File Nos. 333-
811-08445
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes.)
SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
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(Exact Name of Registrant)
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
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(Name of Depositor)
Security Mutual Bldg., 100 Court Street
Binghamton, New York 13902-1625
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (607) 723-3551
Name and Address of Agent for Service
Susan E. Mistretta
Vice President and Associate General Counsel
Security Mutual Life Insurance Company of New York
Security Mutual Bldg., 100 Court Street
Binghamton, New York 13902-1625
(800) 469-4545
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Title of Securities Being Registered:
Individual Flexible Purchase
Payment Deferred Variable
Annuity Contract
================================================================================
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. Location
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<S> <C> <C>
PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Index of Special Terms
Item 3. Synopsis Summary
Item 4. Condensed Financial Information Not Applicable
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies Other Information -
Security Mutual; The Separate
Account; Cova Series Trust; Lord
Abbett Series Fund, Inc.; General
American Capital Company
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable
Annuity Contracts The Annuity Contract
Item 8. Annuity Period Annuity Payments
(The Income Phase)
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value Purchase
Item 11. Redemptions Access to Your Money
Item 12. Taxes Taxes
Item 13. Legal Proceedings None
Item 14. Table of Contents of the Statement
of Additional Information Table of Contents of the
Statement of Additional
Information
</TABLE>
CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. LOCATION
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<S> <C> <C>
PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and History Company
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Offered Not Applicable
Item 20. Underwriters Distribution
Item 21. Calculation of Performance Data Performance Information
Item 22. Annuity Payments Annuity Provisions
Item 23. Financial Statements Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C to this Registration Statement.
_______, 1997
PROFILE OF THE FIXED AND VARIABLE ANNUITY CONTRACT
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD
CONSIDER AND KNOW BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE FULLY
DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE READ THE
PROSPECTUS CAREFULLY.
1. THE ANNUITY CONTRACT: The fixed and variable annuity contract offered by
Security Mutual is a contract between you, the owner, and Security Mutual, an
insurance company. The Contract provides a means for investing on a tax-deferred
basis in a fixed account of Security Mutual and 12 investment portfolios. The
Contract is intended for retirement savings or other long-term investment
purposes and provides for a death benefit and guaranteed income options.
The fixed account offers an interest rate that is guaranteed by the insurance
company, Security Mutual. This interest rate is set once each year. While your
money is in the fixed account, the interest your money will earn as well as your
principal is guaranteed by Security Mutual.
This Contract also offers 12 investment portfolios which are listed in Section
4. These portfolios are designed to offer a better return than the fixed
account. However, this is NOT guaranteed. You can also lose your money.
You can put money into any or all of the investment portfolios and the fixed
account. You can transfer between accounts up to 12 times a year without charge
or tax implications. After 12 transfers, the charge is $25 or 2% of the amount
transferred, whichever is less.
The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your Contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine the amount of income payments during the
income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE): If you want to receive regular income
from your annuity, you can choose one of three options: (1) monthly payments for
your life (assuming you are the annuitant); (2) monthly payments for your life,
but with payments continuing to the beneficiary for 5, 10 or 20 years (as you
select) if you die before the end of the selected period; and (3) monthly
payments for your life and for the life of another person (usually your spouse)
selected by you. Once you begin receiving regular payments, you cannot change
your payment plan.
During the income phase, you have the same investment choices you had during the
accumulation phase. You can choose to have payments come from the fixed account,
the investment portfolios or both. If you choose to have any part of your
payments come from the investment portfolios, the dollar amount of your payments
may go up or down.
3. PURCHASE: You can buy this Contract with $5,000 or more under most
circumstances. You can add $2,000 or more any time you like during the
accumulation phase. Your registered representative can help you fill out the
proper forms.
4. INVESTMENT OPTIONS: You can put your money in any or all of these investment
portfolios which are described in the prospectuses for the funds:
MANAGED BY J.P. MORGAN INVESTMENT MANAGED BY LORD, ABBETT & CO.
MANAGEMENT INC. Bond Debenture
Select Equity Growth and Income
Large Cap Stock Mid-Cap Value
Small Cap Stock Large Cap Research
International Equity Developing Growth
Quality Bond Lord Abbett Growth and Income
MANAGED BY CONNING ASSET
MANAGEMENT COMPANY
Money Market
Depending upon market conditions, you can make or lose money in any of these
portfolios.
5. EXPENSES: The Contract has insurance features and investment features, and
there are costs related to each.
Each year Security Mutual deducts a $30 contract maintenance charge from your
Contract. Security Mutual currently waives this charge if the value of your
Contract is at least $50,000. Security Mutual also deducts for its insurance
charges which total 1.40% of the average daily value of your Contract allocated
to the investment portfolios.
There are also investment charges which range from .205% to 1.10% of the average
daily value of the investment portfolio depending upon the investment portfolio.
If you take your money out, Security Mutual may assess a withdrawal charge which
is equal to 7% of each payment you take out in the first and second years after
Security Mutual receives the payment, 5% of each payment you take out in the
third, fourth and fifth years, and 3% of each payment you take out in the sixth
and seventh years.
The following chart is designed to help you to understand the expenses in the
Contract. The column "Total Annual Expenses" shows the total of the $30 contract
maintenance charge (which is represented as .10% below), the 1.40% insurance
charges and the investment expenses for each investment portfolio. The next two
columns show you two examples of the expenses, in dollars, you would pay under a
Contract. The examples assume that you invested $1,000 in a Contract which earns
5% annually and that you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. For year 1, the Total Annual Expenses are assessed as
well as the withdrawal charges. For year 10, the example shows the aggregate of
all the annual expenses assessed for the 10 years, but there is no withdrawal
charge.
The premium tax is assumed to be 0% in both examples.
<TABLE>
<CAPTION>
EXAMPLES:
Total Annual
Total Annual Total Annual Total Expenses At End of:
Insurance Portfolio Annual (1) (2)
Portfolio Charges Expenses Expenses 1 Year 10 Years
- --------- ------- -------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
MANAGED BY J.P. MORGAN
INVESTMENT MANAGEMENT INC.
Select Equity 1.50% 0.85% 2.35% $ 93.80 $ 266.24
Large Cap Stock 1.50% 0.75% 2.25% $ 92.80 $ 256.13
Small Cap Stock 1.50% 0.95% 2.45% $ 94.80 $ 276.23
International Equity 1.50% 0.95% 2.45% $ 94.80 $ 276.23
Quality Bond 1.50% 0.65% 2.15% $ 91.79 $ 245.92
MANAGED BY LORD, ABBETT
& CO.
Bond Debenture 1.50% 0.85% 2.35% $ 93.80 $ 266.24
Growth and Income 1.50% 0.59% 2.09% $ 91.19 $ 239.74
Mid-Cap Value 1.50% 1.10% 2.60% $ 96.30 $ 291.02
Large Cap Research 1.50% 1.10% 2.60% $ 96.30 $ 291.02
Developing Growth 1.50% 1.00% 2.50% $ 95.30 $ 281.19
Lord Abbett Growth and Income 1.50% 0.75% 2.25% $ 92.80 $ 256.13
MANAGED BY CONNING ASSET
MANAGEMENT COMPANY
Money Market 1.50% 0.205% 1.705% $ 87.31 $ 199.08
</TABLE>
For the newly formed Portfolios the expenses have been estimated. The expenses
reflect any expense reimbursement or fee waiver. For more detailed information,
see the Fee Table in the prospectus for the Contract.
6. TAXES: Your earnings are not taxed until you take them out. If you take money
out, earnings come out first and are taxed as income. If you are younger than 59
1/2 when you take money out, you may be charged a 10% federal tax penalty on the
earnings. Payments during the income phase are considered partly a return of
your original investment. That part of each payment is not taxable as income.
7. ACCESS TO YOUR MONEY: You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10% of your total
purchase payments each year without charge from Security Mutual. Withdrawals in
excess of that will be charged 7% of each payment you take out in the first and
second years after Security Mutual receives the payment, 5% of each payment you
take out in the third, fourth and fifth years, and 3% of each payment you take
out in the sixth and seventh years. After Security Mutual has had a payment for
7 years, there is no charge for withdrawals. Of course, you may also have to pay
income tax and a tax penalty on any money you take out. Each purchase payment
you add to your Contract has its own 7 year withdrawal charge period.
8. PERFORMANCE: The value of the Contract will vary up or down depending upon
the investment performance of the investment portfolios you choose. Security
Mutual may provide total return figures for each investment portfolio.
9. DEATH BENEFIT: If you die before moving to the income phase, the person you
have chosen as your beneficiary will receive a death benefit. This death benefit
will be the greater of three amounts: 1) the money you've put in less any money
you've taken out, and the related withdrawal charges, or 2) the current value of
your Contract, or 3) the value of your Contract at the most recent
7th-year-anniversary plus any money you've added since that anniversary minus
any money you've taken out since that anniversary, and the related withdrawal
charges. If you die after age 80, slightly different rules apply.
10. OTHER INFORMATION: Free Look. If you cancel the Contract within 10 days
after receiving it we will send you whatever your Contract is worth on the day
we receive your request (this may be more or less than your original payment)
without assessing a withdrawal charge. If you have purchased the Contract as an
Individual Retirement Annuity (IRA) you will receive back your purchase payment.
(Currently, the Contract is not available under an IRA until the IRA Endorsement
is approved by the State of New York Insurance Department.)
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
However, the avoidance of probate does not mean that the beneficiary will not
have tax liability as a result of receiving the death benefit.
Who should purchase the Contract? This Contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state tax brackets. You should not buy this Contract if you are
looking for a short-term investment or if you cannot take the risk of getting
back less money than you put in.
Additional Features. This Contract has additional features you might be
interested in. These include:
* You can arrange to have money automatically sent to you each month while
your Contract is still in the accumulation phase. Of course, you'll have to pay
taxes on money you receive. We call this feature the Systematic Withdrawal
Program.
* You can arrange to have a regular amount of money automatically invested
in investment portfolios each month, theoretically giving you a lower average
cost per unit over time than a single one time purchase. We call this feature
Dollar Cost Averaging.
* Security Mutual will automatically readjust the money between investment
portfolios periodically to keep the blend you select. We call this feature
Automatic Rebalancing.
11. INQUIRIES: If you need more information about buying a Contract, please
contact:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
(800) 523-1661
If you have any other questions, please contact us at our Home Office:
Security Mutual Life Insurance Company of New York
Security Mutual Bldg., 100 Court Street
Binghamton, NY 13902-1625
THE FIXED AND VARIABLE ANNUITY
ISSUED BY
SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
AND
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
This prospectus describes the Fixed and Variable Annuity Contract offered by
Security Mutual Life Insurance Company of New York (Security Mutual).
The annuity contract has 13 investment choices - a fixed account which offers an
interest rate which is guaranteed by Security Mutual, and 12 investment
portfolios listed below. The 12 investment portfolios are part of Cova Series
Trust, Lord Abbett Series Fund, Inc. or General American Capital Company. You
can put your money in the fixed account and/or any of these investment
portfolios.
COVA SERIES TRUST
MANAGED BY J.P. MORGAN INVESTMENT MANAGEMENT INC.:
Select Equity
Large Cap Stock
Small Cap Stock
International Equity
Quality Bond
MANAGED BY LORD, ABBETT & CO.:
Bond Debenture
Mid-Cap Value
Large Cap Research
Developing Growth
Lord Abbett Growth and Income
LORD ABBETT SERIES FUND, INC.
MANAGED BY LORD, ABBETT & CO.:
Growth and Income
GENERAL AMERICAN CAPITAL COMPANY
MANAGED BY CONNING ASSET MANAGEMENT COMPANY:
Money Market
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the Security Mutual Fixed and
Variable Annuity Contract.
To learn more about the Security Mutual Fixed and Variable Annuity Contract, you
can obtain a copy of the Statement of Additional Information (SAI) dated
__________, 1997. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is legally a part of the prospectus. The Table of Contents
of the SAI is on Page __ of this prospectus. For a free copy of the SAI, call us
at (800) 831-5433 or write us at: Security Mutual Bldg., 100 Court Street,
Binghamton, NY 13902-1625.
INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________, 1997
TABLE OF CONTENTS
PAGE
INDEX OF SPECIAL TERMS
FEE TABLE
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Accumulation Units
4. INVESTMENT OPTIONS
Cova Series Trust
Lord Abbett Series Fund, Inc.
General American Capital Company
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the Withdrawal Charge
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Security Mutual
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Suspension of Payments or Transfers
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
APPENDIX
PERFORMANCE INFORMATION
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable. We have identified the following as some of these
words or terms. They are identified in the text in italic and the page that is
indicated here is where we believe you will find the best explanation for the
word or term.
PAGE
Accumulation Phase...................................................... 4
Accumulation Unit....................................................... 6
Annuitant............................................................... 4
Annuity Date............................................................ 4
Annuity Options......................................................... 5
Annuity Payments........................................................ 4
Annuity Unit............................................................ 6
Beneficiary............................................................. 14
Fixed Account........................................................... 4
Income Phase............................................................ 4
Investment Portfolios................................................... 7
Joint Owner............................................................. 14
Non-Qualified........................................................... 10
Owner................................................................... 13
Purchase Payment........................................................ 7
Qualified............................................................... 12
Tax Deferral............................................................ 11
FEE TABLE
OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE (as a percentage of purchase YEARS SINCE
payments) (see Note 2 below) PAYMENT CHARGE
----------- ------
1 7%
2 7%
3 5%
4 5%
5 5%
6 3%
7 3%
8+ 0%
TRANSFER FEE (see Note 3 below) No charge for first 12 transfers in a
contract year; thereafter, the fee is $25
per transfer or, if less, 2% of the amount
transferred.
CONTRACT MAINTENANCE CHARGE $30 per contract per year
(see Note 4 below)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
-----
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 1.40%
INVESTMENT PORTFOLIO EXPENSES
(as a percentage of the average daily net assets of an investment portfolio)
<TABLE>
<CAPTION>
Other Expenses
(after expense Total
reimbursement for Annual
Management 12b-1 certain Portfolios - Portfolio
Fees Fees see Note 5 below) Expenses
---------- ----- ----------------- --------
<S> <C> <C> <C> <C>
COVA SERIES TRUST
Managed by J.P. Morgan Investment
Management Inc.
Select Equity* .75% --- .10% .85%
Large Cap Stock* .65% --- .10% .75%
Small Cap Stock* .85% --- .10% .95%
International Equity* .85% --- .10% .95%
Quality Bond* .55% --- .10% .65%
Managed by Lord, Abbett & Co.
Bond Debenture* .75% --- .10% .85%
Mid-Cap Value* 1.00% --- .10% 1.10%
Large Cap Research** 1.00% --- .10% 1.10%
Developing Growth** .90% --- .10% 1.00%
Lord Abbett Growth and Income** .65% --- .10% .75%
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income# .50% .07% .02% .59%
GENERAL AMERICAN CAPITAL COMPANY
Managed by Conning Asset
Management Company
Money Market 2.05% --- .00% 2.05%
<FN>
* Annualized. The Portfolio commenced regular investment operations on
April 2, 1996.
** Estimated. The Portfolio has not yet commenced regular investment
operations.
# The Growth and Income Portfolio of Lord Abbett Series Fund, Inc. has a
12b-1 plan which provides for payments to Lord, Abbett & Co. for remittance to a
life insurance company for certain distribution expenses (see the Fund
Prospectus). The 12b-1 Plan provides that such remittances, in the aggregate,
will not exceed .15%, on an annual basis, of the daily net asset value of shares
of the Growth and Income Portfolio. As of May 1, 1997 no payments were made
under the 12b-1 Plan. For the year ending December 31, 1997, the 12b-1 Plan fees
are estimated to be .07% The examples below for this Portfolio reflect the
estimated 12b-1 fees.
</FN>
</TABLE>
EXAMPLES:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
(a) upon surrender at the end of each time period;
(b) if the contract is not surrendered or is annuitized.
<TABLE>
<CAPTION>
Time Periods
1 year 3 years
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<S> <C> <C>
COVA SERIES TRUST
Managed by J.P. Morgan Investment Management Inc.
Select Equity (a) $93.80 (a) $118.16
(b) $23.80 (b) $ 73.16
Large Cap Stock (a) $92.80 (a) $115.15
(b) $22.80 (b) $ 70.15
Small Cap Stock (a) $94.80 (a) $121.17
(b) $24.80 (b) $ 76.17
International Equity (a) $94.80 (a) $121.17
(b) $24.80 (b) $ 76.17
Quality Bond (a) $91.79 (a) $112.12
(b) $21.79 (b) $ 67.12
Managed by Lord, Abbett & Co.
Bond Debenture (a) $93.80 (a) $118.16
(b) $23.80 (b) $ 73.16
Mid-Cap Value (a) $96.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Large Cap Research (a) $96.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Developing Growth (a) $95.30 (a) $122.67
(b) $25.30 (b) $ 77.67
Lord Abbett Growth and Income (a) $92.80 (a) $115.15
(b) $22.80 (b) $ 70.15
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income (a) $90.49 (a) $108.17
(b) $20.49 (b) $ 63.17
GENERAL AMERICAN CAPITAL COMPANY
Managed by Conning Asset Management Company
Money Market (a) $87.31 (a) $98.54
(b) $17.31 (b) $53.54
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES
1. The purpose of the Fee Table is to show you the various expenses you
will incur directly or indirectly with the contract. The Fee Table reflects
expenses of the Separate Account as well as the investment portfolios.
2. The withdrawal charge is 7% of each payment you take out in the first
and second years after Security Mutual receives the payment, 5% of each payment
you take out in the third, fourth and fifth years, and 3% of each payment you
take out in the sixth and seventh years. After Security Mutual has had a
purchase payment for 7 years, there is no charge by Security Mutual for a
withdrawal of that purchase payment. You may also have to pay income tax and a
tax penalty on any money you take out. After the first year, you can take up to
10% of your total purchase payments each year without a charge from Security
Mutual.
3. Security Mutual will not charge you the transfer fee even if there are
more than 12 transfers in a year if the transfer is for the Dollar Cost
Averaging or Automatic Rebalancing Programs.
4. Security Mutual will not charge the contract maintenance charge if the
value of your contract is $50,000 or more, although, if you make a complete
withdrawal, Security Mutual will charge the contract maintenance charge.
