vice President Chief Financial Officer and Treasurer, MWL, January 1996 to
Age: 43 and Chief present; Vice President and Chief Financial Officer, U.S.
Actuary Operations, Manulife Financial, January 1996 to present;
Appointed Actuary, ManAmerica, May 1996 to present; Director,
MWL, December 1995 to present; Vice President and Chief Actuary,
Manulife New York, March 1992 to present; Director, Manulife New
York, March 1992 to February 1998; Vice President and Chief
Actuary, Manulife North America, January 1986 to present.
</TABLE>
*Each Director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and qualified.
IMPACT OF YEAR 2000 [TO BE UPDATED BY AMENDMENT]
We make extensive use of information systems in the operations of our various
businesses, including for the exchange of financial data and other information
with customers, suppliers and other counterparties. We also use software and
information systems provided by third parties in our accounting, business and
investment systems.
The Year 2000 risk, as it is commonly known, is the result of computer programs
being written using two digits, rather than four, to define the applicable year.
Any of our computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the Year 2000. This could result in
systems failures or miscalculations causing disruptions of operations, including
among other things, a temporary inability to process transactions, send premium
billing notices, make claims payments or engage in other normal business
activities.
43
<PAGE> 48
The systems used by us have been assessed as part of a comprehensive written
plan conducted by The Manufacturers Life Insurance Company (collectively with
its subsidiaries, "Manulife Financial"), to ensure that computer systems and
processes of Manulife Financial will continue to perform through the end of this
century and in the next.
In 1996, in order to make Manulife Financial's systems Year 2000 compliant, a
program was instituted to modify or replace both Manulife Financial's
information technology systems ("IT systems") and embedded technology systems
"Non-IT systems"). The phases of this program include (i) an inventory and
assessment of all systems to determine which are critical, (ii) planning and
designing the required modifications and replacements, (iii) making these
modifications and replacements, (iv) testing modified or replaced systems, (v)
redeploying modified or replaced systems and (vi) final management review and
certification. For most IT and Non-IT systems identified as critical,
certification has been completed for Manulife New York. Of those systems
classified as critical, management believes that over 99% were Year 2000
compliant at the end of 1998. Management continues to focus attention on the
remaining 1% of critical systems. Those that affect Manulife New York are
expected to be compliant by the end of the second quarter in 1999. Manulife New
York's non-critical systems were Year 2000 compliant by the end of the first
quarter 1999.
In addition to efforts directed at Manulife Financial's own systems, Manulife
Financial is presently consulting vendors, customers, and other third parties
with which it deals in an effort to ensure that no material aspect of Manulife
Financial's operations will be hindered by Year 2000 problems of these third
parties. This process includes providing third parties with questionnaires
regarding the state of their Year 2000 readiness and, where possible or where
appropriate, conducting further due diligence activities.
Manulife Financial recognizes the importance of preparing for the change to the
Year 2000 and, in January 1999, commenced preparation of contingency plans, in
the event that Manulife Financial's Year 2000 program has not fully resolved its
Year 2000 issues. The Year 2000 Project Management Office for Manulife
Financial's U.S. Division is coordinating the preparation of the Year 2000
contingency plan on behalf of U.S. Division affiliates and subsidiaries.
Contingency planning is targeted for completion by the end of the first quarter
of 1999.
Management currently believes that, with modifications to existing software and
conversions to new software, the Year 2000 risk will not pose significant
operations problems for Manulife Financial's computer systems. As part of the
Year 2000 program, critical systems were "time-shift" tested in the Year 2000
and beyond to confirm that they will continue to function properly before,
during and after the change to the Year 2000. However, there can be no assurance
that Manulife Financial's Year 2000 program, including consulting third parties
and its contingency planning, will avoid any material adverse effect on Manulife
Financial's operations, customer relations or financial condition. Manulife
Financial estimates the total cost of its Year 2000 program will be
approximately $US59.9 million*, of which $US49.6 million* has been incurred
through December 31, 1998; however, there can be no assurance that the actual
cost incurred will not be materially higher than such estimate. Manulife
Financial's Year 2000 costs were $US3.9 million* for the first three months of
1999 and $US7.1 million* for the first three months of 1998. Most costs will be
expensed as incurred; however, those costs attributed to the purchase of new
software and hardware will generally be capitalized. The total cost of the Year
2000 program is not expected to have a material effect on Manulife Financial's
net operating income.
*All dollar values converted from Canadian dollars using the exchange rate of
1.512 in effect March 31, 1999.
ILLUSTRATIONS
The tables set forth in Appendix A 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]
44
<PAGE> 49
PART II
OTHER INFORMATION
UNDERTAKINGS
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 "Company") 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 Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of 44 pages;
Representation pursuant to Section 26 of the Investment Company Act of
1940;
The signatures;
Written consents of the following persons:
Tracy Kane - [TO BE FILED BY AMENDMENT]
John Vrysen - [TO BE FILED BY AMENDMENT]
Ernst & Young LLP- [TO BE FILED BY AMENDMENT]
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 were previously filed in the
Registrant's initial registration statement on Form
S-6 (File No. 333-33351) as filed with the Commission
on August 8, 1997.
