Registration No. 333-38119 April 28, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 1
to
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust:
American Skandia Life Assurance Corporation Separate Account F
B. Name of depositor:
American Skandia Life Assurance Corporation
C. Complete address of depositor's principal executive offices:
One Corporate Drive, Shelton, CT 06484
D. Name and complete address of agent for service:
Scott K. Richardson, Esq.
American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, CT 06484
It is proposed that this filing will become effective
(check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on 5/3/99 pursuant to paragraph (b)of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on ____________ pursuant to paragraph (a)(1) of rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
E. Title and amount of securities being registered:
Modified Single Premium Variable Life Insurance.
The Registrant elects to register an indefinite number of securities by
this registration statement in accordance with Rule 24f-2 under the
Investment Company Act of 1940.
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
G. Amount of filing fee:
None
H. Approximate date of proposed public offering
As soon as practicable after the effective date of this Registration
Statement.
[ ] Check box if it is proposed that this filing will become effective
on ______________ at ____________ pursuant to Rule 487.
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
1. Face page
2. Face page
3. Not applicable
4. Distribution of this Offering
5. The Separate Account
6. The Separate Account
7. Not Applicable
8. Not Applicable
9. Legal Proceedings
10. Face page; Variable Investment Options; The Separate
Account; Voting; Modification of the Separate
Account; Additional Tax Considerations; Loans;
Partial Withdrawals; Surrenders; Transfers and
Allocation Services; Safekeeping of the Assets
11. Face page; Variable Investment Options
12. Face page; Variable Investment Options
13. Costs; Variable Investment Options; Taxes;
Additional Tax Considerations
14. Buying a Policy - How do I buy a Policy?
15. Account Value and Cash Value; Buying a Policy - How
and When is my Premium Invested?
16. Buying a Policy - How and When is my Premium
Invested? Variable Investment Options
17. Partial Withdrawals; Surrenders; Reinstatement;
Account Value and Cash Value; Buying a Policy;
Pricing Transactions
18. Account Value and Cash Value; Variable Investment
Options; The Separate Account; Safekeeping of the
Assets
19. Reports
20. Voting; Safekeeping of the Assets
21. Loans
22. Not applicable
23. Safekeeping of the Assets
24. Not applicable
25. Regulation; The Insurance Company
26. Not applicable
27. The Insurance Company
28. Executive Officers and Directors
29. The Insurance Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. The Insurance Company; Regulation
36. Not applicable
37. Not applicable
38. Distribution of this Offering
39. Distribution of this Offering
40. Not applicable
41. The Insurance Company; Distribution of this Offering
42. Not applicable
43. Not applicable
44. Account Value and Cash Value; Pricing Transactions;
Additional Tax Considerations; Net Investment Factor
45. Not applicable
46. Account Value and Cash Value; Pricing Transactions;
Additional Tax Considerations; Net Investment Factor
47. Variable Investment Options; The Separate Account
48. Face Page; The Insurance Company
49. Not applicable
50. The Separate Account; Safekeeping of the Assets
51. Face Page; The Insurance Company; Benefits at the
Insured's Death; Designations
52. Modification of the Separate Account
53. Additional Tax Considerations
54. Not applicable
55. Not applicable
56. Not applicable
57. Not applicable
58. Not applicable
59. Audited Consolidated Financial Statements of
American Skandia Life Assurance Corporation;
Financial Statements for American Skandia Life
Assurance Corporation Separate Account F
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
One Corporate Drive, Shelton, Connecticut 06484
This Prospectus describes a modified single premium variable life insurance
policy being offered by American Skandia Life Assurance Corporation ("we,"
"our," "us," "American Skandia," or "the Company"), One Corporate Drive, P.O.
Box 883, Shelton, Connecticut, 06484. This policy may be offered as individual
coverage or as an interest in a group policy. This Prospectus provides a
detailed discussion of matters you should consider before buying a policy. This
policy or certain of its investment options may not be available in all
jurisdictions. Various rights and benefits may differ between jurisdictions to
meet applicable law and/or regulations. This Prospectus is made up of the
following general sections: Cover Page, Table of Contents, Definitions,
Description of the Offering, Miscellaneous Provisions and Additional Details. On
this cover page and in the Description of the Offering section, we use a
"question and answer" format to assist you in understanding this offering.
The questions are numbered for easy reference.
What is American Skandia offering? We are offering a type of cash value life
insurance coverage. This life insurance coverage is called a "modified single
premium variable life insurance policy." These technical terms can be explained
as follows:
|X| The coverage is "life insurance" because a death benefit becomes payable to
a beneficiary upon the death of the insured person (if coverage is issued
on two insureds, the death benefit is payable upon the death of the second
of the insureds to die). It is "cash value" life insurance because, in
addition to a death benefit, it also provides living benefits for the
owner, such as the right to take withdrawals and the right to take loans
from us using the value of the policy as collateral.
|X| The coverage is called "modified single premium" because we do not accept
any premium other than the first unless we know about the additional
premium during the underwriting period or an additional amount is required
to keep the policy from being cancelled.
|X| The coverage is "variable" because you can allocate all or part of your
premium to variable investment options that invest in an underlying mutual
fund or a portfolio of an underlying mutual fund. The variable investment
options are segments of American Skandia Life Assurance Corporation
Separate Account F ("Account F"). The following underlying mutual funds or
portfolios of the following underlying mutual funds are being offered:
American Skandia Trust, The Alger American Fund and Montgomery Variable
Series. The available portfolios of these underlying mutual funds and the
applicable investment management fees and operating expenses are listed on
page 16. The performance of the variable investment options is not
guaranteed. You bear the investment risk if you allocate funds to these
investment options because the performance of these investment options can
decrease or increase which can impact the death benefit and the cash value
of the Policy.
|X| The coverage allows you to allocate all or part of your premium to a fixed
option to which we credit a fixed rate of interest. We guarantee the rate
of return on this option. These obligations are supported by our general
account. We bear the investment risk if you allocate funds to this option.
|X| We believe this policy will be treated as a "modified endowment contract"
under the Internal Revenue Code (the "Code"). In general, the tax treatment
of a modified endowment contract's death benefit is similar to that of
death benefits under life insurance policies, while the tax treatment of
the contract's living benefits are similar to those of living benefits
under deferred annuities. This means that in most circumstances the
beneficiary owes no Federal income tax on the death proceeds. However, most
distributions from such a policy while the insured is alive, including
loans, withdrawals and surrender, are taxable to the owner, like
distributions from a deferred annuity before annuity payments begin. This
means that such distributions are deemed to come first from any gain in the
policy. Any gain is treated as ordinary income and may be subject to a 10%
tax penalty if taken before your age 59 1/2. Information relating to the
tax treatment of life insurance contracts which are not modified endowment
contracts appears in the section entitled "Additional Tax Considerations".
The variable life insurance policy described in this Prospectus is not a deposit
of or guaranteed by, any bank or bank subsidiary, and is not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. The Policy is subject to investment risks, including the possible loss
of the principal amount invested.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE
READ THIS PROSPECTUS AND THE CURRENT PROSPECTUSES FOR THE UNDERLYING FUNDS. KEEP
IT FOR FUTURE REFERENCE.
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ASTr-PROS (5/99) CALL 1-800-752-6342 FOR FURTHER INFORMATION
Prospectus Dated: May 3, 1999
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VLI
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Definitions........................................................................................................................4
Description of the Offering........................................................................................................8
Purchasers......................................................................................................................8
The Insurance Company...........................................................................................................8
Benefits at the Insured's Death.................................................................................................8
Account Value and Cash Value...................................................................................................10
Cash Value Credits.............................................................................................................11
Costs..........................................................................................................................12
Buying a Policy................................................................................................................14
Variable Investment Options....................................................................................................16
Transfers and Allocation Services..............................................................................................16
Loans..........................................................................................................................22
Partial Withdrawals............................................................................................................24
Surrenders.....................................................................................................................25
Accelerated Death Benefit......................................................................................................25
Medically-Related Waiver.......................................................................................................25
Risks..........................................................................................................................26
Other Rights...................................................................................................................26
The Separate Account...........................................................................................................26
Taxes..........................................................................................................................26
Available Information..........................................................................................................27
Miscellaneous Provisions And Additional Details...................................................................................27
Providing Services to You......................................................................................................27
Designations...................................................................................................................27
Net Investment Factor..........................................................................................................28
Allocation Programs............................................................................................................28
Limitations on Transfers.......................................................................................................29
Death During the Grace Period..................................................................................................29
Reinstatement..................................................................................................................29
Maturity.......................................................................................................................29
Pricing Transactions...........................................................................................................29
Delaying Transactions..........................................................................................................30
Voting.........................................................................................................................30
Transfers, Assignments, Pledges................................................................................................30
Reports........................................................................................................................30
Incontestability...............................................................................................................31
Suicide........................................................................................................................31
Misstatement...................................................................................................................31
Backdating.....................................................................................................................31
Policy Loans on Exchanges......................................................................................................31
Resolving Material Conflicts...................................................................................................32
Modification of the Separate Account...........................................................................................32
Entire Contract................................................................................................................32
Additional Tax Considerations..................................................................................................32
Safekeeping of the Assets......................................................................................................34
Regulation.....................................................................................................................34
Legal Matters..................................................................................................................35
Legal Proceedings..............................................................................................................35
Experts........................................................................................................................35
Distribution of this Offering..................................................................................................35
Illustrations..................................................................................................................36
Executive Officers and Directors...............................................................................................36
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION ......................................................................................................................1
Financial Statements for American Skandia Life Assurance Corporation Separate
Account F.........................................................................................................................1
Appendix A Hypothetical Illustrations of Death Benefits, Account Values and Cash
Values.............................................................................................................................1
Appendix B Hypothetical Illustration of Accelerated Death Benefit.................................................................11
Appendix C Net Single Premium Factors for Determination of Required Death Benefits................................................12
Appendix D Guaranteed Monthly Maximum Cost of Insurance Charges Per Thousand
of Net Amount At Risk.............................................................................................................14
</TABLE>
<PAGE>
DEFINITIONS
The following are key terms used in this Prospectus. Other terms are defined in
this Prospectus as they appear.
ACCOUNT VALUE is the value of your allocation to each Sub-account and any Fixed
Allocation, plus any earnings and less any losses, distributions and charges
thereon, plus the value of any amounts in the Loan Account, plus any earnings
and less any distributions and charges thereon, all before assessment of any
contingent deferred sales charge, contingent deferred tax charge or Debt.
Account Value is determined separately for each Sub-account and each Fixed
Allocation, as well as for any amounts in the Loan Account, and then totaled to
determine the Account Value of your entire Policy.
AGE is the age of an Insured for purposes of this Policy. Initially, and for the
first Policy Year, it is the age last birthday of an Insured as of the Policy
Date. In each following Policy Year, it is the age last birthday of an Insured
as of the preceding Policy Anniversary.
APPLICATION is the form or combination of forms you must submit to apply for a
Policy. If there are two Insureds, the Application must be completed for both
Insureds.
BENEFICIARY is a person or entity you designate for us to pay any Death
Proceeds. Unless otherwise specified, Beneficiary refers to all persons or
entities so designated.
CASH VALUE is the Account Value less any contingent deferred sales charge,
contingent deferred tax charge and Debt.
CASH VALUE CREDITS are amounts we credit to your Account Value. We credit these
amounts if your total Cash Value on a Policy Anniversary equals or exceeds a
Cash Value trigger.
CODE is the Internal Revenue Code of 1986, as amended from time to time, and the
regulations thereunder.
DEATH BENEFIT is the amount payable as a result of an Insured's death before any
reduction due to Debt and before addition of any interest due pursuant to law.
If there is a second Insured, the Death Benefit is payable upon the death of the
last surviving Insured.
DEATH PROCEEDS equals the Death Benefit less any reduction for Debt and after
addition of any interest due pursuant to law.
DEBT is the total of any outstanding loan and loan interest.
FACE AMOUNT is the Death Benefit as of the Policy Date.
FIXED ALLOCATION is an allocation of Account Value to our general account that
is credited a fixed rate of interest.
GROWTH is a portion of the Account Value. It equals (a) less (b) less (c),
where: (a) is the total current Account Value; (b) is any Debt; and (c) is the
Premium less any partial withdrawals treated as a withdrawal of Premium.
GUARANTEED MINIMUM DEATH BENEFIT is the minimum amount we guarantee is payable
as a result of the Insured's death, before any reduction for Debt, even if it is
higher than the Required Death Benefit.
IN WRITING is in a written form, in a manner we accept, that is satisfactory to
us and filed at our Office. We retain the right to specifically agree in advance
to accept communication regarding a specific matter by telephone or by some
other form of electronic transmission, in a manner we prescribe.
INSURED is the person upon whose life coverage is issued and as a result of
whose death the Death Proceeds are payable. If there is more than one Insured,
Insured means the last surviving Insured, unless otherwise stated.
ISSUE DATE is the date we issue your Policy.
LOAN ACCOUNT is where we maintain Account Value as collateral for a loan to you
from us.
MATURITY DATE is the Policy Anniversary immediately following the Insured's 95th
birthday, or if there are two Insureds, immediately following the 95th birthday
of the younger Insured, or what would have been the younger Insured's 95th
birthday if the younger Insured predeceases the older Insured.
MONTHLY PROCESSING DAY/DATE is the Valuation Day each month when we deduct
charges from the Account Value. The first Monthly Processing Date is the Policy
Date. After that, the Monthly Processing Dates generally occur on the same day
of the month as the Policy Date. If the Monthly Processing Date occurs on a day
that is not a Valuation Day, the Monthly Processing Date that month will be the
next Valuation Day.
NET SINGLE PREMIUM is the amount that would be required, according to the Code
and the regulations based on the Code, to fund: (a) the Policy's Required Death
Benefit, assuming the current Required Death Benefit would not change; and (b)
future benefits and charges using assumptions about: (i) growth of Account Value
so that it would equal the current Required Death Benefit on the Maturity Date;
and (ii) charges, as provided pursuant to the Code. The Net Single Premium
depends on the attained age, gender (where permitted) and risk class of the
Insured. The Net Single Premium changes as the Insured ages. The applicable Net
Single Premiums would change if required under the Code or regulations based on
the Code.
OFFICE is our administrative office: American Skandia Life Assurance
Corporation, P.O. Box 290698, Wethersfield, Connecticut 06129-0698.
OWNER is either an entity or person who may exercise the ownership rights
provided by a Policy. If we issue a certificate representing interests in a
group life insurance policy, the rights, benefits, and requirements of and the
events relating to an Owner, as described in this Prospectus, will be your
rights as participant in such group policy. Unless later changed, Owner refers
to all persons or entities designated as such in your Policy.
POLICY is the insurance contract or certificate we issue as evidence of our
commitment to pay the Death Proceeds upon the death of the Insured.
POLICY ANNIVERSARY is the anniversary of the Policy Date.
POLICY DATE is the effective date of your Policy.
POLICY YEARS are continuous 12-month periods that begin on the Policy Date and
each Policy Anniversary thereafter.
PORTFOLIO is a portfolio of an underlying mutual fund.
PREMIUM is the cash consideration you give to us for the rights, privileges and
benefits provided by a Policy according to its terms. This includes Premium paid
as of the Issue Date, as shown in the Policy, and any additional consideration
we choose to accept. Acceptance must occur before completion of the underwriting
for the Policy.
REQUIRED DEATH BENEFIT is the minimum amount due as a result of the Insured's
death pursuant to the applicable test we apply in accordance with the Code,
prior to any reduction for Debt.
SEPARATE ACCOUNT is our separate account to which we allocate assets in relation
to our obligations for benefits based on the variable investment options.
American Skandia Life Assurance Corporation Separate Account F (also referred to
as Separate Account F) is the separate account utilized for the Policy.
SUB-ACCOUNT is a division of the Separate Account.
UNIT is a measure used to calculate Account Value in a Sub-account.
UNIT PRICE is used for calculating: (a) the number of Units allocated to a
Sub-account; and (b) the value of transactions into or out of a Sub-account or
benefits based on Account Value in a Sub-account. Each Sub-account has its own
Unit Price, which will vary each Valuation Period to reflect the investment
experience of that Sub-account.
VALUATION DAY/DATE is every day the New York Stock Exchange is open for trading
or any other day that the Securities and Exchange Commission requires mutual
funds or unit investment trusts to be valued.
VALUATION PERIOD is the period of time between the close of business of the New
York Stock Exchange on successive Valuation Days.
"We," "us," "our," "American Skandia," or "the Company" means American Skandia
Life Assurance Corporation.
"You" or "your" means the Owner.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF COSTS
The following is a summary of the cost of the Policies being offered, or, in the
case of costs that vary from Policy to Policy, a short description of how such
costs are determined. All of these costs are described in more detail within
this Prospectus.
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COST AMOUNT DEDUCTED/ WHEN DEDUCTED
DESCRIPTION OF COST
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<S> <C> <C>
Mortality & Expense Risk 0.90% per year of the value of each Sub-account Daily
Charge
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Administration Charge 0.25% per year of the value of each Sub-account Daily
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- --------------------------- ------------------ -------------------------- -------------------------- -------------------------------
Cost of Insurance Gender Age 20-69 Age 70-90 Monthly
Male 0.55% No Tobacco Use 0.90% No Tobacco Use
(See Appendix D for 0.90% Tobacco Use 1.25% Tobacco Use (Pro-rata from the variable
information on guaranteed and fixed investment options
cost of insurance rates. in which you maintain Account
See the Prospectus for cost Value)
of insurance rates for
Policies issued with two
Insureds.)
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
Female 0.40% No Tobacco Use 0.75% No Tobacco Use
0.75% Tobacco Use 1.10% Tobacco Use
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Sales Charge 0.40% per year of the Account Value Monthly for the 1st 10
Policy Years
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- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ----------------------------
Contingent Deferred Sales 1 2 3 4 5 6 7 8 9 10 Upon Surrender or Withdrawal
Charge (Percentage of Premium
deducted in Policy Years 1
through 10)
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- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ---------------------------
7.75 7.50 7.25 6.50 5.75 5.00 4.25 3.50 2.75 0
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Contingent Deferred Tax 1 2 3 4 5 6 7 8 9 10 Upon Surrender of Withdrawal
Charge (Percentage of Premium
deducted in Policy Years
1 through 10)
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- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ---------------------------
2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0
- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ----------------------------
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Maintenance Fee $2.50 per month unless Account Value is greater than $75,000 Monthly
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Transfer Fee $10.00 After the 12th transfer each
Policy Year
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Underlying Portfolio Expenses Each Portfolio has different fees and charges as provided in the
"Variable Investment Options" section of this Prospectus. Total
Portfolio expenses range from 0.60% to 1.75%. More detailed Daily
information about fees and charges can be found in the prospectuses
for the Portfolios.
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</TABLE>
<PAGE>
DESCRIPTION OF THE OFFERING
This Policy is described using a "question and answer" format that assumes you,
the prospective purchaser, are asking the questions. The description below is
divided into the following sections: Purchasers, The Insurance Company, Benefits
at the Insured's Death, Account Value and Cash Value, Cash Value Credits, Costs,
Buying a Policy, Variable Investment Options, Transfers and Allocation Services,
Loans, Partial Withdrawals, Surrenders, Accelerated Death Benefit,
Medically-Related Waiver, Risks, Other Rights, The Separate Account, Taxes and
Available Information. A section addressing Miscellaneous Provisions and
Additional Details about American Skandia follows this description.
PURCHASERS
[1] Who should buy this Policy? Life insurance can be bought to meet a number of
needs of individuals or entities, such as corporations or trusts. Different
types of life insurance are designed to address certain needs more than others.
This Policy may be appropriate for a number of persons or entities, but it may
be especially useful for persons addressing a range of estate planning needs.
Because of estate taxes, purchasers may want to consider placing this type of
coverage in a trust or transferring ownership of the Policy in an effort to
remove the asset from their estate. This Policy may also be useful for persons
seeking to make a sizable donation to a charity or eligible non-profit
organization, where the charity is named both Owner and Beneficiary of the
Policy, and the donor is named as the Insured. You should carefully evaluate
with your financial representative whether this Policy is right for your
specific needs in light of your entire situation and your personal and financial
goals. In particular, you should evaluate the advantages and disadvantages of
replacing any existing life insurance or annuity coverage with this Policy. If
you are seeking specific tax consequences, you should consult with a competent
tax advisor as to whether and how your goals may best be achieved.
THE INSURANCE COMPANY
[2] Who is American Skandia? American Skandia Life Assurance Corporation is
organized as a stock insurance company domiciled in Connecticut. The predecessor
company of American Skandia was originally incorporated on May 21, 1969. We are
licensed as a life insurer in all 50 states and the District of Columbia. We are
a wholly owned subsidiary of American Skandia Investment Holding Corporation,
whose indirect parent is Skandia Insurance Company Ltd. Skandia Insurance
Company Ltd. is part of a group of companies whose predecessor began operations
in 1855. Two of our affiliates, American Skandia Marketing, Incorporated, and
American Skandia Information Services and Technology Corporation, may provide
certain administrative functions for us. We may also engage various independent
firms to provide various administrative functions for us. Another affiliate,
American Skandia Investment Services, Incorporated, currently acts as the
investment manager to American Skandia Trust, one of the underlying mutual funds
whose Portfolios are available as variable investment options. We currently
engage Skandia Investment Management, Inc., an affiliate whose indirect parent
is Skandia Insurance Company Ltd., as investment manager for our general
account. We are under no obligation to engage or continue to engage any
investment manager.
BENEFITS AT THE INSURED'S DEATH
[3] What benefits are due as a result of the Insured's death? The benefits due
as a result of the Insured's death are the Death Proceeds. If there are joint
Insureds, the benefits are due as a result of the death of the last surviving
Insured.
[4] What are the Death Proceeds? The Death Proceeds are based on the Death
Benefit as of the date we receive all our requirements for paying a death claim
and are satisfied that the death claim can be paid. These requirements include,
but are not limited to, receipt of a valid death certificate and information we
need to make payments to all Beneficiaries. We determine the Death Proceeds by
first subtracting any Debt from the Death Benefit. We then add any interest
amount required by law.
[5] What is the Death Benefit? The Death Benefit is the higher of the Required
Death Benefit and the Guaranteed Minimum Death Benefit, each as of the date we
receive due proof of death. The Required Death Benefit is the minimum amount
that must be payable at the Insured's death, before reduction for any Debt, for
the Policy to be treated as life insurance under the Code. The Guaranteed
Minimum Death Benefit, which is discussed below in response to the question,
"What is the Guaranteed Minimum Death Benefit?," is the minimum amount payable
at the Insured's death, before reduction for any Debt, irrespective of the
Required Death Benefit. The Required Death Benefit is determined by treating the
Account Value as if it were a net single premium. We determine the Required
Death Benefit by dividing the Account Value by factors that are determined as of
the Policy Date. These factors vary by the attained Age, gender (where
permitted) and risk class of the Insured. See Appendix C for a complete
description of the applicable factors we use to determine the Required Death
Benefit. The following are representative examples of the factors on the Policy
Date for different Ages, genders and risk classes, as well as the amount of the
Required Death Benefit if the Account Value were $100,000.
Female, Age 55, not a tobacco user: The factor is .400884. $100,000 divided
by .400884 results in a Required Death Benefit of $249,449.
Male, Age 60, a tobacco user: The factor is .586632. $100,000 divided by
.586632 results in a Required Death Benefit of $170,465.
Female, Age 70, a tobacco user: The factor is .637176. $100,000 divided by
.637176 results in a Required Death Benefit of $156,943.
Male, Age 75, not a tobacco user: The factor is .736865. $100,000 divided
by .736865 results in a Required Death Benefit of $135,710.
As noted above, the factors depend on the Insured's gender (where permitted),
risk class and attained Age. The gender and risk class of the Insured does not
change, so the only element that changes the factor after the Policy Date is the
aging of the Insured.
The following example illustrates the effect of aging on the Required Death
Benefit.
The Insured is a woman, Age 64, for whom coverage was issued at her Age 60 in
the "not a tobacco user" risk class. On the Valuation Day before the Policy
Anniversary following the Insured's 65th birthday, the Account Value is
$100,000. The Required Death Benefit as required under the Code for this
Insured's age, gender, risk class and Account Value is $100,000 divided by the
applicable factor of .521878, which results in a Required Death Benefit of
$191,616. For the sake of this example, assume that the next Valuation Day,
which is the Policy Anniversary after the Insured's 65th birthday (the day the
Insured turns Age 65 for purposes of the Policy), the Account Value remains
$100,000. At the higher Age of 65, the Required Death Benefit on the Policy
Anniversary is $100,000 divided by the applicable factor of .536544, which
results in a Required Death Benefit of $186,378.
[6] What else can affect the Required Death Benefit? The Required Death Benefit
changes as the Account Value changes. This is because the Required Death Benefit
is calculated based on the Account Value. A few examples may help show what this
means. Assume for purposes of these examples that the Insured is a woman, Age
65, for whom coverage was issued at her Age 60 in the "not a tobacco user" risk
class.
(a) On a particular Monthly Processing Date, the Account Value of the
Policy is $100,000. The Required Death Benefit as of that Valuation Day is
$100,000 divided by the then applicable factor of .536544 or $186,378. As of the
next Valuation Day, assume the Account Value has grown to $100,010. The Required
Death Benefit is $100,010 divided by the same factor of .536544, or $186,396.
(b) On a particular Monthly Processing Date, the Account Value of the
Policy is $100,000. The Required Death Benefit as of that Valuation Day is
$100,000 divided by the then applicable factor of .536544, or $186,378. As of
the next Valuation Day, assume the Account Value has decreased to $99,990. The
Required Death Benefit is $99,990 divided by the same factor of .536544, or
$186,359.
(c) On a particular Monthly Processing Date, the Account Value of the
Policy before any partial withdrawal is $100,000. The Required Death Benefit as
of that Valuation Day is $100,000 divided by the then applicable factor of
.536544, or $186,378. On that same day, assume $20,000 is taken as a partial
withdrawal. Immediately after the partial withdrawal, the Required Death Benefit
is $80,000 divided by the same factor of .536544, or $149,102.
[7] What is the Face Amount? The Face Amount is the Required Death Benefit on
the Policy Date.
[8] What is the Guaranteed Minimum Death Benefit? We use the Guaranteed Minimum
Death Benefit to determine the Death Proceeds if the Guaranteed Minimum Death
Benefit is higher than the Required Death Benefit. The Guaranteed Minimum Death
Benefit is determined as follows:
(a) On the Policy Date, the Guaranteed Minimum Death Benefit equals the
Premium.
(b) After the Policy Date and until the first Policy Anniversary, the
Guaranteed Minimum Death Benefit is the Premium less every "reduction
due to a withdrawal," which is defined below.
(c) After the first Policy Anniversary but before the "target date," (the
Policy Anniversary when the Insured is Age 75), the Guaranteed Minimum
Death Benefit is the higher of (1) or (2), where: (1) is the Premium
less every "reduction due to a withdrawal"; and (2) is the highest
"Anniversary Value." "Anniversary Value" is the Account Value on any
Policy Anniversary less every reduction due to a withdrawal since that
Policy Anniversary.
(d) On or after the "target date," the Guaranteed Minimum Death Benefit is
the higher of (1) or (2), where: (1) is the Premium less every
"reduction due to a withdrawal"; and (2) is the highest Anniversary
Value, as defined above in (c), as of the "target date," less every
"reduction due to a withdrawal" after the "target date."
(e) Notwithstanding items (a) through (d) above, if the Insured is Age 75
or older on the Policy Date, the Guaranteed Minimum Death Benefit is
the Premium less every "reduction due to a withdrawal."
(f) If the Policy is issued for two (2) Insureds, the Guaranteed Minimum
Death Benefit is based on the age of the younger Insured, or what
would have been the age of the younger Insured if the younger Insured
predeceases the older Insured.
A "reduction due to a withdrawal" is a proportional reduction. It equals the
ratio by which the Account Value is reduced by a partial withdrawal or a payment
under the Accelerated Death Benefit provision, described below in the section of
the same name, multiplied by the Guaranteed Minimum Death Benefit as of the
effective date of such partial withdrawal or payment. For example, if the
Guaranteed Minimum Death Benefit before a partial withdrawal is $100,000 and the
Account Value is $120,000, the Guaranteed Minimum Death Benefit after a $60,000
partial withdrawal (a 50% reduction in the Account Value) would be $50,000 (a
50% reduction in the Guaranteed Minimum Death Benefit).
[9] How are Death Proceeds paid? We pay the Death Proceeds as a lump sum or in
accordance with the terms of whatever settlement options we then make available
to Beneficiaries. Generally, Beneficiaries can choose a lump sum or one of the
settlement options we make available. However, you may choose the method of
payment for your Beneficiaries if you notify us In Writing before the Insured's
death how you want the Death Proceeds to be paid.
ACCOUNT VALUE AND CASH VALUE
[10] What is the Account Value? The Account Value is the value of a Policy
before any deduction for any contingent deferred sales charge, contingent
deferred tax charge or Debt. It is the total of the Account Value allocated to
each Sub-account and any Fixed Allocation plus any Account Value in the Loan
Account. You may allocate Account Value to the variable investment options,
which are each of the Sub-accounts of the Separate Account, or to Fixed
Allocations. Any portion of the Account Value maintained in the Loan Account
serves as collateral for outstanding Policy loans.
[11] How does American Skandia determine the Account Value in the variable
investment options? On each Valuation Date, the Account Value in any variable
investment option you utilize equals the number of Units you then maintain in
that investment option multiplied by that investment option's then current Unit
Price. When you allocate all or a portion of the Premium to an investment option
or when you transfer Account Value into a variable investment option, Units are
purchased using the then current Unit Price. When you take all or a portion of a
distribution or benefit from a variable investment option or you transfer
Account Value from a variable investment option, Units are sold at the then
current Unit Price in order to fund that distribution, benefit or transfer.
[12] How does American Skandia determine the Account Value for Fixed
Allocations? We credit a fixed rate of interest to Fixed Allocations. From time
to time we declare interest rates applicable to new Fixed Allocations. If you
make a Fixed Allocation, we credit the rate then in effect to that Fixed
Allocation until the next Policy Anniversary. Once that Policy Anniversary is
reached, we credit, for the next Policy Year, the then current rate applicable
to new Fixed Allocations. This applies to all your Fixed Allocations then in
effect. During each subsequent Policy Year, the rate we credit for that Policy
Year is the one then in effect for new Fixed Allocations.
- --------------------------------------------------------------------------------
The Policy offered pursuant to this Prospectus includes Fixed Allocations. These
Fixed Allocations are not registered as a security with the Securities and
Exchange Commission under either the Securities Act of 1933 or the Investment
Company Act of 1940. The Fixed Allocations are not subject to these Acts.