5. Cova Financial Services Life Insurance Company (another insurance
company which also invests in Cova Series Trust) currently reimburses the
investment portfolios of Cova Series Trust for all operating expenses (exclusive
of the management fees) in excess of approximately .10%. Absent this expense
reimbursement, the expenses (on an annualized basis) for the period ended
December 31, 1996 would have been: 1.70% for the Select Equity Portfolio, 2.68%
for the Small Cap Stock Portfolio, 3.80% for the International Equity Portfolio,
1.52% for the Quality Bond Portfolio, 1.23% for the Large Cap Stock Portfolio
and 2.05% for the Bond Debenture Portfolio. Absent this expense reimbursement,
the expenses (exclusive of the management fees) are estimated (on an annualized
basis) to be: 1.77% for the Mid-Cap Value Portfolio, 1.58% for the Large Cap
Research Portfolio, 2.29% for the Developing Growth Portfolio, and .10% for the
Lord Abbett Growth and Income Portfolio.
6. Premium taxes are not reflected. New York does not assess premium taxes.
7. The assumed average contract size is $30,000.
8. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered by
Security Mutual.
An annuity is a contract between you, the owner, and an insurance company (in
this case Security Mutual), where the insurance company promises to pay you an
income, in the form of annuity payments, beginning on a designated date that's
at least one year after we issue your contract. Until you decide to begin
receiving annuity payments, your annuity is in the accumulation phase. Once you
begin receiving annuity payments, your contract switches to the income phase.
The contract benefits from tax deferral.
Tax deferral means that you are not taxed on earnings or appreciation on the
assets in your contract until you take money out of your contract.
The contract is called a variable annuity because you can choose among 12
investment portfolios and, depending upon market conditions, you can make or
lose money in any of these portfolios. If you select the variable annuity
portion of the contract, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the investment portfolio(s) you select. The amount of the annuity payments
you receive during the income phase from the variable annuity portion of the
contract also depends upon the investment performance of the investment
portfolios you select for the income phase.
The contract also contains a fixed account. The fixed account offers an interest
rate that is guaranteed by Security Mutual. This interest rate is set once each
year. Security Mutual guarantees that the interest credited to the fixed account
will not be less than 3% per year. If you select the fixed account, your money
will be placed with the other general assets of Security Mutual. If you select
the fixed account, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the total interest credited
to your contract. The amount of the annuity payments you receive during the
income phase from the fixed account portion of the contract will remain level
for the entire income phase.
As owner of the contract, you exercise all rights under the contract. You can
change the owner at any time by notifying Security Mutual in writing. You and
another person can be named joint owners. We have described more information on
this in Section 10 - Other Information.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first day of a calendar month. You can also
choose among income plans. We call those annuity options.
We ask you to choose your annuity date and annuity option when you purchase the
contract. You can change either at any time before the annuity date with 30 days
notice to us. Your annuity date cannot be any earlier than one year after we
issue the contract. Annuity payments must begin by the annuitant's 90th
birthday. The annuitant is the person whose life we look to when we make annuity
payments.
If you do not choose an annuity option at the time you purchase the contract, we
will assume that you selected Option 2 which provides a life annuity with 10
years of guaranteed payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. At the annuity date, you can choose
whether payments will come from the fixed account, the investment portfolio(s)
or a combination of both. If you don't tell us otherwise, your annuity payments
will be based on the investment allocations that were in place on the annuity
date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things: 1) the value of your contract in the investment portfolio(s) on the
annuity date, 2) the 3% assumed investment rate used in the annuity table for
the contract, and 3) the performance of the investment portfolios you selected.
If the actual performance exceeds the 3% assumed rate, your annuity payments
will increase. Similarly, if the actual rate is less than 3%, your annuity
payments will decrease.
You can choose one of the following annuity options. After annuity payments
begin, you cannot change the annuity option.
OPTION 1. LIFE ANNUITY. Under this option, we will make an annuity payment
each month so long as the annuitant is alive. After the annuitant dies, we stop
making annuity payments.
OPTION 2. LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED. Under this
option, we will make an annuity payment each month so long as the annuitant is
alive. However, if, when the annuitant dies, we have made annuity payments for
less than the selected guaranteed period, we will then continue to make annuity
payments for the rest of the guaranteed period to the beneficiary. If the
beneficiary does not want to receive annuity payments, he or she can ask us for
a single lump sum.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
annuity payments each month so long as the annuitant and a second person are
both alive. When either of these people dies, we will continue to make annuity
payments, so long as the survivor continues to live. The amount of the annuity
payments we will make to the survivor can be equal to 100%, 66 2/3% or 50% of
the amount that we would have paid if both were alive.
Annuity payments are made monthly unless you have less than $2,000 to apply
toward a payment. In that case, Security Mutual may provide your annuity payment
in a single lump sum. Likewise, if your annuity payments would be less than $20
a month, Security Mutual has the right to change the frequency of payments so
that your annuity payments are at least $20.
3. PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you give us to buy the contract. The minimum we
will accept is $5,000 when the contract is bought as a non-qualified contract.
If you are buying the contract as part of an IRA (Individual Retirement Annuity)
the minimum we will accept is $2,000. (Currently, the contract is not available
under an IRA until the IRA Endorsement is approved by the State of New York
Insurance Department.) The maximum we accept is $1 million without our prior
approval. You can make additional purchase payments of $2,000 or more to either
type of contract.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the investment portfolios you have selected.
If you make additional purchase payments, we will allocate them in the same way
as your first purchase payment unless you tell us otherwise. There is a $500
minimum balance requirement for the fixed account and for each investment
portfolio.
If you change your mind about owning this contract, you can cancel it within 10
days after receiving it. When you cancel the contract within this time period,
Security Mutual will not assess a withdrawal charge. You will receive back
whatever your contract is worth on the day we receive your request. If you have
purchased the contract as an IRA, we are required to give you back your purchase
payment if you decide to cancel your contract within 10 days after receiving it.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you add more money to
your contract by making additional purchase payments, we will credit these
amounts to your contract within one business day. Our business day closes when
the New York Stock Exchange closes, usually 4:00 P.M. Eastern time.
ACCUMULATION UNITS
The value of the variable annuity portion of your contract will go up or down
depending upon the investment performance of the investment portfolio(s) you
choose. In order to keep track of the value of your contract, we use a unit of
measure we call an accumulation unit. (An accumulation unit works like a share
of a mutual fund.) During the income phase of the contract we call the unit an
annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
(1) determining the total amount of money invested in the particular
investment portfolio;
(2) subtracting from that amount any insurance charges and any other
charges such as taxes we have deducted; and
(3) dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment portfolio divided by
the value of the accumulation unit for that investment portfolio.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your contract.
EXAMPLE:
On Monday we receive an additional purchase payment of $5,000 from you. You
have told us you want this to go to the Quality Bond Portfolio. When the New
York Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Quality Bond Portfolio is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Quality Bond Portfolio.
4. INVESTMENT OPTIONS
The Contract offers 12 investment portfolios which are described below.
Additional investment portfolios may be available in the future.
YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY BEFORE INVESTING.
COPIES OF THESE PROSPECTUSES ARE ATTACHED TO THIS PROSPECTUS.
COVA SERIES TRUST
Cova Series Trust is managed by Cova Investment Advisory Corporation (Cova
Advisory). Cova Series Trust is a mutual fund with multiple portfolios. Each
investment portfolio has a different investment objective. Cova Advisory has
engaged sub-advisers to provide investment advice for the individual investment
portfolios. The following investment portfolios are available under the
contract:
J.P. MORGAN INVESTMENT MANAGEMENT INC. IS THE SUB-ADVISER TO THE FOLLOWING
PORTFOLIOS:
Select Equity Portfolio
Large Cap Stock Portfolio
Small Cap Stock Portfolio
International Equity Portfolio
Quality Bond Portfolio
LORD, ABBETT & CO. IS THE SUB-ADVISER TO THE FOLLOWING PORTFOLIOS:
Bond Debenture Portfolio
Mid-Cap Value Portfolio
Large Cap Research Portfolio
Developing Growth Portfolio
Lord Abbett Growth and Income Portfolio
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a mutual fund with multiple portfolios. Each
portfolio is managed by Lord, Abbett & Co. The following portfolio is available
under the contract:
Growth and Income Portfolio
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
Money Market Fund
TRANSFERS
You can transfer money among the fixed account and the 12 investment portfolios.
TRANSFERS DURING THE ACCUMULATION PHASE. You can make 12 transfers every
year during the accumulation phase without charge. We measure a year from the
anniversary of the day we issued your contract. You can make a transfer to or
from the fixed account and to or from any investment portfolio. If you make more
than 12 transfers in a year, there is a transfer fee deducted. The fee is $25
per transfer or, if less, 2% of the amount transferred. The following apply to
any transfer during the accumulation phase:
1. The minimum amount which you can transfer is $500 or your entire value
in the investment portfolio or fixed account.
2. Your request for transfer must clearly state which investment
portfolio(s) or the fixed account are involved in the transfer.
3. Your request for transfer must clearly state how much the transfer is
for.
4. You cannot make any transfers within 7 calendar days of the annuity
date.
TRANSFERS DURING THE INCOME PHASE. You can only make transfers between the
investment portfolios once each year. We measure a year from the anniversary of
the day we issued your contract. You cannot transfer from the fixed account to
an investment portfolio, but you can transfer from one or more investment
portfolios to the fixed account at any time. If you make more than 12 transfers
in a year, a transfer fee will be charged.
You can make transfers by telephone. If you own the contract with a joint owner,
unless Security Mutual is instructed otherwise, Security Mutual will accept
instructions from either you or the other owner. Security Mutual will use
reasonable procedures to confirm that instructions given us by telephone are
genuine. If Security Mutual fails to use such procedures, we may be liable for
any losses due to unauthorized or fraudulent instructions. Security Mutual tape
records all telephone instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from the Money Market Fund of General American Capital Company
or the fixed account to any of the other investment portfolio(s). By allocating
amounts on a regular schedule as opposed to allocating the total amount at one
particular time, you may be less susceptible to the impact of market
fluctuations.
The minimum amount which can be transferred each month is $500. You must have at
least $6,000 in the Money Market Fund of General American Capital Company or the
fixed account, (or the amount required to complete your program, if less) in
order to participate in the Dollar Cost Averaging Program.
All Dollar Cost Averaging transfers will be made on the 15th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
AUTOMATIC REBALANCING PROGRAM
Once your money has been allocated among the investment portfolios, the
performance of each portfolio may cause your allocation to shift. You can direct
us to automatically rebalance your contract to return to your original
percentage allocations by selecting our Automatic Rebalancing Program. You can
tell us whether to rebalance quarterly, semi-annually or annually. We will
measure these periods from the anniversary of the date we issued your contract.
The transfer date will be the 1st day after the end of the period you selected.
If you participate in the Automatic Rebalancing Program, the transfers made
under the program are not taken into account in determining any transfer fee.
EXAMPLE:
Assume that you want your initial purchase payment split between 2
investment portfolios. You want 40% to be in the Quality Bond Portfolio and 60%
to be in Select Equity Portfolio. Over the next 2 1/2 months the bond market
does very well while the stock market performs poorly. At the end of the first
quarter, the Quality Bond Portfolio now represents 50% of your holdings because
of its increase in value. If you had chosen to have your holdings rebalanced
quarterly, on the first day of the next quarter, Security Mutual would sell some
of your units in the Quality Bond Portfolio to bring its value back to 40% and
use the money to buy more units in the Select Equity Portfolio to increase those
holdings to 60%.
VOTING RIGHTS
Security Mutual is the legal owner of the investment portfolio shares. However,
Security Mutual believes that when an investment portfolio solicits proxies in
conjunction with a vote of shareholders, it is required to obtain from you and
other owners instructions as to how to vote those shares. When we receive those
instructions, we will vote all of the shares we own in proportion to those
instructions. This will also include any shares that Security Mutual owns on its
own behalf. Should Security Mutual determine that it is no longer required to
comply with the above, we will vote the shares in our own right.
SUBSTITUTION
Security Mutual may be required to substitute one of the investment portfolios
you have selected with another portfolio. We would not do this without the prior
approval of the Securities and Exchange Commission. We will give you notice of
our intent to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
INSURANCE CHARGES
Each day, Security Mutual makes a deduction for its insurance charges. Security
Mutual does this as part of its calculation of the value of the accumulation
units and the annuity units. The insurance charge has two parts: 1) the
mortality and expense risk premium and 2) the administrative expense charge.
MORTALITY AND EXPENSE RISK PREMIUM. This charge is equal, on an annual
basis, to 1.25% of the daily value of the contracts invested in an investment
portfolio, after expenses have been deducted. This charge is for all the
insurance benefits e.g., guarantee of annuity rates, the death benefits, for
certain expenses of the contract, and for assuming the risk (expense risk) that
the current charges will be sufficient in the future to cover the cost of
administering the contract. If the charges under the contract are not
sufficient, then Security Mutual will bear the loss. The mortality and expense
risk premium cannot be increased.
ADMINISTRATIVE EXPENSE CHARGE. This charge is equal, on an annual basis, to
.15% of the daily value of the contracts invested in an investment portfolio,
after expenses have been deducted. This charge, together with the contract
maintenance charge (see below) is for all the expenses associated with the
administration of the contract. Some of these expenses are: preparation of the
contract, confirmations, annual reports and statements, maintenance of contract
records, personnel costs, legal and accounting fees, filing fees, and computer
and systems costs. If this charge and the contract maintenance charge are not
enough to cover the costs of the contracts in the future, Security Mutual will
bear the loss.
CONTRACT MAINTENANCE CHARGE
During the accumulation phase, every year on the anniversary of the date when
your contract was issued, Security Mutual deducts $30 from your contract as a
contract maintenance charge. This charge is for administrative expenses (see
above). This charge can not be increased.
Security Mutual will not deduct this charge, if when the deduction is to be
made, the value of your contract is $50,000 or more. Security Mutual may some
time in the future discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. A prorata portion of the charge will be deducted
if the annuity date is other than an anniversary. After the annuity date, the
charge will be collected monthly out of the annuity payment.
WITHDRAWAL CHARGE
During the accumulation phase, you can make withdrawals from your contract.
Security Mutual keeps track of each purchase payment. Once a year after the
first year, you can withdraw up to 10% of your total purchase payments and no
withdrawal charge will be assessed on the 10%, if on the day you make your
withdrawal the value of your contract is $5,000 or more. Otherwise, the charge
is 7% of each payment you take out in the first and second years after Security
Mutual receives the payment, 5% of each payment you take out in the third,
fourth and fifth years, and 3% of each payment you take out in the sixth and
seventh years. After Security Mutual has had a purchase payment for 7 years,
there is no charge when you withdraw that purchase payment. For purposes of the
withdrawal charge, Security Mutual treats withdrawals as coming from the oldest
purchase payment first. When the withdrawal is for only part of the value of
your contract, the withdrawal charge is deducted from the remaining value in
your contract.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to come
out first.
Security Mutual does not assess the withdrawal charge on any payments paid out
as annuity payments or as death benefits.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
Security Mutual will reduce or eliminate the amount of the withdrawal charge
when the contract is sold to an officer, director or employee of Security
Mutual. In no event will elimination of the Withdrawal Charge be permitted where
elimination will be unfairly discriminatory to any person.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred whichever is less.
If the transfer is part of the Dollar Cost Averaging Program or the Automatic
Rebalancing Program it will not count in determining the transfer fee.
INCOME TAXES
Security Mutual will deduct from the contract for any income taxes which it
incurs because of the contract. At the present time, we are not making any such
deductions.
INVESTMENT PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the attached fund prospectuses.
6. TAXES
NOTE: Security Mutual has prepared the following information on taxes as a
general discussion of the subject. It is not intended as tax advice to any
individual. You should consult your own tax adviser about your own
circumstances. Security Mutual has included in the Statement of Additional
Information an additional discussion regarding taxes.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract qualified
or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your contract
until a distribution occurs - either as a withdrawal or as annuity payments.
When you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For annuity payments, different rules apply. A portion of each annuity
payment is treated as a partial return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment will be treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have received all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than tax-qualified trusts), the
contract will generally not be treated as an annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract as an individual and not under an Individual
Retirement Annuity (IRA), your contract is referred to as a non-qualified
contract.
If you purchase the contract under an IRA, your contract is referred to as a
qualified contract. Currently, the contract is not available under an IRA until
the IRA Endorsement is approved by the State of New York Insurance Department.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts: (1) paid on or after the
taxpayer reaches age 59 1/2; (2) paid after you die; (3) paid if the taxpayer
becomes totally disabled (as that term is defined in the Code); (4) paid in a
series of substantially equal payments made annually (or more frequently) under
a lifetime annuity, (5) paid under an immediate annuity; or (6) which come from
purchase payments made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. We have provided a more complete discussion in
the Statement of Additional Information.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Security Mutual believes that the investment portfolios are
being managed so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Security Mutual
would be considered the owner of the shares of the investment portfolios. If
this occurs, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent under federal tax law owners are
permitted to select investment portfolios, to make transfers among the
investment portfolios or the number and type of investment portfolios owners may
select from. If any guidance is provided which is considered a new position,
then the guidance would generally be applied prospectively. However, if such
guidance is considered not to be a new position, it may be applied
retroactively. This would mean that you, as the owner of the contract, could be
treated as the owner of the investment portfolios.
Due to the uncertainty in this area, Security Mutual reserves the right to
modify the contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract: (1) by making a withdrawal
(either a partial or a complete withdrawal); (2) by electing to receive annuity
payments; or (3) when a death benefit is paid to your beneficiary. Withdrawals
can only be made during the accumulation phase.
When you make a complete withdrawal you will receive the value of the contract
on the day you made the withdrawal less any applicable withdrawal charge, less
any premium tax and less any contract maintenance charge. (See Section 5.
Expenses for a discussion of the charges.)
Unless you instruct Security Mutual otherwise, any partial withdrawal will be
made pro-rata from all the investment portfolios and the fixed account you
selected. Under most circumstances the amount of any partial withdrawal must be
for at least $500. Security Mutual requires that after a partial withdrawal is
made you keep at least $1,000 in your contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
SYSTEMATIC WITHDRAWAL PROGRAM
If you are 59 1/2 or older, you may use the Systematic Withdrawal Program. This
program provides an automatic monthly payment to you of up to 10% of your total
purchase payments each year. No withdrawal charge will be deducted for these
payments. Security Mutual does not have any charge for this program. If you use
this program, you may not also make a single 10% free withdrawal. For a
discussion of the withdrawal charge and the 10% free withdrawal, see Section 5.
