Registration No. 333-58703 January 4, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 2
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)
[ ] on ____________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on 1/4/99 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:
Flexible 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 Initial
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. Appendix H - 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. Appendix I
This Prospectus describes a flexible 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 "flexible premium
variable life insurance policy". These technical terms can be explained as
follows:
(1) 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.
(2) The coverage is a "flexible premium" plan because it offers
considerable flexibility regarding the timing and amount of premium
payments after the first. No additional premium must be paid unless it
is required to pay the ongoing monthly charges. However, there is a
minimum amount we accept, both for initial and subsequent premiums.
There is also a maximum total amount you can pay. In order to achieve
certain beneficial tax treatment for withdrawals and loans, you may
need to limit the amounts you pay. If you pay the maximum allowable
amount, you may not be able to pay any additional premiums without
applying for, and our agreeing to issue, additional insurance.
(3) The coverage is "variable" because you can allocate all or part of your
premiums to variable investment options that invest in an underlying
mutual fund or a portfolio of an underlying mutual fund. 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 performance of the
variable investment options is not guaranteed. You bear the investment
risk if you allocate funds to these investment options because the
benefits that depend on the investment performance of these investment
options can decrease or increase.
(4) The coverage allows you to allocate all or part of your premiums 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.
(5) As life insurance, generally your beneficiary will owe no Federal
income tax on the death proceeds. Depending on whether the policy
satisfies a test outlined in the Internal Revenue Code (the "Code"),
distributions taken by the owner while the insured person is alive will
be treated differently for Federal income tax purposes. This test is
commonly known as the "7-pay test". In general, this test compares the
amount of premiums paid to the amount of insurance purchased. If your
policy "passes" the 7-pay test, it will not be treated as a "modified
endowment contract" or "MEC" for income tax purposes. As a "non-MEC",
most distributions while the insured is alive, such as any withdrawals
and a surrender, are taxable, but amounts are deemed to be distributed
first from any tax basis in the policy. Also, loans from such a policy
are not treated as taxable distributions. However, if at any time the
policy "fails" the 7-pay test, the policy must be treated as a MEC for
income tax purposes. If and when that occurs, subsequent distributions
from a policy are deemed for tax purposes to come first from any gain
in the policy, and loans and assignments are deemed to be
distributions. Whether or not a policy is considered a MEC, any
distribution deemed a distribution of gain is taxable as ordinary
income.
(continued on the next page)
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.
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.
FPVLI-PROS (1/99) CALL 1-800-752-6342 FOR FURTHER INFORMATION
Prospectus Dated: January 4, 1999
(6) During the first ten (10) years the coverage has a limited amount of
liquidity. During that period, you can only make withdrawals under
certain medically-related circumstances or from premium amounts made in
excess of certain limits. However, you can access a portion of the
policy's value through policy loans using a portion of its value as
collateral. Assuming that the policy is not treated as a MEC, policy
loans receive favorable tax treatment. Policy loans are currently
available at no net cost. Loans can have an impact on benefits that can
be positive or negative.
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TABLE OF CONTENTS
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DEFINITIONS........................................................................................................................6
SUMMARY OF COSTS...................................................................................................................9
DESCRIPTION OF THE OFFERING.......................................................................................................10
Purchasers.....................................................................................................................10
The Insurance Company..........................................................................................................10
Benefits at the Insured's Death................................................................................................10
Account Value and Cash Value...................................................................................................14
Cash Value Credits.............................................................................................................15
Costs..........................................................................................................................16
Buying a Policy................................................................................................................19
Variable Investment Options....................................................................................................21
Additional Premiums............................................................................................................25
Keeping the Policy In Force....................................................................................................25
Transfers and Allocation Services..............................................................................................26
Loans..........................................................................................................................27
Partial Withdrawals............................................................................................................28
Surrenders.....................................................................................................................28
Accelerated Death Benefit......................................................................................................29
Medically-Related Waiver.......................................................................................................29
Risks..........................................................................................................................29
Other Rights...................................................................................................................30
The Separate Account...........................................................................................................30
Taxes..........................................................................................................................30
Available Information..........................................................................................................31
MISCELLANEOUS PROVISIONS AND ADDITIONAL DETAILS...................................................................................31
Providing Services to You......................................................................................................31
Designations...................................................................................................................32
Net Investment Factor..........................................................................................................32
Allocation Programs............................................................................................................32
Limitations on Transfers.......................................................................................................33
Death During the Grace Period..................................................................................................33
Reinstatement..................................................................................................................33
Maturity.......................................................................................................................33
Pricing Transactions...........................................................................................................33
Delaying Transactions..........................................................................................................34
Voting.........................................................................................................................34
Transfers, Assignments, Pledges................................................................................................35
Reports........................................................................................................................35
Incontestability...............................................................................................................35
Suicide........................................................................................................................35
Misstatement...................................................................................................................35
Policy Loans on Exchanges......................................................................................................35
Resolving Material Conflicts...................................................................................................36
Modification of the Separate Account...........................................................................................36
Entire Contract................................................................................................................37
Additional Tax Considerations..................................................................................................37
Safekeeping of the Assets......................................................................................................38
Regulation.....................................................................................................................38
Legal Matters..................................................................................................................39
Legal Proceedings..............................................................................................................39
Experts........................................................................................................................39
Distribution of this Offering..................................................................................................39
Illustrations..................................................................................................................40
Executive Officers and Directors...............................................................................................41
Financial Statements.................................................................................Error! Bookmark not defined.
Financial Statements for American Skandia Life Assurance Corporation and American Skandia Life Assurance Corporation Separate
Account F
Appendix A.....................................................................................................................44
Hypothetical Illustrations of Death Benefits, Account Values and Cash Values...................................................44
Appendix B.....................................................................................................................57
Multiple Factors for Determination of Minimum Required Death Benefits..........................................................57
Appendix C.....................................................................................................................59
Premium Tax Rates..............................................................................................................59
Appendix D.....................................................................................................................60
Guaranteed Maximum Monthly Cost of Insurance Charges...........................................................................60
Appendix E.....................................................................................................................63
Current Monthly Cost of Insurance Rates........................................................................................63
Appendix F.....................................................................................................................65
Description of the Calculation of Current Monthly Cost of Insurance Charges....................................................65
Appendix G
Maximum Annual Assessable Premiums per $1,000 of Specified Amount..............................................................66
Appendix H.....................................................................................................................68
Hypothetical Illustration of Accelerated Death Benefit.........................................................................68
</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 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.
ASSESSABLE PREMIUM is the portion of Premiums paid against which we assess any
applicable contingent deferred sales charge upon a surrender of the Policy.
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, less
any unpaid charges 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 any unpaid charges due 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 due to Debt and any
unpaid charges due and after addition of any interest due pursuant to law.
DEBT is the total of any outstanding loan and loan interest.
EXCHANGE POLICY is a Policy: (a) purchased as part of an exchange of life
insurance policies that does not incur any current taxation pursuant to Section
1035 of the Code or any successor provision; and (b) into which the surrender
value of one or more prior policies is contributed to the Policy in conjunction
with such exchange.
EXEMPT PREMIUM is the portion of Premiums paid against which we do not assess
any contingent deferred sales charge upon surrender or withdrawal and the amount
of any loans we establish in conjunction with your purchase of an Exchange
Policy.
FIXED ALLOCATION is an allocation of Account Value to our general account that
is credited a fixed rate of interest.
GUARANTEED MINIMUM DEATH BENEFIT is the minimum amount we guarantee is payable
as a result of the Insured's death, before we assess any unpaid charges due and
any reduction for Debt. However, this benefit does not apply once the Insured
reaches Age 100, or if there are two Insureds, when the younger Insured reaches
Age 100 or would have reached that Age if the younger Insured dies before the
older Insured.
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.
MAXIMUM ANNUAL ASSESSABLE PREMIUM is the maximum amount of Premium against which
we will assess any contingent deferred sales charge upon surrender of the
Policy. We do not assess any contingent deferred sales charge upon surrender
against any portion of the Premium you pay that exceeds the maximum amount for
that Policy Year.
MEC is a modified endowment contract as defined in Section 7702A of the Code or
any successor provision thereto.
MEC THRESHOLD AMOUNT is the annual level amount of Premium which, if exceeded,
would cause the Policy to become a MEC.