Information about the Fixed Allocations is included in this Prospectus to help
with your understanding of the features of the Policy. The staff of the
Securities and Exchange Commission has not reviewed this information. However,
the information may be subject to certain generally applicable provisions of the
Federal securities laws regarding accuracy and completeness. The assets
supporting Fixed Allocations are held in American Skandia's general account.
- --------------------------------------------------------------------------------
[13] How does American Skandia determine the interest rate for Fixed
Allocations? We determine the interest rate applied to Fixed Allocations based
on our assessment of the earnings we expect to achieve when investing to support
these obligations, our costs, competition, profit targets and other factors. We
have sole discretion to determine the rates. However, the interest rate will
never be less than 3.0% per year, compounded yearly.
[14] How does American Skandia determine the Account Value in the Loan Account?
The rate we credit to Account Value in the Loan Account depends on whether that
Account Value is serving as collateral for "preferred loans" or for "standard
loans," which are discussed below in response to the question "What are a
`preferred loan' and a `standard loan'?" We credit interest at the rate of 6.0%
per year, compounded yearly, to Account Value in the Loan Account serving as
collateral for "preferred loans." We credit interest at the rate of 4.0% per
year, compounded yearly, to Account Value in the Loan Account serving as
collateral for "standard loans."
[15] What is the Cash Value? The Cash Value is the total Account Value less any
contingent deferred sales charge, contingent deferred tax charge and Debt.
[16] Do I have to maintain a minimum Cash Value? The answer depends on whether
there is any Debt. You do not have to maintain a minimum Cash Value if there is
no Debt, except if you take a partial withdrawal. We will inform you if, on a
Monthly Processing Date, your Cash Value equals or is less than zero. Such
Monthly Processing Date will be the beginning of the grace period. At that time
we will also inform you of the amount you can pay if you wish to reestablish any
Cash Value. No payment is required. The Policy remains in force with the Death
Benefit equal to the Guaranteed Minimum Death Benefit as of the beginning of the
grace period.
If there is any Debt, there must always be enough Cash Value so that after we
deduct any charges the Cash Value is more than zero. If the Cash Value would be
zero or less after we deduct charges, we send you a notice giving you a 61-day
"grace period" to send us a required amount. If this amount is not paid by the
end of the grace period, the Policy ends without value.
CASH VALUE CREDITS
[17] What are Cash Value Credits, and how do I get them? Cash Value Credits are
amounts we credit to your Account Value, where permitted by law. We provide
these amounts if your total Cash Value on a Policy Anniversary equals or exceeds
a Cash Value trigger. We determine if your Policy is eligible for a Cash Value
Credit on each Policy Anniversary. Your Policy's eligibility for Cash Value
Credits may change from year to year. Whether your Cash Value meets or exceeds
the trigger depends on the investment performance of the investment options,
partial withdrawals, Debt and whether you pay back any loans or loan interest.
[18] What is the Cash Value trigger? The Cash Value trigger is 200% of the
Premium. That means that, even if your Account Value is greater than the Cash
Value Trigger, you may not have reached the trigger amount, since the Cash Value
may be less than the Account Value due to the contingent deferred sales charge,
the contingent deferred tax charge and any Debt.
[19] How much is added to my Account Value? The Cash Value Credit, if any, added
to your Account Value equals 0.25% of the Cash Value on the applicable Policy
Anniversary. The following examples illustrate how this works:
(a) Assume that the Premium paid for a Policy is $100,000. Assume
that on the 10th Policy Anniversary the Cash Value is
$202,000. The Cash Value trigger is 200% of $100,000, which is
$200,000. The amount to be added to the Account Value is 0.25%
of $202,000, which is $505.
(b) For the same Policy, assume that the Cash Value on the 11th
Policy Anniversary is $195,000, due to a combination of
investment performance and a loan of $25,000 in the middle of
the Policy Year. The Cash Value trigger for this Policy, as
noted above, is $200,000. Therefore, no Cash Value Credit is
provided on the 11th Policy Anniversary.
(c) For the same Policy, assume that the Cash Value on the 12th
Policy Anniversary is $240,000, due to a combination of
investment performance and repayment of the loan and loan
interest. As noted above, the Cash Value trigger is $200,000.
The amount to be added is 0.25% of $240,000, which is $600.
[20] Who pays for the Cash Value Credits, and how are they paid? We pay for any
Cash Value Credits out of our general account. We allocate any Cash Value
Credits due on the applicable Policy Anniversary to the variable investment
options and Fixed Allocations in which you then maintain Account Value. We make
the allocations pro-rata based on the Account Value in the variable investment
options and any Fixed Allocations on the applicable Policy Anniversary. No
allocation is made to the Loan Account. Cash Value Credits cannot be used to
repay Debt.
COSTS
[21] What kinds of charges are there for this Policy? The Policy has four (4)
different kinds of charges: (1) charges we assess daily against assets
maintained in the Separate Account, which only apply to the Account Value you
allocate to the variable investment options; (2) charges we deduct monthly from
the Account Value and which are due in all Policy Years; (3) charges that we
deduct monthly from the Account Value only for the first ten Policy Years; and
(4) "contingent" charges, which are those charges that you only pay in certain
specified circumstances. There are also fees and expenses charged by the
Portfolios.
[22] What are the charges assessed against the Separate Account and when are
they paid? We assess a mortality and expense risk charge and an administration
charge against the assets in the Separate Account. The mortality and expense
risk charge is 0.90% per year. The mortality and expense risk we assume is that
charges and fees under the Policy will be insufficient to meet our long-term
costs and expenses in issuing, administering and paying claims based on our
obligations under the Policy. The charge for the administrative expenses
connected with operating the Separate Account is 0.25% per year. We assess these
charges each Valuation Period against the daily value of each Sub-account. We
reserve the right to assess the Separate Account for any taxes that may be
attributed to it. Currently, no such charge for taxes is assessed.
[23] What monthly charge applies in all Policy Years? We deduct the cost of
insurance charge. We take this charge from your Account Value, in advance, each
Monthly Processing Day. The charge is a percentage of your then current Account
Value.
[24] How much is the cost of insurance charge? The cost of insurance charge is
not a constant dollar amount, in part because it is a percentage of your Account
Value. The percentage of your Account Value that we charge differs depending on
four factors: (1) whether we issue the Policy for only one Insured or for two;
(2) the Age(s) of the Insured(s) as of the Policy Date; (3) the gender of the
Insured(s), where permitted; and (4) the risk class(es) of the Insured(s). We
reserve the right to also have the percentage decrease based on the size of the
Premium.
The actual charge is a monthly charge. The equivalent yearly cost of insurance
charges as of the Policy Date are shown below for a Policy issued for one
Insured. The charges will be different if we are required by law to charge the
same amount for males and females. For purposes of this and the succeeding
table, "Age" is as of the Policy Date.
- ------------------ ------------------------- ----------------- -----------------
Gender Tobacco Usage Class Age 20-69 Age 70-90
---------------- ------------------------- ----------------- -----------------
- ------------------ ------------------------- ----------------- -----------------
Male No Tobacco Use 0.55% 0.90%
- ------------------ ------------------------- ----------------- -----------------
- ------------------ ------------------------- ----------------- -----------------
Female No Tobacco Use 0.40% 0.75%
- ------------------ ------------------------- ----------------- -----------------
- ------------------ ------------------------- ----------------- -----------------
Male Tobacco User 0.90% 1.25%
- ------------------ ------------------------- ----------------- -----------------
- ------------------ ------------------------- ----------------- -----------------
Female Tobacco User 0.75% 1.10%
- ------------------ ------------------------- ----------------- -----------------
If the Policy is issued for two Insureds, the yearly percentages of the Account
Value we deduct for the cost of insurance will depend on the risk classes of the
Insureds. The following are examples of applicable charges as of the Policy
Date. The charges will be different if we are required by law to charge the same
amount for males and females.
<TABLE>
<CAPTION>
-------------------------- -------------------------- ------------------------- ------------------------ ------------
<S> <C> <C> <C> <C> <C>
Gender (1st Insured) Tobacco Usage Class Gender (2nd Insured) Tobacco Usage Class Charge
-------------------------- -------------------------- ------------------------- ------------------------ ------------
-------------------------- -------------------------- ------------------------- ------------------------ ------------
Male No Tobacco Use Female No Tobacco Use 0.25%
-------------------------- -------------------------- ------------------------- ------------------------ ------------
-------------------------- -------------------------- ------------------------- ------------------------ ------------
Male Tobacco User Female Tobacco User 0.35%
-------------------------- -------------------------- ------------------------- ------------------------ ------------
-------------------------- -------------------------- ------------------------- ------------------------ ------------
Male No Tobacco Use Female Tobacco User 0.30%
-------------------------- -------------------------- ------------------------- ------------------------ ------------
-------------------------- -------------------------- ------------------------- ------------------------ ------------
Male Tobacco User Female No Tobacco Use 0.30%
-------------------------- -------------------------- ------------------------- ------------------------ ------------
</TABLE>
[25] Is there a maximum cost of insurance charge? We monitor the cost of
insurance charge so that it never exceeds a guaranteed maximum charge. We
determine the guaranteed maximum as if we were charging you an increasing amount
based on the Insured's attained Age and were assessing that charge on the
difference between the Death Benefit and the Account Value. If the percentages
we otherwise would charge would exceed the guaranteed maximum, we only charge
the guaranteed maximum.
The guaranteed maximum cost of insurance charge depends on the risk class of the
Insured(s). Also, if required by law, unisex charges will apply. We base the
guaranteed maximum charges on the sex distinct 1980 Commissioners Standard
Ordinary Ultimate Mortality Table, age last birthday unless unisex rates apply.
See Appendix D for a description of the maximum cost of insurance charges for
different age gender and risk classes.
[26] What monthly charges apply only for a specified number of Policy Years? We
deduct the tax charge and the sales charge for a specified number of Policy
Years.
[27] How much is the sales charge and when do I pay it? We deduct the sales
charge during the first ten (10) Policy Years. It is a percentage of your
Account Value and is the equivalent of 0.40% per year. We deduct this charge
from your Account Value each Monthly Processing Day. The charge is a percentage
of your then current Account Value. If you surrender your Policy or take a
partial withdrawal, we may deduct a contingent deferred sales charge, as
described below in response to the question "How much is the contingent deferred
sales charge and when must I pay it?"
There are certain circumstances which may result in reduction or elimination of
the sales charge. These are exactly the same circumstances that may result in
reduction or elimination of the contingent deferred sales charge, as described
below in response to the question "How much is the contingent deferred sales
charge and when must I pay it?"
[28] How much is the tax charge and when do I pay it? We deduct the tax charge
during the first ten (10) Policy Years. It is a percentage of your Account Value
and is the equivalent of 0.25% per year. We deduct this charge from your Account
Value each Monthly Processing Day. The charge is a percentage of your then
current Account Value. If you surrender your Policy or take a partial
withdrawal, we deduct a contingent deferred tax charge, as described below in
response to the question "How much is the contingent deferred tax charge and
when must I pay it?"
[29] What are the contingent charges? The contingent charges are: (1) the
contingent deferred sales charge; (2) the contingent deferred tax charge; (3)
the maintenance fee; and (4) the transfer fee.
[30] How much is the contingent deferred sales charge and when must I pay it?
The contingent deferred sales charge is a percentage of the Premium that is
charged if you surrender or withdraw any amount: (a) during the first nine (9)
Policy Years; and (b) that, according to our rules, is a withdrawal of Premium,
not a withdrawal of Growth. It may be assessed at the time of any partial
withdrawal or surrender, unless the Policy qualifies for a medically-related
waiver of these charges, as discussed in the section of this Prospectus entitled
"Medically-Related Waiver." The percentages are as follows:
------------------- ---------------- ---------------- ----------------
Policy Year Percentage Policy Year Percentage
------------------- ---------------- ---------------- ----------------
------------------- ---------------- ---------------- ----------------
1 7.75% 6 5.00%
------------------- ---------------- ---------------- ----------------
------------------- ---------------- ---------------- ----------------
2 7.50% 7 4.25%
------------------- ---------------- ---------------- ----------------
------------------- ---------------- ---------------- ----------------
3 7.25% 8 3.50%
------------------- ---------------- ---------------- ----------------
------------------- ---------------- ---------------- ----------------
4 6.50% 9 2.75%
------------------- ---------------- ---------------- ----------------
------------------- ---------------- ---------------- ----------------
5 5.75% 10+ 0.00%
------------------- ---------------- ---------------- ----------------
From time to time, and to the extent permitted by law, we may reduce the amount
of the sales charge and the contingent deferred sales charge, the period during
which such charges apply, or both, when Policies are sold to persons or groups
of persons in a manner that reduces sales expenses. We would consider such
factors as: (a) the size and type of group; (b) the amount of Premiums; and/or
(c) other transactions where sales expenses are likely to be reduced.
No sales charge or contingent deferred sales charge is imposed when, as of the
Policy Date, the Owner or the Insured of a Policy issued pursuant to this
Prospectus is: (a) any parent company, affiliate or subsidiary of ours; (b) an
officer, director, employee, retiree, sales representative, or in the case of an
affiliated broker-dealer, registered representative of such company; (c) a
director, officer or trustee of any underlying mutual fund; (d) a director,
officer or employee of any investment manager, sub-advisor, transfer agent,
custodian, auditing, legal or administrative services provider that is providing
investment management, advisory, transfer agency, custodianship, auditing, legal
and/or administrative services to an underlying mutual fund or any affiliate of
such firm; (e) a director, officer, employee or registered representative of a
broker-dealer or insurance agency that has a then current selling agreement with
us and/or with American Skandia Marketing, Incorporated; (f) a director,
officer, employee or authorized representative of any firm providing us or our
affiliates with regular legal, actuarial, auditing, underwriting, claims,
administrative, computer support, marketing, office or other services; (g) the
then current spouse of any such person noted in (b) through (f) above; (h) the
parents of such person noted in (b) through (g) above; (i) such person's
child(ren) or other legal dependent under the age of 21; and (j) the siblings of
any such persons noted in (b) through (h) above.
[31] How much is the contingent deferred tax charge, and when must I pay it? The
contingent deferred tax charge is a percentage of the Premium that is charged if
you surrender or withdraw any amount: (a) during the first nine (9) Policy
Years; and (b) that, according to our rules, is a withdrawal of Premium, not a
withdrawal of Growth. It is assessed at the time of any partial withdrawal or
surrender, unless the Policy qualifies for a medically-related waiver of these
charges, as discussed on the section of the Prospectus entitled
"Medically-Related Waiver." The percentages are as follows:
- ------------------- ---------------- ---------------- ----------------
Policy Year Percentage Policy Year Percentage
- ------------------- ---------------- ---------------- ----------------
- ------------------- ---------------- ---------------- ----------------
1 2.25% 6 1.00%
- ------------------- ---------------- ---------------- ----------------
- ------------------- ---------------- ---------------- ----------------
2 2.00% 7 0.75%
- ------------------- ---------------- ---------------- ----------------
- ------------------- ---------------- ---------------- ----------------
3 1.75% 8 0.50%
- ------------------- ---------------- ---------------- ----------------
- ------------------- ---------------- ---------------- ----------------
4 1.50% 9 0.25%
- ------------------- ---------------- ---------------- ----------------
- ------------------- ---------------- ---------------- ----------------
5 1.25% 10+ 0.00%
- ------------------- ---------------- ---------------- ----------------
[32] How much is the maintenance fee and when must I pay it? The maintenance fee
is $2.50 per month. We take the charge from your Account Value monthly in
advance. However, we will waive the maintenance fee on any Monthly Processing
Day if your Account Value is $75,000 or greater.
[33] How much is the transfer fee and when must I pay it? We charge $10.00 for
every transfer after the 12th in each Policy Year. That includes transfers into
a Fixed Allocation and any transfers from a Fixed Allocation unless the transfer
occurs on a Policy Anniversary. It does not include transfers made as part of
any dollar cost averaging program we offer. For this purpose, all transfers
occurring during the same Valuation Period are considered one transfer. We
assess the transfer fee at the time of any transfer which is subject to the fee.
[34] How are charges deducted from Account Value? We deduct charges from your
investment options pro-rata based on the Account Value in each investment
option. If you maintain Account Value in more than one Fixed Allocation in a
Policy Year, any applicable charges will be deducted on a "last-in, first-out"
basis, starting with the last Fixed Allocation that was made prior to the
Monthly Processing Date the deduction is made. Upon surrender or withdrawal, we
assess charges against the investment options pro-rata in the same ratio as
Account Value is being withdrawn from such investment options.
[35] What charges do the Portfolios make? We do not assess any charges against
the Portfolios. However, each Portfolio charges a total annual fee comprised of
an investment management fee and operating expenses. Expenses for the Portfolios
are provided in the "Variable Investment Options" section below. More detailed
information about fees and charges can be found in the prospectuses for the
Portfolios.
BUYING A POLICY
[36] How do I buy a Policy? We require that our standards be met and that we
receive a Premium before we issue a Policy. We need information to determine if
those standards have been met. We require you to submit an Application as part
of our effort to gather the needed information. We may require additional
information, including, but not limited to, some of the Insured's medical
records. We may also require the Insured to take certain medical tests. As part
of our standards, we will not issue a Policy if, as of the Policy Date, the
Insured would be less than Age 20 or older than Age 90. If our standards are not
met and we received a Premium, we will return an amount equal to the Premium to
you. No interest will be paid.
To the extent permitted by law, we reserve the right to apply differing
standards of insurability to persons who may be part of a group or who may
qualify, for some other reason, as part of a different class. Such classes may
include, but are not limited to, persons seeking a Policy who are applying all
or a portion of proceeds from an insurance or annuity contract, or proceeds of a
redemption from another financial product, such as mutual funds. One of the
criteria we may apply in such a situation is that such differing standards of
insurability apply only after maintaining funds in such policy, contract, or
financial product for a specified period of time.
[37] What is the Premium, and when do I pay it? The minimum Premium we generally
accept is $10,000. We may accept less under certain circumstances. The maximum
we accept without prior approval by our home office is $500,000. If you are
seeking a specific Face Amount, the Premium will depend on the Insured's age,
risk class and gender, where permitted. We will determine the Face Amount using
the Premium as the Net Single Premium for the Insured's age, risk class and
gender, where permitted. You may submit Premium with the Application if: (a) the
Insured is not over age 80; and (b) the Insured meets certain medical
underwriting criteria. If any portion of the Premium is to be received as part
of a replacement of a life insurance, endowment or annuity policy then we must
receive all our requirements In Writing for all such replacements as of the same
date and any additional Premium amounts other than the proceeds of such
replacement must be received by us at our Office at the same time as we receive
such requirements In Writing. Replacements include tax-free exchanges subject to
our acceptance. We will immediately return any Premium that should not have been
submitted based on these criteria. If we would not accept Premium with the
Application or you chose not to submit a Premium with the Application, we will
notify you if and when we have accepted the Application and agreed, subject to
submission of the Premium, to issue a Policy. We will not issue a Policy until
we receive Premium at our Office. We will not accept Premium of which we were
not informed at the time you submit the Application to us.
You may choose to use our funds transfer authorization procedures as part of
buying a Policy. If you elect this procedure, you authorize us to redeem funds
from one or more financial institutions with which you currently maintain funds
and use those funds to pay Premium. You must do so In Writing using a form that
authorizes us to obtain such funds only if and when we have determined that the
Application meets our standards for issuing a Policy. If you use this procedure,
you must provide us with all such authorizations simultaneously. If you wish to
also pay any additional amounts, we must receive such Premium amounts at the
same time we receive such authorizations.
The standards we apply in reviewing the Application may depend on factors such
as the proposed Insured's age and the amount of Premium to be applied to the
Policy. In certain cases, we may apply simplified standards. However, the
Premium amount you state in the Application may be an estimate if you are
planning: (a) to replace a life insurance, endowment or annuity policy; (b) to
exchange a life insurance or endowment policy; or (c) to use our funds transfer
authorization procedures. If we used simplified standards based on a Premium
estimate but the actual amounts we receive to be applied as Premium exceed the
limits for such standards, we reserve the right, to the extent permitted by law,
to not issue a Policy and return such amounts directly to you or, on your
behalf, to the financial institution from which the funds were obtained. We
cannot guarantee such institution will accept the return of such amounts.
[38] Am I covered while my Application is being reviewed? We may issue you a
temporary insurance agreement during the "underwriting period." The
"underwriting period" is the period between the time you first apply for a
Policy and the time we either issue the Policy or decide not to issue one. A
temporary insurance agreement may be issued if: (a) the Application is completed
in full; (b) the Insured answers "no" to certain questions on the Application
(these are questions we use as indicators of whether we will issue temporary
insurance); (c) the Insured is age 80 or younger; and (d) a Premium is submitted
with the Application. If we issue a temporary insurance agreement and the
Insured (both Insureds if there are two Insureds) dies during the underwriting
period, the temporary insurance benefit will be payable if all the conditions of
the temporary insurance agreement are satisfied. The underwriting period
generally will not exceed 60 days. If the Insured(s) die(s) during the
underwriting period and no temporary insurance agreement was in effect, no
benefit is payable.
We will return any Premium submitted with the Application if we cannot complete
underwriting within 60 days from the date the Application is signed. If you
notify us promptly, we will continue the underwriting process and notify you if
and when you meet our standards for issuing a Policy, at which time you may once
again send us a Premium.
Temporary insurance ends 60 days after the Application is signed, even if the
underwriting period exceeds 60 days. In certain jurisdictions, the underwriting
period and the temporary insurance benefit is limited to 45 days.
[39] What is the temporary insurance benefit? If the Insured dies while
temporary insurance is in effect, we pay the Beneficiary the lesser of the Face
Amount that would be in effect on the Policy Date if a Policy had been issued or
$250,000. This $250,000 maximum applies to all temporary insurance then in
effect with us. Premium amounts in excess of this benefit are returned to you,
without interest or earnings.
[40] How and when is my Premium invested? We invest the Premium on the Issue
Date. You can request that we allocate the Premium using one or more variable
investment options and/or a Fixed Allocation. However, we initially invest the
portion of the Premium that you indicate to us that you want invested in
variable investment options in the AST Money Market Sub-account, unless you
submit a "return waiver" In Writing before the Issue Date, where permitted by
law. A return waiver is an election by you to invest as soon as possible in the
variable investment options of your choice. If you submit a "return waiver" and
then decide to return your Policy during the "free-look" period, you may receive
back less than the Premium. Generally, we transfer the Account Value in the AST
Money Market Sub-account to the variable investment options you request as of
the Valuation Date which is on or immediately after the 15th day after the date
we issue a Policy. However, we will make the transfer as of a later date if your
"free-look" period is longer than 10 days to meet state law requirements.
[41] What happens if I change my mind about buying a Policy? You have a
"free-look" period during which you can change your mind about buying a Policy.
The free-look period is never less than 10 days from the date you receive your
Policy. It may be longer depending on the applicable state law and the
circumstances of your purchase. If you return your Policy to us within the
free-look period, we generally will return the greater of (1) or (2) where (1)
is the Premium paid; and (2) is your Account Value plus any charges deducted
from your Account Value. However, if you have submitted a "return waiver," we
will return only your Account Value plus any charges deducted from your Account
Value. This may be more or less than Premium paid.
VARIABLE INVESTMENT OPTIONS
[42] What are the investment objectives and policies of the variable investment
options? What charges are made by the Portfolios in which these options invest?
Each variable investment option is a Sub-account of the Separate Account. Each
Sub-account invests exclusively in an underlying mutual fund or one portfolio of
an underlying mutual fund. Details about the investment objectives, policies,
risks, costs and management of the Portfolios are found in the prospectuses for
the underlying mutual funds. You should carefully read the prospectuses for any
Portfolio in which you are interested. To assist you in determining which
Portfolios may be of interest to you, we have provided below a list of the
Portfolios, their investment objectives (in italics) and a short, summary
description of their key policies. Next to each Portfolio's investment objective
and policies is the investment management fee, other expenses, and the total
annual expense for such Portfolio. The total annual expense is the sum of the
investment management fee and other expenses. Each figure is stated as a
percentage of the Portfolio's average daily net assets. Except as noted, all
expenses shown are after any applicable reimbursement or waiver of fees. These
percentages are fees for the calendar year that ended December 31, 1998. Those
Portfolios below that are marked with an asterisk (*) have not been in operation
for a full year. Therefore, the expenses shown are estimated and annualized. The
underlying mutual fund portfolio information was provided by the underlying
mutual funds and has not been independently verified by the Company.
<TABLE>
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Invest- Other Total
INVESTMENT OBJECTIVES/POLICIES Ment Expenses Net
Manage- Annual
ment Expenses
Fee
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<S> <C> <C> <C> <C>
AST Money Market: seeks to maximize current income and maintain high levels of
CAPITAL liquidity. The Portfolio attempts to accomplish its objective by maintaining a
PRESERVATION dollar-weighted average maturity of not more than 90 days and by investing in 0.50% 0.16% 0.60%(1)
securities which have effective maturities of not more than 397 days.
---------------------------------------------------------------------------------- --------- --------- --------
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AST PIMCO Limited Maturity Bond: seeks to maximize total return, consistent with
SHORT-TERM BOND preservation of capital and prudent investment management. The Portfolio will
invest in a diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio generally will vary 0.65% 0.21% 0.86%
within a one- to three-year time frame based on the
Sub-advisor's forecast for interest rates.
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LONG-TERM AST PIMCO Total Return Bond: seeks to maximize total return consistent with
BOND preservation of capital and prudent investment management. The Portfolio will
invest in a diversified portfolio of fixed-income securities of varying 0.65% 0.18% 0.83%
maturities. The average portfolio duration of the Portfolio generally will vary
within a three- to six-year time frame based on the
Sub-advisor's forecast for interest rates.
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AST Federated High Yield: seeks high current income by investing primarily in a
diversified portfolio of fixed income securities. The Portfolio will invest at
least 65% of its assets in lower-rated corporate fixed income securities ("junk
HIGH YIELD BOND bonds"). These fixed income securities may include preferred stocks, convertible
securities, bonds, debentures, notes, equipment lease certificates and equipment 0.75% 0.20% 0.95%
trust certificates. A fund that invests primarily in lower-rated fixed income
securities will be subject to greater risk and share price fluctuation than a
typical fixed income fund, and may be subject to an amount
of risk that is comparable to or greater than many equity
funds.
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AST T. Rowe Price International Bond: seeks to provide high current income and
capital growth by investing in high-quality, non dollar-denominated government
and corporate bonds outside the United States. The Portfolio will invest at
least 65% of its assets in high-quality, non-U.S. dollar denominated government
INTERNATIONAL and corporate bonds outside the United States. The Sub-advisor bases its
BOND investment decisions on fundamental market factors, currency trends, and credit
quality. The Portfolio generally invests in countries where the combination of 0.80% 0.31% 1.11%
fixed-income returns and currency exchange rates appears attractive, or, if
the currency trend is unfavorable, where the Sub-advisor believes that the
currency risk can be minimized through hedging. The Portfolio may also invest up
to 20% of its assets in below investment-grade, high-risk bonds ("junk bonds"),
including bonds in default or those with the lowest rating.
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Invest- Other Total
INVESTMENT OBJECTIVES/POLICIES Ment Expenses Net
Manage- Annual
ment Expenses
Fee
- --------------- ------------------------------------------------------------------------------ ------------ --------- ---------
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<S> <C> <C> <C> <C>
AST T. Rowe Price Asset Allocation: seeks a high level of total return by
investing primarily in a diversified portfolio of fixed income and equity
securities. The Portfolio normally invests approximately 60% of its total
ASSET ALLOCATION assets in equity securities and 40% in fixed income securities. The 0.85% 0.24% 1.09%
Sub-advisor concentrates common stock investments in larger, more
established companies, but the Portfolio may include small and medium-sized
companies with good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade securities, high
yield or "junk" bonds, foreign high quality debt securities and cash reserves.
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AST American Century Strategic Balanced: seeks capital growth and current
income. The Sub-advisor intends to maintain approximately 60% of the Portfolio's
assets in equity securities and the remainder in bonds and other fixed income
BALANCED securities. Both the Portfolio's equity and fixed income investments will 0.85% 0.28% 1.13%
fluctuate in value. The equity securities will fluctuate depending on the
performance of the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income investments will be
affected primarily by rising or falling interest rates and the credit quality of
the issuers.
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AST AIM Balanced: seeks to provide a well-diversified portfolio of stocks and
bonds that will produce both capital growth and current income. The Portfolio
BALANCED attempts to meet its objective by investing, normally, a minimum of 30% and a
maximum of 70% of its total assets in equity securities and a minimum of 30% and 0.74% 0.26% 1.00%(2)
a maximum of 70% of its total assets in non-convertible debt securities. The
Sub-Advisor will primarily purchase equity securities for growth of capital
and debt securities for income purposes.
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AST Cohen & Steers Realty: seeks to maximize total return through investment in
real estate securities. The Portfolio pursues its investment objective by
REAL ESTATE seeking, with approximately equal emphasis, capital growth and current income.
(REIT) Under normal circumstances, the Portfolio will invest substantially all of its
assets in the equity securities of real estate companies, i.e., a company that 1.00% 0.30% 1.30%
derives at least 50% of its revenues from the ownership, construction,
financing, management or sale of real estate or that has at least 50% of its
assets in real estate. Real estate companies may include real estate investment
trusts or REITs.
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AST INVESCO Equity Income: seeks high current income while following sound
investment practices. Capital growth potential is an additional, but secondary,
EQUITY INCOME consideration in the selection of portfolio securities. The Portfolio seeks to
achieve its objective by investing in securities that will provide a relatively 0.75% 0.18% 0.93%
high yield and stable return and that, over a period of years, may also
provide capital appreciation. The Portfolio normally will invest at least
65% of its assets in dividend-paying common stocks of domestic and
foreign issuers.
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AST Bankers Trust Enhanced 500: seeks to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500(R)") through stock selection resulting
ENHANCED INDEX in different weightings of common stocks relative to the index. The Portfolio
will invest in the common stocks of companies included in the S&P 500(R). The 0.60% 0.26 0.80%(3)
majority of the issues held by the Portfolio will have neutral weightings to the
S&P 500, but approximately 100 will be over- or under-weighted relative to
the index.
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</TABLE>
<TABLE>
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Invest- Other Total
INVESTMENT OBJECTIVES/POLICIES Ment Expenses Net
Manage- Annual
ment Expenses
Fee
- --------------- ------------------------------------------------------------------------------ ------------ --------- ---------
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AST American Century Income & Growth: seeks capital growth with current income
GROWTH as a secondary objective. The Portfolio invests primarily in common stocks that
& offer potential for capital growth, and may, consistent with its investment
INCOME objectives, invest in stocks that offer potential for current income. The 0.75% 0.25% 1.00%(4)
Sub-adviser utilizes a quantitative management technique with a goal of building
an equity portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk and while
attempting to create a dividend yield that will be greater than the
S&P 500 Index.
