Registration No. 33-_______________
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
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-1
(Exact Name of Registrant)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
1150 South Olive Street
Los Angeles, CA 90015
(Address of Principal Executive Office of Depositor)
(Name and Address of Agent for Service Copies to
James W. Dederer, Esq. Stephen E. Roth, Esq.
Executive Vice President, General Counsel Sutherland, Asbill & Brennan LLP
and Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Occidental Life Insurance Company Washington, D.C. 20004
1150 South Olive Street
Los Angeles, CA 90015
Approximate date of proposed public offering: as soon as practicable after the
effective date of the Registration Statement.
Title of securities being registered: Flexible Payment Variable Life Insurance
Policy.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such dates as the Commission, acting pursuant to said Section 8(a)
shall determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
[NOTE, THIS TABLE WILL BE CORRECTED ONCE DOCUMENT IS FINAL]
<TABLE>
<CAPTION>
Item No. of
Form N-8B-2 Caption in Prospectus
<S> <C>
1........................................................... Cover Page
2........................................................... Cover Page
3........................................................... Not Applicable
4........................................................... Distribution
5........................................................... Transamerica; The Separate Account
6........................................................... The Separate Account
7........................................................... Not Applicable
8........................................................... Not Applicable
9........................................................... Legal Proceedings
10.......................................................... Summary; Description of the Company, The Separate
Account, the Funds;The Policy; Policy Termination
and Reinstatement; Other Policy Provisions
11.......................................................... Summary;; Investment Objectives and Policies
12 Summary;
13.......................................................... Summary; ; Charges and Deductions
14.......................................................... Summary; Application for a Policy
15.......................................................... Summary; Application for a Policy;
Payments; Allocation of Net Payments
16.......................................................... The Separate Account; Payments; Allocation of Net
Payments
17.......................................................... Summary; Surrender; Partial Withdrawal;
Charges and Deductions; Policy
Termination and Reinstatement
18.......................................................... The Separate Account; Payments
19.......................................................... Reports; Voting Rights
20.......................................................... Not Applicable
21.......................................................... Summary; Policy Loans; Other Policy
Provisions
22.......................................................... Other Policy Provisions
23.......................................................... Not Required
24.......................................................... Other Policy Provisions
25.......................................................... Transamerica
26.......................................................... Not Applicable
27.......................................................... Transamerica
28.......................................................... Directors and Principal Officers of the Company
29.......................................................... Transamerica
30.......................................................... Not Applicable
31.......................................................... Not Applicable
32.......................................................... Not Applicable
33.......................................................... Not Applicable
34.......................................................... Not Applicable
35.......................................................... Distribution
36.......................................................... Not Applicable
37.......................................................... Not Applicable
38.......................................................... Summary; Distribution
39.......................................................... Summary; Distribution
40.......................................................... Not Applicable
41.......................................................... Transamerica, Distribution
42.......................................................... Not Applicable
43.......................................................... Not Applicable
44.......................................................... Payments; Policy Value and Cash
Surrender Value
45.......................................................... Not Applicable
46.......................................................... Policy Value and Cash Surrender Value;
Federal Tax Considerations
47.......................................................... Transamerica
48.......................................................... Not Applicable
49.......................................................... Not Applicable
50.......................................................... The Separate Account
51.......................................................... Cover Page; Summary; Charges and
Deductions; The Policy; Policy Termination and
Reinstatement; Other Policy Provisions
52.......................................................... Addition, Deletion or Substitution of
Investments
53.......................................................... Federal Tax Considerations
54.......................................................... Not Applicable
55.......................................................... Not Applicable
56.......................................................... Not Applicable
57.......................................................... Not Applicable
58.......................................................... Not Applicable
59.......................................................... Not Applicable
</TABLE>
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-1
OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Transamerica Occidental Life Separate Account VUL-1 ("Separate Account") is a
separate investment account of Transamerica Occidental Life Insurance Company
("Transamerica"). Transamerica issues the individual flexible payment variable
life insurance policies described in this prospectus ("Policies").
You may direct your net payments, as well as any value accumulated under the
Policy, to up to seven sub-accounts of the Separate Account or to the Fixed
Account, or to both. The money you place in each sub-account will be invested
solely in a corresponding mutual fund investment portfolio ("portfolio"). The
value of each sub-account will vary in accordance with the investment
performance of the portfolio in which that sub-account invests. You bear the
entire investment risk for all assets you place in the sub-accounts. This means
that, depending on market conditions, the amount you invest in the sub-accounts
may increase or decrease. Currently, you may choose among sub-accounts investing
in the following portfolios:
Portfolios
Transamerica Variable Insurance Fund, Inc.: Growth Portfolio
Transamerica Variable Insurance Fund, Inc.: Money Market Portfolio
Policy owners may, within limits, choose the amount of initial payment and vary
the frequency and amount of future payments. The Policy allows partial
withdrawals and full surrender of the Policy's surrender value, within limits.
The Policies are not suitable for short-term investment because of the
substantial nature of the surrender charge.
IT MAY NOT BE ADVANTAGEOUS TO REPLACE EXISTING INSURANCE WITH THE POLICY.
THIS PROSPECTUS IS VALID ONLY WHEN
ACCOMPANIED BY CURRENT PROSPECTUSES OF EACH OF THE PORTFOLIOS. INVESTORS
SHOULD RETAIN A COPY OF THIS PROSPECTUS
FOR FUTURE REFERENCE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE POLICIES ARE OBLIGATIONS OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY AND ARE DISTRIBUTED BY
TRANSAMERICA SECURITIES SALES CORPORATION. THE POLICIES ARE NOT DEPOSITS O
OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR CREDIT UNION. THE POLICIES ARE NOT INSURED BY THE
U. S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER FEDERAL AGENCY. INVESTMENTS
IN THE POLICIES ARE SUBJECT TO VARIOUS
RISKS, INCLUDING THE FLUCTUATION OF VALUE AND POSSIBLE LOSS OF PRINCIPAL.
Dated January 1, 1998
<PAGE>
Table of Contents
[NOTE, THIS TABLE WILL BE CORRECTED ONCE DOCUMENT IS FINAL]
<TABLE>
<CAPTION>
SUMMARY
<S> <C>
SPECIAL TERMS...........................................................................................10
DESCRIPTION OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, THE SEPARATE ACCOUNT, AND THE PORTFOLIOS
12
INVESTMENT OBJECTIVES AND POLICIES.............................................................13
INVESTMENTADVISERS.............................................................................14
THE POLICY..............................................................................................16
APPLICATION FOR A POLICY.......................................................................16
FREE LOOK PERIOD...............................................................................16
CONVERSION PRIVILEGE...........................................................................17
PAYMENTS.......................................................................................17
ALLOCATION OF NET PAYMENTS.....................................................................18
TRANSFER PRIVILEGE.............................................................................18
DEATH BENEFIT..................................................................................19
LEVEL OPTION OR ADJUSTABLE OPTION..............................................................19
CHANGE TO LEVEL OPTION AND ADJUSTABLE OPTION...................................................21
CHANGE IN FACE AMOUNT..........................................................................21
POLICY VALUE...................................................................................22
PAYMENT OPTIONS................................................................................23
OPTIONAL INSURANCE BENEFITS....................................................................23
SURRENDER......................................................................................24
PARTIAL WITHDRAWAL.............................................................................24
PAID-UP INSURANCE OPTION.......................................................................24
CHARGES AND DEDUCTIONS..................................................................................25
PAYMENT EXPENSE CHARGE.........................................................................25
MONTHLY INSURANCE PROTECTION CHARGE............................................................25
CHARGES AGAINST OR REFLECTED IN THE ASSETS OF THE VARIABLE ACCOUNT.............................27
SURRENDER CHARGE...............................................................................28
PARTIAL WITHDRAWAL COSTS.......................................................................29
TRANSFER CHARGES...............................................................................29
CHARGE FOR CHANGE IN FACE AMOUNT...............................................................29
OTHER ADMINISTRATIVE CHARGES...................................................................30
POLICY LOANS............................................................................................30
PREFERRED LOAN OPTION
LOAN INTEREST CHARGED
REPAYMENT OF OUTSTANDING LOAN
EFFECT OF POLICY LOANS
POLICY TERMINATION AND REINSTATEMENT....................................................................31
TERMINATION
REINSTATEMENT
OTHER POLICY PROVISIONS.................................................................................33
POLICY OWNER
BENEFICIARY
ASSIGNMENT
LIMIT ON RIGHT TO CHALLENGE POLICY
SUICIDE
MISSTATEMENT OF AGE OR SEX
DELAY OF PAYMENTS
FEDERAL TAX CONSIDERATIONS..............................................................................34
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
AND THESEPARATE ACCOUNT..................................................................34
TAXATION OF THE POLICIES.......................................................................34
POLICY LOANS...................................................................................35
INTEREST DISALLOWANCE
MODIFIED ENDOWMENT CONTRACTS...................................................................35
DISTRIBUTION UNDER MODIFIED ENDOWMENT CONTRACTS
VOTING RIGHTS...........................................................................................35
DIRECTORS AND PRINCIPAL OFFICERS OF TRANSAMERICA........................................................36
DISTRIBUTION............................................................................................37
REPORTS 37
PERFORMANCE INFORMATION.................................................................................38
LEGAL PROCEEDINGS.......................................................................................41
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS.......................................................41
FURTHER INFORMATION.....................................................................................41
MORE INFORMATION ABOUT THE FIXED ACCOUNT
GENERAL DESCRIPTION
FIXED ACCOUNT INTEREST
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS
INDEPENDENT ACCOUNTANTS.................................................................................42
FINANCIAL STATEMENTS....................................................................................42
APPENDIX A - GUIDELINE MINIMUM SUM INSURED TABLE.......................................................A-1
APPENDIX B - OPTIONAL INSURANCE BENEFITS...............................................................A-2
APPENDIX C - PAYMENT OPTIONS...........................................................................A-3
APPENDIX D - ILLUSTRATIONS.............................................................................A-4
APPENDIX E - MAXIMUM SURRENDER CHARGES.................................................................A-9
</TABLE>
<PAGE>
SUMMARY
WHAT IS THE POLICY'S OBJECTIVE?
The objective of the Policy is to give permanent life insurance protection and
help you build assets on a tax-deferred basis. Features available through the
Policy include:
o A net death benefit that can protect your family or beneficiaries
o Payment options that can guarantee an income for life
o A personalized investment portfolio
o Experienced professional investment advisers
o Tax deferral on earnings
While the Policy is in force, it will provide:
o Life insurance coverage on the Insured
o Policy Value
o Surrender rights and partial withdrawal rights
o Loan privileges
o Optional insurance benefits available by rider
The Policy combines features and benefits of traditional life insurance with the
advantages of professional money management. However, unlike the fixed benefits
of ordinary life insurance, the Policy Value and the Adjustable Option death
benefit will increase or decrease depending on investment results of the
portfolios. Unlike traditional insurance policies, the Policy has no fixed
schedule for payments. Within limits, you may make payments of any amount and
frequency. While you may establish a schedule of payments ("planned payments"),
the Policy will not necessarily lapse if you fail to make planned payments.
Also, making planned payments will not guarantee that the Policy will remain in
force. If the Guaranteed Death Benefit Rider is in effect, however, payments of
sufficient amounts, net of withdrawals, withdrawal costs and any outstanding
loans, will guarantee that the Policy will not lapse. See "Payments" and "Policy
Termination and Reinstatement."
WHO ARE THE KEY PERSONS UNDER THE POLICY?
The Policy is a contract betweenthe Policy owner and Transamerica. Each Policy
has a Policy owner (you), an Insured (you or another individual you select) and
a beneficiary. As Policy owner, you make payments, choose investment allocations
and select the Insured and beneficiary. The Insured is the person covered under
the Policy. The beneficiary is the person who receives the net death benefit
when the Insured dies.
WHAT HAPPENS WHEN THE INSURED DIES?
We will pay the net death benefit to the beneficiary when the Insured dies while
the Policy is in effect. You may choose between two death benefit options. Under
the Level Death Benefit Option ("Level Option"), the death benefit is the face
amount (the insurance amount issued) or the guideline minimum sum insured (the
minimum death benefit required by federal tax law), whichever is greater. Under
the Adjustable Death Benefit Option ("Adjustable Option"), the death benefit is
either (a) the sum of the face amount and Policy Value, or (b) the guideline
minimum sum insured, whichever is greater. The net death benefit is the death
benefit less any outstanding loan and due and unpaid partial withdrawals,
partial withdrawal costs, and monthly insurance protection charges. However,
after the final payment date (and except as provided otherwise under the
Guaranteed Death Benefit Option), the net death benefit is 101% of the Policy
Value less any outstanding loan and due and unpaid partial withdrawals and
withdrawal costs. The beneficiary may receive the net death benefit in a lump
sum or under a payment option we offer. See "Death Benefit."
CAN I EXAMINE THE POLICY?
Yes. You have the right to examine and cancel your Policy by returning it to
us or to one of our representatives by the later of:
o 45 days after the application or enrollment form for the Policy is
signed, or
o 10 days after you receive the Policy (or a longer period as required by
state law for replacement policies or for other reasons). We refer to
this 10 day or longer period as the "state free look period"
This right to examine and cancel your Policy is often referred to as the free
look right.
If your Policy provides for a full refund under its "Right to Examine Policy"
provision as required in your state, and you exercise your free look right, your
refund will be the greater of
o Your entire payment or
o The Policy Value plus deductions under the Policy or by the portfolios
for taxes, charges or fees
If your Policy does not provide for a full refund and you exercise your free
look right, you will receive, with regard to your Policy,
o Amounts allocated to the Fixed Account plus
o The current value in the Separate Account plus
o All fees, charges and taxes which have been imposed
After an increase in face amount, a right to cancel the increase also applies.
See "Free Look Period."
WHAT ARE MY INVESTMENT CHOICES?
The Policy gives you an opportunity to select among a number of investment
options, including sub-accounts and a Fixed Account. Seventeen portfolios from
eight mutual funds advised by [advisers to be added by pre-effective amendment]
and Transamerica, offer a wide range of investment objectives. The available
portfolios are as follows:
Transamerica Variable Insurance Fund, Inc.: Growth Portfolio
Transamerica Variable Insurance Fund, Inc.: Money Market Portfolio
[Other portfolios to be added by pre-effective amendment.]
See "Description of Transamerica Occidental Life Insurance Company, the Separate
Account, and the Portfolios."
This range of investment choices allows you to allocate your money among the
sub-accounts to meet your investment needs. If your Policy provides for a full
refund under its "Right to Examine Policy" provision as required in your state,
we will allocate all sub-account investments to the sub-account investing in the
Money Market Portfolio of Transamerica Variable Insurance Fund, Inc., until the
end of four calendar days plus the number of days under the state free look
period (usually 10 days, but longer under some circumstances). After this, we
will allocate all amounts to the sub-accounts as you have chosen.
The Policy also offers a Fixed Account which provides a guaranteed
minimum interest rate of 4% annually on amounts allocated to the Fixed
Account. We may declare a higher rate. The Fixed Account is part of the
General Account of Transamerica. Amounts in the Fixed Account do not
vary with the investment performance of a
portfolio. See "More Information About the Fixed Account."
CAN I MAKE TRANSFERS AMONG THE SUB-ACCOUNTS AND THE FIXED ACCOUNT?
Yes. You may transfer among the sub-accounts and the Fixed Account, subject to
our consent and then current rules. You will incur no current taxes on transfers
while your money is in the Policy. A transfer charge may apply to certain
transfers. See "Transfer Privilege.".
HOW MUCH CAN I INVEST AND HOW OFTEN?
The number and frequency of your payments are flexible, within limits.
See "Payments."
WHAT IF I NEED MY MONEY?
You may borrow up to the loan value of your Policy. You may also make partial
withdrawals and you may surrender the Policy for its surrender value. There are
two types of loans which may be available to you:
o A preferred loan option is available after the tenth Policy year, and,
after that date, will apply to any outstanding loans and new loan
requests unless you revoke the preferred loan option in writing. The
guaranteed annual interest rate credited to the portion of the Policy
Value securing a preferred loan will be not less than 7.5%.
o A non-preferred loan option is always available to you. The guaranteed
annual interest rate credited to the portion of the Policy Value
securing a non-preferred loan will be not less than 6.0%. The current
interest rate credited is 7.2%. We may change the interest rate
credited at any time in our sole discretion.
We will allocate Policy loans among the sub-accounts and the Fixed Account
according to your instructions. If you do not make an allocation, we will make a
pro-rata allocation among the sub-accounts and the Fixed Account. We will
transfer the Policy Value in each sub-account equal to the Policy loan to the
Fixed Account. See "Policy Loans."
You may surrender your Policy and receive its surrender value. See "Surrender"
and "Surrender Charge." After the first Policy year, you may make partial
withdrawals of $500 or more from the Policy Value (provided you have not
exercised the paid-up insurance option), subject to partial withdrawal costs.
Under the Level Option, the face amount and Policy Value will be reduced by each
partial withdrawal and the Policy Value will be further reduced by the partial
withdrawal costs. Under the Adjustable Option the Policy Value will be reduced
by the amount of the partial withdrawal and the withdrawal costs. We will not
allow a partial withdrawal if it would reduce the face amount below $50,000. See
"Partial Withdrawal" and "Partial Withdrawal Costs." A surrender or partial
withdrawal may have tax consequences. See "TAXATION OF THE POLICIES."
CAN I MAKE FUTURE CHANGES UNDER MY POLICY?
Yes. There are several changes you can make after receiving your Policy,
within limits. You may
o Cancel your Policy under its right to examine and cancel provision
o Transfer your ownership to someone else
o Change the beneficiary
o Change the allocation of payments, with no tax consequences under
current law
o Make transfers of Policy Value among the Fixed Account and the sub
accounts
o Adjust the death benefit by increasing or decreasing the face amount
o Change your choice of death benefit options between the Level Option
and Adjustable Option
o Add or remove optional insurance benefits provided by rider
CAN I CONVERT MY POLICY INTO A NON-VARIABLE POLICY?
Yes. You can convert your Policy without charge during the first 24 months after
the date of issue or after an increase in face amount. On conversion, we will
transfer the Policy Value in the sub-accounts to the Fixed Account. We will
allocate all future payments to the Fixed Account, unless you instruct us
otherwise.
WHAT CHARGES WILL I INCUR UNDER MY POLICY?
The following charges will apply to your Policy under the circumstances
described. Some of these charges apply throughout the Policy's duration. Other
charges apply only if you choose options under the Policy. See "Charges and
Deductions."
o From each payment, we will deduct a payment expense charge, currently
4.0%. The payment expense charge is deducted for state and local
premium taxes, federal income tax treatment of Deferred Acquisition
Costs, and a portion of Policy sales expenses.
o We deduct the following monthly charge from Policy Value:
Monthly Insurance Protection Charge - This charge is the cost of
insurance, including optional insurance benefits provided by rider.
o The following expenses are charged against or reflected in the
Separate Account:
Administration Charge - We deduct this charge during the first 20
Policy years only. It is a daily charge for the number of days in a
valuation period at a rate equivalent to an annual rate of 0.15% of the
daily net asset value of each sub-account. This charge is eliminated
after the twentieth Policy year. We currently waive this charge after
the tenth Policy year, but we reserve the right to implement this
charge after the tenth Policy year.
Mortality and Expense Risk Charge - We impose a daily charge at a
current rate equivalent to an annual rate of 0.65% of the daily net
asset value of each sub-account. We may increase this charge, subject
to state and federal law, to a daily rate equivalent to a rate no
greater than 0.80% annually.
Portfolio Expenses - The portfolios incur investment advisory fees and
other expenses, which are reflected in the sub-accounts of the Separate
Account. The levels of fees and expenses vary among the portfolios and
are described below under "What Are The Expenses And Fees of the
Portfolios?.
o Charges designed to reimburse us for Policy administrative costs apply
under the following circumstances:
Charge for Change in Face Amount - For each increase or decrease in
face amount, we deduct a charge of $40 from Policy Value.
Transfer Charge - The first 12 transfers Policy Value in a Policy year
are free. A current transfer charge of $10, never to exceed $25,
applies for each additional transfer in the same Policy year.
Other Administrative Charges - We reserve the right to charge for other
administrative costs we incur. While there are no current charges for
these costs, we may impose a charge (guaranteed never to exceed $25 per
occurrence) for
o Changing net payment allocation instructions
o Changing the allocation of monthly insurance protection
charges among the various sub-accounts
o Providing a projection of values in addition to your annual
statement
The charges below apply only if you surrender your Policy or make
partial withdrawals:
Surrender Charges- The charges only applies if, during the time the
charges are in effect, you request a full surrender of your Policy or a
decrease in face amount. The surrender charges are intended to help
compensate us for certain administrative expenses and certain
distribution expenses.
The surrender charges are computed on the date of issue for the initial
face amount and apply for ten years from the date of issue. New
surrender charges are computed for any increase in face amount. The
surrender charges for a face increase apply for ten years from the date
the increase is effective, and those surrender charges only apply to
the face increase.
The amount of the surrender charges is equal to a rate per $1,000 of
face amount. The rate varies by age and sex of the Insured, as well as
the Policy duration (or duration since the increase in face amount).
Surrender charge rates decrease each Policy year on the Policy
anniversary for the initial face amount and on each twelve month
anniversary of the effective date of a face increase for the charges
associated with the increase.
Partial Withdrawal Costs - We deduct the following from the Policy
Value for partial withdrawals:
o A transaction fee of 2.0% of the amount withdrawn, not
to exceed $25, for each partial
withdrawal for processing costs
o A partial withdrawal charge of 5.0% of the amount
withdrawn which exceeds the "Free 10%
Withdrawal," described below
The partial withdrawal charge does not apply to:
o That part of a withdrawal equal to 10% of the Policy Value in
a Policy year less prior free withdrawals made in the same
Policy year ("Free 10% Withdrawal")
o Withdrawals when no surrender charge applies
We reduce the Policy's outstanding surrender charge, if any, by partial
withdrawal charges that we previously deducted.
WHAT ARE THE EXPENSES AND FEES OF THEPORTFOLIOS?
In addition to the charges described above, certain management fees and other
expenses are deducted from the assets of the underlying portfolios. The levels
of fees and expenses vary among the portfolios. The following table shows the
management fees and other expenses of the portfolios for 1996. For more
information concerning these fees and expenses, see the prospectuses of the
portfolios.
<TABLE>
<CAPTION>
Other Portfolio Total Portfolio
Underlying Portfolio Management Fee Expenses Expenses
<S> <C> <C> <C>
Transamerica Growth .75 .10 .85
Transamerica Money Market
[To be completed by pre-effective amendment.]
</TABLE>
WHAT ARE THE LAPSE AND REINSTATEMENT PROVISIONS OF MY POLICY?
The Policy will not lapse if you fail to make payments unless:
o The surrender value is insufficient to cover the next monthly
insurance protection charge and loan interest accrued or
o The outstanding loan exceeds Policy Value less surrender charges
In either situation there is a 62-day grace period during which you must pay
premium sufficient to keep the Policy in force. If you make payments at least
equal to minimum monthly payments, we guarantee that your Policy will not lapse
before the 49th monthly processing date from date of issue or increase in face
amount, within limits. Under the Guaranteed Death Benefit Rider, if you make
payments of a sufficient amount, net of withdrawals, withdrawal costs and any
outstanding loans, we guarantee that your Policy will not lapse. In order to
maintain this guarantee, on each Policy anniversary through the final payment
date, the total of your payments, net of withdrawals, withdrawal costs and any
outstanding loans, must at least equal the guaranteed death benefit premium
times the number of Policy years since the Policy was issued. The guaranteed
death benefit premiums are currently 90% of the guideline level premium if you
elected the Level Death Benefit Option or 75% of the guideline level premium if
you elected the Adjustable Death Benefit Option. Certain other conditions may
apply and once terminated this rider You may reinstate your Policy within three
years after the grace period, within limits.
CAN I ELECT PAID-UP INSURANCE WITH NO FURTHER PREMIUMS DUE?
Yes. The Policy provides a paid-up insurance option. If this option is elected,
we will provide paid-up insurance coverage, usually having a reduced face
amount, for the life of the Insured with no more premiums being due under the
Policy. If you elect this option, Policy owner rights and benefits will be
limited. See "Paid-Up Insurance Option."
HOW IS MY POLICY TAXED?
The Policy is given federal income tax treatment similar to a conventional fixed
benefit life insurance policy. On a withdrawal of Policy Value, Policy owners
currently are taxed only on the amount of the withdrawal that exceeds total
payments. Withdrawals greater than payments made are treated as ordinary income.
During the first 15 Policy years, however, an "income-out first" rule applies to
certain distributions required under Section 7702 of the Internal Revenue Code
(the "Code") because of a reduction in benefits under the Policy.
The net death benefit under the Policy is excludable from the gross income of
the beneficiary. However, in some circumstances federal estate tax may apply to
the net death benefit or the Policy Value.
A Policy may be considered a "modified endowment contract." This may occur if
total payments during the first seven Policy years exceed the total net level
payments payable if the Policy had provided certain paid-up future benefits
after seven level annual payments. If the Policy is considered a modified
endowment contract, all distributions (including Policy loans, partial
withdrawals, surrenders and assignments) will be taxed on an "income-out first"
basis. Also, a 10% penalty tax may be imposed on that part of a distribution
that is includible in income. For more information, see "FEDERAL TAX
CONSIDERATIONS-MODIFIED ENDOWMENT CONTRACTS".
This Summary is intended to provide only a very brief overview of the more
significant aspects of the Policy. The Prospectus and the Policy provide further
detail. The Policy provides insurance protection for the named beneficiary. We
do not claim that the Policy is similar or comparable to a systematic investment
plan of a mutual fund. The Policy and its attached application or enrollment
form are the entire agreement between you and Transamerica.
<PAGE>
SPECIAL TERMS
Age: how old the Insured is on the birthday closest to the Date of
Issue and, subsequently, the Policy
anniversary.
Attained Age: the Insured's age on his or her last birthday. Attained
age is used in the calculation of the
Guideline Minimum Sum Insured.
Beneficiary: the person or persons you name to receive the net death benefit
when the Insured dies.
Date of Issue: the date the Policy was issued, used to measure the monthly
processing date, Policy months, Policy
years and Policy anniversaries.
Death Benefit: the amount payable when the Insured diesbefore the Maturity
Date, before deductions for any
outstanding loan and due and unpaid partial withdrawals, partial
withdrawal costs, and monthly insurance
protection charges.
Evidence of Insurability: information, including medical information,
used by us to decide the Insured's
underwriting class.
Face Amount: the amount of insurance coverage issued. The initial face amount
is shown in your Policy.
Final Payment Date: is the Policy anniversary nearest the Insured's 100th
birthday. No payments may be made by
you after this date. No monthly insurance protection charges will be
deducted from the Policy Value after this
date. Generally, the net death benefit after this date will equal 101% of the
Policy Value minus any outstanding
loan, except as otherwise provided in the Guaranteed Death Benefit Rider. Policy
Value
Fixed Account: an account that is a part of the General Account and that
guarantees principal and a fixed
interest rate.
General Account: all our assets other than those held in the Separate
Account and other separate accounts we
establish.
Guideline Minimum Sum Insured: the minimum death benefit required to
qualify the Policy as a "life insurance
contract" under federal tax laws. The guideline minimum sum insured is the
product of
o The Policy Value times
o A percentage based on the Insured's age
Insured: the person insured under the Policy. If the Insured dies while
the Policy is in force and before the
Maturity Date the net death benefit will be paid to the Beneficiary.
Insurance Protection Amount: the death benefit less the Policy Value.
Internal Revenue Code or Code: the Internal Revenue Code of 1986, as amended,
and its rules and regulations.
Issuance and Acceptance: the date we mail the Policy if the application or
enrollment form is approved with no changes requiring your consent; otherwise,
the date we receive your written consent to any changes.
Loan Value: the maximum amount you may borrow under the Policy.
Maturity Date: the Policy anniversary nearest the Insured's age 115.
Minimum Monthly Payment: a monthly amount shown in your Policy. If you pay this
amount, we guarantee that your Policy will not lapse before the 49th monthly
processing date from the date of issue or increase in face amount, within
limits.
Monthly Insurance Protection Charge: the amount of money we deduct from
Policy Value each month to pay for the
insurance protection amount and any riders.
Monthly Processing Date: the date, shown in your Policy, when monthly insurance
protection charges are deducted.
Net Death Benefit: On or before the final payment date (and before the
paid-up insurance option is exercised),
the net death benefit is
o The death benefit under the elected death benefit option
(Level Option or Adjustable Option) minus
o Any outstanding loan, monthly insurance protection charges due
and unpaid through the Policy month in which the Insured dies,
as well as any partial withdrawals and partial withdrawal
costs.
After the final payment date (and except as otherwise provided under the
Guaranteed Death Benefit Rider), the net death benefit is
o 101% of the Policy Value minus
o Any outstanding loan and any due and unpaid partial
withdrawals and withdrawal costs.
If the paid-up insurance option is exercised, the net death benefit is the
paid-up insurance amount minus any outstanding loan.
Net Payment: your payment less a payment expense charge.
Outstanding Loan: all unpaid Policy loans plus loan interest due or accrued.
Paid-Up Insurance: life insurance coverage for the life of the Insured, with no
further premiums due.
Policy Anniversary: annual anniversary of the date of issue.
Policy Change: any change in the face amount, the addition or deletion of a
rider, or a change in death benefit
option (Level Option or Adjustable Option).
Policy Value: the total value of your Policy. It is the sum of the:
o Value of the units of the sub-accounts credited to your
Policy plus
o Accumulation in the Fixed Account credited to your Policy
Policy owner: the person who may exercise all rights under the Policy,
with the consent of any irrevocable
beneficiary. "You" and "your" refer to the Policy owner in this Prospectus.
Portfolio: a mutual fund investment portfolio in which a corresponding sub-
account invests.
Premium: a payment you must make to us to keep the Policy in force.
Pro-rata Allocation: an allocation among the Fixed Account and the sub-accounts
in the same proportion that, on the date of allocation, the portion of the
Policy Value in the Fixed Account and the portion of the Policy Value in each
sub-account bear to the total Policy Value net of any outstanding loans.
Separate Account: Transamerica Occidental Life Separate Account VUL-1 of
Transamerica Occidental Life Insurance
Company, one of our separate investment accounts.
Sub-Account: a subdivision of the Separate Account investing exclusively in th
shares of a portfolio.
Surrender Value: the Policy Value less any outstanding loan and surrender
charges. The surrender value is the
amount payable on a full surrender.
Transamerica: Transamerica Occidental Life Insurance Company. "We", "our"
and "us" refer to Transamerica in this
Prospectus.
Underwriting Class: the insurance risk classification that we assign the Insured
based on the information in the application or enrollment form and other
evidence of insurability we consider. The Insured's underwriting class will
affect the monthly insurance protection charge and the payment required to keep
the Policy in force.
Unit: a measure of your interest in a sub-account.
Valuation Date: any day on which the net asset value of the shares of any
portfolio and unit values of any
sub-accounts are computed. Valuation dates currently occur on
o Each day the New York Stock Exchange is open for trading
o Other days (other than a day during which no payment, partial
withdrawal or surrender of a Policy was received) when there
is a sufficient degree of trading in a portfolio's securities
so that the current net asset value of the sub-account may be
materially affected
Valuation Period: the interval between two consecutive valuation dates.
Variable Life Service Center: our office at 440 Lincoln Street, P. O. Box 3800,
Worcester, Massachusetts 01653.
Written Request: your request in writing, satisfactory to us, received at our
Variable Life Service Center.
<PAGE>
DESCRIPTION OF TRANSAMERICA,
THE SEPARATE ACCOUNT, AND THE PORTFOLIOS
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY. Transamerica Occidental Life
Insurance Company ("Transamerica") is a stock life insurance company
incorporated under the laws of the State of California in 1906. Transamerica is
principally engaged in the sale of life insurance and annuity policies.
Transamerica is a wholly-owned subsidiary of Transamerica Insurance Corporation
of California, which in turn is a direct subsidiary of Transamerica Corporation.
The home office of Transamerica is 1150 South Olive Street, Los Angeles,
California 90015.
THE SEPARATE ACCOUNT. Transamerica Occidental Life Separate Account VUL-1
("Separate Account") was established by us as a separate account under the laws
of the State of California, pursuant to resolutions adopted by our Board of
Directors on June 11, 1996. The Separate Account is registered with the
Securities and Exchange Commission ("SEC" or "Commission") under the Investment
Company Act of 1940 ("1940 Act") as a unit investment trust. It meets the
definition of a separate account under the federal securities laws. However, the
Commission does not supervise the management of the investment practices or
policies of the Separate Account.
The assets used to fund the variable part of the Policies are set aside in the
Separate Account. The assets of the Separate Account are owned by Transamerica
but they are held separately from our other assets, Section 10506 of the
California Insurance Law provides that the assets of a separate account are not
chargeable with liabilities arising out of any other business operation of the
insurance company (except to the extent provided in the policies). Income, gains
and losses incurred on the assets in the Separate Account, whether or not
realized, are credited to or charged against the Separate Account without regard
to our other income, gains or losses. Therefore, the investment performance of
the Separate Account is entirely independent of the investment performance of
our General Account assets or any other separate account maintained by us.
The Separate Account currently has seventeen sub-accounts available for
investment, each of which invests solely in a specific corresponding mutual fund
portfolio. Changes to the sub-accounts may be made at our discretion.
THE PORTFOLIOS. The portfolios are open-end management investment
companies or portfolios of series, open-end management companies registered
with the SEC under the 1940 Act and usually referred to as mutual funds. This
SEC Shares of the portfolios are not offered to the public but solely to the
insurance company separate accounts and other qualified purchasers as
limited by federal tax laws. The assets of each portfolio are held separate
from the assets of the other portfolios. Each portfolio operates as a
separate investment vehicle. The income or losses of one portfolio have no
effect on the investment performance of another portfolio. The sub-accounts
reinvest dividends and/or capital gains distributions received from a
portfolio in more shares of that portfolio as retained assets.
The portfolios available under the Policies are:
Transamerica Variable Insurance Fund, Inc.: Growth Portfolio
Transamerica Variable Insurance Fund, Inc.: Money Market Portfolio
[To be completed by pre-effective amendment.]
INVESTMENT OBJECTIVES AND POLICIES
A summary of investment objectives of the portfolios is set forth below. Before
investing, read carefully the profiles or prospectuses of the portfolios that
accompany this Prospectus. The portfolios' prospectuses contain more detailed
information on the portfolios' investment objectives, restrictions, risks and
expenses. Statements of Additional Information for the portfolios are available
on request. There is no guarantee that the investment objectives of the
portfolios will be achieved. Policy Value may be less than the aggregate
payments made to the Policy.
The Transamerica VIF Growth Portfolio seeks long-term capital growth. Common
stock (listed and unlisted) is the basic form of investment. The portfolio may
also invest in debt securities and preferred stock having a call on common
stocks,
The Transamerica VIF Money Market Portfolio seeks to maximize current income
from money market securities consistent with liquidity and the preservation of
principal.