Expenses.
All Systematic Withdrawals will be paid on the 15th day of the month unless that
day is not a business day. If it is not, then the payment will be the next
business day.
INCOME TAXES MAY APPLY TO SYSTEMATIC WITHDRAWALS.
8. PERFORMANCE
Security Mutual periodically advertises performance of the various investment
portfolios. Security Mutual will calculate performance by determining the
percentage change in the value of an accumulation unit by dividing the increase
(decrease) for that unit by the value of the accumulation unit at the beginning
of the period. This performance number reflects the deduction of the insurance
charges. It does not reflect the deduction of any applicable contract
maintenance charge and withdrawal charge. The deduction of any applicable
contract maintenance charge and withdrawal charges would reduce the percentage
increase or make greater any percentage decrease. Any advertisement will also
include total return figures which reflect the deduction of the insurance
charges, contract maintenance charges, and withdrawal charges.
Security Mutual may, from time to time, include in its advertising and sales
materials, tax deferred compounding charts and other hypothetical illustrations,
which may include comparisons of currently taxable and tax deferred investment
programs, based on selected tax brackets.
The Appendix contains performance information that you may find informative.
Future performance will vary and the results shown are not necessarily
representative of future results.
9. DEATH BENEFIT
UPON YOUR DEATH
If you die before annuity payments begin, Security Mutual will pay a death
benefit to your beneficiary (see below). If you have a joint owner, the death
benefit will be paid when the first of you dies. The surviving joint owner will
be treated as the beneficiary.
The amount of the death benefit depends on how old you or your joint owner is.
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greater of:
1. Total purchase payments, less withdrawals (and any withdrawal charges
paid on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid;
or
3. The value of your contract on the most recent seven year anniversary
before the date of death, plus any subsequent purchase payments, less any
withdrawals (and any withdrawal charges paid on the withdrawals.)
After you, or your joint owner, reaches age 80, the death benefit will be the
greater of:
1. Total purchase payments, less any withdrawals (and any withdrawal
charges paid on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid;
or
3. The value of your contract on the most recent seven year anniversary on
or before you or your joint owner reaches age 80, plus any subsequent purchase
payments, less any withdrawals (and any withdrawal charges paid on the
withdrawals).
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an annuity
option. The death benefit payable under an annuity option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payment must begin within one year of the date of death. If the
beneficiary is the spouse of the owner, he/she can continue the contract in
his/her own name at the then current value. If a lump sum payment is elected and
all the necessary requirements are met, the payment will be made within 7 days.
DEATH OF ANNUITANT
If the annuitant, not an owner or joint owner, dies before annuity payments
begin, you can name a new annuitant. If no annuitant is named within 30 days of
the death of the annuitant, you will become the annuitant. However, if the owner
is a non-natural person (for example, a corporation), then the death or change
of annuitant will be treated as the death of the owner, and a new annuitant may
not be named.
Upon the death of the annuitant after annuity payments begin, the death benefit,
if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
SECURITY MUTUAL
Security Mutual Life Insurance Company of New York (Security Mutual) is a mutual
life insurance company which was incorporated in 1886 under the laws of the
State of New York. Security Mutual is licensed to do business in the District of
Columbia, the U.S. Virgin Islands and all states.
THE SEPARATE ACCOUNT
Security Mutual has established a separate account, Security Mutual Variable
Annuity Account One (Separate Account), to hold the assets that underlie the
contracts. The Board of Directors of Security Mutual adopted a resolution to
establish the Separate Account under New York insurance law on August 21, 1997.
We have registered the Separate Account with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940.
The assets of the Separate Account are held in Security Mutual's name on behalf
of the Separate Account and legally belong to Security Mutual. However, those
assets that underlie the contracts, are not chargeable with liabilities arising
out of any other business Security Mutual may conduct. All the income, gains and
losses (realized or unrealized) resulting from these assets are credited to or
charged against the contracts and not against any other contracts Security
Mutual may issue.
DISTRIBUTOR
Cova Life Sales Company, One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois
60181-4644 acts as the distributor of the contracts.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions of up to ____% of purchase payments. In
addition, under certain circumstances, an expense allowance of up to ____% of
purchase payments may be payable. The New York Insurance Department has ruled
that asset based compensation is permissible under certain circumstances.
Security Mutual may, in the future, adopt an asset based compensation program in
addition to, or in lieu of, the present compensation program.
OWNERSHIP
OWNER. You, as the owner of the contract, have all the rights under the
contract. Prior to the annuity date, the owner is as designated at the time the
contract is issued, unless changed. On and after the annuity date, the annuitant
is the owner. The beneficiary becomes the owner when a death benefit is payable.
JOINT OWNER. The contract can be owned by joint owners. Upon the death of
either joint owner, the surviving owner will be the designated beneficiary. Any
other beneficiary designation at the time the contract was issued or as may have
been later changed will be treated as a contingent beneficiary unless otherwise
indicated.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
ASSIGNMENT
You can assign the contract at any time during your lifetime. Security Mutual
will not be bound by the assignment until it receives the written notice of the
assignment. Security Mutual will not be liable for any payment or other action
we take in accordance with the contract before we receive notice of the
assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be limitations
on your ability to assign the contract.
SUSPENSION OF PAYMENTS OR TRANSFERS
Security Mutual may be required to suspend or postpone payments for withdrawal
or transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or Security Mutual cannot
reasonably value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
Security Mutual has reserved the right to defer payment for a withdrawal or
transfer from the fixed account for the period permitted by law but not for more
than six months.
FINANCIAL STATEMENTS
The financial statements of Security Mutual have been included in the Statement
of Additional Information.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
PAGE
Company
Experts
Legal Opinions
Distribution
Performance Information
Tax Status
Annuity Provisions
Financial Statements
APPENDIX
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
EXISTING PORTFOLIOS
Certain investment portfolios have been in existence for sometime and have an
investment performance history. In order to show how investment performance of
the portfolios affects accumulation unit values, we have developed performance
information.
The chart below shows the investment performance of the portfolios and the
accumulation unit performance calculated by assuming that accumulation units
were invested in each of the investment portfolios for the periods shown.
The performance figures in Column A below for each investment portfolio reflect
the fees and expenses paid by each portfolio. Column B presents performance
figures for the accumulation units which reflects the insurance charges as well
as the fees and expenses of the investment portfolio. Column C presents
performance figures for the accumulation units which reflects the insurance
charges, the contract maintenance charge, the fees and expenses of each
investment portfolio, and assumes that you make a withdrawal at the end of the
period and therefore the withdrawal charge is reflected.
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED _______________:
<TABLE>
<CAPTION>
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance 10 yrs or
10 yrs or 10 yrs or since
Portfolio 1 yr 5 yrs since inception 1 yr 5 yrs since inception 1 yr 5 yrs inception
- --------- ---- ---- --------------- ---- ---- --------------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COVA SERIES
TRUST
Select Equity ___% ___% ___% ___% ___% ___% ___% ___% ___%
Small Cap Stock ___% ___% ___% ___% ___% ___% ___% ___% ___%
International
Equity ___% ___% ___% ___% ___% ___% ___% ___% ___%
Quality Bond ___% ___% ___% ___% ___% ___% ___% ___% ___%
Large Cap Stock ___% ___% ___% ___% ___% ___% ___% ___% ___%
Bond Debenture ___% ___% ___% ___% ___% ___% ___% ___% ___%
LORD ABBETT
SERIES FUND,
INC.
Growth and Income ___% ___% ___% ___% ___% ___% ___% ___% ___%
GENERAL AMERICAN
CAPITAL COMPANY
Money Market ___% ___% ___% ___% ___% ___% ___% ___% ___%
</TABLE>
_________________________________________________________________
------------------
------------------
------------------
FRONT
Security Mutual Life Insurance Company of New York
Attn: Variable Products
Security Mutual Bldg., 100 Court Street
Binghamton, NY 13902-1625
-----------------------------------------------------------------
-----------------------------------------------------------------
Please send me, at no charge, the Statement of Additional
Information dated _________, 1997, for The Annuity Contract
issued by Security Mutual.
(Please print or type and fill in all information)
BACK _________________________________________________________________
Name
-----------------------------------------------------------------
Address
-----------------------------------------------------------------
City State Zip Code
-----------------------------------------------------------------
CNY-1090 (5/97)
Security
Mutual VA
Security Mutual Life Insurance Company of New York
Home Office
Security Mutual Bldg., 100 Court Street
Binghamton, NY 13902-1625
(607) 723-3551
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
ISSUED BY
SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
AND
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED______, 1997, FOR THE INDIVIDUAL
FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT WHICH IS DESCRIBED HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE THE
COMPANY AT: (800) 831-5433, One Tower Lane, Suite 3000, Oakbrook Terrace,
Illinois 60181.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED __________, 1997.
TABLE OF CONTENTS
Page
COMPANY
EXPERTS
LEGAL OPINIONS
DISTRIBUTION
PERFORMANCE INFORMATION
Total Return
Historical Unit Values
Reporting Agencies
Performance Information
TAX STATUS
General
Diversification
Multiple Contracts
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals - Qualified Contracts
ANNUITY PROVISIONS
Variable Annuity
Fixed Annuity
Annuity Unit
Net Investment Factor
Mortality and Expense Guarantee
FINANCIAL STATEMENTS
COMPANY
Security Mutual Life Insurance Company of New York ("Security Mutual" or the
"Company") is a New York domiciled mutual life insurance company with total
assets of $1.363 billion and total adjusted capital of $88.8 million and a
policyowner surplus of $65.0 million as of December 31, 1996. Organized in 1886,
the Company is licensed to conduct business in 50 states, the District of
Columbia and the U.S. Virgin Islands. The Company's primary business focus
involves the sale of individual life insurance products.
The principal lines of business of Security Mutual are: Individual Operations,
which provides a broad range of individual life insurance and annuity products
to middle and upper income level individuals, small to medium sized businesses,
their owners and employees, and professionals; and Group Operations, which
provides various group life and disability products to small businesses,
professionals and other institutions. For the year ended December 31, 1996,
Security Mutual had total premiums, annuity considerations and fund deposits of
$197.3 million, of which $150.1 million was attributable to Individual Life
insurance products, $19.0 million attributable to Individual Annuity products,
$25.0 million attributable to Group Operations and $3.2 million to various other
products.
EXPERTS
The statutory financial statements of the Company as of December 31, 1996 and
1995, and for each of the years in the three year period ended December 31, 1996
included in this Prospectus and the Statement of Additional Information, have
been included herein in reliance upon the reports of _________________,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C. of Westport, Connecticut has provided advice
on certain matters relating to the federal securities and income tax laws in
connection with the Contracts described in the Prospectus.
DISTRIBUTION
Cova Life Sales Company acts as the distributor. The offering is on a continuous
basis.
PERFORMANCE INFORMATION
TOTAL RETURN
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an Accumulation Unit based on the
performance of an investment portfolio over a period of time, usually a calendar
year, determined by dividing the increase (decrease) in value for that unit by
the Accumulation Unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of a 1.25% Mortality and Expense Risk Premium, a .15% Administrative
Expense Charge, the expenses for the underlying investment portfolio being
advertised and any applicable Contract Maintenance Charges and Withdrawal
Charges.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges and any applicable Withdrawal Charge to arrive at
the ending hypothetical value. The average annual total return is then
determined by computing the fixed interest rate that a $1,000 purchase payment
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described. The formula used in these
calculations is:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods
used (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the time periods
used.
The Company may also advertise performance data which will be calculated in the
same manner as described above but which will not reflect the deduction of any
Withdrawal Charge. The deduction of any Withdrawal Charge would reduce any
percentage increase or make greater any percentage decrease.
Owners should note that the investment results of each investment portfolio will
fluctuate over time, and any presentation of the investment portfolio's total
return for any period should not be considered as a representation of what an
investment may earn or what an Owner's total return may be in any future period.
HISTORICAL UNIT VALUES
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to the
investment portfolio being compared. The Standard & Poor's 500 Composite Stock
Price Index is an unmanaged, unweighted average of 500 stocks, the majority of
which are listed on the New York Stock Exchange. The Dow Jones Industrial
Average is an unmanaged, weighted average of thirty blue chip industrial
corporations listed on the New York Stock Exchange. Both the Standard & Poor's
500 Composite Stock Price Index and the Dow Jones Industrial Average assume
quarterly reinvestment of dividends.
REPORTING AGENCIES
The Company may also distribute sales literature which compares the performance
of the Accumulation Unit values of the Contracts with the unit values of
variable annuities issued by other insurance companies. Such information will be
derived from the Lipper Variable Insurance Products Performance Analysis
Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is published
by Lipper Analytical Services, Inc., a publisher of statistical data which
currently tracks the performance of almost 4,000 investment companies. The
rankings compiled by Lipper may or may not reflect the deduction of asset-based
insurance charges. The Company's sales literature utilizing these rankings will
indicate whether or not such charges have been deducted. Where the charges have
not been deducted, the sales literature will indicate that if the charges had
been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking may address the question as to which funds
provide the highest total return with the least amount of risk. Other ranking
services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
PERFORMANCE INFORMATION
Certain Portfolios of Cova Series Trust, Lord Abbett Series Fund, Inc., and
General American Capital Company have been in existence for sometime and
consequently have an investment performance history. In order to demonstrate how
the investment experience of the Portfolios affects Accumulation Unit values,
performance information was developed. The information is based upon the
historical experience of the Portfolios and is for the periods shown. The
prospectus contains a chart of performance information.
Future performance of the Portfolios will vary and the hypothetical results
shown are not necessarily representative of future results. Performance for
periods ending after those shown may vary substantially from the examples shown.
The performance of the Portfolios is calculated for a specified period of time
by assuming an initial Purchase Payment of $1,000 allocated to the Portfolio.
There are performance figures for the Accumulation Units which reflect the
insurance charges as well as the portfolio expenses. There are also performance
figures for the Accumulation Units which reflect the insurance charges, the
contract maintenance charge, the portfolio expenses, and assume that you make a
withdrawal at the end of the period and therefore the withdrawal charge is
reflected. The percentage increases (decreases) are determined by subtracting
the initial Purchase Payment from the ending value and dividing the remainder by
the beginning value. The performance may also show figures when no withdrawal is
assumed.
TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is not
taxed on increases in the value of a Contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option selected. For a lump sum payment received as a total withdrawal (total
surrender), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For Non-Qualified Contracts, this cost basis is
generally the purchase payments, while for Qualified Contracts there may be no
cost basis. The taxable portion of the lump sum payment is taxed at ordinary
income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period or refund feature) bears
to the expected return under the Contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the Contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the Contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the Contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the Contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the Contracts
should seek competent financial advice about the tax consequences of any
distributions. The Company is taxed as a life insurance company under the Code.
For federal income tax purposes, the Separate Account is not a separate entity
from the Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts will
be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a Contract held by a trust or other entity as an
agent for a natural person nor to Contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions). Participants should consult their own tax counsel
or other tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered herein may also be used as Qualified Contracts. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified
Contract may be subject to the terms and conditions of the plan regardless of
the terms and conditions of the Contracts issued pursuant to the plan. The
following discussion of Qualified Contracts is not exhaustive and is for general
informational purposes only. The tax rules regarding Qualified Contracts are
very complex and will have differing applications depending on individual facts
and circumstances. Each purchaser should obtain competent tax advice prior to
purchasing Qualified Contracts.
Qualified Contracts include special provisions restricting Contract provisions
that may otherwise be available as described herein. Generally, Qualified
Contracts are not transferable except upon surrender or annuitization.
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. Qualified Contracts will utilize annuity tables
which do not differentiate on the basis of sex. Such annuity tables will also be
available for use in connection with certain non-qualified deferred compensation
plans.
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity (IRA).
THE CONTRACTS ARE NOT AVAILABLE AS QUALIFIED CONTRACTS UNTIL AN IRA ENDORSEMENT
IS APPROVED BY THE STATE OF NEW YORK INSURANCE DEPARTMENT. Under applicable
limitations, certain amounts may be contributed to an IRA which will be
deductible from the individual's gross income. These IRAs are subject to
limitations on eligibility, contributions, transferability and distributions.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.) Under certain
conditions, distributions from other IRAs and other Qualified Plans may be
rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any distribution from qualified retirement plans, including Contracts issued and
qualified under Code Section 408(b) (Individual Retirement Annuities). To the
extent amounts are not includible in gross income because they have been rolled
over to an IRA or to another eligible Qualified Plan, no tax penalty will be
imposed. The tax penalty will not apply to the following distributions: (a) if
distribution is made on or after the date on which the Annuitant reaches age 59
1/2; (b) distributions following the death or disability of the Annuitant (for
this purpose disability is as defined in Section 72(m)(7) of the Code); (c)
distributions that are part of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the Annuitant
or the joint lives (or joint life expectancies) of the Annuitant and his or her
designated Beneficiary; (d) distributions made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the amount allowable
as a deduction under Code Section 213 to the Owner or Annuitant (as applicable)
for amounts paid during the taxable year for medical care; or (e) distributions
from an Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant (as
applicable) has received unemployment compensation for at least 12 weeks. This
exception will no longer apply after the Owner or Annuitant (as applicable) has
been re-employed for at least 60 days.
Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year following the year in which the employee attains age 70
1/2. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
ANNUITY PROVISIONS
VARIABLE ANNUITY
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable investment portfolio(s) of the Separate Account. At the
Annuity Date, the Contract Value in each investment portfolio will be applied to
the applicable Annuity Tables. The Annuity Table used will depend upon the
Annuity Option chosen. If, as of the Annuity Date, the then current Annuity
Option rates applicable to this class of Contracts provide a first Annuity
Payment greater than guaranteed under the same Annuity Option under this
Contract, the greater payment will be made. The dollar amount of Annuity
Payments after the first is determined as follows:
(1) the dollar amount of the first Annuity Payment is divided by the value
of an Annuity Unit as of the Annuity Date. This establishes the number of
Annuity Units for each monthly payment. The number of Annuity Units remains
fixed during the Annuity Payment period.
