PROSPECTUS FOR
TRANSAMERICA SERIESsm
TRANSAMERICA TRIBUTEsm
VARIABLE UNIVERSAL LIFE INSURANCE
Issued by
Transamerica Occidental
Life Insurance Company
Including Prospectuses for:
Income and Growth Portfolio of The Alger American Fund
Growth and Income Portfolio and
Premier Growth Portfolio of Alliance Variable Products Series
Fund, Inc.
Capital Appreciation Portfolio and
Small Cap Portfolio of Dreyfus Variable Investment Fund
Balanced Portfolio and
Worldwide Growth Portfolio of Janus Aspen Series
Emerging Growth Series
Growth with Income Series and
Research Series of MFS Variable Insurance Trust
Fixed Income Portfolio
High Yield Portfolio and
International Magnum Portfolio of Morgan Stanley Universal Funds, Inc.
Managed Portfolio and
Small Cap Portfolio of OCC Accumulation Trust
Growth Portfolio and
Money Market Portfolio of Transamerica Variable Insurance Fund, Inc.
May 1, 1998
Revised December 15, 1998
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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, among 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 the following sub-accounts:
Alger American Income & Growth MFS VIT Research
Alliance VPF Growth & Income Morgan Stanley UF Fixed Income
Alliance VPF Premier Growth Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap OCC Accumulation Trust Managed
Janus Aspen Balanced OCC Accumulation Trust Small Cap
Janus Aspen Worldwide Growth Transamerica VIF Growth Portfolio
MFS VIT Emerging Growth Transamerica VIF Money Market
MFS VIT Growth with Income
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. 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 OR 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.
THIS PROSPECTUS SETS FORTH THE INFORMATION YOU SHOULD KNOW BEFORE DECIDING TO
PURCHASE A POLICY. YOU SHOULD RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY CURRENT PROSPECTUSES FOR THE
PORTFOLIOS. THE PORTFOLIO PROSPECTUSES SHOULD BE READ IN CONJUNCTION WITH THIS
PROSPECTUS. May 1, 1998; Revised December 15, 1998
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Table of Contents
SUMMARY 4
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INVESTMENT OBJECTIVES AND POLICIES, AND INVESTMENT ADVISERS.....................................6
SPECIAL TERMS...........................................................................................18
DESCRIPTION OF TRANSAMERICA, THE SEPARATE ACCOUNT, AND THE PORTFOLIOS...................................21
THE POLICY..............................................................................................22
APPLICATION FOR A POLICY.......................................................................22
FREE LOOK PERIOD...............................................................................23
CONVERSION PRIVILEGE...........................................................................23
PAYMENTS.......................................................................................23
ALLOCATION OF NET PAYMENTS.....................................................................24
TRANSFER PRIVILEGE.............................................................................25
DEATH BENEFIT..................................................................................27
LEVEL OPTION AND ADJUSTABLE OPTION.............................................................27
CHANGE TO LEVEL OR ADJUSTABLE OPTION...........................................................29
CHANGE IN FACE AMOUNT..........................................................................30
OPTION TO ACCELERATE DEATH BENEFITS (LIVING BENEFITS RIDER)....................................30
POLICY VALUE...................................................................................31
MATURITY BENEFITS..............................................................................33
PAYMENT OPTIONS................................................................................33
OPTIONAL INSURANCE BENEFITS....................................................................33
SURRENDER......................................................................................33
PARTIAL WITHDRAWAL.............................................................................34
PAID-UP INSURANCE OPTION.......................................................................34
CHARGES AND DEDUCTIONS..................................................................................35
PAYMENT EXPENSE CHARGE.........................................................................35
MONTHLY INSURANCE PROTECTION CHARGE............................................................36
CHARGES AGAINST OR REFLECTED IN THE ASSETS
OF THE SEPARATE ACCOUNT...................................................................37
SURRENDER CHARGES..............................................................................38
PARTIAL WITHDRAWAL COSTS.......................................................................39
TRANSFER CHARGES...............................................................................40
CHARGE FOR CHANGE IN FACE AMOUNT...............................................................40
OTHER ADMINISTRATIVE CHARGES...................................................................40
POLICY LOANS............................................................................................41
PREFERRED LOAN OPTION..........................................................................41
LOAN INTEREST CHARGED..........................................................................41
REPAYMENT OF OUTSTANDING LOAN..................................................................42
EFFECT OF POLICY LOANS.........................................................................42
POLICY TERMINATION AND REINSTATEMENT....................................................................42
TERMINATION....................................................................................42
REINSTATEMENT..................................................................................43
OTHER POLICY PROVISIONS.................................................................................44
POLICY OWNER...................................................................................44
BENEFICIARY....................................................................................44
ASSIGNMENT.....................................................................................44
LIMIT ON RIGHT TO CHALLENGE POLICY.............................................................44
SUICIDE........................................................................................45
MISSTATEMENT OF AGE OR SEX.....................................................................45
DELAY OF PAYMENTS..............................................................................45
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FEDERAL TAX CONSIDERATIONS..............................................................................45
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND
THE SEPARATE ACCOUNT......................................................................46
TAXATION OF THE POLICIES.......................................................................46
POLICY LOANS...................................................................................46
INTEREST DISALLOWANCE..........................................................................47
MODIFIED ENDOWMENT CONTRACTS...................................................................47
DISTRIBUTION UNDER MODIFIED ENDOWMENT CONTRACTS................................................47
VOTING RIGHTS...........................................................................................48
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY.................................................48
DISTRIBUTION............................................................................................50
REPORTS 50
PERFORMANCE INFORMATION.................................................................................51
LEGAL PROCEEDINGS.......................................................................................56
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS.......................................................56
PREPARING FOR YEAR 2000.................................................................................57
FURTHER INFORMATION.....................................................................................57
MORE INFORMATION ABOUT THE FIXED ACCOUNT................................................................57
GENERAL DESCRIPTION............................................................................57
FIXED ACCOUNT INTEREST.........................................................................58
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS....................................58
INDEPENDENT AUDITORS....................................................................................58
FINANCIAL STATEMENTS....................................................................................58
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 OF DEATH BENEFIT,
POLICY VALUES AND ACCUMULATED PAYMENTS........................................................A-4
APPENDIX E - MAXIMUM SURRENDER CHARGES................................................................A-14
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SUMMARY
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 are the entire
agreement between you and Transamerica.
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. 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. Also, 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.
However, 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 partial withdrawals, partial withdrawal charges
and any outstanding loans, will guarantee that the Policy will not lapse. See
"PAYMENTS" at page 23 and "POLICY TERMINATION AND REINSTATEMENT" at page 42.
WHO ARE THE KEY PERSONS UNDER THE POLICY?
The Policy is a contract between the 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 charges, 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
partial withdrawal charges. The beneficiary may receive the net death benefit in
a lump sum or under a payment option we offer. Under certain conditions, a
portion of the net death benefit may be paid to you prior to the Insured's death
as provided under the Option to Accelerate Death Benefits (Living Benefits
Rider). See "DEATH BENEFIT" at page 27.
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, generally by the later of:
o 45 days after the application 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"
In some states, the 45 day period noted above does not apply, and only the 10
day (or longer) provision applies.
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 total of payments made to the Policy.
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 tax deductions which have been imposed
After an increase in face amount, a right to examine and cancel the increase
also applies. See "FREE LOOK PERIOD" at page 23.
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, each fund having its own adviser(s), offer a wide range of
investment objectives. The available sub-accounts are as follows:
Alger American Income & Growth MFS VIT Research
Alliance VPF Growth & Income Morgan Stanley UF Fixed Income
Alliance VPF Premier Growth Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap OCC Accumulation Trust Managed
Janus Aspen Balanced OCC Accumulation Trust Small Cap
Janus Aspen Worldwide Growth Transamerica VIF Growth Portfolio
MFS VIT Emerging Growth Transamerica VIF Money Market
MFS VIT Growth with Income
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,
after the policy is issued by us 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" at
page 57.
INVESTMENT OBJECTIVES AND POLICIES, AND INVESTMENT ADVISERS
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. 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 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 their
board's 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
The management fees listed below are fees specified in the applicable advisory
contract (i.e., before any fee waivers). The portfolios' prospectuses contain
more detailed information on the portfolios' investment objectives,
restrictions, risks, expenses and Advisers.
The Income and Growth Portfolio of The Alger American Fund seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio. Except during temporary defensive periods, the portfolio attempts
to invest 100%, and it is a fundamental policy of the portfolio to invest at
least 65% of its total assets in dividend paying equity securities. The Adviser
will favor securities it believes also offer opportunities for capital
appreciation. The portfolio may invest up to 35% of its total assets in money
market instruments and repurchase agreements and in excess of that amount (up to
100% of its assets) during temporary defensive periods.
Adviser: Fred Alger Management, Inc. Management Fee: 0.625%.
The Growth and Income Portfolio of the Alliance Variable Products Series Fund,
Inc. seeks reasonable current income and reasonable opportunity for appreciation
through investments primarily in dividend-paying common stocks of good quality.
Whenever the economic outlook is unfavorable for investment in common stock,
investments in other types of securities, such as bonds, convertible bonds,
preferred stock and convertible preferred stocks may be made by the portfolio.
Purchases and sales of portfolio securities are made at such times and in such
amounts as are deemed advisable in light of market, economic and other
conditions.
Adviser: Alliance Capital Management L.P. Management Fee: 0.625%.
The Premier Growth Portfolio of Alliance Variable Products Series Fund, Inc.
seeks growth of capital by pursuing aggressive investment policies. Since
investments will be made based upon their potential for capital appreciation,
current income will be incidental to the objective of capital growth. The
portfolio will invest predominantly in the equity securities (common stocks,
securities convertible into common stocks and rights and warrants to subscribe
for or purchase common stocks) of a limited number of large, carefully selected,
high-quality U.S. companies that, in the judgment of the Adviser, are likely to
achieve superior earnings growth. The portfolio investments in the 25 such
companies most highly regarded at any point in time by the Adviser will usually
constitute approximately 70% of the portfolio's net assets. The portfolio thus
differs from more typical equity mutual funds by investing most of its assets in
a relatively small number of intensively researched companies. The portfolio
will, under normal circumstances, invest at least 85% of the value of its total
assets in the equity securities of U.S. companies.
Adviser: Alliance Capital Management L.P. Management Fee: 1%.
The Capital Appreciation Portfolio of the Dreyfus Variable Investment Fund is a
diversified portfolio, the primary investment objective of which is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective. During periods which the Sub-Adviser
determines to be of market strength, the portfolio acts aggressively to increase
shareholders' capital by investing principally in common stocks of domestic and
foreign issuers, common stocks with warrants attached and debt securities of
foreign governments. The portfolio will seek investment opportunities generally
in large capitalization companies (those with market capitalizations exceeding
$500 million) which the Sub-Adviser believes have the potential to experience
above average and predictable earnings growth.
Adviser: The Dreyfus Corporation. Sub-Adviser: Fayez Sarofim & Co. Management
Fee: 0.75%.
The Small Cap Portfolio of the Dreyfus Variable Investment Fund seeks to
maximize capital appreciation. It seeks to achieve its objective by investing
principally in common stocks. Under normal market conditions, the portfolio will
invest at least 65% of its total assets in companies with market capitalizations
of less than $1.5 billion at the time of purchase which the Adviser believes to
be characterized by new or innovative products, services or processes which
should enhance prospects for growth in future earnings.
Adviser: The Dreyfus Corporation. Management Fee: 0.75%.