If there is a material change in the investment policy of a portfolio, we will
notify you of the change. If you have Policy Value allocated to that portfolio,
you may without charge reallocate the Policy Value to another portfolio or to
the Fixed Account. For you to exercise your rights, we must receive your written
request within sixty (60) days of the later of the
o Effective date of the change in the investment policy, or
o Receipt of the notice of your right to transfer
INVESTMENT ADVISERS
INVESTMENT ADVISERS TO THE PORTFOLIOS. The boards of the portfolios have
responsibility for the supervision of the affairs of the portfolios. These
boards have entered into management agreements with the investment advisers
("Advisers"). . These Advisers, subject to boards', review, are responsible for
the daily affairs and general management of the portfolios The Advisers perform
the respective administrative and management services for the portfolios,
furnish to the portfolios all necessary office space, facilities and equipment,
and pay the compensation, if any, of officers and board members who are
affiliated with the Advisers.
Each portfolio bears all expenses incurred in its operation, other than the
expenses its Advisers assume under the management agreement. Portfolio expenses
include
o Costs to register and qualify the portfolio's shares under the
Securities Act of 1933 ("1933 Act")
o Other fees payable to the SEC
o Independent public accountant, legal and custodian fees
o Association membership dues, taxes, interest, insurance
payments and brokerage commissions
o Fees and expenses of the board members who are not affiliated
with the Advisers
o Expenses for proxies, prospectuses, reports to shareholders
and other expenses
[To be completed by pre-effective amendment.]
THE POLICY
APPLICATION FOR A POLICY - We offer Policies to proposed Insureds 80 years old
and under. After receiving a completed application or enrollment form from a
prospective Policy owner, we will begin underwriting to decide the insurability
of the proposed Insured. We may require medical examinations and other
information before deciding insurability. We issue a Policy only after
underwriting has been completed. We may reject an application or enrollment form
that does not meet our underwriting guidelines.
If a prospective Policy owner makes an initial payment of at least one minimum
monthly payment, we will issue a conditional receipt which provides fixed
conditional insurance, but not until after all its conditions are met. Included
in these conditions are the completion of both parts of the application,
completion of all underwriting requirements, and the proposed Insured must be
insurable under the Transamerica's rules for insurance under the Policy, in the
amount, and in the underwriting class applied for in the application. After all
conditions are met, the amount of fixed conditional insurance provided by the
conditional receipt will be the amount applied for, up to a maximum of $250,000
for persons age 16 to 65 and insurable in a standard underwriting class, and up
to $100,000 for all other ages and underwriting classes. If you make payments
before the date of issuance and acceptance, we will allocate the payments
initially to the Fixed Account within two business days of receipt of the
payments at ourVariable Life Service Center. If the Policy is not issued and
accepted, we will return to you the amount of your payments.
If your application or enrollment form is approved and the Policy is issued and
accepted, we will allocate your Policy Value on issuance and acceptance
according to your instructions. However, if your Policy provides for a full
refund of payments under its "Right to Examine Policy" provision as required in
your state (see "THE POLICY "Free Look Period"), we will initially allocate your
sub-account investments to the sub-account investing in the Money Market
portfolio ("Money Market sub-account"). We will also transfer interest earned in
the Fixed Account allocable to the portion of your payment designated by you for
the Separate Account. This allocation to the Money Market sub-account will be
effective for four calendar days plus the state free look period.
After this, we will allocate all amounts to the sub-accounts according to your
investment choices.
FREE LOOK PERIOD - The Policy provides for a free look period. You have the
right to examine and cancel your Policy by returning it to us or to one of our
representativesby the later of:
o 45 days after the application or enrollment form for the
Policy is signed, or
o 10 days after you receive the Policy (or a longer period as
required by state law for replacement policies or for other
reasons). We refer to this 10 day or longer time period as the
"state free look period"
If your Policy provides for a full refund under its "Right to Examine Policy"
provision as required in your state, your refund will be the greater of
o Your entire payment or
o The Policy Value plus deductions under the Policy or by the
funds for taxes, charges or fees
If your Policy does not provide for a full refund, you will receive
o Amounts allocated to the Fixed Account plus
o The Policy Value in the Separate Account plus
o All fees, charges and taxes which have been imposed
We may delay a refund of any payment made by check until the check has cleared
your bank.
After an increase in face amount, we will mail or deliver a notice of a free
look for the increase. You will have the right to cancel the increase by the
later of
o 45 days after the application or enrollment form for the
increase is signed or
o 10 days after you receive the new Policy specification pages
issued for the increase
On canceling the increase, you will receive a credit to your Policy Value of
charges deducted for the increase. We will refund to you the amount to be
credited if you request. We will waive any surrender charge computed for the
increase.
CONVERSION PRIVILEGE - Within 24 months of the date of issue or of the effective
date of an increase in face amount, you can convert your Policy into a
non-variable Policy by transferring the value in the sub-accounts to the Fixed
Account. The conversion will take effect at the end of the valuation period in
which we receive, at ourVariable Life Service Center, notice of the conversion
satisfactory to us. There is no charge for this conversion.
We will allocate all future payments to the Fixed Account, unless you instruct
us otherwise.
PAYMENTS - Payments are payable to Transamerica Occidental Life Insurance
Company. Payments may be made by mail to our Variable Life Service Center or
through our authorized representative. All net payments after the initial
payment are credited to the Separate Account or Fixed Account on the valuation
date of receipt at theVariable Life Service Center.
You may establish a schedule of planned payments. If you do, we will bill you at
regular intervals. Making planned payments will not guarantee that the Policy
will remain in force. The Policy will not necessarily lapse if you fail to make
planned payments. You may make unscheduled payments before the final payment
date or skip planned payments.
You may choose a monthly automatic payment method of making payments. Under this
method, each month we will deduct payments from your checking account and apply
them to your Policy. The minimum payment allowed is $50.
The Policy does not limit payments as to frequency and number. However, no
payment may be less than $100 without our consent. Payments must be sufficient
to provide a positive surrender value at the end of each Policy month or the
Policy may lapse. See "POLICY TERMINATION AND REINSTATEMENT." During the first
48 Policy months following the date of issue or the effective date of an
increase in face amount, a guarantee may apply to prevent the Policy from
lapsing. The guarantee will apply during this period if we received payments
from you that, when reduced by outstanding loans, partial withdrawals and
partial withdrawal costs, equal or exceed the required minimum monthly payments.
The required minimum monthly payments are based on the number of months the
Policy, increase in face amount or Policy change that causes a change in the
minimum monthly payment has been in force. MAKING MONTHLY PAYMENTS EQUAL TO THE
MINIMUM MONTHLY PAYMENTS DOES NOT GUARANTEE THAT THE POLICY WILL REMAIN IN
FORCE, EXCEPT AS STATED IN THIS PARAGRAPH.
Under the Guaranteed Death Benefit Rider, if you make payments of a sufficient
amount, net of withdrawals, withdrawal costs and any outstanding loans, we
guarantee that your Policy will not lapse. In order to maintain this guarantee,
on each Policy anniversary through the final payment date, the total of your
payments received by us, net of withdrawals, withdrawal costs and any
outstanding loans, must at least equal the guaranteed death benefit premium
times the number of Policy years since the Policy was issued. The guaranteed
death benefit premiums are currently 90% of the guideline level premium if you
elected the Level Option or 75% of the guideline level premium if you elected
the Adjustable Option. A Policy change may affect the amount of payments
necessary to keep the rider in force. Certain other conditions may apply and
once terminated this rider may not be reinstated.
Total payments may not exceed the current maximum payment limits under federal
tax law. These limits will change with a change in face amount, the addition or
deletion of a rider, or a change between the Level Option and Adjustable Option.
Where total payments would exceed the current maximum payment limits, we will
only accept that part of a payment that will make total payments equal the
maximum. Any part of the payments greater than that amount will first be applied
as a loan repayment, if you have an outstanding loan, and any remainder will be
returned to you. We will refund to you any excess amount (including interest)
not later than 60 days after the end of the Policy year in which the excess
payment occurred. However, we will accept a payment needed to prevent Policy
lapse during a Policy year. See "POLICY TERMINATION AND REINSTATEMENT."
ALLOCATION OF NET PAYMENTS - The net payment equals the payment made less the
payment expense charge. In the application or enrollment form for your Policy,
you decide the initial allocation of the net payment among the Fixed Account and
the sub-accounts. You may allocate net payments to one or more of the
sub-accounts, but may not have Policy Value in more than seven sub-accounts at
once. The minimum amount that you may allocate to a sub-account is 1.0% of the
net payment. Allocation percentages must be in whole numbers (for example,
331/3% may not be chosen) and must total 100%.
You may change the allocation of future net payments by written request or
telephone request. You have the privilege to make telephone requests, unless you
elected not to have the privilege on the application or enrollment form. The
policy of Transamerica and its representatives and affiliates is that they will
not be responsible for losses resulting from acting on telephone requests
reasonably believed to be genuine. We will use reasonable methods to confirm
that instructions communicated by telephone are genuine; otherwise,
Transamericamay be liable for any losses from unauthorized or fraudulent
instructions. We require that callers on behalf of a Policy owner identify
themselves by name and identify the Policy owner by name, date of birth and
social security number. All telephone requests are tape recorded. An allocation
change will take effect on the date of receipt of the notice at theVariable Life
Service Center. No charge is currently imposed for changing payment allocation
instructions. We reserve the right to impose a charge in the future, but
guarantee that the charge will not exceed $25.
The Policy Value of each sub-account will vary with the investment experience of
the portfolio in which the sub-account invests. You bear this investment risk.
Investment performance may also affect the death benefit. Review your
allocations of payments and Policy Value as market conditions and your financial
planning needs change.
TRANSFER PRIVILEGE - Subject to our then current rules, you may transfer amounts
among the sub-accounts or between one or more sub-accounts and the Fixed
Account. (You may not transfer that portion of the Policy Value held in the
Fixed Account that secures a Policy loan.)
The transfer privilege is subject to our consent. We reserve the right to
impose limits on transfers including, but not limited to, the
o Minimum amount that may be transferred
o Minimum amount that may remain in a sub-account following a
transfer from that sub-account
o Minimum period between transfers involving the Fixed Account
o Maximum amounts that may be transferred from the Fixed Account
Transfers involving the Fixed Account are currently permitted only if:
o There has been at least a ninety (90) day period since the
last transfer from the Fixed Account;
and
o The amount transferred from the Fixed Account in each transfer
does not exceed the lesser of $100,000 or 25% of the Policy
Value.
These rules are subject to change by us.
We will make transfers at your written request or telephone request, as
described in "THE POLICY - Allocation of Net Payments." Transfers are effected
at the value next computed after receipt of the transfer order, except for
automatic transfers.
You may apply for automatic transfers
o From the Money Market sub-account to one or more of the
other sub-accounts on a monthly,
quarterly or semiannual schedule, or
o To reallocate Policy Value among the sub-accounts on a
quarterly, semiannual or annual schedule
Each automatic transfer must be at least $100. We will process automatic
transfers on the 15th day of each scheduled month. If the 15th is not a business
day or is the monthly processing date, we will process the automatic transfer on
the next business day.
The first 12 transfers in a Policy year are free. After that, we will deduct a
$10 transfer charge from amounts transferred in that Policy year. We reserve the
right to increase the charge, but we guarantee the charge will never exceed $25.
The first automatic transfer counts as one transfer toward the 12 free transfers
allowed in each Policy year. Each subsequent automatic transfer is also free,
but does not reduce the remaining number of transfers that are free in a Policy
year. Any transfers made for a conversion privilege, or because of a Policy loan
or material change in investment Policy will not count toward the 12 free
transfers.
DEATH BENEFIT - If the Policy is in force on the date of the Insured's death, we
will, with due proof of death, pay the net death benefit to the named
beneficiary. We will normally pay the net death benefit within seven days of
receiving due proof of the Insured's death, but we may delay payment of net
death benefits. See "OTHER POLICY PROVISIONS - Delay of Payments." The
beneficiary may receive the net death benefit in a lump sum or under a payment
option. See "APPENDIX C - PAYMENT OPTIONS."
Before the final payment date and before the paid-up insurance option is
exercised, the net death benefit is
o The death benefit provided under the Level Option or
Adjustable Option, whichever is elected and
in effect on the date of death plus
o Any other insurance on the Insured's life that is provided
by rider minus
o Any outstanding loan and any due and unpaid partial
withdrawals, partial withdrawal costs and monthly insurance
protection charges through the Policy month in which the
Insured dies
After the final payment date and except as otherwise provided in the Guaranteed
Death Benefit Rider, the net death benefit is
o 101% of the Policy Value minus
o Any outstanding loan and any due and unpaid withdrawals and
withdrawal costs.
If the paid-up insurance option is exercised, the net death benefit is the
paid-up insurance amount minus any outstanding loan.
In most states, we will compute the net death benefit on the date we receive due
proof of the Insured's death.
LEVEL OPTION AND ADJUSTABLE OPTION - The Policy provides two death benefit
options through the final payment date and before the paid-up insurance option
is exercised: the Level Option and the Adjustable Option. You choose the desired
option in the application or enrollment form. You may change the option once per
Policy year by written request. There is no charge for a change in option.
Under the Level Option, the death benefit is the greater of the
o Face amount or
o Guideline minimum sum insured
Under the Adjustable Option, the death benefit is the greater of the
o Face amount plus Policy Value or
o Guideline minimum sum insured
Under both the Level Option and Adjustable Option, the death benefit provides
insurance protection. Under the Level Option, the death benefit is level unless
the guideline minimum sum insured exceeds the face amount; then, the death
benefit varies as the Policy Value changes. Under the Adjustable Option, the
death benefit always varies as the Policy Value changes.
At any face amount, the death benefit will be greater under the Adjustable
Option than under the Level Option because the Policy Value is added to the face
amount and included in the death benefit. However, the monthly insurance
protection charge will be greater and, therefore, Policy Value will accumulate
at a slower rate than under the Level Option.
If you desire to have payments and investment performance reflected in the death
benefit, you should choose the Adjustable Option. If you desire to have payments
and investment performance reflected to the maximum extent in the Policy Value,
you should select the Level Option.
Guideline Minimum Sum Insured - The guideline minimum sum insured is a
percentage of the Policy Value as set forth in "APPENDIX A - GUIDELINE MINIMUM
SUM INSURED TABLE." The guideline minimum sum insured is computed in accordance
with federal income tax laws to ensure that the Policy qualifies as a life
insurance contract and that the insurance proceeds will be excluded from the
gross income of the beneficiary.
Illustration of the Level Option - In this illustration, assume that the Insured
is currently under the age of 40, and that there is no outstanding loan.
Under the Level Option, a Policy with a $100,000 face amount will have a death
benefit of $100,000. However, because the death benefit must be equal to or
greater than 250% of Policy Value, if the Policy Value exceeds $40,000 the death
benefit will exceed the $100,000 face amount. In this example, each dollar of
Policy Value above $40,000 will increase the death benefit by $2.50. For
example, a Policy with a Policy Value of $50,000 will have a guideline minimum
sum insured of $125,000 ($50,000 x 2.50); Policy Value of $60,000 will produce a
guideline minimum sum insured of $150,000 ($60,000 x 2.50); and Policy Value of
$75,000 will produce a guideline minimum sum insured of $187,500 ($75,000 x
2.50).
Similarly, if Policy Value exceeds $40,000, each dollar taken out of Policy
Value will reduce the death benefit by $2.50. If, for example, the Policy Value
is reduced from $60,000 to $50,000 because of partial withdrawals, charges or
negative investment performance, the death benefit will be reduced from $150,000
to $125,000. If, however, the product of the Policy Value times the applicable
percentage from the table in Appendix A is less than the face amount, the death
benefit will equal the face amount.
The applicable percentage becomes lower as the Insured's age increases. If the
Insured's attained age in the above example were, for example, 50 (rather than
40), the applicable percentage would be 185%. The death benefit would not exceed
the $100,000 face amount unless the Policy Value exceeded $54,054 (rather than
$40,000), and each dollar then added to or taken from Policy Value would change
the death benefit by $1.85.
Illustration of the Adjustable Option - In this illustration, assume that the
Insured is currently under the age of 40 and that there is no outstanding loan.
Under the Adjustable Option, a Policy with a face amount of $100,000 will
produce a death benefit of $100,000 plus Policy Value. For example, a Policy
with Policy Value of $10,000 will produce a death benefit of $110,000 ($100,000
+ $10,000); Policy Value of $25,000 will produce a death benefit of $125,000
($100,000 + $25,000); Policy Value of $50,000 will produce a death benefit of
$150,000 ($100,000 + $50,000). However, the death benefit must be at least 250%
of the Policy Value. Therefore, if the Policy Value is greater than $66,667,
250% of that amount will be the death benefit, which will be greater than the
face amount plus Policy Value. In this example, each dollar of Policy Value
above $66,667 will increase the death benefit by $2.50. For example, if the
Policy Value is $70,000, the guideline minimum sum insured will be $175,000
($70,000 x 2.50); Policy Value of $80,000 will produce a guideline minimum sum
insured of $200,000 ($80,000 x 2.50); and Policy Value of $90,000 will produce a
guideline minimum sum insured of $225,000 ($90,000 x 2.50).
Similarly, if Policy Value exceeds $66,667, each dollar taken out of Policy
Value will reduce the death benefit by $2.50. If, for example, the Policy Value
is reduced from $80,000 to $70,000 because of partial withdrawals, charges or
negative investment performance, the death benefit will be reduced from $200,000
to $175,000. If, however, the product of the Policy Value times the applicable
percentage is less than the face amount plus Policy Value, then the death
benefit will be the current face amount plus Policy Value.
The applicable percentage becomes lower as the Insured's age increases. If the
Insured's attained age in the above example were 50, the death benefit must be
at least 185% of times the Policy Value. The death benefit would be the sum of
the Policy Value plus $100,000 unless the Policy Value exceeded $117,647 (rather
than $66,667). Each dollar added to or subtracted from the Policy would change
the death benefit by $1.85.
CHANGE TO LEVEL OR ADJUSTABLE OPTION - You may change the death benefit option
once each Policy year by written request, within limits noted in "LEVEL OPTION
AND ADJUSTABLE OPTION". Changing options will not require evidence of
insurability. The change takes effect on the monthly processing date on or next
following the date of receipt of the written request. We will impose no charge
for changes in death benefit options.
If you change the Level Option to the Adjustable Option, we will decrease the
face amount to equal
o The death benefit minus
o The Policy Value on the date of the change
The change may not be made if the face amount would fall below $50,000. After
the change from the Level Option to the Adjustable Option, future monthly
insurance protection charges may be higher or lower than if no change in option
had been made. However, the insurance protection amount will always equal the
face amount unless the guideline minimum sum insured applies.
If you change the Adjustable Option to the Level Option, we will increase the
face amount by the Policy Value on the date of the change. The death benefit
will be the greater of
o The new face amount or
o The guideline minimum sum insured
After the change from the Adjustable Option to the Level Option, an increase in
Policy Value will reduce the insurance protection amount and the monthly
insurance protection charge. A decrease in Policy Value will increase the
insurance protection amount and the monthly insurance protection charge.
A change in death benefit option may result in total payments exceeding the then
current maximum payment limitation under federal tax law. If this occurs, we
will pay the excess to you.
CHANGE IN FACE AMOUNT - You may increase or decrease the face amount by written
request. An increase or decrease in the face amount takes effect on the later of
the
o The monthly processing date on or next following the date of
receipt of your written request or
o The date of our approval of your written request, if evidence
of insurability is required
Increases - You must submit evidence of insurability satisfactory to us with
your written request for an increase. The consent of the Insured is also
required whenever the face amount is increased. An increase in face amount may
not be less than $10,000. You may not increase the face amount after the Insured
reaches age 80. A written request for an increase must include a payment if the
surrender value is less than the sum of
o $40 plus
o Two minimum monthly payments
On the effective date of each increase in face amount, we will deduct a
transaction charge of $40 from Policy Value for administrative costs. You may
allocate the deduction to one sub-account. If you make no allocation we will
make a pro rata allocation. We will also compute a surrender charge for the
increase. An increase in the face amount will increase the insurance protection
amount and, therefore, the monthly insurance protection charges. We will provide
you new specification pages for the Policy indicating the effective date of the
increase and any additional charges due to the increase.
After increasing the face amount, you will have the right, during a free look
period, to have the increase canceled. See "THE POLICY - Free Look Period." If
you exercise this right, we will credit to your Policy the charges deducted for
the increase, unless you request a refund of these charges.
Decreases - You may decrease the face amount by written request. The minimum
amount for a decrease in face amount is $10,000. The minimum face amount in
force after a decrease is $50,000. We may limit the decrease or return Policy
Value to you, as you choose, if the Policy would not comply with the maximum
payment limitation under federal tax law. A return of Policy Value may result in
tax liability to you.
A decrease in the face amount will lower the insurance protection amount and,
therefore, the monthly insurance protection charge. In computing the monthly
insurance protection charge, a decrease in the face amount will reduce the face
amount in inverse order (i.e., first, the most recent increase, then the next
most recent increases, then the initial face amount).
On a decrease in the face amount, we will deduct from the Policy Value a
transaction charge of $40 and, if applicable, any surrender charges. You may
allocate the deduction to one sub-account. If you make no allocation, we will
make a pro-rata allocation. We will reduce the surrender charge by the amount of
any surrender charge deducted.
POLICY VALUE - The Policy Value is the total value of your Policy. It is the
sum of
o Your accumulation in the Fixed Account plus
o The value of your units in the sub-accounts
There is no guaranteed minimum Policy Value. Policy Value on any date depends on
variables that cannot be predetermined.
Your Policy Value is affected by the
o Frequency and amount of your net payments
o Interest credited in the Fixed Account
o Investment performance of your sub-accounts
o Partial withdrawals
o Loans, loan repayments and loan interest paid or credited
o Charges and deductions under the Policy
o The death benefit option
Computing Policy Value - We compute the Policy Value on the date of issue and on
each valuation date. On the date of issue, the Policy Value is
o The value of the amounts allocated to the Fixed Account and
sub-account(s), net of mortality and expense risks,
administrative charges and portfolioexpenses (see "THE POLICY
- Application for a Policy"), minus
o The monthly insurance protection charge due
On each valuation date after the date of issue, the Policy Value is the sum of
o Accumulations in the Fixed Account plus
o The sum of the product of
o The number of units in each sub-account times
o The value of a unit in each sub-account on the valuation date
The Unit - We allocate each net payment to the sub-accounts you selected. We
credit allocations to the sub-accounts as units. Units are credited separately
for each sub-account.
The number of units of each sub-account credited to the Policy is the quotient
of
o That part of the net payment allocated to the sub-account
divided by
o The dollar value of a unit on the valuation date the payment
is received at our Variable Life Service Center (but see
"APPLICATION FOR A POLICY" for treatment of payments received
by us before we approve the application)
The number of units will remain fixed unless changed by a split of unit value,
transfer, loan, partial withdrawal or surrender. Also, each deduction of charges
from a sub-account will result in the cancellation of units equal in value to
the amount deducted.
The dollar value of a unit of a sub-account varies from valuation date to
valuation date based on the investment experience of that sub-account. This
investment experience reflects the investment performance, expenses and charges
of the portfolio in which the sub-account invests. The value of each unit was
set at $10.00 on the first valuation date of each sub-account. The value of a
unit on any valuation date after the first valuation date is the product of
o The dollar value of the unit on the preceding valuation dat
times
o The net investment factor
Net Investment Factor - The net investment factor measures the investment
performance of a sub-account during the valuation period that has just ended.
The net investment factor is the result of (a) plus (b), divided by (c), minus
(d) and minus (e) where:
(a) is the net asset value per share of a portfolio held in the
sub-account determined at the end of the current valuation period;
(b) is the per share amount of any dividend or capital gain
distributions made by the portfolio on shares held in the sub-account
if the "ex-dividend" date occurs during the current valuation period;
(c) is the net asset value per share of a portfolio share held in the
sub-account determined as of the end of the immediately preceding
valuation period;
(d) is a charge for mortality and expense risks plus, during a period
not exceeding the first twenty Policy years, a charge for
administration; and
(e) is a charge for administration during a period not exceeding a
first twenty Policy years.
See "CHARGES AGAINST OR REFLECTED IN THE ASSETS OF THE SEPARATE ACCOUNT."
MATURITY BENEFITS - If the insured is alive on the maturity date, we will pay
the surrender value as of the maturity date to the Policy owner. The surrender
value may be paid in a single sum or under a payment option as described below.
PAYMENT OPTIONS - The net death benefit payable may be paid in a single sum or
under one or more of the payment options then offered by Transamerica. See
"APPENDIX C - PAYMENT OPTIONS." These payment options also are available at the
maturity date or if the Policy is surrendered. If no election is made, we will
pay the net death benefit in a single sum.
OPTIONAL INSURANCE BENEFITS - You may add optional insurance benefits to the
Policy by rider, as described in "APPENDIX B - OPTIONAL INSURANCE BENEFITS." The
cost of optional insurance benefits becomes part of the monthly insurance
protection charge, except that the guaranteed death benefit rider cost is a one
time transaction charge of $25 deducted on the first monthly processing date.
SURRENDER - You may surrender the Policy and receive its surrender value. The
surrender value is
o The Policy Value minus
o Any outstanding loan and surrender charges
We will compute the surrender value on the valuation date on which we receive
the Policy with your written request for surrender. We will deduct a surrender
charge if you surrender the Policy within 10 full Policy years of the date of
issue or of an increase in face amount. See "CHARGES AND DEDUCTIONS - Surrender
Charge."
The surrender value may be paid in a lump sum or under a payment option then
offered by us. See "APPENDIX C PAYMENT OPTIONS." We will normally pay the
surrender value within seven days following our receipt of your written request.
We may delay benefit payments under the circumstances described in "OTHER POLICY
PROVISIONS Delay of Payments."
For important tax consequences of a surrender, see "FEDERAL TAX CONSIDERATIONS."
PARTIAL WITHDRAWAL - After the first Policy year (and before the paid-up
insurance option is exercised), you may withdraw part of the surrender value of
your Policy on written request. Your written request must state the dollar
amount you wish to receive. You may allocate the amount withdrawn among the
sub-accounts and the Fixed Account. If you do not provide allocation
instructions, we will make a pro-rata allocation. Each partial withdrawal must
be at least $500. Under the Level Option, the face amount is reduced by the
partial withdrawal. We will not allow a partial withdrawal if it would reduce
the Level Option face amount below $50,000.
On a partial withdrawal from a sub-account, we will cancel the number of units
equal in value to the amount withdrawn. The amount withdrawn will be the amount
you requested plus the partial withdrawal costs. See "CHARGES AND DEDUCTIONS -
Partial Withdrawal Costs." We will normally pay the partial withdrawal within
seven days following our receipt of written request. We may delay payment as
described in "OTHER POLICY PROVISIONS - Delay of Payments."
For important tax consequences of partial withdrawals, see "FEDERAL TAX
CONSIDERATIONS."
PAID-UP INSURANCE OPTION - On written request, you may elect life insurance
coverage, usually for a reduced amount, for the life of the Insured with no
further premiums due. The paid-up insurance will be the amount that the
surrender value can provide as a net single premium applied at the Insured's age
and underwriting class on the date this option is elected. If the surrender
value exceeds the net single premium, we will pay the excess to you. The net
single premium is based on the Commissioners Ultimate 1980 Standard Ordinary
Mortality Tables, Smoker or Non-Smoker, male or female or Table B for unisex
policies with increases in the tables for non-standard risks. Interest will not
be less than 4.5% annually.
IF THE PAID-UP INSURANCE OPTION IS ELECTED, THE FOLLOWING POLICY OWNER RIGHTS
AND BENEFITS WILL BE AFFECTED:
o As described above, the paid-up insurance benefit will be
computed differently from the net death benefit and the death
benefit options will not apply
o We will not allow transfers of Policy Value from the Fixed
Account back to the Separate Account
o You may not make further payments
o You may not increase or decrease the face amount or make
partial withdrawals
o Riders will continue only with our consent
You may, after electing paid-up insurance, surrender the Policy for its net cash
value. The guaranteed cash value is the net single premium for the paid-up
insurance at the Insured's attained age. The net cash value is the guaranteed
cash value less any outstanding loan. We will transfer the portion of the Policy
Value in the sub-accounts of the Separate Account to the Fixed Account on the
date we receive your written request to elect the paid-up insurance option.
On election of reduced paid-up insurance, the Policy could become a modified
endowment contract. If a Policy becomes a modified endowment contract, Policy
loans, partial withdrawals or surrender will receive unfavorable federal tax
treatment. See "FEDERAL TAX CONSIDERATIONS - Modified Endowment Contracts."
CHARGES AND DEDUCTIONS
The following charges will apply to your Policy under the circumstances
described. Some of these charges apply throughout the Policy's duration. Other
charges apply only if you choose options under the Policy.
The charges are for the services and benefits provided, costs and expenses
incurred and risks assumed by Transamerica under or in connection with the
Policies. Services and benefits provided by Transamerica include:
(1) the death benefits, cash and loan benefits provided
by the Policy;
(2) investment options, including net payment allocations;
(3) administration of various elective options under the
Policy; and
(4) the distribution of various reports to Policy owners.
Costs and expenses incurred by Transamerica include:
(1) those associated with underwriting applications and
changes in face amount and riders;
(2) various overhead and other expenses associated with
providing the services and benefits related to the Policy;
(3) sales and marketing expenses; and
(4) other costs of doing business, such as federal, state and
local premium and other taxes and fees.
Risks assumed by Transamerica include the risks that Insureds may live for a
shorter period of time than estimated resulting in the payment of greater death
benefits than expected, and that the costs of providing the services and
benefits under the Policies will exceed the charges deducted.
PAYMENT EXPENSE CHARGE - Currently, we deduct 4.0% of each payment as a payment
expense charge. This charge is for state and local premium taxes, federal income
tax treatment of deferred acquisition costs, and Policy sales expenses.
We may increase or decrease the payment expense charge to reflect changes in our
expenses for taxes.
MONTHLY INSURANCE PROTECTION CHARGE - Before the final payment date, on each
monthly processing date we will deduct a monthly insurance protection charge
from your Policy Value. This charge is the cost for insurance protection under
the Policy, including optional insurance benefits provided by rider.
We deduct the monthly insurance protection charge on each monthly processing
date starting with the date of issue. You may allocate monthly insurance
protection charges to one sub-account. If you make no allocation, we will make a
pro-rata allocation. If the sub-account you chose does not have sufficient funds
to cover the monthly insurance protection charges, we will make a pro-rata
allocation. We will deduct no monthly insurance protection charges after the
final payment date.
Computing Monthly Insurance Protection Charge - We designed the monthly
insurance protection charge to compensate us for the anticipated cost of paying
net death benefits under the Policies. The charge is computed monthly for the
initial face amount and for each increase in face amount. Monthly insurance
protection charges can vary.
For the initial face amount under the Level Option, the monthly insurance
protection charge is the product of
o The insurance protection rate times
o The difference between (a) the initial face amount and (b) the
Policy Value (minus any rider charges at the beginning of the
Policy month), divided by 1,000
Under the Level Option, the monthly insurance protection charge decreases as the
Policy Value increases if the guideline minimum sum insured is not in effect.
For the initial face amount under the Adjustable Option, the monthly insurance
protection charge is the product of
o The insurance protection rate times
o The initial face amount, divided by 1,000
For each increase in face amount under the Level Option, the monthly insurance
protection charge is the product of
o The insurance protection rate for the increase times
o The difference between (a) the increase in face amount and (b)
any Policy value (minus any rider charges) greater than the
initial face amount at the beginning of the Policy month and
not allocated to a prior increase, divided by 1,000
For each increase in face amount under the Adjustable Option, the monthly
insurance protection charge is the product of
o The insurance protection rate for the increase times
o The increase in face amount, divided by 1,000
If the guideline minimum sum insured is in effect under either Option, we will
compute a monthly insurance protection charge for that part of the death benefit
subject to the guideline minimum sum insured that exceeds the current death
benefit not subject to the guideline minimum sum insured. This charge is the
product of
o The insurance protection rate for the initial face amount
times
o The difference between
o The guideline minimum sum insured and (a) the greater of the
face amount or the Policy Value, if you selected the Level
Option, or (b) the face amount plus the Policy Value, if you
selected the Adjustable Option, divided by 1,000
We will adjust the monthly insurance protection charge for any decreases in
face amount. See "THE POLICY - Change
In Face Amount: Decreases."
Insurance Protection Rates - We base insurance protection rates on the
o Male, female or unisex rate table
o Age and underwriting class of the Insured
o Effective date of an increase or date of any rider
For unisex Policies, sex-distinct rates do not apply. For the initial face
amount, the insurance protection rates are based on your age at the beginning of
each Policy year. For an increase in face amount or for a rider, the insurance
protection rates are based on your age on the effective date of the increase or
rider and, thereafter, on each anniversary of the effective date of the increase
or rider. We base the current insurance protection rates on our expectations as
to future mortality experience. Rates will not, however, be greater than the
guaranteed insurance protection rates set forth in the Policy. These guaranteed
rates are based on the Commissioners 1980 Standard Ordinary Mortality Tables,
Smoker or Non-Smoker (Mortality Table B for unisex Policies) and the Insured's
sex and age (with increases in the Tables for non-standard risks). The Tables
used for this purpose set forth different mortality estimates for males and
females and for smokers and non-smokers. Any change in the insurance protection
rates will apply to all Insureds of the same age, sex and underwriting class
whose Policies have been in force for the same period.
The underwriting class of an Insured will affect the insurance protection rates.
We currently place Insureds into preferred underwriting classes, standard
underwriting classes and sub-standard underwriting classes. The underwriting
classes are also divided into two categories: smokers and non-smokers. We will
place an Insured under age 18 at the date of issue in a standard or sub-standard
underwriting class. We will then classify the Insured as a smoker at age 18
unless we receive satisfactory evidence that the Insured is a non-smoker. Prior
to the Insured's age 18, we will give you notice of how the Insured may be
classified as a non-smoker.
We compute the insurance protection rate separately for the initial face amount
and for any increase in face amount. However, if the Insured's underwriting
class improves on an increase, the lower insurance protection rate will apply to
the total face amount.
CHARGES AGAINST OR REFLECTED IN THE ASSETS OF THE SEPARATE ACCOUNT - We assess
each sub-account with a charge for mortality and expense risks we assume and,
during the first 20 Policy years, a charge for administrative expenses related
to the Separate Account. Portfolio expenses are also reflected in the value of
the assets of the Separate Account.
Administration Charge - For a period not to exceed the first 20 Policy years, we
may impose a daily charge at an annual rate of 0.15% of the daily net asset
value in each sub-account. The charge is to help reimburse us for administrative
expenses incurred in the administration of the Separate Account and the
sub-accounts. The administrative functions and expenses we assume for the
Separate Account and the sub-accounts include
o Clerical, accounting, actuarial and legal services
o Rent, postage, telephone, office equipment and supplies
o The expenses of preparing and printing registration
statements and prospectuses (not allocable to
sales expense)
o Regulatory filing fees and other fees
Currently, the administration charge is waived after the tenth Policy year, but
we reserve the right to impose the charge after the tenth Policy year.
Mortality and Expense Risk Charge - We impose a daily charge at a current annual
rate of 0.65% of the average daily net asset value of each sub-account. This
charge compensates us for assuming mortality and expense risks for variable
interests in the Policies. We may increase this charge, subject to state and
federal law, to an annual rate no greater than 0.80%.