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) is incorporated by reference to
Exhibit (b)(3)(a) to post-effective amendment No. 7
to the Registration Statement on Form N-4, file
number 33-46217, filed February 25, 1998 on behalf of
The Manufacturers Life Insurance Company of New York
Separate Account A.
A(3)(b) Selling Agreement between The Manufacturers Life
Insurance Company of New York, Manufactures
Securities Services, LLC (Underwriter), Selling
Broker Dealers, and General Agent is incorporated by
reference to Exhibit (b)(3)(b) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
A(3)(c) Not applicable.
A(4) Not applicable.
A(5) Form of Flexible Premium Variable Life Insurance
Policy is filed herewith.
<PAGE> 50
A(6)(a)(i) Declaration of Intention and Charter of First North
American Life Assurance Company is incorporated by
reference to Exhibit (b)(6)(i) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
A(6)(a)(ii) Certificate of amendment of the Declaration of
Intention and Charter of First North American Life
Assurance Company is incorporated by reference to
Exhibit (b)(6)(i) to post-effective amendment No. 7
to the Registration Statement on Form N-4, file
number 33-46217, filed February 25, 1998 on behalf of
The Manufacturers Life Insurance Company of New York
Separate Account A.
A(6)(a)(iii) Certificate of amendment of the Declaration of
Intention and Charter of The Manufacturers Life
Insurance Company of New York is incorporated by
reference to Exhibit (b)(6)(i) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
(A)(6)(b) By-laws of The Manufacturers Life Insurance Company
of New York are incorporated by reference to Exhibit
(b)(6)(i) to post-effective amendment No. 7 to the
Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account A.
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) is
incorporated by reference to Exhibit A(8)(a) to
pre-effective amendment No. 1 to a Registration
Statement on Form S-6, file number 333-33351, filed
on March 16, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account B.
A(8)(b) Administrative Services Agreement between The
Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company of New York is
incorporated by reference to Exhibit (b)(8)(a) to
post-effective amendment No. 7 to the Registration
Statement on Form N-4, file number 33-46217, filed
February 25, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account A.
A(8)(c) Investment Services Agreement between The
Manufacturers Life Insurance Company of New York and
The Manufacturers Life Insurance Company is
incorporated by reference to Exhibit A(8)(a) to
pre-effective amendment No. 1 to a Registration
Statement on Form S-6, file number 333-33351, filed
on March 16, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account B.
A(9) Not applicable.
A(10)(a) Form of Application for Flexible Premium Variable
Life Insurance Policy is incorporated by reference to
Exhibit A(8)(a) to pre-effective amendment No. 1 to a
Registration Statement on Form S-6, file number
333-33351, filed on March 16, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account B.
<PAGE> 51
2. Consents of the following:
A Opinion and consent of Tracy A. Kane, Esq., Secretary and
Counsel of The Manufacturers Life Insurance Company of New
York - [TO BE FILED BY AMENDMENT]
B Consent of John G. Vrysen, Chief Actuary of The Manufacturers
Life Insurance Company of New York - [TO BE FILED BY
AMENDMENT]
C Consent of Ernst & Young LLP - [TO BE FILED BY AMENDMENT]
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.(i) Powers of Attorney are incorporated by reference to Exhibit A(7)
to pre-effective amendment No. 1 to a Registration Statement on
Form S-6, file number 333-33351, filed on March 17, 1998 on behalf
of The Manufacturers Life Insurance Company of New York Separate
Account B.
7.(ii) Power of Attorney, James O'Malley and Thomas Borshoff - previously
filed as Exhibit (b)(14)(b) to post-effective amendment no. 6 to
Registrant's Registration Statement on Form N-4 File, No.
33-79112, filed March 2, 1999.
<PAGE> 52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE
ACCOUNT B, and the depositor, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW
YORK, have duly caused this registration statement to be signed on their behalf
by the undersigned thereunto duly authorized, in the city of Boston, and
Commonwealth of Massachusetts, on the 15th day of July, 1999.
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK SEPARATE ACCOUNT B
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK
(Depositor)
By:/s/ A. SCOTT LOGAN
---------------------------------------
A. Scott Logan
President
Attest
/s/ TRACY A. KANE
- -------------------------------
Tracy A. Kane
Secretary
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 15th day of July, 1999.