The Balanced Portfolio of the Janus Aspen Series seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. It is a
diversified portfolio that, under normal circumstances, pursues its objective by
investing 40-60% of its assets in securities selected primarily for their growth
potential and 40-60% of its assets in securities selected primarily for their
income potential. This portfolio normally invests at least 25% of its assets in
fixed-income senior securities, which include debt securities and preferred
stocks.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200
million plus 0.65% of the assets over $500 million.
The Worldwide Growth Portfolio of the Janus Aspen Series seeks long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers. The portfolio has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of organization or place of principal
business activity. The portfolio normally invests in issuers from at least five
different countries, including the United States. The portfolio may at times
invest in fewer than five countries or even a single country.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million plus 0.65% of the assets over $500
million.
The Emerging Growth Series of the MFS Variable Insurance Trust seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the investment objective of long-term
growth of capital. The investment policy is to invest primarily (i.e., at least
80% of its assets under normal circumstances) in common stocks of companies that
the Adviser believes are early in their life cycle but which have the potential
to become major enterprises (emerging growth companies). While the portfolio
will invest primarily in common stocks, the portfolio may, to a limited extent,
seek appreciation in other types of securities such as fixed income securities
(which may be unrated), convertible securities and warrants when relative values
make such purchases appear attractive either as individual issues or as types of
securities in certain economic environments. The portfolio may invest in
non-convertible fixed income securities rated lower than "investment grade"
(commonly known as "junk bonds") or in comparable unrated securities, when, in
the opinion of the Adviser, such an investment presents a greater opportunity
for appreciation with comparable risk to an investment in "investment grade"
securities. Under normal market conditions the portfolio will invest not more
than 5% of its net assets in these securities. Consistent with its investment
objective and policies described above, the portfolio may also invest up to 25%
(and generally expects to invest not more than 15%) of its net assets in foreign
securities (including emerging market securities and Brady Bonds) which are not
traded on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Growth with Income Series of the MFS Variable Insurance Trust seeks
reasonable current income and long-term growth of capital and income. Under
normal market conditions, the portfolio will invest at least 65% of its assets
in equity securities of companies that are believed to have long-term prospects
for growth and income. Equity securities in which the portfolio may invest
include the following: common stocks, preferred stocks and preference stock;
securities such as bonds, warrants or rights that are convertible into stocks;
and depository receipts for those securities. These securities may be listed on
securities exchanges, traded in various over-the-counter markets or have no
organized markets. Consistent with its investment objective and policies
described above, the portfolio may also invest up to 75% (and generally expects
to invest no more than 15%) of its net assets in foreign securities (including
emerging market securities and Brady Bonds) which are not traded on a U.S.
exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Research Series of the MFS Variable Insurance Trust seeks long-term growth
of capital and future income. The policy is to invest a substantial proportion
of its assets in equity securities of companies believed to possess better than
average prospects for long-term growth. Equity securities in which the portfolio
may invest include the following: common stocks, preferred stocks, securities
such as bonds, warrants or rights that are convertible into stocks and
depository receipts for those securities. These securities may be listed on
securities exchanges, traded in various over-the-counter markets or have no
organized markets. A smaller proportion of the assets may be invested in bonds,
short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. Such securities may also
offer opportunities for growth of capital as well as income. In the case of both
growth stocks and income issues, emphasis is placed on the selection of
progressive, well-managed companies. The portfolio's non-convertible debt
investments, if any, may consist of "investment grade" securities, and, with
respect to no more than 10% of the portfolio's net assets, securities in the
lower rated categories or securities which the Adviser believes to be a similar
quality to these lower rated securities (commonly known as "junk bonds").
Consistent with its investment objective and policies described above, the
portfolio may also invest up to 20% of its net assets in foreign securities
(including emerging market securities) which are not traded on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Fixed Income Portfolio of the Morgan Stanley Universal Funds, Inc. seeks
above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of U.S. government and agencies
securities, corporate bonds, mortgage backed securities, foreign bonds and other
fixed income securities and derivatives. The portfolio's average weighted
maturity will ordinarily exceed five years and will usually be between five and
fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.40% of the first
$500 million plus 0.35% of the next $500 million plus 0.30% of the assets over
$1 billion.
The High Yield Portfolio of the Morgan Stanley Universal Funds, Inc. seeks
above-average total return over a market cycle of three to five years by
investing primarily in high yield securities of U. S. and foreign issuers,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds." The portfolio's average weighted maturity will ordinarily
exceed five years and will usually be between five and fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.50% of the first
$500 million plus 0.45% of the
next $500 million plus 0.40% of the assets over $1 billion.
The International Magnum Portfolio of the Morgan Stanley Universal Funds, Inc.
seeks long-term capital appreciation by investing primarily in equity securities
of non-U.S. issuers domiciled in EAFE countries. The countries in which the
portfolio will invest are those comprising the Morgan Stanley Capital
International EAFE Index, which includes Australia, Japan, New Zealand, most
nations located in Western Europe and certain developed countries in Asia, such
as Hong Kong and Singapore (collectively the "EAFE countries"). The portfolio
may invest up to 5% of its total assets in securities of issuers domiciled in
non-EAFE countries. Under normal circumstances, at least 65% of the total assets
of the portfolio will be invested in equity securities of issuers in at least
three different EAFE countries.
Adviser: Morgan Stanley Asset Management Inc. Management Fee: 0.80% of the first
$500 million plus 0.75% of the next $500 million plus 0.70% of the assets over
$1 billion.
The Managed Portfolio of the OCC Accumulation Trust seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the Adviser's
assessments of the relative outlook for such investments. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt, although the portfolio will also invest in high
quality short term money market and cash equivalent securities and may invest
almost all of its assets in such securities when the Adviser deems it advisable
in order to preserve capital. In addition, the portfolio may also purchase
foreign securities provided that they are listed on a domestic or foreign
securities exchange or are represented by American depository receipts listed on
a domestic securities exchange or traded in domestic or foreign over-the-counter
markets.
Adviser: OpCap Advisors. Management Fee: 0.80% of the first $400 million plus
0.75% of the next $400 million plus 0.70% of the assets over $800 million.
The Small Cap Portfolio of the OCC Accumulation Trust seeks capital appreciation
through investments in a diversified portfolio consisting primarily of equity
securities of companies with market capitalizations of under $1 billion. Under
normal circumstances at least 65% of the portfolio's assets will be invested in
equity securities. The majority of securities purchased by the portfolio will be
traded on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market, and will also include options, warrants, bonds, notes
and debentures which are convertible into or exchangeable for, or which grant a
right to purchase or sell, such securities. In addition, the portfolio may also
purchase foreign securities provided that they are listed on a domestic or
foreign securities exchange or are represented by American depository receipts
listed on a domestic securities exchange or traded in domestic or foreign
over-the-counter markets.
Adviser: OpCap Advisors. Management Fee: 0.80% of the first $400 million plus
0.75% of the next $400 million plus 0.70% of assets over $800 million.
The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., seeks
long-term capital growth. Common stock (listed and unlisted) is the basic form
of investment. The Growth Portfolio invests primarily in common stocks of growth
companies that are considered by the Sub-Adviser to be premier companies. In the
Sub-Adviser's view, characteristics of premier companies include one or more of
the following: dominant market share; leading brand recognition; proprietary
products or technology; low-cost production capability; and excellent management
with shareholder orientation. The Sub-Adviser of the portfolio believes in
long-term investing and places great emphasis on the sustainability of the above
competitive advantages. Unless market conditions indicate otherwise, the
Sub-Adviser also tries to keep the portfolio fully invested in equity-type
securities and does not try to time stock market movements. When in the judgment
of the Sub-Adviser market conditions warrant, the portfolio may, for temporary
defensive purposes, hold part or all of its assets in cash, debt or money market
instruments. The portfolio may invest up to 10% of its assets in debt securities
having a call on common stocks that are rated below investment grade.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc. Management Fee: 0.75%.
The Money Market Portfolio of the Transamerica Variable Insurance Fund, Inc.
seeks to maximize current income from money market securities consistent with
liquidity and the preservation of principal. The portfolio invests primarily in
high quality U. S. dollar-denominated money market instruments with remaining
maturities of 13 months or less, including: obligations issued or guaranteed by
the U. S. and foreign governments and their agencies and instrumentalities;
obligations of U. S. and foreign banks, or their foreign branches, and U. S.
savings banks; short-term corporate obligations, including commercial paper,
notes and bonds; other short-term debt obligations with remaining maturities of
397 days or less; and repurchase agreements involving any of the securities
mentioned above. The portfolio may also purchase other marketable,
non-convertible corporate debt securities of U. S. issuers. These investments
include bonds, debentures, floating rate obligations, and issues with optional
maturities.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc. Management Fee: 0.35%.
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
Portfolios Not Publicly Available
The portfolios are open-end management investment companies or portfolios of
series, open-end management companies registered with the SEC under the 1940 Act
that are often referred to as mutual funds. This SEC registration does not
involve SEC supervision of the investments or investment policies of the
portfolios. 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. These portfolios are not the same as mutual funds
that may have very similar names that are sold directly to the public. 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.
CAN I MAKE TRANSFERS AMONG THE SUB-ACCOUNTS AND THE FIXED ACCOUNT?
Yes. You may make transfers among the sub-accounts and the Fixed Account,
subject to our consent and current rules. Under current tax law, 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" at page 25.
HOW MUCH CAN I INVEST AND HOW OFTEN?
The number and frequency of your payments are flexible, within limits. See
"PAYMENTS" at page 23.
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
annual interest rate credited is 7.2%. We may change the interest rate
credited at any time in our sole discretion.
For policies issued subject to the jurisdiction of the Virgin Islands, the
guaranteed annual interest rate credited on a preferred loan is 5.5%; the
guaranteed annual interest rate credited on a non-preferred loan is 4.0%; and
the current annual interest rate credited on a non-preferred loan is 5.2%.
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" at page 41.
You may surrender your Policy and receive its surrender value. See "SURRENDER"
at page 33 and "SURRENDER CHARGES" at page 38. 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 partial withdrawal
costs. We will not allow a partial withdrawal if it would reduce the face amount
below $50,000. See "PARTIAL WITHDRAWAL" at page 34 and "PARTIAL WITHDRAWAL
COSTS" at page 39. A surrender or partial withdrawal may have tax consequences.
See "TAXATION OF THE POLICIES" at page 46.
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
o Make transfers of Policy Value among the Fixed Account and the
sub-accounts, with no tax consequences under current law
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" at page 35.
o Charges deducted from payments.
Payment Expense Charge - From each payment, we will deduct a payment
expense charge, currently equal to 4.0% of the payment. 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 and administrative 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 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 (subject to state law) 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?" at page 15.
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 you request, we deduct a charge of $40 from Policy Value.
(In some jurisdictions, no charge is imposed for increases in face
amount.)
Transfer Charge - The first 12 transfers of 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 more than one projection of values during a Policy year in
addition to your annual statement
o The charges below apply only if you surrender your Policy or make
partial withdrawals:
Surrender Charges- The charges only apply 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 amount increase apply for ten years from
the date the increase is effective, and those surrender charges only
apply to the face amount 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 amount 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 charges apply
We reduce the Policy's outstanding surrender charges, if any, by
partial withdrawal charges that we previously deducted.
<PAGE>
WHAT ARE THE EXPENSES AND FEES OF THE PORTFOLIOS?
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 and total portfolio annual expenses of the
portfolios for 1997. For more information concerning these fees and expenses,
see the prospectuses of the portfolios.