The mortality risk we assume is that Insureds may live for a shorter time than
anticipated. If this happens, we will pay more net death benefits than
anticipated. The expense risk we assume is that the expenses incurred in issuing
and administering the Policies will exceed those compensated by the
administration charges in the Policies.
Portfolio Expenses - The value of the units of the sub-accounts will reflect the
investment advisory fee and other expenses of the portfolios whose shares the
sub-accounts purchase. The prospectuses and Statements of Additional Information
of the portfolios contain more information concerning the fees and expenses.
No charges are currently made against the sub-accounts for federal or state
income taxes. Should income taxes be
imposed, we may make deductions from the sub-accounts to pay the taxes. See
"FEDERAL TAX CONSIDERATIONS."
SURRENDER CHARGES - The Policy's surrender charges are designed to reimburse us
for part of the costs of product research and development, underwriting, Policy
administration, surrendering the Policy and the part of sales expenses,
including commissions to our representatives, advertising, and the printing of
prospectuses and sales literature.
A surrender charge is computed on the date of issue for the initial face amount.
This surrender charge applies for ten years from the date of issue. We impose
this surrender charge only if, during the time the charge is effective, you
request a full surrender of your Policy or a decrease in face amount.
A new surrender charge is computed for any increase in face amount. The
surrender charge for a face increase applies for ten years from the date the
increase is effective. The new surrender charge computed for an increase in face
amount applies only to the face increase.
We compute each surrender charge based on a rate per $1,000 of the related face
amount. The rate which applies to your Policy is based on whether the Insured is
male or female (male rates are used if the Policy is issued using unisex rates);
the Insured's age; and the number of years during which that surrender charge
has been effective. The surrender charge rate for the initial face amount
decreases each Policy year. The surrender charge rate for each increase in face
amount decreases each year on the twelve month anniversary of the effective date
of the increase in face amount.
We determine the Insured's age as of the date of issue for the initial face
amount for the Policy. If there is an increase in the face amount, we determine
the Insured's age on the effective date of the increase.
The surrender charge amount which applies in a particular Policy year on your
Policy is shown on the specifications page of your Policy. A new specifications
page showing the new surrender charge amounts will be provided to you if there
is an increase or a decrease in face amount on your policy.
Policy Value
If more than one surrender charge is in effect because of one or more increases
in face amount, we will apply the surrender charges in inverse order. We will
apply surrender and partial withdrawal charges (described below) in this order:
o First, those related to the most recent increase
o Second, those related to the next most recent increases, and
so on
o Third, those related to the initial face amount.
A surrender charge may be deducted on a decrease in the face amount. On a
decrease, the surrender charge deducted is a fraction of the charge that would
apply to a full surrender. The fraction is the product of
o The decrease divided by the current face amount times
o the surrender charge
Where a decrease causes a partial reduction in an increase or in the initial
face amount, we will deduct a proportionate share of the surrender charge for
that increase or for the initial face amount.
See "APPENDIX E - MAXIMUM SURRENDER CHARGES" for the maximum surrender charge
rates and an example of how we compute the amount of surrender charges.
PARTIAL WITHDRAWAL COSTS - For each partial withdrawal, we deduct a transaction
fee of 2.0% of the amount withdrawn, not to exceed $25.
A partial withdrawal charge may also be deducted from Policy Value. After the
first Policy year (and before you exercise the paid-up insurance option), during
each Policy year you may withdraw, without a partial withdrawal charge, up to
o 10% of the Policy Value on the date we receive the written
request at the Variable Life Service
Center, minus
o The total of any prior free withdrawals in the same Policy
year ("Free 10% Withdrawal")
The right to make the Free 10% Withdrawal is not cumulative from Policy year to
Policy year. For example, if only 8% of Policy Value were withdrawn in the
second Policy year, the amount you could withdraw in future Policy years would
not be increased by the amount you did not withdraw in the second Policy year.
We impose the partial withdrawal charge on any withdrawal greater than the Free
10% Withdrawal (the "excess withdrawal" amount). The maximum charge is 5.0% of
the excess withdrawal amount up to the surrender charge. If no surrender charge
applies on withdrawal, no partial withdrawal charge will apply. We will reduce
the Policy's outstanding surrender charges by the partial withdrawal charge
deducted. The partial withdrawal charge deducted will decrease existing
surrender charges in inverse order (i.e., first the most recent increase's
surrender charges, then the next most recent increase's surrender charges in
succession, and last the initial face amount's surrender charge).
TRANSFER CHARGES - The first 12 transfers in a Policy year are free. After that,
we will deduct a $10 transfer charge from amounts transferred in that Policy
year. We reserve the right to increase the charge, but it will never exceed $25.
If you apply for automatic transfers, the first automatic transfer counts as one
transfer towards the 12 free transfers allowed in each Policy year. Each future
automatic transfer is without charge and does not reduce the remaining number of
transfers that may be made without charge.
Each of the following transfers of Policy Value from the sub-accounts to the
Fixed Account is free and does not count as one of the 12 free transfers in a
Policy year:
o A conversion within the first 24 months from date of issue or
increase
o A transfer to the Fixed Account to secure a loan
o A reallocation of the value in the Money Market sub-account as
described above under "Application for A Policy" regarding
"Right to Examine Policy"
CHARGE FOR CHANGE IN FACE AMOUNT - For each increase or decrease in face amount,
we will deduct a transaction charge of $40 from Policy Value to reimburse us for
the administrative costs of the change. Unless you specify the sub-account from
which the charge is to be deducted, we will allocate the charge pro-rata.
OTHER ADMINISTRATIVE CHARGES - We reserve the right to charge for other
administrative costs we incur. While there are no current charges for these
costs, we may impose a charge (guaranteed not to exceed $25 per transaction) for
o Changing net payment allocation instructions
o Changing the allocation of monthly
insurance protection charges among the
various sub-accounts and the Fixed Account
o Providing a projection of values in
addition to the annual statement
POLICY LOANS
You may borrow money secured by your Policy Value. The total amount of loans you
may have outstanding at any time is the loan value. In the first Policy year,
the loan value is 75% of
o The Policy Value minus
o Any surrender charges, unpaid monthly insurance protection
charges and outstanding loan interest
through the end of the Policy year
After the first Policy Year, the loan value is 90% of
o The Policy Value minus
o Any surrender charges
The loan value and the Policy Value in the first Policy year or any subsequent
Policy year are the values on the valuation date we receive your request for a
loan at our Variable Life Service Center.
There is no minimum loan. We will usually pay the loan within seven days after
we receive the written request. We may delay the payment of loans as stated in
"OTHER POLICY PROVISIONS - Delay of Payments"
We will withdraw the amount of the loan from the sub-accounts and the Fixed
Account according to your instructions. If you do notprovide us with
instructions, we will make a pro-rata withdrawal of the loan amount. We will
transfer the portion of the Policy Value in each sub-account equal to the Policy
loan to the Fixed Account to secure the outstanding loan. We will not count this
transfer as a transfer subject to the transfer charge.
The portion of the Policy Value securing the outstanding loan will earn monthly
interest in the Fixed Account at an annual rate of at least 6.0% (7.5% for
preferred loans). NO OTHER INTEREST WILL BE CREDITED.
PREFERRED LOAN OPTION - A preferred loan option is available after the tenth
Policy year, and, after that date, will apply to any outstanding loans and new
loan requests unless you revoke the preferred loan option in writing. The
guaranteed annual interest rate credited to the portion of the Policy Value
securing a preferred loan will be not less than 7.5%.
There is some uncertainty as to the tax treatment of preferred loans. Consult a
qualified tax adviser (and see "FEDERAL TAX CONSIDERATIONS").
LOAN INTEREST CHARGED - Interest accrues daily at the annual rate of 8.0%.
Interest is due and payable in arrears at the end of each Policy year or for as
short a period as the loan may exist. Interest not paid when due will be added
to the loan amount and bears interest at the same rate. If this makes the loan
principle higher than the portion of the Policy Value in the Fixed Account, we
will offset this shortfall by transferring amounts from the sub-accounts. The
transferred amount will be allocated proportionately among the sub-accounts
which have value in them.
REPAYMENT OF OUTSTANDING LOAN - You may pay any loans before Policy lapse. On
the valuation date on which we receive your loan repayment at our Variable Life
Service Center, we will allocate that part of the Policy Value in the Fixed
Account that secured a repaid loan to the sub-accounts and Fixed Account
according to your instructions. If you do not make a repayment allocation, we
will allocate Policy Value according to your most recent payment allocation
instructions. However, loan repayments allocated to the Separate Account cannot
exceed that portion of the Policy Value previously transferred from the Separate
Account to secure the outstanding loan.
If the outstanding loan exceeds the Policy Value less the surrender charge, the
Policy will be in default. We will mail a notice of default to the last known
address of you and any assignee. If you do not make sufficient payment within 62
days after this notice is mailed, the Policy will terminate with no value. See
"POLICY TERMINATION AND REINSTATEMENT."
EFFECT OF POLICY LOANS - Policy loans will permanently affect the Policy Value
and surrender value, and may permanently affect the death benefit. The effect
could be favorable or unfavorable, depending on whether the investment
performance of the sub-accounts is less than or greater than the interest
credited to the portion of the Policy Value in the Fixed Account that secures
the loan.
We will deduct any outstanding loan from the proceeds payable when the Insured
dies or from a surrender.
Loans must be repaid within five (5) years, except when the loan is used to
acquire any dwelling unit which within a reasonable time is to be used
as the Policyowner's principal residence.
All Policy loans must be amortized on a level basis with loan repayments
being made not less frequently than quarterly.
The sum of all outstanding loan balances for all loans from all of your TSA
plans may not exceed the lesser of:
$50,000 reduced by the excess (if any) of
the highest outstanding balance of loans from all of the
Policyowner's TSA plans during the one-year period
preceding the date of the loan, minus
the outstanding balance of loans from the Policyowner's TSA
plans on the date on which such loan
was made
50% of the Policyowner's non-forfeitable accrued benefit in all of
his/her TSA plans, but not less than $10,000.
POLICY TERMINATION AND REINSTATEMENT
TERMINATION - The Policy will be in default if
o Surrender value is insufficient to cover the next monthly
insurance protection charge plus loan
interest accrued OR
o Outstanding loan exceeds the Policy Value less surrender charges
If one of these situations occurs, the Policy will be in default. On the date of
default, we will send a notice to you and to any assignee of record. The notice
will state the payment due and the date by which it must be paid. You will then
have a grace period of 62 days, measured from the date of the notice of default,
to make a payment sufficient to prevent termination.
Failure to pay a sufficient premium within the grace period will result in
Policy termination. If the Insured dies during the grace period, we will deduct
from the net death benefit any monthly insurance protection charges due and
unpaid through the Policy month in which the Insured dies and any other overdue
charge.
During the first 48 Policy months following the date of issue or an increase in
the face amount, a guarantee may apply to prevent the Policy from terminating
because of insufficient surrender value. This guarantee applies if, during this
period, we receive payments from you that, when reduced by outstanding loans,
partial withdrawals and partial withdrawal costs, equal or exceed specified
minimum monthly payments. The specified minimum monthly payments are based on
the number of months the Policy, increase in face amount or Policy change that
causes a change in the minimum monthly payment has been in force. A Policy
change that causes a change in the minimum monthly payment is a change in the
face amount, the addition or deletion of a rider, or a change in the smoker or
non-smoker underwriting class on the Policy. Except for the first 48 months
after the date of issue or the effective date of an increase, payments equal to
the minimum monthly payment do not guarantee that the Policy will remain in
force.
You may also elect the Guaranteed Death Benefit Rider. There is a one time $25
charge for this rider. The charge is assessed on the first monthly processing
date. Under the Guaranteed Death Benefit Rider, if you make payments of a
sufficient amount, net of withdrawals, withdrawal costs and any outstanding
loans, we guarantee that your Policy will not lapse. In order to maintain this
guarantee on each Policy anniversary through the final payment date, the total
of your payments received, net of withdrawals, withdrawal costs and any
outstanding loans, must at least equal the guaranteed death benefit premium
times the number of policy years since the policy was issued.
See "Payments."
REINSTATEMENT - A defaulted Policy may be reinstated within three years of the
date of default and before the final payment date (or, before the Maturity Date,
if the default occurred because the outstanding loan exceeded the Policy Value
less surrender charges). The reinstatement takes effect on the monthly
processing date following the date you submit to us
o Written application for reinstatement
o Evidence of insurability satisfactory to us
o A payment that, after the deduction of the payment expense
charge, is large enough to cover the
minimum amount payable
Policies which have been surrendered may not be reinstated.
Minimum Amount Payable - If reinstatement is requested when less than 48 monthly
insurance protection charges have been paid since the date of issue or increase
in the face amount, you must pay the lesser of:
o The minimum monthly payment for the three months beginning
on the date of reinstatement or
o The sum of
o The amount by which the surrender charge(s)
on the date of reinstatement exceeds the
Policy Value on the date of default plus
o Monthly insurance protection charges for the
three months beginning on the date of
reinstatement
If you request reinstatement more than 48 monthly processing dates from the date
of issue or increase in the face amount, you must pay the sum shown above
without regard to the three months of minimum monthly payments.
Surrender Charge - The surrender charge on the date of reinstatement is the
surrender charge that would have been in effect had the Policy remained in force
from the date of issue.
Policy Value on Reinstatement - The Policy Value on the date of reinstatement
is:
. The net payment made to reinstate the Policy and interest
earned from the date the payment was
received at our Variable Life Service Center plus
. The Policy Value less any outstanding loan on the date of
default (not to exceed the surrender
charge on the date of reinstatement) minus
. The monthly insurance protection charges due on the date of
reinstatement
You may repay or reinstate any outstanding loan on the date of default or
foreclosure.
OTHER POLICY PROVISIONS
POLICY OWNER - The Policy owner is the Insured unless another person has been
named as owner in the application or enrollment form. As Policy owner, you are
entitled to exercise all rights under your Policy while the Insured is alive,
with the consent of any irrevocable beneficiary. The consent of the Insured is
required whenever the face amount is increased.
BENEFICIARY -The beneficiary is the person or persons to whom the net death
benefit is payable on the Insured's death. The Policy owner names the
beneficiary. Unless otherwise stated in the Policy, the beneficiary has no
rights in the Policy before the Insured dies. While the Insured is alive, you
may change the beneficiary, unless you have declared the beneficiary to be
irrevocable. If no beneficiary is alive when the Insured dies, the Policy owner
(or the Policy owner's estate) will be the beneficiary. If more than one
beneficiary is alive when the Insured dies, we will pay each beneficiary in
equal shares, unless you have chosen otherwise. Where there is more than one
beneficiary, the interest of a beneficiary who dies before the Insured will pass
to surviving beneficiaries proportionally.
ASSIGNMENT - You may assign a Policy as collateral or make an absolute
assignment. All Policy rights will be transferred as to the assignee's interest.
The consent of the assignee may be required to make changes in payment
allocations, make transfers or to exercise other rights under the Policy. We are
not bound by an assignment or release thereof, unless it is in writing and
recorded at our Variable Life Service Center. When recorded, the assignment will
take effect as of the date the written request was signed. Any rights the
assignment creates will be subject to any payments we made or actions we took
before the assignment is recorded. We are not responsible for determining the
validity of any assignment or release.
The following Policy provisions may vary by state.
LIMIT ON RIGHT TO CHALLENGE POLICY - Except for fraud (unless prohibited by
state law) or nonpayment of premium, we cannot challenge the validity of your
Policy if the Insured was alive after the Policy had been in force for two years
from the date of issue. This provision does not apply to any riders providing
benefits specifically for disability or death by accident. Also, we cannot
challenge the validity of any increase in the face amount if the Insured was
alive after the increase was in force for two years from the effective date of
the increase.
SUICIDE - The net death benefit will not be paid if the Insured commits suicide,
while sane or insane, within two years from the date of issue. Instead, we will
pay the beneficiary all payments made for the Policy, without interest, less any
outstanding loan and partial withdrawals. If the Insured commits suicide, while
sane or insane, within two years from any increase in face amount, we will not
recognize the increase. We will pay to the beneficiary the monthly insurance
protection charges paid for the increase.
MISSTATEMENT OF AGE OR SEX - If the Insured's age or sex is not correctly stated
in the Policy application or enrollment form, we will adjust the death benefit
under the Policy to reflect the correct age and sex. The adjusted death benefit
will be the Policy Value plus the insurance protection amount that the most
recent monthly insurance protection charge would have purchased for the correct
age and sex. We will not reduce the death benefit to less than the guideline
minimum sum insured. For a unisex Policy, there is no adjusted benefit solely
for misstatement of sex. Certain rider benefits may also be adjusted for
misstatement of age or sex.
DELAY OF PAYMENTS - Amounts payable from the Separate Account for surrender,
partial withdrawals, net death benefit, Policy loans and transfers may be
postponed whenever
. The New York Stock Exchange is closed other than customary
weekend and holiday closings
. The SEC restricts trading on the New York Stock Exchange
. The SEC determines an emergency exists, so that disposal
of securities is not reasonably
practicable or it is not reasonably practicable to compute
the value of the Separate Account's
net assets
We may delay paying any amounts derived from payments you made by check until
the check has cleared your bank.
We reserve the right to defer amounts payable from the Fixed Account. This delay
may not exceed six months.
FEDERAL TAX CONSIDERATIONS
The following description is a brief summary of some of the federal tax
considerations based on our understanding of the present federal income tax laws
as they are currently interpreted. Legislation may be proposed which, if passed,
could adversely and possibly retroactively affect the taxation of the Policies.
This summary is not exhaustive, does not purport to cover all situations, and is
not intended as tax advice. We do not address tax provisions that may apply if
the Policy owner is a corporation. You should consult a qualified tax adviser to
apply the law to your circumstances.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE SEPARATE ACCOUNT -
Transamerica is taxed as a life insurance company under Subchapter L of the
Code. We file a consolidated tax return with our parent and affiliates. We do
not currently charge for any income tax on the earnings or realized capital
gains in the Separate Account. A charge may apply in the future for any federal
income taxes we incur. The charge may become necessary, for example, if there is
a change in our tax status. Any charge would be designed to cover the federal
income taxes on the investment results of the Separate Account.
Under current laws, Transamerica may incur state and local taxes besides premium
taxes. These taxes are not currently significant. If there is a material change
in these taxes affecting the Separate Account, we may charge for taxes paid or
for tax reserves.
TAXATION OF THE POLICIES - We believe that the Policies described in this
prospectus are life insurance contracts under Section 7702 of the Code. Section
7702 affects the taxation of life insurance contracts and places limits on the
relationship of the Policy Value to the death benefit. As life insurance
contracts, the net death benefits of the Policies are generally excludable from
the gross income of the beneficiaries. In the absence of any guidance from the
Internal Revenue Service ("IRS") on the issue, we believe that providing the
same amount at risk after age 99 as is provided at age 99 should be sufficient
to maintain the excludibility of the death benefit after age 99. However, this
lack of specific IRS guidance makes the tax treatment of the death benefit after
age 99 uncertain. Also, any increase in Policy Value is not taxable until
received by you or your designee (but see "MODIFIED ENDOWMENT CONTRACTS").
Federal tax law requires that the investment of each sub-account funding the
Policies is adequately diversified according to Treasury regulations. We believe
that the portfolios currently meet the Treasury's diversification requirements.
We will monitor continued compliance with these requirements.
The Treasury Department has announced that previous regulations on
diversification do not provide guidance concerning the extent to which Policy
owners may direct their investment assets to divisions of a separate investment
account without being treated as the owner of such assets who is taxed directly
on the income from such assets. Regulations may provide such guidance in the
future. The Policies or our administrative rules may be modified as necessary to
prevent a Policy owner from being treated as the owner of any assets of the
Separate Account who is taxed directly on their income.
A surrender, partial withdrawal, distribution, payment at maturity date, change
in the death benefit option, change in the face amount, lapse with Policy loan
outstanding, or assignment of the Policy may have tax consequences. Within the
first fifteen Policy years, a distribution of cash required under Section 7702
of the Code because of a reduction of benefits under the Policy may be taxable
to the Policy owner as ordinary income respecting any investment earnings.
Federal, state and local income, estate, inheritance, and other tax consequences
of ownership or receipt of Policy proceeds depend on the circumstances of each
Insured, Policy owner or beneficiary.
POLICY LOANS - Transamerica believes that non-preferred loans received under the
Policy will be treated as an indebtedness of the Policy owner for federal income
tax purposes. Under current law, these loans will not constitute income for the
Policy owner while the Policy is in force (but see "Modified Endowment
Contracts"). There is a risk, however, that a preferred loan may be
characterized by the IRS as a withdrawal and taxed accordingly. At the present
time, the IRS has not issued any guidance on whether loans with the attributes
of a preferred loan should be treated differently from a non-preferred loan.
This lack of specific guidance makes the tax treatment of preferred loans
uncertain.
INTEREST DISALLOWANCE - Under Section 264(a)(4) of the Code, as amended in 1997,
interest on Policy loans is generally nondeductible for a Policy issued or
materially changed after June 8, 1997. In addition, under Section 264(f) certain
policies under which a trade or business (other than a sole proprietorship or a
business performing services as an employee) is directly or indirectly a
beneficiary can subject a taxpayer's interest expense to partial disallowance
(if the Policy is issued or materially changed after June 8, 1997), to the
extent such interest expense is allocable to the taxpayer's unborrowed cash
values thereunder. You should consult your tax advisor on how the rules
governing the non-deductibility of interest would apply in your individual
situation.
MODIFIED ENDOWMENT CONTRACTS - Special rules described below apply to the tax
treatment of loans and other distributions under any life insurance contract
that is classified as a modified endowment contract ("MEC") under Section 7702A
of the Code. A MEC is a life insurance contract that either fails the "7-pay
test" or is received in exchange for a MEC. In general, a Policy will fail this
7-pay test if the cumulative premiums and other amounts paid for the Policy at
any time during the first 7 contract years (or during any subsequent 7-year test
period resulting from a material change in the Policy) exceed the sum of the net
level premiums which would have been paid up to such time if the Policy had
provided for certain paid-up future benefits after the payment of 7 level annual
premiums. If to comply with this 7-pay test limit any premium amount is refunded
with applicable interest no later than 60 days after the end of the contract
year in which it is received, such refunded amount will be removed from the
cumulative amount of premiums that is compared against such 7-pay test limit. If
there is any reduction in the Policy's benefits (e.g., upon a withdrawal, death
benefit reduction or termination of a rider benefit) during a 7-pay test period,
the Policy will be retested retroactively from the start of such period by
taking into account such reduced benefit level from such starting date.
Generally, any increase in death benefits or other material change in the Policy
may be treated as producing a new contract for 7-pay test purposes, requiring
the start of a new 7-pay test period as of the date of such change.
DISTRIBUTIONS UNDER MODIFIED ENDOWMENT CONTRACTS - Under Section 72(c)(10) of
the Code, loans, withdrawals and other distributions made prior to the Insured's
death under a MEC are includible in gross income on an "income-out-first" basis,
i.e., the amount received is treated as allocable first to the "income in the
contract" and then to a tax-free recovery of the Policy's " investment in the
contract" (or "tax basis"). Generally, a Policy's tax basis is equal to its
total premiums less amounts recovered tax-free. To the extent that the Policy's
cash value (ignoring surrender charges except upon a full surrender) exceeds its
tax basis, such excess constitutes its "income in the contract." However, under
Code Section 72(e)(11)(A)(i), where more than one MEC has been issued to the
same policyholder by the same insurer (or an affiliate) during a calendar year,
all such MEC's are aggregated for purposes of determining the amount of a
distribution from any such MEC that is includible in gross income. In addition,
any amount includible in gross income from a MEC distribution is subject to a
10% penalty tax on premature distributions under Section 72(v) of the Code,
unless the taxpayer has attained age 59 1/2 or is disabled or the payment is
part of a series of substantially equal periodic payments for a qualifying
lifetime period. Furthermore, under Section 72(e)(4)(A) of the Code, any loan,
pledge, or assignment of (or any agreement to assign or pledge) any portion of a
MEC's cash value is treated as producing an amount received for purposes of
these MEC distribution rules. It is unclear to what extent this assignment rule
applies to a collateral assignment that does not secure a loan or pledge (e.g.,
in certain split-dollar arrangements). Under Code Section 7702A(d) the MEC
distribution rules apply not only to all distributions made during the contract
year in which the Policy fails the 7-pay test (and later years), but also to any
distributions made "in anticipation of" such failure, which is deemed to include
any distributions made during the two years prior to such failure. The Treasury
Department has not yet issued regulations or other guidance indicating what
other distributions can be treated as made "in anticipation of" such a failure
or how (e.g., as of what date) should "income in the contract" be determined for
purposes of any distribution that is deemed to be made in anticipation of a
failure.
Policy Value
VOTING RIGHTS
We are the legal owner of all portfolio shares held in the Separate Account and
each sub-account. As the owner, we have the right to vote at a portfolio's
shareholder meetings. However, to the extent required by federal securities laws
and regulations, we will vote portfolio shares that each sub-account holds
according to instructions received from Policy owners with Policy Value in the
sub-account. If, any federal securities laws or regulations or their
interpretation change to permit us to vote shares in our own right, we reserve
the right to do so, whether or not the shares relate to the Policies.
We will provide each person having a voting interest in a portfolio with proxy
materials and voting instructions. We will vote shares held in each sub-account
for which no timely instructions are received in proportion to all instructions
received for the sub-account. We will also vote in the same proportion our
shares held in the Separate Account that do not relate to the Policies.
We will compute the number of votes that a policy owner has the right to
instruct on the record date established for the portfolio. This number is the
quotient of
o Each Policy owner's Policy Value in the sub-account divided by
o The net asset value of one share in the portfolio in which
the assets of the sub-account are
invested
We may disregard voting instructions Policy owners initiate in favor of any
change in the investment policies or in any investment adviser or principal
underwriter. Our disapproval of any change must be reasonable. A change in
investment policies or investment adviser must be based on a good faith
determination that the change would be contrary to state law or otherwise is
improper under the objectives and purposes of the portfolios. If we do disregard
voting instructions, we will include a summary of and reasons for that action in
the next report to Policy owners.
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Thomas J. Cusack* Director, Chairman, President and Chief Executive
Officer of TOLIC since 1997.
Director, President and Chief
Executive Officer of TOLIC since
1995. Senior Vice President of
Transamerica Corporation from 1993
to 1995. Vice President of Corporate
Development of General Electric
Company from 1989 to 1993.
Nooruddin S. Veerjee, FSA* Director, President
of Group Pension Division of TOLIC
since 1993. Senior Vice President of
TOLIC from 1992 to 1993. Vice
President of TOLIC from 1990 to
1992.
James W. Dederer, CLU* Director, Executive Vice President
General Counsel and Corporate
Secretary of TOLIC since 1988.
David E. Gooding* Director, Executive Vice President and Chief
Information Officer of TOLIC since 1992.
T. Desmond Sugrue* Director and
Executive Vice President of TOLIC
since 1997. Senior Vice President of
TOLIC from 1996 to 1997.
Self-employed - Consulting from 1994
to 1996. Employed at Bank of America
from 1988 to 1993.
Robert Abeles* Director, Executive Vice
President and Chief Financial
Officer of TOLIC since 1996.
Executive Vice President and Chief
Financial Officer of First
Interstate Bank of California from
1990 to 1996.
Nicki Bair* Senior Vice President of TOLIC
since 1996. Vice President of TOLIC
from 1991 to 1996.
Roy Chong-Kit* Senior Vice President and
Actuary of TOLIC since 1997. Vice
President and Actuary of TOLIC from
1995 to 1997. Actuary of TOLIC from
1988 to 1995.
Bruce Clark* Senior Vice President and
Chief Actuary of TOLIC since 1996.
Vice President and Actuary of TOLIC
from 1994 to 1996. Vice President
and Associate Actuary of TOLIC from
1988 to 1994.
Daniel E. Jund, FLMI* Senior Vice President of TOLIC since 1988.
Karen MacDonald* Director, Senior Vice President and Corporate
Actuary of TOLIC since 1995. Senior
Vice President and Corporate Actuary
from 1992 to 1995.
William N. Scott, CLU, FLMI** Senior Vice
President of TOLIC since 1993. Vice
President of TOLIC from 1988 to
1993.
Claude W. Thau, FSA** Senior Vice President
of TOLIC since 1996. Vice President
of TOLIC from 1985 to 1996.
Ron F. Wagley* Senior Vice President and
Chief Agency Officer of TOLIC since
1993. Vice President of TOLIC from
1989 to 1993.
William R. Wellnitz, FSA*** Senior Vice
President and Actuary of TOLIC since
1996. Vice President and Reinsurance
Actuary of TOLIC from 1988 to 1996.
*The business address is 1150 South Olive Street, Los Angeles, California 90015.
**The business address is 1100 Walnut Street, 23rd Floor, Kansas City, Missouri
64106. ***The business address is 401 North Tryon Street, Charlotte, North
Carolina 28202.
The depositor is insured under a broad manuscript fidelity bond program with
coverage limits of $40,000,000. The lead underwriter is Continental Casualty
Company of Chicago, Illinois.
DISTRIBUTION
Transamerica Securities Sales Corporation acts as the principal underwriter and
general distributor of the Policies. Transamerica Securities Sales Corporation
is registered with the SEC as a broker-dealer and is a member of the National
Association of Securities Dealers. Broker-dealers sell the Policies through
their registered representatives who are appointed by us.
We pay to broker-dealers who sell the Policy commissions based on a commission
schedule. After the date of issue or an increase in face amount, commissions
will be 90% of the first-year payments up to a payment amount we established and
5% of any excess. After the first year, commissions will be 2% of payments plus
0.30% of unloaned Policy Value. To the extent permitted by NASD rules,
promotional incentives or payments may also be provided to broker-dealers based
on sales volumes, the assumption of wholesaling functions or other sales-related
criteria. Other payments may be made for other services that do not directly
involve the sale of the Policies. These services may include the recruitment and
training of personnel, production of promotional literature, and similar
services.
We intend to recoup commissions and other sales expenses through
o The payment expense charge
o The surrender charge
o Investment earnings on amounts allocated under the Policies to the
Fixed Account
Commissions paid on the Policies, including other incentives or payments, are
not charged to Policy owners or to the Separate Account.
REPORTS
We will maintain the records for the Separate Account. We will promptly send you
statements of transactions under your Policy, including
o Payments
o Changes in face amount
o Changes in death benefit option
o Transfers among sub-accounts and the Fixed Account
o Partial withdrawals
o Increases in loan amount or loan repayments
o Lapse or default for any reason
o Reinstatement
We will send an annual statement to you that will summarize all of the above
transactions and deductions of charges during the Policy year. It will also set
forth the status of the death benefit, Policy Value, surrender value, amounts in
the sub-accounts and Fixed Account, and any Policy loans. We will send you such
reports containing financial statements and other information for the portfolios
as the 1940 Act requires.
PERFORMANCE INFORMATION
We may advertise "Total Return" and "Average Annual Total Return" performance
information based on the periods that the portfolios have been in existence. The
results for any period prior to the Policies being offered will be calculated as
if the Policies had been offered during that period of time, with all charges
assumed to be those applicable to the sub-accounts and the portfolios.
Total return and average annual total return are based on the hypothetical
profile of a representative Policy owner and historical earnings and are not
intended to indicate future performance. "Total return" is the total income
generated net of certain expenses and charges. "Average annual total return" is
net of the same expenses and charges, but reflects the hypothetical return
compounded annually. This hypothetical return is equal to cumulative return had
performance been constant over the entire period. Average annual total returns
are not the same as yearly results and tend to smooth out variations in the
fund's return.
Performance information under the Policies is net of portfolio expenses,
mortality and expense risk charges, administration charges, monthly insurance
protection charges and surrender charges.
We take a representative Policy owner and assume that
o The Insured is a male Age 36, standard non-smoker underwriting class
o The Policy owner had allocations in each of the sub-accounts for the
fund durations shown, and
o There was a full surrender at the end of the applicable period
We may compare performance information for a sub-account in reports and
promotional literature to
o Standard & Poor's 500 Stock Index ("S & P 500")
o Dow Jones Industrial Average ("DJIA")
o Shearson Lehman Aggregate Bond Index
o Other unmanaged indices of unmanaged securities widely regarded by
investors as representative of the
securities markets
o Other groups of variable life separate accounts or other investment
products tracked by Lipper Analytical Services
o Other services, companies, publications, or persons such as
Morningstar, Inc., who rank the investment products on performance or
other criteria
o The Consumer Price Index
Unmanaged indices may assume the reinvestment of dividends but generally do not
reflect deductions for insurance and administration charges, separate account
charges and fund management costs and expenses. Performance information for any
sub-account reflects only the performance of a hypothetical investment in the
sub-account during a period. It is not representative of what may be achieved in
the future. However, performance information may be helpful in reviewing market
conditions during a period and in considering a fund's success in meeting its
investment objectives.
In advertising, sales literature, publications or other materials, we may give
information on various topics of interest to Policy owners and prospective
Policy owners. These topics may include
o The relationship between sectors of the economy and the economy as a
whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, market timing,
dollar cost averaging, asset allocation and automatic account
rebalancing)
o The advantages and disadvantages of investing in tax-deferred and
taxable investments
o Customer profiles and hypothetical payment and investment scenarios
o Financial management and tax and retirement planning
o Investment alternatives to certificates of deposit and other financial
instruments, including comparisons between the Policies and the
characteristics of, and market for, the financial instruments.
In each table below, "One-Year Total Return" refers to the total of the income
generated by a sub-account, based on certain charges and assumptions as
described in the respective tables, for the one-year period ended December 31,
1996. "Average Annual Total Return" is based on the same charges and
assumptions, but reflects the hypothetical annually compounded return that would
have produced the same cumulative return if the sub-account's performance had
been constant over the entire period. Because average annual total returns tend
to smooth out variations in annual performance return, they are not the same as
actual year-by-year results.
<PAGE>
Table 1: SUB-ACCOUNT PERFORMANCE
(Net of all Charges and Assuming Surrender of the Policy)
The following performance information is based on the periods that the
portfolios have been in existence. The data is net of expenses of the
portfolios, all sub-accounts charges, and all Policy charges (including
surrender charges) for a representative Policy. It is assumed that the Insured
is Male, Age 36, standard nonsmokerunderwriting class, that the face amount of
the Policy is $250,000, that an annual payment of $3,000 (approximately the
guideline level premium) was made at the beginning of each Policy year, that all
payments were allocated to each sub-account individually, and that there was a
full surrender of the Policy at the end of the applicable period.
Years
10 Years Since
One-Year or Life Inception
Portfolios Total 5 of Portfolio (if less
return Years (if less) than 10)
- -----------------------------------------------------------------
Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio in which a
sub-account invests and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
<PAGE>
Table II: SUB-ACCOUNT PERFORMANCE
(Excluding Monthly Policy Charges and Surrender Charges)
The following performance information is based on the periods that the
portfolios have been in existence. The performance information is net of total
portfolios expenses, all sub-account charges, and premium tax and expense
charges. The data does NOT reflect monthly charges under the Policies or
surrender charges. It is assumed that an annual payment of $3,000 (approximately
one Guideline Annual Premium) was made at the beginning of each Policy year and
that all payments were allocated to each sub-account individually.