(2) the fixed number of Annuity Units is multiplied by the Annuity Unit
value for the last Valuation Period of the month preceding the month for which
the payment is due. This result is the dollar amount of the payment.
The total dollar amount of each Variable Annuity Payment is the sum of all
investment portfolios' Variable Annuity Payments reduced by the applicable
Contract Maintenance Charge.
FIXED ANNUITY
A fixed annuity is a series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Separate Account. The General Account Value on the
day immediately preceding the Annuity Date will be used to determine the Fixed
Annuity monthly payment. The first monthly Annuity Payment will be based upon
the Annuity Option elected and the appropriate Annuity Option Table.
ANNUITY UNIT
The value of an Annuity Unit for each investment portfolio was arbitrarily set
initially at $10. This was done when the first investment portfolio shares were
purchased. The investment portfolio Annuity Unit value at the end of any
subsequent Valuation Period is determined by multiplying the investment
portfolio Annuity Unit value for the immediately preceding Valuation Period by
the product of (a) the Net Investment Factor for the day for which the Annuity
Unit value is being calculated, and (b) 0.999919.
NET INVESTMENT FACTOR
The Net Investment Factor for any investment portfolio for any Valuation Period
is determined by dividing:
(a) the Accumulation Unit value as of the close of the current Valuation
Period, by
(b) the Accumulation Unit value as of the close of the immediately
preceding Valuation Period.
The Net Investment Factor may be greater or less than one, as the Annuity Unit
value may increase or decrease.
MORTALITY AND EXPENSE GUARANTEE
The Company guarantees that the dollar amount of each Annuity Payment after the
first Annuity Payment will not be affected by variations in mortality or expense
experience.
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be considered
only as bearing upon the ability of the Company to meet its obligations under
the Contracts.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements
Financial statements of the Company will be filed by amendment.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account.
2. Not Applicable.
3. Principal Underwriter's Agreement.
4. (i) Individual Flexible Purchase Payment
Deferred Variable Annuity Contract.
(ii) Endorsement.
(iii) Rebalancing Transfers Endorsement.
(iv) Dollar Cost Averaging Endorsement.
5. Application for Variable Annuity.
6. (i) Copy of the Charter of the Company.
(ii) Copy of the Bylaws of the Company.
7. Not Applicable.
8. Not Applicable.
9. Opinion and Consent of Counsel (to be filed by amendment).
10. Consent of Independent Accountants (to be filed by amendment).
11. Not Applicable.
12. Not Applicable.
13. Calculation of Performance Information (to be filed by amendment).
14. Company Organizational Chart.
27. Not Applicable
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Officers and Directors of the Company:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
DIRECTORS
Willard N. Archie Director
Vice Chairman
Mitchell & Titus, LLP
One Battery Park Plaza
New York, NY 10004-1461
William W. Atkin Director, Executive Vice President &
Security Mutual Life Insurance Chief Financial Officer
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
Carson E. Beadle Director
Managing Director
William M. Mercer, Inc.
1166 Avenue of the Americas
New York, NY 10036
Bruce W. Boyea Director
Security Mutual Life Insurance President & Chief Executive Officer
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
James A. Carrigg Director
Chairman, Executive Committee
NYSEG
P.O. Box 3607
Binghamton, NY 13902-3607
Melvin B. Dunn Director
Security Mutual Life Insurance Executive Vice President, Individual
Company of New York Insurance Operations
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
Daryl R. Forsythe Director
President & Chief Executive
Officer
NBT Bancorp Inc.
52 South Broad Street
Norwich, NY 13815
Stanley Goldstein Director
Accuhealth, Inc.
1185 Avenue of the Americas
New York, NY 10036-2602
David D. Holbrook, Chairman Director
Marsh & McLennan, Inc.
1166 Avenue of the Americas
New York, NY 10036
John M. Keeler, Esq. Director
Hinman, Howard & Kattell, LLP
P.O. Box 5250
Binghamton, NY 13902-5250
Richard A. Liddy, Chairman, Chairman of the Board of Directors
President & Chief Executive
Officer
General American Life
Insurance Company
700 Market Street
St. Louis, MO 63101
Mary L. MacLachlan Director
Director of Private Accounts
Private Capital Management,
Inc.
3003 Tamiami Trail North
Naples, FL 34103
Peter L. Meyers, Vice Chairman Director
OnBank & Trust Company
101 South Salina Street
Syracuse, NY 13221
Richard R. Millar Director
2115 Tocobaga Lane
Nokomis, FL 34275
Walter G. Rich Director
President & Chief Executive
Officer
Delaware Otsego Corporation
1 Railroad Avenue
Cooperstown, NY 13326
Robert E. Sadler, Jr., Director
President
M & T Bank
One M & T Plaza
Buffalo, NY 14203
OFFICERS
John T. Terrenzi Executive Vice President,
Security Mutual Life Insurance Group & Worksite Marketing Operations
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
Robert L. Dalke Senior Vice President, Corporate
Security Mutual Life Insurance Administration & Chief Compliance Officer
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
James P. Daly, Jr. Senior Vice President,
Security Mutual Life Insurance Individual Insurance Services
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
F. David Mistretta Senior Vice President, General Counsel
Security Mutual Life Insurance & Secretary
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
Gregory W. Simonelli Senior Vice President, Agency
Security Mutual Life Insurance
Company of New York
100 Court Street; P.O. Box 1625
Binghamton, NY 13902-1625
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
A company organizational chart is included as Exhibit 14.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable
ITEM 28. INDEMNIFICATION
The Charter of the Company (Article IV, Section 1) provides that:
"ARTICLE IV
SECTION 1. The corporate powers of the company shall be exercised by the Board
of Directors and such officers, agents and employees as the Board may authorize.
(a) No director shall be personally liable to the Company or any of its
policyholders for damages for any breach of duty as a Director; provided,
however, that the foregoing provisions shall not eliminate or limit (i) the
liability of a Director if a judgment or other final adjudication adverse to him
or her establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or were acts or omissions (a) which he or she
knew or reasonably should have known violated the New York Insurance Law, or (b)
which violated a specific standard of care imposed on Directors directly, and
not by reference, by a provision of the New York Insurance Law (or any
regulations promulgated thereunder), or (c) which constituted a knowing
violation of any other law, or establishes that he or she personally gained in
fact a financial profit or other advantage to which he or she was not legally
entitled; or (ii) the liability of a Director for any act or omission prior to
the adoption of this amendment by the Company."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Cova Life Sales Company is the principal underwriter for the following
investment companies:
Cova Variable Annuity Account One
Cova Variable Annuity Account Five
Cova Variable Life Account One
Cova Variable Life Account Five
First Cova Variable Annuity Account One
(b) Cova Life Sales Company ("Life Sales") is the principal underwriter for
the Contracts. The following persons are the officers and directors of Life
Sales. The principal business address for each officer and director of Life
Sales is One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181- 4644.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Underwriter
- ---------------- ----------------
<S> <C>
Judy M. Drew President, Chief Operations Officer and
Director
Lorry J. Stensrud Director
Patricia E. Gubbe Vice President and Chief Compliance
Officer
William C. Mair Director
Philip A. Haley Vice President
Frances S. Cook Assistant Secretary
Robert A. Miner Treasurer
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Christopher Harden, whose address is One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644 maintains physical possession of the accounts,
books or documents of the Variable Account required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. Security Mutual Life Insurance Company of New York ("Company") hereby
represents that the fees and charges deducted under the Contracts described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Binghamton, and State of New York, on this 29th day of
September, 1997.
SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
(Registrant)
By: SECURITY MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ F. DAVID MISTRETTA
------------------------------------
Secretary
SECURITY MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK
Depositor
By: /s/ F. DAVID MISTRETTA
------------------------------------
Secretary
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ RICHARD A. LIDDY
____________________
Richard A. Liddy Chairman of the Board 10/1/97
of Directors _______
/s/ WILLARD N. ARCHIE
_____________________ 9/30/97
Willard N. Archie Director _______
/s/ WILLIAM W. ATKIN
____________________ 9/29/97
William W. Atkin Director & Chief ________
Financial Officer
/s/ CARSON E. BEADLE
_____________________ 9/29/97
Carson E. Beadle Director _______
/s/ BRUCE W. BOYEA
___________________ Director, 9/29/97
Bruce W. Boyea President & Chief _______
Executive Officer
/s/ JAMES A. CARRIGG
____________________ 10/2/97
James A. Carrigg Director _______
/s/ MELVIN B. DUNN
__________________ Director 9/29/97
Melvin B. Dunn _______
/s/ DARYL R. FORSYTHE
_____________________ Director 9/29/97
Daryl R. Forsythe _______
/s/ STANLEY GOLDSTEIN
_____________________ Director 9/29/97
Stanley Goldstein _______
/s/ DAVID D. HOLBROOK 9/29/97
_________________________ Director _______
David D. Holbrook
/s/ JOHN M. KEELER 9/26/97
_________________________ Director _______
John M. Keeler
/s/ MARY L. MACLACHLAN 9/29/97
_________________________ Director _______
Mary L. MacLachlan
/s/ PETER L. MEYERS 9/29/97
_________________________ Director _______
Peter L. Meyers
/s/ RICHARD R. MILLAR 9/29/97
________________________ Director _______
Richard R. Millar
/s/ WALTER G. RICH 9/29/97
________________________ Director _______
Walter G. Rich
/s/ ROBERT E. SADLER, JR. 9/29/97
________________________ Director _______
Robert E. Sadler, Jr.
</TABLE>
EXHIBITS
TO
FORM N-4
FOR
SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
INDEX TO EXHIBITS
99.B1 Resolution of Board of Directors
99.B3 Principal Underwriter's Agreement
99.B4(i) Individual Flexible Purchase Payment Deferred
Variable Annuity Contract
99.B4(ii) Endorsement
99.B4(iii) Rebalancing Transfers Endorsement
99.B4(iv) Dollar Cost Averaging Endorsement
99.B5 Application for Variable Annuity
99.B6(i) Copy of Charter of the Company
99.B6(ii) Copy of Bylaws of the Company
99.B14 Company Organizational Chart
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
RESOLUTION
VARIABLE ANNUITY CONTRACTS
WHEREAS, the Company is desirous of developing and marketing certain types
of variable and fixed annuity contracts which may be required to be registered
with the Securities and Exchange Commission pursuant to the various securities
laws; and
WHEREAS, it will be necessary to take certain actions including, but not
limited to, establishing separate accounts for segregation of assets and seeking
approval of regulatory authorities;
NOW, THEREFORE, BE IT RESOLVED, that the Company is hereby authorized to
develop the necessary program in order to effectuate the issuance and sale of
variable and fixed annuity contracts; and be it
FURTHER RESOLVED, that the Company is hereby authorized to establish and
to designate one or more separate accounts of the Company in accordance with the
provisions of state insurance law. The purpose of any such separate account
shall be to provide an investment medium for such variable and fixed annuity
contracts issued by the Company as may be designated as participating therein.
Any such separate account shall receive, hold, invest and reinvest only the
monies arising from (i) premiums, contributions or payments made pursuant to the
variable and fixed annuity contracts participating therein; (ii) such assets of
the Company as shall be deemed appropriate to be invested in the same manner as
the assets applicable to the Company's reserve liability under the variable and
fixed annuity contracts participating in such separate accounts; or as may be
necessary for the establishment of such separate accounts; (iii) the dividends,
interest and gains produced by the foregoing; and be it
FURTHER RESOLVED, that the proper officers of the Company are hereby
authorized:
(i) to register the variable and fixed annuity contracts participating in
any such separate accounts under the provisions of the Securities Act
of 1933 to the extent that it shall be determined that such
registration is necessary;
(ii) to register any such separate accounts with the Securities and
Exchange Commission under the provisions of the Investment Company
Act of 1940 to the extent that it shall be determined that such
registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including
post-effective amendments), supplements and exhibits thereto as they
may be deemed necessary or desirable;
(iv) to apply for exemption from those provisions of the aforementioned
Acts as shall be deemed necessary and to take any and all other
actions which shall be deemed necessary, desirable, or appropriate in
connection with such Acts;
(v) to file the variable and fixed annuity contracts participating in any
such separate accounts with the appropriate state insurance
departments and to prepare and execute all necessary documents to
obtain approval of the insurance departments;
(vi) to prepare or have prepared and execute all necessary documents to
obtain approval of, or clearance with, or other appropriate actions
required; of any other regulatory authority that may be necessary;
and be it
FURTHER RESOLVED, that for the purposes of facilitating the execution and
filing of any registration statement and of remedying any deficiencies therein
by appropriate amendments (including post-effective amendments) or supplements
thereto, the President of the Company and the Secretary of the Company, and each
of them, are hereby designated as attorneys and agents of the Company; and the
appropriate officers of the Company be, and they hereby are, authorized and
directed to grant the power of attorney of the Company to the President of the
Company and the Secretary of the Company by executing and delivering to such
individuals, on behalf of the Company, a power of attorney; and be it
FURTHER RESOLVED, that in connection with the offering and sale of the
fixed and variable annuity contracts in the various States of the United States,
as and to the extent necessary, the appropriate officers of the Company be, and
they hereby are, authorized to take any and all such action, including but not
limited to the preparation, execution and filing with proper State authorities,
on notices, certificates, affidavits, powers of attorney, consents to service of
process, issuer's covenants, certified copies of minutes of policyholders' and
directors' meetings, bonds, escrow and impounding agreements and other writings
and instruments, as may be required in order to render permissible the offering
and sale of the fixed and variable annuity contracts in such jurisdictions; and
be it
FURTHER RESOLVED, that the forms of any resolutions required by any State
authority to be filed in connection with any of the documents or instruments
referred to in any of the preceding resolutions be, and the same hereby are,
adopted as if fully set forth herein if (1) in the opinion of the appropriate
officers of the Company, the adoption of the resolutions is advisable and (2)
the Secretary or any Assistant Secretary of the Company evidences such adoption
by inserting into these minutes copies of such resolutions; and be it
FURTHER RESOLVED, that the officers of the Company, and each of them, are
hereby authorized to prepare and to execute the necessary documents and to take
such further actions as may be deemed necessary or appropriate, in their
discretion, to implement the purpose of these resolutions.
PRINCIPAL UNDERWRITER'S AGREEMENT
IT IS HEREBY AGREED by and between SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW
YORK ("INSURANCE COMPANY") on behalf of SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT
ONE (the "VARIABLE ACCOUNT") and COVA LIFE SALES COMPANY (the "PRINCIPAL
UNDERWRITER") as follows:
I
INSURANCE COMPANY proposes to issue and sell Individual Fixed and Variable
Deferred Annuity Contracts (the "Contracts") of the Variable Account to the
public through PRINCIPAL UNDERWRITER. The PRINCIPAL UNDERWRITER agrees to
provide sales service subject to the terms and conditions hereof. The Contracts
to be sold are more fully described in the registration statement and prospectus
hereinafter mentioned. Such Contracts will be issued by INSURANCE COMPANY
through the Variable Account.
II
INSURANCE COMPANY grants PRINCIPAL UNDERWRITER the exclusive right, during the
term of this Agreement, subject to registration requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 and the provisions of the
Securities Exchange Act of 1934, to be the distributor of the Contracts issued
through the Variable Account. PRINCIPAL UNDERWRITER will sell the Contracts
under such terms as set by INSURANCE COMPANY and will make such sales to
purchasers permitted to buy such Contracts as specified in the prospectus.
III
PRINCIPAL UNDERWRITER shall be compensated for its distribution services in such
amount as to meet all of its obligations to selling broker-dealers with respect
to all Purchase Payments accepted by INSURANCE COMPANY on the Contracts covered
hereby.
IV
On behalf of the Variable Account, INSURANCE COMPANY shall furnish PRINCIPAL
UNDERWRITER with copies of all prospectuses, financial statements and other
documents which PRINCIPAL UNDERWRITER reasonably requests for use in connection
with the distribution of the Contracts. INSURANCE COMPANY shall provide to
PRINCIPAL UNDERWRITER such number of copies of the current effective
prospectuses as PRINCIPAL UNDERWRITER shall request.
V
PRINCIPAL UNDERWRITER is not authorized to give any information, or to make any
representations concerning the Contracts or the Variable Account of INSURANCE
COMPANY other than those contained in the current registration statements or
prospectuses relating to the Variable Account filed with the Securities and
Exchange Commission or such sales literature as may be authorized by INSURANCE
COMPANY.
VI
Both parties to this Agreement agree to keep the necessary records as indicated
by applicable state and federal law and to render the necessary assistance to
one another for the accurate and timely preparation of such records.
VII
This Agreement shall be effective upon the execution hereof and will remain in
effect unless terminated as hereinafter provided. This Agreement shall
automatically be terminated in the event of its assignment by PRINCIPAL
UNDERWRITER.
This Agreement may at any time be terminated by either party hereto upon 60
days' written notice to the other party.
VIII
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been given on the date of
service if served personally on the party to whom notice is to be given, or on
the date of mailing if sent by First Class Mail, Registered or Certified,
postage prepaid and properly addressed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized.
EXECUTED this ___ day of _______________, 1997.
INSURANCE COMPANY
SECURITY MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK
BY:_____________________________
ATTEST:________________________
Secretary
PRINCIPAL UNDERWRITER
COVA LIFE SALES COMPANY
BY:_____________________________
ATTEST:________________________
Secretary
SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
SECURITY MUTUAL BUILDING * 100 COURT STREET
P.O. BOX 1625 * BINGHAMTON, NEW YORK 13902
(607) 723-3551
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK (the "Company") will make
Annuity Payments to the Annuitant starting on the Annuity Date subject to the
terms of this Contract.
This Contract is issued in return for the Application and payment of the initial
Purchase Payment. A copy of the Application is attached to and made a part of
the Contract.
This is a legal contract between the Owner and the Company.
TEN DAY FREE LOOK
Within 10 days of the date of receipt of this Contract by the Owner, it may be
returned by delivering or mailing it to the Company or to the agent through whom
it was purchased. When this Contract is received by the Company, it will be
voided as if it had never been in force. The Company will refund the Contract
Value computed at the end of the Valuation Period during which this Contract is
mailed to or delivered to the Company at its Home Office or the agent through
whom it was purchased.
Signed for the Company.