<TABLE>
<CAPTION>
Portfolio Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(1)
Total
Portfolio
Management Other Annual
Portfolio Fees (2) Expenses Expenses
<S> <C> <C> <C>
Alger American Income & Growth 0.63% 0.11% 0.74%
Alliance VPF Growth & Income 0.63% 0.09% 0.72%
Alliance VPF Premier Growth 1.00% 0.10% 1.10%
Dreyfus VIF Capital Appreciation 0.75% 0.05% 0.80%
Dreyfus VIF Small Cap 0.75% 0.03% 0.78%
Janus Aspen Balanced 0.77% 0.06% 0.83%
Janus Aspen Worldwide Growth 0.66% 0.08% 0.74%
MFS VIT Emerging Growth 0.75% 0.12% 0.87%
MFS VIT Growth with Income 0.75% 0.25% 1.00%
MFS VIT Research 0.75% 0.13% 0.88%
Morgan Stanley UF Fixed Income 0.00% 0.70% 0.70%
Morgan Stanley UF High Yield 0.00% 0.80% 0.80%
Morgan Stanley UF International Magnum 0.00% 1.15% 1.15%
OCC Accumulation Trust Managed 0.80% 0.07% 0.87%
OCC Accumulation Trust Small Cap 0.80% 0.17% 0.97%
Transamerica VIF Growth 0.62% 0.23% 0.85%
Transamerica VIF Money Market 0.35% 0.25% 0.60%
</TABLE>
Transamerica may receive payments from some or all of the portfolios or their
advisers in varying amounts that may be based on the amount of assets allocated
to the portfolios. The payments are for administrative or distribution services.
Expense information regarding the portfolios has been provided by the
portfolios. Transamerica has no reason to doubt the accuracy of that
information, but Transamerica has not verified those figures. These figures are
for the year ended December 31, 1997, except for the Transamerica VIF Money
Market Portfolio which are estimates for the year 1998, its first year of
operation. Actual expenses in future years may be higher or lower than these
figures.
<PAGE>
Notes to Fee Table:
(1) From time to time, the portfolios' investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in
the Portfolio Expenses table are the expenses paid for 1997 (except for
the Transamerica VIF Money Market Portfolio, which are estimates). The
expenses shown in the table reflect a portfolio's adviser's waivers of
fees or reimbursement of expenses, if applicable, except for Alliance
VPF Premier Growth. It is anticipated that such waivers or
reimbursements will continue for calendar year 1998, except for
Alliance VPF Premier Growth. The expenses shown for Alliance VPF
Premier Growth are those that would have been incurred for 1997 had
there been no reimbursement or waiver. The management fee, other
expenses and total portfolio annual expenses for Alliance VPF Premier
Growth for 1998 without waivers or reimbursements are estimated to be
1.00%, 0.08% and 1.08%, respectively. Without such waivers or
reimbursements, the annual expenses for 1997 for certain portfolios
would have been, as a percentage of assets, as follows:
<TABLE>
<CAPTION>
Total Portfolio
Management Fee Other Annual Expenses
Expenses
Portfolio
<S> <C> <C> <C>
Janus Aspen Worldwide Growth 0.72 0.09 0.81
MFS VIT Growth with Income 0.75 0.35 1.10
Morgan Stanley UF Fixed Income 0.40 1.31 1.71
Morgan Stanley UF High Yield 0.80 0.88 1.68
Morgan Stanley UF International Magnum 0.80 1.98 2.78
Transamerica VIF Growth 0.75 0.23 0.98
</TABLE>
Without expense reimbursements, the management fee, other expenses and
total portfolio expenses for the first year of operation for the
Transamerica VIF Money Market Portfolio are expected to be 0.35%, 0.45%
and 0.80% respectively. There were no fee waivers or expense
reimbursements during 1997 for the Alger American Income and Growth
Portfolio, Alliance VPF Growth & Income, Dreyfus VIF Capital
Appreciation Portfolio, Dreyfus VIF Small Cap Portfolio, Janus Aspen
Balanced Portfolio, MFS VIT Emerging Growth Portfolio, MFS VIT Research
Portfolio, OCC Accumulation Trust Managed Portfolio or OCC Accumulation
Trust Small Cap Portfolio.
(2) The management fee of certain of the portfolios includes breakpoints at
designated asset levels. Further information on these breakpoints is provided
under "INVESTMENT OBJECTIVES AND POLICIES, AND INVESTMENT ADVISERS" at page 6
and in the prospectuses for the portfolios.
WHAT ARE THE LAPSE AND REINSTATEMENT PROVISIONS OF MY POLICY?
The Policy will not lapse if you fail to make payments unless the surrender
value is insufficient to cover the next monthly insurance protection charge and
loan interest accrued. Additionally, if the outstanding loan exceeds Policy
Value less surrender charges, the outstanding loan will be in default.
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 partial
withdrawals, partial withdrawal charges 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 partial withdrawals, partial withdrawal charges and any outstanding
loans, must at least equal the guaranteed death benefit premium times the number
of Policy years since the Policy was issued (adjusted for Policy changes, if
any). 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 may not be
reinstated. The Guaranteed Death Benefit rider will not prevent an outstanding
loan from going into default, if the outstanding loan exceeds the Policy Value
less surrender charges. In that case, your Policy will terminate without value
unless you pay the required premium within the 62-day grace period. See "POLICY
TERMINATION AND REINSTATEMENT" at page 42.
You may reinstate your Policy within three years (subject to state law) after
the date of default, 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" at page 34.
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 during the Insured's lifetime (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" at page 47.
<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 as of the Insured's birthday closest to the
start of the policy year of determination. 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. It is the date used to measure
the monthly processing date,
Policy months, Policy years and Policy anniversaries.
Death Benefit: the amount payable when the Insured dies before the Maturity
Date, before deductions for any outstanding loan and due and unpaid partial
withdrawals, partial withdrawal charges, and monthly insurance protection
charges.
Evidence of Insurability: 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: the amount of insurance coverage issued. The initial face amount is
shown in your Policy.
Final Payment Date: 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 under the Guaranteed Death
Benefit Rider.
Fixed Account: an account that is a part of the General Account and that
guarantees 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 attained 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: the date we mail the Policy for delivery to you if the application is
approved.
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, less partial withdrawals, partial withdrawal charges and any outstanding
loans, 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, on which 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 due and unpaid partial withdrawals and partial
withdrawal charges.
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 partial
withdrawal charges.
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 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.
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.
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 the
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 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, Worcester,
Massachusetts 01653. Our mailing address for all written requests and other
correspondence is: Transamerica Occidental Life Insurance Company, Variable Life
Service Center, P.O. Box 8990, Boston, Massachusetts 02266-8990. Our address for
express mail packages is: Transamerica Occidental Life Insurance Company,
Variable Life Service Center, 2 Heritage Drive, Quincy, Massachusetts 02171. Our
customer service telephone number is (800) 782-8315.
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 Code 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 are usually referred to as mutual funds. This SEC
registration does not involve SEC supervision of the investments or investment
policies of the portfolios. 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 sub-accounts available under the Policies invest in the following
portfolios:
Income and Growth Portfolio of The Alger American Fund
Growth and Income Portfolio and
Premier Growth Portfolio of Alliance Variable Products Series Fund, Inc.
Capital Appreciation Portfolio and
Small Cap Portfolio of Dreyfus Variable Investment Fund
Balanced Portfolio and
Worldwide Growth Portfolio of Janus Aspen Series
Emerging Growth Series
Growth with Income Series and
Research Series of MFS Variable Insurance Trust
Fixed Income Portfolio
High Yield Portfolio and
International Magnum Portfolio of Morgan Stanley Universal Funds, Inc.
Managed Portfolio and
Small Cap Portfolio of OCC Accumulation Trust
Growth Portfolio and
Money Market Portfolio of Transamerica Variable Insurance Fund, Inc.
THE POLICY
APPLICATION FOR A POLICY - We offer Policies to proposed Insureds 80 years old
and younger. In some jurisdictions, however, the Policy is not available to
proposed Insureds less than 18 years old. After receiving a completed
application 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
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 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, we will allocate the payments
initially to the Fixed Account within two business days of receipt of the
payments at our Variable Life Service Center. If the Policy is not issued, we
will return to you the amount of your payments.
If your application is approved and the Policy is issued, we will allocate your
Policy Value within two days of the date we approve your application according
to your allocation 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.
Term life insurance conversions. Owners of term life insurance policies issued
by us may convert their term insurance coverage to coverage under a Policy
without providing new evidence of insurability, within limits. Conversions are
subject to the provisions of any conversion option attached to the term life
insurance policy or to any change of plan option attached to certain "term-like"
insurance policies. Generally, a conversion permits an owner of a term life
insurance policy to replace the term life insurance coverage with an equal
amount of life insurance coverage under a Policy issued on the same insured at
the same underwriting class (if available under the Policy) as on the term
policy, without providing new evidence of insurability. Requests for a change in
underwriting class or other changes generally will require new evidence of
insurability, however.
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
representatives by the later of:
o 45 days after the application 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"
In some states, the 45 day period noted above does not apply, and only the 10
day (or longer) provision applies.
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 total payments made
to the Policy.
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 tax deductions 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 as a result of your written request, we will
mail or deliver a notice of a free look period for the increase. You will have
the right to cancel the increase by the later of
o 45 days after the application 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 our Variable 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 the Variable 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 under this method 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 receive payments from
you that, when reduced by outstanding loans, partial withdrawals and partial
withdrawal charges, 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 partial withdrawals, partial withdrawal charges 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 partial withdrawals,
partial withdrawal charges 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. 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. See "POLICY TERMINATION AND
REINSTATEMENT."
ALLOCATION OF NET PAYMENTS - The net payment equals the payment made less the
payment expense charge. In the application 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 seventeen sub-accounts, plus the
Fixed Account, 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. 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, Transamerica may 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 the Variable 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 under either the Dollar Cost Averaging
(DCA) option or the Automatic Account Rebalancing (AAR) option by submitting
your written request to our Variable Life Service Center. Transfers under either
DCA or AAR are generally effective on the 15th day of each scheduled month. If
your written request is received by us prior to the 15th of the month, your
option may begin as early as the 15th of the month in which we receive your
request. Otherwise, your option may begin as early as the 15th of the following
month. You may cancel your election of an option by written request at any time
with regard to future transfers. The DCA option and the AAR option may not be
effective at the same time on your Policy. If you elect one option and, at a
later date, submit written request for the other option, your new written
request will be honored, and the previously elected option will be automatically
terminated.
Dollar Cost Averaging. This option allows you to systematically transfer a set
dollar amount from the Money Market sub-account on a monthly, quarterly, or
semi-annual basis to one or more other sub-accounts. The minimum amount of each
DCA transfer from the Money Market sub-account is $100, and you may not have
value in more than seventeen sub-accounts (including the Money Market
sub-account) at any time. The Dollar Cost Averaging option is designed to reduce
the risk of your purchasing units only when the price of the units is high, but
you should carefully consider your financial ability to continue the option over
a long enough period of time to purchase units when their value is low as well
as when it is high. The DCA option does not assure a profit or protect against a
loss. The DCA option will terminate automatically when the value of your Money
Market sub-account is depleted.
There is no additional charge for electing the DCA option. Transfers to the
Fixed Account are not permitted under the DCA option. We reserve the right to
terminate the DCA option at any time and for any reason.
Automatic Account Rebalancing. Once your net payments and requested transfers
have been allocated among your sub-account choices, the performance of each
sub-account may cause your allocation to shift such that the relative value of
one or more sub-accounts is no longer consistent with your overall objectives.
Under the Automatic Account Rebalancing option, the balances in your selected
sub-accounts can be restored to the allocation percentages you elect on your
written request by transferring values among the sub-accounts. You may not have
value in more than seventeen sub-accounts at any time. The minimum percentage
allocation without our consent is 5% for each selected sub-account. Percentage
allocations must be in whole numbers. The AAR option is available on a
quarterly, semi-annual or annual basis. The minimum total amount of the
transfers under the AAR option is $100 per scheduled date. If the total transfer
amount is less than $100, no transfer will occur on that scheduled date. The AAR
option does not guarantee a profit or protect against a loss.