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
/s/ A. SCOTT LOGAN Director and President (Principal
- ------------------------------ Executive Officer)
A. Scott Logan
* Chairman of the Board of Directors
- ------------------------------
John D. Richardson
* Director
- ------------------------------
John D. DesPrez, III
* Director
- ------------------------------
Ruth Ann Flemming
* Director
- ------------------------------
Neil M. Merkl
* Director
- ------------------------------
Thomas Borshoff
* Director
- ------------------------------
James K. Robinson
* Director
- ------------------------------
Theodore Kilkuskie
* Director
- ------------------------------
Bruce Avedon
* Director
- ------------------------------
James O'Malley
* Director
- ------------------------------
Robert Cook
/s/ DAVID W. LIBBEY Treasurer (Principal Financial
- ------------------------------ and Accounting Officer)
David W. Libbey
</TABLE>
*By: /s/ TRACY A. KANE
------------------------------
Tracy A. Kane
Attorney-in-Fact Pursuant
to Powers of Attorney
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
A(5) Form of Flexible Premium Variable Life Insurance Policy
</TABLE>
<PAGE> 1
LIFE INSURED JOHN M DOE
POLICY NUMBER 12 345 678
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
ADJUSTABLE DEATH BENEFIT.
FLEXIBLE PREMIUMS PAYABLE TO THE MATURITY DATE OR UNTIL PRIOR DEATH OF THE LIFE
INSURED.
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 of the policy. "We", "us" and
"our" refer to The Manufacturers Life Insurance Company of New York.
If the life insured is living on the Maturity Date, we will pay you the Net Cash
Surrender Value of the policy.
If the life insured dies while the policy is in force, we will pay the Insurance
Benefit to the beneficiary, subject to the provisions of the policy. The life
insured and the beneficiary are named on page 3 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.
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 FINANCIAL LETTERHEAD]
/s/ A. SCOTT LOGAN /s/ TRACY A. KANE
President Secretary
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Policy Information......................................................................3
Table Of Guaranteed Maximum Cost Of Insurance Rates.....................................4
Definitions.............................................................................5
Qualification As Life Insurance.........................................................6
Payment Of Premiums.....................................................................6
No-Lapse Guarantee......................................................................7
Policy Termination......................................................................7
Reinstatement...........................................................................8
Maturity Benefit........................................................................8
Insurance Benefit.......................................................................8
Policy Value............................................................................9
Policy Value Composition...............................................................11
Separate Account And Sub-Accounts......................................................11
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................................................................................19
Beneficiary............................................................................20
Ownership And Assignment...............................................................20
Protection Against Creditors...........................................................20
Currency And Place Of Payment..........................................................21
Contract...............................................................................21
Validity...............................................................................21
Non-Participating......................................................................21
Age And Sex............................................................................21
Flexible Factors.......................................................................21
How Values Are Computed................................................................22
Annual Statement.......................................................................22
Tax Considerations.....................................................................22
</TABLE>
Any endorsements, any supplementary benefits, and a copy of the application,
follow page 22.
Page 2
<PAGE> 3
POLICY INFORMATION
LIFE INSURED JOHN M. DOE AGE AT POLICY DATE: 35
POLICY NUMBER 12 345 678 POLICY DATE: JAN 1, 1999
ISSUE DATE: FEB 1, 1999
MATURITY DATE: JAN 1, 2064
OWNER JOHN M. DOE
BENEFICIARY AS DESIGNATED IN THE APPLICATION OR SUBSEQUENTLY CHANGED
PREMIUM MODE ANNUALLY
BEGINNING ON
MON DAY YEAR PLANNED PREMIUM
JAN 01 1999 $700.00
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
LIFE INSURED JOHN M. DOE
POLICY NUMBER 12 345 678
PLAN FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
NON-PARTICIPATING
FACE AMOUNT $100,000.00
DEATH BENEFIT OPTION 1
SEX MALE
RISK
CLASSIFICATION NON-SMOKER, STANDARD CLASS
ADDITIONAL
RATING NOT APPLICABLE
PAGE 3.0B
<PAGE> 5
POLICY INFORMATION (CONTINUED) - POLICY 12 345 678
TABLE OF CHARGES
PREMIUM LOAD:
6.60% OF EACH PREMIUM PAID DURING THE FIRST 10 POLICY YEARS.
3.60% OF EACH PREMIUM PAID DURING EACH POLICY YEAR THEREAFTER.
MONTHLY ADMINISTRATION CHARGE:
FOR THE FIRST POLICY YEAR THE CHARGE IS $30.00 PER POLICY MONTH. FOR ALL
SUBSEQUENT POLICY YEARS THE CHARGE IS $15.00 PER POLICY MONTH.
MORTALITY AND EXPENSE RISKS CHARGE:
0.0627% IS DEDUCTED MONTHLY FROM EACH INVESTMENT ACCOUNT VALUE FOR 10
POLICY YEARS AND THEN REDUCES TO 0.0209% THEREAFTER.
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) $8.20 MULTIPLIED BY EACH $1,000 OF FACE AMOUNT; PLUS
(II) 80.0% OF THE SUM OF PREMIUMS PAID IN THE FIRST POLICY YEAR UP TO AN
AMOUNT NOT GREATER THAN THE SURRENDER CHARGE PREMIUM LIMIT SHOWN ON
PAGE 3.2.