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AST Lord Abbett Growth and Income: seeks long-term growth of capital and
GROWTH income while attempting to avoid excessive fluctuations in market value.
& The Portfolio normally will invest in common stocks (and securities
INCOME convertible into common stocks). The Sub-advisor will take a value-oriented 0.75% 0.16% 0.91%
approach, in that it will try to keep the Portfolio's assets invested in
securities that are selling at reasonable prices in relation to their value.
The stocks that the Portfolio will normally invest in are those of seasoned
companies that are expected to show above-average growth and that the
Sub-advisor believes are in sound financial condition.
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AST T. Rowe Price Natural Resources: seeks long-term capital growth primarily
through the common stocks of companies that own or develop natural resources
NATURAL (such as energy products, precious metals, and forest products) and other
RESOURCES basic commodities. The Portfolio normally invests primarily (at least 65% of 0.90% 0.26% 1.16%
its total assets) in the common stocks of natural resource companies whose
earnings and tangible assets could benefit from accelerating inflation. The
Portfolio looks for companies that have the ability to expand production, to
maintain superior exploration programs and production facilities, and the
potential to accumulate new resources.
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Invest- Other Total
INVESTMENT OBJECTIVES/POLICIES Ment Expenses Net
Manage- Annual
ment Expenses
Fee
- --------------- ------------------------------------------------------------------------------ ------------ --------- ---------
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AST JanCap Growth: seeks growth of capital in a manner consistent with
the preservation of capital. Realization of income is not a significant
GROWTH investment consideration and any income realized on the Portfolio's
investments, therefore, will be incidental to the Portfolio's objective.
The Portfolio will pursue its objective by investing primarily in common 0.90% 0.14% 1.02%(5)
stocks of companies that the Sub-advisor believes are experiencing favorable
demand for their products and services, and which operate in a favorable
competitive and regulatory environment. The Sub-advisor generally takes a
"bottom up" approach to choosing investments for the Portfolio. In other
words, the Sub-advisor seeks to identify individual companies with earnings
growth potential that may not be recognized by the market at large.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
----------------------------------------------------------------------------
AST Marsico Capital Growth: seeks capital growth. Income realization is not
an investment objective and any income realized on the Portfolio's
investments, therefore, will be incidental to the Portfolio's objective. The
GROWTH Portfolio will pursue its objective by investing primarily in common stocks
of larger, more established companies. In selecting investments for the 0.90% 0.21% 1.11%
Portfolio, the Sub-advisor uses an approach that combines "top down"
economic analysis with "bottom up" stock selection. The "top down" approach
identifies sectors, industries and companies that should benefit from the
trends the Sub-advisor has observed. The Sub-advisor then looks for individual
companies with earnings growth potential that may not be recognized by the
market at large. This is called "bottom up" stock selection.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Neuberger Berman Mid-Cap Growth: seeks capital growth. The
Portfolio primarily invests in the common stocks of mid-cap companies,
GROWTH i.e., companies with equity market capitalizations from $300 million
to $10 billion at the time of investment. The Portfolio is normally 0.90% 0.17% 1.07%(6)
managed using a growth-oriented investment approach. The Sub-advisor
looks for fast-growing companies that are in new or rapidly evolving
industries.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Neuberger Berman Mid-Cap Value: seeks capital growth. The
Portfolio primarily invests in the common stocks of mid-cap companies.
Under the Portfolio's value-oriented investment approach, the
Sub-advisor looks for well-managed companies whose stock prices are
GROWTH undervalued and that may rise in price before other investors realize 0.90% 0.15% 1.05%(7)
their worth. Factors that the Sub-advisor may use to identify these
companies include strong fundamentals, including a low
price-to-earnings ratio, consistent cash flow, and a sound track record
through all phases of the market cycle.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Oppenheimer Large-Cap Growth: seeks capital growth. The Portfolio seeks
its investment objective by emphasizing investment in common stocks
issued by established large-capitalization "growth companies" that, in the
opinion of the Sub-advisor, have above average earnings prospects
GROWTH but are selling at below normal prices. At least 65% of the Portfolio's 0.90% 0.22% 1.12%(8)
assets normally will be invested in companies that have market
capitalizations greater than $3 billion, and the Portfolio will normally
maintain a median market capitalization greater than $5 billion.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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The Alger American Fund - Growth: seeks long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least
GROWTH 65% of its total assets in equity securities of companies that, at 0.75% 0.04% 0.79%
the time of purchase, total market capitalization of $1 billion or greater.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
AGGRESSIVE The Alger American Fund - MidCap Growth: seeks long-term capital appreciation.
GROWTH Except during temporary defensive periods, the Portfolio invests at least
65% of its total assets in equity securities of companies that, at the time 0.80% 0.04% 0.84%
of purchase of the securities, have total market capitalization within the
range of companies included in the S&P MidCap 400 Index, updated quarterly.
- --------------- -------------------------------------------------------------------------------- ------------ --------- --------
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Invest- Other Total
INVESTMENT OBJECTIVES/POLICIES Ment Expenses Net
Manage- Annual
ment Expenses
Fee
- --------------- ------------------------------------------------------------------------------ ------------ --------- ---------
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AST Janus Small-Cap Growth: seeks capital growth. The Portfolio pursues its
objective by normally investing at least 65% of its total assets in the
SMALL common stocks of small-sized companies, i.e., those that have market
CAPITALIZATION capitalizations of less than $1.5 billion or annual gross revenues of less 0.90% 0.22% 1.12%(9)
than $500 million. As a Portfolio that invests primarily in smaller or
newer issuers, the Portfolio may be subject to greater risk of loss and share
price fluctuation than funds investing primarily in larger
or more established issuers.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Kemper Small-Cap Growth: seeks maximum growth of investors'
capital from a portfolio primarily of growth stocks of smaller companies.
At least 65% of the Portfolio's total assets normally will be invested in
SMALL the equity securities of smaller companies, i.e., those having a market
CAPITALIZATION capitalization of $1.5 billion or less at the time of investment, many of
which would be in the early stages of their life cycle. The Portfolio seeks 0.95% 0.60% 1.35%(10)
attractive areas for investment that arise from factors such as technological
advances, new marketing methods, and changes in the economy and population.
Because of the Portfolio's focus on the stocks of smaller growth
companies, investment in the Portfolio may involve substantially
greater than average share price fluctuation and investment risk.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Lord Abbett Small Cap Value: seeks long-term capital growth. The
Portfolio will seek its objective through investments primarily in
equity securities that are believed to be undervalued in the marketplace.
The Portfolio primarily seeks companies that are small-sized, based on the
SMALL value of their outstanding stock. Specifically, under normal circumstances, 0.95% 0.36% 1.31%
CAPITALIZATION at least 65% of the Portfolio's total assets will be invested in common
stocks issued by smaller, less well-known companies(with market
capitalizations of less than $1 billion) selected on the basis of
fundamental investment analysis. The small capitalization companies in
which the Portfolio primarily invests may offer significant appreciation
potential. However, smaller companies may carry more risk than larger companies.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST T. Rowe Price Small Company Value: seeks to provide long-term capital
growth by investing primarily in small-capitalization stocks that appear to
be undervalued. The Portfolio will normally invest at least 65% of its
total assets in stocks and equity-related securities of small companies ($1 0.90% 0.21% 1.11%
SMALL billion or less in market capitalization). Reflecting a value approach to
CAPITALIZATION investing, the Portfolio will seek the stocks of companies whose current stock
current stock prices do not appear to adequately reflect their underlying value
as measured by assets, earnings, cash flow or business franchises.Investing in
small companies involves greater risk of loss than is customarily associated
with more established companies.
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<PAGE>
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Invest- Other Total
STYLE/ INVESTMENT OBJECTIVES/POLICIES Ment Expenses Net
TYPE Manage- Annual
ment Expenses
Fee
- --------------- -------------------------------------------------------------------------------- ------------ --------- ---------
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AST American Century International Growth: seeks capital growth. The
Portfolio will seek to achieve its investment objective by investing
primarily in equity securities of international companies that the
Sub-advisor believes will increase in value over time. Under normal
INTERNATIONAL conditions, the Portfolio will invest at least 65% of its assets in
EQUITY equity securities of issuers from at least three countries outside of
the United States. The Sub-advisor uses a growth investment 1.00% 0.65% 1.65%
strategy it developed that looks for companies with earnings and
revenue growth. The Sub-advisor will consider a number of other
factors in making investment selections, including the prospects
for relative economic growth among countries or regions, economic and
political conditions, expected inflation rates, currency exchange
fluctuations and tax considerations.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Founders Passport: seeks capital growth. The Portfolio normally invests
primarily in securities issued by foreign companies that have market
capitalizations or annual revenues of $1 billion or less. These securities
INTERNATIONAL may represent companies in both established and emerging economies throughout
EQUITY the world. At least 65% of the Portfolio's total assets normally will be 1.00% 0.30% 1.30%
invested in foreign securities representing a minimum of three countries.
Foreign securities are generally considered to involve more risk than those
of U.S. companies, and securities of smaller companies are generally considered
to be riskier than those of larger companies.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST Janus Overseas Growth: seeks long-term growth of capital. The Portfolio
pursues its objective primarily through investments in common stocks of issuers
INTERNATIONAL from atleast five different countries, excluding the United States. Securities
EQUITY are generally selected without regard to any defined allocation among 1.00% 0.27% 1.27%
countries, geographic regions or industry sectors, or other similar selection
procedure.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST AIM International Equity: seeks capital growth. The Portfolio seeks
to meet its objective by investing, normally, at least 70% of its
assets in marketable equity securities of foreign companies that are
INTERNATIONAL listed on a recognized foreign securities exchange or traded in a 0.87% 0.26% 1.13%(11)
EQUITY foreign over-the-counter market. The Portfolio will normally invest in
a diversified portfolio that includes companies from at least four countries
outside the United States, emphasizing counties of Western Europe and the
Pacific Basin.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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AST T. Rowe Price International Equity: seeks total return from long-term
growth of capital and income, principally through investments in common
stocks of established, non-U.S. companies. Investments may be made solely
for capital appreciation or solely for income or any combination ofboth for
INTERNATIONAL the purpose of achieving a higher overall return. The Sub-advisor expects to 1.00% 0.25% 1.25%
EQUITY invest substantially all of the Portfolio's assets (with a minimum of 65%)
in established foreign companies. Geographic diversification will be wide,
including both developed and developing countries, and there will normally
be at least three different countries represented in the Portfolio.
- --------------- ---------------------------------------------------------------------------- ------------ --------- --------
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Montgomery Variable Series - Emerging Markets: seeks capital appreciation,
which under normal conditions it seeks by investing at least 65% of its
total assets in equity securities of companies in countries having emerging 1.25% 0.56% .75(12)
EMERGING MARKETS markets. Under normal conditions, investments are maintained in at least
six emerging market countries at all times and no more than 35% of total
assets are invested in any one emerging market country.
- --------------- ---------------------------------------------------------------------------- ------------ --------- ---------
</TABLE>
1 The Total Net Annual Expenses reflect Fee Waivers and Expense Reimbursement
of 0.06%.
2 Prior to May 3, 1999, the Investment Manager had engaged Putnam Investment
Management, Inc. as Sub-Advisor for the Portfolio (formerly the AST Putnam
Balanced portfolio).
3 The Total Net Annual Expenses reflect Fee Waivers and Expense Reimbursement
of 0.06%.
4 Prior to May 3, 1999, the Investment Manager had engaged Putnam Investment
Management, Inc. as Sub-Advisor for the Portfolio (formerly the AST Putnam
International Equity portfolio).
5 The Total Net Annual Expenses reflect Fee Waivers and Expense Reimbursement
of 0.02%.
6 Prior to May 1, 1998, the Investment Manager had engaged Berger Associates,
Inc. as Sub-advisor for the Portfolio (formerly, the Berger Capital Growth
portfolio), for a total Investment Management fee payable at the annual
rate of .75% of the average daily nets assets of the Portfolio. As of May
1, 1998, the Investment Manager engaged Neuberger Berman Management
Incorporated as Sub-advisor for the Portfolio, for a total Investment
Management fee payable at the annual rate of 0.90% of the first $1 billion
of the average daily net assets of the Portfolio plus .85% of the
Portfolio's average daily net assets in excess of $1 billion. The
Management Fee in the above chart reflects the current Investment
Management fee payable to the Investment Manager.
7 Prior to May 1, 1998, the Investment Manager had engaged Federated
Investment Counseling as Sub-advisor for the Portfolio (formerly, the
Federated Utility Income portfolio), for a total Investment Management fee
payable at the annual rate of .75% of the first $50 million of the average
daily net assets of the Portfolio, plus .60% of the Portfolio's average
daily net assets in excess of $50 million. As of May 1, 1998, the
Investment Manager engaged Neuberger Berman Management Incorporated as
Sub-advisor for the Portfolio, for a total Investment Management fee
payable at the annual rate of 0.90% of the first $1 billion of the average
daily net assets of the Portfolio plus .85% of the Portfolio's average
daily net assets in excess of $1 billion. The Management Fee in the above
chart reflects the current Investment Management fee payable to the
Investment Manager.
8 Prior to January 1, 1999, the Investment Manager had engaged Robertson,
Stephens & Company Investment Management, L.P. as Sub-advisor for the
Portfolio (formerly the Robertson Stephens Value + Growth portfolio), and
the total Investment Management fee was at the annual rate of 1.00% of the
average daily net assets of the Portfolio. As of January 1, 1998, the
Investment Manager engaged OppenheimerFunds, Inc. as Sub-advisor for the
Portfolio, and the Investment Management fee is payable at the annual rate
of 0.90% of the first $1 billion of the average daily net assets of the
Portfolio, plus .85% of the Portfolio's average daily net assets in excess
of $1 billion. The Management Fee in the above chart reflects the current
Investment Management fee payable to the Investment Manager.
9 Prior to January 1, 1999, the Investment Manager had engaged Founders Asset
Management, LLC as Sub-Advisor for the Portfolio (formerly the Founders
Capital Appreciation portfolios).
10 This portfolio commenced operations in January 1999. The Total Net Annual
Expenses reflect Fee Waivers and Expense Reimbursement of 0.20%.
11 Prior to May 3, 1999, the Investment Manager had engaged Putnam Investment
Management, Inc. as Sub-Advisor for the Portfolio (formerly the AST Putnam
International Equity portfolio).
12 The Total Net Annual Expenses reflect Fee Waivers and Expense Reimbursement
of 0.06%.
TRANSFERS AND ALLOCATION SERVICES
[43] May I transfer Account Value between investment options? You may transfer
Account Value between investment options, but there are limits, as well as
potential charges, which are discussed above in the question "How much is the
transfer fee, and when must I pay it?" We permit the agent of record to make
transfers on your behalf unless you give us other instructions.
[44] Are there any limits on transfers? No transfers are permitted when the
Policy is in its "grace period." In order to maintain Account Value in an
investment option after transferring a portion of your Account Value out of that
investment option, we reserve the right to require that there be at least
$500.00 in such investment option after the transfer. If, as a result of the
transfer, there would be less than $500.00 in an investment option, we reserve
the right to transfer the remaining Account Value pro rata to the investment
option(s) that you were transferring to. We retain the right to impose a limit
of not more than 12 transfers per Policy Year, including transfers involving
Fixed Allocations. Unless such a limit is in effect, there is no limit on the
number of transfers that only involve variable investment options, or the number
of transfers from variable investment options to make Fixed Allocations.
However, we do limit each transfer from Fixed Allocations that are to be
effective on any day other than a Policy Anniversary to the greater of 25% of
the Account Value in your Fixed Allocations or $1,000. If you make such a
transfer from your Fixed Allocations, you cannot make another such transfer
until either 90 days has passed or the next Policy Anniversary occurs. We also
retain the right to refuse or limit transfers, either for one Owner or a group
of Owners, if we believe there may be adverse consequences for other Owners.
[45] What are `allocation services'? Allocation services are programs that
automatically transfer Account Value between investment options. We may waive or
reduce the minimum amounts required for transfers noted above when your Policy
is participating in certain allocation programs, including, but not limited to,
static rebalancing programs. However, any limitations on transfers from Fixed
Allocations also apply if any allocation services are being utilized.
[46] What allocation services does American Skandia provide? We support dollar
cost averaging and static rebalancing. Dollar cost averaging allows you to
systematically transfer an amount periodically from one investment option to one
or more other investment options. With static rebalancing, you choose allocation
percentages for the Sub-accounts into which you allocate Account Value. However,
over time the performance of the variable investment options will differ,
causing your percentage allocations to shift. Periodically, we will "rebalance"
your allocations by transferring the appropriate amount from the "overweighted"
Sub-accounts to the "underweighted" Sub-accounts to return your allocations to
the percentages you request.
LOANS
[47] When can I take a loan? We offer loans using Account Value as collateral.
We do not make loans available during the first Policy Year. Starting after the
first Policy Year, we allow one loan each Policy Year. The Insured must be alive
when you take a loan (if there are two Insureds, at least one must be alive when
a loan is taken). Subject to our rules, on the Issue Date, we will establish a
loan equal to the outstanding indebtedness on previous life insurance exchanged
for a Policy.
[48] Is this type of loan tax-free? A loan from this Policy is treated for
income tax purposes as a distribution, similar to a partial withdrawal, in that:
(a) amounts are deemed to come first from any gain in the Policy; (b)
distributions of gain are subject to income tax as ordinary income; and (c) if
the distribution occurs before the taxpayer's age 59 1/2, there may be an
additional 10% tax on any gain distributed.
[49] How much is available for a loan? The maximum amount available as a loan is
equal to 90% of your current Account Value, minus any applicable contingent
deferred sales charge and contingent deferred tax charge. The minimum amount you
may borrow is $500.
[50] What happens to the Account Value if I take a loan? When you take a loan,
we transfer Account Value equal to the amount of the loan into the Loan Account.
Account Value in the Loan Account is maintained in our general account. Unless
you give us different instructions, we move Account Value from the variable
investment options and the Fixed Allocations in the same proportion as your
Account Value in the investment options on the Valuation Date we move such
Account Value.
The impact of a loan on your Account Value may be positive or negative. At the
time a loan is taken, there is no impact. However, if the interest rate credited
to Account Value in the Loan Account is greater than what would be earned in the
investment options, the loan will have a positive impact on your Account Value
and on the Required Death Benefit. If the interest rate credited to Account
Value in the Loan Account is less than what would be earned in the investment
options, the loan will have a negative impact on your Account Value and on the
Required Death Benefit.
[51] What is the interest rate charged on any loan? You owe us interest on any
loan at the rate of 6.0% per year, compounded yearly, in arrears. Each Policy
Anniversary that the loan is not repaid, we add an amount equal to any unpaid
interest to your Debt.
[52] Does Account Value in the Loan Account earn interest? We credit interest to
Account Value in the Loan Account. The amount we credit depends on whether the
loan is a "preferred" or "standard" loan, which are described below. The rates
we credit are as follows:
|X| Preferred Loans: we currently credit interest at the rate of 6.0% per year,
compounded yearly, to the Account Value maintained in the Loan Account that
serves as collateral for a "preferred loan."
|X| Standard Loans: we currently credit interest at the rate of 4.0% per year,
compounded yearly, to the Account Value maintained in the Loan Account that
serves as collateral for a "standard loan."
[53] What are a "preferred loan" and a "standard loan"? We determine what
portion of a loan is a "preferred loan" and what portion is a "standard loan" at
the time you take the loan. Whether a loan is "preferred" or "standard" depends
on the source of the collateral to support the loan. We consider the Account
Value moved to the Loan Account to come first from Growth. The portion of any
outstanding loans supported by Account Value drawn from Growth is treated as a
preferred loan. The portion of any outstanding loans supported by Account Value
drawn from other than Growth is treated as a standard loan. A loan retains its
character as "preferred" or "standard" until repaid.
[54] Once a loan is taken, does American Skandia ever require more `collateral'
in the Loan Account? The Loan Account acts as collateral for any loans from us.
We monitor the Debt and the Account Value in the Loan Account to assure that
they are equal to each other. Therefore, on each Policy Anniversary we equalize
the Debt and the Account Value in the Loan Account. If the Debt is larger due to
outstanding loan interest, we transfer Account Value equal to the difference
pro-rata from the investment options and add it to the Loan Account.
We also match up the Debt and the Loan Account when you repay any portion of the
Debt. If the Account Value in the Loan Account then exceeds the Debt, we
transfer the excess pro-rata to the investment options which you are utilizing
at that time. Any amount then allocated to the fixed option will be treated as a
separate Fixed Allocation.
[55] When must I repay the loan? You are not required to repay the loan while
the Insured is alive, except when an amount is due to keep the Policy in force
or upon reinstatement.
[55] What happens at the Insured's death if I have not repaid the loan? If there
is any outstanding Debt when Death Proceeds are due, we subtract the Debt from
the Death Benefit as part of the calculation of the Death Proceeds.
[56] What happens if I repay any portion of the loan? The amount of Debt is
reduced by the amount of any loan repayment. Any standard loan is repaid before
any preferred loan. Loan repayments reduce the amount of principal and loan
interest proportionately based on the ratio between principal and loan interest
as of the Valuation Date the loan repayment is applied. We allocate any loan
repayment to the variable investment and fixed options pro-rata based on the
Account Value in each investment option as of the Valuation Period we receive
your loan repayment. Any amount then allocated to the fixed option will be
treated as a separate Fixed Allocation.
PARTIAL WITHDRAWALS
[57] When can I make a partial withdrawal? We allow partial withdrawals while
the Insured is alive, except that, where permitted by law, you may not take a
partial withdrawal until after the end of the "free-look" period.
[58] How much is available as a partial withdrawal? The maximum partial
withdrawal available at any time equals the then current maximum amount we would
permit as a loan under your Policy. This amount is equal to 90% of your current
Account Value less any applicable contingent deferred sales charge and
contingent deferred tax charge. The minimum amount of a partial withdrawal is
$500.00.
[59] What happens to the Account Value if I take a partial withdrawal? When you
take a partial withdrawal, we reduce your Account Value by an amount equal to
the amount of the partial withdrawal. Unless you give us different instructions,
we take Account Value from the variable investment options and the Fixed
Allocations in the same proportion as your Account Value in the investment
options on the Valuation Date we take such Account Value. If you have multiple
Fixed Allocations, amounts are taken on a "last in, first out" basis. Any
Account Value in the Loan Account is not available for a partial withdrawal.
[60] Is there a charge for a partial withdrawal? We charge any applicable
contingent deferred sales charge and contingent deferred tax charge on the
portion of any partial withdrawal that is not treated as a "free withdrawal" or
for which we waive such charges under the medically-related waiver provision. We
take these charges pro-rata from the investment options from which we take the
Account Value as a result of the partial withdrawal.
[61] What amount can I take as a free withdrawal? In any Policy Year the maximum
amount you can take as a free withdrawal is the greater of Growth or 10% of the
Premium. The following examples may help show what this means. For each example,
assume that the Premium was $50,000.
(a) For this example assume the Account Value as of the Valuation Day
we process your partial withdrawal is $60,000. You request a partial withdrawal
of $25,000. Assume also that you have not requested any other partial
withdrawals during this Policy Year. The free withdrawal amount is the greater
of Growth, which is the current Account Value ($60,000) less the Premium
($50,000), or $10,000, and 10% of the Premium, which is $5,000. Therefore, we
treat $10,000 as the free withdrawal portion of this partial withdrawal.
Assuming that this partial withdrawal request occurs during the "surrender
charge period," and there is no subsequent Growth in that Policy Year, we would
assess the then applicable contingent deferred sales charge and contingent
deferred tax charge on $15,000, which is the portion of the partial withdrawal
that exceeds the free withdrawal amount. The contingent deferred sales charge
and contingent deferred tax charge would apply to the full amount of any
subsequent partial withdrawal you request during the same Policy Year that was
not eligible for a medically-related waiver.
(b) For this example assume the Account Value as of the Valuation Day
we process your partial withdrawal request for the "maximum free withdrawal
amount" is $47,000. Assume also that you have not requested any other partial
withdrawals during this Policy Year. The free withdrawal amount is the greater
of Growth, which is the current Account Value ($47,000) less the Premium
($50,000), or $3,000, and 10% of the Premium, which is $5,000. Therefore, the
maximum free withdrawal amount is $5,000. Assuming that this partial withdrawal
request occurs during the "surrender charge period," and there is no subsequent
Growth in that Policy Year, the contingent deferred sales charge and the
contingent deferred tax charge would apply to any subsequent surrender or
partial withdrawal that Policy Year that was not eligible for a
medically-related waiver.
[62] Does a partial withdrawal affect the Death Benefit? A partial withdrawal
reduces the Required Death Benefit. The Required Death Benefit is reduced
because the Account Value, which is used in calculating the Required Death
Benefit, has been reduced. It also reduces the Guaranteed Minimum Death Benefit
in the same proportion as the Account Value is reduced by the partial
withdrawal. The effect on the Guaranteed Minimum Death Benefit is described
above in response to the question "What is the Guaranteed Minimum Death
Benefit."
[63] Can I put back funds taken as a partial withdrawal? No.
SURRENDERS
[64] When can I surrender my Policy? You can surrender your Policy after the end
of the free-look period as long as the Insured is alive.
[65] What is paid out when a Policy is surrendered? If you surrender the Policy,
we will pay you the Cash Value.
ACCELERATED DEATH BENEFIT
[66] What is an accelerated death benefit? An accelerated death benefit is
pre-payment to the Owner of a portion of the Death Proceeds. The maximum we will
pay, before any reductions, is the lesser of 50% of the Required Death Benefit
or $250,000. The actual amount is reduced by a 12-month interest rate discount
(currently 6.0%) and a pro-rata portion of any Debt. We reserve the right to
change the interest rate discount percentage.
[67] When will American Skandia make such a payment? We will make such a payment
one time, where allowed by law, based on the Owner's request. The Insured may
not request such a payment unless the Insured is also the Owner. We only make
the payment if we receive all our requirements. Our requirements include, but
are not limited to, proof satisfactory to us In Writing that the Insured (the
last surviving Insured if there are two Insureds) became terminally ill, as
defined in your Policy: (a) at least 30 days after the Issue Date; or (b) as a
result of an accident that occurred after the Issue Date. To the extent
permitted by law, we will change our procedures in relation to this benefit or
the definition of terminally ill or any other applicable term in order to
maintain the tax-free status of any amounts paid out under this provision.
[68] What happens to the remaining benefits if American Skandia makes such a
payment? Any such payment reduces the Account Value, the Premium, the Guaranteed
Minimum Death Benefit and any Debt in the same ratio as the Required Death
Benefit is reduced as of the Valuation Period such a payment is made. You should
consult a tax advisor on the tax consequences of such a payment. Please refer to
Appendix B for a hypothetical illustration of the accelerated death benefit
provision.
MEDICALLY-RELATED WAIVER
[69] What is a medically-related waiver? A medically-related waiver is a waiver
of the contingent deferred sales charge and the contingent deferred tax charge
that would otherwise apply to a partial withdrawal or surrender. Note that while
the accelerated death benefit is payable to the Insured, the medically-related
waiver is a benefit, while based on the Insured's life, that is of value to the
Owner, who normally is the recipient of amounts paid as a partial withdrawal or
surrender. A medically-related waiver is available by rider to the Policy
currently with no charge to you.
[70] When would American Skandia waive these charges? We will waive the
contingent deferred sales charge and contingent deferred tax charge, where
allowed by law, if you provide us with all of our requirements. Our requirements
include, but are not limited to proof satisfactory to us In Writing that the
Insured (the last surviving Insured if there is more than one Insured) has
continuously been confined to a long term care facility, such as a nursing home
or a hospital, as defined in the rider, and that such confinement started after
the Issue Date.
[71] Are there any restrictions on medically-related waivers? We will only
consider providing this benefit on amounts up to $500,000. The $500,000 maximum
will apply regardless of when taken, on any life insurance policy or annuity
contract issued by American Skandia where the Insured under this Policy is named
as the Insured, Owner or Annuitant under the other policy or contract.
[72] What happens to the remaining benefits if American Skandia makes such a
payment in connection with a partial withdrawal? A partial withdrawal for which
we grant a medically-related waiver has the same impact on the remaining
benefits that results from any other partial withdrawal. We simply do not deduct
the contingent deferred sales charge and contingent deferred tax charge that
otherwise would apply.
RISKS
[73] What are the risks, and who takes the risks? We bear the risk that, for all
the Policies we issue, when considered together, our expenses exceed our
charges, including the expense of providing the difference at death between the
Account Value and the Death Benefit. We also bear the investment and
reinvestment risk in providing interest crediting guarantees to Fixed
Allocations and to the Loan Account, as well as for any settlement options that
assume a fixed rate of return. We also bear the risk in guaranteeing the
Guaranteed Minimum Death Benefit if your Policy lapses and you do not have any
Debt. You bear the investment risk when allocating Account Value to any variable
investment option, since that will affect the amount available for any loans,
partial withdrawals or surrender. Any irrevocable beneficiary bears the risk as
to the Death Proceeds, which are affected by investment performance of the
investment options, the age at which the Insured dies, any loan or withdrawal
activity by the Owner prior to the Insured's death or payment of an accelerated
death benefit.
OTHER RIGHTS
[74] Do I have any other rights if I buy a Policy? There are certain other
ownership rights you may exercise under a Policy. You may name one or more
Beneficiaries. You may make that designation "irrevocable," which means it
cannot be changed. If you do not designate the Beneficiary as irrevocable, you
retain the right to change the Beneficiary before the Insured dies. However, all
Beneficiary designations are subject to our acceptance, to the extent permitted
by law. You also may transfer, pledge or assign your Policy, which may trigger a
currently taxable event. You should only transfer, pledge or assign your Policy
after consulting with a competent tax advisor. You may exercise voting rights in
relation to the applicable Portfolios. Some of these rights may be limited
depending on the usage of your Policy, especially if we permit it to be held in
connection with certain retirement plans designed to be "qualified" plans under
the Code.
THE SEPARATE ACCOUNT
[75] What supports American Skandia's obligation to me if I buy a Policy? The
benefits provided by the Policy are our obligations. The assets supporting our
obligations equaling the Account Value allocated to the variable investment
options are held in our Separate Account F. We maintain assets in our general
account to support our obligations: (1) equal to the Account Value allocated to
the fixed option; (2) equal to the Account Value in the Loan Account; (3) for
the portion of the Death Proceeds greater than the Account Value; (4) for any
settlement option; and (5) for any other obligation we may have in relation to a
Policy.