Years
10 Years Since
One-Year or Life Inception
Total 5 of Portfolio (if less
Portfolios return Years (if less) than 10)
Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio in which a
sub-account invests and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
LEGAL PROCEEDINGS
There are no pending legal proceedings involving the Separate Account or its
assets. Transamerica is not involved in any litigation that is materially
important to its total assets.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to law, to make additions to, deletions from, or
substitutions for the shares that are held in the sub-accounts. We may redeem
the shares of a portfolio and substitute shares of another registered open-end
management company if
o The shares of the portfolio are no longer available for investment or
o In our judgment further investment in the portfolio would be
improper based on the purposes of the Separate
Account ................................or the affected sub-account
Where the 1940 Act or other law requires, we will not substitute any shares
respecting a Policy interest in a sub-account without notice to Policy owners
and prior approval of the SEC and state insurance authorities. The Separate
Account may, as the law allows, purchase other securities for other policies or
allow a conversion between policies on a Policy owner's request.
We reserve the right to establish additional sub-accounts funded by a new
portfolio or by another investment company. Subject to law, we may, in our sole
discretion, establish new sub-accounts or eliminate one or more sub-accounts.
Shares of the portfolios are issued to other separate accounts of Transamerica
and its affiliates that fund variable annuity contracts ("mixed funding").
Shares of the portfolios are also issued to other unaffiliated insurance
companies ("shared funding"). It is conceivable that in the future such mixed
funding or shared funding may be disadvantageous for variable life Policy owners
or variable annuity Policy owners. Transamerica does not believe that mixed
funding is currently disadvantageous to either variable life insurance Policy
owners or variable annuity Policy owners. Transamerica will monitor events to
identify any material conflicts among Policy owners because of mixed funding. If
Transamerica concludes that separate portfolios should be established for
variable life and variable annuity separate accounts, we will bear the expenses.
We may change the Policy to reflect a substitution or other change and will
notify Policy owners of the change. Subject to any approvals the law may
require, the Separate Account or any sub-accounts may be
o Operated as a management company under the 1940 Act
o Deregistered under the 1940 Act if registration is no longer required
OR
o Combined with other sub-accounts or our other separate accounts
FURTHER INFORMATION
We have filed a 1933 Act registration statement for this offering with the SEC.
Under SEC rules and regulations, we have omitted from this prospectus parts of
the registration statement and amendments. Statements contained in this
prospectus are summaries of the Policy and other legal documents. The complete
documents and omitted information may be obtained from the SEC's principal
office in Washington, D.C., on payment of the SEC's prescribed fees.
MORE INFORMATION ABOUT THE FIXED ACCOUNT
This prospectus serves as a disclosure document only for the aspects of the
Policy relating to the Separate Account. For complete details on the Fixed
Account, read the Policy itself. The Fixed Account and other interests in our
General Account are not regulated under the 1933 Act or the 1940 Act because of
exemption and exclusionary provisions. 1933 Act provisions on the accuracy and
completeness of statements made in prospectuses may apply to information on the
fixed part of the Policy and the Fixed Account. The SEC has not reviewed the
disclosures in this section of the Prospectus.
GENERAL DESCRIPTION - You may allocate part or all of your net payments to
accumulate at a fixed rate of interest in the Fixed Account. The Fixed Account
is a part of our General Account. The General Account is made up of all of our
general assets other than those allocated to any separate account. Allocations
to the Fixed Account become part of our General Account assets and are used to
support insurance and annuity obligations.
FIXED ACCOUNT INTEREST - We guarantee amounts allocated to the Fixed Account as
to principal and a minimum rate of interest. The interest rates credited to the
portion of Policy Value in the Fixed Account are set by us, but will never be
less than 4% per year. We may establish higher interest rates and the initial
interest rates and the renewal interest rates may be different. We will
guarantee initial rates on amounts allocated to the Fixed Account, either as
payments or transfers, to the next Policy anniversary. At each Policy
anniversary, we will credit the then renewal interest rate effective on that
date to money remaining in the Fixed Account. We will guarantee this rate for
one year. These interest rates do not apply to the portion of the Policy Value
in the Fixed Account which secures any outstanding loan. See below "TRANSFERS,
SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS."
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS - If a Policy is
surrendered or if a partial withdrawal is made, a surrender charge or partial
withdrawal charge may be imposed. On a decrease in face amount, the surrender
charge deducted is a fraction of the charge that would apply to a full
surrender. We deduct partial withdrawals from the portion of the Policy Value
allocated to the Fixed Account on a last-in/first out basis.
The first 12 transfers in a Policy year are free. After that, we will deduct a
$10 transfer charge for each transfer in that Policy year. (We may increase the
charge to a maximum of $25.) The transfer privilege is subject to our consent
and to our then current rules.
Policy loans may also be made from the portion of the Policy Value in the Fixed
Account. We will credit that part of the Policy Value that is equal to any
outstanding loan with interest at an effective annual yield of at least 6.0%
(7.5% for preferred loans).
We may delay transfers, surrenders, partial withdrawals, net death benefits and
Policy loans from the Fixed Account for up to six months. However, if payment is
delayed for 30 days or more, we will pay interest at least equal to an effective
annual yield of 3.0% per year for the deferment. Amounts from the Fixed Account
used to make payments on policies that we or our affiliates issue will not be
delayed.
FINANCIAL STATEMENTS
Financial Statements for Transamerica are included in this prospectus, starting
on the next page. Transamerica Occidental Life Separate Account VUL-1 has not
yet commenced operations and, therefore, no financial statement is included for
the Separate Account. The financial statements of Transamerica should be
considered only as bearing on our ability to meet our obligations under the
Policy. They should not be considered as bearing on the investment performance
of the assets held in the Separate Account.
<PAGE>
Part II
Undertaking To File Reports
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
Rule 484 Undertaking
Article V, Section I, of Transamerica's Bylaws provides: Each person who was or
is a party or is threatened to be made a party to or is involved, even as a
witness, in any threatened, pending, or completed action, suit, or proceeding,
whether civil criminal, administrative, or investigative (hereafter a
"Proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another foreign or domestic corporation
partnership, joint venture, trust, or other enterprise, or was a director,
officer, employee, or agent of a foreign or domestic corporation that was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. (It is the Corporation's
intent that these bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the corporation's Articles of Incorporation.)
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Representations Pursuant to Section 26(e) of the Investment Company Act of 1940
Transamerica hereby represents that the fees and charges deducted under the
Policy, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed byTransamerica.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2. The prospectus consists of
____ pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representations Pursuant to Section 26(e) of the Investment Company Act of 1940
The signatures.
Written consents of the following persons:
1. Ernst & Young L.L.P. 1/
2. Opinion of Counsel
3. Actuarial Opinion 1/
The following exhibits:
1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1) Certified copy of Resolutions of the Board of Directors of the
Company of December 6, 1996 establishing the Transamerica
Occidental Life Separate Account
VUL-1.
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between Transamerica
Securities Sales Corporation and Transamerica
Occidental Life Insurance Company.
(b) Form of Sales Agreement between Transamerica Life
Companies, Transamerica Securities Sales Corporation
and Broker-Dealers
(c) Schedules of Sales Commissions 1/
(4) Not Applicable.
(5) Forms of Policy and Policy riders filed herewith.
(6) Organizational documents of the Company, as amended
(7) Not Applicable.
(8) Form of Participation Agreement between
Transamerica Variable Insurance Fund, Inc., Transamerica Securities Sales
Corporation and Transamerica Occidental Life Insurance Company.
(9) Administrative Agreements between TOLIC and Allmerica 1/
(10) Form of Application
2. Form of Policy and Policy riders are included in Exhibit 1 above.
3. Opinion of Counsel is filed herewith.
4. Not Applicable.
5. Not Applicable.
6. Actuarial consent 1/
7. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
1940 Act which includes conversion procedures pursuant to Rule
6e-3(T)(b)(13)(v)(B) 1/
8. Consent of Independent Accountants 1/
1/ To be filed with subsequent amendment.
<PAGE>
FORM S-6 EXHIBIT TABLE
Exhibit 1 Resolution of Board of Directors
Exhibit 3 (a) Form of Distribution Agreement
(b) Form of Sales Agreement
Exhibit 5 Forms of Policy and Riders
Exhibit 6 Articles of Incorporation and Blaws
Exhibit 8 Form of Participation Agreement
Exhibit 10 Application of Policy
RESTATED
ARTICLES OF INCORPORATION
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
William A. Simpson and James W. Dederer hereby certify that:
1. They are the President and the Secretary, respectively, of Transamerica
Occidental Life Insurance Company, a California corporation.
2. The Articles of Incorporation of this corporation are amended and
restated to read as follows:
FIRST
The name of this corporation is TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY.
SECOND
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the
trust company business or the practice of a profession permitted to be
incorporated by the California Corporations Code. The business of the
corporation is to be an insurer.
THIRD
This corporation is authorized to issue only one class of stock; and
the total number of shares this corporation is authorized to issue is
FOUR MILLION (4,000,000) shares with a par value of $12.50 per share.
FOURTH
This corporation elects to be governed by all of the provisions of the
General Corporation Law effective January 1, 1977 not otherwise
applicable to it under Chapter 23 thereof.
FIFTH
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California.
<PAGE>
SIXTH
The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through
by-law provisions, agreements with the agents, vote of shareholders or
disinterested directors, or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations Code,
subject only to the limits on excess indemnification set forth in
Section 204 of the California Corporations Code. The corporation is
further authorized to provide insurance for agents as set forth in
Section 317 of the California Corporations Code, provided that, in
cases where the corporation owns all or a portion of the shares of the
company issuing the insurance policy, the company and/or the policy
must meet one of the two sets of conditions set forth in section 317,
as amended.
3. The foregoing amendment and restatement of Articles of Incorporation
has been duly approved by the Board of Directors.
4. The foregoing amendment and restatement of Articles of Incorporation
has been duly approved by the required vote of shareholders of said
corporation in accordance with section 902 of the Corporations Code.
The total number of outstanding shares entitled to vote, with respect
to the foregoing amendment was 2,206,933 shares; and the number of
shares voting in favor of the foregoing amendment equaled or exceeded
the vote required, such required vote being more than 50% of the
outstanding shares entitled to vote.
The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at Los Angeles, California, on January 11, 1988.
TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
By: William A. Simpson
President
By: James W. Dederer
Secretary
7
<PAGE>
RESTATED BYLAWS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
ARTICLE I
SHAREHOLDERS
The annual meeting of the shareholders of Transamerica Occidental Life
Insurance Company shall be held on the fourth Wednesday in February of each
year, if not a legal holiday, in which case the annual meeting shall be held on
the next business day following, at 10:00 a.m., for the purpose of electing
directors and for the transaction of such other business as may be brought
before the meeting.
ARTICLE II
BOARD OF DIRECTORS
The number of directors of this corporation shall be at least ten (10)
and not more than nineteen (19). The exact number of directors shall be fixed,
within the limits specified, by a resolution adopted by the Board of Directors
or by the shareholders.
ARTICLE III
CHIEF EXECUTIVE OFFICER
The board of directors shall from time to time designate one of the
officers of the corporation to be chief executive officer.
ARTICLE IV
GENERAL
Except as is expressly set forth herein, this corporation shall be
governed by the applicable statutes of the California General Corporation Law as
though said statutes had been fully set forth herein.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
Section 1. Right to Indemnification.
Each person who was or is a party or is threatened to be made a party to or is
involved, even as a witness, in any threatened, pending, or completed action,
suit, or proceeding, whether civil criminal, administrative, or investigative
(hereafter a "Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another foreign or domestic
corporation partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a foreign or domestic corporation that
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. (It is the Corporation's
intent that these bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the corporation's Articles of Incorporation.]
Section 2. Authority to Advance Expenses.
Expenses incurred by an officer or director (acting in his capacity as such) in
defending a Proceeding shall be paid by the corporation in advance of the final
disposition of such Proceeding, provided, however, that if required by
California General Corporation Law, as amended, such Expenses shall be advanced
only upon delivery to the corporation of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article or otherwise. Expenses incurred by other Agents of the corporation
(or by the directors or officers not acting in their capacity as such, including
service with respect to employee benefit plans) may be advanced upon the receipt
of a similar undertaking, if required by law, and upon such other terms and
conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
Section 3. Right of Claimant to Bring Suit.
If a claim under Section 1 or 2 of this Article is not paid in full by the
corporation within 30 days after a written claim has been received by the
corporation the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the California
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the California General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
Section 4. Provisions Nonexclusive.
The rights conferred on any person by this Article shall not be exclusive of any
other rights that such person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Articles, agreement, or vote of
the stockholders or disinterested directors is inconsistent with these bylaws,
the provision, agreement, or vote shall take precedence.
Section 5. Authority to Insure.
The corporation may purchase and maintain insurance to protect itself and any
Agent against any Expense asserted against or incurred by such person, whether
or not the corporation would have the power to indemnify the Agent against such
Expense under applicable law or the provisions of this Article [provided that,
in cases where the corporation owns all or a portion of the shares of the
company issuing the insurance policy, the company and/or the policy must meet
one of the two sets of conditions set forth in Section 317 of the California
General Corporation Law, as amended].
Section 6. Survival of Rights.
The rights provided by this Article shall continue as to a person who has case
to be an Agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
Section 7. Settlement of Claims.
The corporation shall not be liable to indemnify any Agent under this Article
(a) for any amounts paid in settlement of any action or claim effected without
the corporation's written consent, which consent shall not be unreasonably
withheld; or (b) for any judicial award, if the corporation was not given a
reasonable and timely opportunity, at its expense, to participate in the defense
of such action.
Section 8. Effect of Amendment.
Any amendment, repeal, or modification of this Article shall not adversely
affect any right or protection of any Agent existing at the time of such
amendment, repeal, or modification.
Section 9. Subrogation.
In the event of payment under this Article, the corporation shall be subrogated
to the extent of such payment to all of the rights of recovery of the Agent, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary to
enable the corporation effectively to bring suit to enforce such rights.
Section 10. No Duplication of Payments
The corporation shall not be liable under this Article to make any payment in
connection with any claim made against the Agent to the extent the Agent has
otherwise actually received payment (under any insurance policy, agreement,
vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
September 18, 1997
Transamerica Occidental Life
Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Gentlemen:
With reference to the initial filing of the registration statement on Form S-6
by Transamerica Occidental Life Insurance Company with the Securities and
Exchange Commission covering certain variable life insurance contracts, I have
examined such documents and such law as I considered necessary and appropriate,
and on the basis of
such examinations, it is my opinion that:
1.) Transamerica Occidental Life Insurance Company is duly
organized and validly existing under the laws of the State of
California.
2.) The variable life insurance contracts, when issued as
contemplated by the said Form S-6 Registration Statement, will
constitute legal, validly issued and binding obligations of
Transamerica Occidental Life Insurance
Company.
I hereby consent to the filing of this opinion as an exhibit to the said initial
Registration Statement on Form S-6 and to the reference to my name under the
caption "Legal Matters" in the prospectus contained in the said Form S-6
Registration Statement. In giving this consent, I am not admitting that I am in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
James W. Dederer
Executive Vice President,
General Counsel and
Corporate Secretary
<PAGE>
1
Form TA1031-97
- -------------------------------------------------------------------
[GRAPHIC OMITTED]
- -------------------------------------------------------------------
Here Is Your
Transamerica Occidental Life Insurance Policy
From Transamerica Occidental Life Insurance Company
Please Read it Carefully
This flexible premium variable life insurance policy is a legal contract between
you ("the owner") and Transamerica Occidental Life Insurance Company ("we" and
"the Company"). If you pay the required premiums, we will pay your beneficiary
the net death benefit when the person you are insuring ("the insured") dies
prior to the Maturity Date or, if the insured is alive on the Maturity Date, we
will pay the surrender value to the owner on the Maturity Date.
You may change the amount of insurance as well as the payments you make subject
to provisions of this policy. Except as otherwise provided in the paid-up
insurance option, you may direct your net payments into an account that has a
guaranteed minimum interest rate, and into as many as [seven] sub-accounts (if
available) of an account that has a rate of return that will vary.
These two accounts are called the Fixed and Variable Accounts.
The value of the Variable Account may increase or decrease according to its
investment results. For more details, please see the Variable Account Policy
Value provision on page 13.
The value in the Fixed Account will accumulate interest at a rate set by us
which will not be less than 4% a year.
The amount of the death benefit may be variable or fixed. The length of time
this policy will remain in force will be variable. Please refer to the Death
Benefit provisions and the Policy Value provisions in this policy for additional
information.
There may be little or no surrender value remaining on the final payment date.
Your Right to Examine
This Policy
You have the right to void this policy by returning it to our Variable Life
Service Center at 440 Lincoln Street, P.O. Box 3800, Worcester, MA 01653, or to
one of our authorized representatives by the later of:
o ten days after receiving it, or
o 45 days after you sign the application.
If you return the policy, it will be void from the date of its issue, and you
will receive a refund equal to the total of:
o the difference between any payments made, including fees or other charges,
and the amounts allocated to the Variable Account, and
o the value of the amounts in the Variable Account on the date the returned
policy is received at our Variable Life Service Center,
and
o any fees or other charges imposed on amounts in the Variable Account.
Signed for the Company at Los Angeles, California, on the date of issue.
- ----------------------------------------------------
[GRAPHIC OMITTED]
- ----------------------------------------------------
Executive Vice President, General Counsel and Corporate
Secretary
- ---------------------------------------------------
[GRAPHIC OMITTED]
- ---------------------------------------------------
President and CEO
Transamerica Occidental Life Insurance Company
Home Office: 1150 South Olive Street
Los Angeles, CA 90015
Variable Life Service Center: 440 Lincoln Street
P.O. Box 3800
Worcester, MA 01653
<PAGE>
Table of Contents
Cover Page..................................................1
Specifications Page...................................3
Riders/Endorsements...............................3
Monthly Insurance Protection Charges....5
Important Definitions...............................7
General Provisions ....................................8
Information About You and
the Beneficiary.........................................9
What You Should Know About
the Premiums..........................................10
Information About the Value
of Your Policy........................................11
What You Should Know About
the Variable Account..............................13
What You Should Know About
the Fixed Account..................................14
What You Should Know About
Transfers...................................................15
If You Want to Borrow from Your
Policy........................................................16
Details on Surrender and
Partial Withdrawals..................................16
What You Should Know About
the Death Benefit...................................18
Paid-Up Insurance Option......................20
Payment of Benefits...............................21
Alphabetical Index
Addition, Deletion or Substitution
of Investments.........................................14
Allocation of Payments..........................11
Assignment..............................................9
Basis of Value of Fixed Account...........15
Beneficiary...............................................9
Decrease in Face Amount......................20
Entire Contract........................................8
Fixed Account.......................................14
Fixed Account Policy Value..................15
Foreclosure............................................16
Increase in Face Amount.......................19
Lapse......................................................10
Loans on Policy.....................................16
Misstatement of Age or Sex.....................8
Monthly Insurance Protection Charge.....5
Net Death Benefit................................18
Net Investment Factor............................13
Owner......................................................9
Paid-Up Insurance Option......................20
Partial Withdrawals................................17
Payment Options....................................21
Policy Value...........................................11
Postponement of Payment......................17
Preferred Loan Option...........................16
Premium Grace Period......................... 10
Premiums................................................10
Protection of Benefits...............................8
Reinstatement.........................................11
Right to Contest Policy...........................8
Right to Examine....................................1
Suicide Exclusion....................................8
Surrender..............................................16
Transfers...............................................15
Valuation Dates and Periods.................14
Variable Account.................................13
Variable Account Policy Value............13
<PAGE>
Form 9031-97 TA
4
Form 9031-97 TA
<PAGE>
Who is Insured and For How
Much?
- ---------------------
Owner's Name: John Doe
Insured's Name: John Doe
Insured's Age at Issue: 35
Underwriting Class: Standard Male Non-Smoker
Policy Number: 12345
Initial Face Amount: $100,000
Date of Issue: June 1, 1997
Monthly Processing Date: On the 1st day of each month
Your Final Payment Date: June 1,
2062. Coverage will expire prior
to the final payment date if the
surrender value is insufficient
to continue coverage to such
date. Please refer to the
Premium Grace Period and Policy
Lapse provision on page 10 for
more information.
The Death Benefit Option You Have Chosen:
Level Death Benefit Option - The
death benefit will be the face
amount of your policy if the
insured dies on or before the
Final Payment Date. As the
policy value increases, the
insurance protection amount
decreases, keeping the death
benefit level. ( But, see
Required Minimum Amount of Death
Benefit provision on page 19.)
- -
Additional Insurance Benefits
Living Benefits Rider
Waiver of Payment Rider
Children's Insurance Rider
Guaranteed Insurability Rider
Guaranteed Death Benefit Rider
Your Maximum Payment
Federal tax laws limit the amount you may pay into
your policy. These limits are based upon the amount
Guideline Single Premium: $14,733.71
of your insurance coverage and your age, sex, and
underwriting class at the date the policy is issued.
Guideline Level Premium: $1,289.52
They are called Guideline Premiums. Your payments may not exceed the
greater of the guideline single premium or the total of the guideline
level premiums.
<PAGE>
The Charges You Will Pay
Payment Expense Charge: [ 4%] of each payment to cover federal, state and
local taxes, and certain sales and administrative costs; see page 11. We
reserve the right to increase or decrease this charge to reflect changes in
federal, state and local taxes.
Monthly Insurance Protection Charge: See pages 5 and 12.
Surrender Charge for Initial Face Amount: If you surrender this policy
during the first 10 policy years, you will be charged a surrender charge as
shown below:
Year Surrender Charge
--------------------------- ----------------------------
1 $1,276
2 $1,148
3 $1,020
4 $893
5 $765
6 $638
7 $510
8 $382
9 $255
--------------------------- ----------------------------
10 $127
Partial Withdrawal Transaction Charges: If you withdraw part of your funds,
you will pay a transaction charge of $25 or 2% of the amount withdrawn,
whichever is less. You may also pay a charge of 5% on any "excess"
withdrawal; this charge will not be higher than the surrender charge; see
page 16.
Change in Face Amount: If you increase the face amount of this policy, you
will pay a $40 transaction charge. If you decrease the face amount of this
policy, you will pay $40 plus part of the surrender charge; see page 19.
Statement of Projected Values Charge: You may be charged a fee of u
to $25 if you request a statement of
projected values.
Allocation Change Charges: You may be charged a fee of up to $25 if you
change the sub-accounts from which monthly insurance protection charges are
deducted. You may also be charged a fee of up to $25 if you change your
allocations for net payments.
Transfer Charge: You may make 12 transfers in any policy year free of
charge. After 12 transfers, you may be charged up to $25 to transfer funds
from one account to another; see page 15.
Variable Account Mortality and Expense Risk Charge: You will be assessed a
daily charge on the daily net asset value of the Variable Account for the
mortality and expense risks assumed by us. This daily charge is currently
at a rate equivalent to [.65%] on an annual basis and may not exceed a rate
equivalent to .80% on an annual basis.
Variable Account Administration Charge: You will be charged a daily charge
at a rate equivalent to .15% on an annual basis on the daily net asset
value of the Variable Account for a period not to exceed 20 policy years.
Minimum Monthly Payment: A monthly amount of $43.40 is used to determine if
your policy will lapse within 48 months of the date of issue of your
policy. If you increase or decrease the face amount, add or delete a rider,
or change the smoking class of the policy this monthly amount will change.
The new amount will be used to determine if your policy will lapse within
48 months of the date of issue, except that if you increase the face amount
of the policy, the new amount will be used to determine if your policy will
lapse within 48 months of the date of the face amount increase.
<PAGE>
Your Monthly Insurance Protection Charges are Guaranteed
Never to Go Higher Than the Following:
<TABLE>
<CAPTION>
Insurance Waiver of Insurance Waiver of
Protection Rate ($) Per Payment Protection Rate ($) Per Payment
Age $1,000 Rate ($) Per $1,000 Age $1,000 Rate ($) Per $1,000
- ----------- -------------------------- ------------------------- ----------- -------------------------- -------------------------
- ----------- -------------------------- ------------------------- ----------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
[35 0.14 0.05 70 2.94
36 0.14 0.05 71 3.26
37 0.15 0.05 72 3.63
38 0.16 0.05 73 4.05
39 0.17 0.05 74 4.54
40 0.19 0.05 75 5.06
41 0.20 0.06 76 5.62
42 0.22 0.06 77 6.21
43 0.23 0.06 78 6.83
44 0.25 0.06 79 7.49
45 0.27 0.06 80 8.22
46 0.29 0.07 81 9.05
47 0.32 0.07 82 9.99
48 0.34 0.08 83 11.07
49 0.37 0.08 84 12.26
50 0.41 0.09 85 13.55
51 0.44 0.10 86 14.91
52 0.48 0.11 87 16.34
53 0.53 0.12 88 17.80
54 0.59 0.13 89 19.33
55 0.65 0.15 90 20.94
56 0.72 0.17 91 22.66
57 0.79 0.18 92 24.57
58 0.87 0.20 93 26.76
59 0.96 0.22 94 29.63
60 1.06 0.14 95 33.93
61 1.17 0.14 96 41.27
62 1.29 0.14 97 56.03
63 1.43 0.14 98 83.33
64 1.60 0.14 99 83.33]
65 1.78
66 1.97
67 2.18
68 2.41
69 2.66
- ----------- -------------------------- ------------------------- ----------- --------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Paid Up Insurance Table
Table of Guaranteed Net Single Premiums
Per $1,000 of Insurance
----------------------------- ------------------------------ ------------------------------ ------------------------------
Age Net Single Premium ($) Age Net Single Premium ($)
----------------------------- ------------------------------ ------------------------------ ------------------------------
----------------------------- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C> <C> <C>
[35 197.08 70 624.87
36 204.57 71 639.93
37 212.41 72 654.65
38 220.53 73 669.34
39 228.93 74 683.74
40 237.63 75 697.71
41 246.55 76 711.28
42 255.81 77 724.44
43 265.32 78 737.25
44 275.20 79 749.77
45 285.38 80 762.04
46 295.87 81 774.03
47 306.69 82 785.69
48 317.79 83 796.94
49 329.27 84 807.66
50 341.07 85 817.83
51 353.13 86 827.45
52 366.57 87 836.59
53 378.32 88 845.35
54 391.35 89 853.90
55 404.60 90 862.38
56 418.12 91 870.99
57 431.87 92 879.97
58 445.87 93 889.58
59 460.11 94 900.15
60 474.57 95 911.96
61 489.21 96 925.13
62 504.03 97 939.68
63 519.02 98 955.52
64 534.12 99 973.33]
65 549.22
66 564.33
67 579.47
68 594.62
69 609.75
----------------------------- ------------------------------ ------------------------------ ------------------------------
</TABLE>
<PAGE>
21
Form TA1031-97
Important Definitions
<PAGE>
Age means how old the insured is on the birthday closest to the date of issue
and, subsequently, to the policy anniversary.
Assignee is the person to whom you have transferred your ownership of this
policy.
Company means Transamerica Occidental Life Insurance Company, also referred to
as we, our, and us. Our telephone number is [1-800-782-8315].
Date of issue is stated on page 3. Policy months, years and anniversaries are
measured from this date.
Evidence of insurability is the information, including medical information, that
we use to decide whether to issue the requested coverage, to determine the
underwriting class for the person insured, or to determine whether the policy
may be reinstated.
Face amount is the amount of insurance you elect to buy in the application or
enrollment form and which we agree to issue. The face amount is shown on page 3
of the policy. The death benefit is based on the face amount; see the Net Death
Benefit provisions beginning on page 18.
Final payment date is the policy anniversary nearest the insured's 100th
birthday. No payments may be made by you after this date. No monthly insurance
protection charges will be deducted from the policy value after this date.
Generally, the net death benefit after this date will equal 101% of the policy
value minus any outstanding loan, except as otherwise provided in the Guaranteed
Death Benefit Rider.
Insurance protection amount is the death benefit minus the policy value.
Maturity Date is the policy anniversary nearest age 115.
Monthly insurance protection charge is the amount of money we deduct from the
policy value each month to pay for the insurance and any riders; see page 12 for
more details.
Monthly processing date is the day of the month the monthly insurance protection
charge is deducted from the policy value. This date is shown on page 3.
Net payment is your payment to us less the payment expense charge shown on page
4.
Outstanding loan means all unpaid policy loans plus interest due or accrued on
such loans.
Policy change means any change in the face amount, the underwriting class, the
addition or deletion of a rider, or a change in the death benefit option.
Policy value is the sum of the values in the Variable Account and the Fixed
Account.
Premium means a payment you must make to keep the policy in force.
Variable Life Service Center means our office located at 440 Lincoln St., P.O.
Box 3800, Worcester, MA 01653.
Pro rata refers to an allocation among the sub-accounts of the Variable Account
and the Fixed Account. A pro rata allocation will be in the same proportion that
the policy value in each sub-account of the Variable Account and the policy
value in the Fixed Account have to the total policy value net of any outstanding
loans.
Rider is an optional benefit which may be added to your policy and which may
require an additional charge.
Specification pages contain information specific to your policy, and are located
after the Table of Contents in your policy.
Sub-accounts are subdivisions of the Variable Account investing exclusively in
the shares of one or more Funds.
Surrender Value is the policy value less any surrender charges and less any
outstanding loans.
Underwriting class means the insurance risk classification that we assign to the
insured based on the information in the application or enrollment form and any
other evidence of insurability we obtain. The insured's underwriting class
affects the monthly insurance protection charge and the amount of the payments
required to keep the policy in force.
Written request is a request you make in writing in a form which is satisfactory
to us and which is filed at our Variable Life Service Center.
You or your means the owner of this policy as shown in the application or in the
latest change filed with us.
<PAGE>
General Provisions
<PAGE>
Entire Contract: We have issued this policy in consideration of the application
and your initial premium payment. A copy of the application is attached and is a
part of this policy. The entire contract also includes: a copy of any
application to increase the face amount or to change to a different underwriting
class; any new specification pages; and any supplemental pages. The policy,
including the application and any endorsements and riders, forms our contract
with you.
All statements made by or for the insured will be considered representations and
not warranties. We will not use any statements made by or for the insured to
deny a claim unless the statement is in an application and an application is
attached to this policy when it is issued or delivered. Our representatives are
not permitted to change this policy or extend the time for paying premiums. Only
our President or a Vice President together with our Secretary may change the
provisions of this policy, and then only in writing.
Our Right to Contest the Policy is Limited: A contest is any action taken by us
to cancel your insurance or deny a claim based on untrue or incomplete answers
in your application. Except for fraud or nonpayment of premiums, this policy
will be incontestable after it has been in force during the lifetime of the
insured for two years from the date of issue. This provision does not apply to
any riders providing benefits specifically for disability or death by accident.
If the policy's total face amount is increased, or the underwriting class is
changed at your request, we cannot contest the increase or change after it has
been in force for 2 years from the effective date and the insured is alive.
Nonparticipating: No insurance dividends will be paid on this policy.
Adjustment of Cost Factors: We determine the monthly insurance protection charge
and Fixed Account interest rates which are used to calculate the policy value,
subject to the guarantees noted in this policy.
We will determine the rate for the monthly insurance protection charge for each
policy month on the monthly processing date for that policy month. The monthly
insurance protection rates will depend on: the insured's gender; the insured's
smoking status; the insured's class of risk; the number of years that the policy
has been in force; and the insured's age.
A table of guaranteed maximum monthly insurance protection charge rates for the
base policy is shown on page 5. We may use rates lower than the guaranteed
maximum monthly
insurance protection charge rates. We will never use higher
rates.
Any change in the rates for monthly insurance protection charges will apply to
all policies in the same underwriting class, will be prospective, and will be
based on our expectations as to future cost factors. Such cost factors may
include, but are not limited to: mortality expenses, interest, persistency, and
any applicable federal, state and local taxes.
Suicide Exclusion: If the insured dies by suicide, while sane or insane, within
two years from the date of issue, we will be liable only for the amount of
payments made to us less any outstanding loans and amounts withdrawn. If the
face amount is increased at your request, and then the insured commits suicide
within two years, while sane or insane, we will not pay the increased amount.
Instead the beneficiary will receive the monthly insurance protection charges
paid for this increase, plus any net death benefit otherwise payable.
Misstatement of Age or Sex: If the insured's age or sex is not correctly
stated, we will adjust the death benefit.
This amount will be:
o the policy value, plus
o the insurance protection amount that would have been purchased by the last
monthly insurance protection charge using the correct age and sex.
No adjustment will be made if:
o the insured dies after the final payment date; or
o the underwriting class is unisex and there has been a misstatement only
of sex.
Protection of Benefits: To the extent allowed by law, the benefits provided by
this policy cannot be reached by the beneficiary's creditors. No beneficiary may
assign, transfer, anticipate or encumber the policy value or benefit unless you
give them this right.
Periodic Report: We will mail a report to you at your last known address
at least once a year. This report will
provide the following information:
o death benefit;
policy values in each sub-account and in the Fixed Account;
the value of the policy if it is surrendered;
payments made by you and the monthly insurance protection charges
deducted by us since the last report; and
o outstanding loan and any other information required
by law.
Termination of Policy -- This policy will terminate at the earliest of:
1. The date we receive your written request to surrender or
terminate;
2. The Maturity Date; or
3. The date of lapse or foreclosure.
<PAGE>
Information About You and the Beneficiary
<PAGE>
Owner: The insured is the owner of this policy unless another person (which
could include a trust, corporation, partnership, etc.) is named as owner in the
application. The owner may change the ownership of this policy without the
consent of any beneficiary. Whenever the face amount of insurance is increased,
the insured must agree.
Assignment: You may change the ownership of this policy by sending us a
written request. An absolute assignment will
transfer ownership of the policy from you to another person called the assignee.
You may also assign this policy as collateral to a collateral assignee. The
limitations on your ownership rights while a collateral assignment is in effect
are specified in the assignment.
We will not be bound by an assignment unless it has been recorded at our
Variable Life Service Center. When recorded, it will take place as of the date
it was signed by you. Any rights created by the assignment will be subject to
any payments made or actions taken by us before the change is recorded. We are
not responsible for assuring that any assignment or any assignee's interest is
valid.
Beneficiary: The beneficiary is the person you name to receive the net death
benefit. The beneficiary's interest will be affected by any assignment you make.
If you assign this policy as collateral, all or a portion of the net death
benefit will first be paid to the collateral assignee; any money left over from
the amount due the assignee will go to those otherwise entitled to it.
Your choice of beneficiary may be revocable or irrevocable. You may change a
revocable beneficiary at any time by written request; but an irrevocable
beneficiary must agree to any change in writing. You will also need an
irrevocable beneficiary's permission to exercise other rights and options
granted by this policy. Unless you have asked otherwise, this policy's
beneficiary will be revocable.
Any change of the beneficiary must be made while the insured is living. This
change will take place on the date the request is signed, even if the insured is
not living on the day we receive it. Any rights created by the change will be
subject to any payments made, or actions taken, before we receive the written
request.
If a beneficiary dies before the insured, his or her interest in this policy
will pass to any surviving beneficiaries in proportion to their share in the net
death benefit, unless you have requested otherwise. If all beneficiaries die
before the insured, the net death benefit will pass to you or your estate.