FOR AN INCREASE IN FACE AMOUNT
(I) $8.20 MULTIPLIED BY EACH $1,000 OF FACE AMOUNT INCREASE; PLUS
(II) 80.0% OF THE SUM OF PREMIUMS ATTRIBUTABLE TO AN INCREASE IN THE FIRST
YEAR AFTER IT TAKES EFFECT, UP TO AN AMOUNT NOT GREATER THAN THE
SURRENDER CHARGE PREMIUM LIMIT FOR THE INCREASE.
TABLE OF GRADING PERCENTAGES DURING THE SURRENDER CHARGE PERIOD
(APPLICABLE TO THE INITIAL FACE AMOUNT AND SUBSEQUENT INCREASES)
<TABLE>
<CAPTION>
SURRENDER GRADING
CHARGE PERIOD PERCENTAGE
------------- ----------
<S> <C>
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 30%
9 20%
10 10%
11 0%
</TABLE>
GRADING PERCENTAGE SHOWN IS AT BEGINNING OF POLICY YEAR. PROPORTIONATE
GRADING PERCENTAGE APPLIES FOR OTHER POLICY MONTHS.
PAGE 3.1B
<PAGE> 7
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.
<TABLE>
<CAPTION>
<S> <C>
LIFE INSURANCE QUALIFICATION TEST GUIDELINE
PREMIUM TEST
GUIDELINE SINGLE PREMIUM $16,451.95
GUIDELINE LEVEL PREMIUM $1,396.31
NO-LAPSE GUARANTEE PREMIUM $635.10
NO-LAPSE GUARANTEE PERIOD FIRST 5 POLICY
YEARS
MINIMUM FACE AMOUNT $100,000.00
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%
LOAN INTEREST CHARGED RATE
FIRST 10 POLICY YEARS 5.25%
THEREAFTER 4.00%
LOAN INTEREST CREDITED DIFFERENTIAL
FIRST 10 POLICY YEARS 1.25%
THEREAFTER 0%
DEATH BENEFIT DISCOUNT FACTOR 1.0032737
FIRST YEAR GUARANTEED MONTHLY COST OF INSURANCE RATE PER THOUSAND $0.131
SURRENDER CHARGE PREMIUM LIMIT $1,139.05
</TABLE>
PAGE 3.2
<PAGE> 8
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
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, 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 AGGRESSIVE GROWTH TRUST SEEKS TO PROVIDE CAPITAL APPRECIATION.
(5) THE EMERGING SMALL COMPANY TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(6) THE SMALL COMPANY BLEND TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL AND INCOME.
(7) THE MID CAP GROWTH TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
(8) THE MID CAP STOCK TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
(9) THE OVERSEAS TRUST SEEKS TO PROVIDE GROWTH OF CAPITAL.
(10) THE INTERNATIONAL STOCK TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(11) THE INTERNATIONAL VALUE TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(12) THE MID CAP BLEND TRUST SEEKS TO PROVIDE GROWTH OF CAPITAL (CURRENT
INCOME IS A SECONDARY OBJECTIVE).
(13) THE SMALL COMPANY VALUE TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
Page 3.3A
<PAGE> 9
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
LIST OF INVESTMENT FUNDS
(14) THE GLOBAL EQUITY TRUST SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
(15) THE GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
(16) THE LARGE CAP GROWTH TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
(17) THE QUANTITATIVE EQUITY TRUST SEEKS TO ACHIEVE INTERMEDIATE AND
LONG-TERM GROWTH THROUGH CAPITAL APPRECIATION AND CURRENT INCOME.
(18) 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.
(19) THE REAL ESTATE SECURITIES TRUST SEEKS TO ACHIEVE A COMBINATION OF
LONG-TERM CAPITAL APPRECIATION AND SATISFACTORY CURRENT INCOME.
(20) THE VALUE TRUST SEEKS TO REALIZE AN ABOVE-AVERAGE TOTAL RETURN OVER A
MARKET CYCLE OF THREE TO FIVE YEARS, CONSISTENT WITH REASONABLE RISK.
(21) THE EQUITY INDEX TRUST SEEKS TO ACHIEVE INVESTMENT RESULTS WHICH
APPROXIMATE THE TOTAL RETURN OF PUBLICLY TRADED COMMON STOCKS INCLUDED
IN THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX.
(22) THE GROWTH AND INCOME TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL AND INCOME CONSISTENT WITH PRUDENT INVESTMENT RISK.
(23) THE U.S. LARGE CAP VALUE TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL AND INCOME.
(24) THE EQUITY-INCOME TRUST SEEKS TO PROVIDE SUBSTANTIAL DIVIDEND INCOME
AND ALSO LONG-TERM CAPITAL APPRECIATION.
(25) THE INCOME AND VALUE TRUST SEEKS TO REALIZE THE BALANCED ACCOMPLISHMENT
OF (A) CONSERVATION OF PRINCIPAL AND (B) LONG-TERM GROWTH OF CAPITAL
AND INCOME.