The Separate Account was established under the laws of Connecticut. Assets in
the Separate Account may support obligations created in relation to the Policies
described in this Prospectus or other policies we offer. We are the legal owner
of the assets in the Separate Account. Income, gains and losses, whether or not
realized, are credited or charged to the Separate Account according to the terms
of the Policies and any other policies supported by the assets in the Separate
Account without regard to our other income, gains or losses or to the income,
gains or losses in any other of our separate accounts. We will maintain assets
in the Separate Account with a total market value at least equal to the reserves
and other liabilities we must maintain in relation to the life insurance
policies supported by such assets. These assets may only be charged with
liabilities that arise from such life insurance policies.
Separate Account F is registered with the U.S. Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940 as a unit
investment trust, which is a type of investment company. This does not involve
any supervision by the SEC of the investment policies, management or practices
of the Separate Account or of us. The Separate Account meets the definition of
"separate account" under the federal securities law.
The only Sub-accounts available to you are those offered in this Prospectus.
These Sub-accounts are available as investment options for other policies we
offer. Sub-accounts are permitted to invest in Portfolios we consider suitable.
The Portfolios in which the Sub-accounts invest are available to Sub-accounts of
other separate accounts, including separate accounts we use in relation to a
number of variable annuities. Separate accounts of other insurers and of various
qualified retirement plans may also invest in the Portfolios.
TAXES
[76] What are the taxes connected to the Policy? Federal and state tax laws, as
well as the interpretations of those laws, change. In addition, we do not know
your particular circumstances, which is one of a number of reasons we cannot
give you tax advice. You should consult a professional tax advisor for tax
advice for your particular situation. You should also be sure to read the
"Additional Tax Considerations" section appearing later in this Prospectus,
which includes, but is not limited to, information regarding estate and gift
taxes. What we do provide are some brief summary answers to the following
questions about Federal income taxes.
[77] Is gain in the Policy taxed every year? Under most circumstances, any gain
in the Policy is not taxed currently. However, if you assign or pledge the
Policy, we expect to report any gain in the Policy as then currently taxable as
ordinary income. In addition, except in the case of a partial assignment as of
the Policy Date, we expect to report gain in the Policy as currently taxable in
each tax year the assignment remains in effect.
[78] How are amounts that I receive before the Insured's death taxed? Amounts
you receive as a partial withdrawal, a loan or if you surrender the Policy are
deemed for income tax purposes to come first from any gain in the Policy. Any
gain is taxed as ordinary income. Any portion of these types of distributions
representing gain in the Policy may be subject to a 10% tax penalty if taken
before your age 59 1/2.
[79] Will my Beneficiary pay taxes on the Death Proceeds? Under most
circumstances, the Beneficiary does not pay any income tax on the Death
Proceeds.
AVAILABLE INFORMATION
[80] How can I find out more about this offer? You first should review the rest
of this Prospectus for additional information. This Prospectus is part of the
registration statement we filed with the Securities and Exchange Commission
regarding this offering. Additional information on American Skandia and this
offering is available in that registration statement and accompanying exhibits.
You may obtain copies of these materials at the prescribed rates from the SEC's
Public Reference Section, 450 Fifth Street N.W., Washington, D.C., 20549. You
may inspect and copy the registration statement and the accompanying exhibits at
the SEC's public reference facilities at the above address, Room 1024, and at
the SEC's Regional Offices, 7 World Trade Center, New York, NY, and the Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, IL. These
documents, as well as documents incorporated by reference, may also be obtained
through the SEC's Internet Website (http://www.sec.gov) for this registration
statement as well as for other registrants that file electronically with the
SEC.
MISCELLANEOUS PROVISIONS AND ADDITIONAL DETAILS
The following sections provide additional information you should consider before
purchasing a Policy.
PROVIDING SERVICES TO YOU
You can reach us by telephone at 1-888-554-3348 or through our Internet Website
at http://www.americanskandia.com. We may require that you provide us with
proper identification before we release information about your Policy or accept
instructions received over the phone, the Internet or via any other electronic
means. We may require that you provide your Social Security or tax
identification number. We also may require you to present the personal
identification number ("PIN") we provide you after we issue a Policy. To the
extent permitted by law or regulation, neither we nor any person authorized by
us will be responsible for any claim, loss, liability or expense in connection
with a transaction, including but not limited to a transfer between investment
options, over the phone, the Internet or via any other electronic means.
However, this will only be the case if we or such authorized person acted: (a)
in good faith reliance that you authorized the transaction; and (b) on
reasonable procedures to identify you or your designee though a number of
verification methods. These methods may include recording phone conversations,
requesting Social Security or tax identification numbers, PINs, confirming
electronic mail addresses, or similar means. We may be liable for losses due to
unauthorized or fraudulent instructions should we not follow such reasonable
procedures.
We may require that you submit forms In Writing for certain transactions. We
require the written consent of all joint Owners for any transaction for which we
require the Owner's written consent.
DESIGNATIONS
Certain designations apply to a Policy - the Owner, the Insured and the
Beneficiary. All designations are subject to our rules and our acceptance. We
assume all designations, other than the Insured, are revocable unless you tell
us otherwise. You should consult with a competent tax advisor on the income tax,
estate and inheritance tax implications of various designations. You should also
consult with a competent legal advisor as to the implications of certain
designations in relation to an estate, bankruptcy and community property, where
applicable, as well as other matters.
We assume the Insured(s) is/are the Owner(s) unless you tell us otherwise. If
you name more than one Owner, all rights reserved to Owners are then held as
joint tenants with rights of survivorship unless you provide alternative
instructions. Naming someone to be the Owner other than the payor of the Premium
may have gift, estate or other tax implications.
We assume the Beneficiary is you or your estate unless you tell us otherwise.
You may name more than one primary and more than one contingent Beneficiary.
NET INVESTMENT FACTOR
For each Sub-account the initial Unit Price was $10.00. The Unit Price for each
subsequent Valuation Period is the net investment factor for that Valuation
Period, multiplied by the Unit Price for the immediately preceding Valuation
Period. The net investment factor is (1) divided by (2), less (3), where:
(1) is the net result of:
(a) the net asset value per share of the underlying
Portfolio at the end of the current Valuation Period
plus the per share amount of any dividend or capital
gain distribution declared and unpaid (accrued) by
the Portfolio; plus or minus
(b) any per share charge or credit during the Valuation
Period as a provision for taxes attributable to the
operation or maintenance of that Sub-account.
(2) is the net result of:
(a) the net asset value per share of the underlying
Portfolio at the end of the preceding Valuation
Period plus the per share amount of any dividend or
capital gain distribution declared and unpaid
(accrued) by the Portfolio; plus or minus
(b) any per share charge or credit during the preceding
Valuation Period as a provision for taxes
attributable to the operation or maintenance of the
Sub-account.
(3) is the mortality and expense risk charges and the administration charge.
ALLOCATION PROGRAMS
We may provide administrative support for various programs that automatically
transfer Account Value between certain investment options at scheduled times.
These include dollar cost averaging and static rebalancing (periodic rebalancing
of Account Values between investment options to conform to preset percentages).
However, we only offer to support such allocation programs according to our
rules. While we are offering to support these programs as of the date of this
Prospectus, we do not guarantee to support these programs at all times.
We may also provide administrative support for various allocation programs that
may be made available by your financial professional. These may include various
asset allocation and market timing programs. In connection with such programs,
we may support periodic withdrawals from your Policy to pay your financial
professional. We only offer to support such programs according to our rules.
These rules may include, but are not limited to, receipt of your authorization
In Writing permitting a financial professional to make transfers between
investment options on your behalf, or to enroll your Policy in one of the
allocation programs for which we provide administrative support. We permit the
agent of record to make transfers on your behalf unless you give us other
instructions.
Any financial professional you authorize may or may not be appointed by us as
our agent for the sale of Policies. However, we do not engage any agent of
record or any third parties to offer investment allocation services of any type,
so that persons or firms offering such services do so independent from any
agency relationship they may have with us for the sale of Policies. We therefore
take no responsibility for the investment allocations and transfers transacted
on your behalf by such third parties, in accordance with any allocation programs
employed by such third parties or any investment allocation recommendations made
by such third parties. While we offer support for a number of these programs as
of the date of this Prospectus, we do not support all such programs and do not
guarantee to always continue support for those programs we currently support or
may support in the future. We do not charge you for the administrative support
we provide to these third parties.
LIMITATIONS ON TRANSFERS
We retain the right to refuse transfers, either for one Owner or a group of
Owners, if we believe that: (a) excessive trading or a specific transfer request
or group of transfer requests may have a detrimental effect on Unit Prices or
the share prices of the Portfolios; or (b) we are informed by one or more of the
Portfolios that the purchase or redemption of shares is to be restricted because
of excessive trading or a specific transfer or group of transfers is deemed to
have a detrimental effect on the share prices of affected Portfolios. Without
limiting the above, the most likely scenario where either of the above could
occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. Under
such a circumstance, we will process transfers according to our rules then in
effect and provide notice if your transfer request was denied. If a transfer
request is denied, a new transfer request may be required.
DEATH DURING THE GRACE PERIOD
We deduct the unpaid charges from the Death Benefit when calculating the Death
Proceeds, if the Insured dies during a grace period. For more information on the
grace period, please refer to the response to the question "Do I have to
maintain a minimum Cash Value?"
REINSTATEMENT
You may apply for reinstatement of the Policy if it lapses. We must receive this
application In Writing at our Office within 3 years of the date the lapse
occurred as measured from the end of the grace period. We may require evidence
of insurability satisfactory to us. In order to reinstate your Policy, you also
must pay us a reinstatement amount, including any applicable charges and any
Debt.
MATURITY
A Policy "matures" as of the Policy Anniversary on which the Insured is Age 95.
If there are two Insureds, a Policy "matures" as of the Policy Anniversary on
which the younger Insured is Age 95 or would have been Age 95 if the younger
Insured is then deceased. We will pay out the Cash Value once the Policy
matures. The Policy will then end, and we will not have any more obligations
under the Policy. We may provide a rider, where permitted by law, that allows
the Policy to mature at a later date if there is adequate guidance available to
us regarding the tax treatment of all Policies if we were to permit extension of
the maturity date. Should we permit such extension of the maturity, we advise
you to seek tax advice regarding your specific circumstances should you want the
Policy to mature at a later date. If the Policy is no longer treated as life
insurance after any extension of maturity, gain in the Policy may be taxable to
you in the year of the original maturity and all or a portion of the Death
Proceeds may be taxable to the beneficiary.
PRICING TRANSACTIONS
We "price" charges, transfers, distributions and payments on the date indicated
below. If such transactions are scheduled to occur on other than a Valuation
Day, we price such transactions as of the following Valuation Period:
|X| "Scheduled" transactions such as monthly deductions, transfers and
distributions are "priced" according to the Unit Price next computed after
the date such transactions are scheduled to occur. However, if a
transaction is "scheduled" to occur on a day other than a Valuation Day,
such transaction will be processed and priced on the next Valuation Day
following the scheduled transaction. "Scheduled" transactions include, but
are not limited to, all charges deducted on a Monthly Processing Date,
equalization of Debt and the Account Value in the Loan Account on a Policy
Anniversary, transfers under a dollar cost averaging program or transfers
previously scheduled with us at our Office as part of any rebalancing,
asset allocation or similar program, or any program of scheduled
distributions.
|X| "Unscheduled" transactions such as transfers, loans or partial withdrawals
that are not subject to any medical waiver are "priced" according to the
Unit Price next computed after we receive the request for such transactions
at our Office. "Unscheduled" transfers include any transfers processed in
conjunction with any market timing program, or transfers not previously
scheduled with us at our Office pursuant to any rebalancing, asset
allocation or similar program which you employ or you authorize to be
employed on your behalf. "Unscheduled" transfers received pursuant to an
authorization to accept transfer instructions using voice or data
transmission over the phone are priced as of the Valuation Period we
receive the request at our Office for such transactions. We price
unscheduled payments sent to us as of the date we receive such amounts at
our Office. These include loan repayments, payments to keep a Policy in
effect during a grace period or a reinstatement payment.
|X| We price surrenders, withdrawals subject to a medical waiver, accelerated
death benefit payments and payment of Death Proceeds as of the date we
receive at our Office all materials we require for such transactions and
such materials are satisfactory to us.
DELAYING TRANSACTIONS
We may defer any distribution or transfer from a Fixed Allocation or any payment
under a fixed settlement option for a period not to exceed the lesser of six (6)
months or the period permitted by law. If we defer a distribution or transfer
from any Fixed Allocation or any payment under a settlement option for more than
thirty days, or less where required by law, we pay interest at the minimum rate
required by law but not less than 3% per year on the amount deferred. We may
defer payment of proceeds of any distribution from any Sub-account or any
transfer from a Sub-account for a period not to exceed seven (7) calendar days
from the date the transaction is effected. This is a delay in payment only, and
is not a delay in the pricing of any such distribution or transfer. Any deferral
period begins on the date such distribution or transfer would otherwise have
been transacted.
All procedures, including distributions, based on the valuation of the
Sub-accounts may be postponed during the period: (1) the New York Stock Exchange
is closed (other than customary holidays or weekends) or trading on the New York
Stock Exchange is restricted as determined by the SEC; (2) the SEC permits
postponement and so orders; or (3) the SEC determines that an emergency exists
making valuation or disposal of securities not reasonably practical.
VOTING
You have voting rights in relation to Account Value maintained in the
Sub-accounts. You do not have voting rights in relation to Account Value
maintained in any Fixed Allocations, in the Loan Account or in relation to fixed
payments under a settlement option.
We will vote shares of the Portfolios in which the Sub-accounts invest in the
manner directed by Owners, unless we, in our sole discretion, determine that we
are required by law or regulation to vote otherwise. Owners have voting rights
equal to the number of shares represented by the Sub-account Units attributable
to their Policy.
We will vote the shares attributable to assets held in the Sub-accounts solely
for us rather than on behalf of Owners, or any share as to which we have not
received instructions, in the same manner and proportion as the shares for which
we have received instructions. We will do so separately for each Sub-account
from various classes that may invest in the same underlying mutual fund
portfolio.
The number of votes for a Portfolio will be determined as of the record date for
such Portfolio as chosen by its board of trustees or board of directors, as
applicable. We will furnish Owners with proper forms and proxies to enable them
to instruct us how to vote.
You may instruct us how to vote on the following matters: (a) changes to the
board of trustees or board of directors, as applicable; (b) changing the
independent accountant; (c) approval of changes to the investment advisory
agreement or adoption of a new investment advisory agreement; (d) any change in
the fundamental investment policy; and (e) any other matter requiring a vote of
the shareholders.
With respect to approval of changes to the investment advisory agreement,
approval of a new investment advisory agreement or any change in fundamental
investment policy, only Owners maintaining Account Value as of the record date
in a Sub-account investing in the applicable Portfolio will instruct us how to
vote on the matter, pursuant to the requirements of Rule 18f-2 under the
Investment Company Act of 1940.
TRANSFERS, ASSIGNMENTS, PLEDGES
Generally, your rights in a Policy may be transferred, assigned or pledged at
any time. These transactions may be subject to income taxes and certain penalty
taxes. You may transfer, assign or pledge your rights to another person at any
time, prior to the death upon which the Death Benefit is payable. You must
request a transfer or provide us a copy of the assignment In Writing. A transfer
or assignment is subject to our acceptance. We will not be deemed to know of or
be obligated under any assignment prior to our receipt and acceptance thereof.
We assume no responsibility for the validity or sufficiency of any assignment.
REPORTS
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at http://www.americanskandia.com
or any other electronic means. We send a confirmation statement to you each time
an unscheduled transaction is made affecting Account Value. Such transactions
will generally include changes in investment allocation or transfers among
investment options, loans and loan repayments, partial surrenders or
withdrawals, and any charges associated with such unscheduled transactions. We
also send quarterly statements detailing the activity affecting your Policy
during the prior quarter, including all scheduled and unscheduled transactions.
To the extent permitted by law, some types of scheduled transactions will only
be confirmed on a quarterly basis. Such transactions will generally include
those pre-authorized charges deducted on the Monthly Processing Date. You may
request additional reports. We reserve the right to charge up to $50 for each
such additional report. You should review the information in these statements
carefully. You must report all errors or corrections to us at our Office
immediately to assure proper crediting to your Policy. For transactions that are
confirmed immediately, we assume all transactions are accurate unless you notify
us otherwise within 10 days after the date of the transaction. For transactions
that are only confirmed on the quarterly statement, we assume all transactions
are accurate unless you notify us within 10 days of the end of the calendar
quarter. We may also send you or make available electronically through our
Internet Website an annual report and a semi-annual report containing financial
statements for the applicable Sub-accounts, as of December 31 and June 30,
respectively.
INCONTESTABILITY
We may not contest the validity of a Policy after it has been in effect during
the Insured's lifetime for two years from the Issue Date. If there are two
Insureds, this applies to the lifetime of either Insured. If the Policy is
reinstated, to the extent permitted by law, we may not contest the validity of a
Policy after it has been in effect for two years from the date of the
reinstatement.
SUICIDE
If an Insured commits suicide within two years of the Issue Date (or whatever
maximum period is permitted under law) or the date of a reinstatement if allowed
by law, the Death Benefit will be the greater of: (a) Premium paid less any
outstanding Debt and any partial withdrawals; or (b) the Cash Value. All other
requirements as to calculation and payment of Death Proceeds will apply.
MISSTATEMENT
We will adjust the amount of the Death Proceeds to conform to the facts if the
age or gender of an Insured is incorrectly stated. We will do so as specified in
the Policy and as permitted by law.
BACKDATING
Depending on your Age at the time you apply for a Policy, it may be advantageous
to have the Policy Date be earlier than the Issue Date. This is known as
"backdating." Doing so may enable you to qualify for lower cost of insurance
charges. We only permit backdating if: (a) doing so will qualify you for a lower
cost of insurance charge; and (b) the Policy Date is the no earlier than the
date the Application is signed and in no case more than 90 days before the Issue
Date. If you elect backdating, on the Issue Date we will deduct charges that
would have been deducted as of the Policy Date and any Monthly Processing Dates
between the Policy Date and the Issue Date. To the extent permitted by law, we
do not guarantee any increase in the Account Value for the period between the
Policy Date and the Issue Date. However, we also reserve the right, to the
extent permitted by law, to credit you a fixed rate of interest for such period.
POLICY LOANS ON EXCHANGES
Subject to our rules, we will establish a loan on a Policy that you purchase as
part of an exchange that is not subject to current taxation in accordance with
Section 1035 of the Code. The amount of the loan will be equal to the loan that
was in effect before you surrendered your prior policy. Under our rules we will,
among other things, increase the Account Value as of the Policy Date by the
amount of the loan and allocate that portion of the increased Account Value to
the Loan Account as collateral for the loan. By increasing the Account Value,
there will be a corresponding increase in the Face Amount and the Required Death
Benefit. In addition, for purposes of determining the Guaranteed Minimum Death
Benefit, we will deem the "Premium" to be the amounts paid plus the loan amount
as of the Policy Date. Any contingent deferred sales charge and contingent
deferred tax charge will be based on the actual amounts received, not such
amounts plus the amount of the loan. All charges that are calculated as a
percentage of your Account Value will increase because the Account Value will be
increased by the amount of the loan.
RESOLVING MATERIAL CONFLICTS
The Portfolios may be available to registered separate accounts offering either
or both life and annuity contracts of insurance companies not affiliated with
us. We also may offer life insurance policies and/or annuity contracts that
offer different variable investment options from those offered under this
Policy, but which invest in the same Portfolios. It is possible that differences
might arise between our Separate Account F and one or more accounts of other
insurance companies which offer a Portfolio as a Sub-account. It is also
possible that differences might arise between a Sub-account offered under this
Policy and variable investment options offered under different life insurance
policies or annuities we offer, even though such different variable investment
options invest in the same Portfolio. In some cases, it is possible that the
differences could be considered "material conflicts." Such a "material conflict"
could also arise due to changes in the law (such as state insurance law or
Federal tax law) which affect either these different life and annuity separate
accounts or differing life insurance policies and annuities. It could also arise
by reason of differences in voting instructions of persons with voting rights
under our policies and/or annuities and those of other companies, persons with
voting rights under annuities and those with rights under life policies, or
persons with voting rights under one of our life policies or annuities with
those under other life policies or annuities we offer. It could also arise for
other reasons. We will monitor events so we can identify how to respond to such
conflicts. If such a conflict occurs, we will take the necessary action to
protect persons with voting rights under our life policies or annuities
vis-a-vis those with rights under life policies or annuities offered by other
insurance companies. We will also take the necessary action to treat equitably
persons with voting rights under this Policy and any persons with voting rights
under any other life policy or annuity we offer.
MODIFICATION OF THE SEPARATE ACCOUNT
We reserve the right to do any or all of the following: (a) combine any
Sub-account(s) with any other Sub-account(s); (b) combine Separate Account F or
a portion thereof with other separate accounts; (c) deregister Separate Account
F under the Investment Company Act of 1940; (d) operate Separate Account F as a
management investment company under the Investment Company Act of 1940 or in any
other form permitted by law; (e) make changes required by any change in the
Securities Act of 1933, the Securities Exchange Act of 1934 or the Investment
Company Act of 1940; (f) make changes that are necessary to maintain the tax
status of your Policy under the Code; and (g) make changes required by any
change in other Federal or state laws relating to life insurance policies in
general or variable life insurance policies in particular.
We also may make additional Sub-accounts available to you from time to time.
These Sub-accounts will invest in Portfolios we believe to be suitable for the
Policy. We may or may not make a new Sub-account available to invest in any new
portfolio of one of the current underlying mutual funds should such a portfolio
be made available to Separate Account F.
We may eliminate Sub-accounts, combine two or more Sub-accounts or substitute
one or more new underlying mutual funds or portfolios for the one in which a
Sub-account is invested. Substitutions may be necessary if we believe a
Portfolio no longer suits the purpose of the Policy. This may happen due to a
change in laws or regulations, or a change in the investment objectives or
restrictions of a Portfolio, or because the Portfolio is no longer available for
investment, or for some other reason. We would obtain prior approval from the
insurance department of our state of domicile, if so required by law, before
making such a substitution, combination, deletion or addition. We also would
obtain prior approval from the SEC so long as required by law, and any other
required approvals before making such a substitution, combination, deletion or
addition.
ENTIRE CONTRACT
For any Policy issued, the entire contract between you and us includes the
Policy form and any of the following which may be attached to the Policy: riders
or endorsements, the copy of any Application and endorsements. All statements
made in any Application are deemed to be representations and not warranties. No
statement is used to void a Policy or defend a claim unless it is contained in
any Application attached to the Policy.
Only our President, one of our Vice Presidents or our Secretary may change or
waive any provisions of a Policy. Any change or waiver must be In Writing. To
the extent permitted by law, we are not bound by any promises or representations
made by or to any other person.
ADDITIONAL TAX CONSIDERATIONS
The following is a brief summary of certain Federal tax laws as they are
currently interpreted. No one can be certain that the laws or interpretations
will remain unchanged or that agencies or courts will always agree as to how the
tax law or regulations are to be interpreted. This discussion is not intended as
tax advice. You may wish to consult a professional tax advisor for tax advice as
to your particular situation.
Our taxation: We are taxed as a life insurance company under Part I, subchapter
L, of the Code.
Treatment as a "modified endowment contract": Under most circumstances, taxes on
any gain in the Policy are `deferred' and not taxed every year. Unless your
Policy is established as part of an eligible exchange of a life insurance policy
entered into before June 21, 1988, amounts you receive as a partial withdrawal,
a loan or as a surrender are taxed in the same manner as distributions from a
deferred annuity before annuity payments begin. This means that these types of
distributions are deemed to come first from any gain in the policy and that any
gain is treated as ordinary income. It also means that distributions of gain may
be subject to a 10% tax penalty if taken before age 59 1/2. Under most
circumstances, the Beneficiary will not pay any income tax on the Death
Proceeds.
Assignment: If you assign or pledge any portion of the Policy, the transaction
is treated as a distribution subject to taxation as ordinary income. The tax
penalty noted above may apply. In addition, except in the case of a partial
assignment as of the Policy Date, we expect to report gain in the Policy as
currently taxable in each tax year the assignment remains in effect.
Gifts: If you give your Policy as a gift to an entity for which you are not the
taxpayer or to anyone other than your spouse (or former spouse incident to a
divorce), the gift is treated for tax purposes as a distribution.
Aggregation rules: You may purchase more than one life insurance policy from us
in the same calendar year that is treated under the Code as a "modified
endowment contract," including the Policy described in this Prospectus. If you
do, all such policies are subject to "aggregation rules." Under these rules, all
of these policies must be treated as one modified endowment contract when
determining the portion of any distribution or deemed distribution which is
currently taxable. It is also possible that these aggregation rules may apply to
any annuity contracts you purchase from us in the same calendar year as you
purchase a Policy.
Exchanges: Section 1035 of the Code permits certain income tax-free exchanges of
life insurance policies. You must comply with various requirements for such
exchanges to be treated as tax-free, which include, but are not limited to: (a)
the need for the insured to be the same individual or individuals before and
after the exchange; (b) the need for the owner(s) to be the same before and
after the exchange; and (c) the need to have the Debt on a Policy as of the date
all premium is received equal to any outstanding indebtedness on the life
insurance exchanged for the Policy. If you exchange a life insurance policy
considered entered into before June 21, 1988 and which is not a modified
endowment contract, we believe the new policy generally will not be treated as a
modified endowment contract if no additional premium is paid. For those Policies
not treated as modified endowment contracts, we believe that loans are not
treated as distributions and withdrawals are deemed to come first from your
investment in the policy. In addition, we believe that the aggregation rules as
well as the tax treatment of assignments, pledges and gifts, noted above, would
not apply. However, we cannot guarantee this tax treatment and advise you to
consult your tax advisor before exchanging any existing life insurance policy.
Transfers between investment options: Transfers between investment options are
not subject to taxation. The Treasury Department may promulgate guidelines under
which a variable life insurance policy will not be treated as life insurance for
tax purposes if persons with ownership rights have excessive control over the
investments underlying such a policy. Such guidelines may or may not address the
number of investment options or the number of transfers between investment
options offered. It is not known whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also not known what effect, if
any, such guidelines may have on transfers between the investment options of the
Policy offered pursuant to this Prospectus. We will take any action, including
modifications to your Policy or the Sub-accounts, required to comply with such
guidelines if promulgated.
Generation skipping transfers: Under the Code certain taxes may be due when all
or part of a life insurance policy is transferred to or a death benefit is paid
to an individual two or more generations younger than the policy holder. These
generation-skipping transfers generally include those subject to federal estate
or gift tax rules. There is an aggregate $1 million exemption from tax on all
such transfers. We may be required to determine whether a transaction is a
direct skip as defined in the Code and the amount of the resulting tax. We will
deduct from your Policy or from any applicable payment treated as a direct skip
any amount of tax we are required to pay. You should consult with competent tax
counsel for more information on generation skipping transfers.
Diversification: Section 817(h) of the Code provides that a variable life
insurance policy, in order to qualify as life insurance, must have an
"adequately diversified" segregated asset account (including investments in a
mutual fund by the segregated asset account of insurance companies). The
Treasury Department's regulations prescribe the diversification requirements for
variable life insurance policy. We believe the underlying mutual fund portfolios
should comply with the terms of these regulations.
Withholding: Section 3405 of the Code provides for Federal income tax
withholding on the portion of a distribution which is includible in the gross
income of the recipient. Amounts to be withheld depend upon the nature of the
distribution. However, under most circumstances a recipient may elect not to
have income taxes withheld or have income taxes withheld at a different rate by
filing a completed election form with us. A withholding form may be required.
Accelerated Death Benefits: Payments of amounts that otherwise would be payable
to the Beneficiary as a result of an Insured's death can qualify for the same
tax-free treatment as death benefits if certain requirements are met. These
include requirements regarding the terminal illness of the Insured. We believe
payments under the provisions of the accelerated death benefit of the Policy
will meet the requirements of the Code and the regulations in order to qualify
as tax-free payments. A qualified tax advisor should be consulted as to any
federal gift and estate tax consequences of an Owner's exercise of the
Accelerated Death Benefit provision and payment of the proceeds under this
provision to the Insured or other parties.
Extending the Policy's Maturity: We believe that a Policy will continue to be
treated as life insurance and as a modified endowment contract under the Code if
you extend the Policy's maturity under any extended maturity rider we may offer
in the future. However, this tax treatment is not certain, so you should consult
your tax advisor before taking this step. If the Policy is not treated as life
insurance after any extension of maturity, gain in the Policy may no longer be
taxed deferred, and all or a portion of the Death Proceeds may be taxable to the
Beneficiary.
Survivorship Policies: The Code does not directly address how certain features
of a policy paying on the death of a surviving insured should be treated. We
believe such a Policy should be treated as other life insurance policies, but
there is some uncertainty as to whether that is the case. If the surviving
Insured is an Owner, the Death Proceeds payable as a result of the death of the
last surviving Insured generally will be treated as part of the Owner's estate
for purposes of the Federal estate tax. If the surviving Insured was not an
Owner, the replacement cost of the Policy would be included in the estate of the
Owner upon his or her death and Death Proceeds payable as a result of the death
of the surviving Insured are includible in the person's estate if the proceeds
are payable to or for the benefit of that person's estate or if the surviving
Insured held incidents of ownership in the Policy within three years prior to
death.
Other Taxes: Amounts received or deemed received from a Policy that may be
subject to Federal income tax also may be subject to state income taxes. The
fair market value of a Policy or the Death Proceeds may be included under
certain circumstances in an estate for purposes of state inheritance taxes or
Federal estate taxes. Federal estate and gift taxes are integrated for various
purposes. An unlimited marital deduction may apply for purposes of Federal
estate and gift taxes, which would allow deferral of taxes until the death of
the surviving spouse.
SAFEKEEPING OF THE ASSETS
We maintain the assets of the Separate Account and those in our general account.
The assets of the Separate Account are segregated from those in our general
account.
REGULATION
We are organized as a Connecticut stock life insurance company, and are subject
to Connecticut law governing insurance companies. We are regulated and
supervised by the Connecticut Commissioner of Insurance. By March 1 of every
year, we must prepare and file an annual statement, in a form prescribed by the
Connecticut Insurance Department, which covers our operations for the preceding
calendar year, and must prepare and file our statement of financial condition as
of December 31 of such year. The Commissioner and his or her agents have the
right at all times to review or examine our books and assets. A full examination
of our operations will be conducted periodically according to the rules and
practices of the National Association of Insurance Commissioners ("NAIC"). We
are subject to the insurance laws and various Federal and state securities laws
and regulations and to regulatory agencies, such as the Securities and Exchange
Commission and the Connecticut Banking Department, which administer those laws
and regulations.