Common Disaster Option: The common disaster option may be elected in the
application or later by written request. If the common disaster option is in
effect on the date of the insured's death, the beneficiary must be alive a
certain number of days following the insured's date of death in order to be
entitled to receive a benefit; otherwise we will pay the net death benefit as
though the beneficiary died before the insured. The number of days which the
beneficiary must live after the insured's death is selected by you when you
elect the common disaster option.
<PAGE>
What You Should Know About the Premiums
<PAGE>
Premiums: This policy will not be in force until the first full premium is paid
to us. Additional payments may be made to us at any time through the final
payment date, but before the date of death of the insured or the date the
paid-up insurance option is exercised. Payments must be sent either to our
Variable Life Service Center or to our authorized representative.
If you request it in writing, we will send you a signed receipt after payment.
The payment amount which must be paid to keep the policy in force is described
in the Premium Grace Period and Policy Lapse provision.
Maximum Payment Limits: We may limit the amount you pay to us in any policy
year. This limit will not be less than the guideline level premium; however, the
sum of all payments made from the issue date, minus any partial withdrawals, may
not be more than the greater of:
o the guideline single premium, or
o the sum of the guideline level premiums on the date of payment.
The guideline premium limits are shown on page 3. These premium limitations will
not apply if they prevent you from paying us enough to keep the policy in force.
Guideline premium limits are determined according to rules in the federal tax
law, and will be adjusted as that law changes.
If the payments made exceed the amount allowable for this policy to continue to
qualify as a life insurance contract under Section 7702 of the Internal Revenue
Code and the regulations thereunder, as applicable to this policy from time to
time, we will remove the excess amount of payments made from the policy, with
interest. Such an excess amount could occur, for example, as a result of a
partial withdrawal or other change in the benefits or terms of the policy, since
the guideline premium limit allowable for the policy may be reduced. The portion
of the payment that cannot be accepted as premium will be applied first against
any outstanding policy loans. We will refund to you any excess amount (including
interest) not later than 60 days after the end of that policy year.
The amount refundable will not exceed the surrender value of the policy. If the
entire surrender value is refunded, we will treat the transaction as a full
surrender of your policy.
Premium Grace Period and Policy Lapse: We will send you a notice if your
payments and surrender value are not enough to keep the policy in force. Your
policy will continue for 62 days from the date contained in the notice, which is
the grace period.
The first day of the grace period is called the date of default. We will send
the notice to your last known address, or to the person you name to receive this
notice, showing the due date and the amount of premium you must pay to keep the
policy in force.
The date when the grace period begins and the amount you must pay depends on how
long the policy has been in force and whether there have been any increases in
the face amount.
Beginning on the date this policy is issued or the effective date of any
increase in the face amount, whichever is later, and continuing for the next 47
monthly processing dates, the grace period will begin when both the following
conditions occur:
(a) the surrender value is less than the amount needed to pay the next
monthly insurance protection charge; and
(b) the sum of the payments made minus any outstanding loans, partial
withdrawals and withdrawal charges since the latest of the following three
dates:
o the date this policy is issued, or
o the effective date of any increase in the face amount, or
o the date of any policy change which changes the
minimum monthly payment;
is less than the minimum monthly payment multiplied by the number of
months which have elapsed since that date.
Thereafter, the grace period will begin if the surrender value on a monthly
processing date is less than the amount needed to pay the next monthly insurance
protection charge plus any loan interest accrued.
The minimum monthly payment, which is shown on page 4, may change if the policy
is changed; it will be listed in new specification pages provided to you.
The death benefit during the grace period will be reduced by any overdue
charges. The policy will lapse if the amount shown in the notice remains unpaid
at the end of the grace period. The policy terminates on the date of lapse.
Reinstatement: If this policy has lapsed or has been foreclosed for failure to
pay loan interest, and has not been surrendered, it may be restored (called
"reinstated" in this policy) within three years after the date of default or
foreclosure and before the Maturity Date. We will reinstate the policy on the
monthly processing date following the day we receive all of the following items:
o a written application for reinstatement,
o evidence of insurability satisfactory to us, and
o a payment large enough to keep the policy in force for three months.
You may repay or reinstate any outstanding loan on the date of default or
foreclosure.
Your reinstatement premium will be allocated to the Fixed Account until we
approve your application, at which time we will transfer the reinstatement
premium, plus accrued interest, as you directed in your last payment allocation
request.
The date of reinstatement is the later of the date we approve the reinstatement
application or the date the payment required to reinstate this policy is
received by us. The policy value on the reinstatement date is:
o the net payment to reinstate the policy, including the interest
earned from the date we received your
payment; plus
o an amount equal to the policy value less any outstanding loan on the default
date, to the extent that the outstanding loan is less than the surrender charge
on the reinstatement date; less
o the monthly insurance protection charge due on thereinstatement date.
The surrender charge on the reinstatement date is the charge which would have
been in effect if the policy had remained in force from the date it was issued.
Reinstatement of Paid-Up Insurance: If this policy is in force as paid-up
insurance and later terminates for failure to pay policy loan interest, the
paid-up insurance may be reinstated during the insured's lifetime, but no more
than three years after the date of foreclosure and before the Maturity Date, by
providing us with the following:
o evidence of insurability satisfactory to us; and
o payment or reinstatement of the outstanding loan on the date of the default.
Interest is payable on this outstanding loan from the date of termination to the
date of reinstatement at the interest rate of 8% per year.
The date of reinstatement is the later of the date we approve the reinstatement
application or the date the payment required to reinstate this policy is
received by us. The death benefit of the reinstated paid-up insurance will be
the same as the death benefit on the date of termination.
<PAGE>
Information About the Value of Your Policy
<PAGE>
Net Payment and Allocation of New Payments: A net payment is a payment made to
us reduced by the payment expense charge. This charge is based, in part, on
local, state and federal taxes we must pay. The charge is shown on page 4.
Each net payment will be added to the policy value. The policy value consists of
the total of the values in the Variable Account and the Fixed Account.
You may allocate the net payment to:
o any of the sub-accounts which are available at the time the payment
is made; and/or
o the Fixed Account.
The Company reserves the right to limit the number of sub-
accounts which are available at one time, but in no event will this be less than
7. All percentage allocations must be in whole numbers, with the total
allocation to all selected accounts equaling 100%. A processing charge may be
made for changing the net payment allocation. The maximum charge allowed is
shown on page 4, " Allocation Change Charges."
Allocation of Initial Payments: If you make a payment with your application or
at any time before the policy is approved for issue by us, we may put that net
payment into the Fixed Account on the date we receive it at our Variable Life
Service Center. Not later than two days after the date this policy is approved
for issue by us, the policy value you elected to allocate to the Variable
Account will be transferred from the Fixed Account to either the sub-accounts
you have selected or to the Money Market sub-account. In any event, we will
transfer any Variable Account policy values from the Money Market sub-account to
the sub-accounts you have selected not later than the expiration of the period
during which you may exercise your right to examine this policy and request a
refund of your payments.
Monthly Insurance Protection Charge: Beginning on the date this policy is
issued, and through the final payment date, we will deduct a monthly insurance
protection charge from the policy value. Except as otherwise prescribed in the
paid-up insurance option, you may choose a sub-account from which this monthly
charge will be deducted. If you do not make a choice, we will deduct the charge
pro rata. If the sub-account you choose does not have enough funds to cover the
charge, we will deduct the charge as if you had not made any choice. We reserve
the right to charge for changes made to the sub-accounts from which monthly
insurance protection charges are deducted. The maximum charge allowed is shown
on page 4, "Allocation Change Charges."
Charges allocated to the Fixed Account will be deducted on a last-in, first-out
basis. This means that we use the most recent payments to pay the fees.
The monthly insurance protection charge equals the sum of the charges that apply
to:
o the initial face amount, plus
o each increase in the face amount, plus
o any rider benefits.
We will determine the monthly insurance protection charge each month. Any
changes in this charge will apply to all policies in the same underwriting
class. If you decrease the face amount of the policy, we will adjust the monthly
insurance protection charge according to the Benefit Change provision on page
19.
The monthly insurance protection charge for the initial face amount will not be
more than (1) multiplied by (2) where:
(1) is the insurance protection rate shown for the insured's age in the
Table on page 5; and
(2) is the initial face amount divided by 1,000.
For the purposes of this calculation, if the Level Death Benefit Option (see
page 19) is in effect, the initial face amount will be reduced by the policy
value, minus charges for rider benefits at the beginning of the month, but not
less than zero.
If you increase the face amount, the monthly insurance protection charge for the
amount of the increase will not be more than (3) multiplied by (4) where:
(3) is the insurance protection rate applicable to the increased face
amount for the insured's age; and
(4) is the amount of the increase in the face amount divided by 1,000.
For purposes of this calculation, if the Level Death Benefit Option is in effect
and the policy value is higher than the initial face amount, the excess policy
value, minus charges for rider benefits at the beginning of the month, will be
used to reduce any increases in the face amount in the order in which the
increases were issued.
If the death benefit is the "guideline minimum death benefit" required for the
policy to qualify as life insurance under the federal tax law ( see page 19),
the monthly insurance protection charge for the portion of the death benefit
which exceeds the face amount (i.e., initial face amount plus any increases)
will not be higher than (5) multiplied by (6) divided by 1,000 where:
(5) is the insurance protection rate applicable to the initial face amount;
and
(6) is the death benefit less:
o the greater of the face amount or the policy value
if the Level Death Benefit Option is in
effect, or
o the face amount plus the policy value, if the
Adjustable Death Benefit Option (see page 19)
is in effect.
Insurance Protection Rates: The cost of insurance rate includes an expense
factor and a mortality factor. The expense factor covers a portion of our
acquisition costs, taxes, and administrative expenses. The mortality factor is
based on the insured's:
o age,
o sex (unless this policy is issued in a unisex class as
indicated on the specification pages); and
o underwriting class.
The guaranteed rates are based on:
o the Commissioners Ultimate 1980 Standard Ordinary Mortality Table, Male, or
Female, or Table B for unisex risks (Smoker or Non-Smoker versions of these
tables are used if the insured is over 17 years of age on the date of issue),
and
o appropriate increases in such tables for non-standard risks.
The insurance protection rates actually charged will never be higher than the
guaranteed rates. We will review the actual insurance protection rates for this
policy whenever we change .
these rates for new policies. In any event, rates will be
reviewed not more often than once each year, but not less than
once in a five-year period.
<PAGE>
What You Should Know About the Variable Account
<PAGE>
Variable Account: The value of your policy will vary if it is funded through
investments in the sub-accounts of the Variable Account. This account is
separate from our Fixed Account. We have exclusive and absolute ownership and
control of all assets, including those in the Variable Account. However, the
portion of assets in the Variable Account equal to the reserves and liabilities
of the policies which are supported by this account will not be charged with
liabilities that come from any other business we conduct.
This account, which we established to support variable life insurance policies,
is registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940. It is also governed
by the laws of the State of California.
This account has several sub-accounts. Each sub-account invests its assets in a
separate series of a registered investment company (called a "Fund"). We reserve
the right, when the law allows, to change the name of the Variable Account or
any of its sub-accounts. You will find a list in your application of the
sub-accounts in which you may invest.
Variable Account Policy Value: Not later than two days after the date this
policy is approved for issue by us, the policy value you elected to allocate to
the Variable Account may be transferred from the Fixed Account to either the
sub-accounts you have selected or to the Money Market sub-account. We will
transfer the Variable Account policy values from the Money Market sub-account to
the sub-accounts you have selected not later than the expiration of the period
during which you may exercise your right to examine this policy and request a
refund of your payments. Net payments made thereafter which are allocated to the
sub-accounts will purchase additional units of the sub-accounts.
The number of units purchased in each sub-account is equal to the portion of the
net payment allocated to the sub-account, divided by the value of the applicable
unit as of the valuation date the payment is received at our Variable Life
Service Center or on the date value is transferred to the sub-account from
another sub-account or the Fixed Account. If we receive your payment on a date
which is not a valuation date, we will use the value of the applicable unit on
the first valuation date following the date we receive your payment to determine
the number of units that the net payment will purchase.
The number of units will remain fixed unless (1) changed by a subsequent split
of unit value, or (2) reduced because of a transfer, policy loan, partial
withdrawal, withdrawal charge, transaction charge, monthly insurance protection
charge deduction, surrender or surrender charge allocated to the sub-account.
Any transaction described in (2) will result in the cancellation of a number of
units which are equal in value to the amount of the transaction. On each
valuation date we will value the assets of each sub-account in which there has
been activity. The policy value in a sub-account at any time is equal to the
number of units this policy then has in that sub-account multiplied by the
sub-account's unit value. The value of a unit for any sub-account for any
valuation period is determined by multiplying that sub-account's unit value for
the immediately preceding valuation period by the net investment factor for the
valuation period for which the unit value is being calculated. The unit value
will reflect the investment advisory fee and other expenses incurred by the
registered investment companies.
Net Investment Factor: This measures the investment performance of a sub-account
during the valuation period that has just ended. The net investment factor is
the result of (a) plus (b), divided by (c), minus (d) and minus (e) where:
(a) is the net asset value per share of a Fund share held in the
sub-account determined at the end of the current valuation period,
(b) is the per share amount of any dividend or capital gain distributions
made by the Fund on shares held in the sub-account if the "ex-dividend" date
occurs during the currenvaluation period,
(c) is the net asset value per share of a Fund share held in the
sub-account determined as of the end of the immediately preceding valuation
period;
(d) is a charge for mortality and expense risks in the valuation period.
The current mortality and expense risk charge is shown on the specification
pages. The mortality and expense risk charge may be increased or decreased,
but it will never exceed the maximum rate shown on the specification pages;
and
<PAGE>
(e) is an administration charge for the valuation period. The current
administration charge is shown on the specification pages. The administration
charge may be decreased, but will never exceed the rate shown on the
specification pages. The administration charge period will not exceed 20 policy
years.
Since the net investment factor may be more or less than one, the unit value may
increase or decrease. You bear the investment risk. We reserve the right
(subject to any required regulatory approvals) to change the method we use to
determine the net investment factor.
Valuation Dates and Periods: A valuation date is each day that the New York
Stock Exchange (NYSE) is open for business and any other day in which there is
enough trading in the Variable Account's underlying portfolio securities to
materially affect the value of the Variable Account. A valuation period is the
period between valuation dates.
Addition, Deletion or Substitution of Investments: We may not change the
investment policy of the Variable Account without the approval of the Insurance
Commissioner of California. This approval process is on file with the Insurance
Commissioner of your state.
We reserve the right, subject to compliance with applicable law, to add to,
delete from, or substitute for the shares of a Fund that are held by the
Variable Account or that the Variable Account may purchase. We also reserve the
right to eliminate the shares of any Fund if they are no longer available for
investment, or if we believe investing more in any eligible Fund is no longer
appropriate for the purposes of the Variable Account.
We will notify you before we substitute any of your shares in the Variable
Account. However, this will not prevent the Variable Account from buying other
shares of underlying securities for other series or classes of policies, or from
permitting a conversion between series or classes of policies or contracts if
holders request it, subject to compliance with any state or federal
requirements.
We reserve the right to establish other sub-accounts, and to make them available
to any class or series of policies as we think appropriate. Each new sub-account
would invest in a new investment company or in shares of another open-end
investment company. We also reserve the right to eliminate or combine existing
sub-accounts of the Variable Account and to transfer the assets between
sub-accounts, when allowed by law.
If we make any substitutions or changes that we believe are necessary or
appropriate, we may make changes in this policy by written notice to reflect the
substitutions or changes. If we think it is in the best interests of our policy
owners, we may operate the Variable Account as a management company under the
Investment Company Act of 1940, or we may de-register it under that Act if the
registration is no longer required. We may also combine it with other separate
accounts.
Federal Taxes: If we must pay taxes on the Variable Account, we will charge you
for that tax. Although the account is not now taxable, we reserve the right to
make a charge for taxes if the account becomes taxable.
Splitting of Units: We reserve the right to split the value of a unit, either to
increase or decrease the number of units. Any splitting of units will have no
material effect on policy benefits.
<PAGE>
What You Should Know About the Fixed Account
<PAGE>
Fixed Account: The Fixed Account is a part of our General Account. The General
Account consists of all assets owned by us, other than those in the Variable
Account and other separate accounts. Except as limited by law, we have sole
control over the investment of these General Account assets. You do not share
directly in the investment experience of the General Account, but are allowed to
allocate and transfer funds into the Fixed Account.
Fixed Account Interest Rates: The interest rates credited to the policy value in
the Fixed Account are set by us, but will never be less than 4% per year. We may
establish higher interest rates, and the initial interest rates and the renewal
interest rates may be different.
o Net payments allocated to the Fixed Account will be credited at the initial
interest rate in effect on the day we receive your payment at our Variable Life
Service Center, and the initial interest rate is guaranteed until the next
policy anniversary unless you borrow from that policy value.
o Funds transferred from a sub-account of the Variable Account to the Fixed
Account will be credited with interest at the initial interest rate in effect on
the valuation date of the transfer, and the initial interest rate is guaranteed
until the next policy anniversary unless you borrow from that policy value.
o Policy values in the Fixed Account on the policy anniversary will be credited
with interest at the renewal interest rate in effect on the policy anniversary,
and the renewal interest rate is guaranteed for one year so long as those values
remain in the Fixed Account and are not borrowed.
<PAGE>
o The interest rate we use for that portion of the policy value that equals the
outstanding loan will be at least 6% per year. The interest rate will be higher
if the policy qualifies under the Preferred Loan provision; see page 16.
Fixed Account Policy Value: On each monthly processing date, the policy value
of the Fixed Account is:
o the policy value in this account on the preceding monthly
processing date increased by one month's interest, plus
o net payments received since the last monthly processing date which are
allocated to the Fixed Account plus the interest accrued from the date the
payments are received by us, plus
o Variable Account policy value transferred to the Fixed Account from any
sub-accounts since the preceding monthly processing date, increased by
interest from the date the policy value is transferred, minus
o policy value transferred from the Fixed Account to a
sub-account since the preceding monthly processing date and interest
accrued on these transfers from the transfer date to the monthly processing
date, minus
o partial withdrawals from the Fixed Account, partial withdrawal transaction
charges and withdrawal charges since the last monthly processing date, and
interest accrued on these withdrawals and charges from the withdrawal date
to the monthly processing date, minus
o any transaction charges allocated to the Fixed Account for any changes in the
face amount since the last monthly processing date and interest accrued on such
charges to the monthly processing date, minus
o the portion of the monthly insurance protection charge allocated to the policy
value in the Fixed Account.
During any policy month, the Fixed Account policy value will be calculated on a
consistent basis. In no event will the Fixed Account policy value be less than
the guaranteed cash value shown in the Paid-Up Insurance Table after the paid-up
option has been exercised.
Basis of Value of the Fixed Account: We base the minimum surrender value in the
Fixed Account on the Commissioners Ultimate 1980 Standard Ordinary Mortality
Table, Male or Female or Table B for unisex risks (or appropriate increases in
such tables for rated risks) with interest at 4% each year, compounded annually;
however, if the insured is over age 17 on the date of issue, the minimum
surrender value is based on the Smoker or Non-Smoker versions of such tables.
Actual policy values are based on interest and insurance protection rates that
we set. We have filed a detailed description of the way we determine this value
with the State Insurance Department. All values equal or exceed the minimums
required by law in the states in which this policy is delivered.
<PAGE>
What You Should Know About Transfers
<PAGE>
While this policy is in force other than as paid-up insurance, you may transfer
amounts between the Fixed Account and the sub-accounts or among sub-accounts, on
request.
You may transfer, without charge, all or part of the policy value in the
Variable Account to the Fixed Account once during the first 24 months after the
policy is issued, and once during the first 24 months after you have increased
the face amount in order to convert to a fixed-only product. If you do so,
future payments will be allocated to the Fixed Account unless you specify
otherwise. All other transfers are subject to the following rules, and will be
permitted with our approval.
We will determine the minimum and maximum amounts that may be transferred
according to the rules that are in effect at the time of the transfer.
We also reserve the right to limit the number of transfers that can be made in
each policy year, and to set other reasonable rules controlling transfers.
If a transfer would reduce the policy value in a sub-account to less than the
current minimum balance required for such accounts, we reserve the right to
include the remaining value in the amount transferred.
You will not be charged for the first twelve transfers in a policy year, but a
transfer charge of up to $25 may be made on each additional transfer. Any
transfer charge will be deducted from the amount that is transferred. Transfers
that result from a policy loan or repayment of a loan are not subject to these
rules.
<PAGE>
If You Want to Borrow from Your Policy
<PAGE>
This policy is the only security you need to borrow from it.
Amount You May Borrow: The total amount of loans you may have outstanding at any
time is the loan value. Except as otherwise provided in the paid-up insurance
option, the loan value in the first policy year is 75% of (a) minus (b) where:
(a) is the policy value minus the surrender charge, and
(b) is the monthly insurance protection charges and interest which will be
due on the loan through the end of the policy year.
The loan value in the second policy year and any year after is 90% of the
result of the policy value minus the surrender
charge.
If you do not specify from which accounts you want to borrow, we will allocate
the loan pro rata.
In order to secure the outstanding loan, we will transfer the policy value in
each sub-account equal to the policy loan allocated to each sub-account to the
Fixed Account.
Loan Interest: You will pay interest on your loan at an annual rate of 8%.
Interest accrues daily, and is payable at the end of each policy year. Any
interest that is not paid on time will be added to the loan principal and bear
interest at the same rate. If this makes the principal higher than the policy
value in the Fixed Account, we will offset this shortfall by transferring funds
from the Variable Account to the Fixed Account. We will allocate the transferred
amount pro rata among the sub-accounts in the same proportion that the value in
each sub-account has to the total value in all of them.
Repaying the Outstanding Loan: You may repay any part of any outstanding loan at
any time while the Insured is living before this policy lapses and before the
Maturity Date. When you repay it, we will transfer the policy value that is in
the Fixed Account to the various sub-accounts and increase the value in
them. You may tell us how to allocate repayments, but if you do not, we will
allocate them according to the most recent payment allocation choices you have
made. Loan repayments made to the Variable Account cannot be higher than the
amounts you transferred from it to secure the outstanding loan.
If you wish to make a loan repayment, you must tell us that the payment you
send us is for that purpose. Unless your payment is clearly marked as a loan
repayment, we will assume it is a premium payment unless it is received after
the final payment date. When we receive a loan repayment, we will apply it to
the portion of the policy value that secures the loan. If the
loan payment exceeds the loan balance, we will apply the balance as a premium
payment.
Foreclosure: If at any time the amount of the outstanding loan is higher than
the policy value, minus the surrender charge, we will terminate the policy. We
will mail a notice of this termination to the last known address of you and any
assignee. If the excess outstanding loan is not paid within 62 days from the
date contained in the notice, the policy will terminate with no value. You may
reinstate this policy according to the Reinstatement provision on page 11.
Preferred Loan Option: The preferred loan option is available after the 10th
policy year. The guaranteed annual interest rate credited to the portion of the
policy value securing a preferred loan is 7.5%.
After the 10th policy year, any outstanding loan will be treated as a preferred
loan from that date forward, unless you revoke the preferred loan option on that
outstanding loan. The interest credited to the portion of the policy value
securing the non-preferred loans will not be less than 6% per year.
This option may be revoked by you at any time.
This option will be canceled if the Paid-Up Life Insurance Option is elected.
<PAGE>
Details on Surrender and Partial Withdrawals
<PAGE>
Surrender: You may cancel this policy and receive its surrender value as long as
the insured is living on the date we receive your written request in our
Variable Life Service Center. The policy will be canceled on that day. You may
choose to receive the surrender value in a lump sum or under a payment option.
Surrender Value: Except as otherwise provided in the paid-up
insurance option, the surrender value equals the policy value minus the
outstanding loan and surrender charges.
You will find the surrender charge for the initial face amount on page 4. Any
changes in this charge when you increase or decrease the face amount will be
shown in new specification pages.
<PAGE>
Partial Withdrawals: Partial withdrawals are not allowed during the first policy
year or if your policy is in force as paid-up insurance. After the first policy
year, you may withdraw part of the surrender value on written request. Each
withdrawal must be at least $500. We will deduct a 2% partial withdrawal
transaction charge (maximum $25) from the policy value each time you make a
partial withdrawal.
We also may deduct a withdrawal charge from the policy value. However, a portion
of the partial withdrawal will not be subject to the withdrawal charge. This
amount equals (a) minus (b), where:
(a) is 10% of the policy value on the date we receive the written request
at our Variable Life Service Center, and
(b) is the total of the withdrawals (or portions of them) made in the same
policy year which were exempt from the withdrawal charge.
We will charge you on the balance of the withdrawal, called the "excess
withdrawal." This charge is calculated by multiplying the excess withdrawal
amount by 5%. The charge will never exceed the surrender charge in effect on the
withdrawal date.
Your policy's surrender charge will be reduced by any withdrawal charges
previously paid. There will be no "excess withdrawal" charge if no surrender
charge applies to the policy on the withdrawal date.
The withdrawal charge will decrease existing surrender charges in the following
order:
o first, the most recent increase's surrender charge,
second, the next most recent increase's surrender charges in succession,
and
o last, the initial face amount's surrender charge.
If you elected the Level Death Benefit Option, the face amount and policy value
will be reduced by the amount of the partial withdrawal, and the policy value
will be further reduced by the partial withdrawal transaction and withdrawal
charges. The face amount will be decreased in the following order:
o first, the most recent increase,
o second, the next most recent increases in succession, and
o last, the initial face amount.
If you elected the Adjustable Death Benefit Option, the policy value will be
reduced by the amount of the partial withdrawal, plus the partial withdrawal
transaction and withdrawal charges.
We will not permit a partial withdrawal if it reduces the face amount to less
than $50,000.
If you do not allocate a partial withdrawal and its charges among the Fixed
Account and each sub-account, we will allocate that amount pro rata.
Postponement of Payment: We may postpone any transfer from the Variable
Account, or payment of any amount payable on:
o surrender, o partial withdrawal, o transfer, o policy loan, or o death of the
insured.
The postponement will continue during any period when:
o trading on the NYSE is restricted as determined by the SEC, or the NYSE is
closed for days other than weekends and holidays,
or
o the SEC by order has permitted such suspension, or
o the SEC has determined that such an emergency exists that disposal of
portfolio securities or valuation of assets is not reasonably practical.
We may also postpone any transfer from the Fixed Account or payment of any
portion of the amount payable on surrender, partial withdrawal or policy loan
from the Fixed Account for not more than six months from the day we receive your
written request and, if it is required, your policy. If we postpone those
payments for 30 days or more, the amount postponed will earn interest during
that period at a rate of not less than 3% per year or such higher rate as
required by law. We will not postpone payments to pay premiums on our policies.
<PAGE>
.
<PAGE>
What You Should Know About the Death Benefit
Guideline Minimum Sum Insured Table
Attained Attained
Age Percentage Age Percentage
40 or less 250% 60 130%
41 243% 61 128%
42 236% 62 126%
43 229% 63 124%
44 222% 64 122%
45 215% 65 120%
46 209% 66 119%
47 203% 67 118%
48 197% 68 117%
49 191% 69 116%
50 185% 70 115%
51 178% 71 113%
52 171% 72 111%
53 164% 73 109%
54 157% 74 107%
55 150% 75 - 90 105%
56 146% 91 104%
57 142% 92 103%
58 138% 93 102%
59 134% 94-115 101%
Net Death Benefit: If the insured dies before the
Maturity Date and before the policy is terminated, we
will pay the net death benefit. The net death benefit
is equal to the death benefit reduced by certain
amounts, as described below. The death benefit is
determined as of the date we receive due proof of the
insured's death at our Variable Life Service Center.
Due proof of death is a valid death certificate or
other evidence satisfactory to us.
The amount of the net death benefit depends upon: (1)
whether the date the insured dies is after, or on or
before, the final payment date; (2) whether the paid-up
insurance option is in effect on the date of the
insured's death; and (3) which death benefit option is
in effect on the date of death of the insured.
If the insured dies on or before the final payment date
and the paid-up insurance option has not been
exercised, then the net death benefit is determined by
deducting from the death benefit under the Level Death
Benefit Option or the Adjustable Death Benefit Option
(which are described later) the following: any
outstanding loan and monthly insurance protection
charges due and unpaid through the policy month in which the insured dies, as
well as any partial withdrawals and withdrawal charges.
If the paid- up insurance option has been exercised before the insured's
death, then the net death benefit is the paid-up insurance death benefit
minus any outstanding loan; (see page 20).
Except as otherwise provided in the Guaranteed Death Benefit Rider, if the
insured dies after the final payment date and the paid-up insurance option
has not been exercised, then the net death benefit will be equal to 101% of
the policy value, minus any outstanding loan and minus any partial
withdrawals and withdrawal charges.
If the net death benefit is paid in a lump sum, interest will be earned at
our declared interest rate for sums held on deposit, but not less than 2.5%
per year, beginning on the date we receive notice of death at our Variable
Life Service Center. We will pay a higher interest rate if required by state
law. We will credit interest from an earlier date (for example, from the date
of the insured's death) if required by state law.
<PAGE>
Required Minimum Amount of Death Benefit: This
policy is intended to qualify under Section 7702 of the Internal Revenue Code as
a life insurance contract for federal tax purposes. The provisions of this
policy (including any rider or endorsement) shall be interpreted to ensure such
tax qualification, regardless of any language to the contrary.
At no time will the amount of the death benefit under the policy ever be less
than the amount needed to ensure such tax qualification. To the extent that the
death benefit is increased, appropriate adjustments will be made in any monthly
insurance protection charges or supplemental benefits as of that time,
retroactively or otherwise, that are consistent with such an increase. Such
adjustments may be made by right of setoff against any death benefits payable.
The death benefit under this policy will not be less than the Guideline Minimum
Sum Insured as specified in the tax code. This is calculated by multiplying the
policy value by the percentage shown in the preceding table. The guideline
minimum sum insured varies by attained age. The amounts shown in the table are
determined to provide a death benefit at least as great as those in the federal
tax law, and will be adjusted according to any changes in that law applicable to
this policy.
Death Benefit Options: You have two options for determining the amount of the
death benefit. The option you elected in your application is shown on page 3.
These options are not available after the final payment date or if the policy is
in force as paid-up insurance.
Under the Level Death Benefit Option, the death benefit is the greater of:
o the face amount, or
o the guideline minimum sum insured.
Under the Adjustable Death Benefit Option, the death benefit is the greater of:
o the face amount plus the policy value on the date we receive proof of death
(we will refund monthly insurance protection charges deducted from the policy
value after the insured's date of death), or
o the guideline minimum sum insured.
You may change the death benefit option by making a written request. That change
will be made on the next monthly processing date after we receive your request.
o If you change from the Level Death Benefit Option to the Adjustable Death
Benefit Option, the face amount under the Adjustable Death Benefit Option will
be equal to the death benefit under the Level Death Benefit Option, minus the
policy value on the date of change.
o If you change from the Adjustable Death Benefit Option to the Level Death
Benefit Option, the face amount will be equal to the death benefit under the
Adjustable Death Benefit Option on the date of change.
You may not change your death benefit option more than once in any policy year,
or if the change reduces the face amount to less than $50,000.
Benefit Change: You may increase or decrease the face amount of insurance
if you make a written request during the insured's
lifetime.
You may not change the face amount if it does not meet the minimum death benefit
requirement set by federal tax law.
Increase: To increase the face amount:
o you must complete our application and provide us with evidence of
insurability satisfactory to us; and
o the insured's age must not be over our maximum issue age for new
insurance; and
o you must pay a $40 transaction charge, plus the net premium sufficient to keep
the policy in force for two months if the surrender value is less than this
amount.
This increased face amount will become effective on the first monthly processing
date on, or following, the date that all the conditions are met. We will deduct
the $40 transaction charge from the policy value on the effective date of
increase. You may choose the sub-account from which these charges will be
deducted; but if you do not choose, we will allocate the charges pro-rata. We
will provide you new specification pages, including a Supplemental Monthly
Insurance Protection Charge Table if the insured's underwriting class changes.
These pages will include the following information:
o effective date of the increase,
o amount of the increase,
o underwriting class,
o new minimum monthly payment,
o new guideline premiums, and
o new surrender charges applicable to the entire policy.
<PAGE>
We reserve the right to set a limit on the minimum amount of an increase in the
face amount. No increase may be less than our minimum limit in effect on the
date we receive your request.
You may return the new specification pages to us by the later of ten days after
receiving them or 45 days after you complete the "Application Form" which shows
the amount of the increase. If you return these pages within the period
described above, we will consider the increase void from the beginning. We will
add the charges back to the policy value unless you request otherwise.
We will also cancel any surrender charge for the increase.
Decrease: You may decrease the face amount of the policy at any time. It will be
effective on the first monthly processing date after we receive your written
request. You must pay a $40 transaction charge. The face amount will be
decreased or eliminated in the following order:
o first, the most recent increase,
second, the next most recent increases successively, and
o last, the initial face amount.
We will deduct a $40 transaction charge and a surrender charge from the policy
value on the date of the decrease. The surrender charge will be the surrender
charge for the face amounts which are decreased or eliminated in the order as
noted above.
You may choose the sub-account from which these charges will be deducted; but if
you do not choose, we will allocate the charges pro rata.
We will provide you with new specification pages. These pages will include the
following information:
effective date of the decrease,
amount of the decrease and the face amount remaining in force,
new minimum monthly payment, if any,
new guideline premiums, and
new surrender charges applicable to the entire policy.
You may not decrease the face amount to less than $50,000. We reserve the
right to establish a minimum limit on the amount of
any decrease.
<PAGE>
Paid-Up Insurance Option
<PAGE>
Benefit: This is insurance, usually having a reduced face amount for the
lifetime of the insured with no further premiums due. The amount of paid-up
insurance is the amount that the surrender value can provide as a net single
premium applied at the insured's age and underwriting class on the date this
option is exercised. The paid-up insurance death benefit may not exceed the
death benefit in effect on the date this option is exercised. In the event that
the surrender value exceeds the net single premium for the death benefit on the
date this option is exercised, the excess surrender value will be paid to you.
Basis of Values: The policy value and net single premium of the paid-up
insurance meet the minimum standards which are set by state law. The net single
premium is based on the Commissioners Ultimate 1980 Standard Ordinary Mortality
Table, Smoker or Non-Smoker; Male or Female or Table B for unisex risks (or
appropriate increases in such tables for non-standard risks). Interest will not
be less than 4 1/2%. See page 6 for the table showing the guaranteed net single
premiums per $1,000 of insurance.
Exercise of Option: The paid-up insurance option may be exercised by you on
written request. Policy value in the Variable Account will be transferred to the
Fixed Account on the date your written request to exercise this option is
received in our Variable Life Service Center. We will issue supplemental
specification pages that show the policy is paid- up effective as of the monthly
processing date following receipt of the written request.
The supplemental specification pages will show:
o the effective date of paid-up insurance,
o the paid-up death benefit,
o guaranteed cash surrender values, and
o riders.
<PAGE>
Effect on the Policy: After the policy becomes paid-up, no further payments may
be made by you. You may not increase or decrease the face amount. You may not
make partial withdrawals or transfer funds to the Variable Account; however, you
may make policy loans or surrender the policy for its net cash value. Riders
will continue only with our consent.