/s/F. DAVID MISTRETTA /s/ BRUCE W. BOYEA
___________________________Secretary ____________________ President
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
NOTICE -- THE OWNER OF THIS CONTRACT IS ENTITLED TO VOTE, IN PERSON, BY MAIL, OR
BY PROXY, AT THE ANNUAL MEETINGS WHICH ARE HELD AT THE HOME OFFICE IN
BINGHAMTON, NEW YORK, ON THE FIRST TUESDAY OF FEBRUARY.
READ YOUR CONTRACT CAREFULLY
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. VARIABLE ACCOUNT EXPENSES CONSIST OF A MORTALITY
AND EXPENSE RISK PREMIUM, AN ADMINISTRATIVE EXPENSE CHARGE, A CONTRACT
MAINTENANCE CHARGE AND A TRANSFER FEE. THESE CHARGES ARE SHOWN ON THE CONTRACT
DATA PAGE. VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE AS LONG AS THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT EQUALS OR EXCEEDS 3% PER YEAR.
THE VARIABLE PROVISIONS OF THIS CONTRACT CAN BE FOUND ON PAGES 9 AND 11.
INDEX
Page
Contract Data Page........................................................ 3
Definitions............................................................... 7
General Provisions........................................................ 7
The Contract.............................................................. 7
Incontestability.......................................................... 7
Misstatement of Age or Sex................................................ 7
Contract Settlement....................................................... 8
Reports................................................................... 8
Taxes..................................................................... 8
Evidence of Survival...................................................... 8
Modification of Contract.................................................. 8
Annuitant, Ownership, Assignment Provisions............................... 8
Annuitant................................................................. 8
Ownership................................................................. 8
Assignment................................................................ 8
Beneficiary Provisions.................................................... 8
Beneficiary............................................................... 8
Change of Beneficiary..................................................... 8
Purchase Payment Provisions............................................... 8
Purchase Payments......................................................... 8
Change in Purchase Payments............................................... 8
Allocation of Purchase Payments........................................... 8
No Default................................................................ 8
General Account Provisions................................................ 8
General Account Value..................................................... 8
Interest To Be Credited................................................... 9
Dividends................................................................. 9
Contract Value Provision.................................................. 9
Contract Value............................................................ 9
Variable Account Provisions............................................... 9
The Variable Account...................................................... 9
Investments of the Variable Account....................................... 9
Valuation of Assets....................................................... 9
Accumulation Unit......................................................... 9
Mortality and Expense Risk Premium........................................ 9
Administrative Expense Charge............................................. 9
Mortality and Expense Guarantee........................................... 10
Contract Maintenance Charge............................................... 10
Deduction for Contract Maintenance Charge................................. 10
Transfer Provision........................................................ 10
Transfers................................................................. 10
Death Benefit............................................................. 10
Death of Annuitant........................................................ 10
Death of Owner............................................................ 10
Payment of Death Benefit.................................................. 11
Annuity Provisions........................................................ 11
Annuity Date.............................................................. 11
Election of Annuity Option................................................ 11
Frequency and Amount of Annuity Payments.................................. 11
Annuity Options........................................................... 11
Annuity................................................................... 11
Fixed Annuity............................................................. 11
Variable Annuity.......................................................... 12
Annuity Unit.............................................................. 12
Net Investment Factor..................................................... 12
Transfers During the Annuity Period....................................... 12
Protection of Proceeds.................................................... 12
Withdrawal Provisions..................................................... 12
Withdrawals............................................................... 12
Withdrawal Charge......................................................... 12
Waiver of Withdrawal Charge............................................... 13
Suspension or Deferral of Payments or Transfers from the Variable Account. 13
Deferral of Payments or Transfers from the General Account................ 13
Reserves, Values and Benefits............................................. 13
Tables....................................................................14-17
CONTRACT DATA PAGE
ANNUITANT: [John Doe] AGE AT ISSUE: [35]
OWNER: [John Doe] AGE AT ISSUE: [35]
CONTRACT NUMBER: [123] ISSUE DATE: [6/1/1997]
INITIAL PURCHASE PAYMENT: [$25,000] ANNUITY DATE: [6/1/2027]
MINIMUM SUBSEQUENT PURCHASE
PAYMENT: [$2,000]
BENEFICIARY:
AS STATED IN THE APPLICATION FOR THIS CONTRACT UNLESS CHANGED IN ACCORDANCE
WITH THE CONTRACT PROVISIONS.
INITIAL INTEREST RATE APPLICABLE TO THE GENERAL ACCOUNT:
[7% GUARANTEED THROUGH THE END OF THE CURRENT CALENDAR YEAR]
MINIMUM GUARANTEED INTEREST RATE: 3% PER YEAR.
CONTRACT MAINTENANCE CHARGE: $30.00 EACH CONTRACT YEAR.
AFTER THE ANNUITY DATE, THE CONTRACT MAINTENANCE CHARGE WILL BE COLLECTED
ON A MONTHLY BASIS.
MORTALITY AND EXPENSE RISK PREMIUM:
EQUAL ON AN ANNUAL BASIS TO 1.25% OF THE AVERAGE DAILY NET ASSET VALUE OF
THE VARIABLE ACCOUNT.
ADMINISTRATIVE EXPENSE CHARGE:
EQUAL ON AN ANNUAL BASIS TO .15% OF THE AVERAGE DAILY NET ASSET VALUE OF
THE VARIABLE ACCOUNT.
TRANSFER FEE:
$25 OR, IF SMALLER, 2% OF THE AMOUNT TRANSFERRED PER TRANSACTION IF THERE
ARE MORE THAN 12 TRANSFERS IN A CONTRACT YEAR.
ELIGIBLE INVESTMENTS:
- J.P. MORGAN INVESTMENT MANAGEMENT
- SELECT EQUITY PORTFOLIO
- LARGE CAPITAL STOCK PORTFOLIO
- SMALL CAPITAL STOCK PORTFOLIO
- INTERNATIONAL EQUITY PORTFOLIO
- QUALITY BOND PORTFOLIO
- LORD ABBETT & CO.
- BOND DEBENTURE PORTFOLIO
- MID-CAP VALUE PORTFOLIO
- LARGE CAP RESEARCH PORTFOLIO
- DEVELOPING GROWTH PORTFOLIO
- GROWTH AND INCOME PORTFOLIO
- LORD ABBETT SERIES FUND, INC., GROWTH AND INCOME PORTFOLIO
- CONNING ASSET MANAGEMENT COMPANY
- MONEY MARKET
VARIABLE ACCOUNT: SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
HOME OFFICE:
Security Mutual Life
Insurance Company of New York
Security Mutual Building o 100 Court Street
P.O. Box 1625
Binghamton, New York 13902
(607) 723-3551
FOR USE WITH SECURITY MUTUAL VARIABLE ANNUITY ACCOUNT ONE
A SEPARATE INVESTMENT ACCOUNT OF SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
DEFINITIONS
ACCOUNT -- General Account and/or one or more of the Subaccount(s) of the
Variable Account.
ACCUMULATION UNIT -- An accounting unit of measure used to calculate the
Contract Value in a Subaccount of the Variable Account.
ANNUITANT -- The natural person on whose life Annuity Payments are based.
ANNUITY OR ANNUITY PAYMENTS -- The series of payments made to the Annuitant
after the Annuity Date under the Annuity Option elected.
ANNUITY DATE -- The date on which Annuity Payments begin. The Annuity Date is
shown on the Contract Data Page.
ANNUITY PERIOD -- The period starting on the Annuity Date.
ANNUITY UNIT -- An accounting unit of measure used to calculate Variable Annuity
Payments after the Annuity Date.
ATTAINED AGE -- The age on the birthday prior to any date for which age is to be
determined.
BENEFICIARY -- The person(s) who will receive the Death Benefit.
COMPANY -- Security Mutual Life Insurance Company of New York at its Home Office
shown on the Contract Data Page.
CONTRACT ANNIVERSARY -- An anniversary of the Issue Date.
CONTRACT VALUE -- The sum of the Owner's interest in the General Account and the
Subaccounts of the Variable Account.
CONTRACT YEAR -- One year from the Issue Date and from each Contract
Anniversary.
ELIGIBLE INVESTMENT(S) -- An investment entity shown on the Contract Data Page.
FIXED ANNUITY -- A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Variable Account.
GENERAL ACCOUNT -- The Company's general investment account which contains all
the assets of the Company with the exception of Security Mutual Variable Annuity
Account One (the "Variable Account") and other segregated asset accounts.
GENERAL ACCOUNT VALUE -- The Owner's interest in the General Account.
ISSUE DATE -- The date this Contract is issued. The Issue Date is shown on the
Contract Data Page.
OWNER -- The person or entity named in the Application who/which has all rights
under this Contract.
PORTFOLIO -- A segment of an Eligible Investment which constitutes a separate
and distinct class of shares.
SUBACCOUNT -- A segment of the Variable Account.
SUBACCOUNT VALUE -- The Owner's interest in a Subaccount.
VALUATION DATE -- The Variable Account will be valued each day that the New York
Stock Exchange is open for trading.
VALUATION PERIOD -- The period beginning at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
VARIABLE ACCOUNT -- A separate investment account of the Company designated on
the Contract Data Page.
VARIABLE ACCOUNT VALUE -- The sum of the Owner's interest in each of the
Subaccounts of the Variable Account.
VARIABLE ANNUITY -- A series of payments made during the Annuity Period which
vary in amount with the investment experience of each applicable Subaccount.
WITHDRAWAL VALUE -- The Withdrawal Value is:
1) the Contract Value for the Valuation Period next following the Valuation
Period during which a written request for a withdrawal is received at the
Company; less
2) any applicable taxes not previously deducted; less
3) the Withdrawal Charge, if any; less
4) the Contract Maintenance Charge, if any.
GENERAL PROVISIONS
THE CONTRACT -- The entire contract consists of:
1) this Contract;
2) the Application which is attached to this Contract; and
3) any riders or endorsements attached to this Contract.
This Contract may be changed or altered only by the President or Secretary of
the Company. A change or alteration must be made in writing.
INCONTESTABILITY -- The Company will not contest this Contract from the Issue
Date.
MISSTATEMENT OF AGE OR SEX -- The Company may require proof of age or sex of the
Annuitant before making any life Annuity Payments under this Contract. If the
age or sex of the Annuitant has been misstated, the amount payable will be the
amount that the Contract Value would have provided at the correct age or sex.
After the Annuity Date, any under payments will be made up in one sum, including
interest at 6% per year, with the next Annuity Payment. Any overpayments,
including interest at 6% per year, will be deducted from future Annuity Payments
until the total is repaid.
CONTRACT SETTLEMENT -- This Contract must be returned to the Company prior to
any settlement. Prior to any payment as a death claim, due proof of death must
be submitted to the Company.
REPORTS -- At least once each calendar year, the Company will furnish the Owner
with a report showing the Contract Value and any other information as may be
required by law. The Company will also furnish an annual report of the Variable
Account. Reports will be sent to the last known address of the Owner.
TAXES -- Any taxes paid to any governmental entity relating to this Contract
will be deducted from the Purchase Payments or Contract Value when incurred. The
Company will, in its sole discretion, determine when taxes have resulted from:
the investment experience of the Variable Account; receipt by the Company of the
Purchase Payments; or commencement of Annuity Payments. The Company may, at its
sole discretion, pay taxes when due and deduct that amount from the Contract
Value at a later date. Payment at an earlier date does not waive any right the
Company may have to deduct amounts at a later date. The Company will deduct any
withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL -- The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
MODIFICATION OF CONTRACT -- This Contract may not be modified by the Company
without the consent of the Owner except as may be required by applicable law.
ANNUITANT, OWNERSHIP, ASSIGNMENT
PROVISIONS
ANNUITANT -- The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated in the Application, unless
changed.
OWNERSHIP -- The Owner has all rights and may receive all benefits under this
Contract. Prior to the Annuity Date, the Owner is the person designated in the
Application, unless changed. On and after the Annuity Date:
1) the Annuitant is the Owner; and
2) upon the death of the Annuitant, the Beneficiary is the Owner.
The Owner may change the Owner at any time. A change of Owner will automatically
revoke any prior designation of Owner. A request for change must be:
1) made in writing; and
2) received at the Company.
The change will become effective as of the date the written request is signed. A
new designation of Owner will not apply to any payment made or action taken by
the Company prior to the time it was received.
ASSIGNMENT -- The Owner may, at any time during his or her lifetime, assign his
or her rights under this Contract. The Company will not be bound by any
assignment until written notice is received by the Company. The Company is not
responsible for the validity of any assignment. The Company will not be liable
as to any payment or other settlement made by the Company before receipt of the
assignment.
BENEFICIARY PROVISIONS
BENEFICIARY -- The Beneficiary is named in the Application, unless changed. The
Beneficiary is entitled to receive the benefits to be paid at the death of the
Owner.
Unless the Owner provides otherwise, the Death Benefit will be paid in equal
shares or all to the survivor as follows:
1) to the Primary Beneficiaries who survive the Owner's death; or if there are
none,
2) to the Contingent Beneficiaries who survive the Owner's death; or if there
are none,
3) to the estate of the Owner.
CHANGE OF BENEFICIARY -- Subject to the rights of any irrevocable Beneficiary,
the Owner may change the Primary Beneficiary or Contingent Beneficiary. A change
may be made by filing a written request with the Company. The change will take
effect as of the date the notice is signed. The Company will not be liable for
any payment made or action taken before it records the change.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS -- The Initial Purchase Payment is due on the Issue Date.
Thereafter, a Purchase Payment may be made at any time in any amount, subject to
the Minimum Subsequent Purchase Payment shown on the Contract Data Page. The
Company reserves the right to reject any Application or Purchase Payment.
CHANGE IN PURCHASE PAYMENTS -- Subject to the minimum shown on the Contract Data
Page, the Owner may increase or decrease or change the frequency of subsequent
Purchase Payments.
ALLOCATION OF PURCHASE PAYMENTS -- The allocation of the initial Purchase
Payment is elected by the Owner on the Application. Unless elected otherwise by
the Owner, subsequent Purchase Payments are allocated in the same manner as the
initial Purchase Payment. Allocation of the Purchase Payments is subject to the
terms and conditions imposed by the Company.
NO DEFAULT -- Unless the Owner makes a total withdrawal, this Contract will
remain in force until the Annuity Date. This Contract will not be in default if
subsequent Purchase Payments are not made.
GENERAL ACCOUNT PROVISIONS
GENERAL ACCOUNT VALUE -- The General Account Value at any time is equal to:
1) the Purchase Payments allocated to the General Account; plus
2) amounts transferred to the General Account; plus
3) interest credited to the General Account; less
4) any prior partial withdrawals and Withdrawal Charges deducted from the
General Account; less
5) amounts transferred from the General Account; less
6) any applicable premium taxes, Contract Maintenance Charge or Transfer Fee.
INTEREST TO BE CREDITED -- The Company guarantees that the interest rate
credited to the General Account will not be less than the Minimum Guaranteed
Interest Rate. The Minimum Guaranteed Interest Rate is 3% per year. The Company
may credit additional interest at its sole discretion.
DIVIDENDS -- Prior to the Maturity Date this Contract is eligible to share in
the divisible surplus of the Company. This Contract's share, if any, will be
determined each year by the Company and paid as a dividend in cash. The Company
expects that it will pay only minimal dividends, if any.
CONTRACT VALUE PROVISION
CONTRACT VALUE -- Each Purchase Payment is allocated to a Subaccount of the
Variable Account and/or the General Account. A Purchase Payment allocated to a
Subaccount of the Variable Account is converted into Accumulation Units. The
number of Accumulation Units in a Subaccount credited to this Contract is
determined by dividing the Purchase Payment allocated to that Subaccount by the
Accumulation Unit Value for that Subaccount. The Contract Value on any Valuation
Date is the sum of the Owner's interest in the General Account and the
Subaccounts of the Variable Account. The value of the Owner's interest in a
Subaccount is determined by multiplying the number of Accumulation Units
attributable to that Subaccount by the Accumulation Unit Value for that
Subaccount.
Withdrawals will result in the cancellation of Accumulation Units in a
Subaccount or a reduction of the General Account Value.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT -- The Variable Account is a separate investment account of
the Company. It is shown on the Contract Data Page. The Company has allocated a
part of its assets for this and certain other contracts to the Variable Account.
The assets of the Variable Account are the property of the Company. However,
they are not chargeable with the liabilities arising out of any other business
the Company may conduct.
INVESTMENTS OF THE VARIABLE ACCOUNT -- Purchase Payments applied to the Variable
Account are allocated to a Subaccount of the Variable Account. The assets of the
Subaccount are allocated to the Eligible Investment(s) and the Portfolio(s), if
any, within an Eligible Investment shown on the Contract Data Page. The Company
may, from time to time, and with the prior approval of the Superintendent of
Insurance of the state of New York, and any other necessary approvals, add
additional Eligible Investments or Portfolios to those shown on the Contract
Data Page. The Owner may be permitted to transfer Contract Values to the
additional Eligible Investments or Portfolios. However, the right to make any
transfer will be limited by the terms and conditions imposed by the Company.
If the shares of any of the Eligible Investment(s) or any Portfolio(s) within
the Eligible Investments become unavailable for investment by the Variable
Account, or the Company's Board of Directors deems further investment in these
shares inappropriate, the Company may substitute shares of another Eligible
Investment for shares already purchased under this Contract.
VALUATION OF ASSETS -- Assets of the Variable Account are valued at their fair
market value in accordance with procedures of the Company.
ACCUMULATION UNIT -- A Purchase Payment allocated to the Variable Account is
converted into Accumulation Units for each elected Subaccount. The number of
Accumulation Units in a Subaccount credited to this Contract is determined by
dividing the Purchase Payment allocated to that Subaccount by the Accumulation
Unit Value for that Subaccount as of the Valuation Period during which the
Purchase Payment is allocated to the Subaccount. The Accumulation Unit Value for
each Subaccount was arbitrarily set initially at $10. The Accumulation Unit
Value for any later Valuation Period is determined by subtracting (b) from (a)
and dividing the result by (c) where:
(a) is the net result of
1) the assets of the Subaccount; i.e., the aggregate value of the
underlying Eligible Investment shares held at the end of such Valuation
Period; plus or minus
2) the cumulative charge or credit for taxes reserved which is determined
by the Company to have resulted from the operation of the Subaccount of
the Variable Account;
(b) is the cumulative unpaid charge for the Mortality and Expense Risk Premium
and for the Administrative Expense Charge which are shown on the Contract
Data Page; and
(c) is the number of Accumulation Units in a Subaccount of the Variable Account
outstanding at the end of the Valuation Period.