(26) THE BALANCED TRUST SEEKS TO PROVIDE CURRENT INCOME AND CAPITAL
APPRECIATION.
(27) 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> 10
POLICY INFORMATION (CONTINUED) - POLICY 1,234,567
LIST OF INVESTMENT FUNDS
(28) THE STRATEGIC BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF TOTAL RETURN
CONSISTENT WITH PRESERVATION OF CAPITAL.
(29) THE GLOBAL BOND TRUST SEEKS TO REALIZE MAXIMUM TOTAL RETURN CONSISTENT
WITH PRESERVATION OF CAPITAL AND PRUDENT INVESTMENT MANAGEMENT.
(30) THE TOTAL RETURN TRUST SEEKS TO REALIZE MAXIMUM TOTAL RETURN CONSISTENT
WITH PRESERVATION OF CAPITAL AND PRUDENT INVESTMENT MANAGEMENT.
(31) THE INVESTMENT QUALITY BOND TRUST SEEKS TO PROVIDE A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH THE MAINTENANCE OF PRINCIPAL AND
LIQUIDITY.
(32) THE DIVERSIFIED BOND TRUST SEEKS TO REALIZE HIGH TOTAL RETURN
CONSISTENT WITH THE CONSERVATION OF CAPITAL.
(33) THE U.S. GOVERNMENT SECURITIES TRUST SEEKS TO OBTAIN A HIGH LEVEL OF
CURRENT INCOME CONSISTENT WITH PRESERVATION OF CAPITAL AND MAINTENANCE
OF LIQUIDITY.
(34) THE MONEY MARKET TRUST SEEKS TO OBTAIN MAXIMUM CURRENT INCOME
CONSISTENT WITH PRESERVATION OF PRINCIPAL AND LIQUIDITY.
(35) THE LIFESTYLE AGGRESSIVE 1000 TRUST SEEKS TO PROVIDE LONG-TERM GROWTH
OF CAPITAL. CURRENT INCOME IS NOT A CONSIDERATION.
(36) THE LIFESTYLE GROWTH 820 TRUST SEEKS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL WITH CONSIDERATION ALSO GIVEN TO CURRENT INCOME.
(37) 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.
(38) 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.
(39) 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> 11
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
GUARANTEED MAXIMUM MONTHLY RATES PER $1,000
OF NET AMOUNT AT RISK
MALE, SMOKER
<TABLE>
<CAPTION>
LIFE LIFE LIFE
INSURED'S INSURED'S INSURED'S
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE RATE AGE RATE AGE RATE
$ $ $
<S> <C> <C> <C> <C> <C>
0 0.3483 35 0.2191 70 4.5400
1 0.0891 36 0.2341 71 4.9241
2 0.0825 37 0.2533 72 5.3608
3 0.0816 38 0.2750 73 5.8525
4 0.0791 39 0.3000 74 6.3883
5 0.0750 40 0.3283 75 6.9808
6 0.0716 41 0.3616 76 7.5916
7 0.0666 42 0.3958 77 8.2100
8 0.0633 43 0.4350 78 8.8258
9 0.0616 44 0.4758 79 9.4575
10 0.0608 45 0.5225 80 10.1325
11 0.0641 46 0.5691 81 10.8675
12 0.0708 47 0.6200 82 11.6833
13 0.0825 48 0.6733 83 12.5858
14 0.0958 49 0.7333 84 13.5408
15 0.1375 50 0.7966 85 14.5166
16 0.1558 51 0.8700 86 15.4816
17 0.1708 52 0.9516 87 16.4216
18 0.1800 53 1.0450 88 17.4475
19 0.1883 54 1.1500 89 18.4600
20 0.1925 55 1.2616 90 19.4741
21 0.1941 56 1.3825 91 20.5100
22 0.1916 57 1.5075 92 21.6108
23 0.1883 58 1.6408 93 23.0250
24 0.1841 59 1.7791 94 24.8458
25 0.1783 60 1.9325 95 27.4966
26 0.1733 61 2.1050 96 32.0458
27 0.1716 62 2.2991 97 40.0166
28 0.1700 63 2.5191 98 54.8316
29 0.1716 64 2.7616 99 83.3333
30 0.1750 65 3.0241
31 0.1808 66 3.2975
32 0.1866 67 3.5841
33 0.1958 68 3.8791
34 0.2066 69 4.1933
</TABLE>
The above rates will be adjusted for any Additional Rating shown in the Policy
Information section.