There is no additional charge for electing the AAR option. Transfers to the
Fixed Account are not permitted under the AAR option. We reserve the right to
terminate the AAR option at any time and for any reason.
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 for the elected option counts as one transfer
toward the 12 free transfers allowed in each Policy year. Each subsequent
automatic transfer for the elected option is free, and does not reduce the
remaining number of transfers that are free in a Policy year.
The following transfers will not count toward the 12 free transfers:
any transfers made for a conversion privilege
transfers to or from the Money Market sub-account during the free-look
period if your policy provides for a full refund of payments under the
free-look provision (see "APPLICATION FOR A POLICY" regarding "Right to
Examine Policy")
transfers because of a policy loan or a policy loan repayment
transfers because of a material change in investment policy
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."
If the Insured dies 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 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 charges and monthly insurance
protection charges through the Policy month in which the
Insured dies
If 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 partial withdrawals and
partial withdrawal charges
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. 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. (If, however, the death benefit is the
guideline minimum sum insured, then the death benefit will be the same.)
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 age 40 (attained age) 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 age 40 (attained age) 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 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 under the Level Option 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. No surrender
charges will be imposed for the decrease in face amount resulting solely because
of a change in death benefit options from the Level Option to the Adjustable
Option.
If you change the Adjustable Option to the Level Option, we will increase the
face amount, and the new face amount will be equal to the death benefit under
the Adjustable Option on the date of change. The death benefit will be the
greater of
o The new face amount or
o The guideline minimum sum insured
No new surrender charge rates or new surrender charge period will be imposed
solely because of a change in death benefit options. 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
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. In some
jurisdictions, there is no transaction charge assessed for an increase in face
amount. In these jurisdictions, a payment must accompany a request for a face
amount increase if the surrender value is less than two minimum monthly
payments. 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 surrender
charges 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. We will also cancel
any surrender charges for the increase.
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 the effective date of 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. We will provide you with
new specification pages indicating the effective date of the decrease and the
new minimum monthly payment, if any.
OPTION TO ACCELERATE DEATH BENEFITS (LIVING BENEFITS RIDER) - Subject to state
law and approval, you may elect to add the Option to Accelerate Death Benefits
(Living Benefits Rider) to your Policy. There is no direct charge for this
rider. The rider allows you to receive a portion of the net death benefit while
the Insured is alive, subject to the conditions of the rider. You may submit a
written request to receive the "living benefit" under this rider if the policy
is in force and a qualified physician certifies that the Insured has an illness
or physical condition which is likely to result in the Insured's death within 12
months. You may receive the living benefit either in a single sum or in 12 equal
payments. The option may only be exercised once under the Policy.
The amount you may receive is based on the "option amount". The option amount is
the portion of the death benefit you elect to apply under the rider as an
accelerated death benefit. The option amount must be at least $25,000 and may
not exceed the smallest of
One-half of the death benefit on the date the option is elected, or The amount
that would reduce the face amount to $100,000, our current minimum issue limit,
or
$250,000
The "living benefit" is the lump sum benefit under this rider and is the amount
used to determine the monthly benefit under the rider. It is the actuarially
calculated present value of the option amount adjusted to reflect the actuarial
present value of lost future mortality charges and to reflect any outstanding
loans. The methodology used in this calculation is on file with state
departments of insurance, where required. Subject to state law, an expense
charge of $150 will be deducted from Policy Value if you exercise the option
under this rider.
If you elect to exercise this option, your Policy will be affected as follows:
A portion of the outstanding loan will be deducted from the living
benefit, while the remaining outstanding loan will continue in force
The Policy's death benefit will be decreased by the option amount, with
insurance decreased or eliminated in inverse order, starting with the
most recent face amount increase and ending with the initial face
amount
Policy value will be reduced in the same proportion as the reduction in the
death benefit
To the extent of the decrease in face amount as a result of exercising the
option, we will waive any surrender charges which would otherwise apply to that
decrease in face amount.
The rider is intended to provide a qualified accelerated death benefit that is
excludable from gross income for federal income tax purposes. Whether any tax
liability may be incurred, however, depends upon a number of factors.
POLICY VALUE - The Policy Value is the total value of your Policy. It is
the sum of
o Your accumulation in the Fixed Account (including amounts securing any
outstanding loans) 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.
<PAGE>
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 risk charges,
administration charges and portfolio expenses (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 select. 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 "THE
POLICY - 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 (except that the
value for the Money Market sub-account was set at $1.00). 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 date 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 and
(e) is a charge for administration during a period not exceeding the
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. Payment
options are paid from our General Account and are not based on the investment
experience of the Separate Account. 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
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 CHARGES." 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 unisex 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 age. The net cash value is the cash value less any
outstanding loan. (The cash value will equal the guaranteed cash value unless we
credit interest at a rate higher than 4.5% annually.) 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 us under or in connection with the Policies.
Services and benefits provided by us include:
The death benefits, cash and loan benefits provided by the Policy
Investment options, including net payment allocations
Administration of various elective options under the Policy, and
The distribution of various reports to Policy owners
Costs and expenses incurred by us include:
Those associated with underwriting applications and changes in face amount
and riders
Various overhead and other expenses associated with providing the services
and benefits related to the Policy
Sales and marketing expenses, and
Other costs of doing business, such as federal, state and local premium and
other taxes and fees
Risks assumed by us 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 certain Policy sales and
administrative expenses.
Premium tax rates vary from state to state and are a percentage of payments made
by Policy owners to us. Currently, rates in the fifty states and the District of
Columbia range between 0.75% and 3.5%. Since we are subject to retaliatory tax,
the effective premium tax for us typically ranges between 2.35% and 3.5%.
Typically, we pay premium taxes (including retaliatory tax) in all
jurisdictions, but the payment expense charge would be deducted, even if we were
not subject to premium or retaliatory tax in a state.
We may increase or decrease the payment expense charge to reflect changes in our
expenses for taxes.
MONTHLY INSURANCE PROTECTION CHARGE - On each monthly processing date through
the final payment 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, as well as to compensate us for a part of
our acquisition costs, taxes, and administrative expenses. 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 for the increase 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. Unisex rates are not
available in all jurisdictions. For Policies issued subject to Montana's
jurisdiction, unisex rates apply to all Policies. For the initial face amount,
the insurance protection rates are based on the Insured's 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 the Insured's 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 Ultimate Standard
Ordinary Mortality Tables, Smoker or Non-Smoker, and the Insured's sex (except
for policies for which unisex rates apply) 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 (unisex rates use male rates) 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, preferred
non-standard underwriting classes, standard underwriting classes and
non-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 non-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. (In some jurisdictions, Policies are not available for proposed
Insureds who are less than 18 years old.)
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 administration 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
(subject to state law), 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%. We may realize a profit
from this charge.
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
management fee and other expenses of the portfolios whose shares the
sub-accounts purchase. The management fees and other expenses of the portfolios
are listed above under "SUMMARY - WHAT ARE THE EXPENSES AND FEES OF THE
PORTFOLIOS." 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 part of sales expenses, including
commissions to our agents, advertising, and the printing of prospectuses and
sales literature.
Surrender charges are computed on the date of issue for the initial face amount.
Surrender charges apply for ten years from the date of issue. We impose
surrender charges only if, during the time the charges are effective, you
request a full surrender of your Policy or a decrease in face amount.
New surrender charges are computed for any increase in face amount. Surrender
charges for a face amount increase apply for ten years from the date the
increase is effective. The new surrender charges computed for an increase in
face amount apply only to the face increase.
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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 the surrender charges
have been effective. The surrender charge rate for the initial face amount
decreases each Policy year on the Policy anniversary. 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 specification pages of your Policy. New specification
pages 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.
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. The
surrender charge will be the surrender charges for the face amounts which are
decreased or eliminated in the order shown above.
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. 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
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 charges).
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 for the
elected option counts as one transfer towards the 12 free transfers allowed in
each Policy year. Each future automatic transfer for the elected option 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
. A transfer from the Fixed Account because of a loan repayment
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"
. A transfer made because of a material change in investment 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. In some jurisdictions no charge is
assessed for an increase in face amount. 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 more than one projection of values in a Policy year, 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
In some jurisdictions, the loan value after the first Policy year is (a) 90% of
the portion of the Policy Value in the sub-accounts minus any surrender charges
which are allocated to the sub-accounts; plus (b) 100% of the portion of the
Policy Value in the Fixed Account minus the monthly insurance protection charges
and the loan interest due to the end of the Policy year which are allocated to
the Fixed Account. 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 not provide 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). For policies issued subject to the jurisdiction of the Virgin
Islands, the annual interest rate will be at least 4.0% or, for preferred loans,
5.5%. 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% (or, for policies issued
subject to the jurisdiction of the Virgin Islands, 5.5%).
There is some uncertainty as to the tax treatment of preferred loans. Consult a
qualified tax adviser. See "FEDERAL TAX CONSIDERATIONS".
LOAN INTEREST CHARGED - Interest accrues daily at the annual rate of 8.0% (or,
for policies issued subject to the jurisdiction of the Virgin Islands, 6.0%).
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
principal 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 and
before the maturity date. 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
outstanding loan 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.
If the outstanding loan on your Policy exceeds the Policy Value minus surrender
charges, the Policy will be in default. There is no charge imposed solely
because the Policy goes into default. If you do not pay the required premium
within the grace period, however, the Policy will terminate without value.
If you have an outstanding loan, decreases in Policy Value, including decreases
due to negative investment results in your sub-account allocations, could result
in default of your Policy. If you have an outstanding loan and do not pay loan
interest when due, unpaid interest will be added to your loan and will bear
interest at the same rate. If your investment gains are not sufficient, the
outstanding loan could be greater than your Policy Value minus surrender
charges, resulting in your Policy going into default.
In the event the Policy lapses or is otherwise terminated while a loan is
outstanding, the loan is foreclosed and this foreclosure will be treated as cash
received from the Policy for income tax purposes. Any cash received (the
outstanding loan plus any other Policy Value less surrender charges) in excess
of the Policy's tax basis should be taxable as ordinary income.
POLICY TERMINATION AND REINSTATEMENT
TERMINATION - The Policy will be in default if the surrender value is
insufficient to cover the next monthly insurance protection charge plus loan
interest accrued. Additionally, if an outstanding loan exceeds the Policy Value
less surrender charges, the outstanding loan 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 premium 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 based on a request from the Policy owner, 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 charges, 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 when you apply for the
policy. 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 partial withdrawals, partial
withdrawal charges 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
partial withdrawals, partial withdrawal charges and any outstanding loans must
at least equal the guaranteed death benefit premium times the number of policy
years since the policy was issued, adjusted as applicable for policy changes.
See "THE POLICY - PAYMENTS."
REINSTATEMENT - A lapsed Policy may be reinstated within three years (or such
other time period required by state law) 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 A 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. Also, a lesser amount may be required if the
Guaranteed Death Benefit Rider is in effect.
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. In some jurisdictions, however, the surrender charge on
the date of reinstatement is the surrender charge that was in effect on the date
of default.
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. 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, unless you have requested otherwise.
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. If your Policy was issued as a result of a conversion of a term
life insurance policy issued by us, the two year period during which we may
challenge the Policy with respect to the coverage amount converted is measured
from the later of (a) the issue date of the term life insurance policy or (b)
the most recent date on which that policy was reinstated.
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, plus any other net death benefit
payable under the policy. If your Policy was issued as a result of a conversion
of a term life insurance policy issued by us, then, with respect to the coverage
amount converted, the two year period during which the net death benefit under
the Policy will not be paid if the Insured commits suicide will be measured from
the later of (a) the issue date of the term life insurance policy or (b) the
most recent date on which that policy was reinstated.