Withdrawals from a Subaccount will result in the cancellation of Accumulation
Units in each Subaccount of the Variable Account. The Contract Value
attributable to a Subaccount of the Variable Account is determined by
multiplying the number of Accumulation Units attributable to the Subaccount by
the Accumulation Unit Value for that Subaccount. An Accumulation Unit Value may
increase or decrease from Valuation Period to Valuation Period.
MORTALITY AND EXPENSE RISK PREMIUM -- The Company deducts a Mortality and
Expense Risk Premium from the Variable Account which is equal, on an annual
basis, to the amount shown on the Contract Data Page. The Mortality and Expense
Risk Premium compensates the Company for assuming the mortality and expense
risks under this Contract.
ADMINISTRATIVE EXPENSE CHARGE -- The Company deducts an Administrative Expense
Charge from the Variable Account which is equal, on an annual basis, to the
amount shown on the Contract Data Page. The Administrative Expense Charge
compensates the Company for the costs associated with the administration of this
Contract and the Variable Account.
MORTALITY AND EXPENSE GUARANTEE -- The Company guarantees that the dollar amount
of each Annuity Payment after the first Annuity Payment will not be affected by
variations in mortality or expense experience.
CONTRACT MAINTENANCE CHARGE
DEDUCTION FOR CONTRACT MAINTENANCE CHARGE -- The Company deducts an annual
Contract Maintenance Charge from the Contract Value by cancelling Accumulation
Units from each applicable Subaccount or reducing the General Account Value to
reimburse it for expenses relating to maintenance of this Contract. The Contract
Maintenance Charge is shown on the Contract Data Page. The Contract Maintenance
Charge will be deducted from the Contract Value on each Contract Anniversary
while this Contract is in force.
If a total withdrawal is made on other than a Contract Anniversary, the Contract
Maintenance Charge will be deducted at the time of withdrawal. If the Annuity
Date is not a Contract Anniversary, a prorata portion of the annual Contract
Maintenance Charge will be deducted on the Annuity Date. After the Annuity Date,
the Contract Maintenance Charge will be collected on a monthly basis and will
result in a reduction of each Annuity Payment.
TRANSFER PROVISION
TRANSFERS -- Prior to the Annuity Date, the Owner may transfer all or part of an
Account without the imposition of any fee or charge if there have been no more
than 12 transfers made in the Contract Year. All transfers are subject to the
following:
1) if more than 12 transfers have been made in the Contract Year, the Company
will deduct a Transfer Fee. The Transfer Fee is shown on the Contract Data
Page. The Transfer Fee will be deducted from the Account from which the
transfer is made. However, if the entire interest in an Account is being
transferred, the Transfer Fee will be deducted from the amount which is
transferred.
2) the minimum amount which may be transferred is the lesser of: (A) $500; or
(B) the Owner's entire interest in the Account.
3) transfers will be effected during the Valuation Period next following
receipt by the Company of a written transfer request containing all
required information. However, no transfer may be made effective within
seven calendar days of the Annuity Date.
4) any transfer direction must clearly specify: (A) the amount which is to be
transferred; and (B) the Accounts which are to be affected.
If the Owner elects to use the transfer privilege, neither the Company nor its
Home Office will be liable for transfers made in accordance with the Owner's
instructions.
DEATH BENEFIT
DEATH OF ANNUITANT -- Upon death of the Annuitant prior to the Annuity Date, the
Owner must designate a new Annuitant. If no designation is made within 30 days
of the death of the Annuitant, the Owner will become the Annuitant.
Upon death of the Annuitant after the Annuity Date, the Death Benefit, if any,
will be as specified in the Annuity Option elected and the remaining Annuity
Payments will be distributed at least as rapidly as prior to the Annuitant's
death.
DEATH OF OWNER -- Upon death of the Owner prior to the Annuity Date, the Death
Benefit will be paid to the Beneficiary designated by the Owner.
Upon death of the Owner after the Annuity Date, the Death Benefit, if any, will
be as specified in the Annuity Option elected and the remaining Annuity Payments
will be distributed at least as rapidly as prior to the Owner's death.
Prior to the Owner, or a Joint Owner, attaining age 80, the Death Benefit will
be the greater of:
1) the Purchase Payments less any Withdrawals and any applicable Withdrawal
Charge;
2) the Contract Value; or
3) the Contract Value on the most recent seven year Contract Anniversary plus
any subsequent Purchase Payments less any subsequent Withdrawals and any
applicable Withdrawal Charge.
After the Owner, or a Joint Owner, attains age 80, the Death Benefit will be the
greater of:
1) Purchase Payments less any Withdrawals and any applicable Withdrawal
Charge;
2) the Contract Value; or
3) the Contract Value on the most recent seven year Contract Anniversary on or
before the Owner's 80th birthday plus any subsequent Purchase Payments less
any subsequent Withdrawals and any applicable Withdrawal Charge.
If Joint Owners are named, the Death Benefit is payable upon the first death of
a Joint Owner. However, a surviving Joint Owner who is both the spouse of the
other Joint Owner and the Beneficiary may elect that this Contract remain in
effect.
The Death Benefit will be determined and paid as of the Valuation Period next
following the date of receipt by the Company of both due proof of death and an
election for a single sum payment or election under an Annuity Option.
If a single sum payment is requested, the proceeds will be paid within seven (7)
days of receipt of proof of death and the election. Payment under an Annuity
Option may only be elected during the sixty-day period beginning with the date
of receipt of proof of death or a single sum payment will be made to the
Beneficiary at the end of the sixty-day period.
The entire Death Benefit must be paid within five (5) years of the date of death
unless the Beneficiary elects to have the Death Benefit payable under an Annuity
Option over the Beneficiary's lifetime or for a period not extending beyond the
Beneficiary's life expectancy, beginning within one (1) year of the date of
death.
If the Beneficiary is the spouse of the Owner, the spouse may elect to become
the Owner and continue this Contract in effect at the then current Contract
Value.
PAYMENT OF DEATH BENEFIT -- The Company will require due proof of death before
any Death Benefit is paid. Due proof of death will be:
1) a certified death certificate;
2) a certified decree of a court of competent jurisdiction as to the finding
of death;
3) a written statement by a medical doctor who attended the deceased; or
4) any other proof satisfactory to the Company.
Any Death Benefit will be paid in accordance with applicable law or regulations
governing death benefit payments.
ANNUITY PROVISIONS
ANNUITY DATE -- The Annuity Date is elected by the Owner on the Application. The
Annuity Date is shown on the Contract Data Page. The Annuity Date must be the
first day of a calendar month and must be at least one year after the Issue
Date. The Annuity Date may not be later than the first day of the calendar month
following the Annuitant's 90th birthday.
Prior to the Annuity Date, the Owner may, subject to the above, change the
Annuity Date upon 30 days prior written notice to the Company.
ELECTION OF ANNUITY OPTION -- The Annuity Option is elected by the Owner on the
Application. If no Annuity Option is elected, Option 2 with 10 years guaranteed
will automatically be applied. Prior to the Annuity Date, the Owner may, upon 30
days prior written notice to the Company, change the Annuity Option.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS -- Annuity Payments will be paid as
monthly installments. The Contract Value on the Annuity Date is applied to the
Annuity Table for the Annuity Option elected. If the amount of the Contract
Value to be applied under an Annuity Option is less than $2,000, the Company
reserves the right to make one lump sum payment in lieu of Annuity Payments. If
the amount of any Annuity Payment would be or become less than $20, the Company
will reduce the frequency of payments to an interval which will result in each
payment being at least $20.
The Annuity Tables are based on the 1983 Individual Annuity Mortality Tables
with interest at the rate of 3% per year.
ANNUITY OPTIONS -- The following Annuity Options or any other Annuity Option
acceptable to the Company may be elected.
Option 1 -- Life Annuity -- The Company will make monthly payments during the
life of the Annuitant.
Option 2 -- Life Annuity with 5, 10 or 20 Years Guaranteed -- The Company will
make monthly Annuity Payments during the life of the Annuitant. If payments have
been made for less than the guaranteed period at the death of the Annuitant,
payments will continue to the Beneficiary for the remainder of the guaranteed
period. However, the Beneficiary may elect to receive a single sum payment. A
single sum payment will be equal to the present value of remaining payments as
of the date of receipt of due proof of death commuted at the assumed investment
rate of 3%. If any life income optional settlement with a period certain
provides for installment payments of the same amount at some ages for different
periods certain, the contract must provide that the insurer will deem an
election to have been made for the longest period certain which could have been
elected for such age and amount.
Option 3 -- Joint and Last Survivor Annuity -- The Company will make monthly
Annuity Payments for the joint lifetime of the Annuitant and another person. At
the death of either Payee, Annuity Payments will continue to be made to the
survivor Payee. The survivor's Annuity Payments will be equal to 100%, 66 2/3%
or 50% of the amount payable during the joint lifetime, as chosen.
ANNUITY -- If all of the Contract Value on the seventh calendar day before the
Annuity Date is allocated to the General Account, the Annuity will be paid as a
Fixed Annuity. If all of the Contract Value on the Annuity Date is allocated to
the Variable Account, the Annuity will be paid as a Variable Annuity. If the
Contract Value on the Annuity Date is allocated to both the General Account and
the Variable Account, the Annuity will be paid as a combination of a Fixed
Annuity and a Variable Annuity to reflect the allocation between the Accounts.
Variable Annuity Payments will reflect the investment performance of the
Variable Account in accordance with the allocation of the Contract Value to the
Subaccounts on the Annuity Date.
The Contract Value will be applied to the applicable Annuity Tables. The Annuity
Table used will depend upon the Annuity Option elected. The amount of the first
payment for each $1,000 of Contract Value is shown in the Annuity Tables. If, as
of the Annuity Date, the then current Single Premium Immediate Annuity rates
applicable to this class of contracts provide a first Annuity Payment greater
than guaranteed under the same Annuity Option under this Contract, the greater
payment will be made.
FIXED ANNUITY -- The General Account Value on the day immediately preceding the
Annuity Date will be used to determine the Fixed Annuity monthly payment. The
first monthly Annuity Payment will be based upon the Annuity Option elected and
the appropriate Annuity Option Table.
VARIABLE ANNUITY -- Variable Annuity Payments:
1) are not predetermined as to dollar amount; and
2) will vary in amount with the net investment results of the applicable
Subaccount(s) of the Variable Account at the Annuity Date.
The dollar amount of Variable Annuity Payments for each applicable Subaccount
after the first is determined as follows:
1) the dollar amount of the first Variable Annuity Payment is divided by the
value of an Annuity Unit for each applicable Subaccount as of the Annuity
Date. This establishes the number of Annuity Units for each monthly
payment. The number of Annuity Units for each applicable Subaccount remains
fixed during the Annuity Period;
2) the fixed number of Annuity Units per payment in each Subaccount is
multiplied by the Annuity Unit Value for that Subaccount for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Subaccount.
The total dollar amount of each Variable Annuity Payment is the sum of all
Subaccount Variable Annuity Payments reduced by the applicable Contract
Maintenance Charge.
ANNUITY UNIT -- The value of an Annuity Unit for each Subaccount of the Variable
Account was initially set on an arbitrary basis. This was done when the first
Eligible Investment shares were purchased.
The Subaccount Annuity Unit Value at the end of any subsequent Valuation Period
is determined by multiplying the Subaccount Annuity Unit Value for the
immediately preceding Valuation Period by the net investment factor for the day
for which the Annuity Unit Value is being calculated; and multiplying the result
by 0.999919 for each day within the Valuation Period.
NET INVESTMENT FACTOR -- The Net Investment Factor for any Subaccount of the
Variable Account for any Valuation Period is determined by dividing:
1) the Accumulation Unit Value as of the close of the current Valuation
Period; by
2) the Accumulation Unit Value as of the close of the immediately preceding
Valuation Period.
The Net Investment Factor may be greater or less than one, as the Annuity Unit
Value may increase or decrease.
TRANSFERS DURING THE ANNUITY PERIOD -- During the Annuity Period, the Owner may
make transfers, by written request, as follows:
1) the Owner may make a transfer once each Contract Year between Subaccounts
of the Variable Account.
2) the Owner may at any time, make a transfer from one or more Subaccounts to
the General Account. The Owner may not make a transfer from the General
Account to the Variable Account.
The amount transferred to the General Account from a Subaccount of the Variable
Account will be equal to the annuity reserve for the payee's interest in that
Subaccount. The annuity reserve is the product of "(a)" multiplied by "(b)"
multiplied by "(c)", where (a) is the number of Annuity Units representing the
Owner's interest in the Subaccount per Annuity Payment; (b) is the Annuity Unit
Value for the Subaccount; and (c) is the present value of $1.00 per payment
period as of the Attained Age of the Owner at time of transfer for the Annuity
Option, determined using the 1983 Individual Annuity Mortality Tables with
interest at 3% per year. Amounts transferred to the General Account will be
applied under the Annuity Option elected at the attained age of the Owner at the
time of the transfer. All amounts and Annuity Unit Values will be determined as
of the end of the Valuation Period preceding the effective date of the transfer.
PROTECTION OF PROCEEDS -- No Payee may commute, encumber, alienate or assign any
payments under this Contract. To the extent permitted by law, no payments will
be subject to the debts, contracts or engagements of any Payee or to any
judicial process to levy upon or attach the same for payment thereof.
WITHDRAWAL PROVISIONS
WITHDRAWALS -- Prior to the Annuity Date, the Owner may, upon written request
received by the Company, make a total or partial withdrawal of the Withdrawal
Value. A withdrawal will result in the cancellation of Accumulation Units from
each applicable Subaccount of the Variable Account or a reduction in the General
Account Value in the ratio that the Subaccount Value and/or the General Account
Value bears to the total Contract Value. The Owner must specify in writing in
advance which units are to be cancelled or values are to be reduced if other
than the above method is desired. The Company will pay the amount of any
withdrawal within seven (7) days of receipt of a request in good order unless
the Suspension Or Deferral Of Payments Or Transfers From The Variable Account
provision or the Deferral Of Payments Or Transfers From The General Account
provision is in effect.
Each partial withdrawal must be for an amount which is not less than $500 or, if
smaller, the remaining Withdrawal Value. The remaining Withdrawal Value must be
at least $1,000 after a partial withdrawal is completed.
WITHDRAWAL CHARGE -- A Withdrawal Charge may be deducted in the event of a
withdrawal of all or a portion of the Contract Value. The Withdrawal Charge is
imposed on a withdrawal of Contract Value attributable to a Purchase Payment
within seven (7) years of receipt of the Purchase Payment. The Withdrawal
Charge, if any, is equal to 7% of the Purchase Payment withdrawn within first
and second years following receipt, 5% of the Purchase Payment withdrawn during
third, fourth and fifth years following receipt and 3% of the Purchase Payment
withdrawn during sixth and seventh years following receipt.
For a partial withdrawal, the Withdrawal Charge will be deducted from the
remaining Withdrawal Value, if sufficient, or from the amount withdrawn. The
Withdrawal Charge will be deducted by cancelling Accumulation Units from each
applicable Subaccount or reducing the General Account Value in the ratio that
the Subaccount Value and/ or General Account bears to the total Contract Value.
The Owner must specify in writing in advance if other than the above method of
cancellation is desired.
WAIVER OF WITHDRAWAL CHARGE -- A withdrawal of 10% of the aggregate Purchase
Payments may be made without the Withdrawal Charge on a non-cumulative basis as
follows:
1) Once each Contract Year after the first Contract Year, as a single sum
payment if the Contract Value prior to the withdrawal exceeds $5,000; or
2) At any time, subject to any conditions the Company may impose, as equal
periodic installments.
Any equal periodic installments made to which the Waiver of Withdrawal Charge
applies are made in accordance with the following:
1) Total monthly withdrawals cannot exceed 10% of Purchase Payments in any 12
month period; and
2) The Owner must be over age 59 1/2.
SUSPENSION OR DEFERRAL OF
PAYMENTS OR TRANSFERS FROM
THE VARIABLE ACCOUNT
The Company reserves the right to suspend or postpone payments for a withdrawal
or transfer for any period when:
1) the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2) trading on the New York Stock Exchange is restricted;
3) an emergency exists as a result of which disposal of securities held in the
Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
4) during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Owners; provided that applicable
rules and regulations of the Securities and Exchange Commission will govern
as to whether the conditions described in (2) and (3) exist.
DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE GENERAL ACCOUNT
The Company reserves the right to defer payment for a withdrawal or transfer
from the General Account for the period permitted by law but not for more than
six months after written election is received by the Company.
RESERVES, VALUES AND BENEFITS
All reserves are greater to or equal to those required by statute. Any values
and death benefits that may be available under this Contract are not less than
the minimum benefits required by any statute of the state in which this Contract
is delivered.