The guaranteed cash value of the paid-up insurance equals the net single premium
for the paid-up insurance at the insured's attained age. The net single premium
is determined on the same basis as is used for the purchase price of the paid-up
insurance. The net cash value is the cash value less any outstanding loan. The
loan value of paid-up insurance is the amount that, with interest at 8% per
year, equals the cash value of the paid-up policy as of the next policy
anniversary.
<PAGE>
24
Form TA1031-97
Payment of Benefits
<PAGE>
Payment Options: Upon written request, the surrender value or all or part of the
net death benefit may be placed under one or more of the payment options offered
by us at the time the request is made. If you make no election, we will pay the
benefit in a single sum.
A certificate will be provided to the payee describing the payment option
selected.
If a payment option is selected, the beneficiary, when filing proof of claim,
may pay us any amount that otherwise would be deducted from the net death
benefit.
The amounts payable under these options are paid from the General Account. The
options are not based on the investment experience of the Variable Account.
The amount applied under any one option for any one payee must be at least
$5,000. The periodic payment for any one payee must be at
least $50.
Subject to the Owner and Beneficiary provisions, you may change any option
selection before the net death benefit becomes payable. If you make no
selection, the beneficiary may select an option when the proceeds become
payable.
<PAGE>
Summary:
Flexible Premium Variable Life Insurance Policy
Adjustable Sum Insured
Death Proceeds Payable at Death of Insured
Flexible Premiums Payable to the Final Payment Date
Coverage to the Maturity Date and Amount of Policy Value Not Guaranteed
Nonparticipating.
<PAGE>
9
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
CHILDREN'S INSURANCE RIDER
This rider is part of the policy to which it is attached if it is shown in the
specification pages. The insured under the policy is the insured under this
rider. "Insured Child" is defined below.
Benefit
<PAGE>
Benefit - The Company will pay the children's insurance benefit upon receipt of
due proof that an Insured Child died while this rider was in force. The amount
of the children's insurance benefit is shown in the specification pages. Unless
requested otherwise, the beneficiary under this rider is the owner.
Insured Child Description - "Acquired" means born, legally adopted or attained
the status of stepchild.
"Insured Child" means an acquired child of the insured who:
o is named in the application for this rider and on the date of the
application has not reached his or her 18th birthday; or
o is acquired during the insured's lifetime after the date of the application
but before such child's 18th birthday.
No child can be an Insured Child while under the age of 14 days. A person will
cease to be an Insured Child on the policy anniversary nearest the earlier of
the Insured Child's 25th birthday and/or the insured's 65th birthday.
Period of Term Insurance - The term insurance on each Insured Child will begin
on the date of coverage under this rider if the child is an Insured Child on
such date; otherwise the term insurance will begin on the date the Insured Child
is acquired and is 14 days old. The term insurance will expire on the date the
child ceases to be an Insured Child.
Paid-Up Term Insurance - If the insured dies while this rider is in force, the
term insurance in force on each Insured Child will be converted to paid-up term
insurance. The paid-up term insurance on each child will terminate on the date
the child ceases to be an Insured Child. This rider may be surrendered at any
time while the paid-up term insurance is in force for its net reserve on the
date of surrender. However, if this rider is surrendered within 30 days after a
policy anniversary, the value will not be less than the net reserve on such
anniversary. We will furnish a statement of the values for this rider upon
request.
<PAGE>
Conversion
<PAGE>
Conversion - You may convert the insurance on the life of an Insured Child if
such request is made:
o within 60 days before the term insurance on the life of an Insured Child
expires;
o during the Insured Child's lifetime; and
o while the rider is in force.
You may convert to a new policy issued by Transamerica Occidental Life Insurance
Company. Evidence of insurability will not be required.
New Policy Description - The new policy will be issued:
o on any form of individual life insurance, other than term, being issued
by us on the date of issue of the new policy;
o on the life of the Insured Child only; and
o at the Insured Child's age and for the premium rates in effect on the
date of issue of the new policy.
<PAGE>
(Over)
Form TA1096-97
Conversion (continued)
<PAGE>
The sum insured may not be less than our minimum issue limit for the new policy.
The sum insured may be up to 5 times the amount of insurance under this rider on
the Insured Child. The new policy will not become binding unless the first
premium is paid during the lifetime of the Insured Child and within 31 days
after the expiration of the term insurance under this rider.
The date of issue of the new policy will be the day after the expiration of the
term insurance under this rider.
The new policy will be subject to any assignments outstanding against this
rider. Riders will be available on the new policy subject to evidence of
insurability and consent of the Company. The time periods of the suicide and
incontestability provisions of the new policy will expire on the same date as
such provision in this rider would have expired.
<PAGE>
General
<PAGE>
Incontestability - Except for fraud or failure to pay the charges, this rider
cannot be contested after it has been in force, during the insured's lifetime,
for two years from its date of issue. The insurance on any Insured Child named
in the application cannot be contested after it has been in force, during the
Insured Child's lifetime, for two years from the date of issue of this rider.
Misstatement of Age - If the age of a child has been misstated and if the child
would not have been an Insured Child upon his or her death if the age had been
correctly stated, no benefit will be payable if the child dies. Any benefit paid
to the beneficiary because of the death of such child shall be repaid to the
Company. If the age of the insured has been misstated, the termination date of
the Insured Child's coverage will be based upon the insured's correct age.
Termination - Coverage under the rider will terminate on the first to occur of:
o the end of the grace period of a required premium in default; or
o the termination or maturity of the policy except as provided in the
Paid-Up Term Insurance provision; or
o the day before the policy anniversary nearest the insured's age 65; or
o the last day of the policy month in which you request the termination.
General - The specification pages (see page 3 of the policy) will show the date
of issue of this rider.
Charges for this rider are payable as part of the monthly insurance protection
charges due under this policy. The monthly charge is shown on page 5.
Except as otherwise provided, all conditions and provisions of the policy apply
to this rider.
<PAGE>
Signed for Transamerica Occidental Life Insurance Company at Los Angeles,
California and effective on the date of issue of the policy to which this rider
is attached, unless a different date is shown here.
- -------------------------------------------------------------------------
[GRAPHIC OMITTED]
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
[GRAPHIC OMITTED]
- -------------------------------------------------------------------------
Executive Vice President, General Counsel President and CEO
and Corporate Secretary
Form TA1096-97
<PAGE>
10
<PAGE>
Form TA1097-97
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Guaranteed Insurability Rider
This rider is a part of the policy to which it is attached if it is shown in the
specification pages of the policy. The insured under the policy is the insured
under this rider.
<PAGE>
Benefit - Subject to the terms of this rider, on each option date you may
increase the face amount of insurance without evidence of insurability if
written request is made:
during the lifetime of the insured; and
while this rider and policy are in force.
Option Dates - The first option date for this rider is shown in the
specification pages of the policy. Option dates will then occur on every second
anniversary of the first option date until the policy anniversary nearest age 40
or until the fifth option date, whichever is later.
Exercise of Increase Option - Options may be exercised on the life of the
insured not earlier than 60 days prior to, nor later than 31 days after, an
option date. The specification pages of the policy show the "option amount" and
the "total option amount". The total option amount is the maximum aggregate face
amount of insurance which may be purchased through this rider. Each time the
option to increase the face amount of insurance is exercised, the total option
amount is reduced by the amount of the insurance purchased. The face amount
which may be purchased at one time may not exceed the option amount or, if less,
the total option amount remaining. The increased face amount may not be less
than $10,000.
The insurance protection charges for the increased face amount will be
calculated in the same manner as the charges for other increases in the face
amount. The guaranteed insurance protection charges will not exceed the
guaranteed charges in effect on the date of issue of this rider.
Supplemental specification pages will be issued. They will include the following
information:
the effective date of the increased face amount;
the amount of the increase; and
the surrender charge.
The supplemental specification pages will also show a new minimum monthly
payment and new guideline premiums which will apply to the entire policy. There
is no administrative charge for the exercise of this option.
If the surrender value on the date of issue of an increase is less than the
insurance protection charges due on the policy you must pay the grace period
premium to us. The effective date of the increase in face amount will be the
monthly processing date following the date of the written request. If the
insured dies after the date of the written request and before the increased face
amount takes effect, we will refund any premium paid to exercise this option.
The time periods in the suicide and incontestable clauses for the increased face
amount will be measured from the date of issue of this rider.
Waiver of Payments - If this policy contains a waiver of payment rider on the
effective date of the increased face amount, the waiver of payment benefit may
be increased without evidence of insurability. If waiver of payment benefits are
being paid on the increase date, the increased benefit will become payable on
the increase date.
If on the effective date of an increase the waiver of payment benefit is
designated in the specification pages as the monthly insurance protection
charges, this benefit will be increased by the insurance protection charges for
the increased face amount.
If the waiver of payment benefit on an increase date is shown in the
specification pages as a dollar amount, this benefit will be increased by the
smaller of:
the waiver of payment benefit on the option date minus 1/12 of the sum of
the payments made by you over the last 12 months; or the amount shown in
the waiver of payment benefit table.
- ------------------------------------------------------
Waiver of Payment Benefit Table
- ------------------------------------------------------
- --------------- --------------------------------------
Monthly Benefit
Attained Increase Per $1,000
Ages Face Amount Increased:*
- --------------- --------------------------------------
- --------------- --------------------------------------
18-19 $ .50
20-29 .63
30-39 1.00
40-49 1.50
50-54 2.00
55-59 2.75
- --------------- --------------------------------------
- ------------------------------------------------------
*In no event may the waiver of payment benefit be
increased to exceed the monthly equivalent of your
periodic payment.
- ------------------------------------------------------
Incontestability - Except for fraud or failure to pay the monthly insurance
protection charges, this rider cannot be contested after it has been in force
for two years from its date of issue.
Termination - This rider will terminate on the first to occur of:
the end of the grace period of a premium in default; or
the end of the policy month following a request for termination; or
the last option date; or
the date of issue of an increase which, when added to the sum of all prior
increases under this rider, reduces the total option amount remaining to
less than $10,000.
General - The specification pages (see page 3 of the policy) will show for this
rider:
the date of issue;
the first option date;
the option amount; and
the total option amount.
Except as otherwise provided, any additional benefits or riders will not be
added or increased without our prior consent.
Reinstatement of this rider will not revive any option date which occurred
during the period of lapse.
Charges for this rider are payable as a part of the monthly insurance protection
charges due under this policy. The monthly insurance protection charge for this
rider is shown on page 5 of the policy.
Except as otherwise provided, all conditions and provisions of the policy apply
to this rider.
<PAGE>
Signed for Transamerica Occidental Life Insurance Company at Los Angeles,
California and effective on the date of issue of the policy to which this rider
is attached, unless a different date is shown here.
- ---------------------------------------------------
[GRAPHIC OMITTED]
- ---------------------------------------------------
- ---------------------------------------------------
[GRAPHIC OMITTED]
- ---------------------------------------------------
Executive Vice President, General Counsel President and CEO
and Corporate Secretary
11
<PAGE>
1
Form TA1093-97
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Option To Accelerate Death Benefits
(Living Benefits Rider)
This rider is a part of the policy to which it is attached. The insured under
this rider is the insured under the policy. This rider does not apply to any
benefits provided by other riders under this policy.
<PAGE>
Benefit - While this rider is in force, you may elect to receive a portion of
the net death benefit called the "living benefit," prior to the insured's death
under this option subject to the definitions, conditions and limitations in this
rider. This option may only be exercised once.
Definitions - "Option amount" means that portion of the death benefit which you
elect to apply under this option. The option amount must be at least $25,000 and
may not exceed the least of:
one-half of the death benefit on the date the option is elected; or
the amount that would reduce the face amount to our minimum issue limit
for this policy; or
$250,000.
"Option percentage" is the option amount divided by the death benefit.
"Living benefit" is the option amount which has been reduced for interest and
other factors. It is equal to the lump sum benefit under this rider, and is the
amount used to determine the monthly benefit. The living benefit will not be
less than the surrender value of the policy multiplied by the option percentage.
The following factors will be used to calculate the living benefit:
age;
sex, unless the policy is issued on a unisex basis;
life expectancy;
policy value;
outstanding loan;
rate of interest currently being credited to the Fixed Account including
those values which are subject to outstanding loan;
face amount;
death benefit option;
current cost of insurance rates; and
an expense charge of $150.
An amount equal to the outstanding loan multiplied by the option percentage will
be deducted from the living benefit. The remaining outstanding loan will
continue in force.
The assumptions we use to calculate the living benefit may change from time to
time. The factors used to compute the living benefit will be set and changed
only prospectively; that is, based on changes in future expectations. We will
not change these factors to recoup any prior losses or distribute past gains
under the rider.
"Proof of claim satisfactory to us" shall include:
a request signed by the insured and owner to disclose all facts
concerning the insured's health;
records of the attending physician, including a prognosis of the insured;
and
if we request, a medical examination of the insured at our expense
conducted by a physician we choose.
Conditions - Upon written request you may elect to receive payment under the
accelerated death benefit option subject to the following conditions:
the policy is in force;
a written consent has been given by any collateral assignee, irrevocable
beneficiary and the insured if you are not the insured; if the policy was
delivered in a community property state, we may require your spouse to
sign the consent; and
the insured qualifies for the option.
Exercising the Option - If you provide proof of claim and a certification of a
qualified physician satisfactory to us that the insured has an illness or
physical condition which can reasonably be expected to result in death in 12
months or less, you may elect to receive the living benefit in equal monthly
payments for 12 months. For each $1,000 of living benefit, each payment will be
at least $85.21. This assumes an annual interest rate of 5%.
If the insured dies before all the payments have been made, we will pay the
beneficiary in one sum the present value of the remaining payments due under
this rider calculated at the interest rate we use to determine those payments.
<PAGE>
If you do not wish to receive monthly payments, you may elect to receive the
living benefit in a lump sum.
Effect on Policy - The policy's death benefit will be decreased by the option
amount. Such decrease will be effective on the monthly processing date following
the date of the written request.
Existing insurance will be decreased or eliminated in the following order:
first, the most recent increase;
second, the next most recent increases successively; and
last, the initial face amount.
Any surrender charge applicable to the decrease in the face amount will be
waived. The amount of the charge which is waived will be:
the surrender charge applicable to any increased face amount which is
eliminated in the order set forth above; plus
a pro rata share of the surrender charge applicable to a partial
reduction in an increase or in the original face amount.
New specification pages will be issued. These pages will include the following
information:
the effective date of the decrease;
the amount of the decrease and the benefit remaining in force;
the revised surrender charge;
the revised minimum monthly payment, if any; and
the new guideline premiums.
The policy value will be reduced in the same proportion as the reduction in the
death benefit. Riders will continue in force.
Exclusion - No benefit will be paid under this rider if a claim results,
directly or indirectly, from a suicide attempt or a self-inflicted injury (while
sane or insane) for any period during which a suicide exclusion is applicable.
Termination - This rider will terminate on the first to occur of:
the date the living benefit is paid or the first monthly installment of
the living benefit is paid; or
the end of the grace period of a premium in default; or
the termination or maturity of the policy while the insured is alive; or
at any time on your written request.
General - The specification pages (see page 3 of the policy) will show the date
of issue of this rider.
The living benefit will be made available to you on a voluntary basis only.
Accordingly:
(a) If you are required by law to exercise this option to satisfy the claim of
creditors, whether in bankruptcy or otherwise, you are not eligible for this
benefit.
(b) If you are required by a government agency to exercise this option in order
to apply for, obtain, or retain a government benefit or entitlement, you are not
eligible for this benefit.
Except as otherwise provided, all conditions and provisions of the policy apply
to this rider.
TAX QUALIFICATION: This rider is intended to provide a qualified accelerated
death benefit that is excludable from gross income for federal income tax
purposes. To that end, the provisions of this rider and the policy are to be
interpreted to ensure or maintain such tax qualification, notwithstanding any
other provisions to the contrary. Whether any tax liability may be incurred when
benefits are paid under this rider could depend on whether the owner is also the
insured and on how the Internal Revenue Service interprets applicable provisions
of the Internal Revenue Code. As with any tax matter, the owner and any other
recipient of this benefit should each consult his own tax advisor to evaluate
any tax impact of this benefit.
<PAGE>
Signed for Transamerica Occidental Life Insurance Company at Los Angeles,
California and effective on the date of issue of the policy to which this rider
is attached, unless a different date is shown here.
- --------------------------------------------------------
[GRAPHIC OMITTED]
- --------------------------------------------------------
- --------------------------------------------------------
[GRAPHIC OMITTED]
- --------------------------------------------------------
Executive Vice President, General Counsel President and CEO
and Corporate Secretary
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
CHILDREN'S INSURANCE RIDER
This rider is part of the policy to which it is attached if it is shown in the
specification pages. The insured under the policy is the insured under this
rider. "Insured Child" is defined below.
Benefit
Benefit - The Company will pay the children's insurance benefit upon receipt of
due proof that an Insured Child died while this rider was in force. The amount
of the children's insurance benefit is shown in the specification pages. Unless
requested otherwise, the beneficiary under this rider is the owner.
Insured Child Description - "Acquired" means born, legally adopted or attained
the status of stepchild.
"Insured Child" means an acquired child of the insured who:
o is named in the application for this rider and on the date
of the application has not reached his or her 18th
birthday; or
o is acquired during the insured's lifetime after the date of the application
but before such child's 18th birthday.
No child can be an Insured Child while under the age of 14 days. A person will
cease to be an Insured Child on the policy anniversary nearest the earlier of
the Insured Child's 25th birthday and/or the insured's 65th birthday.
Period of Term Insurance - The term insurance on each Insured Child will begin
on the date of coverage under this rider if the child is an Insured Child on
such date; otherwise the term insurance will begin on the date the Insured Child
is acquired and is 14 days old. The term insurance will expire on the date the
child ceases to be an Insured Child.
Paid-Up Term Insurance - If the insured dies while this rider
is in force, the term insurance in force on each Insured Child
will be converted to paid-up term insurance. The paid-up term
insurance on each child will terminate on the date the child
ceases to be an Insured Child. This rider may be surrendered
at any time while the paid-up term insurance is in force for its
net reserve on the date of surrender. However, if this rider is
surrendered within 30 days after a policy anniversary, the
value will not be less than the net reserve on such anniversary.
We will furnish a statement of the values for this rider upon request.
-------------------------------
Conversion -------------------------------
Conversion - You may convert the insurance on the life of an Insured Child if
such request is made:
o within 60 days before the term insurance on the life of an
Insured Child expires;
o during the Insured Child's lifetime; and
o while the rider is in force.
You may convert to a new policy issued by Transamerica
Occidental Life Insurance Company. Evidence of insurability
will not be required.
New Policy Description - The new policy will be issued:
o on any form of individual life insurance, other than term,
being issued by us on the date of issue of the new policy;
o on the life of the Insured Child only; and
o at the Insured Child's age and for the premium rates in
effect on the date of issue of the new policy.
(Over)
Form TA1096-97
<PAGE>
-------------------------------
Conversion (continued)
-------------------------------
The sum insured may not be less than our minimum issue limit for the new policy.
The sum insured may be up to 5 times the amount of insurance under this rider on
the Insured Child. The new policy will not become binding unless the first
premium is paid during the lifetime of the Insured Child and within 31 days
after the expiration of the term insurance under this rider.
The date of issue of the new policy will be the day after the expiration of the
term insurance under this rider.
The new policy will be subject to any assignments outstanding against this
rider. Riders will be available on the new policy subject to evidence of
insurability and consent of the Company. The time periods of the suicide and
incontestability provisions of the new policy will expire on the same date as
such provision in this rider would have expired.
General
Incontestability - Except for fraud or failure to pay the charges, this rider
cannot be contested after it has been in force, during the insured's lifetime,
for two years from its date of issue. The insurance on any Insured Child named
in the application cannot be contested after it has been in force, during the
Insured Child's lifetime, for two years from the date of issue of this rider.
Misstatement of Age - If the age of a child has been misstated and if the child
would not have been an Insured Child upon his or her death if the age had been
correctly stated, no benefit will be payable if the child dies. Any benefit paid
to the beneficiary because of the death of such child shall be repaid to the
Company. If the age of the insured has been misstated, the termination date of
the Insured Child's coverage will be based upon the insured's correct age.
Termination - Coverage under the rider will terminate on the first to occur of:
o the end of the grace period of a required premium in
default; or
o the termination or maturity of the policy except as
provided in the Paid-Up Term Insurance provision; or
o the day before the policy anniversary nearest the insured's
age 65; or
o the last day of the policy month in which you request the
termination.
General - The specification pages (see page 3 of the policy) will show the date
of issue of this rider.
Charges for this rider are payable as part of the monthly
insurance protection charges due under this policy. The
monthly charge is shown on page 5.
Except as otherwise provided, all conditions and provisions of the policy apply
to this rider.
Signed for Transamerica Occidental Life Insurance Company at Los Angeles,
California and effective on the date of issue of the policy to which this rider
is attached, unless a different date is shown here.
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Executive Vice President, General Counsel President and CEO
and Corporate Secretary
Form TA1096-97
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
-------------------------------
Waiver of Payment Rider ---------------------------------
This rider is part of the policy to which it is attached if it is shown in the
specification pages of the policy. The insured
under the policy is the insured under this rider.
Benefit - On each monthly processing date, while the insured is totally
disabled, we will add to the policy value the waiver of payment benefit. This
benefit is the largest of:
o the amount shown in the specification pages; or
o the minimum monthly payment for the face amount covered by this rider during
a period when the minimum monthly payment applies; or
o the monthly insurance protection charges applicable to the face amounts and
other riders covered by this rider.
The waiver of payment benefit is subject to:
o our receipt of due proof of such total disability; and
o evidence the total disability:
o began while this rider was in force; and
o began before the policy anniversary nearest
insured's age 65; and
o has continued for at least 4 months; and
o the other terms and conditions of this rider.
The benefit will begin with the policy month following the date total disability
begins or the policy anniversary nearest the insured's age 5, if later. The
benefit will not be provided for any period more than one year prior to the date
we received written notice of claim. We will credit the policy value with any
benefit which applies to the time during which benefits are payable.
Each monthly benefit will be allocated in accordance with the payment allocation
in effect on the date each benefit is credited to the policy value.
If the insured's total disability occurs before the policy anniversary nearest
the insured's age 60, the benefit will end when total disability ends. If the
total disability occurs on or after the policy anniversary nearest the insured's
age 60, the benefit will continue during such total disability but not beyond
the policy anniversary nearest the insured's age 65 or two years, whichever is
longer.
Benefits will cease on the next monthly processing date following the end of a
period of total disability.
Definitions of Total Disability - Total disability means the insured is unable
to engage in any occupation as a result of disease or bodily injury.
"Occupation" means attendance at school if the insured is not old enough to
legally end his or her formal education. Otherwise "occupation" means any
occupation for which the insured is or becomes reasonably fitted by training,
education or experience.
Total loss of the following as a result of disease or bodily injury shall be
deemed total disability:
o speech
o hearing in both ears; or
o the sight of both eyes; or
o the use of both hands; or
o the use of both feet; or
o the use of one hand and one foot.
Risks Not Covered - No benefit will be provided if total disability results,
directly or indirectly, from:
o an act of war, whether such war is declared or
undeclared, and the insured is a member of the armed
forces of a country or combination of countries; or
o any bodily injury occurring or disease first manifesting itself prior to the
date of issue of this rider. However, no claim for total disability
commencing after two years from the date of issue will be denied on the
ground that the disease or impairment not excluded from coverage by name or
specific description existed prior to the date of issue of this rider.
(over)
Form TA1094-97
<PAGE>
Notice and Proof of Claim - Written notice of claim must be sent to our Variable
Life Service Center:
o during the lifetime of the insured; and
o while the insured is totally disabled; and
o not later than 12 months after this rider terminates.
Proof of claim must be sent to our Variable Life Service Center within 6 months
of the notice of claim. Failure to give notice and proof within the time
required will not void or reduce any claim if it can be shown that notice and
proof were given as soon as was reasonably possible.
Proof of continued total disability must be furnished at our request. Failure to
do so will end the benefit. Such proof will include an authorization to disclose
facts concerning the insured's health, and may include medical exams of the
insured conducted by physicians chosen by us. Such medical exams will be at our
expense. After total disability has continued for 24 months, proof will not be
required more than once a year, nor after the policy anniversary nearest age 65.
Benefit Changes - The benefit may be changed on written request. An increase
will only be allowed if the insured is under age 60 and we receive:
o evidence of insurability that is satisfactory to us; and
o payment to us of the premium sufficient to keep the policy in force if the
surrender value is less than all charges due on the policy.
No increase, when added to the existing benefit, shall exceed the following
limits:
Maximum Benefit Table
Monthly Benefit
Attained Per $1,000
Age Face Amount
0-19 $1.00
20-29 1.25
30-39 2.00
40-49 3.00
50-54 4.00
55 and above 5.50
The waiver of payment benefit will be reduced if it exceeds the maximum benefit
after the face amount of the policy is reduced. The monthly benefit may not
exceed the amount shown in the Maximum Benefit Table.
The effective date of the changed benefit will be the first monthly processing
date on or after the date all conditions are met. The changed benefit will be
shown in supplementary specification pages. The charges for an increased benefit
will be shown in a Supplemental Insurance Protection Charge Table if the
insured's underwriting class changes.
Incontestability - Except for fraud or failure to pay the monthly insurance
protection charges, this rider cannot be contested after the end of the
following time periods:
o the initial benefit cannot be contested after the rider has been in force
during the insured's lifetime and without the occurrence of the total
disability of the insured for two years from the date of issue; and
o an increase in the benefit cannot be contested after the increased benefit
has been in force during the insured's lifetime and without the occurrence
of the total disability of the insured for two years from its effective
date.
Termination - This rider will terminate on the first to occur of:
o the end of the grace period of a premium in default; or
o the termination or maturity of the policy; or
o the day before the policy anniversary nearest age 65,
except as provided in the Benefit provision; or
o the end of the policy month following a request for
termination.
Rider Charge - Charges for this rider are paid as a part of the monthly
insurance protection charges due under the policy.
The monthly charge is the waiver charge shown in the
Insurance Protection Charge Table multiplied by the
greater of:
o the monthly insurance protection charges applicable
to the face amount and other riders covered by this
rider; or
o one-half of the waiver of payment benefit shown in the
specification pages.
Form TA1094-97
<PAGE>
General - The specification pages (see page 3 of the policy) will show the date
of issue of this rider.
When an increase in face amount or an additional rider is applied for, waiver of
payment coverage must also be requested. We reserve the right to decline
issuance of the waiver of payment coverage for the increased face amount or
additional rider benefit. If total disability begins during the grace period of
a past due premium, such a premium will be payable.
The waiver of payment benefit will not reduce any amount payable under the
policy.
Except as otherwise provided, all conditions and provisions of the policy apply
to this rider.
Signed for Transamerica Occidental Life Insurance Company at Los Angeles,
California and effective on the date of issue of the policy to which this rider
is attached, unless a different date is shown here.
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Executive Vice President, General Counsel President and CEO
and Corporate Secretary
Form TA1094-97
<PAGE>
CERTIFICATE
I, Aldo Davanzo, Assistant Secretary of Transamerica Occidental Life
Insurance Company, do hereby certify that the attached is a full, true and
correct copy of a resolution - SEPARATE ACCOUNTS - duly passed and adopted at a
regular meeting of the Board of Directors of Transamerica Occidental Life
Insurance Company on the 6th day of December, 1996 at which meeting a quorum of
directors was present. I further certify that said resolution is now in full
force and effect.
WITNESS my hand and seal of Transamerica Occidental Life Insurance
Company this 18th day of September, 1997.
<PAGE>
EXCERPTS FROM THE MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY HELD DECEMBER 6, 1996.
SEPARATE ACCOUNTS
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
WHEREAS, this Corporation adopted a resolution authorizing its proper officers
to enter into, make, perform and carry out contracts pursuant to Section 10506
of the California Insurance Code; and
WHEREAS, this Corporation desires to continue entering into, making, performing
and carrying out contracts pursuant to Section 10506 et seq. of the California
Insurance Code, and specifically at this time to authorize its proper officers
to establish additional separate accounts under Section 10506 et seq. of the
California Insurance Code without further action of approval of this Board of
Directors;
THEREFORE IT IS RESOLVED, that this Corporation reaffirms that through its
proper officers, be and hereby is authorized (1) to enter into, make, perform
and carry out contracts of every sort and kind which may be necessary, suitable
or convenient to the conduct of business pursuant to Section 10506 et seq. of
the California Insurance Code, which permits a life insurance company to
allocate to one more separate accounts, in accordance with the terms of a
written agreement approved by the Insurance Commissioner of California, any
amounts that are paid to the Company under a pension, retirement or
profit-sharing plan, or program for one or more persons and that are to be
applied in payment of proceeds or benefits under the Company's policies,
contracts, or agreements in fixed or variable dollar amounts, or both, and (2)
to do all and everything necessary, suitable or convenient to the conduct of
such business, including any act or thing incidental to, or growing out of, or
connected with the conduct of such business and further including, but not
limited to, the power to establish new separate accounts, both pooled and
non-pooled, without further action or approval by this Board of Directors; and
FURTHER RESOLVED, that 1) the income, if any, and gains and losses, realized and
unrealized, in each separate account shall be credited to or charged against
such separate account without regard to other gains or losses of the Company's
general account or other separate accounts; and 2) no separate account shall be
chargeable with liabilities arising out of any other business of the Company.
POWER OF ATTORNEY
The undersigned director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
him and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and him or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand,
this 22nd day of July, 1996.
Robert Abeles
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Occidental Life Insurance
Company, a California corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E. Gooding
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any variable life insurance or annuity policies: registration statements on
any form or forms under the Securities Act of 1933 and under the Investment
Company Act of 1940, and any and all amendments and supplements thereto, with
all exhibits and all instruments necessary or appropriate in connection
therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 2nd day of February 1994.
-----------------------------
Thomas J. Cusack
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 14th day of July, 1992.
Richard H. Finn
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 12th day of April, 1990.
David E. Gooding
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 16th day of April, 1990.
Edgar H. Grubb
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 16th day of April, 1990.
Frank C. Herringer
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 16th day of April, 1990.
Richard N. Latzer
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 16th day of April, 1990.
Gary U. Rolle
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 8th day of April, 1993.
Nooruddin S. Veerjee
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 8th day of April, 1993.
Karen O. MacDonald
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 8th day of April, 1993.
Robert A. Watson
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 8th day of April, 1993.
Daniel E. Jund
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 13th day of December, 1990.
James W. Dederer
<PAGE>
POWER OF ATTORNEY
The undersigned director of Transamerica Life Insurance and Annuity
Company, a North Carolina corporation (the "Company"), hereby constitutes and
appoints Aldo Davanzo, James W. Dederer, David E. Gooding and Charles E. LeDoyen
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
his and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance or annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand,
this 24th day of March, 1997.
T. Desmond Sugrue
<PAGE>
1
DISTRIBUTION AGREEMENT BETWEEN
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
AND TRANSAMERICA INSURANCE SECURITIES SALES CORPORATION
This Agreement (the "Agreement") made as of this 24th day of August,
1994, by and between TRANSAMERICA INSURANCE SECURITIES SALES CORPORATION (the
"Distributor"), a corporation organized and existing under the laws of the State
of Maryland with its principal place of business in Los Angeles, California, and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (the "Company"), an insurance
company organized and existing under the laws of the State of California with
its principal place of business in Los Angeles, California, for itself and on
behalf of certain of its separate accounts.
W I T N E S S E T H
WHEREAS, the Company has established and maintains the class or classes
of variable annuity contracts set forth on Schedule 1 to this Agreement as in
effect at the time this Agreement is executed, and such other classes of
variable annuity contracts and variable life insurance contracts (collectively,
"variable insurance products") that may be added to Schedule 1 from time to time
in accordance with Section 18 of this Agreement, and including any riders to
such contracts and any other contract offered in connection therewith
(collectively the "Contracts") (A "class of Contracts" shall mean those
Contracts issued by the Company on the same policy form or forms and covered by
the same Registration Statement.); and
<PAGE>
8
WHEREAS, the Distributor, a wholly-owned subsidiary of Transamerica
Insurance Corporation of California, is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "1934 Act") and is a member of the National Association
of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the parties desire to have the Distributor act as the
principal underwriter for and in connection with the sale of the Contracts to
the public and assume full responsibility for the securities activities of each
"associated person" (as that term is defined in Section 3(a)(18) of the 1934
Act) of the Distributor, including each associated person of the Distributor
engaged in the offer and sale of the Contracts (a "Representative"); and
WHEREAS, the Distributor and the Company acknowledge that the Company
is best suited to provide certain administrative functions in connection with
the Contracts, subject at all times to the control and direction of the
Distributor with respect to the broker-dealer operations;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, the Distributor and the Company agree as follows:
1. Definitions
a. Fund -- An investment company serving as the funding medium
for any Contracts, specified in Schedule 2 to this Agreement as in
effect at the time this Agreement is executed, and such other
investment companies that may be added to Schedule 2 from time to time
in accordance with Section 18 of this Agreement.
b. Intermediary Distributors -- A person registered as a
broker-dealer and licensed as a life insurance agent or affiliated with
a person so licensed, and authorized to distribute the Contracts
pursuant to a sales agreement as provided for in Section 2 of this
Agreement (the "Sales Agreement").
c. Separate Account -- Each separate account of the Company
specified on Schedule 3 to this Agreement as in effect at the time this
Agreement is executed, and such other separate accounts of the Company
that may be added to Schedule 3 from time to time in accordance with
Section 18 of this Agreement, each of which will be approved by the
Commissioner of Insurance of the State of California under Section
10506 of the California Insurance Code.
2. Distribution Duties and Responsibilities. The Distributor shall act
as principal underwriter for the Contracts in connection with their sale during
the term of this Agreement in each state or other jurisdiction where they may
legally be sold (the "Territory"). The Distributor is authorized to solicit
applications for the Contracts ("Applications") directly from customers and
prospective customers in the Territory and to select all persons who will be
authorized to engage in solicitation activities with respect to the Contracts.
Such selection activity shall include the recruitment and appointment of third
parties to act as distributors. In turn such third parties may be authorized as
Intermediary Distributors to engage in solicitation activities, including the
solicitation of Applications directly from customers and prospective customers
in the Territory and/or as Intermediary Distributors to recruit other third
parties to act as Intermediary Distributors, in each case as the Company and the
Distributor shall agree to. The Distributor shall enter into separate written
Sales Agreements with each such Intermediary Distributor. Such Sales Agreements
will be substantially in the form attached to this Agreement as Exhibit A, but
may include such additional or alternative terms and conditions that are not
otherwise inconsistent with this Agreement, subject to the Company's review and
prior written consent (which may be given by facsimile), which consent will not
be unreasonably withheld, and which will be deemed to have been given if the
Company has not responded in writing (by facsimile or otherwise) within 10
calendar days. The Distributor will provide the Company with a profile on each
Intermediary Distributor. The Distributor shall use its best efforts to market
the Contracts actively, both directly and through Intermediary Distributors.