We can be assessed up to prescribed limits for policyholder losses incurred by
insolvent insurers under the insurance guaranty fund laws of most states. We
cannot predict or estimate the amount any such future assessments we may have to
pay. However, the insurance guaranty laws of most states provide for deferring
payment or exempting a company from paying such an assessment if it would
threaten such insurer's financial strength.
Several states, including Connecticut, regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates. Under such laws, inter-company transactions, such as dividend
payments to parent companies and transfers of assets, may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.
Currently, the federal government does not directly regulate the business of
insurance. However, federal legislative, regulatory and judicial decisions and
initiatives often have significant effects on our business. Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance companies; (b) the tax treatment of insurance products; (c)
the securities laws, particularly as they relate to insurance and annuity
products; (d) the "business of insurance" exemption from many of the provisions
of the anti-trust laws; (e) the barriers preventing most banks from selling or
underwriting insurance: and (f) any initiatives directed toward improving the
solvency of insurance companies. We would also be affected by federal
initiatives that have impact on the ownership of or investment in United States
companies by foreign companies or investors.
LEGAL MATTERS
The law firm of Werner & Kennedy has passed on the legal matters relating to the
offering of these Policies.
LEGAL PROCEEDINGS
As of the date of this Prospectus, neither we nor American Skandia Marketing,
Incorporated were involved in any litigation outside of the ordinary course of
business, and know of no material claims.
EXPERTS
The consolidated financial statements of American Skandia Life Assurance
Corporation at December 31, 1998 and 1997, and for the years then ended, and the
financial statements of American Skandia Life Assurance Corporation Variable
Account F at December 31, 1998 and for the period June 26, 1998 through December
31, 1998, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors. The consolidated financial
statements of American Skandia Life Assurance Corporation for the year ended
December 31, 1996 has been audited by Deloitte & Touche LLP, independent
auditors. The audits, as set forth in their respective reports thereon appearing
elsewhere herein, are included in reliance upon such reports given on the
authority of such firms as experts in accounting and auditing.
William H. Strong, Vice President, FSA, MAAA, has approved the hypothetical
illustration included in this Prospectus and Registration Statement. We have
included them relying on his opinion that they are reasonable.
DISTRIBUTION OF THIS OFFERING
American Skandia Marketing, Incorporated ("ASM, Inc."), a wholly-owned
subsidiary of American Skandia Investment Holding Corporation, acts as the
principal underwriter of the Policies. ASM was incorporated under the laws of
the State of Delaware on September 8, 1987. ASM, Inc.'s principal business
address is One Corporate Drive, Shelton, Connecticut 06484. ASM, Inc. is a
broker-dealer registered with the SEC under the 1934 Act and a member of the
National Association of Securities Dealers, Inc.
("NASD").
ASM, Inc. will enter into distribution agreements with certain broker-dealers
registered under the Securities and Exchange Act of 1934 or with entities which
may otherwise offer the Policies that are exempt from such registration. In
addition, ASM, Inc. may offer Policies directly to potential purchasers. The
maximum initial commission to be paid on premiums received is 8.5% and a portion
of compensation may be paid from time to time based on all or a portion of
either the Account Value or the Cash Value. We reserve the right to base
commissions from time-to-time on the investment options chosen by Owners,
including investment options that may be deemed our "affiliates" or "affiliates"
of ASM, Inc. under the Investment Company Act of 1940.
As of the date of this Prospectus, we expect to pay an on-going service fee in
relation to providing certain statistical information upon request by Owners
about the investment options and the Portfolios. We may make the fee payable to
the service providers based on either the Account Value or Cash Value of
Policies. Under most circumstances, we will engage the broker-dealer of record
for your Policy, or the entity of record if such entity could offer Policies
without registration as a broker-dealer (i.e. certain banks), to be your
resource for the statistical information, and to be available upon your request
to both provide and explain such information to you. The broker-dealer of record
or the entity of record is the firm which sold you the Policy, unless later
changed. Some portion of the fee we pay for this service may be payable to your
representative.
From time to time we may promote the sale of our products such as the Policies
offered pursuant to this Prospectus through programs of non-cash rewards to
registered representatives of participating broker-dealers. We may withdraw or
alter such promotions at any time.
To the extent permitted, we may advertise certain information regarding the
performance of the investment options that does not take into consideration the
effect of either the cost of insurance charges, the contingent deferred sales
charge, the contingent tax charge or the maintenance fee. This performance
information may help you review the performance of the investment options and
provide a basis for comparison between the Policy's investment options. This
information may be less useful when comparing the performance of the investment
options with the performance of investment options provided in other variable
life policies because each plan of life insurance will have its own applicable
charges. This information is even less useful in comparing performance to that
of any savings or investment vehicle, rather than variable life insurance.
Performance information on the Sub-accounts is based on past performance only
and is no indication of future performance. Actual performance will depend on
the type, quality and, for some of the Sub-accounts, the maturities of the
investments held by the Portfolios and upon prevailing market conditions and the
response of the Portfolios to such conditions. Actual performance will also
depend on changes in the expenses of the Portfolios. Such changes are reflected,
in turn, in the Sub-accounts which invest in such Portfolios. In addition, the
charges deducted from your Account Value and those assessed against each
Sub-account will affect performance.
Certain of the Portfolios existed prior to the inception of the Sub-accounts
available under the Policy. To the extent permitted by applicable law,
performance quoted in advertising regarding such Sub-accounts may indicate
periods during which the Portfolios have been in existence but prior to the
inception of the Sub-account(s) or the initial offering of the Policies. Such
performance is considered hypothetical historical performance because the
Sub-accounts did not exist during the period the performance was achieved. Such
hypothetical historical performance is calculated using the same assumptions
employed in calculating historical performance since inception of the
Sub-accounts. Any such historical performance will be based on assumptions.
These include assumptions regarding: (a) the Age, risk class and gender, where
applicable, of an Insured or Insureds; (b) the Premium and Policy Date; and (c)
assumptions about a lack of transfers, loans, loan repayments and withdrawals
during the period for which performance is quoted.
American Skandia Life Assurance Corporation may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay Death Proceeds, make payments under any settlement options or administer
Policies. Such rankings and ratings do not reflect or relate to the performance
of Separate Account F or the underlying Portfolios.
ILLUSTRATIONS
In Appendix A we provide examples of the kind of hypothetical illustrations
available to help you better understand how a Policy works. In that Appendix, we
also provide information on how you may obtain additional hypothetical
illustrations. In Appendix B, we provide hypothetical illustrations of how
exercise of the accelerated death benefit provision affects the values of a
Policy.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding work experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.
<S> <C> <C> <C>
Name/ Position with American Skandia
Age Life Assurance Corporation Principal Occupation
Robert M. Arena Vice President, Vice President,
30 Director of Product Director of Product Management:
Management American Skandia Life
Assurance Corporation
Mr. Arena joined us in 1995. He previously held an internship position with KPMG
Peat Marwick in 1994 and the position of Group Sales Representative with Paul
Revere Insurance from October, 1990 to August, 1993.
Gordon C. Boronow* President and President and
45 Deputy Chief Executive Officer Deputy Chief Executive Officer:
Director (since July, 1991) American Skandia Life
Assurance Corporation
Nancy F. Brunetti Executive Vice President Executive Vice President,
36 Director (since February, 1996) Chief Logistics Officer:
American Skandia Life
Assurance Corporation
Malcolm M. Campbell Director (since July, 1991) Director of Operations and
42 Chief Actuary, Assurance and
Financial Services Division:
Skandia Insurance Company Ltd.
Jan R. Carendi* Chief Executive Senior Executive Vice President and
53 Officer and Member of Executive Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Y.K. Chan Senior Vice President and Senior Vice President and
41 Chief Information Officer Chief Information Officer:
American Skandia Life
Assurance Corporation
Mr. Chan joined us in 1999. He previously held the position of Chief Information
Officer with E.M. Warburg Pincus from January 1995 until April 1999 and the
position of Vice President, Client Server Application Development from January
1991 until January 1995.
Lincoln R. Collins Executive Vice President Executive Vice President,
37 Director (since February, 1996) Chief Operating Officer
American Skandia Life
Assurance Corporation
Henrik Danckwardt Director (since July, 1991) Director of Finance
44 and Administration,
Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Wade A. Dokken Director (since July, 1991) President and Deputy
38 Chief Executive Officer:
American Skandia Marketing, Incorporated
Larisa Gromyko Director of Compliance Director of Compliance:
52 American Skandia Life
Assurance Corporation
Teresa Grove Vice President, Vice President,
44 Service Operations Service Operations:
American Skandia Information
Services and Technology Corporation
Ms. Grove joined us in 1996. She previously held the position of Account
Services Manager with Twentieth Century from January, 1992 until September,
1996.
Brian L. Hirst Vice President, Vice President,
50 Corporate Actuary Corporate Actuary:
American Skandia Life
Assurance Corporation
Mr. Hirst joined us in 1996. He previously held the positions of Vice President
from 1993 to 1996 and Second Vice President from 1987 to 1992 at Allmerica
Financial.
N. David Kuperstock Vice President, Vice President,
46 Product Development Product Development:
American Skandia Life
Assurance Corporation
Thomas M. Mazzaferro Executive Vice President and Executive Vice President and
45 Chief Financial Officer, Chief Financial Officer:
Director (since September, 1994) American Skandia Life
Assurance Corporation
Gunnar J. Moberg Director (since October, 1994) Director - Marketing and Sales,
43 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
David R. Monroe Senior Vice President, Senior Vice President,
36 Treasurer and Treasurer and
Corporate Controller Corporate Controller:
American Skandia Life
Assurance Corporation
Mr. Monroe joined us in 1996. He previously held positions of Assistant Vice
President and Director at Allmerica Financial from August, 1994 to July, 1996
and Senior Manager at KPMG Peat Marwick from July, 1983 to July, 1994.
Polly Rae Vice President Vice President,
36 Key Account Operations Key Account Operations:
American Skandia Life
Assurance Corporation
Rodney D. Runestad Vice President Vice President:
48 American Skandia Life
Assurance Corporation
Anders O. Soderstrom Executive Vice President Executive Vice President:
38 Director (since September, 1994) American Skandia Life
Assurance Corporation
William H. Strong Vice President, Vice President,
55 Product Innovation Product Innovation
American Skandia Life
Assurance Corporation
Mr. Strong joined us in 1997. He previously held the position of Vice President
with American Financial Systems from June 1994 to October 1997 and the position
of Actuary with Connecticut Mutual Life from June 1965 to June 1994.
Amanda C. Sutyak Executive Vice President Vice President:
40 Director (since July, 1991) American Skandia
Marketing, Incorporated
C. Ake Svensson Director (since December, 1994) Vice President,
47 Business Development:
American Skandia Investment
Holding Corporation
Mr. Svensson joined us in 1994. He previously held the position of Senior Vice
President with Nordenbanken.
Mary Toumpas Director of Advertising Compliance Vice President and
47 Compliance Director:
American Skandia
Marketing, Incorporated
Ms. Toumpas joined us in 1997. She previously held the position of Assistant
Vice President with Chubb Life/Chubb Securities.
Bayard F. Tracy Director (since September, 1994) Senior Vice President,
50 National Sales Manager:
American Skandia
Marketing, Incorporated
Jeffrey M. Ulness Vice President, Vice President,
37 Product Management Product Management:
American Skandia Life
Assurance Corporation
Mr. Ulness joined us in 1994. He previously held the positions of Counsel at
North American Security Life Insurance Company from March, 1991 to July, 1994
and Associate at LeBoeuf, Lamb, Leiby, Green and MacRae from January, 1990 to
March 1991.
- --------
* Trustees of American Skandia Trust, one of the underlying mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.
</TABLE>
<PAGE>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholder of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the consolidated statements of financial condition of American
Skandia Life Assurance Corporation (the "Company" which is a wholly-owned
subsidiary of Skandia Insurance Company Ltd.) as of December 31, 1998 and 1997,
and the related consolidated statements of income, shareholder's equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Skandia Life Assurance Corporation at December 31, 1998 and 1997, and
the consolidated results of its operations and cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Ernst & Young, LLP
- ----------------------
Hartford, Connecticut
February 20, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholder of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the accompanying consolidated statements of operations,
shareholder's equity, and cash flows of American Skandia Life Assurance
Corporation and subsidiary (a wholly-owned subsidiary of Skandia Insurance
Company Ltd.) for the year ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated results of operations and cash flows of
American Skandia Life Assurance Corporation and subsidiary for the year ended
December 31, 1996 in conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
- ------------------------
New York, New York
March 10, 1997
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION (a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
AS OF DECEMBER 31,
1998 1997
---------- ----------
ASSETS
Investments:
Fixed maturities - at amortized cost $ 8,289 $ 9,367
Fixed maturities - at fair value 141,195 108,323
Investment in mutual funds - at fair value 8,210 6,711
Policy loans 569 687
---------- -----------
Total investments 158,263 125,088
Cash and cash equivalents 77,525 81,974
Accrued investment income 2,880 2,442
Fixed assets 328 356
Deferred acquisition costs 721,507 546,703
Reinsurance receivable 4,191 6,343
Receivable from affiliates 1,161 1,911
Income tax receivable - current - 1,048
Income tax receivable - deferred 38,861 26,174
State insurance licenses 4,413 4,563
Other assets 3,744 2,524
Separate account assets 17,835,400 12,095,164
---------- ----------
Total assets $18,848,273 $12,894,290
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Reserve for future contractowner benefits $ 37,508 $ 43,204
Policy reserves 25,545 24,415
Drafts outstanding 28,941 19,278
Accounts payable and accrued expenses 91,827 71,190
Income tax payable 6,657 -
Payable to affiliates - 584
Future fees payable to parent 368,978 233,034
Short-term borrowing 10,000 10,000
Surplus notes 193,000 213,000
Separate account liabilities 17,835,400 12,095,164
---------- ----------
Total liabilities 18,597,856 12,709,869
---------- ----------
Shareholders Equity:
Common stock, $80 par, 25,000 shares
authorized, issued and outstanding 2,000 2,000
Additional paid-in capital 179,889 151,527
Retained earnings 64,993 30,226
Accumulated other comprehensive income 3,535 668
---------- ----------
Total shareholder's equity 250,417 184,421
---------- ----------
Total liabilities and shareholder's equity $18,848,273 $12,894,290
=========== ===========
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
------------ ------------- ------------
REVENUES
Annuity and life insurance charges and fees $186,211 $121,158 $69,780
Fee income 50,839 27,593 16,420
Net investment income 11,130 8,181 1,586
Premium income 874 920 125
Net realized capital gains 99 87 134
Other 387 75 6
------------ ------------- ------------
Total revenues 249,540 158,014 88,051
------------ ------------- ------------
BENEFITS AND EXPENSES
Benefits:
Annuity benefits 558 2,033 613
Change in annuity policy reserves 1,053 37 635
Cost of minimum death benefit reinsurance 5,144 4,545 2,867
Return credited to contractowners (8,930) (2,018) 673
------------ ------------- ------------
(2,175) 4,597 4,788
------------ ------------- ------------
Expenses:
Underwriting, acquisition and
other insurance expenses 167,640 90,346 49,737
Amortization of state insurance licenses 150 150 150
Interest expense 41,004 24,895 10,791
------------ ------------- ------------
208,794 115,391 60,678
------------ ------------- ------------
Total benefits and expenses 206,619 119,988 65,466
------------ ------------- ------------
Income from operations before income taxes 42,921 38,026 22,585
Income tax expense (benefit) 8,154 10,478 (4,038)
------------ ------------- ------------
Net income $34,767 $27,548 $26,623
============ ============= ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
----------- ----------- -----------
Common stock:
Beginning and ending balance $2,000 $ 2,000 $ 2,000
Additional paid in capital:
Beginning balance 151,527 122,250 81,875
Additional contributions 28,362 29,277 40,375
----------- ----------- ----------
Ending balance 179,889 151,527 122,250
Retained earnings (deficit):
Beginning balance 30,226 2,678 (23,945)
Net income 34,767 27,548 26,623
----------- ----------- ----------
Ending balance 64,993 30,226 2,678
Accumulated other comprehensive income:
Beginning balance 668 (584) (217)
Other comprehensive income 2,867 1,252 (367)
----------- ----------- -----------
Ending balance 3,535 668 (584)
----------- ----------- -----------
Total shareholder's equity $250,417 $184,421 $126,345
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ ------------
Cash flow from operating activities:
Net income $ 34,767 $ 27,548 $ 26,623
Adjustments to reconcile net income to net cash
used in operating activities:
Increase in policy reserves 1,130 3,176 1,852
Amortization of bond discount 101 73 27
Amortization of insurance licenses 150 150 150
Change in receivable from/payable to affiliates 166 (1,321) 540
Change in income tax receivable/payable 7,704 (2,172) 1,688
Increase in other assets (1,191) (604) (661)
Increase in accrued investment income (438) (483) (1,764)
Decrease/(increase) in reinsurance receivable 2,152 (268) (676)
Increase in deferred acquisition costs, net (174,804) (190,969) (153,918)
Increase in income tax receivable - deferred (14,242) (9,631) (16,903)
Increase in accounts payable and accrued expenses 20,637 5,719 32,323
Increase in drafts outstanding 9,663 6,245 13,032
Change in foreign currency translation, net (22) (34) (77)
Realized gain on sale of investments (99) (87) (134)
------------ ------------ ------------
Net cash used in operating activities (114,326) (162,658) (97,898)
------------ ------------ ------------
Cash flow from investing activities:
Purchase of fixed maturity investments (31,828) (28,905) (96,813)
Proceeds from sale and maturity of fixed maturity investments 4,049 10,755 8,947
Purchase of shares in mutual funds (7,158) (5,595) (2,160)
Proceeds from sale of shares in mutual funds 6,086 1,415 1,274
Decrease/(increase) in policy loans 118 (528) (104)
------------ ------------ ------------
Net cash used in investing activities (28,733) (22,858) (88,856)
------------ ------------ ------------
Cash flow from financing activities:
Capital contributions from parent 8,362 29,277 40,375
Surplus notes - - 110,000
Increase in future fees payable to Parent 135,944 185,922 47,112
Net (withdrawals from)/deposits to contractowner accounts (5,696) 6,959 5,753
------------ ------------ ------------
Net cash provided by financing activities 138,610 222,158 203,240
------------ ------------ ------------
Net increase/(decrease) in cash and cash equivalents (4,449) 36,642 16,486
------------ ------------ ------------
Cash and cash equivalents at beginning of year 81,974 45,332 28,846
------------ ------------ ------------
Cash and cash equivalents at end of year $ 77,525 $ 81,974 $ 45,332
============ ============ ============
Supplemental cash flow disclosure:
Income taxes paid $ 14,651 $ 22,308 $ 11,177
============ ============ ============
Interest paid $ 35,588 $ 16,916 $ 7,095
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements
December 31, 1998
1. ORGANIZATION AND OPERATION
American Skandia Life Assurance Corporation (the "Company") is a
wholly-owned subsidiary of American Skandia Investment Holding
Corporation (the "Parent"); whose ultimate parent is Skandia Insurance
Company Ltd., a Swedish corporation.
The Company develops long-term savings and retirement products which
are distributed through its affiliated broker/dealer company, American
Skandia Marketing, Incorporated ("ASM"). The Company currently issues
variable life insurance and variable, fixed, market value adjusted and
immediate annuities for individuals, groups and qualified pension
plans.
The Company has 99.9% ownership in Skandia Vida, S.A. de C.V. which is
a life insurance company domiciled in Mexico. This Mexican life
insurer is a start up company with expectations of selling long-term
savings products within Mexico. Skandia Vida, S.A. de C.V. had total
shareholder's equity of $4,724,000 and $1,509,000 as of December 31,
1998, and 1997, respectively, and has generated net losses of
$2,514,000, $1,438,000 and $781,000 for the years ended December 31,
1998, 1997 and 1996, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Reporting
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles. Intercompany transactions and balances have been
eliminated in consolidation.
Certain reclassifications have been made to prior year amounts
to conform with the current year presentation.
B. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard
("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging
activities. The standard requires that all derivatives be
carried on the balance sheets at fair value. The Company is
currently not involved in derivatives or hedging instruments
as part of its investment strategy. The Company is evaluating
the potential impact of a change in accounting for derivative
instruments embedded in certain products it issues. This
standard is effective for years beginning after June 15, 1999.
In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Software Developed or Obtained
for Internal Use," which provides guidance for determining
when computer software developed or obtained for internal use
should be capitalized. It also provides guidance on the
amortization of capitalized costs and the recognition of
impairment. The Company is evaluating the potential impact of
adopting this SOP, which is effective for fiscal years
beginning after December 15, 1998.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
C. Investments
The Company has classified its fixed maturity investments as
either held-to-maturity or available-for-sale. Investments
classified as held-to-maturity are investments that the
Company has the ability and intent to hold to maturity. Such
investments are carried at amortized cost. Those investments
which are classified as available-for-sale, are carried at
fair value and changes in unrealized gains and losses are
reported as a component of other comprehensive income.
The Company has classified its mutual fund investments as
available-for-sale. Such investments are carried at fair value
and changes in unrealized gains and losses are reported as a
component of other comprehensive income.
Policy loans are carried at their unpaid principal balances.
Realized gains and losses on disposal of investments are
determined by the specific identification method and are
included in revenues.
D. Cash Equivalents
The Company considers all highly liquid time deposits,
commercial paper and money market mutual funds purchased with
a maturity of three months or less to be cash equivalents.
E. State Insurance Licenses
Licenses to do business in all states have been capitalized
and reflected at the purchase price of $6,000,000 less
accumulated amortization. The cost of the licenses is being
amortized over 40 years.
F. Fixed Assets
Fixed assets consisting of furniture, equipment and leasehold
improvements are carried at cost and depreciated on a
straight-line basis over a period of three to five years.
Accumulated depreciation amounted to $142,000 and $96,000 at
December 31, 1998 and 1997, respectively. Depreciation expense
for the years ended December 31, 1998, 1997 and 1996 was
$46,000 and $63,000 and $29,000, respectively.
G. Income Taxes
The Company is included in the consolidated federal income tax
return of Skandia U.S. Investment Holding Corporation and its
subsidiaries. In accordance with the tax sharing agreement,
the federal and state income tax provision is computed on a
separate return basis, as adjusted for consolidated items,
such as net operating loss carryforwards.
Income taxes are provided in accordance with SFAS 109,
"Accounting for Income Taxes", which requires the asset and
liability method of accounting for deferred taxes. The object
of this method is to recognize an asset and liability for the
expected future tax effects due to temporary differences
between the financial reporting and the tax basis of assets
and liabilities, based on enacted tax rates and other
provisions of the tax law.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
H. Recognition of Revenue and Contract Benefits
Revenues for variable annuity contracts consist of charges
against contractowner account values for mortality and expense
risks, administration fees, surrender charges and an annual
maintenance fee per contract. Benefit reserves for variable
annuity contracts represent the account value of the contracts
and are included in the separate account liabilities.
Revenues for market value adjusted annuity contracts consist
of separate account investment income reduced by benefit
payments and changes in reserves in support of contractowner
obligations, all of which are included in return credited to
contractowners. Benefit reserves for these contracts represent
the account value of the contracts, and are included in the
general account liability for future contractowner benefits to
the extent in excess of the separate account liabilities.
Revenues for immediate annuity contracts without life
contingencies consist of net investment income. Revenues for
immediate annuity contracts with life contingencies consist of
single premium payments recognized as annuity considerations
when received. Benefit reserves for these contracts are based
on the Society of Actuaries 1983 Table-a with assumed interest
rates that vary by issue year. Assumed interest rates ranged
from 6.25% to 8.25% and 6.5% to 8.25% at December 31, 1998 and
December 31, 1997, respectively.
Revenues for variable life insurance contracts consist of
charges against contractowner account values for the
maintenance and expense fees, cost of insurance fees and
surrender charges. Benefit reserves for variable life
insurance contracts represent the account value of the
contracts and are included in the separate account
liabilities.
I. Deferred Acquisition Costs
The costs of acquiring new business, which vary with and are
primarily related to the production of new business, are being
deferred net of reinsurance. These costs include commissions,
costs of contract issuance, and certain selling expenses that
vary with production. These costs are being amortized
generally in proportion to expected gross profits from
surrender charges, policy and asset based fees and mortality
and expense margins. This amortization is adjusted
retrospectively and prospectively when estimates of current
and future gross profits to be realized from a group of
products are revised.
Details of the deferred acquisition costs and related
amortization for the years ended December 31, are as follows:
(in thousands) 1998 1997 1996
---- ---- ----
Balance at beginning of year $546,703 $355,734 $201,816
Acquisition costs deferred
during the year 261,432 243,476 171,253
Acquisition costs amortized
during the year (86,628) (52,507) (17,335)
--------- --------- ---------
Balance at end of year $721,507 $546,703 $355,734
======== ======== ========
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
J. Reinsurance
The Company cedes reinsurance under modified co-insurance
arrangements. The reinsurance arrangements provide additional
capacity for growth in supporting the cash flow strain from
the Company's variable annuity and variable life insurance
business. The reinsurance is effected under quota share
contracts.
The company reinsures certain mortality risks relating to the
variable life insurance product, as well as, the guaranteed
minimum death benefit feature in the variable annuity product.
At December 31, 1998 and 1997, in accordance with the
provisions of a modified coinsurance agreement, the Company
accrued $1,976,000 and $0, respectively, for amounts
receivable from favorable reinsurance experience on a block of
variable annuity business.
K. Translation of Foreign Currency
The financial position and results of operations of the
Company's Mexican subsidiary are measured using local currency
as the functional currency. Assets and liabilities of the
subsidiary are translated at the exchange rate in effect at
each year-end. Statements of income and shareholder's equity
accounts are translated at the average rate prevailing during
the year. Translation adjustments arising from the use of
differing exchange rates from period to period are reported as
a component of other comprehensive income.
L. Fair Values of Financial Instruments
The methods and assumptions used to determine the fair value
of financial instruments are as follows:
Fair values of fixed maturities with active markets are based
on quoted market prices. For fixed maturities that trade in
less active markets, fair values are obtained from an
independent pricing service.
Fair values of investments in mutual funds are based on quoted
market prices.
The carrying value of cash and cash equivalents approximates
fair value due to the short-term nature of these investments.
The carrying value of short-term borrowing approximates fair
value due to the short-term nature of these liabilities.
Fair values of certain financial instruments, such as future
fees payable to parent and surplus notes are not readily
determinable and are excluded from fair value disclosure
requirements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
M. Separate Accounts
Assets and liabilities in Separate Accounts are included as
separate captions in the consolidated statements of financial
condition. Separate Account assets consist principally of long
term bonds, investments in mutual funds, short-term securities
and cash and cash equivalents, all of which are carried at
fair value. The investments are managed predominately through
the Company's investment advisory affiliate, American Skandia
Investment Services, Inc. ("ASISI"), utilizing various fund
managers as sub-advisors. The remaining investments are
managed by independent investment firms. The contractowner has
the option of directing funds to a wide variety of mutual
funds. The investment risk on the variable portion of a
contract is borne by the contractowner. A fixed option with a
minimum guaranteed interest rate is also available. The
Company is responsible for the credit risk associated with
these investments.
Included in Separate Account liabilities are $771,195,000 and
$773,067,000 at December 31, 1998 and 1997, respectively,
relating to annuity contracts for which the contractowner is
guaranteed a fixed rate of return. Separate Account assets of
$771,195,000 and $773,067,000 at December 31, 1998 and 1997,
respectively, consisting of long term bonds, short term
securities, transfers due from general account and cash and
cash equivalents are held in support of these annuity
contracts, pursuant to state regulation.
N. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires that
management make estimates and assumptions that affect the
reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. The more significant
estimates and assumptions are related to deferred acquisition
costs and involve policy lapses, investment return and
maintenance expenses. Actual results could differ from those
estimates.
3. COMPREHENSIVE INCOME
As of January 1, 1998 the Company adopted SFAS 130, "Reporting
Comprehensive Income," which sets standards for the reporting and
display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's financial
position or net income. SFAS 130 requires unrealized gains and losses
on the Company's available-for-sale securities and foreign currency
translation adjustments, which prior to adoption were reported
separately in shareholder's equity, to be included in other
comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS 130.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The components of comprehensive income, net of tax, for the years ended
December 31, 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(in thousands) 1998 1997 1996
---- ---- ----
Net income $34,767 $27,548 $26,623
Other comprehensive income:
Unrealized investment gains/(losses) on
available for sale securities 2,751 1,288 (331)
Reclassification adjustment for realized
losses/(gains) included in investment income 138 (14) (99)
--------- --------- ----------
Net unrealized gains/(losses) on securities 2,889 1,274 (430)
Foreign currency translation (22) (22) 64
---------- ---------- ----------
Other comprehensive income 2,867 1,252 (367)
-------- -------- ----------
Comprehensive income $37,634 $28,800 $26,257
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
The components of accumulated other comprehensive income, net of tax,
as of December 31, 1998 and 1997 were as follows:
<S> <C> <C>
(in thousands) 1998 1997
---- ----
Unrealized investment gains $3,843 $954
Foreign currency translation (308) (286)
-------- -----
Accumulated other comprehensive income $3,535 $668
====== ====
</TABLE>
4. INVESTMENTS
The amortized cost, gross unrealized gains/losses and estimated fair
value of available-for-sale and held-to-maturity fixed maturities and
investments in mutual funds as of December 31, 1998 and 1997 are shown
below. All securities held at December 31, 1998 are publicly traded.
Investments in fixed maturities as of December 31, 1998 consisted of
the following:
<TABLE>
<CAPTION>
(in thousands) Held-to-Maturity
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Government
obligations $3,774 $57 $ - $3,831
Corporate securities 4,515 34 - 4,549
------- ---- ----- -------
Totals $8,289 $91 $ - $8,380
====== === ==== ======
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
<TABLE>
<CAPTION>
(in thousands) Available-for-Sale
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Government
obligations $ 17,399 $ 678 $ - $ 18,077
Obligations of
state and political
subdivisions 253 7 - 260
Corporate securities 117,774 5,160 76 122,858
--------- ------- ---- -----------
Totals $135,426 $5,845 $76 $141,195
======== ====== === ========
</TABLE>
The amortized cost and fair value of fixed maturities, by contractual
maturity, at December 31, 1998 are shown below.