<TABLE>
<CAPTION>
ANNUITY TABLE 1
Monthly Annuity Payment Under Option 1
For Each $1,000 Of Contract Value Applied
Male Female Male Female Male Female
Monthly Monthly Monthly Monthly Monthly Monthly
Age Payment Payment Age Payment Payment Age Payment Payment
--- ------- ------- --- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 2.82 2.76 32 3.35 3.19 59 5.18 4.63
6 2.83 2.77 33 3.38 3.21 60 5.31 4.74
7 2.85 2.78 34 3.42 3.24 61 5.45 4.85
8 2.86 2.79 35 3.46 3.27 62 5.61 4.97
9 2.87 2.80 36 3.50 3.30 63 5.77 5.10
10 2.88 2.81 37 3.54 3.33 64 5.95 5.24
11 2.90 2.82 38 3.58 3.37 65 6.13 5.38
12 2.91 2.83 39 3.62 3.40 66 6.34 5.54
13 2.93 2.84 40 3.67 3.44 67 6.55 5.71
14 2.94 2.85 41 3.72 3.48 68 6.78 5.89
15 2.96 2.87 42 3.77 3.52 69 7.02 6.08
16 2.97 2.88 43 3.83 3.56 70 7.29 6.29
17 2.99 2.90 44 3.88 3.60 71 7.57 6.51
18 3.01 2.91 45 3.94 3.65 72 7.87 6.76
19 3.03 2.93 46 4.01 3.70 73 8.19 7.02
20 3.05 2.94 47 4.07 3.75 74 8.53 7.31
21 3.07 2.96 48 4.14 3.80 75 8.90 7.62
22 3.09 2.97 49 4.21 3.86 76 9.30 7.96
23 3.11 2.99 50 4.29 3.92 77 9.72 8.33
24 3.13 3.01 51 4.36 3.98 78 10.18 8.73
25 3.15 3.03 52 4.45 4.05 79 10.67 9.16
26 3.18 3.05 53 4.53 4.12 80 11.19 9.63
27 3.20 3.07 54 4.63 4.19 81 11.75 10.14
28 3.23 3.09 55 4.72 4.27 82 12.35 10.69
29 3.26 3.11 56 4.83 4.36 83 12.99 11.29
30 3.29 3.14 57 4.94 4.44 84 13.66 11.94
31 3.32 3.16 58 5.05 4.54 85+ 14.37 12.64
</TABLE>
<TABLE>
<CAPTION>
ANNUITY TABLE 2
Monthly Annuity Payment Under Option 2
For Each $1,000 Of Contract Value Applied
Male 5 Years 10 Years 20 Years Male 5 Years 10 Years 20 Years
Age Guaranteed Guaranteed Guaranteed Age Guaranteed Guaranteed Guaranteed
--- ---------- ---------- ---------- --- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
5 2.82 2.82 2.82 46 4.00 3.98 3.88
6 2.83 2.83 2.83 47 4.06 4.04 3.94
7 2.84 2.84 2.84 48 4.13 4.10 3.99
8 2.86 2.86 2.85 49 4.20 4.17 4.04
9 2.87 2.87 2.86 50 4.27 4.27 4.10
10 2.88 2.88 2.88 51 4.35 4.31 4.16
11 2.90 2.89 2.89 52 4.43 4.39 4.22
12 2.91 2.91 2.90 53 4.52 4.47 4.28
13 2.92 2.92 2.92 54 4.61 4.56 4.34
14 2.94 2.94 2.93 55 4.70 4.65 4.40
15 2.96 2.95 2.95 56 4.80 4.74 4.47
16 2.97 2.97 2.96 57 4.91 4.84 4.53
17 2.99 2.99 2.98 58 5.03 4.94 4.60
18 3.01 3.00 3.00 59 5.15 5.05 4.66
19 3.03 3.02 3.02 60 5.28 5.17 4.73
20 3.04 3.04 3.04 61 5.41 5.29 4.79
21 3.06 3.06 3.05 62 5.56 5.42 4.86
22 3.09 3.08 3.07 63 5.72 5.55 4.92
23 3.11 3.10 3.10 64 5.88 5.69 4.98
24 3.13 3.13 3.12 65 6.06 5.84 5.04
25 3.15 3.15 3.14 66 6.25 5.99 5.10
26 3.18 3.17 3.16 67 6.45 6.15 5.15
27 3.20 3.20 3.19 68 6.66 6.31 5.20
28 3.23 3.23 3.21 69 6.88 6.48 5.24
29 3.26 3.25 3.24 70 7.12 6.65 5.29
30 3.29 3.28 3.27 71 7.37 6.82 5.32
31 3.32 3.31 3.30 72 7.63 7.00 5.36
32 3.34 3.34 3.33 73 7.91 7.18 5.39
33 3.38 3.38 3.36 74 8.20 7.36 5.41
34 3.42 3.41 3.39 75 8.51 7.53 5.43
35 3.45 3.45 3.42 76 8.83 7.71 5.45
36 3.49 3.49 3.46 77 9.16 7.88 5.47
37 3.53 3.53 3.49 78 9.51 8.05 5.48
38 3.58 3.57 3.53 79 9.88 8.21 5.49
39 3.62 3.61 3.57 80 10.25 8.37 5.50
40 3.67 3.66 3.61 81 10.64 8.51 5.51
41 3.72 3.71 3.65 82 11.03 8.65 5.51
42 3.77 3.76 3.70 83 11.42 8.78 5.52
43 3.82 3.81 3.74 84 11.82 8.90 5.52
44 3.88 3.86 3.79 85+ 12.21 9.00 5.52
45 3.91 3.92 3.84
</TABLE>
<TABLE>
<CAPTION>
ANNUITY TABLE 2
Monthly Annuity Payment Under Option 2
For Each $1,000 Of Contract Value Applied
Female 5 Years 10 Years 20 Years Female 5 Years 10 Years 20 Years
Age Guaranteed Guaranteed Guaranteed Age Guaranteed Guaranteed Guaranteed
--- ---------- ---------- ---------- --- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
5 2.76 2.76 2.75 46 3.70 3.69 3.65
6 2.77 2.77 2.76 47 3.75 3.74 3.69
7 2.78 2.78 2.77 48 3.80 3.79 3.74
8 2.79 2.79 2.78 49 3.86 3.84 3.79
9 2.80 2.80 2.79 50 3.92 3.90 3.84
10 2.81 2.81 2.80 51 3.98 3.96 3.89
11 2.82 2.82 2.82 52 4.04 4.03 3.94
12 2.83 2.83 2.83 53 4.11 4.09 4.00
13 2.84 2.84 2.84 54 4.19 4.16 4.06
14 2.85 2.85 2.85 55 4.26 4.24 4.12
15 2.87 2.87 2.86 56 4.35 4.32 4.18
16 2.88 2.88 2.88 57 4.43 4.40 4.25
17 2.90 2.90 2.89 58 4.53 4.49 4.31
18 2.91 2.91 2.91 59 4.62 4.58 4.38
19 2.92 2.92 2.92 60 4.73 4.68 4.45
20 2.94 2.94 2.94 61 4.84 4.78 4.52
21 2.96 2.96 2.95 62 4.95 4.89 4.60
22 2.97 2.97 2.97 63 5.08 5.00 4.67
23 2.99 2.99 2.99 64 5.21 5.12 4.74
24 3.01 3.01 3.00 65 5.35 5.25 4.81
25 3.03 3.03 3.02 66 5.50 5.38 4.88
26 3.05 3.05 3.04 67 5.66 5.53 4.95
27 3.07 3.07 3.06 68 5.83 5.68 5.02
28 3.09 3.09 3.08 69 6.02 5.83 5.08
29 3.11 3.11 3.10 70 6.22 6.00 5.14
30 3.14 3.14 3.13 71 6.43 6.17 5.20
31 3.16 3.16 3.15 72 6.66 6.35 5.25
32 3.19 3.19 3.17 73 6.90 6.54 5.29
33 3.21 3.21 3.20 74 7.17 6.73 5.33
34 3.24 3.24 3.23 75 7.45 6.93 5.37
35 3.27 3.27 3.25 76 7.75 7.13 5.40
36 3.30 3.30 3.28 77 8.06 7.33 5.43
37 3.33 3.33 3.31 78 8.40 7.53 5.45
38 3.36 3.36 3.34 79 8.76 7.73 5.47
39 3.40 3.40 3.38 80 9.14 7.93 5.48
40 3.44 3.44 3.41 81 9.54 8.12 5.49
41 3.47 3.47 3.45 82 9.95 8.30 5.50
42 3.51 3.51 3.48 83 10.39 8.47 5.51
43 3.56 3.56 3.52 84 10.83 8.63 5.51
44 3.60 3.60 3.56 85+ 11.29 8.78 5.52
45 3.65 3.65 3.60
</TABLE>
<TABLE>
<CAPTION>
ANNUITY TABLE 3
Monthly Annuity Payment Under Option 3
For Each $1,000 Of Contract Value Applied
Joint And 50% Survivor Annuity
Female
Age Male Age
--- --------
<S> <C> <C> <C> <C> <C> <C>
50 55 60 65 70 75
-- -- -- -- -- --
50 4.03 4.21 4.42 4.68 4.98 5.32
55 4.20 4.40 4.63 4.92 5.25 5.62
60 4.41 4.63 4.89 5.21 5.58 6.01
65 4.67 4.91 5.21 5.57 6.00 6.49
70 4.97 5.25 5.59 6.01 6.52 7.10
75 5.34 5.67 6.06 6.56 7.17 7.87
</TABLE>
<TABLE>
<CAPTION>
Joint And 66 2/3% Survivor Annuity
Female
Age Male Age
--- --------
50 55 60 65 70 75
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
50 3.86 4.00 4.16 4.33 4.51 4.70
55 4.02 4.19 4.38 4.58 4.79 5.02
60 4.20 4.40 4.63 4.87 5.14 5.41
65 4.40 4.64 4.91 5.22 5.55 5.89
70 4.61 4.90 5.23 5.62 6.04 6.49
75 4.85 5.18 5.58 6.06 6.62 7.22
</TABLE>
<TABLE>
<CAPTION>
Joint And 100% Survivor Annuity
Female
Age Male Age
--- --------
50 55 60 65 70 75
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
50 3.57 3.65 3.72 3.76 3.80 3.82
55 3.71 3.83 3.94 4.02 4.08 4.13
60 3.83 4.01 4.17 4.31 4.42 4.50
65 3.94 4.17 4.41 4.64 4.83 4.98
70 4.02 4.31 4.63 4.96 5.28 5.54
75 4.09 4.42 4.82 5.27 5.74 6.19
</TABLE>
Information about different age combinations will be furnished upon request.
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT
NOTICE -- THE OWNER OF THIS CONTRACT IS ENTITLED TO VOTE, IN PERSON, BY MAIL, OR
BY PROXY, AT THE ANNUAL MEETINGS WHICH ARE HELD AT THE HOME OFFICE IN
BINGHAMTON, NEW YORK, ON THE FIRST TUESDAY OF FEBRUARY.
SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
SECURITY MUTUAL BUILDING * 100 COURT STREET
P.O. BOX 1625 * BINGHAMTON, NEW YORK 13902
(607) 723-3551
SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
SECURITY MUTUAL BUILDING * 100 COURT STREET
P.O. BOX 1625 * BINGHAMTON, NEW YORK 13902
(607) 723-3551
ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Issue Date shown on the Contract Data
Page.
The Company will make Annuity Payments to the person or entity designated to
receive such Annuity Payments on the Application under "Special Requests" and
all references in the Contract to the Annuitant as the recipient of Annuity
Payments shall be deemed to refer to such person or entity.
All other terms and conditions of the Contract remain unchanged.
Security Mutual Life Insurance Company of New York has caused this Endorsement
to be signed by its President and Secretary.
/s/ F. DAVID MISTRETTA /s/ BRUCE W. BOYEA
_______________________Secretary ____________________President
SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
SECURITY MUTUAL BUILDING * 100 COURT STREET
P.O. BOX 1625 * BINGHAMTON, NEW YORK 13902
(607) 723-3551
ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Issue Date shown on the Contract Data
Page.
REBALANCING TRANSFERS - Rebalancing Transfers will automatically readjust the
Variable Account Value as elected by the Owner on the Application or as
subsequently elected otherwise. Rebalancing Transfers may be made by the Owner
subject to the following conditions:
1) Rebalancing Transfers are not subject to assessment of the
Transfer Fee.
2) Rebalancing Transfers may not be made simultaneously with Dollar
Cost Averaging Transfers.
3) The Company has received written notice of an election to
initiate Rebalancing Transfers from the Owner.
4) Rebalancing Transfers may not be made to or from the General
Account.
All other terms and conditions of the Contract remain unchanged.
Security Mutual Life Insurance Company of New York has caused this Endorsement
to be signed by its President and Secretary.
/s/ F. DAVID MISTRETTA /s/ BRUCE W. BOYEA
_______________________Secretary ____________________President
SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
SECURITY MUTUAL BUILDING * 100 COURT STREET
P.O. BOX 1625 * BINGHAMTON, NEW YORK 13902
(607) 723-3551
ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
effective date of this Endorsement is the Issue Date shown on the Contract Data
Page.
DOLLAR COST AVERAGING TRANSFERS - Dollar Cost Averaging Transfers may be made by
the Owner subject to the following conditions:
1) The minimum amount which may be transferred each month is $500.
2) The minimum amount required in the General Account or Subaccount
from which transfers are made is $6,000 or the amount required to
complete all transfers.
3) Dollar Cost Averaging Transfers are not subject to assessment of
the Transfer Fee.
4) Dollar Cost Averaging Transfers may not be made simultaneously
with Rebalancing Transfers.
5) The Company has received written notice of an election to
initiate Dollar Cost Averaging Transfers from the Owner.
All other terms and conditions of the Contract remain unchanged.
Security Mutual Life Insurance Company of New York has caused this Endorsement
to be signed by its President and Secretary.
/s/ F. DAVID MISTRETTA /s/ BRUCE W. BOYEA
_______________________Secretary ______________________President
<TABLE>
<CAPTION>
SECURITY MUTUAL LIFE
INSURANCE COMPANY OF NEW YORK
FLEXIBLE PURCHASE PAYMENT
VARIABLE AND FIXED
ANNUITY APPLICATION
<S> <C>
Send application and check to:
Security Mutual Life
Insurance Company of New York
P.O. Box 1625
Binghamton, New York 13902-1625
1. OWNER (Correspondence is sent to the Owner.)
Name_______________________________________________________________________
(First) (Middle) (Last)
Address____________________________________________________________________
(Street)
___________________________________________________________________________
(City) (State) (Zip)
Sex [ ]M [ ]F Phone (_______)________________________________________ Birthdate___________/_____________/________________
(Month) (Day) (Year)
Social Security Number_____________________________________________________
2. JOINT OWNER
Name_______________________________________________________________________
(First) (Middle) (Last)
Address____________________________________________________________________
(Street) (City) (State) (Zip)
Birthdate _____/_____/_____ Soc. Sec. No. _______________________________ Sex [ ] M [ ] F Phone (_______)________________
Unless otherwise provided upon the death of a Joint Owner who
is the spouse of the other Joint Owner, the surviving spouse will
be the Beneficiary. ___________________________________________________
(Signature of Joint Owner)
3. ANNUITANT (Complete only if different than Owner.)
Name_______________________________________________________________________
(First) (Middle) (Last)
Address____________________________________________________________________
(Street) (City) (State) (Zip)
Birthdate_______/______/______ Sex [ ] M [ ] F
(Month) (Day) (Year)
Social
Security No.____________________________________________________________________
Phone (_______)_____________________________________
4. BENEFICIARY
(Show full name(s), relationship(s), Social Security number(s), percentage
each is to receive and address. Use Special Requests Section if additional
space is needed.)
Primary ___________________________________________________________________ Primary ___________________________________________
___________________________________________
___________________________________________
Contingent_________________________________________
___________________________________________
5. PURCHASE PAYMENT ALLOCATION
Initial Purchase
Payment
$______________________
Must be whole percentages with a minimum of 10% in any Account or
Portfolio. Unless otherwise directed, subsequent purchase payments will be
allocated as shown. Total Allocation must equal 100%.
_____% General Account
J.P. Morgan Investment Management
_____% Select Equity Portfolio
_____% Large Capital Stock Portfolio
_____% Small Capital Stock Portfolio
_____% International Equity Portfolio
_____% Quality Bond Portfolio
Lord Abbett & Co.
_____% Growth and Income Portfolio
_____% Bond Debenture Portfolio
_____% Mid-Cap Value Portfolio
_____% Large Cap Research Portfolio
_____% Developing Growth Portfolio
Lord Abbett Series Fund, Inc.
_____% Growth and Income Portfolio
Conning Asset Management Company
_____% Money Market
6. TYPE OF PLAN
Non-Qualified
7. SPECIAL REQUESTS
8. DOLLAR COST AVERAGING TRANSFERS - I authorize Dollar Cost Averaging Transfers
of $..... to be transferred each month ($500 minimum) from the Conning Asset
Management Company Money Market or the General Account ($6,000 minimum required
in the Conning Asset Management Company Money Market or the General Account or
amount needed to complete all transfers.)
FROM TO
Check One J.P. Morgan Investment Management
[ ]Conning Asset _______% Select Equity Portfolio
Management _______% Large Capital Stock Portfolio
Company _______% Small Capital Stock Portfolio
Money _______% International Equity Portfolio
Market _______% Quality Bond Portfolio
[ ]General
Account Lord Abbett & Co.
_______% Growth and Income Portfolio
_______% Bond Debenture Portfolio
_______% Mid-Cap Value Portfolio
_______% Large Cap Research Portfolio
_______% Developing Growth Portfolio
_______% Lord Abbett Series Fund, Inc.
Growth and Income Portfolio
Conning Asset Management Company
_______% Money Market
(if transfers are made from
the General Account)
_______
100 % Total
I authorize transfers to be made for: [ ] 12 months [ ] 24 months
[ ] 36 months [ ] 48 months [ ] 60 months Other ______ months
Dollar Cost Averaging Transfers and Rebalancing Transfers are not available
simultaneously.
9. AUTOMATIC WITHDRAWALS
I authorize automatic monthly withdrawals of $__________. Total monthly
withdrawals cannot exceed 10% of purchase payments in any 12 month period.
I understand that Automatic Withdrawals are available only if I am over age
59 1/2.
FEDERAL AND STATE INCOME TAX WITHHOLDING
Check one: [ ]I elect to have Federal Income Tax withheld from
these distributions.
[ ]I elect NOT to have Federal Income Tax withheld from these
distributions.
Note: Even if you elect not to have Federal Income Tax withheld from a
distribution, you are liable for payment of Federal Income Tax on the
taxable portion of your contract. You may also be subject to tax penalties
under the estimated tax payment rules if your payments of estimated tax and
withholding, if any, are not adequate.
If applicable, a State Income Tax election will be made as elected above
for Federal Income Tax withholding.
10. REBALANCING TRANSFERS - I authorize Rebalancing Transfers to be made in the
applicable percentages elected in the Purchase Payment Allocation section.
Rebalancing transfers are not made to or from the General Account. Transfers are
to be made: [ ] quarterly [ ] semi-annually [ ] annually.
Dollar Cost Averaging Transfers and Rebalancing Transfers are not available
simultaneously.
11. ANNUITY OPTION - If no Annuity Option is specified, the Life Annuity with 10
years Guaranteed Option will be automatically applied.
_______________________
Indicate Annuity Option
12. ANNUITY DATE - The Annuity Date must always be on the first day of a
calendar month and must be at least one month after the Issue Date. The Annuity
Date may not be later than the first day of the calendar month following the
Annuitant's 90th birthday.