The Distributor shall have the power and authority to select and
recommend Representatives of the Distributor, and to authorize an Intermediary
Distributor to select and recommend representatives of such Intermediary
Distributor (the "Intermediary's Representatives"), for appointment as agents of
the Company, and only such Representatives and Intermediary's Representatives
shall become agents of the Company with authority to engage in solicitation
activities with respect to the Contracts. The Distributor shall be solely
responsible for background investigations of its Representatives to determine
their qualifications, good character and moral fitness to sell the Contracts,
and pursuant to the Sales Agreement, each Intermediary Distributor shall be
solely responsible for background investigations of its Intermediary's
Representatives to determine their qualifications, good character and moral
fitness to sell the Contracts. The Company shall appoint in the appropriate
states or jurisdictions such selected and recommended agents, provided that the
Company reserves the right, which right shall not be exercised unreasonably, to
refuse to appoint as agent any Representative or Intermediary's Representative,
or, once appointed, to terminate the same at any time with or without cause. No
other individuals, persons or entities, other than affiliates of the Company,
shall have authority to engage in solicitation activities with respect to the
Contracts, without the express prior written consent of the Distributor.
The Distributor shall at all times be an independent contractor, and
shall be under no obligation to produce any particular amount of sales of the
Contracts. Anything in this Agreement to the contrary notwithstanding, the
Company retains ultimate responsibility for the direction and control of the
services provided under this Agreement, and the ultimate right to control the
sale of the Contracts, including the right to suspend sales in any jurisdiction
or jurisdictions, to appoint and discharge agents of the Company, or to refuse
to sell a Contract to any applicant for purchase of a Contract (an "Applicant")
for any reason whatsoever. The Distributor and the Distributor's Representatives
shall not have the authority, and shall not grant the authority to Intermediary
Distributors or the Intermediary's Representatives, on behalf of the Company: to
make, alter or discharge any Contract or other contract entered into pursuant to
a Contract; to waive any Contract forfeiture provision; to extend the time of
paying any premium on the Contracts; or to receive any monies or premiums
(except for the sole purpose of forwarding such monies or premiums to the
Company). The Distributor shall not possess or exercise any authority on behalf
of the Company other than that expressly conferred upon the Distributor by this
Agreement.
3. Filings, Marketing Materials and Representatives. The Distributor
will assume full responsibility for the securities activities of its
Representatives, and, similarly, each Intermediary Distributor shall assume,
pursuant to the Sales Agreement, full responsibility for the Intermediary's
Representatives' securities activities, including compliance with the NASD Rules
of Fair Practice and any applicable state securities laws and regulations. The
Distributor, either directly or indirectly through the Company as its agent,
shall: (a) make timely filings with the SEC, the NASD, and any other appropriate
securities regulatory authorities of any advertisements, sales literature, or
other materials relating to the Contracts, as required by law or regulation to
be filed; (b) make available to the Company for approval copies of all
agreements and other written plans and documents relating to the sale of the
Contracts, and shall, if necessary, submit such agreements and other plans and
documents to the appropriate securities regulatory authorities for approval
prior to their use; (c) assist its Representatives in their efforts to prepare
themselves to pass any and all applicable NASD and state insurance qualification
examinations; (d) register its Representatives with the NASD and any other
appropriate securities regulatory authorities; and (e) supervise and control
their Representatives in the performance of their selling activities. The
Intermediary Distributors, pursuant to each Sales Agreement, shall have similar
responsibilities with regard to the assistance, registration, supervision and
control of the Intermediary's Representatives. In connection with obtaining the
clearances of the appropriate regulatory authorities, the parties agree to use
their best efforts to obtain such clearances as expeditiously as possible, and
shall not use any sales material, plan, or other agreement in any jurisdiction
unless the appropriate filings have been made and approvals obtained that are
necessary to make their use proper and legal therein.
The Distributor will take reasonable steps to ensure that the
Representatives do not make any recommendations to Applicants for the purchase
of a Contract(s) in the absence of reasonable grounds to believe that the
purchase of such Contracts is suitable for the Applicants. Determinations of
suitability will be based on various types of information including, but not
limited to, information furnished to a Representative by an Applicant after
reasonable inquiry by the Representative concerning the Applicant's insurance
and investment objectives, financial situation, and needs, including the
likelihood that the Applicant will be financially able to make sufficient
premium payments to derive the benefits from the Contracts. Likewise, pursuant
to each Sales Agreement, each Intermediary Distributor shall take reasonable
steps to ensure that the Intermediary's Representatives do not make any
recommendations to any Applicant in the absence of reasonable grounds to believe
that the purchase of such Contracts is suitable for the Applicant, with
determinations of suitability based upon the factors set forth immediately
above.
The Distributor will not encourage a prospective Applicant to surrender
or exchange an insurance contract in order to purchase a Contract, nor will the
Distributor encourage any existing holder of a Contract (a "Contractholder") to
surrender or exchange a Contract in order to purchase another insurance
contract. Likewise, each Intermediary Distributor, pursuant to each Sales
Agreement with the Distributor, shall not encourage a prospective Applicant to
surrender or exchange an insurance contract in order to purchase a Contract, nor
encourage any Contractholder to surrender or exchange a Contract in order to
purchase another insurance contract. The obligations under this paragraph are
subject to applicable NASD Rules of Fair Practice and any other applicable laws,
regulations and regulatory guidelines.
The Distributor and each Intermediary Distributor, pursuant to each
Sales Agreement, each shall take reasonable steps to ensure that their
respective Representatives or Intermediary's Representatives do not use any
advertisement, sales literature, or other promotional material which has not
been specifically approved in advance by the Company; and the Company, as agent
for the Distributor, shall be responsible for filing such items, as necessary,
with the SEC, the NASD, and any other appropriate securities regulatory
authorities, and, where necessary, shall obtain the approvals of such
authorities. No associated person, either of the Distributor or of any
Intermediary Distributor, shall, in connection with the offer and sale of the
Contracts, make any representation or communicate any information regarding the
Contracts or the Company, which is not inconsistent with (i) materials approved
by the Company for distribution to the public, or (ii) a current prospectus
relating to the Contracts, or (iii) the then effective registration statements
under the Securities Act of 1933 (the "1933 Act") for the Contracts.
4. Offer, Sale and Acceptance of Applications. The Company will
undertake to appoint the Representatives and Intermediary's Representatives as
life insurance agents of the Company, and will be responsible for ensuring that
only agents properly qualified under the insurance laws of all relevant
jurisdictions will engage in the offer and sale of the Contracts. Completed
Applications shall be transmitted directly to the Company for acceptance or
rejection by the Company in its sole discretion, in accordance with its
insurance underwriting and selection rules. Initial and subsequent premium
payments under the Contracts shall be made payable to the Company, and when such
payments are received by a Representative or Intermediary's Representative they
shall be held in a fiduciary capacity and forwarded promptly, and in any event
not later than two business days, in full to the Company. All such premium
payments, whether by check, money order or wire, shall be the property of the
Company.
5. Undertakings. The Distributor, in order to discharge its duties
under this Agreement, may designate certain employees of the Company to become
limited or general securities principals of the Distributor, and the Company
will use its best efforts to ensure the cooperation of such employees. These
individuals will perform various functions on behalf of the Distributor,
including, but not limited to, supervision of the securities sales activities of
the Representatives and enforcement of the compliance rules and procedures of
the Distributor. All books and records relating to the Distributor's operations
shall: (a) be maintained and preserved by the Company as agent for the
Distributor, in conformity with the requirements of SEC Rules 17a-3 and 17a-4
under the 1934 Act; (b) be and remain the property of the Distributor; and (c)
be at all times subject to inspection by the SEC and the NASD in accordance with
Section 17(a) of the 1934 Act.
The Distributor will fully cooperate with the Company in executing such
papers and performing such acts as may be reasonably requested by the Company
from time to time for the purpose of: (a) maintaining the registration of the
Contracts under the 1933 Act, and of the Separate Account(s) under the
Investment Company Act of 1940 (the "1940 Act"); and (b) maintaining the
qualification of the Contracts for sale under applicable state laws.
Upon the completion of each transaction relating to the Contracts for
which a confirmation is legally required, the Company shall, acting as agent of
the Distributor, send a written confirmation of such transaction to the
customer.
6. Servicing of the Contracts. The Company shall provide all necessary
insurance operations, including such actuarial, financial, statistical, premium
billing and collection, accounting, data processing, and investment services as
may be required with respect to the Contracts. In addition to these services, or
other services provided hereunder, the Company shall provide such executive,
legal, clerical, and other personnel related services as may be required to
carry out the Company's obligations under this Agreement, including its
obligation to perform certain functions on behalf of the Distributor.
7. Recordkeeping. The Company shall provide recordkeeping and general
office administration services incidental to or necessary for the proper
performance of the services to be performed by the Company and, to the extent
the Distributor does not elect to perform said recordkeeping and administration
functions, the Distributor in accordance with this Agreement. In addition, the
Company shall maintain all book and records relating to the Contracts, which
materials will be available to the Distributor (to the extent that they relate
to the broker-dealer operations) and to the appropriate regulatory authorities
upon request.
All books, accounts, and records of the Company and the Distributor as
may pertain to the Contracts and this Agreement shall be maintained so as to
clearly and accurately disclose the nature and details of all Contract
transactions and all other transactions relating to this Agreement. The Company
shall own and control all records pertinent to its variable insurance products
operations that are maintained by the Distributor under this Agreement, and in
the event this Agreement is terminated for any reason, all such records shall
promptly be returned to the Company without charge, free from any claim or
retention of rights of the Distributor.
8. Confidentiality. The Distributor shall keep confidential any
information obtained pursuant to this Agreement, and shall disclose such
information only if the Company has authorized such disclosure, or if such
disclosure is expressly required by the appropriate federal or state regulatory
authorities.
9. Expenses and Fees. The Company shall pay commissions to the
Distributor on premiums paid under all Contracts sold pursuant to this Agreement
and any Sales Agreements entered into pursuant to Section 2 of this Agreement.
The Company shall, in connection with the sale of the Contracts, pay all
amounts, including sales commissions, owed by the Distributor to the
Representatives or Intermediary Distributors. The Distributor shall be
responsible for all tax reporting information which the Distributor is required
to provide under applicable tax law to its agents, Representatives or employees
with respect to the Contracts.
The Company shall pay, or cause another person to pay, all expenses
related to: (a) registering the Distributor's associated persons with the NASD
and all other appropriate securities regulatory authorities; (b) preparing the
Distributor's associated persons to pass the applicable NASD and state
qualification examinations; (c) preparing and distributing all prospectuses
(including all amendments and supplements thereto), Contracts, notices,
confirmations, periodic reports, proxy solicitation materials, sales literature
and advertising relating to the sale of the Contracts; and (d) ensuring
compliance with all applicable insurance and securities laws and regulations
relating to the registration of the Contracts and the activities of the
Representatives in connection with the offer and sale of the Contracts. Except
as otherwise indicated herein, or by written agreement of the parties, the
Company shall pay, or cause another person to pay, all expenses resulting from
this Agreement.
10. Dual Interests. It is understood that any shareholder, director,
officer, employee, or agent of the Distributor, or of any organization
affiliated with the Distributor, or of any organization which the Distributor
may have an interest, or of any organization which may have an interest in the
Distributor may be a Contractholder; and that the existence of any such dual
interest shall not affect the validity thereof or the validity of any
transaction hereunder except as may be otherwise provided in the articles of
incorporation or by-laws of the Distributor, or by the specific provisions of
applicable law. For the purpose of this Section 10, the term "affiliated person"
shall have the same definition as set forth in the 1940 Act subject, however, to
such exemptions as may be granted pursuant to the 1940 Act.
11. Customer Claims. The Company shall provide all services relating to
claims made under the Contracts, including investigation, adjustment, and
defense of claims, and shall make all payments relating to the Contracts,
including payments representing claims, Contract loans, full and partial
surrenders, and amounts paid under Contract settlement options. The Company
shall retain ultimate authority for adjustments and claim payments, which
payments shall be final and conclusive.
12. Cooperation Regarding Investigations and Proceedings. The
Distributor and the Company agree to fully cooperate with each other in any
insurance regulatory examination, investigation, or proceeding, or in any
judicial proceeding arising in connection with the Contracts distributed under
this Agreement. The Distributor and the Company further agree to fully cooperate
with each other in any securities regulatory examination, investigation, or
proceeding, or in any judicial proceeding with respect to the Company, the
Distributor, their affiliates and agents, or representatives, to the extent that
such examination, investigation, or proceeding is in connection with Contracts
distributed under this Agreement. The Distributor shall, upon request by the
appropriate federal and state regulatory authorities, furnish such authorities
with any information or reports in connection with the Distributor's services
under this Agreement.
13. Sharing of Information. Each party hereto will promptly advise the
other of: (a) any action taken by the SEC, the NASD, or other regulatory
authorities, of which it has knowledge, affecting the registration or
qualification of the Contracts, or the right to offer the Contracts for sale;
and (b) the happening of any event which makes untrue any statement contained in
the registration statements or prospectus, or which requires the making of any
change in the registration statements or prospectus in order to make the
statements therein not misleading.
14. Indemnification.
a. The Company. The Company shall indemnify and hold harmless
the Distributor and each person who controls or is associated with the
Distributor within the meaning of such terms under the federal
securities laws, and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of any action, suit or proceeding or any claim asserted), to
which the Distributor and/or any such person may become subject, under
any statute or regulation, any NASD rule or interpretation, at common
law or otherwise, insofar as such losses, claims, damages or
liabilities
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or
omission or alleged omission to state a materials fact
required to be stated therein or necessary to make the
statements therein not misleading, in light of the
circumstances in which they were made, contained in any (A)
registration statement or in any prospectus; or (B) a blue-sky
application or other document executed by the Company
specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities laws of any
jurisdiction; provided that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or
liability arises out of, or is based upon, an untrue statement
or alleged untrue statement or omission or alleged omission:
(A) made in reliance upon information furnished in writing to
the Company by the Distributor specifically for use in the
preparation of any registration statement or any such blue-sky
application or any amendment thereof or supplement thereto; or
(B) contained in any registration statement, or any
post-effective amendment thereto which becomes effective,
filed by a Fund with the SEC relating to shares of such Fund
(the "Shares"), including any financial statements included
in, or any exhibit to, such registration statement or
post-effective amendment, any prospectus of a Fund relating to
the Shares either contained in any such registration statement
or post-effective amendment or filed pursuant to Rule 497(c)
or Rule 497(e) under the 1933 Act, any blue-sky application or
other document executed by a Fund specifically for the purpose
of qualifying any or all of the shares of such Fund for sale
under the securities laws of any jurisdiction or any
promotional, sales or advertising material or written
information relating to the Shares authorized by a Fund; or
(ii) result because of the terms of any Contract or
because of any breach by the Company of any provision of this
Agreement or of any Contract or which proximately result from
any activities of the Company's officers, directors, employees
or agents or their failure to take any action in connection
with the sale, processing or administration of the Contracts.
This indemnification agreement shall be in addition to any
liability that the Company may
otherwise have; provided, however, that no person shall be entitled to
indemnification pursuant to this provision if such loss, claim, damage
or liability is due to the willful misfeasance, bad faith, gross
negligence or reckless disregard of duty by the person seeking
indemnification.
b. The Distributor. The Distributor shall indemnify and hold
harmless the Company and each person who controls or is associated with
the Company within the meaning of such terms under the federal
securities laws, and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of any action, suit or proceeding or any claim asserted), to
which the Company and/or any such person may become subject, under any
statute or regulation, any NASD rule or interpretation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon:
(i) violations(s) by the Distributor or a
Representative of federal or state securities law(s) or
regulation(s), applicable banking law(s) or regulation(s),
insurance law(s) or regulation(s) or any rule or requirement
of the NASD; or
(ii) any unauthorized use of sales or advertising
material, any oral or written misrepresentations, or any
unlawful sales practices concerning the Contracts, by the
Distributor or a Representative; or
(iii) claims by the Representatives or other agents
or representatives of the Distributor for commissions or other
compensation or remuneration of any type; or
(iv) any action or inaction by a clearing broker
through whom the Distributor purchases any transaction
pursuant to this Agreement; or
(v) any failure on the part of the Distributor or a
Representative to submit premiums or Applications to the
Company, or to submit the correct amount of a premium, on a
timely basis and in accordance with Section 4 of this
Agreement, subject to applicable law; or
(vi) any failure on the part of the Distributor or a
Representative to deliver the Contracts to purchasers thereof
on a timely basis; or
(vii) a breach by the Distributor of any provisions
of this Agreement. This indemnification agreement shall be in
addition to any liability that the Distributor may
otherwise have; provided, however, that no person shall be entitled to
indemnification pursuant to this provision if such loss, claim, damage
or liability is due to the willful misfeasance, bad faith, gross
negligence or reckless disregard of duty by the person seeking
indemnification.
c. In General. After receipt by a party entitled to
indemnification (the "indemnified party") under this Section 14 of
notice of the commencement of any action, if a claim in respect thereof
is to be made against any person obligated to provide indemnification
under this Section 14 (the "indemnifying party"), such indemnified
party shall notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, provided that
the omission to so notify the indemnifying party shall not relieve the
indemnifying party from any liability under this Section 14, except to
the extent that the omission results in a failure of actual notice to
the indemnifying party and such indemnifying party is damaged solely as
a result of the failure to give such notice. The indemnifying party,
upon the request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate
in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party shall indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
The indemnification provisions contained in this Section 14
shall remain operative in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company or by or on behalf of
any controlling person thereof, (ii) delivery of any Contracts and
premiums therefor, and (iii) any termination of this Agreement. A
successor by law of the Distributor or the Company, as the case may be,
shall be entitled to the benefits of the indemnification provisions
contained in this Section 14.
15. Standard of Care. Neither the Company nor the Distributor shall be
liable to the other for any action taken or omitted by any of their officers,
directors, employees, or agents, in connection with the good faith performance
of their responsibilities under this Agreement, except for willful misconduct,
bad faith, negligence, or reckless disregard of the duties of the parties under
this Agreement.
16. Assignment. The Distributor may not assign or delegate its
responsibilities under this Agreement without the prior written consent of the
Company.
17. Termination. This Agreement shall become effective as of the date
of its execution, shall continue in full force and effect until terminated, and
may be terminated by either party at any time without penalty upon sixty (60)
days written notice to the other party. This Agreement may be terminated upon
ten days notice upon the other party's material breach of any provision of this
Agreement, unless such breach has been cured to the satisfaction of the
non-breaching party within ten days of receipt by the breaching party of notice
of such breach from the non-breaching party. This Agreement may also be
terminated at any time without penalty if, in the sole discretion of the
Company, the Distributor is not performing its duties in a satisfactory manner.
Upon termination of this Agreement all authorizations, rights and
obligations shall cease except for the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Contracts in effect
at the time of termination or issued pursuant to Applications received by the
Company prior to termination, and the obligations contained in Sections 7, 10,
11, 12, 13, and 14.
18. Amendment. This Agreement and the Schedules hereto may be amended
at any time by a writing executed by both of the parties hereto.
19. Governing Law. This Agreement, and the rights and liabilities of
the parties hereunder, shall be construed in accordance with the internal laws
of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TRANSAMERICA INSURANCE SECURITIES
SALES CORPORATION
By: ____________________________
----------------------------
Name
----------------------------
Title
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
By: _____________________________
-----------------------------
Name
-----------------------------
Title
PARTICIPATION AGREEMENT
Among
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
TRANSAMERICA SECURITIES SALES CORPORATION
and
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this ____ day of _________,
1997 by and among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (hereinafter
"Transamerica"), a California life insurance company, on its own behalf and on
behalf of its SEPARATE ACCOUNT C (the "Account"); TRANSAMERICA VARIABLE
INSURANCE FUND, INC., a corporation organized under the laws of Maryland
(hereinafter the "Fund"); and TRANSAMERICA SECURITIES SALES CORPORATION,
(hereinafter the "Underwriter"), a Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies which have entered into participation
agreements similar to this Agreement (hereinafter "Participating Insurance
Companies"), as well as qualified pension and retirement plans; and
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares, each designated a "Portfolio" and representing interests in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Underwriter is duly registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, Transamerica has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act and said Contracts are listed in Schedule A hereto, as it may be amended
from time to time by mutual written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of
Transamerica to set aside and invest assets attributable to the Contracts; and
WHEREAS, Transamerica has registered the Account as a unit investment
trust under the 1940 Act; and WHEREAS, to the extent permitted by
applicable insurance laws and regulations, Transamerica intends to
purchase shares in the Portfolios listed in Schedule B hereto, as it may be
amended from time to time by mutual written agreement (the "Designated
Portfolios"), on behalf of the Account to fund the aforesaid Contracts, and the
Underwriter is authorized to sell such shares to unit investment trusts such as
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises,
Transamerica, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to Transamerica those shares of the
Designated Portfolios which Transamerica orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Portfolios. For purposes of this
Section 1.1, Transamerica shall be the designee of the Fund for receipt of such
orders and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value.
1.2. The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per share by
Transamerica on those days on which the Fund calculates its net asset values,
and the Fund shall calculate such net asset value on each day which the New York
Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of
Directors of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the
Designated Portfolios will be sold only
to Participating Insurance Companies and their separate accounts and qualified
pension and retirement plans. No
shares of any Designated Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell shares of the
Designated Portfolios to any other insurance company, separate account or
qualified pension and retirement plan unless an agreement containing provisions
substantially the same as Sections 2.1, 3.6, 3.7, 3.8, and Article VII of this
Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on Transamerica's request, any
full or fractional shares of the Fund held by Transamerica, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption or postpone the date of
payment or satisfaction upon redemption consistent with Section 22(e) of the
1940 Act. For purposes of this Section 1.5, Transamerica shall be the designee
of the Fund for receipt of requests for redemption and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice of
such request for redemption on the next following Business Day.
1.6. The Parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies and qualified pension and retirement plans (subject to
Section 1.4 and Article VI hereof) and the cash value of the Contracts may be
invested in other investment companies.
1.7. Transamerica shall pay for Fund shares by the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire
and/or by a credit for any shares redeemed the same day as the purchase. Upon
receipt by the Fund of the federal funds so wired, such funds shall cease to be
the responsibility of Transamerica and shall become the responsibility of the
Fund.
1.8. The Fund shall pay and transmit the proceeds of redemptions of
Fund shares by the next Business Day after a redemption order is received,
subject to Section 1.5 hereof. Payment shall be in federal funds transmitted by
wire and/or a credit for any shares purchased the same day as the redemption.
1.9. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to Transamerica or the Account.
Shares ordered from the Fund will be recorded in an appropriate title for the
Account or the appropriate subaccount of the Account.
1.10. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to Transamerica of any income, dividends or
capital gain distributions payable on the Designated Portfolios' shares.
Transamerica hereby elects to receive all such income dividends and capital gain
distributions in additional shares of that Portfolio. Transamerica reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify Transamerica by the
end of the next following Business Day of the number of shares so issued as
payment of such dividends and distributions.
1.11. The Fund shall make the net asset value per share for each
Designated Portfolio available to Transamerica on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available. If the
Fund provides incorrect per share net asset value information, Transamerica
shall be entitled to an adjustment to the number of shares purchased or redeemed
to reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital gains
information shall be reported immediately upon discovery to Transamerica. Any
error of a lesser amount shall be corrected in the next Business Day's net asset
value per share.
In the event adjustments are required to correct any error in the
computation of a Designated Portfolio's net asset value per share, or dividend
or capital gain distribution, the Underwriter (or the Underwriter or the Fund)
shall notify Transamerica as soon as possible after discovering the need for
such adjustments. Notification can be made orally, but must be confirmed in
writing. If an adjustment is necessary to correct an error which caused Contract
owners to receive less than the amount to which they are entitled, the Fund
shall make all necessary adjustments to the number of shares owned by the
Account and distribute to the Account the amount of the underpayment. In no
event shall Transamerica be liable to the Fund or the Underwriter for any such
adjustments or overpayment amounts.
ARTICLE II. Representations and Warranties
2.1. Transamerica represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. Transamerica further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account as a segregated asset account under Section 10506 of the
California Insurance Law and has registered the Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Designated Portfolio shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
California and all applicable federal and state securities laws including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act and that the
Fund is and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states if and to the extent required by applicable
law.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act or impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund represents and warrant that the investment advisory or
management fees paid to the adviser by the Fund are legitimate and not
excessive. To the extent that the Fund decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Board, a majority of whom
are not interested persons of the Fund, formulate and approve any plan pursuant
to Rule 12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund represents and warrants that the investment policies and
fees and expenses of the Designated Portfolios are and shall at all times remain
in compliance with the insurance and other applicable laws of the State of
California and any other applicable state to the extent required to perform this
Agreement. The Fund further represents and warrants that Designated Portfolio
shares will be sold in compliance with the insurance laws of the State of
California and all applicable state securities laws or exemptions therefrom.
Without limiting the generality of the foregoing, the Fund represents and
warrants that it is and shall at all times remain in compliance with the
policies and restrictions enumerated in Schedule C hereto, as amended by
Transamerica from time to time, provided that such amendments shall either be
(a) agreed to by the Fund and Transamerica, or (b) necessary to comply with
applicable laws of the State of California.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.6. The Fund represents and warrant that all of their directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Fund are, and shall continue to
be at all times, covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage required by
Section 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.7. The Fund will provide Transamerica with as much advance notice as
is reasonably practicable of any material change affecting the Designated
Portfolios (including, but not limited to, any material change in its
registration statement or prospectus affecting the Designated Portfolios and any
proxy solicitation affecting the Designated Portfolios) and consult with
Transamerica in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectuses
for the Contracts. The Fund agrees to share equitably in expenses incurred by
Transamerica as a result of actions taken by the Fund, as set forth in the
allocation of expenses contained in Schedule D.
2.8. Transamerica represents, assuming that the Fund complies with
Article VI of this Agreement, that the Contracts are currently treated as
annuity contracts under applicable provisions of the Internal Revenue Code of
1986, as amended, and that it will make every effort to maintain such treatment
and that it will notify the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.9. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify Transamerica immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1(a). At least annually, the Fund, at its expense, shall provide
Transamerica or its designee with as many copies of the Fund's current
prospectuses for the Designated Portfolios as Transamerica may reasonably
request for marketing purposes (including distribution to Contract owners with
respect to new sales of a Contract). If requested by Transamerica in lieu
thereof, the Fund shall provide such documentation (including a final "camera
ready" copy of the new prospectuses for the Designated Portfolios as set in type
at the Fund's expense or, at the request of Transamerica, as a diskette or such
other form as is required by the financial printer) and other assistance as is
reasonably necessary in order for Transamerica once each year (or more
frequently if the prospectus for the Designated Portfolio is amended) to have
the prospectus for the Contract and the Fund's prospectus for the Designated
Portfolios printed together in one document (the cost of such printing to be
born by the Fund and Transamerica in proportion to the size of the prospectuses
for the Fund and the Contracts).
3.1(b). The Fund agrees that the prospectuses for the Designated
Portfolios will describe only the Designated Portfolios and will not name or
describe any other portfolios or series that may be in the Fund, and that the
Fund will bear the cost of preparing and producing the prospectuses for the
Designated Portfolios that are so custom tailored for use in connection with the
Contracts.
3.2. If applicable state or Federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be distributed to
all purchasers of the Contract, then the Fund shall provide Transamerica with
the Fund's SAI or documentation thereof for the Designated Portfolios in such
quantities and/or with expenses to be borne in accordance with paragraph 3.1(a)
hereof.
3.3. The Fund, at its expense, shall provide Transamerica with as many
copies of the SAI for the Designated Portfolios as may reasonably be requested.
The Fund, at its expense, shall also provide such SAI free of charge to any
owner of a Contract or prospective owner who requests such SAI.
3.4. The Fund, at its expense, shall provide Transamerica with copies
of its prospectus, SAI, proxy material, reports to shareholders and other
communications to shareholders for the Designated Portfolios in such quantity as
Transamerica shall reasonably require for distributing to Contract owners. If
the Contract and Fund prospectuses are printed together in one document, the
Fund shall bear the portion of such printing expense as is attributable to the
Fund's prospectus. If applicable SEC rules require that any of the foregoing
Fund prospectuses, Fund SAIs, proxy materials, Fund reports to shareholders or
other communications to shareholders be filed with the SEC, then the Fund or its
designee shall prepare and file with the SEC such prospectus, SAI, proxy
materials, reports to shareholders, or other communications to shareholders in
such format as required by such applicable rules and shall notify Transamerica
of such filing.
3.5. It is understood and agreed that, except with respect to
information regarding Transamerica provided in writing by Transamerica,
Transamerica shall not be responsible for the content of the prospectus or SAI
for the Designated Portfolios. It is also understood and agreed that, except
with respect to information regarding the Fund and provided in writing by the
Fund, the Fund shall not be responsible for the content of the prospectus or SAI
for the Contracts.
3.6. If and to the extent required by law Transamerica shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Designated Portfolio shares in accordance
with instructions received from
Contract owners: and
(iii) vote Designated Portfolio shares for which no
instruction have been received in the same proportion
as Designated Portfolio shares for which instructions
have been received from Contract owners, so long as
and to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting
privileges for variable contract owners. Transamerica
reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the
extent permitted by law.
3.7. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts holding shares of a Designated
Portfolio calculates voting privileges in the manner required by the Shared
Funding Exemptive Order. The Fund agrees to promptly notify Transamerica of any
amendments or changes of interpretations of the Shared Funding Exemptive Order.
3.8. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. Transamerica shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature and other promotional
material that Transamerica develops or uses and in which the Fund (or a
Portfolio thereof), its investment adviser or one of its sub-advisers or the
Underwriter for the Fund shares is named in connection with the Contracts, at
least 10 (ten) Business Days prior to its use. No such material shall be used if
the Fund or its designee objects to such use within 10 (ten) Business Days after
receipt of such material.
4.2. Transamerica shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts inconsistent with the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund shall furnish, or shall cause to be furnished, to
Transamerica, each piece of sales literature and other promotional material in
which Transamerica and/or the Account is named at least 10 (ten) Business Days
prior to its use. No such material shall be used if Transamerica objects to such
use within 10 (ten) Business Days after receipt of such material.
Notwithstanding the fact that Transamerica or its designee may not initially
object to a piece of sales literature or other promotional material,
Transamerica reserves the right to object at a later date to the continued use
of any such sales literature or promotional material in which Transamerica is
named, and no such material shall be used thereafter if Transamerica or its
designee so objects.
4.4. The Fund shall not give any information or make any
representations on behalf of Transamerica or concerning Transamerica, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Account, or in sales literature or other
promotional material approved by Transamerica or its designee, except with the
permission of Transamerica.
4.5. The Fund will provide to Transamerica at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, all supplements thereto, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Designated Portfolios, contemporaneously with the filing of such
document(s) with the SEC, NASD or other regulatory authorities.
4.6. Transamerica will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, all supplements thereto, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, contemporaneously with the
filing of such document(s) with the SEC, NASD, or other regulatory authority.
4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, telephone directories (other than routine
listings), electronic or other public media), sales literature (i.e., any
written or electronic communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, performance reports or summaries, form letters, telemarketing
scripts, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, Statements of Additional
Information, supplements thereto, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to Transamerica
under this Agreement, except that if the Fund or any Designated Portfolio adopts
and implements a plan pursuant to Rule 12b-1 of the 1940 Act to finance
distribution and shareholder servicing expenses, then the Underwriter may make
payments to Transamerica or to the distributor for the Contracts if and in
amounts agreed to by the Underwriter in writing and such payments will be made
out of existing fees otherwise payable to the Underwriter, past profits of the
Underwriter or other resources available to the Underwriter. No such payments
shall be made directly by the Fund. Nothing herein shall prevent the parties
hereto from otherwise agreeing to perform, and arrange for appropriate
compensation for, other services relating to the Fund and/or the Account.
Transamerica shall pay no fee or other compensation to the Fund under this
Agreement, although the parties hereto will bear certain expenses in accordance
with Schedule D, Articles III, V, and other provisions of this Agreement.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund, as further provided in Schedule E. The Fund
shall see to it that all shares of the Designated Portfolios are registered and
authorized for issuance in accordance with applicable federal law and, if and to
the extent required, in accordance with applicable state laws prior to their
sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, supplements thereto, proxy materials and
reports, setting the prospectus in type, printing prospectuses for distribution
to Contract owners, setting in type, printing and filing the proxy materials and
reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer of
the Fund's shares, and the costs of distributing the Fund's prospectuses and
proxy materials to such Contract owners and any expenses permitted to be paid or
assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940
Act.
5.3. Transamerica shall bear the expenses of routine annual
distribution of the Fund's prospectus to owners of Contracts issued by
Transamerica and of distributing the Fund's proxy materials and reports to such
Contract owners; this shall not include distribution of the Fund's prospectus
with respect to new sales of a Contract. Transamerica shall bear all expenses
associated with the registration, qualification, and filing of the Contracts
under applicable federal securities and state insurance laws; the cost of
preparing, printing, and distributing the Contract prospectus and SAI; and the
cost of preparing, printing and distributing annual individual account statement
to Contract owners as required by state insurance laws.
5.4. The Fund acknowledges that a principal feature of the Contracts is
the Contract owner's ability to choose from a number of unaffiliated mutual
funds (and portfolios or series thereof), including the Designated Portfolios
("Unaffiliated Funds"), and to transfer the Contract's cash value between funds
and portfolios. The Fund and Underwriter agree to cooperate with Transamerica in
facilitating the operation of the Account and the Contracts as intended,
including but not limited to cooperation in facilitating transfers between
Unaffiliated Funds.
ARTICLE VI. Diversification and Qualification
6.1. The Fund and Underwriter represent and warrant that the Fund will
at all times sell its shares and invest its assets in such a manner as to ensure
that the Contracts will be treated as annuity contracts under the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Fund and
Underwriter represent and warrant that the Fund and each Designated Portfolio
thereof will at all times comply with Section 817(h) of the Code and Treasury
Regulation ss. 1.817-5, as amended from time to time, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications or successor provisions to such Section or Regulations. The
Fund and the Underwriter agree that shares of the Designated Portfolios will be
sold only to Participating Insurance Companies and their separate accounts and
qualified pension and retirement plans.
6.2. No shares of any series or portfolio of the Fund will be sold
to the general public.
6.3. The Fund and Underwriter represent and warrant that the Fund
and each Designated Portfolio is
currently qualified as a Regulated Investment Company under Subchapter M of the
Code, and that it will maintain such qualification (under Subchapter M or any
successor or similar provisions) as long as this Agreement is in effect.
6.4. The Fund or Underwriter will notify Transamerica immediately upon
having a reasonable basis for believing that the Fund or any Portfolio has
ceased to comply with the aforesaid Section 817(h) diversification or Subchapter
M qualification requirements or might not so comply in the future.
6.5. The Fund and Underwriter acknowledge that full compliance with the
requirements referred to in Sections 6.1, 6.2, and 6.3 hereof is absolutely
essential because any failure to meet those requirements would result in the
Contracts not being treated as annuity contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners and
could also adversely affect Transamerica's corporate tax liability. The Fund and
Underwriter also acknowledge that it is solely within their power and control to
meet those requirements. Accordingly, without in any way limiting the effect of
Section 8.3 hereof and without in any way limiting or restricting any other
remedies available to Transamerica, the Underwriter will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with correcting
or responding to any such failure; such costs may include, but are not limited
to, the costs involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of obtaining
whatever regulatory authorizations are required to substitute shares of another
investment company for those of the failed Portfolio (including but not limited
to an order pursuant to Section 26(b) of the 1940 Act); such costs are to
include, but are not limited to, fees and expenses of legal counsel and other
advisors to Transamerica and any federal income taxes or tax penalties (or "toll
charges" or exactments or amounts paid in settlement) incurred by Transamerica
in connection with any such failure or anticipated or reasonably foreseeable
failure.