MISSTATEMENT OF AGE OR SEX - If the Insured's age or sex is not correctly stated
in the Policy application, 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 excludability 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.
<PAGE>
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(e)(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.
<PAGE>
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.
<TABLE>
<CAPTION>
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
<S> <C>
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.
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.
<PAGE>
James W. Dederer, CLU* Director, Executive Vice President, General Counsel and Corporate Secretary
of TOLIC since 1988.
Richard H. Finn**** Director and Executive Vice President of Transamerica Corporation since
1993. Director, President and Chief Executive Officer of Transamerica
Finance Group, Inc. since 1990.
George A. Foegele***** Director and Senior Vice President; President and Chief Executive Officer
of Transamerica Life Insurance Company of Canada.
David E. Gooding* Director and Executive Vice President of TOLIC since 1992.
Edgar H. Grubb**** Director, Executive Vice President and Chief Financial Officer of
Transamerica Corporation since 1993. Senior Vice President of Transamerica
Corporation 1989-1993.
Frank C. Herringer**** Director, President and Chief Executive Officer of Transamerica Corporation
since 1991.
Daniel E. Jund, FLMI* Senior Vice President of TOLIC since 1988.
Richard N. Latzer**** Director, Senior Vice President and Chief Investment Officer of
Transamerica Corporation since 1989. Director, President and Chief
Executive Officer of Transamerica Investment Services, Inc. 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.
Gary U. Rolle'* Director, Executive Vice President and Chief Investment Officer of
Transamerica Investment Services, Inc. since 1981.
Larry Roy*** Senior Vice President Sales and Marketing of Transamerica Corporation since
1994.
Paul E. Rutledge III*** Director and President, Reinsurance Division since 1998. President, Life
Insurance Company of Virginia, 1991-1997.
William N. Scott, CLU, FLMI** Senior Vice President of TOLIC since 1993. Vice President of TOLIC from
1988 to 1993.
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.
Claude W. Thau, FSA** Senior Vice President of TOLIC since 1996. Vice President of TOLIC from
1985 to 1996.
Nooruddin S. Veerjee, FSA* President of Insurance
Products Division since 1997. 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.
Ron F. Wagley* Senior Vice President and
Chief Agency Officer of TOLIC since
1993. Vice President of TOLIC from 1989
to 1993.
Robert A. Watson**** Director and Executive Vice President of Transamerica Corporation since
1995. President and Chief Executive Officer Westinghouse Financial
Services, 1992-1995.
William R. Wellnitz, FSA*** Senior Vice
President and Actuary of TOLIC since
1996. Vice President and Reinsurance
Actuary of TOLIC from 1988 to 1996.
</TABLE>
*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 business address is 600
Montgomery Street, San Francisco, California 94111. *****The business
address is 300 Consilium Place, Scarborough, Ontario, Canada M1H3G2
Transamerica 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 up to 90% of the first-year payments up to a payment amount we
established and up to 5% of any excess. After the first year, commissions will
be up to 2% of payments plus up to 0.30% annually 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
portfolio'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 45, standard non-smoker underwriting class
o The Policy owner had allocations in each of the sub-accounts
for the portfolio 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 portfolio 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 portfolio'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,
1997. "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 I: 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-account charges, and all Policy charges (including surrender
charges) for a representative Policy. It is assumed that the Insured is Male,
Age 45, standard non-smoker underwriting class, that the face amount of the
Policy is $200,000, that the death benefit option is the Level Option, that an
annual payment of $3,800 (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. Returns are for the period ending December 31,
1997.
<TABLE>
<CAPTION>
10 Year or
Life of the
Portfolio (if Number
Less than 10 of
Years Since Years Since
5 Year Inception) Inception
Average Average Annual (if Less
Sub-Account Portfolio 1 Year Total Annual Total Return than 10
Investing in the Inception Return Total Years)
Corresponding Portfolio Date Return
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alger American Income & Growth 11/15/88 -91.65% 4.75% 7.61% 9.13
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & Income 1/14/91 -98.18% 6.80% 6.95% 6.96
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier Growth 6/26/92 -93.77% 8.74% 11.16% 5.52
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital Appreciation 4/05/93 -98.83% N/A 6.71% 4.74
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 8/31/90 -100.00% 14.21% 37.28% 7.34
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 9/13/93 -100.00% N/A -0.89% 4.30
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth 9/13/93 -100.00% N/A 8.16% 4.30
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 7/24/95 -100.00% N/A -11.10% 2.44
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
MFS VIT Growth with Income 10/09/95 -97.32% N/A -11.43% 2.23
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
MFS VIT Research 7/26/95 -100.00% N/A -12.66% 2.44
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed Income 1/02/97 -100.00% N/A -100.00% 1.00
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High Yield 1/02/97 -100.00% N/A -100.00% 1.00
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF International Magnum 1/02/97 -100.00% N/A -100.00% 1.00
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Managed(1) 8/01/88 -100.00% 7.46% 14.69% 9.42
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small Cap(2) 8/01/88 -100.00% 1.67% 9.57% 9.42
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth (3) 2/26/69 -82.74% 18.96% 19.98% N/A
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market 1/01/98 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On September 16th, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust (the
"Old Trust") was effectively divided into two investment funds - the Old Trust
and the present OCC Accumulation Trust (the "Present Trust") at which time the
Present Trust commenced operations. The total net assets of the Managed
Portfolio immediately after the transaction were $682,601,380 in the Old Trust
and $51,345,102 in the Present Trust. For the period prior to September 16,
1994, the performance figures for the Managed Portfolio of the Present Trust
reflect the performance of the Managed Portfolio of the Old Trust.
(2) On September 16th, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust (the
"Old Trust") was effectively divided into two investment funds - the Old Trust
and the present OCC Accumulation Trust (the "Present Trust") at which time the
Present Trust commenced operations. The total net assets of the Small Cap
Portfolio immediately after the transaction were $139,812,573 in the Old Trust
and $8,129,274 in the Present Trust. For the period prior to September 16, 1994,
the performance figures for the Small Cap Portfolio of the Present Trust reflect
the performance of the Small Cap Portfolio of the Old Trust.
(3) The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio includes performance of its
predecessor.
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.
<TABLE>
<CAPTION>
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
portfolio expenses, all sub-account charges and premium tax and expense charges.
The data does NOT reflect monthly charges under the Policies or surrender
charges. Returns are for the period ending December 31,1997.
- ---------------------------------------------------------
10 Year or Life of Number
the Portfolio (if of
Less than 10 Years Years Since
5 Year Since Inception) Inception
Average Average Annual (if Less
Sub-Account Portfolio 1 Year Annual Total Total Return than 10
Investing in the Inception Total Return Years)
Corresponding Portfolio Date Return
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alger American Income & Growth 11/15/88 29.80% 15.03% 12.07% 9.13
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & Income 1/14/91 22.66% 16.88% 13.36% 6.96
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier Growth 6/26/92 27.48% 18.64% 19.37% 5.52
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital Appreciation 4/05/93 21.95% N/A 17.33% 4.74
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 8/31/90 11.18% 23.63% 41.78% 7.34
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 9/13/93 16.28% N/A 13.54% 4.30
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth 9/13/93 16.33% N/A 20.08% 4.30
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 7/24/95 16.09% N/A 19.39% 2.44
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
MFS VIT Growth with Income 10/09/95 23.60% N/A 22.90% 2.23
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
MFS VIT Research 7/26/95 14.53% N/A 18.02% 2.44
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed Income 1/02/97 4.70% N/A 4.70% 1.00
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High Yield 1/02/97 8.12% N/A 8.12% 1.00
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF International Magnum 1/02/97 -1.14% N/A -1.14% 1.00
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Managed (1) 8/01/88 16.52% 17.48% 18.60% 9.42
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small Cap (2) 8/01/88 16.46% 12.29% 13.77% 9.42
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth (3) 2/26/69 39.53% 28.03% 23.94% N/A
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market 1/01/98 N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On September 16th, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust (the
"Old Trust") was effectively divided into two investment funds - the Old Trust
and the present OCC Accumulation Trust (the "Present Trust") at which time the
Present Trust commenced operations. The total net assets of the Managed
Portfolio immediately after the transaction were $682,601,380 in the Old Trust
and $51,345,102 in the Present Trust. For the period prior to September 16,
1994, the performance figures for the Managed Portfolio of the Present Trust
reflect the performance of the Managed Portfolio of the Old Trust.
(2) On September 16th, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust (the
"Old Trust") was effectively divided into two investment funds - the Old Trust
and the present OCC Accumulation Trust (the "Present Trust") at which time the
Present Trust commenced operations. The total net assets of the Small Cap
Portfolio immediately after the transaction were $139,812,573 in the Old Trust
and $8,129,274 in the Present Trust. For the period prior to September 16, 1994,
the performance figures for the Small Cap Portfolio of the Present Trust reflect
the performance of the Small Cap Portfolio of the Old Trust.
(3) The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio includes performance of its
predecessor.
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
PREPARING FOR YEAR 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities. Although the Company does not
believe that there is a material contingency associated with the Year 2000
project, there can be no assurance that exposure for material contingencies will
not arise.
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 interest 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 renewal
interest rate effective on that date to money remaining in the Fixed Account. We
will guarantee this rate for one year. The initial and the renewal 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) or, for policies issued subject to the jurisdiction
of the Virgin Islands, at an effective annual yield of at least 4.0% (5.5% 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 (subject to state law).
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.
INDEPENDENT AUDITORS
The consolidated financial statements of Transamerica at December 31, 1997, have
been audited by Ernst & Young LLP, Independent Auditors, as set forth in their
report appearing elsewhere herein, and are included in reliance on such report
given upon the authority of such firm as experts in accounting and auditing.
There are no audited financial statements for the Separate Account since it had
not commenced operations as of December 31, 1997.
FINANCIAL STATEMENTS
Financial Statements for Transamerica are included in this prospectus, starting
on the next page. Transamerica Occidental Life Separate Account VUL-1 had not
yet commenced operations as of December 31, 1997, 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>
APPENDIX A - GUIDELINE MINIMUM SUM INSURED TABLE
The guideline minimum sum insured is a percentage of the Policy Value as set
forth below, according to federal tax regulations:
<TABLE>
<CAPTION>
Guideline Minimum Sum Insured Table
Attained Age Percentage Attained Age Percentage
- ------------ ---------- ------------ ----------
<S> <C> <C> <C>
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%
</TABLE>
<PAGE>
APPENDIX B - OPTIONAL INSURANCE BENEFITS
This Appendix provides only a summary of other insurance benefits available by
rider. There may be an additional charge for benefits under a rider. Rider
availability is subject to state law and approval.
WAIVER OF PAYMENT RIDER
This rider provides that, during periods of total disability continuing
more than four months, we will add to the Policy Value an amount you
selected, or the amount needed to pay the monthly insurance protection
charges, or the amount needed to pay the minimum monthly payment
(during the time the minimum monthly payment applies), whichever is
greatest. This amount will keep the Policy in force, within limits.
This benefit is subject to our maximum issue benefits. Its cost will
change yearly.
GUARANTEED INSURABILITY RIDER
This rider guarantees that insurance may be added at various option
dates without evidence of insurability. This benefit may be exercised
on the option dates even if the insured is disabled.
CHILDREN'S INSURANCE RIDER
This rider provides a term insurance benefit for the Insured's child or
children, subject to age limitations. The rider includes a feature that
allows the insured child to convert the coverage to another type of
policy issued by us, subject to our issue size and issue age
limitations.