MINIMUM 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.
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 AMOUNT AT RISK is the difference between the Death Benefit, discounted to
the beginning of the applicable Policy Month at the rate of 4% per year, and the
Account Value.
NET PREMIUM is a Premium less the deduction for premium taxes, "DAC" taxes and
any amount deductible from Premium for an optional additional benefit should you
elect such benefits.
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 Minimum
Required Death Benefit, assuming the current Minimum 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 Minimum Required
Death Benefit as of the Policy Anniversary the Insured would turn Age 100; 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.
NEW POLICY is a Policy that is not an Exchange Policy.
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 MONTH is the period from one Monthly Processing Day to the next.
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 each 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 Policy Date, as shown in the Policy, and any additional consideration
we choose to accept.
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.
SPECIFIED AMOUNT is a measure we use in determining the Death Benefit.
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>
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.
<TABLE>
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COST WHEN DEDUCTED AMOUNT DEDUCTED/
DESCRIPTION OF COST
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<S> <C> <C> <C> <C> <C> <C>
Premium Tax From each Premium payment Generally from 0% to 3.5% of Premium
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"DAC" Tax From each Premium payment 1.15% of Premium
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Mortality & Expense Risk Charge Daily 0.90% per year of the value of each Sub-account
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Administration Charge Daily 0.25% per year of the value of each Sub-account
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Cost of Insurance Monthly Charge varies depending on a number of factors, including,
the Age, gender (where permitted) and risk class of each
(See Appendix D for information (Pro-rata from the variable and Insured. The charge is assessed as an amount per $1,000
on guaranteed cost of insurance fixed investment options in of Net Amount at Risk. The rate per $1,000 of Net Amount at
rates and Appendix E for which you maintain Account Risk generally increases as the Insured(s) age(s). Current
information on current cost of Value) Cost of Insurance rates can be changed during the life of
insurance rates) a Policy, but are subject to guaranteed maximum charges.
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Sales Charge Monthly for the 1st 10 Policy 0.40% per year of the Account Value
Years
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- ----------------------------------- --------------------------------- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -
Contingent Deferred Sales Charge Upon Surrender Year 1 2 3 4 5 6 7 8 9 10
(Policy Years 1 through 10) % 10 9 8 7 6 5 4 3 2 1
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Contingent Deferred Sales Charges are only assessed
against Assessable Premium. No Contingent Deferred Sales
Charge is assessed against Exempt Premium.
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Transfer Fee After the 12th transfer each $10.00
Policy Year
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Partial Withdrawal Transaction Fee Upon Partial Withdrawal $25.00
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Underlying Portfolio Expenses Daily Each Portfolio has different fees and charges as provided in
the "Variable Investment Options" section of this Prospectus.
Total Portfolio expenses range from 0.69% to 1.81%. More
detailed information about fees and charges can be found in
the prospectuses for the Portfolios.
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<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, Additional Premiums, Keeping the
Policy In Force, 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 who also may need access to some or all of the Cash Value to meet
supplemental retirement income needs or for emergency expenses. For estate tax
purposes, 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, particularly if, at any point, the purchaser believes the
Cash Value may not be needed as a resource for other purposes. 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 and any unpaid
charges due from the Death Benefit. We then add any interest amount required by
law.
[5] .....What is the Death Benefit? The Death Benefit depends on the Death
Benefit option you select. Initially you select an option on your Application.
The Death Benefits options are Option A (Level) and Option B (Variable), as
discussed below.
[6] .....How is the Death Benefit determined under Option A? Under Option A
(Level), the Death Benefit on the Policy Date is the Specified Amount. After
that, the Death Benefit is the highest of the Specified Amount, the Minimum
Required Death Benefit and the Guaranteed Minimum Death Benefit, each as of the
date we receive due proof of death.
[7] .....How is the Death Benefit determined under Option B? Under Option B
(Variable), the Death Benefit on the Policy Date is the Specified Amount plus
the Account Value. After that, the Death Benefit is the highest of: the sum of
the Account Value plus the Specified Amount, the Minimum Required Death Benefit
and the Guaranteed Minimum Death Benefit, each as of the date we receive due
proof of death.
[8] .....Is there any age limit on the Death Benefit? Yes. On a single life
Policy, the Death Benefit equals the Account Value on or after the Policy
Anniversary the Insured attains Age 100. On a joint life Policy, the Death
Benefit equals the Account Value on or after the Policy Anniversary the younger
Insured, attains or, if that person is deceased, would have been, Age 100.
[9] .....What is the Specified Amount? The Specified Amount is a measuring
device we use in determining the Death Benefit before the Insured's Age 100. On
your Application, you indicate the Specified Amount you want us to issue. We may
issue that amount, or we may offer to issue a lower Specified Amount if the
Insured(s) do(es) not qualify for the amount you seek. The Specified Amount
remains level unless you request an increase or decrease and we agree to such a
change. Under certain circumstances, a partial withdrawal may also reduce the
Specified Amount, as discussed in the section on Partial Withdrawals.
[10] .....What is the Minimum Required Death Benefit? The Minimum 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 Minimum Required Death Benefit is determined by treating the
Account Value as if it were a Net Single Premium. We determine the Minimum
Required Death Benefit by multiplying the Account Value by a factor that varies
by the attained Age, gender (where permitted) and risk class of the Insured, as
shown in Appendix B. The gender and risk class of the Insured do not change, so
the only element that changes the factor after the Policy Date is the aging of
the Insured. The following are representative examples of the factors for
different Ages, genders and risk classes, as well as the amount of the Minimum
Required Death Benefit if the Account Value were $100,000.
Female, Age 45, not a tobacco user:
The factor is 3.410489. $100,000 multiplied by 3.410489 results in a
Minimum Required Death Benefit of $341,048.90.
Male, Age 50, a tobacco user:
The factor is 2.194450. $100,000 multiplied by 2.194450 results in a
Minimum Required Death Benefit of $219,445.00.
Female, Age 55, a tobacco user:
The factor is 2.298001. $100,000 multiplied by 2.298001 results in a
Minimum Required Death Benefit of $229,800.10.
Male, Age 60, not a tobacco user:
The factor is 1.919420. $100,000 multiplied by 1.919420 results in a
Minimum Required Death Benefit of $191,942.
The following example illustrates the effect of aging on the Minimum Required
Death Benefit.
The Insured is a woman, Age 60, for whom coverage was issued at her Age 50 in
the "not a tobacco user" risk class. On the Valuation Day before the Policy
Anniversary following the Insured's 60th birthday, the Account Value is
$100,000. The Minimum Required Death Benefit as required under the Code for this
Insured's age, gender, risk class and Account Value is $100,000 multiplied by
the applicable factor of 2.217943, which results in a Minimum Required Death
Benefit of $221,794.30. For the sake of this example, assume that the next
Valuation Day, which is the Policy Anniversary after the Insured's 60th birthday
(the day the Insured turns Age 60 for purposes of the Policy), the Account Value
remains $100,000. At the higher Age of 60, the Minimum Required Death Benefit on
the Policy Anniversary is $100,000 multiplied by the applicable factor of
2.153574, which results in a Minimum Required Death Benefit of $215,357.40.
We use a standard insurance industry method to determine the applicable factors
for Policies with two Insureds.
[11] .....What else can affect the Minimum Required Death Benefit? The Minimum
Required Death Benefit changes as the Account Value changes. This is because the
Minimum 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 60, for whom coverage was issued at her Age 50
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 Minimum Required Death Benefit as of that
Valuation Day is $100,000 multiplied by the then applicable factor of
2.153574, or $215,357.40. As of the next Valuation Day, assume the
Account Value has grown to $100,010. The Minimum Required Death Benefit
is $100,010 multiplied by the same factor of 2.153574, or $215,378.94.
(b) On a particular Monthly Processing Date, the Account Value of the
Policy is $100,000. The Minimum Required Death Benefit as of that
Valuation Day is $100,000 multiplied by the then applicable factor of
2.153574, or $215,357.40. As of the next Valuation Day, assume the
Account Value has decreased to $99,990. The Minimum Required Death
Benefit is $99,990 multiplied by the same factor of 2.153574, or
$215,335.86.