<TABLE>
<CAPTION>
(in thousands) Held-to-Maturity Available-for-Sale
<S> <C> <C> <C> <C>
Amortized Fair Amortized Fair
Cost Value Cost Value
Due in one year or less $4,927 $4,982 $ - $ -
Due after one through five years 3,362 3,398 54,789 56,850
Due after five through ten years - - 80,637 84,345
---------- ---------- ---------- ----------
Total $8,289 $8,380 $135,426 $141,195
====== ====== ======== ========
</TABLE>
Investments in fixed maturities as of December 31, 1997 consisted of
the following:
<TABLE>
<CAPTION>
(in thousands) Held-to-Maturity
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Government
obligations $3,790 $71 $9 $3,852
Obligations of
state and political
subdivisions 50 - - 50
Corporate
securities 5,527 2 19 5,510
------- ----- ---- -------
Totals $9,367 $73 $28 $9,412
====== === === ======
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
<TABLE>
<CAPTION>
(in thousands) Available for Sale
------------------
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
U.S. Government
obligations $ 14,999 $ 202 $ - $ 15,201
Obligations of
state and political
subdivisions 202 - - 202
Corporate
securities 91,470 1,505 55 92,920
---------- ------- ---- ----------
Totals $106,671 $1,707 $55 $108,323
======== ====== === ========
</TABLE>
Proceeds from sales of fixed maturities during 1998, 1997 and 1996 were
$999,000, $5,056,000 and $8,732,000, respectively. Proceeds from
maturities during 1998, 1997 and 1996 were $3,050,000, $5,700,000 and
$215,000, respectively.
The cost, gross unrealized gains/losses and fair value of investments
in mutual funds at December 31, 1998 and 1997 are shown below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(in thousands) Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
------ ---------- ---------- ------
1998 $8,068 $416 $274 $8,210
====== ==== ==== ======
1997 $6,896 $ 43 $228 $6,711
====== ==== ==== ======
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
Net realized investment gains (losses) were as follows for the years
ended December 31:
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Fixed maturities:
Gross gains $ - $ 10 $ -
Gross losses (1) - -
Investment in mutual funds:
Gross gains 281 116 140
Gross losses (181) (39) (6)
------- ------ -----
Totals $ 99 $ 87 $134
====== ===== ====
</TABLE>
5. NET INVESTMENT INCOME
The sources of net investment income for the years ended December 31,
1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $ 8,534 $6,617 $ 836
Cash and cash equivalents 1,717 1,153 685
Investment in mutual funds 1,013 554 144
Policy loans 45 28 5
----------- --------- ----------
Total investment income 11,309 8,352 1,670
Investment expenses 179 171 84
---------- -------- ---------
Net investment income $11,130 $8,181 $1,586
======= ====== ======
</TABLE>
6. INCOME TAXES
The significant components of income tax expense (benefit) for the
years ended December 31, are as follows:
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current tax expense $22,384 $20,108 $12,865
Deferred tax benefit (14,230) (9,630) (16,903)
-------- --------- --------
Total income tax expense (benefit) $ 8,154 $10,478 ($ 4,038)
======== ======= =======
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The tax effects of significant items comprising the Company's deferred
tax balance as of December 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
(in thousands) 1998 1997
---- ----
<S> <C> <C>
Deferred tax liabilities:
Deferred acquisition costs ($210,731) ($159,766)
Payable to reinsurers (25,585) (25,369)
Policy fees (859) (656)
Unrealized investment gains and losses (2,069) (514)
----------- -------------
Total (239,244) (186,305)
--------- ---------
Deferred tax assets:
Net separate account liabilities 225,600 175,872
Reserve for future contractowner benefits 13,128 15,121
Other reserve differences 25,335 10,534
Deferred compensation 9,619 7,187
Surplus notes interest 3,375 2,729
Foreign exchange translation 166 154
Other 882 882
------------ ------------
Total 278,105 212,479
--------- ---------
Income tax receivable - deferred $ 38,861 $ 26,174
========= =========
</TABLE>
Management believes that based on the taxable income produced in the
current year and the continued growth in annuity products, the Company
will produce sufficient taxable income in the future to realize its
deferred tax asset. As such, the Company released the deferred tax
valuation allowance of $9,325,000 in 1996.
The income tax expense was different from the amount computed by
applying the federal statutory tax rate of 35% to pre-tax income from
continuing operations as follows:
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income (loss) before taxes
Domestic $45,435 $39,464 $23,366
Foreign (2,514) (1,438) (781)
--------- --------- ---------
Total 42,921 38,026 22,585
Income tax rate 35% 35% 35%
--------- --------- ---------
Tax expense at federal
statutory income tax rate 15,022 13,309 7,905
Tax effect of:
Change in valuation allowance - - (9,325)
Dividend received deduction (9,085) (4,585) (2,266)
Losses of foreign subsidiary 880 503 273
Meals and entertainment 487 340 43
State income taxes 673 577 356
Other 177 334 (1,024)
-------- ------- ---------
Income tax expense (benefit) $ 8,154 $10,478 ($ 4,038)
======== ======= =========
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
7. RECEIVABLE FROM/PAYABLE TO AFFILIATES
Certain operating costs (including personnel, rental of office space,
furniture, and equipment) have been charged to the Company at cost by
American Skandia Information Services and Technology Corporation
("ASIST"), an affiliated company; and likewise, the Company has charged
operating costs to ASISI. The total cost to the Company for these items
was $7,722,000, $5,572,000 and $11,581,000 for the years ended December
31, 1998, 1997 and 1996, respectively. Income received for these items
was $1,355,000, $3,225,000 and $1,148,000 for the years ended December
31, 1998, 1997 and 1996, respectively. Amounts receivable from
affiliates under these arrangements were $98,000 and $549,000 as of
December 31, 1998 and 1997, respectively. Amounts payable to affiliates
under these arrangements were $551,000 and $264,000 as of December 31,
1998 and 1997, respectively.
8. FUTURE FEES PAYABLE TO PARENT
In a series of transactions with its Parent, the Company sold certain
rights to receive future fees and contract charges expected to be
realized on variable portions of designated blocks of deferred annuity
contracts. The effective dates and issue periods these transactions
cover are as follows:
Closing Effective Contract Issue
Transaction Date Date Period
----------- -------- --------- -----------------
1996-1 12/16/96 9/1/96 1/1/94 - 6/30/96
1997-1 7/23/97 6/1/97 3/1/96 - 4/30/97
1997-2 12/30/97 12/1/97 5/1/95 - 12/31/96
1997-3 12/30/97 12/1/97 5/1/96 - 10/31/97
1998-1 6/30/98 6/1/98 1/1/97 - 5/31/98
1998-2 11/10/98 10/1/98 5/1/97 - 8/31/98
1998-3 12/30/98 12/1/98 7/1/96 - 10/31/98
In connection with these transactions, the Parent issued collateralized
notes in a private placement which are secured by the rights to receive
future fees and charges purchased from the Company.
Under the terms of the Purchase Agreements, the rights sold provide for
the Parent to receive a percentage of future mortality and expense
charges and contingent deferred sales charges, after reinsurance,
expected to be realized over the remaining surrender charge period of
the designated contracts (6 to 8 years). The percentage is 100% on
transactions 1997-3 and 1998-3 and 80% on all other transactions.
The Company did not sell the right to receive future fees and charges
after the expiration of the surrender charge period.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The proceeds from the sales have been recorded as a liability and are
being amortized over the remaining surrender charge period of the
designated contracts using the interest method. The present value of
the transactions as of the respective effective date was as follows:
<TABLE>
<CAPTION>
(in thousands)
Present
<S> <C> <C> <C>
Transaction Discount Rate Value
----------- ------------- -------
1996-1 7.5% $50,221
1997-1 7.5% 58,767
1997-2 7.5% 77,552
1997-3 7.5% 58,193
1998-1 7.5% 61,180
1998-2 7.0% 68,573
1998-3 7.0% 40,128
</TABLE>
Payments representing fees and charges in the aggregate amount of
$69,226,000, $22,250,000 and $0, were made by the Company to the Parent
for the years ended December 31, 1998, 1997 and 1996, respectively.
Related interest expense of $22,978,000, $6,842,000 and $42,000 has
been included in the statement of income for the years ended December
31, 1998, 1997 and 1996, respectively.
Expected payments of future fees payable to Parent as of December 31,
1998 are as follows:
Year Ended
(in thousands) December 31, Amount
------------ ----------
1999 $ 64,520
2000 68,403
2001 67,953
2002 64,238
2003 54,382
2004 35,601
2005 12,441
2006 1,440
----------
Total $ 368,978
==========
The Commissioner of the State of Connecticut has approved the sale of
future fees and charges; however, in the event that the Company becomes
subject to an order of liquidation or rehabilitation, the Commissioner
has the ability to stop the payments due to the Parent under the
Purchase Agreement subject to certain terms and conditions.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
9. LEASES
The Company leases office space under a lease agreement established in
1989 with ASIST. The lease expense for 1998, 1997 and 1996 was
$3,588,000, $2,428,000 and $1,583,000, respectively. Future minimum
lease payments per year and in aggregate as of December 31, 1998 are as
follows:
(in thousands) 1999 $ 3,619
2000 5,070
2001 5,070
2002 5,070
2003 5,070
2004 and thereafter 40,271
--------
Total $ 64,170
========
10. RESTRICTED ASSETS
To comply with certain state insurance departments' requirements, the
Company maintains cash, bonds and notes on deposit with various states.
The carrying value of these deposits amounted to $3,747,000 and
$3,757,000 as of December 31, 1998, and 1997, respectively. These
deposits are required to be maintained for the protection of
contractowners within the individual states.
11. RETAINED EARNINGS AND DIVIDEND RESTRICTIONS
Statutory basis shareholder's equity was $285,553,000 and $294,586,000
at December 31, 1998 and 1997, respectively.
The statutory basis net loss was $13,152,000, $8,970,000 and $5,405,000
for the years ended December 31, 1998, 1997 and 1996, respectively.
Under various state insurance laws, the maximum amount of dividends
that can be paid to shareholders without prior approval of the state
insurance department is subject to restrictions relating to statutory
surplus and net gain from operations. At December 31, 1998, no amounts
may be distributed without prior approval.
12. EMPLOYEE BENEFITS
The Company has a 401(k) plan for which substantially all employees are
eligible. Under this plan, the Company contributes 3% of salary for all
participating employees and matches employee contributions at a 50%
level up to an additional 3% Company contribution. Company
contributions to this plan on behalf of the participants were
$2,115,000, $1,220,000 and $850,000 for the years ended December 31,
1998, 1997 and 1996, respectively.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The Company has a deferred compensation plan, which is available to the
internal field marketing staff and certain officers. Company
contributions to this plan on behalf of the participants were $342,000,
$270,000 and $245,000 for the years ended December 31, 1998, 1997 and
1996, respectively.
The Company and an affiliate cooperatively have a long-term incentive
plan under which units are awarded to executive officers and other
personnel. The program consists of multiple plans, with a new plan
instituted each year. Generally, participants must remain employed by
the Company or its affiliates at the time such units are payable in
order to receive any payments under the plan. The accrued liability
representing the value of these units was $21,372,000 and $15,720,000
as of December 31, 1998 and 1997, respectively. Payments under this
plan were $2,407,000, $1,119,000 and $602,000 for the years ended
December 31, 1998, 1997, and 1996, respectively.
13. REINSURANCE
The effect of reinsurance for the years ended December 31, 1998, 1997
and 1996 is as follows:
<TABLE>
<CAPTION>
(in thousands) 1998
----
Policy Change in Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- --------------- -----------------
<S> <C> <C> <C>
Gross $215,425 $ 691 ($8,921)
Ceded 29,214 (362) 9
-------- ------- -------
Net $186,211 $ 1,053 ($8,930)
======== ======= =======
1997
----
Policy Change in Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- --------------- -----------------
Gross $144,417 $955 ($1,972)
Ceded 23,259 918 46
-------- ----- -------
Net $121,158 $ 37 ($2,018)
======== ===== ======
1996
----
Policy Change in Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- --------------- -----------------
Gross $87,370 $815 $779
Ceded 17,590 180 106
-------- ----- -----
Net $69,780 $635 $673
======= ==== ====
</TABLE>
Such ceded reinsurance does not relieve the Company of its obligations
to policyholders. The Company remains liable to its policyholders for
the portion reinsured to the extent that any reinsurer does not meet
the obligations assumed under the reinsurance agreements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
14. SURPLUS NOTES
The Company has issued surplus notes to its Parent in exchange for cash.
Surplus notes outstanding as of December 31, 1998 and 1997 were
as follows:
<TABLE>
<CAPTION>
(in thousands)
Interest for the
Interest 1998 1997 Years Ended December 31,
Issue Date Rate Amount Amount 1998 1997 1996
---------- ---- ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
December 29, 1993 6.84% $ - $ 20,000 $ 1,387 $ 1,387 $ 1,391
February 18, 1994 7.28% 10,000 10,000 738 738 740
March 28, 1994 7.90% 10,000 10,000 801 801 803
September 30, 1994 9.13% 15,000 15,000 1,389 1,389 1,392
December 28, 1994 9.78% 14,000 14,000 1,388 1,388 1,392
December 19, 1995 7.52% 10,000 10,000 762 762 765
December 20, 1995 7.49% 15,000 15,000 1,139 1,139 1,142
December 22, 1995 7.47% 9,000 9,000 682 682 684
June 28, 1996 8.41% 40,000 40,000 3,411 3,411 1,747
December 30, 1996 8.03% 70,000 70,000 5,699 5,699 31
-------- -------- ------- ------- ------- -
Total $193,000 $213,000 $17,396 $17,396 $10,087
======== ======== ======= ======= =======
</TABLE>
The surplus note for $20,000,000 dated December 29, 1993 was converted
to additional paid-in capital on December 31, 1998.
All surplus notes mature seven years from the issue date.
Payment of interest and repayment of principal for these notes is
subject to certain conditions and require approval by the Insurance
Commissioner of the State of Connecticut. At December 31, 1998 and
1997, $9,644,000 and $7,796,000, respectively, of accrued interest on
surplus notes was not approved for payment under these criteria.
15. SHORT-TERM BORROWING
The Company had a $10 million short-term loan payable to the Parent at
December 31, 1998 and 1997. The total interest expense to the Company
was $622,000, $642,000 and $643,000 and for the years ended December
31, 1998, 1997 and 1996, respectively, of which $182,000 and $201,000
was payable as of December 31, 1998 and 1997, respectively.
16. CONTRACT WITHDRAWAL PROVISIONS
Approximately 99% of the Company's separate account liabilities are
subject to discretionary withdrawal by contractowners at market value
or with market value adjustment. Separate account assets which are
carried at fair value are adequate to pay such withdrawals which are
generally subject to surrender charges ranging from 10% to 1% for
contracts held less than 10 years.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
17. SEGMENT REPORTING
In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS 131 establishes standards
for the way that public enterprises report information about operating
segments in annual financial statements and requires that those
enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes
standards related to disclosures about products and services,
geographic areas and major customers. SFAS 131 is effective for
financial statement periods beginning after December 15, 1997.
During 1998, to complement its annuity products, the Company launched
specific marketing and operational activities towards the release of
variable life insurance and qualified retirement plan annuity products.
As of December 31, 1998, sales were not significant enough to warrant
full segment disclosures. Sales, as measured by premium received, for
the year ended December 31, 1998 and assets under management as of
December 31, 1998, for the respective segments were as follows:
<TABLE>
<CAPTION>
(in thousands) Variable Variable Qualified
Annuity Life Plans Total
------------ -------- --------- -----------
<S> <C> <C> <C> <C>
Sales $ 4,122,272 $1,188 $36,202 $ 4,159,662
=========== ====== ======= ===========
Assets under management $17,809,437 $1,295 $44,029 $17,854,761
=========== ====== ======= ===========
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
18. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table summarizes information with respect to the
operations of the Company on a quarterly basis:
<TABLE>
<CAPTION>
(in thousands) Three Months Ended
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1998
----
<S> <C> <C> <C> <C>
Premiums and other insurance
revenues $ 50,593 $ 57,946 $ 62,445 $ 67,327
Net investment income 3,262 2,410 2,469 2,989
Net realized capital gains (losses) 156 13 (46) (24)
-------- -------- -------- --------
Total revenues 54,011 60,369 64,868 70,292
Benefits and expenses 46,764 42,220 48,471 69,164
-------- -------- -------- --------
Pre-tax net income 7,247 18,149 16,397 1,128
Income taxes 1,175 4,174 2,223 582
-------- -------- -------- --------
Net income $ 6,072 $ 13,975 $ 14,174 $ 546
======== ======== ======== ========
1997
----
Premiums and other insurance
revenues $ 30,186 $ 34,056 $ 41,102 $ 44,402
Net investment income 1,369 2,627 2,031 2,154
Net realized capital gains 20 43 21 3
-------- -------- -------- --------
Total revenues 31,575 36,726 43,154 46,559
Benefits and expenses 18,319 30,465 31,179 40,025
-------- -------- -------- --------
Pre-tax net income 13,256 6,261 11,975 6,534
Income taxes 4,260 2,614 3,354 250
-------- -------- -------- --------
Net income $ 8,996 $ 3,647 $ 8,621 $ 6,284
======== ======== ======== ========
1996
----
Premiums and other insurance
revenues $ 16,606 $ 20,453 $ 22,366 $ 26,906
Net investment income 455 283 270 578
Net realized capital gains 92 13 6 23
-------- -------- -------- --------
Total revenues 17,153 20,749 22,642 27,507
Benefits and expenses 12,725 9,430 17,007 26,304
-------- --------- -------- --------
Pre-tax net income 4,428 11,319 5,635 1,203
Income taxes 1,769 3,624 3,096 (12,527)
-------- --------- -------- --------
Net income $ 2,659 $ 7,695 $ 2,539 $ 13,730
======== ========= ======== ========
</TABLE>
As described in Note 6, the valuation allowance relating to deferred
income taxes was released during the three months ended December 31,
1996.
<PAGE>
FINANCIAL STATEMENTS FOR
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION SEPARATE ACCOUNT F
American Skandia Life
Assurance Corporation
Variable Account F
For the period from June 26, 1998
through December 31, 1998
<PAGE>
Independent Auditor's Report
To the Contractowners of
American Skandia Life Assurance Corporation
Variable Account F and the
Board of Directors and Shareholder of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the accompanying statement of assets and contractowners' equity
of the twenty-six sub-accounts of American Skandia Life Assurance Corporation
Variable Account F, referred to in Note 1, as of December 31, 1998, and the
related statements of operations and changes in net assets for the period from
June 26, 1998 through December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the twenty-six sub-accounts of
American Skandia Life Assurance Corporation Variable Account F, referred to in
Note 1, at December 31, 1998, and the results of their operations and their
changes in net assets for the period June 26, 1998 through December 31, 1998 in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Hartford, Connecticut
February 20, 1999
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARAIBLE ACCOUNT F
STATEMENT OF ASSETS AND CONTRACTOWNERS' EQUITY
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investment in mutual funds at market value ( Note 2 ):
The Alger American Fund ( AAF ):
Growth Portfolio - 33,980 shares ( cost $26,963) $ 33,980
American Skandia Trust ( AST ):
Putnam International Equity Portfolio - 26,727 shares ( cost $22,207) 26,727
Putnam Balanced Portfolio - 4,021 shares ( cost $3,809) 4,021
Putnam Value Growth & Income Portfolio - 8,120 shares ( cost $7,432) 8,120
Lord Abbett Growth & Income Portfolio - 60,973 shares ( cost $55,858) 60,973
Lord Abbett Small Cap Value Portfolio - 11,666 shares ( cost $11,381) 11,666
Jancap Growth Portfolio - 301,846 shares ( cost $253,862) 301,846
Money Market Portfolio - 31,524 shares ( cost $31,524) 31,524
Neuberger & Berman Midcap Value Portfolio - 40,578 shares ( cost $38,967) 40,578
Neuberger & Berman Midcap Growth Portfolio - 39,402 shares ( cost $35,395) 39,402
Federated High Yield Portfolio - 51,210 shares ( cost $50,501) 51,210
T. Rowe Price Asset Allocation Portfolio - 7,736 shares ( cost $7,431) 7,736
T. Rowe Price International Bond Portfolio - 15,385 shares ( cost $14,794) 15,385
T. Rowe Price Natural Resources Portfolio - 12,006 shares ( cost $12,137) 12,006
T. Rowe Price Small Company Value Portfolio - 31,922 shares ( cost $31,292) 31,922
Founders Capital Appreciation Portfolio - 4,022 shares ( cost $3,958) 4,022
PIMCO Total Return Bond Portfolio - 24,671 shares ( cost $24,773) 24,671
PIMCO Limited Maturity Bond Portfolio - 33,883 shares ( cost $33,843) 33,883
INVESCO Equity Income Portfolio - 77,257 shares ( cost $74,478) 77,257
Oppenheimer Large-Cap Growth - 6,473 shares ( cost $5,937) 6,473
Janus Overseas Growth Portfolio - 121,827 shares ( cost $113,101) 121,827
Twentieth Century Strategic Balanced Portfolio - 2,086 shares ( cost $1,977) 2,086
Twentieth Century International Growth Portfolio - 27,908 shares ( cost $27,313) 27,908
Marsico Capital Growth Portfolio - 298,436 shares ( cost $273,152) 298,436
Cohen & Steers Realty Portfolio - 2,095 shares ( cost $2,001) 2,095
Bankers Trust Enhanced 500 Portfolio - 19,256 shares ( cost $17,687) 19,256
-------------
Total Invested Assets $ 1,295,010
=============
Total Assets $ 1,295,010
=============
- -------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Unit
Contractowners' Equity Units Value
<S> <C> <C> <C>
AAF - Growth 2,771 12.26 $ 33,980
AST - Putnam International Equity 2,765 9.67 26,727
AST - Putnam Balanced 390 10.31 4,021
AST - Putnam Value Growth & Income 798 10.17 8,120
AST - Lord Abbett Growth & Income 6,010 10.15 60,973
AST - Lord Abbett Small Cap Value 1,299 8.98 11,666
AST - JanCap Growth 22,655 13.32 301,846
AST - Money Market 3,086 10.21 31,524
AST - Neuberger & Berman Midcap Value 4,156 9.76 40,578
AST - Neuberger & Berman Midcap Growth 3,699 10.65 39,402
AST - Federated High Yield 5,228 9.80 51,210
AST - T. Rowe Price Asset Allocation 723 10.69 7,736
AST - T. Rowe Price International Bond 1,396 11.02 15,385
AST - T. Rowe Price Natural Resources 1,464 8.20 12,006
AST - T. Rowe Price Small Company Value 3,713 8.60 31,922
AST - Founders Capital Appreciation 394 10.20 4,022
AST - PIMCO Total Return Bond 2,341 10.54 24,671
AST - PIMCO Limited Maturity Bond 3,294 10.29 33,883
AST - INVESCO Equity Income 7,576 10.20 77,257
AST - Oppenheimer Large-Cap Growth 573 11.29 6,473
AST - Janus Overseas Growth 13,110 9.29 121,827
AST - Twentieth Century Strategic Balanced 191 10.94 2,086
AST - Twentieth Century International Growth 2,968 9.40 27,908
AST - Marsico Capital Growth 26,845 11.12 298,436
AST - Cohen & Steers Realty 235 8.90 2,095
AST - Bankers Trust Enhanced 1,741 11.06 19,256
-------------
Total Contractowners' Equity $ 1,295,010
=============
Total Contractowners' Equity $ 1,295,010
=============
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AST - Putnam AST - Putnam
AAF International Balanced
Total Growth Equity Portfolio Portfolio
------------------------------------------------------------------------------
Periods Ended June 26 * thru August 11 * thru October 15 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (180) (92) (82) (6)
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (180) (92) (82) (6)
------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 293 144 137 12
Cost of Securities Sold 293 137 145 11
------------------------------------------------------------------------------
Net Gain (Loss) - 7 (8) 1
Capital Gain Distributions Received - - - -
------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) - 7 (8) 1
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period 11,748 7,016 4,520 212
------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 11,748 7,016 4,520 212
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATION$ 11,568 $ 6,931 $ 4,430 $ 207
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
AST - Putnam Value AST - Lord Abbett AST - Lord Abbett AST
Growth & Income Growth & Income Small Cap Value JanCap Growth
------------------------------------------------------------------------------
August 11 * thru August 11 * thru June 26 * thru June 26 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (35) (119) (56) (940)
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (35) (119) (56) (940)
------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 61 217 92 14,534
Cost of Securities Sold 61 206 110 14,557
------------------------------------------------------------------------------
Net Gain (Loss) - 11 (18) (23)
Capital Gain Distributions Received - - - -
------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) - 11 (18) (23)
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period 687 5,115 284 47,984
------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 687 5,115 284 47,984
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 652 $ 5,007 $ 210 $ 47,021
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
AST - Neuberger AST - Neuberger
AST & Berman & Berman AST - Federated
Money Market Midcap Value Midcap Growth High Yield
------------------------------------------------------------------------------
November 18 * thru June 26 * thru June 26 * thru October 7 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ 814 $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (211) (93) (44) (61)
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 603 (93) (44) (61)
------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 330,020 156 80 90
Cost of Securities Sold 330,020 166 85 88
------------------------------------------------------------------------------
Net Gain (Loss) - (10) (5) 2
Capital Gain Distributions Received - - - -
------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) - (10) (5) 2
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period - 1,610 4,007 709
------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) - 1,610 4,007 709
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 603 $ 1,507 $ 3,958 $ 650
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
AST - T. Rowe Price AST-T. Rowe Price AST-T. Rowe Price AST-T. Rowe Price
Asset Allocation International Bond Natural Resources Small Company Value
------------------------------------------------------------------------------
December 4 * thru October 7 * thru August 11 * thru December 3 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (7) (41) (53) (29)
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (7) (41) (53) (29)
------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 7 67 95 62
Cost of Securities Sold 7 66 94 62
------------------------------------------------------------------------------
Net Gain (Loss) - 1 1 -
Capital Gain Distributions Received - - - -
------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) - 1 1 -
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period 306 591 (131) 630
------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 306 591 (131) 630
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 299 $ 551 $ (183) $ 601
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
AST - Founders AST - PIMCO AST - PIMCO Limited AST - INVESCO
Capital Appreciation Total Return Bond Maturity Bond Equity Income
------------------------------------------------------------------------------
June 26 * thru October 7 * thru October 7 * thru December 3 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (22) (50) (53) (55)
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (22) (50) (53) (55)
------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 34 74 79 133
Cost of Securities Sold 39 75 79 132
------------------------------------------------------------------------------
Net Gain (Loss) (5) (1) - 1
Capital Gain Distributions Received - - - -
------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) (5) (1) - 1
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period 64 (102) 40 2,780
------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 64 (102) 40 2,780
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 37 $ (153) $ (13) $ 2,726
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
AST - Oppenheimer
Large - Cap AST - Janus AST-Twentieth Century AST-Twentieth Century
Growth Overseas Growth Strategic Balanced International Growth
------------------------------------------------------------------------------
June 26 * thru August 11 * thru December 3 *, thru August 11 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ 8
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (36) (153) (2) (45)
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (36) (153) (2) (37)
------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 56 287 5 85
Cost of Securities Sold 59 309 5 94
------------------------------------------------------------------------------
Net Gain (Loss) (3) (22) - (9)
Capital Gain Distributions Received - - - -
------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) (3) (22) - (9)
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period 536 8,726 109 595
------------------------------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 536 8,726 109 595
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 497 $ 8,551 $ 107 $ 549
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------
AST - Marsico AST - Cohen & Steer AST - Bankers Trust
Capital Growth Realty Enhanced 500
----------------------------------------------------------
June 26 * thru October 15 * thru October 29 * thru
December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C>
Dividends $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees
(Note 6) (972) (4) (41)
----------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (972) (4) (41)
----------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 20,358 8 19,329
Cost of Securities Sold 21,077 8 18,389
----------------------------------------------------------
Net Gain (Loss) (719) - 940
Capital Gain Distributions Received - - -
----------------------------------------------------------
NET REALIZED GAIN (LOSS) (719) - 940
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - -
End of Period 25,284 94 1,569
----------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 25,284 94 1,569
----------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 23,593 $ 90 $ 2,468
==========================================================
- -------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AST - Putnam AST - Putnam
AAF International Balanced
Total Growth Equity Portfolio Portfolio
------------------------------------------------------------------------------------
Periods Ended June 26 * thru August 11 * thru October 15 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (180) $ (92) $ (82) $ (6)
Net Realized Gain (Loss) - 7 (8) 1
Net Unrealized Gain (Loss) On Investments 11,748 7,016 4,520 212
----------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 11,568 6,931 4,430 207
----------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 1,188,246 27,123 22,372 1,019
Net Transfers Between Sub-accounts - - - -
Surrenders (4,132) (74) (75) 2,795
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 1,184,114 27,049 22,297 3,814
------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,195,682 33,980 26,727 4,021
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period - - - -
------------------------------------------------------------------------------------
End of Period $ 1,195,682 $ 33,980 $ 26,727 $ 4,021
====================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
AST - Putnam Value AST - Lord Abbett AST - Lord Abbett AST
Growth & Income Growth & Income Small Cap Value JanCap Growth
------------------------------------------------------------------------------------
August 11 * thru August 11 * thru June 26 * thru June 26 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (35) $ (119) $ (56) $ (940)
Net Realized Gain (Loss) - 11 (18) (23)
Net Unrealized Gain (Loss) On Inv 687 5,115 284 47,984
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 652 5,007 210 47,021
------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 7,500 24,411 11,500 243,116
Net Transfers Between Sub-accounts - - - -
Surrenders (32) 31,555 (44) 11,709
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 7,468 55,966 11,456 254,825
------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,120 60,973 11,666 301,846
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period - - - -
------------------------------------------------------------------------------------
End of Period $ 8,120 $ 60,973 $ 11,666 $ 301,846
====================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
AST - Neuberger AST - Neuberger
AST & Berman & Berman AST - Federated
Money Market Midcap Value Midcap Growth High Yield
------------------------------------------------------------------------------------
November 18 * thru June 26 * thru June 26 * thru October 7 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ 603 $ (93) $ (44) $ (61)
Net Realized Gain (Loss) - (10) (5) 2
Net Unrealized Gain (Loss) On Investments - 1,610 4,007 709
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 603 1,507 3,958 650
------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 361,161 19,250 15,580 50,634
Net Transfers Between Sub-accounts - - - -
Surrenders (330,240) 19,821 19,864 (74)
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 30,921 39,071 35,444 50,560
------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 31,524 40,578 39,402 51,210
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period - - - -
------------------------------------------------------------------------------------
End of Period $ 31,524 $ 40,578 $ 39,402 $ 51,210
====================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
AST - T. Rowe Price AST - T. Rowe Price AST - T. Rowe Price AST - T. Rowe Price
Asset Allocation International Bond Natural Resources Small Company Value
------------------------------------------------------------------------------------
December 4 * thru October 7 * thru August 11 * thru December 3 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (7) $ (41) $ (53) $ (29)
Net Realized Gain (Loss) - 1 1 -
Net Unrealized Gain (Loss) On Investments 306 591 (131) 630
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 299 551 (183) 601
------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 7,500 14,873 12,121 2,500
Net Transfers Between Sub-accounts - - - -
Surrenders (63) (39) 68 28,821
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 7,437 14,834 12,189 31,321
------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 7,736 15,385 12,006 31,922
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period - - - -
------------------------------------------------------------------------------------
End of Period $ 7,736 $ 15,385 $ 12,006 $ 31,922
====================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
AST - Founders AST - PIMCO AST - PIMCO Limited AST - INVESCO
Capital Appreciation Total Return Bond Maturity Bond Equity Income
------------------------------------------------------------------------------------
June 26 * thru October 7 * thru October 7 * thru December 3 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (22) $ (50) $ (53) $ (55)
Net Realized Gain (Loss) (5) (1) - 1
Net Unrealized Gain (Loss) On Investments 64 (102) 40 2,780
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 37 (153) (13) 2,726
------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 4,000 24,874 33,954 14,357
Net Transfers Between Sub-accounts - - - -
Surrenders (15) (50) (58) 60,174
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 3,985 24,824 33,896 74,531
------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,022 24,671 33,883 77,257
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period - - - -
------------------------------------------------------------------------------------
End of Period $ 4,022 $ 24,671 $ 33,883 $ 77,257
====================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
AST - Oppenheimer
Large-Cap AST-Janus AST-Twentieth Century AST-Twentieth Century
Growth Overseas Growth Strategic Balanced International Growth
------------------------------------------------------------------------------------
June 26 * thru August 11 * thru December 3 *, thru August 11 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (36) $ (153) $ (2) $ (37)
Net Realized Gain (Loss) (3) (22) - (9)
Net Unrealized Gain (Loss) On Investments 536 8,726 109 595
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 497 8,551 107 549
------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 6,000 41,825 1,743 7,500
Net Transfers Between Sub-accounts - - - -
Surrenders (24) 71,451 236 19,859
------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 5,976 113,276 1,979 27,359
------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 6,473 121,827 2,086 27,908
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period - - - -
------------------------------------------------------------------------------------
End of Period $ 6,473 $ 121,827 $ 2,086 $ 27,908
====================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
AST - Marsico AST - Cohen & Steers AST - Bankers Trust
Capital Growth Realty Enhanced 500
---------------------------------------------------------------
June 26 * thru October 15 * thru October 29 * thru
December 31, 1998 December 31, 1998 December 31, 1998
---------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C>
Net Investment Income (Loss) $ (972) $ (4) $ (41)
Net Realized Gain (Loss) (719) - 940
Net Unrealized Gain (Loss) On Investments 25,284 94 1,569
---------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations 23,593 90 2,468
---------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits 211,055 1,890 20,388
Net Transfers Between Sub-accounts - - -
Surrenders 63,788 115 (3,600)
---------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 274,843 2,005 16,788
---------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 298,436 2,095 19,256
---------------------------------------------------------------
NET ASSETS:
Beginning of Period - - -
---------------------------------------------------------------
End of Period $ 298,436 $ 2,095 $ 19,256
===============================================================
- ------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
American Skandia Life Assurance Corporation
Variable Account F
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION
American Skandia Life Assurance Corporation Variable Account F (the
"Account") is a separate investment account of American Skandia Life
Assurance Corporation ("American Skandia" or "Company"). The Account is
registered with the SEC under the Investment Company Act of 1940 as a
unit investment trust. The Account commenced operations on June 25,
1998.