OPTION TO ACCELERATE DEATH BENEFITS (LIVING BENEFITS RIDER)
This rider allows the Policy owner to elect to receive part of the net
death benefit under the Policy prior to the insured's death if the
insured becomes terminally ill, as defined in the rider.
GUARANTEED DEATH BENEFIT RIDER
This rider provides that if the Policy owner makes payments, minus
partial withdrawals, partial withdrawal charges and any outstanding
loans, of a sufficient amount to the Policy, then we guarantee that the
Policy will not lapse prior to the final payment date. After the final
payment date, the rider guarantees a minimum death benefit. The rider
remains effective only if, on each Policy anniversary through the final
payment date, payments, less partial withdrawals, partial withdrawal
charges and any outstanding loans, satisfy the required payment
amounts. Once terminated, the rider may not be reinstated.
<PAGE>
APPENDIX C - PAYMENT OPTIONS
PAYMENT OPTIONS - On written request, the surrender value or all or
part of any payable net death benefit may be paid under one or more
payment options then offered by Transamerica. If you do not make an
election, we will pay the benefits in a single sum. If a payment option
is selected, the beneficiary may pay to us any amount that would
otherwise be deducted from the death benefit. A certificate will be
provided to the payee describing the payment option selected.
The amounts payable under a payment option are paid from our General
Account. These amounts are not based on the investment experience of
the Separate Account.
SELECTION OF PAYMENT OPTIONS - 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 Policy owner and
beneficiary provisions, any option selection may be changed before the
net death benefit becomes payable. If you make no selection, the
beneficiary may select an option when the net death benefit becomes
payable.
<PAGE>
APPENDIX D - ILLUSTRATIONS OF DEATH BENEFIT,
POLICY VALUES AND ACCUMULATED PAYMENTS
The following tables illustrate the way in which the Policy's Surrender
Value, Death Benefit and Policy Value could vary over an extended
period of time.
Assumptions
The tables illustrate a Policy issued to a male, Age 30, under a
standard underwriting class and qualifying for the non-smoker rates,
and a Policy issued to a male, Age 45, under a standard underwriting
class and qualifying for the non-smoker rates. One set of tables
illustrates the Level Death Benefit Option; another set illustrates the
Adjustable Death Benefit Option. In each case, one table illustrates
the guaranteed cost of insurance rates and the other table illustrates
the current cost of insurance rates as presently in effect.
The tables assume that no Policy loans have been made, that you have
not requested an increase or decrease in the initial face amount, that
no partial withdrawals have been made, and that no transfers above 12
have been made in any Policy year (so that no related transaction or
transfer charges have been incurred).
The tables assume that all payments are allocated to and remain in the
Separate Account for the entire period shown. The tables are based on
hypothetical gross investment rates of return for the portfolios (i.e.,
investment income and capital gains and losses, realized or unrealized)
equivalent to constant gross (after tax) annual rates of 0%, 6%, and
12%. The tables also show the amount that would accumulate if payments
accumulated at 5% interest.
The Policy Values and Death Benefits would be different from those
shown if the gross annual investment rates of return averaged 0%, 6%,
and 12% over a period of years, but fluctuated above or below such
averages for individual Policy years. The values also would be
different depending on the allocation of the Policy's total Policy
Value among the sub-accounts if the actual rates of return averaged 0%,
6% or 12%, but the rates of each portfolio varied above and below such
averages.
Deductions for Charges
The tables reflect deduction of the payment expense charge, the
administration charge, the mortality and expense risk charge, and the
monthly insurance protection charge. The amounts shown in the tables
also take into account portfolio management fees and operating
expenses, which averaged an annual rate of 0.85% of the average daily
net assets of the portfolios. This annual rate is based on the average
of the expense ratios of each of the portfolios for the last fiscal
year and takes into account current expense reimbursement arrangements.
The fees and expenses of each portfolio vary, and in 1997 the total
fees and expenses ranged from an annual rate of 0.70% to an annual rate
of 1.15% of average daily net assets. The fees and expenses of your
Policy may be more or less than 0.85% in the aggregate, depending on
how you make allocations of Policy Value among the sub-accounts. For
more information on portfolio expenses, see Portfolio Expenses table in
this prospectus and the prospectuses for the portfolios.
Net Annual Rates of Investment
Applying the current mortality and expense risk charge, the
administration charge, and the average portfolio management fees and
operating expenses of 0.85% of average net assets, the gross annual
rates of investment return of 0%, 6% and 12% would produce net annual
rates of -1.65%, 4.35% and 10.35%, respectively, during the first 10
Policy years and -1.50%, 4.50% and 10.50%, respectively, after that.
The hypothetical returns shown in the tables do not reflect any charges for
income taxes against the Separate Account since no charges are currently made.
However, if in the future the charges are made, to produce the illustrated death
benefits and Policy values, the gross annual investment rate of return would
have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.
On request, we will provide a comparable illustration based on the proposed
Insured's age, sex, and underwriting class, and the requested face amount, death
benefit option and riders.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 30
Face Amount: $100,000
Level Option
BASED ON CURRENT MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $919 $0 $685 $100,000 $0 $730 $100,000 $0 $776 $100,000
2 $1,883 $373 $1,359 $100,000 $508 $1,494 $100,000 $648 $1,634 $100,000
3 $2,896 $1,147 $2,023 $100,000 $1,415 $2,291 $100,000 $1,706 $2,582 $100,000
4 $3,960 $1,910 $2,677 $100,000 $2,358 $3,125 $100,000 $2,863 $3,630 $100,000
5 $5,077 $2,652 $3,309 $100,000 $3,327 $3,984 $100,000 $4,118 $4,775 $100,000
6 $6,249 $3,373 $3,921 $100,000 $4,322 $4,870 $100,000 $5,481 $6,029 $100,000
7 $7,480 $4,086 $4,524 $100,000 $5,359 $5,797 $100,000 $6,978 $7,416 $100,000
8 $8,773 $4,778 $5,106 $100,000 $6,425 $6,753 $100,000 $8,608 $8,936 $100,000
9 $10,131 $5,450 $5,669 $100,000 $7,523 $7,742 $100,000 $10,387 $10,606 $100,000
10 $11,556 $6,103 $6,212 $100,000 $8,656 $8,765 $100,000 $12,332 $12,441 $100,000
11 $13,052 $6,742 $6,742 $100,000 $9,832 $9,832 $100,000 $14,474 $14,474 $100,000
12 $14,624 $7,249 $7,249 $100,000 $10,934 $10,934 $100,000 $16,710 $16,710 $100,000
13 $16,274 $7,733 $7,733 $100,000 $12,073 $12,073 $100,000 $19,171 $19,171 $100,000
14 $18,006 $8,194 $8,194 $100,000 $13,248 $13,248 $100,000 $21,882 $21,882 $100,000
15 $19,825 $8,630 $8,630 $100,000 $14,461 $14,461 $100,000 $24,868 $24,868 $100,000
16 $21,735 $9,045 $9,045 $100,000 $15,718 $15,718 $100,000 $28,165 $28,165 $100,000
17 $23,741 $9,432 $9,432 $100,000 $17,013 $17,013 $100,000 $31,800 $31,800 $100,000
18 $25,847 $9,798 $9,798 $100,000 $18,355 $18,355 $100,000 $35,817 $35,817 $100,000
19 $28,058 $10,142 $10,142 $100,000 $19,747 $19,747 $100,000 $40,259 $40,259 $100,000
20 $30,379 $10,463 $10,463 $100,000 $21,188 $21,188 $100,000 $45,173 $45,173 $100,000
Age 60 $61,041 $11,967 $11,967 $100,000 $38,721 $38,721 $100,000 $133,576 $133,576 $178,992
Age 65 $82,982 $11,138 $11,138 $100,000 $50,170 $50,170 $100,000 $223,102 $223,102 $272,184
Age 70 $110,985 $8,801 $8,801 $100,000 $64,269 $64,269 $100,000 $369,031 $369,031 $428,076
Age 75 $146,725 $3,737 $3,737 $100,000 $82,139 $82,139 $100,000 $607,641 $607,641 $650,176
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $875 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 30
Face Amount: $100,000
Level Option
BASED ON GUARANTEED MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $919 $0 $683 $100,000 $0 $729 $100,000 $0 $775 $100,000
2 $1,883 $369 $1,355 $100,000 $504 $1,490 $100,000 $644 $1,630 $100,000
3 $2,896 $1,140 $2,016 $100,000 $1,408 $2,284 $100,000 $1,698 $2,574 $100,000
4 $3,960 $1,899 $2,666 $100,000 $2,346 $3,113 $100,000 $2,849 $3,616 $100,000
5 $5,077 $2,637 $3,294 $100,000 $3,308 $3,965 $100,000 $4,097 $4,754 $100,000
6 $6,249 $3,352 $3,900 $100,000 $4,296 $4,844 $100,000 $5,449 $5,997 $100,000
7 $7,480 $4,058 $4,496 $100,000 $5,322 $5,760 $100,000 $6,932 $7,370 $100,000
8 $8,773 $4,743 $5,071 $100,000 $6,378 $6,706 $100,000 $8,546 $8,874 $100,000
9 $10,131 $5,406 $5,625 $100,000 $7,462 $7,681 $100,000 $10,304 $10,523 $100,000
10 $11,556 $6,051 $6,160 $100,000 $8,580 $8,689 $100,000 $12,223 $12,332 $100,000
11 $13,052 $6,664 $6,664 $100,000 $9,718 $9,718 $100,000 $14,308 $14,308 $100,000
12 $14,624 $7,148 $7,148 $100,000 $10,782 $10,782 $100,000 $16,480 $16,480 $100,000
13 $16,274 $7,603 $7,603 $100,000 $11,872 $11,872 $100,000 $18,858 $18,858 $100,000
14 $18,006 $8,041 $8,041 $100,000 $13,000 $13,000 $100,000 $21,476 $21,476 $100,000
15 $19,825 $8,450 $8,450 $100,000 $14,157 $14,157 $100,000 $24,349 $24,349 $100,000
16 $21,735 $8,831 $8,831 $100,000 $15,346 $15,346 $100,000 $27,507 $27,507 $100,000
17 $23,741 $9,185 $9,185 $100,000 $16,568 $16,568 $100,000 $30,979 $30,979 $100,000
18 $25,847 $9,501 $9,501 $100,000 $17,816 $17,816 $100,000 $34,794 $34,794 $100,000
19 $28,058 $9,792 $9,792 $100,000 $19,101 $19,101 $100,000 $38,998 $38,998 $100,000
20 $30,379 $10,046 $10,046 $100,000 $20,416 $20,416 $100,000 $43,628 $43,628 $100,000
Age 60 $61,041 $9,756 $9,756 $100,000 $35,299 $35,299 $100,000 $126,569 $126,569 $169,602
Age 65 $82,982 $6,055 $6,055 $100,000 $43,222 $43,222 $100,000 $208,604 $208,604 $254,497
Age 70 $110,985 $0 $0 $0 $50,593 $50,593 $100,000 $339,021 $339,021 $393,265
Age 75 $146,725 $0 $0 $0 $56,137 $56,137 $100,000 $547,506 $547,506 $585,831
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $875 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..................