(c) On a particular Monthly Processing Date, the Account Value of the
Policy before any partial withdrawal is $100,000. The Minimum Required
Death Benefit as of that Valuation Day is $100,000 multiplied by the
then applicable factor of 2.153574, or $215,357.40. On that same day,
assume $20,000 is taken as a partial withdrawal, and the $25.00 partial
withdrawal transaction fee is charged. Immediately after the partial
withdrawal, the Minimum Required Death Benefit is $79,975 multiplied by
the same factor of 2.153574, or $172,232.08.
[12] .....What is the Guaranteed Minimum Death Benefit? We use the Guaranteed
Minimum Death Benefit to determine the Death Proceeds under certain
circumstances. Under Option A, we use the Guaranteed Minimum Death Benefit when
it is higher than both the Specified Amount and the Minimum Required Death
Benefit. Under Option B, we use the Guaranteed Minimum Death Benefit when it is
higher than both the sum of the Account Value plus the Specified Amount, and the
Minimum Required Death Benefit. There is no Guaranteed Minimum Death Benefit
beyond Age 100 of the Insured, or if the policy terminates before the Insured's
death. The Guaranteed Minimum Death Benefit is determined as follows:
(a) On the Policy Date, the Guaranteed Minimum Death Benefit equals the
initial Premium.
(b) After the Policy Date and until the first Policy Anniversary, the
Guaranteed Minimum Death Benefit is the total of all Premiums paid less
any partial withdrawals.
(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 total of
all Premiums paid less all partial withdrawals; and (2) is the highest
"Anniversary Value." "Anniversary Value" is the Account Value on any
Policy Anniversary less all subsequent partial withdrawals.
(d) On or after the "target date", the Guaranteed Minimum Death Benefit is
the higher of (1) or (2), where: (1) is the total of all Premiums paid
less all partial withdrawals and (2) is the highest Anniversary Value,
as defined above in (c), as of the "target date," less all partial
withdrawals after the "target date." If there are two Insureds, the
Guaranteed Minimum Death Benefit ends 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.
(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 total of all Premiums paid less all partial withdrawals.
(f) If the Policy is issued for two (2) Insureds, the "target date" 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. This also applies if, as of the Policy Date, the younger
Insured is younger than Age 75.
[13] .....Would you please provide examples of how the Death Benefit is
determined? Below are six examples of how the Death Benefit is determined. Each
example assumes the death claim becomes payable exactly on the stated Policy
Anniversary. Values shown are hypothetical, including the amount of Premiums
paid, the Account Values shown as of the date the death claim is payable and the
Guaranteed Minimum Death Benefit then applicable.
The first three examples illustrate death benefit Option A. The first example is
a situation where the Death Benefit equals the Specified Amount. The second is
an example where the Death Benefit is the Minimum Required Death Benefit. The
third is an example where the Death Benefit is the Guaranteed Minimum Death
Benefit.
Examples four through six illustrate death benefit Option B. The fourth example
is a situation where the Death Benefit is the Specified Amount plus the Account
Value. The fifth is an example where the Death Benefit is the Minimum Required
Death Benefit. The sixth example is a situation where the Death Benefit is the
Guaranteed Minimum Death Benefit. In reviewing the examples for Option B, please
remember that the sum of the Specified and the Account Value is compared to the
Minimum Required Death Benefit and the Guaranteed Minimum Death Benefit.
The third and sixth examples assume that positive investment performance
significantly increased Account Value, which was then followed by a period of
substantial negative investment performance.
Each example assumes that we issue a Policy to a 50 year old man who qualifies
for the No Tobacco use class, we issued the Policy 6 months after his 50th
birthday, the Policy has a Specified Amount of $100,000 and there have been no
withdrawals. Please remember that these examples show the Death Benefit, and
that the Death Proceeds equal the Death Benefit reduced by any Debt and
increased by any required interest.
<TABLE>
<CAPTION>
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Death Total Policy Account Value Specified Minimum Guaranteed Death Benefit
Benefit Premiums Paid Anniversary Amount Required Minimum Death
Option Claim is Death Benefit Benefit
Payable
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A $15,000 1 $15,500 $100,000 $40,018 $15,500 $100,000
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
A $105,000 12 $185,000 $100,000 $345,527 $200,000 $345,527
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
A $105,000 20 $50,000 $100,000 $76,653 $200,000 $200,000
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
B $15,000 1 $15,500 $100,000 $40,018 $15,500 $115,500
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
B $105,000 20 $200,000 $100,000 $306,611 $200,000 $306,611
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
B $105,000 25 $50,000 $100,000 $69,169 $200,000 $200,000
------------ --------------- --------------- --------------- --------------- --------------- --------------- ---------------
</TABLE>
[14] .....Does choosing between Options A and B affect anything other than the
Death Benefit? Yes. Choosing Option A or Option B affects the Net Amount at Risk
which will have an impact on the amount you pay in cost of insurance charges.
Option B initially has a higher Net Amount at Risk which will result in a higher
cost of insurance charge. It may also have an impact on what you might pay upon
surrender. How these charges work are discussed in more detail below in the
section on Costs. An increase in charges has a negative impact on the growth of
your Account Value. A decrease in charges has a positive impact on the growth of
your Account Value.
[15] .....Who chooses which option to use? You choose the option on your
Application for a Policy. If you do not elect a Death Benefit option on your
Application we will review the Application to determine if our underwriting
requirements are met. However, we will require you to elect either Option A or
Option B prior to issuing a Policy.
[16] .....May I change the Death Benefit option or the Specified Amount? While
the Insured is alive, you may request to change the Death Benefit option or to
increase or decrease the Specified Amount to meet changing needs or goals.
Any change to the Death Benefit option is subject to our acceptance and our
rules, which include, but are not limited to the following:
1. Any change must take effect after the first Policy Year.
2. We only permit one such change per Policy Year.
3. We must receive the request In Writing at our Office.
4. We may require satisfactory evidence of insurability for any change
that prospectively increases the Net Amount at Risk.
5. If evidence of insurability is required, we will not accept the request
if the Insured(s) is over our then current maximum age for issuing a
Policy.
6. We may require you to sign an acknowledgment that you understand the
impact or potential impact of the change on the tax treatment of your
Policy, particularly if the change results or may result in your Policy
becoming a MEC. Changing between Option A and Option B also may have an
impact on whether a Policy is treated as a MEC. Therefore, you should
consult with a competent tax advisor before requesting a change.
7. If we grant any such request, it will take effect on the Monthly
Processing Day occurring on or immediately following the date we agree
to such a change.
8. On the date the change takes effect, there will be no change in the
Death Benefit. That means that, if you change from Option A to Option
B, the Specified Amount will be reduced.
Any change to the Specified Amount is subject to our rules, which include, but
are not limited to the seven rules outlined above for changing the Death Benefit
option, plus the following additional rules:
1. The amount of any increase or decrease may not be less than $5,000.
2. The Specified Amount after any decrease may not be less than $50,000
(single life Policy) or $100,000 (joint life Policy).
3. No decrease in the Specified Amount is permitted during the first five
Policy Years or during the five calendar years subsequent to any
increase in Specified Amount.
[17] .....What other parts of the Policy are affected if I change the Specified
Amount? Increasing the Specified Amount initially results in a higher Death
Benefit, unless the increased Specified Amount would then not exceed the Minimum
Required Death Benefit or the Guaranteed Minimum Death Benefit. When the Death
Benefit is increased in this way, it initially increases the Net Amount at Risk,
and therefore, the cost of insurance charge. Decreasing the Specified Amount
generally has the opposite effects. Changing the Specified Amount could affect
the maximum Premiums you may pay, as well as the Maximum Annual Assessable
Premium. Also, if your policy is not deemed to be a MEC, changing the Specified
Amount may affect how much Premium you may subsequently pay without the Policy
becoming a MEC.
[18] .....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, rather than the
Beneficiaries, may choose the method of payment from among those we make
available if you let us know In Writing before the Insured's death how you want
the Death Proceeds to be paid.
Account Value and Cash Value
[19] .....What is the Account Value? The Account Value is the value of a Policy
while the Insured is alive before any deduction for any contingent deferred
sales charge and before any reduction for any Debt. It is the total of the
Account Value allocated to each Sub-account and any Fixed Allocations 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.
[20] .....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.
[21] .....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.
[22] .....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.