As of December 31, 1998, the Account consisted of thirty -three
sub-accounts. These financial statements report on twenty-six
sub-accounts which had financial activity during 1998 and are offered
in American Skandia's AS Trophy Single Premium Variable Life Insurance
Product. Each of the twenty-six sub-accounts invests only in a single
corresponding portfolio of either The Alger American Fund, American
Skandia Trust, or Montgomery Variable Series (the "Trusts"). Fred Alger
Management, Inc. is the advisor for The Alger American Fund. American
Skandia Investments Services, Incorporated, an affiliate, is the
investment manager for the American Skandia Trust, while Putnam
Investment Management, Inc., Lord Abbett & Co., Janus Capital
Corporation, J.P. Morgan Inc., Neuberger Berman Management,
Incorporated, Federated Investment Counseling, T. Rowe Price
Associates, Inc., Rowe Price-Fleming International, Inc., Founders
Asset Management, LLC, Pacific Investment Management Company, INVESCO
Funds Group Inc., OpphenheimerFunds, Inc., American Century Investments
Management, Inc., Marsico Capital Management, LLC, Cohen & Steers
Capital Management, Inc., and Bankers Trust Company are the
subadvisors. Montgomery Asset Management L.P. is the investment advisor
for the Montgomery Variable Series.
The investment advisors are paid fees for their services by the
respective Trusts.
American Skandia's AS Trophy Single Premium Variable Life Insurance
Policy is marketed through American Skandia Marketing, Inc., an
affiliate.
2. VALUATION OF INVESTMENTS
The market value of the investments in the sub-accounts is based on the
net asset values of the Trust shares held at the end of the current
period. Transactions are accounted for on the trade date and dividend
income is recognized on an accrual basis. Realized gains and losses on
sales of investments are determined on a first-in first-out basis.
3. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
4. INCOME TAXES
American Skandia does not expect to incur any federal income tax
liability on earnings, or realized capital gains attributable to the
Account, therefore, no charges for federal income taxes are currently
deducted from the Account. If American Skandia incurs income taxes
attributable to the Account, or determines that such taxes will be
incurred, it may make a charge for such taxes against the Account.
Under current laws, American Skandia may incur state and local income
taxes (in addition to premium tax) in several states. The Company does
not anticipate that these will be significant. However, American
Skandia may make charges to the Account in the event that the amount of
these taxes change.
5. DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Internal Revenue Code provides that a variable
life insurance policy, in order to qualify as life insurance, must have
an "adequately diversified" segregated asset account (including
investments in a mutual fund by the segregated asset account of the
insurance companies). The Treasury Department's regulations prescribe
the diversification requirements for variable life insurance policies.
We believe the underlying mutual fund portfolios complied with the
terms of these regulations.
6. CONTRACT CHARGES
The following contract charges are paid to American Skandia which
provides administrative services to the Account:
Mortality and Expense Risk Charges - Charged daily against the Account
at an annual rate of 0.90% of the net assets.
Administrative Fees - Charged daily against the Account at an annual
rate of 0.15% of the net assets.
Contingent Deferred Sales Charges are computed as set forth in the
American Skandia's AS Trophy Single Premium Variable Life Insurance
Policy Prospectus.
7. YEAR 2000 COMPLIANCE (UNAUDITED)
The Company is continuing its ongoing assessment of the potential
impact of the year 2000 issue on various aspects of its business. The
Company's computer support is provided by its affiliate, American
Skandia Information Services and Technology Corporation, which also
provides such support for the Company's affiliated broker-dealer,
American Skandia Marketing, Incorporated, and the Company's affiliated
investment advisory firm, American Skandia Investment Services,
Incorporated. Because of the nature of the Company's business, any
assessment of the potential impact of the year 2000 issues on the
company must be an assessment of the potential impact of these issues
on all these companies, which are referred to below as "American
Skandia".
Business Partners
Management believes the company is most vulnerable in its interfaces
with computer systems of investment managers, sub-advisors, third party
administrators, vendors and other business partners. The inability to
properly recognize date sensitive electronic information and transfer
data between systems could cause errors or even a complete systems
failure which would result in a temporary inablility to process
transactions correctly or engage in normal business activities.
The American Skandia deferred annuity operational business partners
report that all critical interfaces are Year 2000 compliant. All
investment manager and sub-advisors are required by the Securities and
Exchange Commission to publicly disclose their Year 2000 status is
December 1998 and June 1999.
American Skandia has initiated formal communications with parties that
provide third party administration, record keeping and trust services
in connection with its life insurance and qualified retirement plan
annuities business. Management has already received several written
assurances that these firms will be Year 2000 compliant. The Company
expects to have certifications from all remaining parties by July 1999.
American Skandia is currently developing contingency plans in the event
that these targets are not met.
Information Technology Systems
American Skandia is a relatively young company whose internally
developed systems were designed from the start with the four digit year
codes. The Company engaged an external information technology
specialist to review American Skandia's operating systems and
internally developed software. The assessment was completed in December
1997 and the results were favorable. Specific modifications were
suggested, evaluated, and implemented for the annuity adminsitration
system. This project was completed during 1998 and a ceritificate of
compliance has been received. Other non-critical internally developed
applications in the client/server area have already been or will be
remediated during 1999. The costs associated with this aspect of the
Year 2000 compliance have not had, and are not expected to have, a
significant impact on the Company's results from operations.
Suppliers and Non-Information Technology Systems
Like most companies, American Skandia is reliant on network, and
desktop operating systems and software providers to release compliant
versions of their respective systems. American Skandia's network is
currently at the most compliant level available. The standard desktop
software will be replaced, as fully compliant versions become
available. In addition, the Company is in the process of contacting the
non-information systems vendors and suppliers regarding their Year 2000
compliance status and will factor the results of these assessments into
its contingency plans.
7. YEAR 2000 COMPLIANCE (UNAUDITED)
Management believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. However, should errors or
disruptions in computer service occur, the Company could realize
losses. Given the nature and uncertainty of such losses, the amounts
cannot be reasonably determined.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. CHANGES IN THE UNITS OUTSTANDING
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
AST- Putnam AST-Putnam AST-Putnam Value
AAF-Growth Int'l Equity Balanced Asset Growth & Income
----------------------------------------------------------------------------------------------
June 26 * thru August 11 * thru October 15 * thru August 11 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period 0 0 0 0
Units Purchased 2,778 2,775 112 803
Units Transferred Between Sub-accounts 0 0 279 0
Units Surrendered (7) (9) (1) (4)
----------------------------------------------------------------------------------------------
Units Outstanding End of the Period 2,771 2,765 390 798
==============================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
AST-Lord Abbett AST-Lord Abbett AST AST
Growth & Income Small Cap Value JanCap Growth Money Market
----------------------------------------------------------------------------------------------
August 11 * thru June 26 * thru June 25 * thru November 18 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period 0 0 0 0
Units Purchased 2,788 1,305 21,796 35,493
Units Transferred Between Sub-accounts 3,236 0 971 (32,365)
Units Surrendered (13) (6) (112) (42)
----------------------------------------------------------------------------------------------
Units Outstanding End of the Period 6,010 1,299 22,655 3,086
==============================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
AST- Neuberger & AST- Neuberger & AST-Federated AST-T. Rowe Price
Berman Midcap Value Berman Midcap Growth High Yield Asset Allocation
----------------------------------------------------------------------------------------------
June 26 * thru June 26 * thru October 7 * thru December 4 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period 0 0 0 0
Units Purchased 2,056 1,615 5,236 724
Units Transferred Between Sub-accounts 2,110 2,089 0 0
Units Surrendered (10) (5) (8) (1)
----------------------------------------------------------------------------------------------
Units Outstanding End of the Period 4,156 3,699 5,228 723
==============================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
AST-T. Rowe AST-T. Rowe Price AST-T.Rowe Price AST-Founders
Price International BonNatural Resources Small Company Value Capital Appreciation
----------------------------------------------------------------------------------------------
October 7 * thru August 11 * thru December 3 * thru June 26 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period 0 0 0 0
Units Purchased 1,399 1,455 295 395
Units Transferred Between Sub-accounts 0 14 3,422 0
Units Surrendered (4) (6) (4) (2)
----------------------------------------------------------------------------------------------
Units Outstanding End of the Period 1,396 1,464 3,713 394
==============================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
AST-PIMCO Total AST-PIMCO AST-INVESCO AST-Oppenheimer
Return Bond Limited Maturity Bond Equity Income Large-Cap Growth
----------------------------------------------------------------------------------------------
October 7 * thru October 7 * thru December 3 * thru June 26 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period 0 0 0 0
Units Purchased 2,346 3,300 1,448 575
Units Transferred Between Sub-accounts 0 0 6,136 0
Units Surrendered (5) (6) (9) (2)
----------------------------------------------------------------------------------------------
Units Outstanding End of the Period 2,341 3,294 7,576 573
==============================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
AST-Janus AST-Twentieth Century AST-Twentieth Century AST-Marsico
Overseas Growth Strategic Balanced International Growth Capital Growth
----------------------------------------------------------------------------------------------
August 11 * thru December 3 * thru August 11 * thru June 25 * thru
December 31, 1998 December 31, 1998 December 31, 1998 December 31, 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period 0 0 0 0
Units Purchased 4,987 168 767 20,596
Units Transferred Between Sub-accounts 8,144 23 2,207 6,378
Units Surrendered (21) 0 (6) (129)
----------------------------------------------------------------------------------------------
Units Outstanding End of the Period 13,110 191 2,968 26,845
==============================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
* Date Operations Commenced.
</TABLE>
-------------------------------------------
AST - Cohen & AST - Bankers
Steers Real Estate Trust 500 Index
-------------------------------------------
October 15 * thru October 29 * thru
December 31, 1998 December 31, 1998
-------------------------------------------
Units Outstanding Beginning of the Period 0 0
Units Purchased 223 2,064
Units Transferred Between Sub-accounts 13 (318)
Units Surrendered (1) (5)
-------------------------------------------
Units Outstanding End of the Period 235 1,741
===========================================
- -------------------------------------------------------------------------------
* Date Operations Commenced.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
9. SECURITIES TRANSACTIONS
Purchases and sales of securities, other than short-term securities, for the year ended December 31, 1998
were as follows:
Purchases Sales
---------------------------------------------
<S> <C> <C>
AAF - Growth $27,238 $144
AST - Putnam International Equity 22,499 137
AST - Putnam Balanced 3,831 12
AST - Putnam Value Growth & Income 7,554 61
AST - Lord Abbett Growth & Income 56,270 217
AST - Lord Abbett Small Cap Value 11,601 92
AST - Jancap Growth 282,976 14,534
AST - Money Market 361,844 330,020
AST - Neuberger & Berman Midcap Value 39,299 156
AST - Neuberger & Berman Midcap Growth 35,564 80
AST - Federated High Yield 50,676 90
AST - T. Rowe Price Asset Allocation 7,444 7
AST - T. Rowe Price International Bond 14,927 67
AST - T. Rowe Price Natural Resources 12,325 95
AST - T. Rowe Price Small Company Value 31,417 62
AST - Founders Capital Appreciation 4,036 34
AST - Pimco Total Return Bond 24,924 74
AST - Pimco Limited Maturity Bond 34,000 79
AST - INVESCO Equity Income 74,741 133
AST - Oppenheimer Large-Cap Growth 6,055 56
AST - Janus Overseas Growth 113,718 287
AST - Twentieth Century Strategic Balanced 1,987 5
AST - Twentieth Century International Growth 27,500 85
AST - Marsico Capital Growth 315,306 20,358
AST - Cohen & Steers Realty 2,016 8
AST - Bankers Trust Enhanced 500 41,899 19,329
=============================================
$1,611,647 $386,222
=============================================
</TABLE>
<PAGE>
APPENDIX A
HYPOTHETICAL ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH VALUES
It is impossible to illustrate exactly how a Policy will perform in the future.
However, you may better understand how a Policy works, and may be able to better
compare a Policy with other life insurance plans, using hypothetical
illustrations based on the personal characteristics of the Insured(s) as well as
certain assumptions about the future. You can do this using the hypothetical
illustrations provided in this Appendix A. You can also do this by requesting
from us personalized hypothetical illustrations based on: (a) the Age(s) of the
Insured(s); (b) the expected risk class(es) of the Insured(s); (c) the gender of
the Insured(s), where permitted; (d) the Face Amount you seek or the amount of
Premium you intend to pay; and (e) applicable cost of insurance charges. Please
forward any such request to us at our address as shown on the first page of this
Prospectus.
As of the date of this Prospectus, we only provide such personalize hypothetical
illustrations on paper. We reserve the right to make such illustrations
available in the future via electronic transmission or as part of a multi-media
presentation.
As of the date of this Prospectus, we do not provide hypothetical illustrations
that assume future loans, withdrawals, loan repayments or varying assumed rates
of return. However, we reserve the right to make such illustrations available in
the future.
The hypothetical illustrations that follow show the changes in the Death
Benefit, Account Value and Cash Value over time based on certain assumptions.
All values are provided as of the end of each Policy Year shown. The assumptions
used are as follows:
1. Hypothetical average annual gross rates of return in the
Portfolios of 0%, 6% and 12%. Of course, actual investment
performance is not a constant rate. If the hypothetical gross
rate of return were to fluctuate above or below the 0%, 6% or
12% average over a period of years, the Death Benefit, Account
Value and Cash Value may be different. For hypothetical rates
of return of 0% and 6%, the illustrations will indicate if a
Policy would lapse. HYPOTHETICAL RATES OF RETURN ARE FOR
ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF
PAST OR FUTURE PERFORMANCE.
2. Hypothetical constant expense ratios of 1.10% for the
Portfolios. The total annual expenses for the underlying
mutual funds are shown in the section entitled "Variable
Investment Options." The 0.98% hypothetical expense ratio is
the weighted average of the actual total annual expenses for
all available Portfolios as of December 31, 1998. Certain of
the Portfolios have not been in existence for a full year and,
therefore, the total annual expenses for those Portfolios are
estimated and annualized. The 0.98% hypothetical expense
ratio, when deducted from the hypothetical average annual
gross rates of return equals a hypothetical average annual net
rate of return of -0.98%, 5.02% and 11.02%, respectively.
3. The mortality and expense risk charge assessed against the
assets in the Separate Account at an annualized rate of 0.90%.
The charge for administrative expenses connected with
operating the Separate Account is 0.25% per year. It is also
assumed that there is no tax charge assessed against the
Separate Account.
4. The charges under the Policy, including the cost of insurance
charges that differ by gender, risk class and attained age. It
is assumed that there are no transfer fees applicable. The
hypothetical illustrations are presented based on both the
current and guaranteed cost of insurance charges.
5. There are no loans, loan repayments, withdrawals, accelerated
death benefit payments or amounts paid to maintain the Policy
in effect during a grace period. The hypothetical values will
include Cash Value Credits, if applicable.
6. The Age(s) and, where applicable, gender of the Insured(s)
shown in each illustration. The cost of insurance charges
differ based on the age(s) of the Insured(s) on the Policy
Date and, where permitted by law, the gender of the
Insured(s).
7. The Insured(s) is/are eligible for the no tobacco use risk
class. For each gender and age classification, the cost of
insurance rate for the "No Tobacco Use" classification is .35%
lower than the rate for the "Tobacco User" classification.
8. The Premium and Face Amount are as shown in each illustration.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
$25,000 $55,347 55 Male Single Life 0% No Usage
(-0.98% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
1 24,148 21,648 51,907 24,047 21,547 51,689
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 23,324 20,949 48,700 23,119 20,744 48,271
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 22,528 20,278 45,707 22,217 19,967 45,077
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 21,757 19,757 42,915 21,340 19,340 42,092
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 21,012 19,262 40,309 20,488 18,738 39,302
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 20,292 18,792 37,877 19,658 18,158 36,695
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 19,595 18,345 35,608 18,852 17,602 34,259
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 18,921 17,921 33,492 18,068 17,068 31,982
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
9 18,269 17,519 31,520 17,304 16,554 29,855
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 17,639 17,639 29,681 16,561 16,561 27,867
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 17,140 17,140 28,148 15,942 15,942 26,180
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 16,655 16,655 26,709 15,335 15,335 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 16,183 16,183 25,358 14,712 14,712 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 15,724 15,724 25,000 14,056 14,056 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 15,276 15,276 25,000 13,358 13,358 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 14,841 14,841 25,000 12,609 12,609 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 14,417 14,417 25,000 11,796 11,796 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 14,004 14,004 25,000 10,903 10,903 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 13,603 13,603 25,000 9,908 9,908 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 13,212 13,212 25,000 8,790 8,790 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 11,407 11,407 25,000 240 240 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 9,830 9,830 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 8,451 8,451 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- ------------------- ------------------ ------------------- ----------------- ------------------- --------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- ------------------- ----------------- ----------------- ---------------- ------------------- ------------------
- ------------------- ------------------- ----------------- ----------------- ---------------- ------------------- ------------------
$25,000 $55,347 55 Male Single Life 6% No Usage
(5.02% net)
- ------------------ ------------------- ----------------- ------------------ ---------------- ------------------- ------------------
- ------------------ -------------------------------------------------------- -------------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
-------------------------------------------------------- ---------------------------------------------------
------------------- ----------------- ------------------- ---------------- ----------------- --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 25,598 23,098 55,024 25,491 22,991 54,793
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 26,211 23,836 54,727 25,980 23,605 54,245
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 26,839 24,589 54,455 26,469 24,219 53,704
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 27,484 25,484 54,209 26,957 24,957 53,170
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 28,144 26,394 53,990 27,441 25,691 52,642
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 28,821 27,321 53,798 27,922 26,422 52,120
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 29,515 28,265 53,635 28,398 27,148 51,605
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 30,226 29,226 53,505 28,865 27,865 51,096
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 30,956 30,206 53,408 29,324 28,574 50,593
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 31,703 31,703 53,347 29,771 29,771 50,095
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 32,682 32,682 53,670 30,404 30,404 49,928
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 33,692 33,692 54,029 31,032 31,032 49,763
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 34,734 34,734 54,425 31,655 31,655 49,600
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 35,809 35,809 54,855 32,273 32,273 49,438
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 36,919 36,919 55,323 32,885 32,885 49,278
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 38,063 38,063 55,831 33,488 33,488 49,120
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 39,245 39,245 56,385 34,079 34,079 48,964
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 40,464 40,464 56,991 34,654 34,654 48,809
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
19 41,721 41,721 57,656 35,209 35,209 48,656
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 43,019 43,019 58,381 35,741 35,741 48,505
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 50,154 50,154 62,840 38,131 38,131 47,776
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 59,236 59,236 69,537 40,121 40,121 47,098
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 69,992 69,992 77,700 41,872 41,872 46,483
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
$25,000 $55,347 55 Male Single Life 12% No Usage
(11.02% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- ------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 27,048 24,548 58,140 26,934 24,434 57,896
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
2 29,266 26,891 61,105 29,008 26,633 60,567
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 31,668 29,418 64,252 31,231 28,981 63,366
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 34,270 32,270 67,595 33,614 31,614 66,300
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 37,089 35,339 71,149 36,164 34,414 69,374
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 40,142 38,642 74,930 38,891 37,391 72,595
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 43,449 42,199 78,957 41,805 40,555 75,970
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 47,031 46,031 83,251 44,915 43,915 79,507
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 50,911 50,161 87,837 48,230 47,480 83,212
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 55,251 55,251 92,971 51,758 51,758 87,093
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 60,356 60,356 99,116 56,015 56,015 91,987
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 65,936 65,936 105,737 60,587 60,587 97,159
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 72,034 72,034 112,870 65,497 65,497 102,627
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 78,715 78,715 120,581 70,768 70,768 108,408
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 86,033 86,033 128,920 76,429 76,429 114,529
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 94,031 94,031 137,924 82,517 82,517 121,035
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 102,773 102,773 147,659 89,028 89,028 127,911
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 112,328 112,328 158,209 95,977 95,977 135,180
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 122,770 122,770 169,661 103,379 103,379 142,863
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 134,184 134,184 182,101 111,256 111,256 150,985
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 209,285 209,285 262,223 158,922 158,922 199,122
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 326,418 326,418 383,181 223,844 223,844 262,770
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 509,108 509,108 565,182 312,662 312,662 347,099
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -----------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
$25,000 $62,362 55 Female Single Life 0% No Usage
(-0.98% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 24,185 21,685 58,549 24,058 21,558 58,241
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 23,395 21,020 54,976 23,146 20,771 54,390
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 22,630 20,380 51,625 22,264 20,014 50,790
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 21,889 19,889 48,480 21,414 19,414 47,427
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 21,172 19,422 45,528 20,593 18,843 44,284
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 20,477 18,977 42,761 19,799 18,299 41,346
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 19,804 18,554 40,171 19,030 17,780 38,602
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 19,152 18,152 37,749 18,283 17,283 36,037
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 18,520 17,770 35,488 17,556 16,806 33,641
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 17,909 17,909 33,378 16,848 16,848 31,401
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 17,430 17,430 31,613 16,265 16,265 29,501
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 16,962 16,962 29,952 15,695 15,695 27,714
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 16,507 16,507 28,388 15,138 15,138 26,033
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 16,063 16,063 26,911 14,594 14,594 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 15,630 15,630 25,517 14,041 14,041 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 15,208 15,208 25,000 13,466 13,466 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 14,797 14,797 25,000 12,862 12,862 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 14,396 14,396 25,000 12,219 12,219 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 14,005 14,005 25,000 11,524 11,524 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 13,624 13,624 25,000 10,765 10,765 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 11,857 11,857 25,000 5,414 5,414 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 10,301 10,301 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 8,931 8,931 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
$25,000 $62,362 55 Female Single Life 6% No Usage
(5.02% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 25,637 23,137 62,063 25,502 23,002 61,737
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 26,290 23,915 61,779 26,010 23,635 61,120
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 26,961 24,711 61,505 26,525 24,275 60,511
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 27,650 25,650 61,238 27,050 25,050 59,909
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 28,357 26,607 60,981 27,583 25,833 59,314
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 29,084 27,584 60,735 28,122 26,622 58,727
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 29,829 28,579 60,507 28,666 27,416 58,146
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 30,595 29,595 60,303 29,210 28,210 57,573
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 31,381 30,631 60,130 29,750 29,000 57,006
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 32,187 32,187 59,990 30,286 30,286 56,446
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 33,232 33,232 60,273 31,018 31,018 56,258
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 34,311 34,311 60,586 31,755 31,755 56,072
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 35,426 35,426 60,923 32,498 32,498 55,889
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 36,578 36,578 61,281 33,251 33,251 55,707
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 37,769 37,769 61,660 34,012 34,012 55,527
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 39,000 39,000 62,066 34,779 34,779 55,348
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 40,271 40,271 62,507 35,546 35,546 55,172
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 41,586 41,586 62,993 36,307 36,307 54,998
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 42,944 42,944 63,533 37,058 37,058 54,825
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 44,347 44,347 64,133 37,792 37,792 54,654
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 52,230 52,230 68,195 41,226 41,226 53,828
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 62,161 62,161 74,596 44,210 44,210 53,054
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 74,012 74,012 82,729 46,830 46,830 52,346
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- -------------- ------------------
- ------------------- -------------------- ------------------ ------------------- ----------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
$25,000 $62,362 55 Female Single Life 12% No Usage
(11.02% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- -------------- ------------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ------------ ------------------ -------------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ------------ ------------------ -------------------
- ------------------- ------------------- ------------------ -------------------- ------------ ------------------ -------------------
1 27,089 24,589 65,578 26,946 24,446 65,234
- ------------------- ------------------- ------------------ -------------------- ------------ ------------------ -------------------
- ------------------- ------------------- ------------------ --------------------------------- ------------------ -------------------
2 29,354 26,979 68,979 29,041 26,666 68,244
- ------------------- ------------------- ------------------ --------------------------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------------------------- ------------------ -------------------
3 31,812 29,562 72,571 31,298 29,048 71,398
- ------------------- ------------------- ------------------ --------------------------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
4 34,478 32,478 76,360 33,730 31,730 74,703
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
5 37,370 35,620 80,362 36,350 34,600 78,167
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
6 40,508 39,008 84,591 39,169 37,669 81,796
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
7 43,911 42,661 89,071 42,200 40,950 85,599
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
8 47,603 46,603 93,827 45,450 44,450 89,584
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
9 51,609 50,859 98,890 48,930 48,180 93,758
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
10 56,093 56,093 104,546 52,652 52,652 98,132
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
11 61,369 61,369 111,308 57,144 57,144 103,645
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
12 67,144 67,144 118,564 61,996 61,996 109,473
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
13 73,466 73,466 126,341 67,239 67,239 115,633
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ ------------------
14 80,409 80,409 134,711 72,907 72,907 122,144
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
15 88,017 88,017 143,692 79,054 79,054 129,061
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ -------------- ----------------- ------------------ -------------------
16 96,344 96,344 153,328 85,700 85,700 136,388
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
17 105,460 105,460 163,689 92,860 92,860 144,131
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
18 115,438 115,438 174,863 100,553 100,553 152,315
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
19 126,360 126,360 186,944 108,801 108,801 160,965
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
20 138,316 138,316 200,029 117,626 117,626 170,107
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------------
- -------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------------
25 217,361 217,361 283,805 171,756 171,756 224,260
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
30 341,578 341,578 409,911 246,479 246,479 295,787
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
35 536,783 536,783 600,002 349,313 349,313 390,454
- ------------------- ------------------- ------------------ --------------- ----------------- ------------------ -------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ----------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ----------------- --------------
$25,000 $75,421 55 Female Joint Life 0% No Usage
55 Male (-0.98% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- ----------------------------------------------------------- -------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 24,279 21,779 70,437 24,279 21,779 70,437
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 23,574 21,199 65,780 23,574 21,199 65,780
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 22,882 20,632 61,429 22,882 20,632 61,429
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 22,204 20,204 57,363 22,204 20,204 57,363
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 21,539 19,789 53,564 21,539 19,789 53,564
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 20,887 19,387 50,015 20,887 19,387 50,015
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 20,247 18,997 46,699 20,247 18,997 46,699
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 19,617 18,617 43,600 19,617 18,617 43,600
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 19,000 18,250 40,710 18,997 18,247 40,706
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 18,401 18,401 38,030 18,387 18,387 38,001
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 17,936 17,936 35,776 17,901 17,901 35,706
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 17,483 17,483 33,675 17,417 17,417 33,549
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 17,040 17,040 31,716 16,934 16,934 31,520
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 16,607 16,607 29,889 16,453 16,453 29,612
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 16,185 16,185 28,186 15,975 15,975 27,819
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 15,773 15,773 26,598 15,497 15,497 26,132
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 15,371 15,371 25,120 15,020 15,020 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 14,978 14,978 25,000 14,526 14,526 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 14,594 14,594 25,000 14,003 14,003 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 14,220 14,220 25,000 13,440 13,440 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 12,476 12,476 25,000 9,544 9,544 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 10,928 10,928 25,000 943 943 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 9,555 9,555 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- ------------
$25,000 $75,421 55 Female Joint Life 6% No Usage
55 Male (5.02% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 25,737 23,237 74,666 25,737 23,237 74,666
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 26,491 24,116 73,921 26,491 24,116 73,921
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
3 27,261 25,011 73,185 27,261 25,011 73,185
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
4 28,048 26,048 72,460 28,048 26,048 72,460
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
5 28,850 27,100 71,743 28,850 27,100 71,743
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 29,666 28,166 71,036 29,666 28,166 71,036
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 30,496 29,246 70,338 30,496 29,246 70,338
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 31,337 30,337 69,648 31,337 30,337 69,648
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 32,191 31,441 68,975 32,187 31,437 68,967
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 33,069 33,069 68,346 33,044 33,044 68,295
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 34,194 34,194 68,206 34,127 34,127 68,072
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 35,359 35,359 68,109 35,226 35,226 67,853
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 36,564 36,564 68,057 36,338 36,338 67,636
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 37,811 37,811 68,051 37,461 37,461 67,421
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 39,102 39,102 68,094 38,594 38,594 67,209
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 40,438 40,438 68,190 39,732 39,732 66,999
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 41,820 41,820 68,345 40,870 40,870 66,791
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 43,251 43,251 68,568 42,001 42,001 66,586
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 44,732 44,732 68,866 43,119 43,119 66,383
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 46,265 46,265 69,248 44,217 44,217 66,181
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 55,045 55,045 72,832 49,284 49,284 65,208
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 66,016 66,016 79,434 53,975 53,975 64,945
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 79,253 79,253 88,577 58,087 58,087 64,920
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- -------------
$25,000 $75,421 55 Female Joint Life 12% No Usage
55 Male (11.02% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- ------------
- ------------------- ----------------------------------------------------------- ---------------------------------------------------
Current Charges Guaranteed Charges
End of Policy Year
----------------------------------------------------------- ---------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ --------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 27,195 24,695 78,894 27,195 24,695 78,894
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
2 29,578 27,203 82,536 29,578 27,203 82,536
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
3 32,166 29,916 86,352 32,166 29,916 86,352
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
4 34,974 32,974 90,352 34,974 32,974 90,352
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
5 38,018 36,268 94,545 38,018 36,268 94,545
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
6 41,318 39,818 98,938 41,318 39,818 98,938
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
7 44,891 43,641 103,542 44,891 43,641 103,542
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
8 48,757 47,757 108,365 48,757 47,757 108,365
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
9 52,939 52,189 113,433 52,933 52,183 113,420
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
10 57,627 57,627 119,102 57,584 57,584 119,013
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
11 63,143 63,143 125,949 63,020 63,020 125,703
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
12 69,190 69,190 133,276 68,930 68,930 132,775
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
13 75,822 75,822 141,128 75,351 75,351 140,251
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
14 83,121 83,121 149,597 82,350 82,350 148,210
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
15 91,122 91,122 158,684 89,937 89,937 156,620
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
16 99,894 99,894 168,450 98,149 98,149 165,508
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
17 109,510 109,510 178,967 107,022 107,022 174,901
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ -------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
18 120,052 120,052 190,322 116,586 116,586 184,828
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
19 131,608 131,608 202,614 126,869 126,869 195,318
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
20 144,278 144,278 215,948 137,902 137,902 206,405
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
25 228,441 228,441 302,256 205,623 205,623 272,064
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
30 361,702 361,702 435,214 298,175 298,175 358,777
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
35 572,698 572,698 640,071 423,721 423,721 473,568
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ --------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
APPENDIX B
HYPOTHETICAL ILLUSTRATION OF ACCELERATED DEATH BENEFIT
The following are hypothetical illustrations of the impact of payments made to
the Insured under the accelerated death benefit provision of the Policy. The
first hypothetical illustration assumes the Insured is a female, age 45 as of
the Policy Date. The second hypothetical illustration assumes the Insured is a
male, age 65 as of the Policy Date. The following other assumptions apply to
both hypothetical illustrations:
1. The Premium paid was $20,000.
2. The Accelerated Death Benefit provision is exercised as of the 10th Policy
Anniversary.