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 45
Face Amount: $250,000
Level Option
BASED ON CURRENT MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,410 $0 $3,174 $250,000 $0 $3,391 $250,000 $0 $3,608 $250,000
2 $9,041 $1,904 $6,249 $250,000 $2,536 $6,881 $250,000 $3,195 $7,540 $250,000
3 $13,903 $5,343 $9,205 $250,000 $6,593 $10,456 $250,000 $7,950 $11,813 $250,000
4 $19,008 $8,679 $12,059 $250,000 $10,754 $14,134 $250,000 $13,098 $16,478 $250,000
5 $24,368 $11,896 $14,794 $250,000 $15,005 $17,902 $250,000 $18,662 $21,560 $250,000
6 $29,996 $14,993 $17,408 $250,000 $19,348 $21,763 $250,000 $24,688 $27,103 $250,000
7 $35,906 $17,963 $19,893 $250,000 $23,782 $25,712 $250,000 $31,219 $33,149 $250,000
8 $42,112 $20,789 $22,237 $250,000 $28,293 $29,741 $250,000 $38,297 $39,744 $250,000
9 $48,627 $23,465 $24,430 $250,000 $32,880 $33,845 $250,000 $45,977 $46,942 $250,000
10 $55,469 $25,974 $26,456 $250,000 $37,530 $38,013 $250,000 $54,317 $54,800 $250,000
11 $62,652 $28,768 $28,768 $250,000 $42,707 $42,707 $250,000 $63,856 $63,856 $250,000
12 $70,195 $30,968 $30,968 $250,000 $47,555 $47,555 $250,000 $73,841 $73,841 $250,000
13 $78,114 $33,058 $33,058 $250,000 $52,567 $52,567 $250,000 $84,869 $84,869 $250,000
14 $86,430 $35,040 $35,040 $250,000 $57,754 $57,754 $250,000 $97,064 $97,064 $250,000
15 $95,161 $36,906 $36,906 $250,000 $63,123 $63,123 $250,000 $110,563 $110,563 $250,000
16 $104,330 $38,653 $38,653 $250,000 $68,681 $68,681 $250,000 $125,522 $125,522 $250,000
17 $113,956 $40,278 $40,278 $250,000 $74,440 $74,440 $250,000 $142,120 $142,120 $250,000
18 $124,064 $41,772 $41,772 $250,000 $80,407 $80,407 $250,000 $160,557 $160,557 $250,000
19 $134,677 $43,125 $43,125 $250,000 $86,591 $86,591 $250,000 $181,064 $181,064 $250,000
20 $145,821 $44,330 $44,330 $250,000 $93,004 $93,004 $250,000 $203,906 $203,906 $250,000
Age 60 $95,161 $36,906 $36,906 $250,000 $63,123 $63,123 $250,000 $110,563 $110,563 $250,000
Age 65 $145,821 $44,330 $44,330 $250,000 $93,004 $93,004 $250,000 $203,906 $203,906 $250,000
Age 70 $210,477 $48,162 $48,162 $250,000 $129,301 $129,301 $250,000 $359,437 $359,437 $416,947
Age 75 $292,995 $46,159 $46,159 $250,000 $174,370 $174,370 $250,000 $613,726 $613,726 $656,686
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $4,200 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..........
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 45
Face Amount: $250,000
Level Option
BASED ON GUARANTEED MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,410 $0 $3,169 $250,000 $0 $3,385 $250,000 $0 $3,602 $250,000
2 $9,041 $1,888 $6,233 $250,000 $2,520 $6,865 $250,000 $3,178 $7,523 $250,000
3 $13,903 $5,304 $9,167 $250,000 $6,552 $10,415 $250,000 $7,907 $11,769 $250,000
4 $19,008 $8,622 $12,002 $250,000 $10,690 $14,070 $250,000 $13,026 $16,406 $250,000
5 $24,368 $11,817 $14,714 $250,000 $14,911 $17,809 $250,000 $18,553 $21,450 $250,000
6 $29,996 $14,864 $17,279 $250,000 $19,195 $21,610 $250,000 $24,505 $26,920 $250,000
7 $35,906 $17,798 $19,728 $250,000 $23,577 $25,507 $250,000 $30,965 $32,895 $250,000
8 $42,112 $20,590 $22,037 $250,000 $28,033 $29,481 $250,000 $37,958 $39,406 $250,000
9 $48,627 $23,219 $24,184 $250,000 $32,547 $33,512 $250,000 $45,527 $46,492 $250,000
10 $55,469 $25,664 $26,147 $250,000 $37,101 $37,583 $250,000 $53,718 $54,200 $250,000
11 $62,652 $27,930 $27,930 $250,000 $41,701 $41,701 $250,000 $62,611 $62,611 $250,000
12 $70,195 $29,511 $29,511 $250,000 $45,850 $45,850 $250,000 $71,791 $71,791 $250,000
13 $78,114 $30,896 $30,896 $250,000 $50,037 $50,037 $250,000 $81,842 $81,842 $250,000
14 $86,430 $32,063 $32,063 $250,000 $54,249 $54,249 $250,000 $92,861 $92,861 $250,000
15 $95,161 $32,988 $32,988 $250,000 $58,472 $58,472 $250,000 $104,959 $104,959 $250,000
16 $104,330 $33,652 $33,652 $250,000 $62,691 $62,691 $250,000 $118,272 $118,272 $250,000
17 $113,956 $34,030 $34,030 $250,000 $66,895 $66,895 $250,000 $132,958 $132,958 $250,000
18 $124,064 $34,101 $34,101 $250,000 $71,072 $71,072 $250,000 $149,206 $149,206 $250,000
19 $134,677 $33,812 $33,812 $250,000 $75,190 $75,190 $250,000 $167,229 $167,229 $250,000
20 $145,821 $33,088 $33,088 $250,000 $79,197 $79,197 $250,000 $187,279 $187,279 $250,000
Age 60 $95,161 $32,988 $32,988 $250,000 $58,472 $58,472 $250,000 $104,959 $104,959 $250,000
Age 65 $145,821 $33,088 $33,088 $250,000 $79,197 $79,197 $250,000 $187,279 $187,279 $250,000
Age 70 $210,477 $21,739 $21,739 $250,000 $97,741 $97,741 $250,000 $325,916 $325,916 $378,062
Age 75 $292,995 $0 $0 $0 $108,720 $108,720 $250,000 $547,906 $547,906 $586,259
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $4,200 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..........
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 30
Face Amount: $100,000
Adjustable Option
BASED ON CURRENT MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $3,360 $1,783 $2,879 $102,879 $1,962 $3,058 $103,058 $2,142 $3,238 $103,238
2 $6,888 $4,724 $5,710 $105,710 $5,264 $6,250 $106,250 $5,825 $6,811 $106,811
3 $10,592 $7,618 $8,494 $108,494 $8,704 $9,580 $109,580 $9,878 $10,754 $110,754
4 $14,482 $10,466 $11,233 $111,233 $12,288 $13,055 $113,055 $14,338 $15,105 $115,105
5 $18,566 $13,257 $13,914 $113,914 $16,012 $16,669 $116,669 $19,237 $19,894 $119,894
6 $22,854 $15,991 $16,539 $116,539 $19,879 $20,427 $120,427 $24,618 $25,166 $125,166
7 $27,357 $18,683 $19,121 $119,121 $23,912 $24,350 $124,350 $30,545 $30,983 $130,983
8 $32,085 $21,321 $21,649 $121,649 $28,102 $28,430 $128,430 $37,062 $37,390 $137,390
9 $37,049 $23,903 $24,122 $124,122 $32,457 $32,676 $132,676 $44,228 $44,447 $144,447
10 $42,262 $26,435 $26,544 $126,544 $36,985 $37,094 $137,094 $52,113 $52,222 $152,222
11 $47,735 $28,952 $28,952 $128,952 $41,747 $41,747 $141,747 $60,866 $60,866 $160,866
12 $53,482 $31,306 $31,306 $131,306 $46,591 $46,591 $146,591 $70,399 $70,399 $171,070
13 $59,516 $33,608 $33,608 $133,608 $51,635 $51,635 $151,635 $80,903 $80,903 $190,931
14 $65,851 $35,856 $35,856 $135,856 $56,887 $56,887 $156,887 $92,462 $92,462 $211,739
15 $72,504 $38,050 $38,050 $138,050 $62,352 $62,352 $162,352 $105,183 $105,183 $233,507
16 $79,489 $40,193 $40,193 $140,193 $68,047 $68,047 $168,047 $119,191 $119,191 $256,260
17 $86,824 $42,279 $42,279 $142,279 $73,971 $73,971 $173,971 $134,601 $134,601 $281,316
18 $94,525 $44,315 $44,315 $144,315 $80,142 $80,142 $180,142 $151,567 $151,567 $307,681
19 $102,611 $46,301 $46,301 $146,301 $86,571 $86,571 $186,571 $170,250 $170,250 $335,392
20 $111,102 $48,235 $48,235 $148,235 $93,267 $93,267 $193,267 $190,824 $190,824 $364,473
Age 60 $223,235 $64,346 $64,346 $164,346 $177,171 $177,171 $277,171 $556,525 $556,525 $745,743
Age 65 $303,476 $69,826 $69,826 $169,826 $233,130 $233,130 $333,130 $926,627 $926,627 $1,130,485
Age 70 $405,887 $73,236 $73,236 $173,236 $300,924 $300,924 $400,924 $1,529,911 $1,529,911 $1,774,697
Age 75 $536,593 $73,524 $73,524 $173,524 $382,147 $382,147 $482,147 $2,516,345 $2,516,345 $2,692,489
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $3,200 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..........
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 30
Face Amount: $100,000
Adjustable Option
BASED ON GUARANTEED MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $3,360 $1,778 $2,874 $102,874 $1,958 $3,054 $103,054 $2,138 $3,234 $103,234
2 $6,888 $4,711 $5,697 $105,697 $5,250 $6,236 $106,236 $5,811 $6,797 $106,797
3 $10,592 $7,592 $8,468 $108,468 $8,675 $9,551 $109,551 $9,848 $10,724 $110,724
4 $14,482 $10,423 $11,190 $111,190 $12,239 $13,006 $113,006 $14,284 $15,051 $115,051
5 $18,566 $13,194 $13,851 $113,851 $15,937 $16,594 $116,594 $19,150 $19,807 $119,807
6 $22,854 $15,904 $16,452 $116,452 $19,772 $20,320 $120,320 $24,487 $25,035 $125,035
7 $27,357 $18,568 $19,006 $119,006 $23,765 $24,203 $124,203 $30,359 $30,797 $130,797
8 $32,085 $21,174 $21,502 $121,502 $27,909 $28,237 $128,237 $36,806 $37,134 $137,134
9 $37,049 $23,723 $23,942 $123,942 $32,208 $32,427 $132,427 $43,886 $44,105 $144,105
10 $42,262 $26,216 $26,325 $126,325 $36,672 $36,781 $136,781 $51,665 $51,774 $151,774
11 $47,735 $28,643 $28,643 $128,643 $41,294 $41,294 $141,294 $60,200 $60,200 $160,200
12 $53,482 $30,906 $30,906 $130,906 $45,984 $45,984 $145,984 $69,472 $69,472 $169,472
13 $59,516 $33,105 $33,105 $133,105 $50,847 $50,847 $150,847 $79,657 $79,657 $187,990
14 $65,851 $35,253 $35,253 $135,253 $55,901 $55,901 $155,901 $90,843 $90,843 $208,030
15 $72,504 $37,338 $37,338 $137,338 $61,143 $61,143 $161,143 $103,116 $103,116 $228,918
16 $79,489 $39,361 $39,361 $139,361 $66,581 $66,581 $166,581 $116,584 $116,584 $250,656
17 $86,824 $41,325 $41,325 $141,325 $72,222 $72,222 $172,222 $131,362 $131,362 $274,546
18 $94,525 $43,218 $43,218 $143,218 $78,064 $78,064 $178,064 $147,561 $147,561 $299,549
19 $102,611 $45,052 $45,052 $145,052 $84,126 $84,126 $184,126 $165,342 $165,342 $325,723
20 $111,102 $46,818 $46,818 $146,818 $90,407 $90,407 $190,407 $184,844 $184,844 $353,051
Age 60 $223,235 $60,500 $60,500 $160,500 $168,183 $168,183 $268,183 $528,972 $528,972 $708,823
Age 65 $303,476 $62,725 $62,725 $162,725 $216,873 $216,873 $316,873 $868,887 $868,887 $1,060,042
Age 70 $405,887 $59,635 $59,635 $159,635 $271,202 $271,202 $371,202 $1,409,255 $1,409,255 $1,634,735
Age 75 $536,593 $48,163 $48,163 $148,163 $328,514 $328,514 $428,514 $2,273,080 $2,273,080 $2,432,196
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $3,200 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..........