[23] .....How does American Skandia determine the Account Value in the Loan
Account? As of the date of this Prospectus, we currently credit interest to
Account Value in the Loan Account at the rate of 6.0% per year, compounded
yearly. However, to the extent permitted by law, we retain the right to credit
less, but never less than 5.5% per year, compounded yearly.
[24] .....What is the Cash Value? The Cash Value is the total Account Value less
any contingent deferred sales charge, unpaid charges and Debt.
[25] .....Do I have to maintain a minimum Cash Value? There must always be
enough Cash Value so that, on any Monthly Processing Date, the Cash Value is
sufficient to pay for the charges then due. If the Cash Value is insufficient to
pay for the charges, we send you a notice giving you a 61-day "grace period" to
send us a required amount. If the Cash Value at the end of the grace period,
after deduction for all previously unpaid charges, is zero or less, the Policy
ends without value, unless the guaranteed continuation provision applies. This
provision is discussed in the section "Keeping the Policy In Force".
Cash Value Credits
[26] .....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. The Cash Value trigger depends on the
total amount of Premiums paid. 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.
[27] .....What is the Cash Value trigger? The Cash Value trigger is 200% of the
Premiums you pay. Please note, 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 and any Debt.
[28] .....How much is added to my Account Value? The Cash Value Credit, if any,
added to your Account Value equals 0.50% of the Cash Value on the applicable
Policy Anniversary. The following examples illustrate how this works:
(a) Assume that the total amount of Premiums paid is $70,000. Assume that
on the 14th Policy Anniversary the Cash Value is $150,000. The Cash
Value trigger is 200% of $70,000, which is $140,000. The amount to be
added to the Account Value is 0.50% of $150,000, which is $750.
(b) For the same Policy, assume that the Cash Value on the 15th Policy
Anniversary is $115,000, 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 remains $140,000. Therefore, no Cash Value
Credit is provided on the 15th Policy Anniversary.
(c) For the same Policy, assume that the Cash Value on the 16th Policy
Anniversary is $160,000, due to a combination of investment performance
and repayment of the loan and loan interest. The Cash Value trigger
remains $140,000. The amount to be added is 0.50% of $160,000, which is
$800.
[29] .....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
[30] .....What kinds of charges are there for this Policy? The Policy has five
(5) different kinds of charges: (1) charges we deduct from Premiums; (2) 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; (3)
charges we deduct monthly from the Account Value and which are due in all Policy
Years to Age 100; (4) charges we deduct monthly from the Account Value for a
specified number of Policy Years; and (5) "contingent" charges, which are those
charges that you only pay in certain specified circumstances. There also are
fees and expenses charged by the Portfolios.
[31] .....What charges are deducted from Premiums? We deduct a percentage of
each Premium in relation to state and local premium taxes we may incur on that
Premium, and an amount in relation to our Federal taxes. We deduct these charges
before we allocate the net amount to the investment options.
[32] .....How much is charged for premium taxes? The amount we charge is based
on the rates determined by state and local governments. In most jurisdictions
these rates range for 0% to 3.5% of each Premium. The actual percentages we
charge for the states and the District of Columbia as of the date of this
Prospectus are found in Appendix C.
[33] .....What is the charge in relation to the Company's Federal taxes? The
Code requires a life insurer to capitalize an imputed acquisition expense,
thereby increasing its tax liability over what it would be without this special
provision. The tax liability created by this imputed acquisition expense is
sometimes referred to as a "deferred acquisition cost" tax, or "DAC" tax. To
reimburse us for this special insurance company tax at a rate we believe to be
reasonable in relation to the liability, we deduct an amount equal to 1.15% of
each Premium.
[34] .....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 risk we assume is that
cost of insurance charges under the Policy will be insufficient to meet our
claims paying obligations. The expense risk we assume is that overall expenses
incurred in issuing and administering the Policy will exceed the charges and
fees stated in 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.
[35] .....What monthly charge applies in all Policy Years to Age 100? We deduct
the cost of insurance charge until the Policy Anniversary on or immediately
after the Insured's 100th birthday. For Policies with two Insureds, this is the
Policy Anniversary on or after the 100th birthday of the younger Insured, or if
that person is deceased, what would have been that Insured's 100th birthday. We
take this charge from your Account Value each Monthly Processing Day.
[36] .....How much is the cost of insurance charge? The monthly cost of
insurance charge is determined by multiplying the current monthly cost of
insurance rate by the Net Amount at Risk. To that amount we add a cost of
insurance fee. The current cost of insurance rates and cost of insurance fee are
subject to change; however, the combination will not exceed the product of the
guaranteed maximum cost of insurance charge multiplied by the Net Amount at
Risk. The cost of insurance charge is not a constant dollar amount.
Please note that in calculating the Net Amount at Risk, the Death Benefit that
would then apply is the highest of the Minimum Required Death Benefit, the
Guaranteed Minimum Death Benefit or, the Specified Amount (for Option A), or the
sum of the Specified Amount plus the Account Value (for Option B). The cost of
insurance rates increase as the Insured ages, although the rates may not
increase each Policy Year. We reserve the right to vary the rates per thousand
of Net Amount at Risk based on either the Net Amount at Risk or on the Specified
Amount.
We reserve the right to adjust current monthly cost of insurance rates by an
underwriting factor. As of the date of this Prospectus, we were not making any
such adjustments.
The guaranteed maximum monthly cost of insurance charges for Policies with one
Insured are shown in Appendix D. The current monthly cost of insurance rates as
of the date of this Prospectus for Policies with one Insured are shown in
Appendix E. Corresponding rates for two proposed Insureds are available from us
upon request. A detailed explanation of how we calculate the current monthly
cost of insurance charges and a sample calculation are provided in Appendix F.
[37] .....What is the guaranteed maximum cost of insurance charge? The
guaranteed maximum cost of insurance charge is different at each Age. The
guaranteed maximum cost of insurance charge depends on the risk class of each
Insured. We base the guaranteed maximum charges on the sex distinct 1980
Commissioners Standard Ordinary Ultimate Mortality Smoker/Non-Smoker Table, age
last birthday. However, if required by law, unisex charges will apply, and we
will use a unisex variation of that table.
[38] .....What monthly charges apply only for a specified number of Policy
Years? We deduct a sales charge for a specified number of Policy Years.
[39] .....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.
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?"
[40] .....What are the contingent charges? The contingent charges are: (1) the
contingent deferred sales charge; (2) the transfer fee; and (3) the partial
withdrawal transaction fee.
[41] .....How much is the contingent deferred sales charge, and when must I pay
it? The contingent deferred sales charge is a percentage of the Assessable
Premium paid. It is charged if you surrender the Policy during the first ten
(10) Policy Years, 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 that we assess against Assessable Premium upon a surrender are
as follows:
---------------------- -------------------
Policy Year Percentage (%)
---------------------- -------------------
---------------------- -------------------
1 10
---------------------- -------------------
---------------------- -------------------
2 9
---------------------- -------------------
---------------------- -------------------
3 8
---------------------- -------------------
---------------------- -------------------
4 7
---------------------- -------------------
---------------------- -------------------
5 6
---------------------- -------------------
---------------------- -------------------
6 5
---------------------- -------------------
---------------------- -------------------
7 4
---------------------- -------------------
---------------------- -------------------
8 3
---------------------- -------------------
---------------------- -------------------
9 2
---------------------- -------------------
---------------------- -------------------
10 1
---------------------- -------------------
---------------------- -------------------
11+ 0
---------------------- -------------------
[42] .....How does American Skandia determine the Assessable Premium? The
Assessable Premium equals the total Premiums less the total Exempt Premiums.
[43] .....What are Exempt Premiums? Exempt Premiums are the amounts against
which we will not charge a contingent deferred sales charge upon surrender or
withdrawal.
[44] .....How does American Skandia determine which Premium amounts are Exempt
Premiums? Exempt Premiums are that portion of Premiums paid in any Policy Year
that exceeds the Maximum Annual Assessable Premium.