Page 4
<PAGE> 12
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
GUARANTEED MAXIMUM MONTHLY RATES PER $1,000
OF NET AMOUNT AT RISK
MALE, NON-SMOKER
<TABLE>
<CAPTION>
LIFE LIFE LIFE
INSURED'S INSURED'S INSURED'S
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE RATE AGE RATE AGE RATE
$ $ $
<S> <C> <C> <C> <C> <C>
0 0.3483 35 0.1408 70 2.8858
1 0.0891 36 0.1475 71 3.2425
2 0.0825 37 0.1566 72 3.5466
3 0.0816 38 0.1666 73 3.9533
4 0.0791 39 0.1783 74 4.4100
5 0.0750 40 0.1908 75 4.9000
6 0.0716 41 0.2058 76 5.4216
7 0.0666 42 0.2208 77 5.9700
8 0.0633 43 0.2383 78 6.5391
9 0.0616 44 0.2558 79 7.1433
10 0.0608 45 0.2766 80 7.8058
11 0.0641 46 0.2991 81 8.5433
12 0.0708 47 0.3233 82 9.3766
13 0.0825 48 0.3491 83 10.3158
14 0.0958 49 0.3783 84 11.3425
15 0.1075 50 0.4091 85 12.4333
16 0.1191 51 0.4458 86 13.5666
17 0.1283 52 0.4883 87 14.7325
18 0.1333 53 0.5358 88 15.9075
19 0.1383 54 0.5908 89 17.1075
20 0.1400 55 0.6516 90 18.3491
21 0.1391 56 0.7191 91 19.6533
22 0.1366 57 0.7908 92 21.0625
23 0.1341 58 0.8683 93 22.6358
24 0.1308 59 0.9558 94 24.6375
25 0.1266 60 1.0533 95 27.4966
26 0.1233 61 1.1616 96 32.0458
27 0.1216 62 1.2850 97 40.0166
28 0.1200 63 1.4258 98 54.8316
29 0.1200 64 1.5850 99 83.3333
30 0.1200 65 1.7608
31 0.1225 66 1.9500
32 0.1250 67 2.1550
33 0.1291 68 2.3750
34 0.1341 69 2.6150
</TABLE>
The above rates will be adjusted for any Additional Rating shown in the Policy
Information section.
Page 4
<PAGE> 13
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
GUARANTEED MAXIMUM MONTHLY RATES PER $1,000
OF NET AMOUNT AT RISK
FEMALE, SMOKER
<TABLE>
<CAPTION>
LIFE LIFE LIFE
INSURED'S INSURED'S INSURED'S
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE RATE AGE RATE AGE RATE
$ $ $
<S> <C> <C> <C> <C> <C>
0 0.2408 35 0.1616 70 2.3291
1 0.0725 36 0.1741 71 2.5375
2 0.0675 37 0.1900 72 2.7958
3 0.0658 38 0.2075 73 3.1108
4 0.0641 39 0.2275 74 3.4783
5 0.0633 40 0.2500 75 3.8866
6 0.0608 41 0.2775 76 4.3266
7 0.0600 42 0.3033 77 4.7883
8 0.0583 43 0.3300 78 5.2691
9 0.0575 44 0.3566 79 5.7841
10 0.0566 45 0.3841 80 6.3550
11 0.0575 46 0.4125 81 7.0000
12 0.0600 47 0.4425 82 7.7366
13 0.0625 48 0.4733 83 8.5725
14 0.0666 49 0.5066 84 9.5541
15 0.0783 50 0.5450 85 10.5350
16 0.0825 51 0.5833 86 11.6491
17 0.0866 52 0.6266 87 12.7225
18 0.0908 53 0.6775 88 13.9358
19 0.0941 54 0.7291 89 15.0891
20 0.0966 55 0.7833 90 16.4175
21 0.0983 56 0.8375 91 17.8333
22 0.1008 57 0.8891 92 19.3783
23 0.1025 58 0.9375 93 21.1291
24 0.1058 59 0.9875 94 23.2758
25 0.1075 60 1.0425 95 26.4433
26 0.1116 61 1.1133 96 31.3116
27 0.1150 62 1.1991 97 39.5808
28 0.1183 63 1.3150 98 54.6541
29 0.1233 64 1.4441 99 83.3333
30 0.1291 65 1.5891
31 0.1341 66 1.7325
32 0.1400 67 1.8816
33 0.1458 68 2.0166
34 0.1550 69 2.1683
</TABLE>
The above rates will be adjusted for any Additional Rating shown in the Policy
Information section.