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 45
Face Amount: $250,000
Adjustable Option
BASED ON CURRENT MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $15,540 $8,341 $13,171 $263,171 $9,167 $13,997 $263,997 $9,994 $14,824 $264,824
2 $31,857 $21,720 $26,065 $276,065 $24,197 $28,542 $278,542 $26,774 $31,119 $281,119
3 $48,990 $34,803 $38,665 $288,665 $39,773 $43,635 $293,635 $45,151 $49,014 $299,014
4 $66,979 $47,610 $50,990 $300,990 $55,936 $59,316 $309,316 $65,309 $68,689 $318,689
5 $85,868 $60,125 $63,022 $313,022 $72,689 $75,586 $325,586 $87,408 $90,305 $340,305
6 $105,702 $72,347 $74,762 $324,762 $90,052 $92,467 $342,467 $111,644 $114,059 $364,059
7 $126,527 $84,271 $86,201 $336,201 $108,042 $109,972 $359,972 $138,228 $140,158 $390,158
8 $148,393 $95,879 $97,327 $347,327 $126,662 $128,110 $378,110 $167,377 $168,825 $418,825
9 $171,353 $107,165 $108,130 $358,130 $145,928 $146,893 $396,893 $199,346 $200,311 $450,311
10 $195,460 $118,111 $118,593 $368,593 $165,844 $166,326 $416,326 $234,401 $234,884 $484,884
11 $220,773 $129,376 $129,376 $379,376 $187,179 $187,179 $437,179 $273,721 $273,721 $523,721
12 $247,352 $139,894 $139,894 $389,894 $208,862 $208,862 $458,862 $316,525 $316,525 $566,525
13 $275,260 $150,150 $150,150 $400,150 $231,415 $231,415 $481,415 $363,714 $363,714 $613,714
14 $304,563 $160,146 $160,146 $410,146 $254,872 $254,872 $504,872 $415,743 $415,743 $665,743
15 $335,331 $169,875 $169,875 $419,875 $279,264 $279,264 $529,264 $473,112 $473,112 $723,112
16 $367,637 $179,334 $179,334 $429,334 $304,626 $304,626 $554,626 $536,373 $536,373 $786,373
17 $401,559 $188,519 $188,519 $438,519 $330,993 $330,993 $580,993 $606,135 $606,135 $856,135
18 $437,177 $197,422 $197,422 $447,422 $358,396 $358,396 $608,396 $683,068 $683,068 $933,068
19 $474,576 $206,032 $206,032 $456,032 $386,869 $386,869 $636,869 $767,909 $767,909 $1,017,909
20 $513,845 $214,341 $214,341 $464,341 $416,445 $416,445 $666,445 $861,476 $861,476 $1,111,476
Age 60 $335,331 $169,875 $169,875 $419,875 $279,264 $279,264 $529,264 $473,112 $473,112 $723,112
Age 65 $513,845 $214,341 $214,341 $464,341 $416,445 $416,445 $666,445 $861,476 $861,476 $1,111,476
Age 70 $741,679 $251,474 $251,474 $501,474 $582,642 $582,642 $832,642 $1,495,776 $1,495,776 $1,745,776
Age 75 $1,032,460 $278,862 $278,862 $528,862 $781,760 $781,760 $1,031,760 $2,531,682 $2,531,682 $2,781,682
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $14,800 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..........
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE
SEPARATE ACCOUNT VUL-1
FLEXIBLE PAYMENT VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Age 45
Face Amount: $250,000
Adjustable Option
BASED ON GUARANTEED MONTHLY INSURANCE
PROTECTION CHARGES (WITHOUT RIDERS), MORTALITY AND EXPENSE RISK CHARGE,
ADMINISTRATION CHARGE AND PORTFOLIO EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Per Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $15,540 $8,320 $13,150 $263,150 $9,146 $13,976 $263,976 $9,973 $14,803 $264,803
2 $31,857 $21,659 $26,004 $276,004 $24,134 $28,479 $278,479 $26,708 $31,053 $281,053
3 $48,990 $34,675 $38,538 $288,538 $39,635 $43,498 $293,498 $45,003 $48,865 $298,865
4 $66,979 $47,406 $50,786 $300,786 $55,706 $59,086 $309,086 $65,051 $68,431 $318,431
5 $85,868 $59,828 $62,725 $312,725 $72,340 $75,237 $325,237 $87,001 $89,898 $339,898
6 $105,702 $71,915 $74,330 $324,330 $89,529 $91,944 $341,944 $111,013 $113,428 $363,428
7 $126,527 $83,708 $85,638 $335,638 $107,331 $109,261 $359,261 $137,333 $139,263 $389,263
8 $148,393 $95,175 $96,623 $346,623 $125,735 $127,182 $377,182 $166,159 $167,607 $417,607
9 $171,353 $106,296 $107,261 $357,261 $144,738 $145,703 $395,703 $197,718 $198,683 $448,683
10 $195,460 $117,048 $117,530 $367,530 $164,334 $164,817 $414,817 $232,257 $232,740 $482,740
11 $220,773 $127,436 $127,436 $377,436 $184,550 $184,550 $434,550 $270,080 $270,080 $520,080
12 $247,352 $136,955 $136,955 $386,955 $204,897 $204,897 $454,897 $311,008 $311,008 $561,008
13 $275,260 $146,096 $146,096 $396,096 $225,883 $225,883 $475,883 $355,889 $355,889 $605,889
14 $304,563 $154,834 $154,834 $404,834 $247,506 $247,506 $497,506 $405,095 $405,095 $655,095
15 $335,331 $163,147 $163,147 $413,147 $269,761 $269,761 $519,761 $459,035 $459,035 $709,035
16 $367,637 $171,014 $171,014 $421,014 $292,644 $292,644 $542,644 $518,161 $518,161 $768,161
17 $401,559 $178,412 $178,412 $428,412 $316,150 $316,150 $566,150 $582,969 $582,969 $832,969
18 $437,177 $185,321 $185,321 $435,321 $340,276 $340,276 $590,276 $654,009 $654,009 $904,009
19 $474,576 $191,689 $191,689 $441,689 $364,985 $364,985 $614,985 $731,851 $731,851 $981,851
20 $513,845 $197,438 $197,438 $447,438 $390,211 $390,211 $640,211 $817,096 $817,096 $1,067,096
Age 60 $335,331 $163,147 $163,147 $413,147 $269,761 $269,761 $519,761 $459,035 $459,035 $709,035
Age 65 $513,845 $197,438 $197,438 $447,438 $390,211 $390,211 $640,211 $817,096 $817,096 $1,067,096
Age 70 $741,679 $217,530 $217,530 $467,530 $527,132 $527,132 $777,132 $1,391,420 $1,391,420 $1,641,420
Age 75 $1,032,460 $214,446 $214,446 $464,446 $671,768 $671,768 $921,768 $2,302,768 $2,302,768 $2,552,768
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a payment of $14,800 (approximately 90% of the guideline level
premium) is made at the beginning of each Policy Year. Values will be
different if payments are made with a different frequency or in
different amounts.
(2) Assumes that no Policy loan has been made. Excessive loans or partial
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT RESULTS
MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
PORTFOLIOS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD..........
<PAGE>
APPENDIX E - MAXIMUM SURRENDER CHARGES
We compute surrender charges on the Policy by using a rate per $1,000 of face
amount of insurance. The rate which applies to a 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 at the start of the surrender charge period
(date of issue for the initial face amount or effective date of increase for an
increase in face amount); and the number of years during which the surrender
charges have been effective.
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 amount apply for ten years from the date the increase is effective and
apply only to the face increase amount.
During the period that surrender charges apply, the rate decreases each Policy
year on the Policy anniversary for the initial face amount and on each twelve
month anniversary of the effective date of the face increase amount. The rate
established on the Policy anniversary or twelve month anniversary for a face
increase amount applies during that year.
The maximum surrender charge rate is the rate in the first year of the surrender
charge period. These rates are listed on the next page. Male rates are used if
unisex rates apply on the Policy.
The maximum amount of the surrender charges is calculated by multiplying the
appropriate rate from the table by the face amount of insurance divided by
$1,000. For example, if the Insured is a male, age 45 at issue, and the initial
face amount of the Policy is $200,000, the maximum surrender charges amount is
determined as follows:
1. Find 45 under the column Insured's Age.
2. Find the rate per $1,000 for age 45 under the column Male Rates ($)
-- $19.32. 3. Divide the face amount by $1,000 -- $200,000 divided by
$1,000 equals 200. 4. Multiply the rate in item 2 by the result in
number 3 -- $19.32 times 200 equals $3,864.
The amount of the surrender charges decreases each year on the Policy
anniversary (or twelve month anniversary for a face increase amount) as long as
the face amount of insurance does not change. For the example shown above, for
instance, the surrender charges rate in the fifth Policy year is $11.59. The
surrender charges amount in the fifth year on a $200,000 face amount is $2,318.
The surrender charges rate in the tenth Policy year is $1.93. The surrender
charges amount in the tenth year on a $200,000 face amount is $386.
<PAGE>
Maximum Surrender Charge Rates
<TABLE>
<CAPTION>
Insured's Age Male Rates ($Female Rates (Insured's Age Male Rates ($Female Rates($)
<S> <C> <C> <C> <C> <C> <C>
0 6.65 6.44 35 12.76 12.12
1 6.72 6.49 36 13.23 12.55
2 6.79 6.57 37 13.73 13.02
3 6.89 6.65 38 14.28 13.53
4 6.95 6.72 39 14.90 14.11
5 7.03 6.79 40 15.51 14.67
6 7.12 6.87 41 16.30 15.41
7 7.19 6.94 42 16.96 16.02
8 7.27 7.00 43 17.72 16.73
9 7.35 7.08 44 18.54 17.49
10 7.42 7.15 45 19.32 18.21
11 7.50 7.23 46 20.52 19.34
12 7.58 7.31 47 21.74 20.47
13 7.66 7.37 48 22.95 21.58
14 7.74 7.45 49 24.15 22.71
15 7.83 7.53 50 25.36 23.84
16 7.90 7.59 51 27.04 25.40
17 7.97 7.67 52 28.71 26.96
18 8.07 7.75 53 30.39 28.51
19 8.21 7.88 54 32.06 30.07
20 8.39 8.05 55 33.74 31.63
21 8.55 8.20 56 35.14 32.94
22 8.75 8.38 57 36.55 34.25
23 8.93 8.55 58 37.96 35.56
24 9.17 8.77 59 39.37 36.87
25 9.48 9.06 60 40.78 38.18
26 9.76 9.33 61 42.52 39.79
27 10.03 9.59 62 44.25 41.41
28 10.32 9.85 63 45.99 43.02
29 10.64 10.14 64 47.72 44.64
30 10.96 10.45 65 49.47 46.26
31 11.28 10.74 66 53.18 49.71
32 11.62 11.06 67 54.00 53.16
33 11.97 11.38 68 54.00 54.00
34 12.37 11.75 69-80 54.00 54.00
</TABLE>