[45] .....What is the Maximum Annual Assessable Premium? The Maximum Annual
Assessable Premium is an amount per thousand of Specified Amount. The amount is
cumulative from year to year. For example, if your Maximum Annual Assessable
Premium is $5,000 and you make a Premium payment of $4,000 in Policy Year 1, in
Policy Year 2 your Maximum Annual Assessable Premium is $5,000 plus $1,000 from
Policy Year 1, or $6,000. The Maximum Annual Assessable Premium depends on the
Age, risk class and, where permitted, gender of the Insured. The Maximum Annual
Assessable Premium is increased if you increase the Specified Amount, and is
decreased if you decrease the Specified Amount. We have provided a table in
Appendix G of the Maximum Annual Assessable Premium for Policies with one
Insured and two Insureds.
[46] .....Please provide examples of what it would cost to surrender the Policy
The following are two hypothetical examples of how much it would cost to
surrender the Policy. In each example, it is assumed that neither the Specified
Amount nor the Death Benefit option is changed after the Policy Date.
(1) In this first example, assume that the Policy is a New Policy.
Assume also: (a) the Maximum Annual Assessable Premium is $10,000;
(b) $10,000 of Premium was paid in each of Policy Years 1 through
5, for a total of $50,000; (c) the Policy is being surrendered in
Policy Year 6; and (d) at the time of surrender, the Account Value
is $75,000.
Given these facts, the Assessable Premium equals the Premiums
paid. No amount paid in any Policy Year exceeded the Maximum
Annual Assessable Premium. The contingent deferred sales charge
for a surrender in Policy Year 6 is 5% of the Assessable Premium
(5% of $50,000 or $2,500). The amount payable upon surrender would
be $75,000 less $2,500, which equals $72,500
(2) In this second example, assume that the Policy is an Exchange
Policy. Assume also: (a) the Maximum Annual Assessable Premium is
$10,000; (b) the proceeds of the exchange were $50,000, which was
the initial Premium, and $5,000 of subsequent Premium was paid in
the second Policy Year; (c) the Policy is being surrendered in
Policy Year 6; and (d) at the time of surrender, the Account Value
is $85,000.
Given these facts, the Assessable Premium is less than the
Premiums paid. The amount of Premium paid in the first Policy Year
over $10,000 is Exempt Premium. Since $50,000 was paid in the
first Policy Year, the amount of the Exempt Premium paid in that
Policy Year was $50,000 minus $10,000, which is $40,000. There was
no Exempt Premium in the second Policy Year, since $5,000 is less
than the applicable Maximum Annual Assessable Premium for the
second Policy Year, which is $10,000. Since there has not been a
change to the Specified Amount or Death Benefit option, the
percentage to be assessed will be assessed against $55,000 of
Premium less $40,000 of Exempt Premium, which equals $15,000. The
contingent deferred sales charge for a surrender in Policy Year 6
is 5% of the Assessable Premium (5% of $15,000 or $750). The
amount payable upon surrender would be $85,000 less $750, which is
$84,250.
[47] .....Are there any situations in which the sales charge and the contingent
deferred sales charge are reduced or eliminated? 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.
[48] .....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.
[49] .....How much is the partial withdrawal transaction fee, and when must I
pay it? We charge $25.00 as a transaction fee for each partial withdrawal unless
the partial withdrawal qualifies as a medically-related withdrawal. This amount
is deducted separately from your Account Value.
[50] .....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.
[51] .....What are the charges for the Portfolios? 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
[52] .....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 older than Age 80 for single life cases and younger than Age 18
or older than Age 80 for joint life cases. 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.
[53] .....When do I pay the initial Premium? You may submit Premium with the
Application if the Insured meets certain medical underwriting criteria.
If any portion of any Premium is to be received as part of a replacement of a
life insurance policy (whether or not a tax-free exchange), endowment or annuity
policy then we must receive all our requirements In Writing for all such
replacements as of the same date. This date must be prior to the date we decide
to issue a Policy. Replacements are subject to our acceptance.
If we do 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 let you know at that time the minimum and maximum amounts we
accept as the initial Premium. We will not issue a Policy until we receive at
least the minimum initial Premium at our Office.
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.
[54] .....What is the initial Premium? There is not a fixed amount of initial
Premium. Instead, we accept a range of initial Premium between a minimum and a
maximum. The minimum and maximum depends on the Specified Amount and the
Insured's age, risk class and gender, where permitted, as of the Policy Date.
[55] .....What is the maximum initial Premium I can pay? The maximum initial
Premium we accept equals the maximum amount that can be paid without increasing
the Death Benefit on the Policy Date. However, if you submit any Premium before
we have determined whether you meet our requirements for issuing a Policy, we
will not accept more than $500,000 without prior Home Office approval.
[56] .....What is the minimum initial Premium I can pay? The minimum Premium we
generally accept as an initial Premium is one fourth (1/4th) of the Maximum
Annual Assessable Premium. We may accept less under certain circumstances, such
as when you authorize periodic withdrawals from an account you may have with a
bank or other financial institution in amounts designed to cumulatively pay
amounts equal to at least one fourth (1/4th) of the MEC Threshold Amount.
[57] .....Will you accept my initial Premium if it causes my Policy to be
treated as a MEC? We will not apply the portion of an initial Premium that we
believe would require us to treat your Policy as a MEC unless you acknowledge In
Writing before the Policy Date that we will treat the Policy as a MEC. If we do
not receive such notification, we will return to you the difference between the
amount you submitted and the amount we will apply as the initial Premium.
However, this will not apply in the case of an Exchange Policy where we receive
information we believe requires us to treat the Exchange Policy as a MEC in any
case.
[58] .....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) no Insured is under age 18; 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. 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 lasts no longer than 90 days.
[59] .....What is the temporary insurance benefit? If the Insured dies while
temporary insurance is in effect, we pay the Beneficiary the lesser of the Death
Benefit 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.
[60] .....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) the Premiums paid,
or (2) your Account Value plus an amount that equals any premium tax and DAC tax
deducted and any charges deducted from your Account Value. However, if you have
submitted a "return waiver," we will return only your Account Value plus any
premium and DAC taxes deducted and any charges deducted from your Account Value.
This may be more or less than the Premiums paid.
[61] .....How and when is my initial Premium invested? We invest your Net
Premium, which is the Premium less the charges deducted from each Premium and
any charge for optional additional benefits (should you elect such benefits). We
invest the initial Net Premium on the Policy Date. You can request that we
allocate the initial Net Premium using one or more variable investment options
and/or a Fixed Allocation. However, we initially invest the portion of the
initial Net Premium that you indicate you want invested in variable investment
options in the AST Money Market Sub-account, unless you submit a "return waiver"
In Writing before the Policy Date, where permitted by law. This also applies to
any additional Premium we receive during the "free-look" period discussed below.
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.
[62] .....How do I choose how much of this type of life insurance to buy, which
Death Benefit Option to use and how much Premium to pay? The Death Benefit
Option, Specified Amount and the program of Premium payments that is right for
your needs depends on your particular circumstances and the reasons you are
buying a Policy. You and your financial representative should discuss your needs
and financial goals before applying for a Policy.
Variable Investment Options
[63] .....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, 1997. 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>
<CAPTION>
- ----------------- ------------------------------------------------------------------------------------- --------- --------- --------
Invest- Other Total
Style/ Investment Objectives/Policies ment Expenses Annual
Type Manage- Expenses
ment Fee
- ----------------- ------------------------------------------------------------------------------------- --------- --------- --------
- ----------------- ------------------------------------------------------------------------------------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
AST JanCap Growth: growth of capital in a manner consistent with the preservation
of capital. The Portfolio pursues its objective by emphasizing investments in 0.88% 0.18% 1.06%(1)
common stocks.
LARGE CAP
GROWTH
------------------------------------------------------------------------------------- --------- ---------- -------
------------------------------------------------------------------------------------- --------- ---------- -------
AST Marsico Capital Growth*: to seek 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 Portfolio will
pursue its objective by investing primarily in common stocks in industries and 0.90% 0.21% 1.11%
companies the sub-advisor believes are experiencing favorable demand for their
products and services, and which operate in a favorable competitive and regulatory
environment.
------------------------------------------------------------------------------------ --------- ---------- -------
------------------------------------------------------------------------------------ --------- ---------- -------
Alger American Growth: long-term capital appreciation. Except during temporary
defensive periods, the Portfolio invests at least 65% of its total assets in equity 0.75% 0.04% 0.79%
securities of companies that, at the time of purchase, have
total market capitalization of $1 billion or greater.