3. The investment options in which Account Value was allocated have grown at a
hypothetical average annual net rate of return of 8% since the Issue Date.
4. There have been no loans or loan repayments.
5. No amounts have been withdrawn.
6. 50% of the maximum available amount is taken pursuant to the accelerated
death benefit provision.
7. The 12 month interest rate discount used in the calculation of the benefit
assumes interest at 6% per year, compounded yearly.
The following are various policy values immediate before and after the
accelerated death benefit is paid:
<TABLE>
<CAPTION>
------------------------- -------------------------
Female Age 45 Male Age 65
(No Tobacco) (No Tobacco)
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
<S> <C> <C>
Account Value Before the Accelerated Death Benefit is $34,224 $33,708
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Cash Value Before the Accelerated Death Benefit is Paid $34,224 $33,708
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available For a Loan Before the $30,802 $30,337
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Death Benefit Before the Accelerated Death Benefit is $85,371 $45,746
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Guaranteed Minimum Death Benefit Before the $34,224 $33,708
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Amount Paid as the Accelerated Death Benefit $20,135 $10,789
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Account Value After the Accelerated Death Benefit is $25,668 $25,281
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Cash Value After the Accelerated Death Benefit is Paid $25,668 $25,281
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available For a Loan After the $23,101 $22,753
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Death Benefit After the Accelerated Death Benefit is $64,028 $34,310
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Guaranteed Minimum Death Benefit After the Accelerated $25,668 $25,281
Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPENDIX C
NET SINGLE PREMIUM FACTORS FOR DETERMINATION OF REQUIRED DEATH BENEFITS
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 .145794 .179648 .128227 .145820 .142549 .173641
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 .150168 .184901 .132462 .150638 .146904 .178832
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 .154741 .190376 .136853 .155637 .151450 .184239
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 .159531 .196117 .141415 .160816 .156205 .189896
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 .164555 .202134 .146147 .166184 .161181 .195813
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 .169822 .208454 .151056 .171748 .166388 .202013
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 .175351 .215097 .156150 .177516 .171842 .208514
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 .181135 .222053 .161428 .183482 .177537 .215307
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 .187175 .229318 .166906 .189661 .183478 .222391
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 .193474 .236889 .172585 .196055 .189667 .229765
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 .200035 .244756 .178464 .202666 .196106 .237421
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 .206860 .252916 .184560 .209495 .202801 .245356
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 .213944 .261368 .190875 .216560 .209747 .253574
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 .221291 .270109 .197419 .223864 .216949 .262073
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 .228895 .279132 .204192 .231403 .224405 .270846
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 .236761 .288437 .211198 .239179 .232117 .279893
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 .244894 .298015 .218438 .247196 .240090 .289210
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 .253298 .307862 .225900 .255421 .248325 .298784
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 .261963 .317956 .233579 .263842 .256812 .308598
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 .270894 .328294 .241477 .272450 .265558 .318646
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 .280099 .338865 .249599 .281240 .274569 .328918
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 .289568 .349652 .257933 .290189 .283834 .339398
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 .299311 .360652 .266484 .299295 .293363 .350082
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 .309334 .371859 .275263 .308570 .303162 .360967
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 .319639 .383267 .284285 .318028 .313237 .372051
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 .330230 .394864 .293562 .327683 .323592 .383327
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 .341103 .406652 .303095 .337537 .334226 .394797
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 .352264 .418644 .312891 .347598 .345142 .406472
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 .363716 .430831 .322953 .357876 .356347 .418348
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 .375463 .443211 .333288 .368370 .367842 .430422
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 .387504 .455776 .343896 .379072 .379628 .442686
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
51 .399832 .468510 .354772 .389982 .391698 .455126
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 .412433 .481383 .365917 .401101 .404041 .467718
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
53 .425290 .494362 .377317 .412407 .416640 .480431
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 .438381 .507408 .388968 .423887 .429477 .493230
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 .451696 .520502 .400884 .435558 .442546 .506102
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 .465218 .533636 .413071 .447432 .455834 .519042
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 .478941 .546812 .425551 .459541 .469340 .532055
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 .492871 .560033 .438358 .471935 .483076 .545154
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 .506993 .573308 .451517 .484649 .497033 .558352
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 .521284 .586632 .465025 .497695 .511192 .571645
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 .535723 .599969 .478863 .511045 .525531 .584998
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 .550287 .613272 .492991 .524640 .540024 .598361
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 .564927 .626483 .507352 .538390 .554621 .611671
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 .579602 .639551 .521878 .552212 .569276 .624871
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 .594281 .652440 .536544 .566075 .583957 .637926
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 .608944 .665153 .551348 .579988 .598650 .650837
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 .623584 .677704 .566315 .593989 .613350 .663624
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 .638205 .690127 .581486 .608159 .628069 .676329
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 .652797 .702445 .596895 .622553 .642805 .688977
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 .667333 .714642 .612535 .637176 .657534 .701560
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
71 .681762 .726681 .628356 .651974 .672204 .714037
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 .696014 .738497 .644271 .666812 .686743 .726330
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 .709994 .750004 .660165 .681560 .701053 .738348
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 .723624 .761135 .675927 .696097 .715050 .750016
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 .736865 .771831 .691482 .710345 .728690 .761272
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 .749724 .782071 .706791 .724284 .741970 .772096
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 .762229 .791908 .721863 .737937 .754918 .782539
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 .774433 .801434 .736726 .751362 .767581 .792686
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 .786390 .810733 .751401 .764609 .780008 .802620
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 .798116 .819847 .765881 .777687 .792212 .812375
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
81 .809588 .828771 .780117 .790566 .804165 .821946
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
82 .820755 .837465 .794038 .803191 .815814 .831289
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
83 .831544 .845863 .807562 .815500 .827084 .840341
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
84 .841909 .853936 .820645 .827387 .837930 .849062
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
85 .851863 .861731 .833298 .838880 .848366 .857494
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
86 .861489 .869377 .845592 .850070 .858473 .865761
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
87 .870930 .877089 .857651 .861099 .868391 .874063
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
88 .880405 .885052 .869655 .872184 .878334 .882592
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
89 .890224 .893507 .881864 .883606 .888601 .891595
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
90 .900787 .902897 .894634 .895774 .899583 .901508
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
91 .912663 .913849 .908493 .909137 .911841 .912922
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
92 .926694 .927262 .924224 .924501 .926204 .926715
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
93 .944200 .944411 .943053 .943115 .943971 .944152
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ================
94 .967326 .967355 .967034 .967034 .967267 .967290
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ================
</TABLE>
- -------------------------------------------------------------------------------
The Required Death Benefit is determined by treating the Account Value as if it
were a net single premium. We determine the Required Death Benefit by dividing
the Account Value by factors that are determined as of the Policy Date. These
factors vary by the attained Age, gender (where permitted) and risk class of the
Insured. Factors for joint life cases depend upon an actuarial derivation of the
applicable rate for both Insureds.
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
APPENDIX D
GUARANTEED MONTHLY MAXIMUM COST OF INSURANCE CHARGES PER THOUSAND OF NET AMOUNT AT RISK
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 0.1401 0.1935 0.0842 0.0976 0.1289 0.1743
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 0.1384 0.1935 0.0859 0.0992 0.1279 0.1747
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 0.1359 0.1902 0.0867 0.1017 0.1261 0.1725
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 0.1326 0.1869 0.0884 0.1042 0.1238 0.1703
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 0.1293 0.1818 0.0900 0.1067 0.1214 0.1668
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 0.1251 0.1760 0.0917 0.1092 0.1184 0.1626
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 0.1226 0.1727 0.0942 0.1134 0.1169 0.1608
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 0.1209 0.1710 0.0959 0.1167 0.1159 0.1601
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 0.1201 0.1710 0.0984 0.1209 0.1157 0.1610
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 0.1201 0.1735 0.1017 0.1259 0.1164 0.1640
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 0.1209 0.1777 0.1042 0.1318 0.1176 0.1685
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 0.1234 0.1835 0.1076 0.1368 0.1202 0.1742
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 0.1268 0.1910 0.1109 0.1426 0.1236 0.1813
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 0.1318 0.2011 0.1151 0.1501 0.1284 0.1909
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 0.1376 0.2127 0.1201 0.1585 0.1341 0.2019
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 0.1443 0.2269 0.1259 0.1677 0.1406 0.2151
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 0.1518 0.2437 0.1343 0.1818 0.1483 0.2313
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 0.1618 0.2646 0.1443 0.1986 0.1583 0.2513
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 0.1727 0.2880 0.1551 0.2178 0.1692 0.2739
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 0.1844 0.3147 0.1668 0.2386 0.1808 0.2995
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 0.1986 0.3457 0.1810 0.2637 0.1950 0.3293
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 0.2136 0.3791 0.1960 0.2905 0.2101 0.3614
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 0.2295 0.4160 0.2111 0.3172 0.2258 0.3962
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 0.2470 0.4561 0.2261 0.3440 0.2428 0.4337
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 0.2662 0.5005 0.2412 0.3708 0.2612 0.4746
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 0.2880 0.5475 0.2579 0.3992 0.2819 0.5178
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 0.3114 0.5961 0.2754 0.4285 0.3042 0.5626
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 0.3365 0.6490 0.2946 0.4587 0.3281 0.6109
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 0.3641 0.7061 0.3147 0.4913 0.3542 0.6631
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 0.3942 0.7682 0.3373 0.5274 0.3828 0.7200
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 0.4285 0.8372 0.3624 0.5659 0.4153 0.7829
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
51 0.4679 0.9154 0.3900 0.6070 0.4523 0.8537
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 0.5131 1.0039 0.4218 0.6540 0.4948 0.9338
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
53 0.5651 1.1042 0.4570 0.7061 0.5435 1.0244
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 0.6230 1.2139 0.4930 0.7590 0.5970 1.1227
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 0.6876 1.3314 0.5316 0.8136 0.6564 1.2276
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 0.7582 1.4558 0.5701 0.8675 0.7205 1.3378
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 0.8330 1.5871 0.6079 0.9180 0.7879 1.4529
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 0.9163 1.7254 0.6456 0.9676 0.8621 1.5734
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 1.0098 1.8742 0.6884 1.0207 0.9454 1.7029
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 1.1143 2.0402 0.7388 1.0839 1.0391 1.8482
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 1.2308 2.2279 0.8010 1.1632 1.1447 2.0140
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 1.3652 2.4400 0.8784 1.2654 1.2676 2.2039
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 1.5176 2.6774 0.9735 1.3897 1.4085 2.4184
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 1.6872 2.9378 1.0806 1.5286 1.5656 2.6542
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 1.8733 3.2146 1.1962 1.6754 1.7375 2.9046
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 2.0752 3.5051 1.3162 1.8249 1.9229 3.1666
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 2.2920 3.8070 1.4388 1.9695 2.1207 3.4365
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 2.5282 4.1248 1.5659 2.1161 2.3349 3.7195
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 2.7908 4.4708 1.7076 2.2758 2.5731 4.0275
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 3.0886 4.8542 1.8742 2.4648 2.8444 4.3712
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
71 3.4298 5.2869 2.0777 2.7049 3.1578 4.7646
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 3.8253 5.7785 2.3279 2.9998 3.5238 5.2159
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 4.2749 6.3264 2.6285 3.3519 3.9432 5.7236
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 4.7716 6.9307 2.9757 3.7549 4.4096 6.2865
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 5.3054 7.5807 3.3649 4.1972 4.9140 6.8938
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 5.8727 8.2501 3.7879 4.6698 5.4519 7.5226
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 6.4695 8.9272 4.2435 5.1659 6.0199 8.1623
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 7.1000 9.6169 4.7391 5.6933 6.6228 8.8184
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 7.7848 10.3436 5.2913 6.2710 7.2806 9.5142
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 8.5472 11.1328 5.9234 6.9226 8.0163 10.2749
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
81 9.4095 12.0089 6.6558 7.6677 8.8520 11.1238
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
82 10.3922 12.9898 7.5074 8.5225 9.8078 12.0784
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
83 11.4945 14.0624 8.4777 9.5196 10.8830 13.1353
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
84 12.6988 15.1933 9.5594 10.6131 12.0621 14.2583
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
85 13.9806 16.3456 10.7444 11.7893 13.3240 15.4156
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
86 15.3265 17.4918 12.0280 13.0418 14.6570 16.5839
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
87 16.7180 18.6836 13.4123 14.3609 16.0470 17.8021
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
88 18.1509 19.9424 14.9028 15.7562 17.4918 19.0893
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
89 19.6476 21.2120 16.5166 17.2301 19.0125 20.4012
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
90 21.2331 22.5117 18.2733 18.8930 20.6332 21.7761
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
91 22.9495 23.8839 20.2227 20.7186 22.3974 23.2417
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
92 24.8700 25.5022 22.4528 22.7883 24.3813 24.9527
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
93 27.2013 27.6222 25.1486 25.2821 26.7869 27.1492
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
94 30.4289 30.5976 28.7360 28.7360 30.0877 30.2221
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
- -------------------------------------------------------------------------------
The guaranteed maximum cost of insurance charge depends on the risk class of the
Insured(s). We base the guaranteed maximum charges on the sex distinct 1980
Commissioners Standard Ordinary Ultimate Mortality Table, age last birthday
unless unisex rates apply. The amounts shown are per $1,000 amount at risk. Cost
of insurance charges for joint life cases depend upon an actuarial derivation of
the applicable rate for both insureds. Guaranteed maximum cost of insurance
charges for specific proposed joint insureds are available upon request.
- -------------------------------------------------------------------------------
<PAGE>
ADDITIONAL INFORMATION: Inquiries will be answered by calling your
representative or by writing to:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION at
P.O. Box 883
Shelton, Connecticut 06484
or
[email protected]
Issued by: Serviced at:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION ASSURANCE CORPORATION
One Corporate Drive P.O. Box 883
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 1-800-752-6342
http://www.AmericanSkandia.com http://www.AmericanSkandia.com
Distributed by:
AMERICAN SKANDIA MARKETING, INCORPORATED
One Corporate Drive
Shelton, Connecticut 06484
Telephone: 203-926-1888
http://www.AmericanSkandia.com
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and
documents:
The facing sheet.
The prospectus consisting of 53 pages.
Representations and Undertakings.
The signatures.
Written consents of the following persons:
Werner & Kennedy FILED HEREWITH
Ernst & Young LLP FILED HEREWITH
Deloitte & Touche, LLP FILED HEREWITH
Corporate Actuary FILED HEREWITH
The following exhibits which correspond to those required by paragraph A
of the instructions for exhibits to Form N-8B-2:
1. A.
(1) Resolution of the Board of Directors of the
Company are incorporated by reference to
Registration Statement No. 333-38119 filed via
EDGAR October 17, 1997.
(2) Not applicable.
(3) Distributing contracts:
(a) Principal Underwriting Agreement
incorporated by reference to Registration
Statement No. 333-38119 filed via EDGAR
October 17, 1997.
(b) Form of Revised Dealer Agreement being
filed via EDGAR with Post-Effective Amendment
No. 7 to Registration Statement No. 33-87010.
(c) Not applicable.
(4) Not applicable.
(5) Form of Modified Single Premium Variable Life
Insurance Policy
(a) Single Life version incorporated by
reference to Pre-effective Amendment No. 1 to
Registration Statement No. 333-38119, filed
via EDGAR March 4, 1998.
(b) Last Survivor version incorporated by
reference to Pre-effective Amendment No. 1 to
Registration Statement No. 333-38119, filed
via EDGAR March 4, 1998.
(6) Articles of Incorporation and By-laws of
American Skandia Life Assurance Corporation,
incorporated by reference to Pre-Effective
Amendment No. 2 to Registration Statement No.
33-19363, filed July 27, 1988. Filed via EDGAR
with Post-Effective Amendment No. 6 to
Registration Statement No. 33-87010, filed
March 2, 1998.
(7) Not applicable.
(8) Not applicable.
(9) Other material contracts. Not applicable
(10) Form of Application for Modified Single
Premium Variable Life Insurance Policy. Filed
via EDGAR with Pre-Effective Amendment No. 2
to this Registration Statement No. 333-38119,
filed April 29, 1998.
(11) Memorandum describing transfer and redemption
procedures is incorporated by reference to
Initial Registration Statement No. 333-38119
filed October 17, 1997.
2. Opinion and Consent of Werner and Kennedy. FILED HEREWITH
3. No financial statements are to be omitted from the prospectus
pursuant to instruction 1(b) or 1(c) of the instructions as to the
prospectus.
4. Not applicable.
5. Financial Data Schedules. FILED HEREWITH
6. Not applicable.
7. Opinion and Consent of certifying actuary. FILED HEREWITH
8. (a) Opinion and Consent of Ernst & Young LLP FILED HEREWITH
(b) Opinion and Consent of Deloitte & Touche LLP FILED HEREWITH
9. Powers of Attorney are incorporated by reference to Registration
Statement No. 333-38119 filed via EDGAR October 17, 1997.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING ON INDEMNIFICATION
Article XIII of the By-laws of American Skandia Life Assurance Corporation, a
Connecticut corporation, (the "Corporation") provides for indemnification of its
officers, directors, and employees as follows:
SECTION 1. Proceedings Other Than by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigate
(other than an action by or in the right of the Corporation) by reason of the
fact that he, or the person whose representative he is, is or was a shareholder,
director, officer, employee or agent of the Corporation, or is or was serving
solely at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if the person is
successful on the merits in the defense of the proceeding or as provided in
Section 3 hereof, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, the person had no reasonable
cause to believe his conduct was unlawful or if upon application to the court as
provided in Section 5 hereof, the court shall have determined that in view of
all the circumstances such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine; except that,
in connection with an alleged claim based upon his purchase or sale of
securities of the Corporation or of another enterprise, which he serves or
served at the request of the Corporation, the Corporation shall only indemnify
such person after the court shall have determined, on application as provided in
Section 5 hereof, that in view of all the circumstances such person is fairly
and reasonably entitled to be indemnified, and then for such amount as the court
shall determine. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation or of the participants and
beneficiaries of such employee benefit plan or trust and consistent with the
provisions of such employee benefit plan or trust, or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
SECTION 2. Proceedings by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, by or in the right of the Corporation, to procure a judgment in its
favor by reason of the fact that he, or the person whose legal representative he
is, is or was a shareholder, director, officer, employee or agent of the
Corporation, or is or was serving solely at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or enterprise, against expenses (including attorney fees)
actually and reasonably incurred by him in connection with such proceeding in
relation to matters as to which such person, or the person whose legal
representative his is, is finally adjudged not to have breached his duty to the
Corporation, or where the court, on application as provided in Section 6 hereof,
shall have determined that in view or all the circumstances such person is
fairly and reasonably entitled to be indemnified, and then for such amount as
the court shall determine. The Corporation shall not so indemnify any such
person for amounts paid to the Corporation, to a plaintiff or to counsel for a
plaintiff in settling or otherwise disposing of a proceeding, with or without
court approval; or for expenses incurred in defending a proceeding which is
settled or otherwise disposed of without court approval.
SECTION 3. Determination of Right of Indemnification.
The conclusion provided for in Section 1 hereof may be reached by any of the
following: (1) The Board of Directors of the Corporation by a consent in writing
signed by a majority of those directors who were not parties to such proceeding;
(2) independent legal counsel selected by a consent in writing signed by a
majority of those directors who were not parties to such proceeding; (3) in the
case of any employee or agent who is not an officer or director of the
Corporation, the Corporation's general counsel; or (4) the shareholders of the
Corporation by the affirmative vote of at least a majority of the voting power
of shares not owned by parties to such proceeding, represented at an annual or
special meeting of shareholders, duly called with notice of such purpose stated.
Such person shall also be entitled to apply to a court for such conclusion, upon
application as provided in Section 5 hereof, even though the conclusion reached
by any of the foregoing shall have been adverse to him or to the person whose
legal representative he is.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION AND UNDERTAKING
The Registrant and the Company hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940 (the "Act"). The Registrant and the Company elect to be
governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with respect to the Policies
described in the prospectus. The Policies are designed in such a way as to
qualify for the exemptive relief from various provisions of the Act afforded by
Rule 6e-3(T).
(b) The Company is relying on Paragraph (b)(13)(iii)(F) of Rule 6e-3(T) for the
deduction of the mortality and expense risk charges ("risk charges")assumed by
the Company under the Policies. The Company represents that the risk charges are
reasonable in relation to all of the risks assumed by the issuer under the
Policies. (Paragraph (b)(13)(iii)(F)(2)(ii)). Actuarial memoranda demonstrating
the reasonableness of these charges are maintained by the Company, and will be
made available to the Securities and Exchange Commission (the "Commission") on
request. (Paragraph (b)(13)(iii)(F)(3).
(c) The Company has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit the
separate account and the contractholders and will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation. (Paragraph (b)(13)(iii)(F)(4)(ii)(A).
(d) The Company represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of the company,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses. (Paragraph (b)(13)(iii)(F)(4)(ii)(B)(2).
(e) Pursuant to Rule 26(e) under the Act, the Company hereby represents that the
fees and charges deducted under the Policy described in the Prospectus, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Shelton, State of Connecticut,
on this th day of April 28, 1999.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
SEPARATE ACCOUNT F
(Registrant)
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(Depositor)
By:/s/Lincoln R. Collins Attest: /s/Kathleen A. Chapman
Lincoln R. Collins, Kathleen A. Chapman,
Executive Vice President Assistant Corporate Secretary
an Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
(Principal Executive Officer)
Jan R. Carendi* Chief Executive Officer, 04/28/99
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer)
/s/Thomas M. Mazzaferro Executive Vice President and 04/28/99
Thomas M. Mazzaferro Chief Financial Officer
(Principal Accounting Officer)
/s/David R. Monroe Vice President and 04/28/99
David R. Monroe Controller
(Board of Directors)
Jan. R. Carendi* Gordon C. Boronow* Malcolm M. Campbell*
Jan. R. Carendi Gordon C. Boronow Malcolm M. Campbell
Henrik Danckwardt* Amanda C. Sutyak* Wade A. Dokken*
Henrik Danckwardt Amanda C. Sutyak Wade A. Dokken
Thomas M. Mazzaferro* Gunnar Moberg* Bayard F. Tracy*
Thomas M. Mazzaferro Gunnar Moberg Bayard F. Tracy
Anders Soderstrom* C. Ake Svensson* Lincoln R. Collins*
Anders Soderstrom C. Ake Svensson Lincoln R. Collins
Nancy F. Brunetti*
Nancy F. Brunetti
*By: /s/Kathleen A. Chapman
Kathleen A. Chapman
*Pursuant to Powers of Attorney filed with Initial
Registration Statement No. 333-38119.
W&KOpinionSPVLI
(212) 408-6900
April 23, 1999
American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, Connecticut 06484
Re: Post-Effective Amendment No. 1 on Form S-6 filed by
American Skandia Life Assurance Corporation, Separate Account F, Registrant
Registration No.: 333-38119
Related Investment Company Act Filing on Form N-8B-2: 811-08447
Our File No. 74877-00-103
Dear Mesdames and Messrs.:
You have requested us, as general counsel to American Skandia Life
Assurance Corporation ("American Skandia"), to furnish you with this opinion in
connection with the above-referenced registration statement by Registrant and
American Skandia, the Depositor, under the Securities Act of 1933, as amended,
(the "Registration Statement") of a certain Modified Single Premium Variable
Life Insurance Contract (the "Contract") that will be issued by American
Skandia.
We have made such examination of the statutes and authorities,
corporate records of American Skandia, documents relating to Registrant, and
other documents as in our judgment are necessary to form a basis for opinions
hereinafter expressed.
In our examinations, we have assumed the genuineness of all signatures
on, and authenticity of, and the conformity to original documents of all copies
submitted to us. As to various questions of fact material to our opinion, we
have relied upon statements and certificates of officers and representatives of
American Skandia, the Registrant, and others.
Based upon the foregoing, we are of the opinion that:
1. American Skandia is a validly existing corporation under the laws of the
State of Connecticut.
<PAGE>
American Skandia Life
Assurance Corporation
December 31, 1998
Page 2
2. The form of the Contract has been duly authorized by American
Skandia, and has been or will be filed in states where it is
eligible for approval, and upon issuance in accordance with
the laws of such jurisdictions, and with the terms of the
Prospectus, will be valid and binding upon American Skandia.
We hereby consent to the use of this opinion as an exhibit to this
Post-effective Amendment No. 1 to the Registration Statement on Form S-6 under
the Securities Act of 1933, as amended, and to the reference to our name under
the heading "Legal Experts" included in the Registration Statement.
Very truly yours,
/s/WERNER & KENNEDY
SPVLI
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 20, 1999 relating to American Skandia Life
Assurance Corporation included in the Registration Statement (Form S-6 No.
333-38119) and related Prospectus, which is part of this Registration Statement.
/s/Ernst & Young LLP
Hartford, Connecticut
April 23, 1999
Trophy
Exhibit 8b
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 1 to Registration
Statement No. 333-38119 of American Skandia Life Assurance Corporation on Form
S-6 of our report dated March 10, 1997, appearing in the Prospectus, which is a
part of such Registration Statement, and to the reference to us under the
heading "Experts" appearing in such Prospectus.
/s/Deloitte & Touche LLP
New York, New York
April 23, 1999
April 23, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration Statement
under the Securities Act of 1933, as amended ("1933 Act"), of a certain modified
single premium variable life insurance policy (the "Policy") that will be
offered and sold by American Skandia Life Assurance Corporation and certain
units of interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6 Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as a part of such Form S-6 Registration
Statement.
Very truly yours,
/s/William H. Strong, FSA, MAAA
Vice President
G:\legal\regstatement\spvli\actuarialltr.doc
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 141,195
<DEBT-CARRYING-VALUE> 149,484
<DEBT-MARKET-VALUE> 149,575
<EQUITIES> 8,210
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 158,263
<CASH> 77,525
<RECOVER-REINSURE> 4,191
<DEFERRED-ACQUISITION> 721,507
<TOTAL-ASSETS> 18,848,273 <F1>
<POLICY-LOSSES> 63,053
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 203,000
0
0
<COMMON> 2,000
<OTHER-SE> 248,417
<TOTAL-LIABILITY-AND-EQUITY> 18,848,273 <F2>
874
<INVESTMENT-INCOME> 11,130
<INVESTMENT-GAINS> 99
<OTHER-INCOME> 237,437 <F3>
<BENEFITS> (2,175)
<UNDERWRITING-AMORTIZATION> 86,628
<UNDERWRITING-OTHER> 81,162
<INCOME-PRETAX> 42,921
<INCOME-TAX> 8,154
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,767
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> Included in Total Assets are Assets Held in Separate Accounts of
$17,835,400.
<F2> Included in Total Liabilities and Equity are Liabilities Related to
Separate Accounts of $17,835,400.
<F3> Other income includes annuity charges and fees of $186,211 and fee
income of $50,839.
</FN>
</TABLE>