Page 4
<PAGE> 14
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
GUARANTEED MAXIMUM MONTHLY RATES PER $1,000
OF NET AMOUNT AT RISK
FEMALE, NON-SMOKER
<TABLE>
<CAPTION>
LIFE LIFE LIFE
INSURED'S INSURED'S INSURED'S
ATTAINED MONTHLY ATTAINED MONTHLY ATTAINED MONTHLY
AGE RATE AGE RATE AGE RATE
$ $ $
<S> <C> <C> <C> <C> <C>
0 0.2408 35 0.1225 70 1.7666
1 0.0725 36 0.1300 71 1.9450
2 0.0675 37 0.1391 72 2.1658
3 0.0658 38 0.1491 73 2.4350
4 0.0641 39 0.1608 74 2.7516
5 0.0633 40 0.1733 75 3.1100
6 0.0608 41 0.1883 76 3.5033
7 0.0600 42 0.2033 77 3.9258
8 0.0583 43 0.2183 78 4.3775
9 0.0575 44 0.2333 79 4.8708
10 0.0566 45 0.2491 80 5.4266
11 0.0575 46 0.2658 81 6.0633
12 0.0600 47 0.2841 82 6.7991
13 0.0625 48 0.3041 83 7.6466
14 0.0666 49 0.3250 84 8.5858
15 0.0700 50 0.3491 85 9.6150
16 0.0733 51 0.3750 86 10.7150
17 0.0766 52 0.4041 87 11.8925
18 0.0791 53 0.4383 88 13.1341
19 0.0816 54 0.4733 89 14.4591
20 0.0841 55 0.5108 90 15.8658
21 0.0850 56 0.5491 91 17.3816
22 0.0866 57 0.5875 92 19.0500
23 0.0875 58 0.6241 93 20.9500
24 0.0900 59 0.6633 94 23.2758
25 0.0908 60 0.7091 95 26.4433
26 0.0933 61 0.7633 96 31.3116
27 0.0950 62 0.8316 97 39.5808
28 0.0975 63 0.9175 98 54.6541
29 0.1000 64 1.0191 99 83.3333
30 0.1033 65 1.1291
31 0.1058 66 1.2475
32 0.1091 67 1.3675
33 0.1125 68 1.4883
34 0.1183 69 1.6175
</TABLE>
The above rates will be adjusted for any Additional Rating shown in the Policy
Information section.
Page 4
<PAGE> 15
DEFINITIONS
THE FOLLOWING TERMS HAVE SPECIFIC MEANINGS IN YOUR POLICY. PLEASE REFER TO THESE
DEFINITIONS AS YOU READ YOUR POLICY.
ADDITIONAL RATING is an increase in the Cost of Insurance Rate that is applied
when a life insured does not meet, at a minimum, our underwriting requirements
for the standard Risk Classification.
AGE at a specific date means age on the nearest birthday. If no specific date is
mentioned, age means the life insured's age on the Policy Anniversary nearest to
the birthday.
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.
GROSS WITHDRAWAL is the amount of partial Net Cash Surrender Value you request
plus any Surrender Charge applicable to the withdrawal.
FIXED ACCOUNT is that part of the Policy Value which reflects the value you have
in our general account.
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.
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 life insured's attained Age 100.
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 any 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.
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.
(continued)
<PAGE> 16
DEFINITIONS (continued)
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 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 deter-mine 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.
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.
QUALIFICATION AS LIFE INSURANCE
It is the intent that this policy be considered as life insurance for tax
purposes under Section 7702 of the Internal Revenue Code of 1986, or any other
equivalent section of the Code.
To ensure that the policy qualifies, one of the following tests will apply to
the policy. The test you elect is shown in the Policy Information section. Your
election cannot be changed after issue.
GUIDELINE PREMIUM TEST. Under this test, the sum of premiums paid into the
policy may not at any time exceed the guideline premium limitation as of such
time. The guideline premium limitation, is as of any date, the greater of:
(a) the Guideline Single premium, or
(b) the sum of the Guideline Level Premiums to such date.
If you elected this test, the Guideline Single Premium and the Guideline Level
Premium are shown in the Policy Information section.
CASH VALUE ACCUMULATION TEST. Under this test, the Policy Value may not at any
time exceed the net single premium. The net single premium is the one payment
that would be needed on a specific date to provide the Death Benefit under this
policy. It is computed using the same mortality table and interest rate
specified under the How Values Are Computed provision. We reserve the right to
refuse any premium payments that would cause the policy to fail this test.
PAYMENT OF PREMIUMS
No insurance will take effect under this policy before we approve the
application and receive the initial premium. 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 any limitations of the life insurance qualification test you
elect. Any excess premium will be refunded immediately. On request, we will
give you a receipt signed by one of our officers.
You may pay premiums until the Maturity Date.
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.
Page 6
<PAGE> 17
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 test will exclude any period during which the life insured was totally
disabled if the Total Disability Waiver Of Monthly Deductions Supplementary
Benefit is included in the policy.
NO-LAPSE GUARANTEE PREMIUM. The No-Lapse Guarantee Premium is the minimum amount
due at the beginning of each month to satisfy the cumulative premium test.
The No-Lapse Guarantee Premium is shown as an annualized amount in the Table of
Values in the Policy Information section.
The No-Lapse Guarantee Premium 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 life insured's Risk Classification.
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 life 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 you must
pay to bring the policy out of default. 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.
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.
(continued)
Page 7
<PAGE> 18
POLICY TERMINATION (continued)
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. 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 life
insured; 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 BENEFIT
We will pay you the Net Cash Surrender Value as of the Maturity Date provided
the policy is in force and the life insured is alive.
INSURANCE BENEFIT
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, 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 And Withdrawals 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.
(continued)
Page 8
<PAGE> 19
INSURANCE BENEFIT (continued)
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. If you elected the Guideline Premium Test, the sum of the
Death Benefit as described above and any supplemental term life insurance
benefit on the life insured will never be less than the Policy Value at the date
of death, multiplied by the applicable percentage in the table below.