------------------------------------------------------------------------------------- --------- ---------- ------
------------------------------------------------------------------------------------- --------- ---------- ------
Alger American MidCap Growth: long-term capital appreciation. Except during
temporary defensive periods, the Portfolio invests at least 65% of its total assets
in equity securities of companies that, at the time of purchase of the securities, 0.80% 0.04% 0.84%
have total market capitalization within the range of
companies included in the S&P MidCap 400 Index, updated
quarterly.
------------------------------------------------------------------------------------ --------- ---------- ------
------------------------------------------------------------------------------------ --------- ---------- ------
AST Bankers Trust Enhanced 500*: to outperform the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500(R)") through stock selection resulting in different
weightings of common stocks relative to the index. The Portfolio will include the
common stocks of companies included in the S&P 500(R). While the majority of the 0.60% 0.20% 0.80%(2)
issues held by the Portfolio will have neutral weightings to
the S&P 500, approximately 100 will be over- or
under-weighted relative to the index.
------------------------------------------------------------------------------------ --------- ---------- ------
------------------------------------------------------------------------------------ --------- ---------- ------
AST Oppenheimer Large-Cap Growth: seeks capital appreciation. The Portfolio does
not invest to seek current income. The Portfolio emphasizes investment in common
stocks issued by established large-capitalization growth companies. For purposes 0.90% 0.23% 1.13%(3)
of the Portfolio, large-cap companies have market capitalizations greater than $5
billion. Investment opportunities may be sought among securities of smaller, less
well-known companies. This Portfolio is not intended for investors seeking assured
income or preservation of capital.
- ------------------- ----------------------------------------------------------------------------------- --------- --------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------ ---------------------------------------------------------------------------------- --------- ---------- ---------
Invest- Other Total
Style/ Investment Objectives/Policies ment Expenses Annual
Type Manage- Expenses
ment Fee
--------------------------------------------------------------------------------- --------- ---------- ---------
- ------------------ ---------------------------------------------------------------------------------- --------- ---------- ---------
<S> <C> <C> <C> <C>
AST Lord Abbett Growth and Income: long-term growth of capital and income while
attempting to avoid excessive fluctuations in market value. Normally, investments
will be made in common stocks of seasoned companies which are expected to show 0.75% 0.18% 0.93%
above-average growth and which the Portfolio's sub-advisor believes to be in sound
financial condition.
LARGE CAP
VALUE
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Putnam Value Growth & Income: to seek capital growth with current income as a
secondary objective. The Portfolio invests primarily in common stocks that offer
potential for capital growth, and may, consistent with its investment objectives, 0.75% 0.48% 1.23%
invest in stocks that offer potential for current income.
The Portfolio may invest up to 20% of its assets in
securities traded in foreign markets.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST INVESCO Equity Income: to seek high current income while following sound
investment practices. Capital growth is a secondary consideration. The Portfolio
seeks to achieve its objective by investing in securities which will provide a
relatively high-yield and stable return and which, over the years, may also provide 0.75% 0.20% 0.95%
capital appreciation. The Portfolio normally will invest at least 65% of its
assets in dividend-paying, marketable common stocks of domestic and foreign
industrial issuers.
- ------------------ ---------------------------------------------------------------------------------- --------- ---------- --------
- ------------------ ----------------------------------------------------------------------------------- --------- ---------- --------
AST Neuberger Berman Mid-Cap Growth*: to seek capital appreciation. The Portfolio
invests in a diversified portfolio of common stocks believed to have the maximum
MID CAP GROWTH potential for long-term above-average capital appreciation. Under normal 0.90% 0.24% 1.14%(4)
conditions, the Portfolio primarily invests in the common stocks of companies with
equity market capitalizations from $300 million to $10 billion at the time of
investment. The Portfolio does not seek to invest in securities that pay dividends
or interest, and any such income is incidental.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
AST T. Rowe Price Natural Resources: to seek long-term growth of capital through
investment primarily in common stocks of companies which own or develop natural
resources and other basic commodities. The Portfolio will invest primarily (at 0.90% 0.26% 1.16%
least 65% of its total assets) in common stocks of companies which own or develop
natural resources and other basic commodities.
MID CAP VALUE
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Neuberger Berman Mid-Cap Value*: to seek capital growth. The Portfolio seeks
capital growth through an investment approach that is designed to increase capital
with reasonable risk. The Portfolio invests principally in common stocks of medium 0.90% 0.25% 1.15%(5)
to large capitalization established companies, using a
value-oriented investment approach. The Sub-advisor looks
for securities believed to be undervalued based on strong
fundamentals, including a low price-to-earnings ratio,
consistent cash flow, and the company's track record through
all parts of the market cycle.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Cohen & Steers Realty*: to maximize total return through
investment in real estate securities. The Portfolio pursues
its investment objective of maximizing total return by
seeking, with approximately equal emphasis, capital
appreciation (both realized and unrealized) and current
income. Under normal circumstances, the Portfolio will
invest substantially all of its assets in the equity
securities of
"real estate companies". Real estate companies include those companies that derive 1.00% 0.29% 1.29%
at least 50% of its revenues from the ownership,
construction, financing, management or sale of commercial,
industrial, or residential real estate or that has at least
50% of its assets in such real estate.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
AST Kemper Small-Cap Growth*: seeks maximum appreciation of investors' capital from
a portfolio primarily of growth stocks of smaller companies. The Portfolio seeks
maximum appreciation of investors' capital. Current income will not be a 0.95% 0.40% 1.35%(6)
significant factor. The Portfolio's investment portfolio will normally consist
SMALL CAP GROWTH primarily of common stocks and securities convertible into or exchangeable for
common stocks, including warrants and rights. The Portfolio is designed as a
long-term investment involving substantial financial risk
commensurate with potential substantial gains.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Janus Small-Cap Growth: seeks capital appreciation. The Portfolio pursues its
objective by normally investing at least 65% of its total assets in securities 0.90% 0.23% 1.13%(7)
issued by small-sized companies. The Portfolio may also
invest in stocks of larger companies with potential for
capital appreciation.
- ------------------- ------------------------------------------------------------------------------------- ---------- ----------- ---
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------ ----------------------------------------------------------------------------------- --------- --------- ---------
Invest- Other Total
Style/ Investment Objectives/Policies ment Expenses Annual
Type Manage- Expenses
ment Fee
- ------------------- ------------------------------------------------------------------------------------ --------- ---------- ------
- ------------------- ------------------------------------------------------------------------------------ --------- ---------- ------
<S> <C> <C> <C> <C>
AST T. Rowe Price Small Company Value: to provide long-term capital appreciation by
investing primarily in small-capitalization stocks that appear to be undervalued.
The Portfolio will invest at least 65% of its total assets in companies with a
market capitalization of $1 billion or less that appear undervalued by various 0.90% 0.26% 1.16%
SMALL CAP VALUE measures, such as price/earnings or price/book value ratios. Investing in small
companies involves greater risk, as well as greater
opportunity, than is customarily associated with more
established companies.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
AST Lord Abbett Small Cap Value*: to seek long-term capital appreciation.
Investments will be primarily made in equity securities which are believed to be
undervalued. Under normal circumstances, the Portfolio will invest at least 65% of 0.95% 0.37% 1.32%
its assets in common stocks issued by smaller, less well-known companies, with
market capitalizations of less than $1 billion. Smaller
companies may carry more risk than larger companies.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
AST Janus Overseas Growth: to seek long-term growth of capital. The Portfolio
pursues its objective primarily through investments in common stocks of issuers 1.00% 0.35% 1.35%
located outside the United States.