_______________________
Indicate Annuity Date
13. Will the annuity applied for replace or change any existing life insurance
or annuity? [ ] Yes [ ] No
14. ACKNOWLEDGMENT AND AUTHORIZATION - I (We) agree that the above information
and statements and those made on the reverse side are true and correct to the
best of my (our) knowledge and belief and are made as the basis of my (our)
application. I (We) acknowledge receipt of the current prospectus(es) of
Security Mutual Variable Annuity Account One, Cova Series Trust, Lord Abbett
Series Fund, Inc. and General American Capital Company. PAYMENTS AND VALUES
PROVIDED BY THE CONTRACT FOR WHICH APPLICATION IS MADE ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
__________________________________________________________
(signature of Owner(s). Annuitant unless otherwise noted)
__________________________________________________________
(signature of Annuitant if other than Owner)
Signed at_________________________________________________
(City) (State)
Date______________________________________________________
15. AGENT'S REPORT Will the annuity replace or change any existing life
insurance or annuity? [ ] No [ ] Yes (Indicate type and cost basis information.)
Type Cost Basis
[ ]Life Pre-TEFRA $___________________ $__________________
(Cost Basis) (Gain)
[ ]Annuity Post-TEFRA $___________________ $__________________
(Cost Basis) (Gain)
Complete any required replacement forms.
Agent's Signature__________________________________
Phone______________________________________________
Agent's Name and Number____________________________
Name and Address of Firm___________________________
10-9180 (6/97)
</TABLE>
AMENDED CHARTER
of
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
The name of the company shall be SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW
YORK.
ARTICLE II
The company shall be located at and its principal place of business shall be in
the City of Binghamton, County of Broome, and State of New York.
ARTICLE III
The business of the company shall be:
1. The making of life insurance, pursuant to Section 46(1) of the Insurance Law
of the State of New York, defined as every insurance upon the lives of human
beings and every insurance appertaining thereto. The business of life insurance
shall be deemed to include the granting of endowment benefits; additional
benefits in the event of death by accident or accidental means; additional
benefits operating to safeguard the contract from lapse, or to provide surrender
value, in the event of total and permanent disability of the insured; and
optional modes of settlement of proceeds. Amounts paid to the insurer for life
insurance and proceeds applied under optional modes of settlement or under
dividend options may be allocated by the insurer to one or more separate
accounts pursuant to Section 227 of the Insurance Law of the State of New York.
Said definition shall be deemed to include any subsequent statutory amendments,
modifications or substitutions of Section 46(1) of the Insurance Law of the
State of New York.
2. The making of annuities, pursuant to Section 46(2) of the Insurance Law of
the State of New York, defined as all agreements to make periodical payments
where the making or continuance of all or of some of a series of such payments,
or the amount of any such payment, is dependent upon the continuance of human
life, except payments made under the authority of paragraph one of this Article.
Amounts paid to the insurer to provide annuities and proceeds applied under
optional modes of settlement or under dividend options may be allocated by the
insurer to one or more separate accounts pursuant to Section 227 of the
Insurance Law of the State of New York. Said definition shall be deemed to
include any subsequent statutory amendments, modifications or substitutions of
Section 46(2) of the Insurance Law of the State of New York.
3. The making of accident and health insurance, pursuant to Section 46(3) of the
Insurance Law of the State of New York, defined as:
(a) insurance against death or personal injury by accident or by any
specified kind or kinds of accident and insurance against sickness, ailment
or bodily injury, including insurance providing disability benefits
pursuant to Article Nine of the Workmen's Compensation Law, except as
provided in subparagraph (b) following; and
(b) non-cancellable disability insurance, meaning insurance against
disability resulting from sickness, ailment or bodily injury, (but not
including insurance solely against accidental injury) under any contract
which does not give the insurer the option to cancel or otherwise terminate
the contract at or after one year from its effective date or renewal date.
Said definition shall be deemed to include any subsequent statutory
amendments, modifications or substitutions of Section 46(3) of the
Insurance Law of the State of New York.
4. Such other kind or kinds of business necessarily or properly incidental or
related to, or reasonably ancillary or collateral to, the kinds of insurance
business it is authorized to do including, but not limited to, the acquisition
or creation of a subsidiary corporation or corporations whose kind or kinds of
activity or business are authorized by the Insurance Law of the State of New
York, or any subsequent statutory amendments, modifications or substitutions
thereto.
ARTICLE IV
SECTION 1. The corporate powers of the company shall be exercised by the Board
of Directors and such officers, agents and employees as the Board may authorize.
(a) No director shall be personally liable to the Company or any of its
policyholders for damages for any breach of duty as a Director; provided,
however, that the foregoing provision shall not eliminate or limit (i) the
liability of a Director if a judgment or other final adjudication adverse
to him or her establishes that his or her acts or omissions were in bad
faith or involved intentional misconduct or were acts or omissions (a)
which he or she knew or reasonably should have known violated the New York
Insurance Law, or (b) which violated a specific standard of care imposed on
Directors directly, and not by reference, by a provision of the New York
Insurance Law (or any regulations promulgated thereunder), or (c) which
constituted a knowing violation of any other law, or establishes that he or
she personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled; or (ii) the liability of a
Director for any act or omission prior to the adoption of this amendment by
the Company.
SECTION 2. The Board of Directors shall consist of not less than thirteen nor
more than twenty-three persons. Provided further, however, that with the
approval of the Superintendent of Insurance, such number may, by a vote of a
majority of the members of the Board of Directors, be further increased. The
majority of the Board of Directors shall be citizens and residents of the State
of New York.
SECTION 3. The Directors shall be divided into three groups, as nearly equal as
possible, and as the respective terms of the Directors in each group shall
expire, their successors shall be elected for a term of three years. Vacancies
on the Board of Directors shall be filled as provided by the by-laws. Nothing
herein shall be construed so as to prevent any Director from being eligible for
re-election.
SECTION 4. REMOVAL OF DIRECTORS. Any member of the Board of Directors may be
removed for cause at a regular meeting of the Board by an affirmative vote of a
majority of the members of the Board.
SECTION 5. The election of Directors of the Company whose terms are then
expiring shall be held on the first Tuesday of February in each year, commencing
at ten o'clock in the morning.
SECTION 6. The officers of the company shall consist of the President, one or
more Vice Presidents, a Secretary and a Treasurer, who shall be elected by the
Board of Directors as provided by the by-laws. A Chairman of the Board of
Directors, and such other officers as the Board may deem expedient, may also be
elected.
SECTION 7. The Board of Directors may adopt such by-laws and rules and
regulations as it may deem expedient for the transaction of the business of the
company, and to amend or repeal such by-laws or rules and regulations as
provided by the by-laws.
ARTICLE V
The Superintendent of Insurance of the State of New York shall be agent of the
company upon whom process against the company may be served.
ARTICLE VI
The company shall have no capital stock, but shall be a mutual company.
ARTICLE VII
The Charter of the company shall be perpetual.
BY-LAWS OF
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
BOARD OF DIRECTORS
SECTION 1. REGULAR MEETINGS. Regular meetings of the Board shall be held at
least four times in each calendar year in the months of February, May,
September, and November, unless a change is ordered by the Board. The day and
hour of the meetings shall be fixed by the Board, or, if not fixed by the Board,
fixed by the Chief Executive Officer and stated in the Notice of Meeting. The
first regular meeting in each year after the election of directors shall be
known as the Annual Meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the Board shall be called by
the Secretary at any time on request of the Chief Executive Officer, Chairman of
the Board, President, or five directors. The business transacted at a special
meeting shall be limited to that referred to in the notice of such meeting.
SECTION 3. NOTICE OF MEETING. Notice of the time and place of any meeting,
including an adjourned regular meeting, shall be mailed to each director at
least three (3) days in advance, or given by telegram dispatched, or telephone
contact made, at least 24 hours in advance. All notices shall be sent to a
director at the address designated and filed with the Secretary by the director.
Notice need not be given to any director who has executed a written waiver of
notice, whether before or after the time of a meeting, or who has appeared at a
meeting without protest.
SECTION 4. PLACE OF MEETING. Meetings of the Board shall be held at the
principal office of the Company or at such other place allowed by the New York
Insurance Law as the Board may designate.
SECTION 5. QUORUM. A majority of the members of the Board shall constitute a
quorum for the transaction of business at any meeting. A majority of directors
present at a meeting, whether or not a quorum is present, may adjourn the
meeting from time to time and from place to place.
SECTION 6. VACANCIES. A vacancy on the Board, or any newly created directorship,
may be filled at any meeting of the Board by an affirmative vote of a majority
of the members then in office. The term of the new director shall be until the
next annual election for which he can be nominated in the regular course of
business. The term for which he is elected at such annual election shall be as
necessary to effectuate, as nearly as possible, an equal number in each of the
groups provided for in the Charter.
SECTION 7. RESIGNATION. Any director may resign his office at any time by
submitting his written resignation to the Secretary of the Company. The
resignation shall be effective upon receipt by the Secretary or such other date
as mutually agreed upon by the Chairman and the director.
SECTION 8. CHAIRMAN. At the Annual Meeting, the Board may elect from its members
a Chairman to serve at the pleasure of the Board until the next Annual Meeting
and until his successor is elected. In the event of a vacancy, the Board may
elect a successor. The Chairman, or in his absence, the President shall preside
over the meetings of the Board and perform such other functions as the Board may
direct.
SECTION 9. FEES. Directors, other than officers of the Company, shall be
entitled to such reasonable fees for their services as directors and members of
committees of the Board as shall be fixed from time to time by Resolution.
Directors shall also be entitled to reimbursement of any reasonable expenses
incurred in attending meetings. In addition, the Board may authorize
compensation to members who are not officers of the Company for service as
Chairman of the Board or as chairman of a committee of the Board.
SECTION 10. RETIREMENT. Directors may not stand for election at any election
held after their seventieth birthday, with the further limitations that any
officer director, other than the Chairman of the Board, shall be retired from
the Board on the date he ceases to be an officer of the Company, and that the
Chairman of the Board shall be retired from the Board on the date he ceases to
be Chairman of the Board. Retired directors shall be considered directors
emeriti of the Company.
SECTION 11. BOARD AND COMMITTEE ACTION BY CONFERENCE TELEPHONE. Any one or more
members of the Board, or any committee thereof, may participate in a meeting
of the Board or such committee by means of a conference telephone or similar
equipment which allows all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute presence in
person at such a meeting.
ARTICLE II
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. GENERAL PROVISIONS. The Board shall have the following standing
committees:
Executive Committee
Finance Committee
Audit Committee
Marketing Committee
Nominating Committee
The Board may establish such additional special committees as it deems
advisable by appropriate action of a majority of the Board.
The members and chairmen of all committees shall be designated by a
majority of the Board to serve at the pleasure of the Board until the next
Annual Meeting and until their successors are designated. The chairmen of all
committees shall be other than Company officers.
Committees shall consist of at least five (5) members. The majority of the
members of any committee shall not be officers of the Company. The Board may
designate one or more directors to act as alternates to replace any absent
member of a committee at any meeting. An alternate member will have the same
voting rights as an absent member. The Board may invite other directors to
attend any meeting of any committee.
A majority of the members of any committee shall constitute a quorum. A
majority of the members present, whether or not a quorum, may adjourn any
meeting from time to time.
During the absence of a committee chairman, or his inability to act,
the committee shall designate one of its members as temporary chairman.
At the request of the committee chairman, the Chairman of the Board,
the President, or any three members, the Secretary shall call a special meeting
of any committee.
The provisions of these By-Laws relating to notice of meeting and
waiver shall also apply to meetings of committees.
The Board shall determine a schedule of regular meetings for its
committees.
Meetings of committees shall be held at the principal place of
business of the Company unless otherwise provided by the Board.
Each standing committee of the Board shall record minutes of its
meetings and a report of its proceedings shall be made at the next meeting of
the Board. A copy of such report shall be furnished to each member of the Board.
Special committees shall report on request at any meeting of the Board.
SECTION 2. EXECUTIVE COMMITTEE. The Executive Committee shall act for the Board
when it is not in session and shall have all of the authority of the Board which
may be delegated.
SECTION 3. FINANCE COMMITTEE. The Finance Committee shall have the duty of
supervising all investments or loans, other than policy loans, made by the
Company. Every purchase, sale, exchange, or conversion of such investments shall
be authorized or approved by this Committee or the Board.
SECTION 4. AUDIT COMMITTEE. The Audit Committee shall consist only of directors
who are not officers of the Company. This Committee shall have general
supervision of the audits, examinations, and inspections of the financial
operations and affairs of the Company.
SECTION 5. MARKETING COMMITTEE. The Marketing Committee shall review the
marketing affairs of the Company, and shall act in advisory capacity on
marketing matters to the Chief Executive Officer.
SECTION 6. NOMINATING COMMITTEE. The Nominating Committee shall consist of the
chairmen of the four other standing committees and the chairman of the Personnel
Committee. Its function shall be: (a) to search for and recommend to the Board
persons deemed qualified to be Company directors, (b) to receive from
policyholders suggested names of persons they wish the Committee to consider for
recommendation as directors.
ARTICLE III
OFFICERS OF THE COMPANY
SECTION 1. ELECTED OFFICERS. At the Annual Meeting, the Board of Directors shall
elect a President, one or more Vice Presidents, a Chief Financial Officer, a
Secretary, and such other officers as required by the New York Insurance Law.
The Board may elect the Chairman of the Board as a Company officer and assign
him such duties as it deems expedient. The Board may also elect a Vice Chairman
as a Company officer. The Board may fill vacancies or elect such officers at any
meeting. One individual may be elected to two or more offices, except that the
President and the Secretary may not be the same individual. The Board shall
designate the principal officers of the Company, one of whom shall be the Chief
Executive Officer.
SECTION 2. APPOINTED OFFICERS. The Chief Executive Officer shall appoint such
officers other than those required to be elected by the Board as he deems
necessary for the conduct of the Company's business.
SECTION 3. TERM OF OFFICE. Elected officers shall hold office at the pleasure of
the Board until the next Annual Meeting of the Board or until their successors
are elected, or if earlier, their resignation, death, removal or suspension by
the Board. Appointed officers shall hold office at the pleasure of the Chief
Executive Officer.
SECTION 4. COMPENSATION. The compensation of all principal officers and the
compensation of those employees as required by the New York Insurance Law shall
be approved by the Board. The compensation of all other employees shall be
determined by the Chief Executive Officer.
SECTION 5. RESIGNATION. Any officer of the Company may resign his office by
filing a written resignation with the Secretary of the Company. Such resignation
shall be effective on receipt unless some other time is specified.
SECTION 6. DUTIES OF OFFICERS.
A. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be responsible for
the direction and supervision of the business and affairs of the Company in
accordance with the Charter, By-Laws, Resolutions and Regulations of the Board,
and applicable laws and regulations relating to the Company. He shall provide
for the organization and administration of the affairs and personnel of the
Company and for staff assistance to the Board and its committees. The Chief
Executive Officer may appoint such assistants to officers as he may deem
expedient and shall provide for the appointment, discharge, and compensation for
all employees and agents of the Company, other than the compensation of elected
officers and the compensation of those employees as required by the New York
Insurance Law to be approved by the Board.
B. PRESIDENT. If the President has not been named Chief Executive Officer,
he shall assist the Chief Executive Officer and, in his absence or inability to
act, shall assume his powers and duties. The President shall perform such duties
as are assigned to him by the Board or the Chief Executive Officer.
C. VICE CHAIRMAN. The Vice Chairman shall assist in the executive
management of the Company and perform such duties as are assigned to him by the
Board or the Chief Executive Officer.
D. VICE PRESIDENTS. The Vice Presidents shall assist in the executive
management of the Company, each having the supervision of such branch of the
Company's affairs as shall be assigned by the Chief Executive Officer or the
Board.
E. CHIEF FINANCIAL OFFICER. In addition to such duties as shall be
assigned by the Chief Executive Officer or the Board, the Chief Financial
Officer shall provide for and safeguard the investments (other than policy
loans) of the Company.
F. SECRETARY. In addition to such duties as may be assigned by the
Chief Executive Officer or the Board, the Secretary shall be the custodian of
the corporate records and seal of the Company. He shall be responsible to retain
the minutes of the Board of Directors and its committees. He shall attend to
the giving of notice required for meetings of the Board and its committees and
of the election of directors by the policyholders. The Secretary shall attend to
all correspondence relating to the Board.
ARTICLE IV
GENERAL
SECTION 1. EXECUTION OF DOCUMENTS AND FACSIMILE SIGNATURES. The Chief Executive
Officer, the President, the Vice Chairman, Vice Presidents, the Secretary, the
Chief Financial Officer, or any other officer or employee designated by the
Board shall have the power to execute all documents relating to the business
affairs of the Company. If any instrument is required to be executed by more
than one person, any of the foregoing officers may execute the document and a
secretary or the Chief Financial Officer may attest to such signature. The
signature of any officer may be in facsimile if the instrument executed shall
also bear the actual signature of an officer or employee empowered to execute
such an instrument. Facsimile signatures of officers may continue to be used for
a period of not to exceed six months after the termination of their service with
the Company.
SECTION 2. DEPOSITS AND WITHDRAWALS. All moneys belonging to the Company shall
be deposited and withdrawn in such manner and form as may be authorized from
time to time by the Board.
SECTION 3. RULES AND REGULATIONS. The Board may adopt, amend, or repeal rules
and regulations to govern officers, agents, and employees in the discharge of
their duties.
SECTION 4. SEAL OF CORPORATION. The seal of the Company shall have inscribed
thereon the name of the corporation, the year of its organization, and the words
"Corporate Seal" and "New York." The seal may be used by causing it or a
facsimile to be affixed or impressed or reproduced in any other manner.
SECTION 5. AMENDMENT OR REPEAL OF BY-LAWS. These By-Laws may be amended or
repealed at any meeting of the Board of Directors by the affirmative vote of
two-thirds of the directors present, provided that the notice of such meeting
set forth the amendment or repeal proposed to be acted upon. Any amendment or
repeal shall take effect upon approval by the New York Superintendent of
Insurance, as required by law.
ORGANIZATIONAL CHART
Security Mutual, Inc. is a wholly-owned subsidiary of Security Mutual Life
Insurance Company of New York.
SML Agency Services, Inc. is a wholly-owned subsidiary of Security
Administrators, Inc.