<TABLE>
<CAPTION>
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
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>
For ages not shown, the Applicable Percentage can be found by reducing the above
Applicable Percentages proportionately.
If you elected the Cash Value Accumulation Test, on any date the sum of the
Death Benefit as described above, plus any supplemental term life insurance
benefit on the life insured will always be equal to the amount required on such
date to produce a Policy Value that does not exceed the net single premium
required to fund future benefits under the policy.
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 PREMIUM. 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.
(continued)
Page 9
<PAGE> 20
POLICY VALUE (continued)
Monthly Deductions are due until the Maturity Date.
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 life insured.
Unless you have requested otherwise and that request is allowed by us, or you do
not have sufficient funds in an account, 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 life 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, on the Policy Date, and subsequently for
each Face Amount increase, are based on the life insured's Age, Sex, Risk
Classification, and the duration that the coverage has been in force. We will
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 calculation will reflect any Additional Rating shown in
the Policy Information section. 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 partial withdrawals; 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.
Page 10
<PAGE> 21
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. Such interest, once credited is non-forfeitable.
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.
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 the Separate
Account And Sub-Accounts 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.
(continued)
Page 11
<PAGE> 22
SEPARATE ACCOUNT AND SUB-ACCOUNTS (continued)
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) deregister 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 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.
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 approval of the Superintendent of Insurance of the
state of New York.
(continued)
Page 12
<PAGE> 23
SEPARATE ACCOUNT AND SUB-ACCOUNTS (continued)
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.
(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.
(continued)
Page 13
<PAGE> 24
INVESTMENT OPTIONS (continued)
(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.
You should consult your tax adviser before making a decision to take out a new
loan.
AVAILABLE LOAN VALUE. The available loan value on any date is 90% of the Net
Cash Surrender Value.
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.
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.
(continued)
Page 14
<PAGE> 25
POLICY LOAN CONDITIONS (continued)
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 the effective annual Loan Interest Charged Rate
shown in the Table of Values in the Policy Information section.
After the tenth Policy Year, we will increase the Loan Interest Charged Rate at
any time it is determined that the rate being charged would cause a loan to be
taxable under any applicable ruling, regulation or court decision. We will
increase the Loan Interest Charged Rate to an amount that would result in the
transaction being treated as a loan under federal tax law.
Any change in the Loan Interest Charged Rate will apply to loans you take out
after the change.
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.
We may change the differential as of 90 days after we send you written notice of
such change.
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.
(continued)
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POLICY LOAN CONDITIONS (continued)
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, we reserve
the right to require that premium payments be applied as loan repayments.
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 section of the
Code.
A Death Benefit Option Change or a Face Amount Change will cause a change in the
No-Lapse Guarantee Premium. These changes will also cause a change in the
Guideline Single Premium and Guideline Level Premium if you have elected the
Guideline Premium Test for the policy. 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 decrease this amount as of
90 days after we send you written notice of the change.
(continued)
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<PAGE> 27
CHANGING THE DEATH BENEFIT OPTION OR THE FACE AMOUNT (continued)
We will not allow a decrease:
(a) if it is for the reduction or termination of a prior Face Amount
increase which has been in force for less than one year; or
(b) 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.
INCREASE IN FACE AMOUNT. For an increase in the Face Amount of insurance you
must provide us with evidence of insurability on the life insured that is
satisfactory to us. The Minimum Face Amount Increase is shown in the Table of
Values in the Policy Information section. We may decrease 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 life insured's
Attained Age at the date the increase would be effective is greater than 90.
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.
(continued)
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<PAGE> 28
SURRENDER AND WITHDRAWALS (continued)
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.
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.
We will deduct a pro-rata Surrender Charge from the Policy Value at the time of
the partial Net Cash Surrender Value withdrawal. 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;
(b) is the Net Cash Surrender Value prior to the withdrawal; and
(c) is the current total Surrender Charge prior to the withdrawal.
We will allocate the deduction of the pro-rata charge 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.
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.
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<PAGE> 29
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 or Non-Smoker Mortality Table and an
interest rate of 4% per year; and
(d) the Flexible Premium 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.
SUICIDE
If within two years after the Issue Date the life insured dies 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 the life insured dies by suicide, within two years after an applied for
increase in Face Amount takes effect, 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 life insured.
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<PAGE> 30
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.
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 life 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.
Page 20
<PAGE> 31
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 you or the life insured are representations, not warranties.
We will not use any statement by you or the life 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 life insured's
lifetime 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 life insured's lifetime 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 life insured's lifetime 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 life insured's Age or Sex 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.
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.
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<PAGE> 32
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.
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[LOGO]
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
ADJUSTABLE DEATH BENEFIT.
FLEXIBLE PREMIUMS PAYABLE TO THE MATURITY DATE OR UNTIL PRIOR DEATH OF THE
LIFE INSURED.
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.