INTER-NATIONAL
EQUITY
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST American Century International Growth: to seek capital growth. The Portfolio
will invest primarily in issuers in developed markets. Under normal conditions,
the Portfolio will invest at least 65% of its assets in equity and equity 1.00% 0.75% 1.75%
equivalent securities of issuers from at least three
different countries outside the United States.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Putnam International Equity: to seek capital appreciation. The Portfolio seeks
its objective by investing primarily in equity securities of companies located in a
country other than the United States. The Portfolio will, under normal 0.88% 0.27% 1.15%
circumstances, invest at least 65% of its total assets in
issuers located in at least three different countries other
than the United States.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST T. Rowe Price International Equity: to seek total return of its assets from
long-term growth of capital and income, principally through investments in common
stock of established, non-U.S. companies. The Portfolio intends to diversify 1.00% 0.26% 1.26%
broadly among countries and to normally have at least three different countries
represented in the Portfolio.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Founders Passport: to seek capital appreciation. The Portfolio invests
primarily in securities issued by foreign companies which have market
capitalizations or annual revenues of $1 billion or less. At least 65% of the
Portfolio's assets will normally be invested in foreign securities representing a
minimum of three countries. The Portfolio will normally invest a significant 1.00% 0.35% 1.35%
proportion of its assets in the securities of small and medium-sized companies,
which involves greater risk than is customarily associated
with more established companies.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
Montgomery Variable Series - Emerging Markets: 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 markets. Under normal 1.25% 0.50% 1.75(8)
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.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
AST American Century Strategic Balanced: to seek capital growth and current
income. It is the intention of the Portfolio's sub-advisor to maintain
approximately 60% of the Portfolio's assets in common stocks that are considered by 0.85% 0.40% 1.25%(9)
the sub-advisor to have better-than-average prospects for appreciation and the
remainder in bonds and other fixed income securities.
BALANCED/
ASSET ALLOCAT-ION
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Putnam Balanced: to provide a balanced investment composed of a
well-diversified portfolio of stocks and bonds which will produce both capital
growth and current income. The Portfolio may invest in almost any type of security
or negotiable instrument, including cash or money market instruments. The portion
of the Portfolio's assets invested in equity securities and fixed income securities 0.74% 0.29% 1.03%
will vary from time to time in light of the Portfolio's investment objective,
changes in interest rates and economic of other factors. Under normal market
conditions, it is expected that at least 25% of the
Portfolio's total assets will be invested in fixed income
securities.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST T. Rowe Price Asset Allocation: to seek a high level of total return by
investing primarily in a diversified group of fixed income and equity securities.
Under normal conditions over the long-term, the Portfolio expects to allocate its 0.85% 0.28% 1.13%
assets so that approximately 40% of its assets will be in
fixed income securities and approximately 60% in equity
securities.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
Invest- Other Total
Style Investment Objectives/Policies ment Expenses Annual
Type/ Manage- Expenses
ment Fee
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
<S> <C> <C> <C> <C>
AST PIMCO Total Return Bond: to seek to maximize total return consistent with
preservation of capital. The Portfolio will invest in a diversified portfolio of 0.65% 0.21% 0.86%
fixed-income securities of varying maturities with a portfolio duration from three
to six years.
FIXED INCOME
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST PIMCO Limited Maturity Bond: to seek to maximize total return, consistent with
preservation of capital and prudent investment management. The Portfolio will
invest in a diversified portfolio of fixed income securities of varying maturities 0.65% 0.23% 0.88%
with a portfolio duration from one to three years.
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST T. Rowe Price International Bond: seeks to provide high current income and
capital appreciation 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 dollar-denominated
government and corporate bonds outside the United States. The Portfolio may also 0.80% 0.31% 1.11%
invest up to 20% of its assets in below investment-grade, high-risk bonds,
including bonds in default or those with the lowest rating
(commonly referred to as "junk bonds").
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Federated High Yield: to seek 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 (BBB or lower) fixed rate corporate debt
obligations. Investments of this type are subject to a greater risk of loss of 0.75% 0.23% 0.98%
principal and interest than investments in higher rated securities and are
generally considered high risk. Lower-rated or unrated bonds are commonly referred
to as "junk bonds."
----------------------------------------------------------------------------------- --------- ---------- -------
----------------------------------------------------------------------------------- --------- ---------- -------
AST Money Market: to maximize current income and maintain high levels of
liquidity. The Portfolio attempts to accomplish its objective by maintaining a
dollar-weighted average maturity of not more than 90 days and by investing in 0.45% 0.15% 0.60%(10)
securities which have effective maturities of not more than 397 days.
- ------------------- ----------------------------------------------------------------------------------- --------- ---------- -------
</TABLE>
1 The investment management fee without any voluntary waiver would have been
0.90%; the total annual expenses without any waiver or reimbursement would
have been 1.08%.
2 The other expenses without any reimbursement would have been 0.29%; the
total annual expenses without any waiver or reimbursement would have been
0.89%.
3 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.
4 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.
5 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.
6 This portfolio commenced operations in January 1999. "Other Expenses" shown
are based on estimated expenses for the fiscal year ending December 31,
1999 with a voluntary expense reimbursement. Estimated other expenses
without any reimbursement would be 0.59%.
7 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).
8 The other expenses without any reimbursement would have been 0.56%; the
total annual expenses without any waiver or reimbursement would have been
1.81%.
9 The other expenses without any reimbursement would have been 0.50%; the
total annual expenses without any waiver or reimbursement would have been
1.35%.
10 The investment management fee without any voluntary waiver would have been
0.50%; the other expenses without any reimbursement would have been 0.19%;
the total annual expenses without any waiver or reimbursement would have
been 0.69%.
Additional Premiums
[64] When may I contribute additional Premiums and how much may I pay? You may
send us additional Premiums at any time before the Insured's Age 100 and while
the Insured is alive unless the amount you have paid to-date equals the then
current maximum we permit. The amount you may pay is flexible within the limits
discussed below.
[65] When do you allocate additional Premiums? We allocate Net Premium resulting
from an additional Premium payment to the investment options as of the Valuation
Period we receive that Premium at our Office.
[66] How do you allocate additional Premiums among the investment options? We
allocate Net Premiums resulting from additional Premium payments according to
your most recent instructions to us. If you are participating in any allocation
programs we agree to support, such as any program of periodic rebalancing of
your Account Value among various investment options, we will allocate additional
Premiums in accordance with such a program unless we receive alternate
instructions.
[67] What is the most I may pay in total while I own a Policy? The maximum you
may pay changes. At any particular time, it is the amount which, at that time,
would not cause the Death Benefit to increase by more than the amount of the
Premium. We reserve the right to require new evidence satisfactory to us that
the Insured meets our underwriting standards before we agree to accept such
Premium. We discuss in the section on Loans what we do if there is any
outstanding Debt.
[68] What is the least amount I may pay at any one time? Unless you must make a
payment to keep the Policy in force, as discussed below, the minimum amount we
accept as an additional Premium depends on whether you have arranged to make
periodic withdrawals from a bank or other financial institution ($100), or
whether you make additional Premium payments directly ($500).
[69] Will you accept an additional Premium if it causes my Policy to be treated
as a MEC? We will not apply the portion of any Premium that we believe would
require us to treat your Policy as a MEC if it was not previously a MEC.
However, if you provide us with a notice In Writing that you understand that the
additional Premium will require us to treat your Policy as a MEC, we will accept
the Premium. If you do not give us such notice, we will return the difference
between the amount you submitted and any amount we apply as a Premium.
[70] How much may I pay as additional Premium if I don't want the Policy treated
as a MEC? If your Policy is not being treated as a MEC, the amount of additional
Premium you can pay at any time without your Policy subsequently being treated
as a MEC depends on the following factors:
(a) The Policy Year in which you want to make the payment and the
Premiums previously paid: The maximum additional Premium you can pay equals the
cumulative MEC Threshold Amount for the current Policy Year plus the prior
Policy Years, less the cumulative total amount previously paid. For example,
assume that as of the Policy Date, the MEC Threshold Amount was $10,000. Also
assume that you gave us $8,000 in each of the first three Policy Years. In the
fourth Policy Year, the maximum premium you can pay without the Policy being
treated as a MEC equals 4 X $10,000 ($40,000) minus 3 X $8,000 ($24,000), which
equals $16,000.
(b) The Specified Amount as of the time you make the payment: How much
you may pay without your Policy being treated as a MEC changes after any
increase or decrease to the Specified Amount. You may pay more after an increase
to the Specified Amount, subject to the maximum Premium rules noted above. You
may be able to pay less in additional Premium, or may not be able to pay any
further additional Premium after a change to the Specified Amount if you do not
want your Policy treated as a MEC. Whether you may pay anything further will
depend on the extent of the reduction to the Specified Amount.
(c) The amount of any proceeds contributed from any prior policy if you
purchased an Exchange Policy: Any proceeds contributed to an Exchange Policy
reduce the MEC Threshold Amount.