6.6. The Fund shall provide Transamerica or its designee with reports
certifying compliance with the aforesaid Section 817(h) diversification and
Subchapter M qualification requirements, at times provided for and substantially
in the form attached hereto as Schedule E; provided, however, that providing
such reports does not relieve the Fund or Underwriter of their responsibility
for such compliance or of their liability for any non-compliance.
6.7. The Fund and the Underwriter represent and warrant that the Fund
will comply with the investment limitations under applicable state law for
investment companies funding separate accounts.
ARTICLE VII. Potential Conflicts and Compliance With
Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by a Participating Insurance Company to disregard the voting
instructions of contract owners. The Board shall promptly inform Transamerica if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. Transamerica will report any potential or existing conflicts of
which it is aware to the Board. Transamerica will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by
Transamerica to inform the Board whenever contract owner voting instructions are
disregarded. Such responsibilities shall be carried out by Transamerica with a
view only to the interests of its Contract Owners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, its adviser or any
sub-adviser to any of the Portfolios (the "Independent Directors"), that a
material irreconcilable conflict exists, Transamerica and other Participating
Insurance Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such segregation
should be implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e., annuity
contract owners, life insurance contract owners, or variable contract owners of
one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account. Transamerica shall not be required by this
Section 7.3 to establish a new funding medium for the Contracts if an offer to
do so has been declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict.
7.4. If a material irreconcilable conflict arises because of a decision
by Transamerica to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
Transamerica may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement; provided, however that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision is
being implemented, and until the end of that six month period the Underwriter
and the Fund shall continue to accept and implement orders by Transamerica for
the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Transamerica conflicts with
the majority of other state regulators, then Transamerica will withdraw the
Account's investment in the Fund and terminate this Agreement within six months
after the Board informs Transamerica in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and the Fund shall continue to accept and implement
orders by Transamerica for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable:
and (b) Sections 3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By Transamerica
8.1(a). Transamerica agrees to indemnify and hold harmless the
Fund and its officers and each member of its Board (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of Transamerica) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration statement or
prospectus or SA for the Contracts or contained in the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished in writing to Transamerica by or on behalf of the
Underwriter or Fund for use in the registration statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts
or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or
sales literature of the Fund not supplied by Transamerica
or persons under its control) or wrongful conduct of
Transamerica or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Fund or
any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement
or omission was made in reliance upon information
furnished in writing to the Fund by or on behalf of
Transamerica; or
(iv) arise as a result of any failure by Transamerica to
provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Transamerica in
this Agreement or arise out of or result from any other
material breach of this Agreement by Transamerica,
as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1
(c) hereof.
8.1(b). Transamerica shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject if caused by such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
8.1(c). Transamerica shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Transamerica in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Transamerica of any
such claim shall not relieve Transamerica from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, Transamerica shall be entitled to participate,
at its own expense, in the defense of such action. Transamerica also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from Transamerica to such party of
Transamerica's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
Transamerica will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify
Transamerica of the commencement of any litigation or proceedings against them
in connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harm-less
Transamerica and each of its directors and officers and each person, if any, who
controls Transamerica within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i)arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or SAI or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Underwriter or Fund by or on behalf of Transamerica for use
in the Registration Statement or prospectus for the Fund or in sales literature
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or
sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful
conduct of the Fund or Underwriter or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus or sales literature covering the
Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished in writing to
Transamerica by or on behalf of the Underwriter or Fund;
or
(iv) arise as a result of any failure by the Fund or
Underwriter to provide the services and furnish the
materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or
otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or
Underwriter in this Agreement or arise out of or result
from any other material breach of this Agreement by the
Fund or Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Underwriter specified in Article VI
hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance or such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to Transamerica or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). Transamerica agrees promptly to notify the Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of California.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Portfolios, upon one (1) year advance
written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than one
year following the date of this Agreement; or (b) at the
option of Transamerica by written notice to the other parties
with respect to any Portfolio based upon Transamerica's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or (c) at
the option of Transamerica by written notice to the other
parties with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/ or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Transamerica; or (d) at the option of the Fund in the event
that formal administrative proceedings are instituted against
Transamerica by the National Association of Securities
Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the Insurance Commissioner or like official of any
state or any other regulatory body regarding Transamerica's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of
the Fund shares, provided, however, that the Fund determines
in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of Transamerica to perform its obligations
under this Agreement; or (e) at the option of Transamerica in
the event that formal administrative proceedings are
instituted against the Fund or Underwriter by the NASD, the
Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body, provided,
however, that Transamerica determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Fund or Underwriter to perform its obligations
under this Agreement; or (f) at the option of Transamerica by
written notice to the Fund and the Underwriter with respect to
any Portfolio if Transamerica reasonably believes that the
Portfolio may fail to meet the Section 817(h) diversification
requirements or Subchapter M qualifications specified in
Article VI hereof; or (g) at the option of either the Fund or
the Underwriter, if (i) the Fund or Underwriter, respectively,
shall determine, in their sole judgement reasonably exercised
in good faith, that Transamerica has suffered a material
adverse change in its business or financial condition or is
the subject of material adverse publicity and that material
adverse change or publicity will have a material adverse
impact on Transamerica's ability to perform its obligations
under this Agreement, (ii) the Fund or Underwriter notifies
Transamerica of that determination and its intent to terminate
this Agreement, and (iii) after considering the actions taken
by Transamerica and any other changes in circumstances since
the giving of such a notice, the determination of the Fund or
Underwriter shall continue on the sixtieth (60th) day
following the giving of that notice, which sixtieth day shall
be the effective date of termination; or (h) at the option of
Transamerica, if (i) Transamerica shall determine, in its sole
judgement reasonably exercised in good faith, that either the
Fund or the Underwriter have suffered a material adverse
change in their business or financial condition or is the
subject of material adverse publicity and that material
adverse change or publicity will have a material adverse
impact on the Fund's or Underwriter's ability to perform its
obligations under this Agreement, (ii) Transamerica notifies
the Fund or Underwriter, as appropriate, of that determination
and its intent to terminate this Agreement, and (iii) after
considering the actions taken by the Fund or Underwriter and
any other changes in circumstances since the giving of such a
notice, the determination of Transamerica shall continue on
the sixtieth (60th) day following the giving of that notice,
which sixtieth day shall be the effective date of termination;
or (i) at the option of any party to this Agreement, upon
another party's material breach of any provision of this
Agreement; or (j) upon assignment of this Agreement, unless
made with the written consent of the parties hereto; or (k) at
the option of Transamerica or the Fund by written notice to
the other party upon a determination by the Fund's Board that
a material irreconcilable conflict exists among the interests
of (i) all contract owners of all separate accounts investing
in the Fund or (ii) the interests of the Participating
Insurance Companies; or (l) at the option of Transamerica by
written notice to the Fund or the Underwriter upon the sale,
acquisition or change of control of the Underwriter.
10.2. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
shall set forth the basis for the termination.
10.3. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of Transamerica,
continue to make available additional shares of the Fund for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts") pursuant to the terms and conditions of
this Agreement. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.3 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail or by overnight mail sent through a nationally-recognized
delivery service to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Transamerica Variable Insurance Fund, Inc.
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
If to Transamerica:
Transamerica Occidental Life Insurance Company
401 N. Tryon, Suite 700
Charlotte, North Carolina 28202
Attention: President, Living Benefits Division
If to the Underwriter:
Transamerica Securities Sales Corporation, Inc.
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party reasonably considers to be proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the California Insurance
Commissioner with any information or reports in connection with services
provided under this Agreement which such Commissioner may request in order to
ascertain whether the variable annuity operations of Transamerica are being
conducted in a manner consistent with the California Variable Annuity
Regulations and any other applicable law or regulations.
12.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.7. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.8. The Schedules attached hereto, as modified from time to time, are
incorporated herein by reference and are part of this Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
By its authorized officer
SEAL By:
Title:
Date:
TRANSAMERICA VARIABLE INSURANCE FUND, INC.:
By its authorized officer,
SEAL By:
Title:
Date:
TRANSAMERICA SECURITIES SALES CORPORATION:
By its authorized officer,
SEAL By:
Title:
Date:
<PAGE>
Transamerica Life Companies
Insurance Products Sales Agreement
This Agreement is made by and between the Transamerica Life Company ("Insurance
Company") which has executed this Agreement as indicated on the signature page,
and Transamerica Securities Sales Corporation ("Underwriter") (collectively,
with the Insurance Company, "Transamerica") and
______________________________________________, a registered broker-dealer
("Broker"). This Agreement is effective, with regard to each Insurance Company,
as of the date specified with the signature executing this Agreement by that
Insurance Company.
WHEREAS, the Insurance Company is in the business of issuing variable
insurance products to the public;
WHEREAS, Underwriter, an affiliate of the Insurance Company, is
registered as a broker-dealer under the Securities Exchange Act of 1934, is a
member of the NASD and acts as principal underwriter for certain variable
insurance products issued by the Insurance Company;
WHEREAS, Transamerica wishes to appoint Broker to solicit applications
for certain variable insurance products issued by the Insurance Company;
WHEREAS, Broker wishes to accept such appointment;
NOW THEREFORE, in consideration of these premises and mutual agreements, wherein
it is agreed as follows:
Section 1. Appointment of Broker and Sale of Contracts.
1.1 Subject to the terms and conditions of this Agreement,
Transamerica appoints Broker to solicit applications for and
to service the variable insurance products identified in the
Attachment(s) (the "Contracts"), and Broker accepts such
appointment. Broker is appointed, on a nonexclusive basis, as
an independent contractor free to exercise its own judgment as
to the time, place and means of performing all acts
thereunder.
1.2 Broker shall distribute the Contracts only in those
jurisdictions in which the Contracts are registered or
qualified for sale, as specified by Transamerica, and only
through their duly licensed registered representatives (in
accordance with the rules of the NASD) who are also of good
character and fully insurance licensed and qualified in the
applicable jurisdictions and duly appointed to solicit
applications for the Contract (in accordance with the
insurance law of such jurisdictions) with the Insurance
Company. The Insurance Company may, in its sole discretion,
reject for appointment any agent and may withdraw its
authority to any agent to solicit applications.
1.3 Broker shall abide by all Transamerica policies, applicable
laws, rules and regulations, including, without limitation,
the rules of the NASD, insurance law and state and federal
securities and banking law, and including, without limitation,
the maintenance of licenses and books and records required by
applicable laws and regulations.
1.4 Broker shall supervise and train its registered
representatives and other associated persons to ensure
compliance with all Transamerica policies, applicable laws and
shall be responsible for the acts of its registered
representatives and associated persons in soliciting
applications for and servicing Contracts.
1.5 All payments collected by Broker for the Insurance Company
shall be received in trust and shall be remitted immediately,
together with all the required documentation, to Transamerica
at the address indicated on the application or by
Transamerica. All checks and money orders for payments under
contracts shall be drawn to the order of the appropriate
Insurance Company. The Broker shall not withhold or deduct any
part of any payment to Transamerica for any reason unless
specifically authorized to do so in writing by Transamerica.
If authorized by Transamerica to "net commissions" by
deducting part of a payment under a Contract, Broker shall
comply with all applicable Transamerica policies and
procedures and with all applicable laws and regulations,
including, if applicable, obtaining the customer's written
consent to deduct the appropriate commission from a payment.
Transamerica may terminate its authorization to "net
commissions" at any time; thereafter, the Broker must remit
the full payment amounts.
1.6 All applications are subject to acceptance or rejection by the
Insurance Company in it sole discretion. The Insurance Company
may at any time, at its sole discretion, discontinue issuing
the Contracts or change the form or content of the Contracts
to be issued.
1.7 In soliciting applications for Contracts, Broker may not
accept any risks of any kind for or on behalf of Transamerica
and may not bind Transamerica by promise or agreement or alter
any Contract in any way.
Section 2. Prospectus, Advertisements, Sales Literature and Other
Communications.
2.1 Transamerica shall use reasonable efforts to provide
information and marketing assistance to Broker, including
providing, without charge, reasonable quantities of
advertising materials, sales literature, reports and current
prospectuses for the Contracts and underlying funding
vehicles.
2.2 In making offers of the Contracts, Broker shall deliver the
applicable currently effective prospectuses, as required by
law.
2.3 Broker and its agents/representatives shall not misrepresent
the Contracts and shall make no oral or written representation
which is inconsistent with the terms of the Contracts,
prospectuses or sales literature or is misleading in any way.
2.4 Transamerica shall deliver to Broker, and Broker shall use,
only sales literature and advertising material which conforms
to all applicable legal requirements and which has been
authorized by Transamerica.
2.5 Broker shall not print, publish, distribute or use any
advertisement, sales literature or other written materials
related to the Contracts, other than materials provided by
Transamerica hereunder, unless such has first been approved in
writing by Transamerica.
Section 3. Compensation.
3.1 In consideration of the services performed as specified in
this Agreement, Broker shall receive compensation as specified
in the Attachment(s). In any states in which Broker may not
receive compensation pursuant to state insurance law, the
insurance agency(ies) with which it has associated itself, and
which is (are) identified on the signature page, shall be paid
the compensation.
Section 4. Representation and Warranties and Compliance by Broker.
4.1 Broker represents, warrants and covenants that:
a. It is, and shall remain during the term of this Agreement, a
properly licensed and registered broker-dealer under
applicable state and federal securities law, a member of SIPC
and a member in good standing of the NASD.
b. It shall solicit applications for Contracts only through
properly licensed insurance agents ("Insurance Agent"), duly
appointed by the appropriate Insurance Company. For purposes
of this Agreement, all acts and omissions of the Insurance
Agent within the scope of this Agreement shall be deemed to be
acts or omissions of Broker.
c. It is in compliance, and shall remain in compliance, with all
applicable laws, rules and regulations, including, without
limitation, those of the NASD and state and federal
securities, banking and insurance laws.
d. It has taken and shall continue to take the actions
appropriate to supervise its representatives and other
associated persons to ensure compliance with all applicable
laws and regulations.
e. It shall comply, and shall cause Insurance Agent to comply,
with any applicable Transamerica policies and procedures,
including, without limitation, those regarding replacements of
Contracts, as amended from time to time, as communicated to
Broker.
f. It shall not solicit or sell any Contracts in connection
with any "market timing" or "asset allocation" program or
service, and if Transamerica determines in its sole discretion
that Broker is soliciting or has solicited Contracts subject
to any such program, Transamerica may take such action it
deems necessary to halt such solicitations or sales, and in
addition to any indemnification provided in Section 5 of this
Agreement and any other liability that Broker may have, Broker
shall be liable to Transamerica and each underlying funding
vehicle affected by any such program, for any damages or
losses, actual or consequential, sustained by them as a
result of such program.
Section 5. Indemnification.
5.1 Broker shall indemnify and hold harmless Transamerica, and
each employee, director, officer and shareholder of
Transamerica, against any losses, claims, damages or
liabilities, including but not limited to reasonable attorney
fees and court costs, to which Transamerica or any employee,
officer, director or shareholder may be subject, which arise
out of or are based on any violation of the terms of this
Agreement, any Transamerica policies or procedures or any
applicable law by Broker, its representatives, the Insurance
Agent, its agents and any employee, officer, director,
shareholder, principal, partner and affiliate of the Broker or
Insurance Agent. In the event Transamerica suffers a loss
resulting from Broker-Dealer activities, Broker-Dealer hereby
assigns any proceeds received under its fidelity bond to
Transamerica to the extent of such losses. If there is any
deficiency amount, whether due to a deductible or otherwise,
Broker-Dealer shall promptly pay Transamerica such amount on
demand and Broker-Dealer shall indemnify and hold harmless
Transamerica from any such deficiency and from the costs of
collection thereof (including reasonable attorney fees).
5.2 Transamerica shall indemnify and hold harmless Broker and each
employee, officer, director or shareholder of Broker, against
any losses, claims, damages or liabilities, including but not
limited to reasonable attorney fees and court costs, to which
Broker or any employee, officer, director or shareholder
becomes subject which arises out of or is based on any
violation of the terms of this Agreement or any applicable law
by Transamerica and any employee or officer.
Section 6. Miscellaneous.
6.1 Trademarks. The provision of Contracts and prospectuses and
sales literature for the Contracts and underlying funding
vehicles to the Broker shall not provide the Broker with any
license to use any tradenames, trademarks, service marks or
logos or proprietary information of Transamerica or any
underlying funding vehicle or any affiliates thereof, except
to the extent necessary for Broker to distribute the Contracts
in accordance with the terms hereof.
6.2 Confidentiality. Each party shall keep confidential any
confidential information it may acquire as a result of this
Agreement.
6.3 Complaints and Proceedings. Broker shall promptly report to
Transamerica any customer or regulatory complaints or
inquiries involving the Contracts and shall fully cooperate
with Transamerica in any regulatory investigation or
proceeding or judicial proceeding and in the settlement of any
claim relating to the solicitation or sale of the Contracts
under this Agreement.
6.4 Records and Files. Any files, documents, lists, training and
solicitation material and other records and information, in
whatever form they may be, at any time in the possession of or
under the control of Broker or Insurance Agent, which pertain
to the Contracts contract owners or applicants or otherwise to
the business of this Agreement, shall at reasonable times and
upon reasonable notice be open to inspection by Transamerica
or its authorized representatives, who may, at reasonable
times and upon reasonable notice, make copies of any of the
same.
6.5 Communications. All communications should be sent to the
parties at the addresses indicated on the signature page of
this Agreement.
6.6 Agreement. (a) This Agreement includes any Attachment(s)
hereto and constitutes the entire agreement between the
parties with respect to the subject matter hereto, and
supersedes all prior oral or written understandings or
agreements, and no prior writings between the parties shall be
used to interpret this Agreement.
(b) If a Sales Agreement existed between the
parties before the effective date of this Agreement, that
Agreement shall terminate as of the effective date of this
Agreement.
6.7 Amendment. Transamerica reserves the right to amend this
Agreement, including by amending any Attachment and by adding
or deleting Attachments, at any time without prior notice.
Broker submission of an application for a Contract subsequent
to notice of such an amendment shall be construed as consent
by Broker to such amendment.
6.8 The Contracts. The Insurance Company may modify, change or
discontinue the offering of any form of the Contracts at any
time.
6.9 Nonwaiver. Forbearance by Transamerica to enforce any rights
in this Agreement shall not be construed as a waiver of the
conditions of this Agreement and no waiverof any provision in
this Agreement shall be deemed to be a waiver of any other
provision.
6.10 Severability. This is a severable Agreement. In the event that
any provision would require action prohibited by law or would
prohibit action required by law, then such provision shall be
enforceable to the extent permitted by law and all other
provisions shall remain valid and enforceable.
6.11 Termination. This Agreement may be terminated by any party
with or without cause upon giving written notice to the other
parties. Sections 5.1, 5.2, and 6 and any applicable
provisions contained in the Attachment(s) shall survive the
termination of this Agreement.
6.12 Assignment. This Agreement may not be assigned without the written
consent of all parties.
6.13 Counterparts. This Agreement may be executed in two or more
counterparts, which when taken together shall constitute one
and the same instrument.
6.14 Governing Law. This Agreement shall be construed in accordance
with the laws of the state of domicile of the contracting
Insurance Company without giving effect to principles of
conflict of laws. For Transamerica Occidental Life Insurance
Company that state is California; for Transamerica Life
Insurance and Annuity Company that state is North Carolina;
and for Transamerica Life Insurance Company of New York that
state is New York
6.15 If this document is used to evidence Agreements with more than
one Insurance Company, its terms shall apply separately and
independently with regard to each contracting Insurance
Company and no Insurance Company shall be liable for
obligations or products of another.
This Agreement is effective as of ___________________, 199____, and is made
between the parties signing below:
Transamerica Occidental Life Transamerica Life Insurance
Insurance Company Company of New York
1150 South Olive Street 100 Manhattanville Road
Los Angeles, CA 90015 Purchase, NY 10577
Signature:_________________________ Signature:_________________________
Name:___________________________ Name:___________________________
Title:_____________________________ Title:_____________________________
Transamerica Life Insurance Transamerica Securities Sales
and Annuity Company Corporation
401 North Tryon Street 1150 South Olive Street
Charlotte, North Carolina 28202 Los Angeles, CA 90015
Signature:______________________________ Signature:____________
Name:__________________________________ Name:_________________
Title:___________________________________ Title:________________
<PAGE>
Broker-Dealer:_________________________
Address:______________________________
==============================
Phone:_______________________________
Signature:_____________________________
Name:_______________________________
Title:________________________________
If Broker may not receive compensation due to state insurance laws, please
indicated the insurance agency(ies) to receive compensation.
For compensation payable in the state of ____________, please pay:
Insurance agency:__________________
Address: _______________________________
===============================
To the attention of:_________________
phone number:____________________
For compensation payable in the state of ____________, please pay:
Insurance agency:__________________
Address: _______________________________
===============================
To the attention of:_________________
phone number:____________________
<PAGE>
A-33
Attachment #1
Dreyfus/Transamerica Triple Advantage Variable Annuity
issued by Transamerica Occidental Life Insurance Company
A. Contracts. Broker is authorized to sell Dreyfus/Transamerica Triple
Advantage Variable Annuity Contracts and Policies (the "Contracts") issued by
Transamerica Occidental Life Insurance Company.
NOTE: Only one Insurance Company may be identified for each Attachment.]
B. Compensation. In consideration of the sales of each Contract, Transamerica
shall pay Broker, or such insurance agency specified by Broker, the compensation
described in one of the attached Options. Broker shall choose the Option to be
applicable to each Contract when or before the initial Purchase Payment or
Premium ("Purchase Payment") under the Contract is received by Transamerica, by
sending to Transamerica a notice such as the attached example or such other
notice acceptable to Transamerica. Without prior notice, Transamerica may change
the amount of compensation payable pursuant to this Attachment #1 and this new
compensation will be applicable prospectively on new Contracts and on new
premiums received under then currently issued Contracts.
C. Chargebacks.
(1) Rejection of Application and Exercise of Free Look.
In the event that a Purchase Payment is returned because the Insurance
Company rejects the application for such Contract or because the
Premium or the application for the Contract is not timely received by
Transamerica, or a refund is made because a purchaser exercises his
free-look right under the Contract, then upon written request from
Transamerica, Broker (or specified insurance agency) shall promptly
repay any and all compensation received based on all Purchase Payments
paid into the Contract and shall pay any loss incurred as a result of a
Purchase Payment being returned which was not timely received or for
which an application was not timely received by Transamerica.
(2) Annuitization.
In the instance of the annuitization of a Contract within the first six
months of receipt of Purchase Payment(s), Transamerica shall pay the
commission due on the annuitization of the Contract and Transamerica
shall chargeback to the Broker (or specified insurance agency), or ask
that Broker repay Transamerica, as Transamerica may determine in it
discretion, the difference between the commission paid on annuitization
and the commission paid upon receipt of the Purchase Payment(s) to the
Contract.
D. Right of Set Off. With respect to commissions, compensation or any other
amounts owed Broker (or insurance agency specified by it) by Transamerica,
Transamerica shall have a right of set off against such amounts any monies owed
Transamerica by Broker (or specified insurance agency) to the extent permitted
by applicable law. This right if set off by Transamerica does not modify
Broker's obligation to promptly pay E.ansamerNetting Commissionsd.
__________ If space is initialed at left by authorized Transamerica
personnel, Broker is authorized to "net commissions" pursuant
to Section 1.5 of the Sales Agreement, with regard to the
Contracts covered by this Attachment only.
This Attachment #1 is made part of Sales Agreement with ______________________
("Broker") effective
_____the effective date of the Sales Agreement or
_____ ___________, 199____. [Check one.]
<PAGE>
EXAMPLE OF FORM TO CHOOSE COMPENSATION OPTIONS FOR EACH CONTRACT
Variable Life Application
Transamerica Occidental Life Insurance Company
Home Office, Los Angeles, CA
Variable Life Service Center
440 Lincoln Street
P.O. Box 3800
Worcester, MA 01653
1 Proposed Insured the person upon whose life this insurance coverage is
proposed
First Name Middle Last
Street Address years at this Address
City State Zip
Daytime Telephone Number
Date of Birth: M/ D/ Y/ Sex: M F
Social Security Number/Tax I.D. Number
Driver's License Number
2 Payment the monetary contribution to the policy
Check one
I have enclosed a check for my initial payment of $_____ ($100 minimum) and have
received a conditional receipt. (Please make check payable to Transamerica
Occidental Life Insurance Company.)
My initial payment will be transferred from another insurance company.
Approximate amount $___
Name of transferring company
My Transfer of Assets form is attached yes
My Transfer of Assets form has been sent to
the transferring company. Yes
2a I want to make future payment of $
Annually Semi-Annually Quarterly
Monthly (I have included a voided check and Bank Drafting Form.)
3 proposed Policy owner the person or entity exercising the policy's contractual
rights.
The policy owner is also referred to as "I" or "Me". The insured will be the
policy owner unless a different person or entity is specified here.
Name
Street Address
City State Zip
Social Security Number/Tax I.D. Number
Date of Birth
Relationship to Insured.
3b Payment reminder notices will be sent to the policy owner unless specified
otherwise here:
Name
Street Address
City State Zip
4 Allocation How I want payments allocated.
Complete Section 4a and Section 4b. Future payments will be allocated according
to this selection unless changed by me.
4a. Allocate payment as follows:
Use whole percentages. If dollar cost averaging is used, please
complete a Dollar Cost Averaging Form. Payments may be allocated to no more than
7 of the 17 variable sub-accounts listed below and to the Fixed Account.
YOUR TOTAL ALLOCATION MUST EQUAL 100%
%Janus Aspen Worldwide Growth %Morgan Stanley UF International Magnum
%Dreyfus VIF Small Cap %OCC Accum Trust Small Cap %MFS VIT Emerging
Growth %Alliance VPF Premier Growth %Dreyfus VIF Capital Appreciation
%MFS VIT Research %Transamerica VIF Growth %Alger American Income &
Growth %Alliance VPF Growth & Income %MFS VIT Growth with Income %Janus
Aspen Balanced Portfolio %OCC Accum Trust Managed Portfolio %Morgan
Stanley UF High Yield %Morgan Stanley UF Fixed Income %Transamerica VIF
Money Market %Fixed Account 100 % Total
4b Deductions of all charges will be made pro rata according to the value of
each sub-account and the Fixed Account.
OR
Deduct all charges from _______________ (Enter any single sub-account; may not
be the Fixed Account)
5 Insurance How much life insurance I want
5a Policy form applied for
5b I want $ in life insurance coverage
5c I want insurance coverage to be: (Choose one)
Level - Insurance coverage remains constant.
Adjustable - Insurance coverage changes with the value of the policy
5d I want the following additional insurance benefits:
Waiver of payment upon disability
Living Benefits Rider
Children's Insurance Rider
Guaranteed Insurability Rider $
Guaranteed Death Benefit Rider
5e The application is for a standard class of risk unless noted otherwise here:
6 Beneficiary
The primary beneficiary is the person or entity who will receive the policy
proceeds. The contingent beneficiary is the person or entity who will receive
the policy proceeds should the primary beneficiary not survive the insured
Name of primary beneficiary Relationship to insured
Name of contingent beneficiary Relationship to insured
10=day common disaster clause*
_____-day Common Disaster Clause* (30 day maximum)
*A common Disaster Clause requires that the beneficiary survive the insured for
a specified length of time before becoming entitled to the policy proceeds. This
may assure that the contingent beneficiary will receive the policy proceeds
rather than the estate of the primary beneficiary.
7 Replacement of Other Contracts
7a May insurance, including annuities in any company be replaced if the proposed
policy is issued?
Yes No
IF yes, list company name and policy amount.
7b Is any application for life insurance on the proposed insured pending in any
other company?
Yes No
If yes, give company name, amount applied for, and total amount to be placed
8 Information About the Proposed Insured
8a Current Employment
Title
Industry and Duties
8b Income.
Annual earned income is $
Annual unearned income is $
Net worth is $
8c Has an illness or injury during the past six months prevented the proposed
insured from working five consecutive days?
Yes No If yes, please explain:
8d During the past two years has the proposed insured participated in or intends
to participate in:
Yes No Aeronautics (including hang-gliding, sky diving, ballooning,
etc.)?
Yes No Powered racing or competitive vehicles (Including motorcycles,
automobiles and motor boats, etc.)?
Yes No Recreational vehicles over open terrain, trails, sand, snow or ice
(including snowmobiles and dirt bikes, etc.)?
Yes No Skin or scuba diving, mountain climbing, competitive skiing?
(If yes, complete Avocation and Sports Questionnaire with dates last
participated.)
8f During the past two years has the proposed insured flown as or intends
to fly as a trainee, pilot or
crew member?
Yes No
(If yes, complete Aviation Questionnaire.)
8g Has the proposed insured used tobacco during the past 2 years?
Yes No
Cigarettes Cigars Pipes Chewing Tobacco
Other tobacco product
(Specify date last used)
8h Will the proposed insured be traveling outside of the United States or Canada
in the next two years except for purely vacation travel? Yes No If yes, give
destination, length of stay, and number of trips per year.
Transamerica Occidental Life
Transamerica Occidental Life Insurance Company
Home Office: Los Angeles, CA
Variable Life Service Center
440 Liincoln Street
P.O. Box 3800
Worcester, MA 01653
Authorization to Obtain Information
Name of Proposed Insured
Authorization To Obtain Information
To all physicians, medical professionals, hospitals, clinics, other health care
providers, employers, Medical Information Bureau, Inc. (MIB), consumer reporting
agencies, other insurance support organizations, the United States Internal
Revenue Service, the Puerto Rico Bureau of Income Tax, and other persons who
have the types of information described below about the proposed insured:
I authorize you to give Transamerica Occidental Life Insurance Company
("Company"), its reinsurers, or its agent; (a) all information you have as to
illness, injury, medical history, diagnosis, treatment, and prognosis (including
any drug or alcohol abuse condition or treatment or any HIV related test results
or disorders, or other dread disease) with respect to any physical or mental
condition of the proposed insured; and (b) any non-medical information,
including but not limited to, an investigative consumer report, which the
Company believes it needs to perform the business functions described below. I
also authorize the Company to give MIB health or non-medical information it has
about me and that of any minor member of my family aplying for insurance.
The information obtained will be used to determine if the proposed insured is
eligible for: (a) the insurance requested; or (b) benefits under a policy which
is in force. It will also be used for any other business purpose which relates
to the insurance requested or the policy which is in force. This authorization
will be valid for 30 months. I know that under Federal Regulations, I may revoke
this authorization as it applies to drug or alcohol abuse treatment at any time;
but my revocation will not affect any information that has been released prior
thereto. I know that I may request a copy of this form. I agree that a photocopy
is as valid as the original. I have received the Insurance Information Practices
notice.
Signature of Proposed Insured
(if proposed insured is a minor, signature of legal guardian) Signature of
Proposed Owner (if other than proposed insured) Date
Name of Minor Child if to Be Covered
Name of Minor Child if to Be Covered
Personal History Interview Information
Proposed Insured's Professional Title
Application For
Adust Juvenile Amount $
Home Telephone: (Area Code) and No.
Business Telephone: (Area Code) and No.
Driver's License Information
No. State
Transamerica Occidental Life may be contacting you to discuss this application.
The best time for us to call you
is at (Eastern Time):
Home Business
1st Choice
2nd Choice
Broker Dealer Firm
Registered Representative
Form Home Office use Only
Date Received in P.H.I. Unit
Attempts to Call
Date/Time Date/Time
Date/Time Date/Time
Date/Time Date/Time
Date Call Completed Time AM PM
Remarks
9 TELEPHONE ACCESS
I will automatically be able to transfer sub-account and or Fixed Account values
and change the allocation of future investments by telephone or fax unless I
check the blx below.
I do not accept this Telephone Access privilege.
(Please see additional information in the fourth paragraph of the section
below.)
ACKNOWLEDGEMENTS AND SIGNATURES
I acknowledge receipt of current Prospectuses describing the Transamerica
Occidental Life Insurance Company ("Company") policy I am applying for, and the
underlying Funds.
I (or "We" if propsoed policy owner and proposed insured are not the same)
understand that any death benefits in excess of the face amount and any policy
value of the flexible premium variable life insurance policy applied for, may
increase or decrease to reflect the investment experience of the sub-accounts of
the variable account. The policy value allocated to the Fixed Account will
accumulate interest at a rate set by the Company which will not be less than the
minimum guaranteed rate of 4% annually. There is no guaranteed minimum policy
value. The policy value may decrease to the point where the policy will lapse
and provide no further death benefit without additional premium payments.
It is agreed that: (1) The application consists of this application form, the
medical questionnaire and the supplemental applications to apply for insurance
on family members, if it applies; (2) The representations are true and complete
to the best of my (our) knowledge and belief; (3) Except as provided in the
conditional receipt if issued with the same number as this application, no
liability exists and the insurance applied for will not take effect until the
policy is delivered and the premium is paid during the lifetime of the proposed
insured(s) and then only if the proposed insured(s) has (have) not consulted or
been treated by any physician or practitioner of any healing art nor had any
tests listed in the application since its completion; and (4) No registered
representative or broker is authorized to amend, alter, or modify the terms of
this agreement.
Unless I did not accept the Telephone Access privilege in section 9 above, I
understand that Transamerica Occidental Lfie Insurance Company is authorized to
honor telephone requests by me, or by individuals authorized by me, to transfer
values among sub-accounts and to change the allocation of my future payments. I
also understand that the withdrawal of funds from my policy cannot be transacted
by telephone or fax instructions.
I (We) understand that omissions or misstatements in the application could cause
an otherwise valid claim to be denied under any policy issued from the
application.
Signed at City State
Signature of Proposed Insured Date
Signature of Owner (if other than Proposed Insured) Date
Signed at City State
If the owner is a corporation, an authorized officer, other than the proposed
insured, must sign as policy
owner. Give corporate title and full name of corporation.
Corporate Title
Name of Corporation
FOR FINANCIAL ADVISERUSE ONLY
Does the policy appleid for replace any existing annuity or life insurance
policy?
Yes No
If yes, attach replacement forms as required.
as Registered Representative, I certify sitnessing the signature of the
applicant and that the information in this application has been accurately
recorded, to the best of my knowledge and belief. Based on the information
furnished by the proposed owner or proposed isnured in this application, I
certify that I have reasonable grounds for believing the purchase of the policy
applied for is suitable for the owner. I further certify that the Prospectuses
were delivered and that no written sales materials other than those furnished or
approved by the Company were used. Signature of Registered Representative Date
Print Name of Registered Representative REG REP # Telephone Fax Signature of
Registered Representative Date Print Name of Registered Representative REG REP #
Signature of Registered Representative Date
print Name of Registered Representative REG REP #
Name of Broker/Dealer Branch #
Branch Office Street Address
City State Zip
Remarks
FOR HOME OFFICE USE ONLY