Keeping the Policy In Force
[71] What is the least amount I must pay so that the Policy doesn't end? We
cannot know in advance any minimum amount that will be required to keep the
Policy from ending without value. This is because: (1) the charges we deduct
each month are based on your Account Value, which may increase or decrease due
to the performance of the investment options; (2) we retain the right to
decrease or increase the current cost of insurance rates, subject to the
guaranteed maximums in the Policy; and (3) you may request and we may agree to a
change in the Death Benefit Option and/or the Specified Amount. If, on any
Monthly Processing Day, your Cash Value is insufficient to pay the current
deductions, a 61-day "grace period" begins unless the guaranteed continuation
provision is then applicable, as discussed below. If you enter the grace period,
we will send you a notice of how much you have to pay before the end of the
grace period to keep the Policy in force.
[72] Can the Policy end because of poor investment performance? The Policy could
enter the grace period because of poor investment performance combined with the
deduction of the Policy's fees and charges. If that were to occur and, by the
end of the grace period, there was not enough Cash Value to deduct the unpaid
charges, the Policy would end, unless the guaranteed continuation provision
applies.
[73] What is the guaranteed continuation provision? During the first ten Policy
Years, you may qualify for a guaranteed continuation provision if: (1) the total
amount of Premium you have paid is not less than a specified minimum for each
Policy Month times the number of Policy Months since the Policy Date; and (2)
there is no Debt. We call the specified minimum for each Policy Month the
"monthly continuation amount". This amount is 1/24th of the Maximum Annual
Assessable Premium. If you qualify for continuation under this provision, we
guarantee that your Policy will not enter into a grace period until the 10th
Policy Anniversary. For example, if the Maximum Annual Assessable Premium is
$12,000, then the monthly continuation amount is $500. If your Policy was in its
20th Policy Month, the sum of the monthly continuation amounts would be $10,000.
Therefore, for purposes of this example, the guaranteed continuation provision
would apply in the 20th Policy Month if you had paid at least $10,000 to that
point, and would apply in the 21st Policy Month if you had paid at least $10,500
up to the 21st Policy Month, assuming there is no Debt. We adjust the monthly
continuation amount going forward after any increase or decrease to the
Specified Amount in the first 10 Policy Years.
The Death Benefit while the Policy is kept in force by this provision is the
Death Benefit in effect as of the Monthly Processing Day the grace period
otherwise would have begun.
Transfers and Allocation Services
[74] 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.
[75] 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.
[76] 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.
[77] What allocation services does American Skandia provide? We support dollar
cost averaging and static rebalancing.
Loans
[78] When can I take a loan? We offer loans using Account Value as collateral.
Where permitted by law, we reserve the right to limit the number of loans in
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 Policy Date we will establish a loan equal to the outstanding
indebtedness on previous life insurance exchanged for a Policy.
[79] Is this type of loan tax-free? A loan is not treated as a distribution and
does not result in any taxable income unless, for any reason, we believe your
Policy must be treated as a MEC.
[80] How much is available for a loan? You can receive loans equal to 90% of
your current Account Value less any applicable contingent deferred sales charge.
At the time you take any loan, the amount then available for a new loan is the
maximum otherwise available less any Debt. The minimum amount you may borrow is
$1,000.
[81] 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.
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. Because a loan can impact the Account Value, it
may also have an impact on the Minimum Required Death Benefit and, possibly, the
Death Benefit.
[82] 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.
[83] Does Account Value in the Loan Account earn interest? We credit interest to
Account Value in the Loan Account. We currently credit interest at the rate of
6.0% per year, compounded yearly, to the Account Value maintained in the Loan
Account. We may change this rate, but it will not be less than 5.5% per year,
compounded yearly.
[84] 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.
[85] When must I repay the loan? You are not required to repay the loan while
the Insured is alive, except if you request reinstatement if the Policy lapses.
[86] 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.
[87] What happens if I repay any portion of the loan? The amount of Debt is
reduced by the amount of any loan repayment. 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.
[88] May I borrow from the Policy to make Premium payments? We will not accept
instructions to borrow from your Policy and use the loan to make Premium
payments.
[89] If I have an outstanding loan and send in money, do you use it to repay the
loan or do you consider it a Premium payment? We treat such funds as Premium or
loan repayment in accordance with your instructions, to the extent such
instructions comply with limitations such as the then applicable maximum Premium
for the Policy. If you send us funds and do not specify whether the money is to
be used as a Premium or to repay a loan, we treat the money as a Premium payment
to the extent such amount does not exceed the maximum Premium then allowed. We
will return to you any amount that exceeds the maximum Premium then allowed.
Partial Withdrawals
[90] When can I make a partial withdrawal? We allow partial withdrawals while
the Insured is alive, subject to the following limitations:
(a) In the first ten Policy Years, we permit a partial withdrawal if
such a withdrawal meets the requirements for a medically-related waiver, as
described in the section "Medically Related Waiver".
(b) After the tenth Policy Year, you may take up to the maximum partial
withdrawal amount as discussed below.
(c) At any time, you may withdraw amounts that cumulatively do not
exceed the total of any Exempt Premiums less the Exempt Premiums previously
withdrawn.
(d) No partial withdrawal may be less than $1,000.
[91] How much is available as a partial withdrawal? The maximum partial
withdrawal is up to 90% of the Cash Value. As a consequence of any partial
withdrawal, the Specified Amount must be at least a specified minimum and your
Cash Value must be at least $1,000. The specified minimum for Policies with one
Insured is $50,000. The specified minimum for Policies with two Insureds is
$100,000.
[92] 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.
[93] Is there a charge for a partial withdrawal? We charge a $25.00 transaction
fee on any partial withdrawal.
[94] Does a partial withdrawal affect the Death Benefit? A partial withdrawal
will have an immediate impact on the Death Benefit. A partial withdrawal always
reduces the Minimum Required Death Benefit, because the Minimum Required Death
Benefit is based on the Account Value. A partial withdrawal also results in a
reduction to the Guaranteed Minimum Death Benefit. If you are using Option B,
the Specified Amount is not reduced by a partial withdrawal. If you are using
Option A, the Specified Amount is reduced by the lesser of: (1) the amount of
the partial withdrawal, including the amount of the transaction fee; or (2) the
extent required such that, immediately after such reduction, the Specified
Amount equals the higher of the recalculated Minimum Required Death Benefit and
the recalculated Guaranteed Minimum Death Benefit.
If a partial withdrawal occurs on or after Age 100, it reduces the Death Benefit
by the exact amount of the partial withdrawal plus the partial withdrawal
transaction fee, because on or after that Age the Death Benefit equals the
Account Value.
Surrenders
[95] 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.
[96] What is paid out when a Policy is surrendered? If you surrender the Policy,
we will pay you the Cash Value.
Accelerated Death Benefit
[97] 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 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, based on the ratio by which
the Death Benefit is reduced as a result of the payment of the accelerated death
benefit. We reserve the right to change the interest rate discount percentage.
[98] 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.
[99] What happens to the remaining benefits if American Skandia makes such a
payment? If we make such a payment, we first reduce the Policy's benefits and
any Debt proportionately. For example, if the Death Benefit before such a
payment is $200,000 and we make an accelerated Death Benefit payment of $50,000,
we reduce the Death Benefit by the ratio of the payment to the then current
Death Benefit, which in this case is by 25%, to $150,000. We also reduce the
Maximum Annual Assessable Premium. You should consult a tax advisor on the tax
consequences of such a payment. Please refer to Appendix F for a hypothetical
illustration of the accelerated death benefit provision.
Medically-Related Waiver
[100] What is a medically-related waiver? A medically-related waiver is a waiver
of the contingent deferred sales charge that would otherwise apply to a
surrender. A medically-related waiver also is the only context in which we
permit a partial withdrawal in the first ten Policy Years of amounts other than
Exempt Premium. No contingent deferred sales charge or partial withdrawal
transaction fee applies to such a partial withdrawal.
[101] When would American Skandia waive the contingent deferred sales charge? We
will waive the contingent deferred sales 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, for at least a specified amount of time, and that such
confinement started after the Issue Date.
[102] 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. However,
once we have approved a medically-related waiver, should you choose to only take
a partial withdrawal, the waiver will apply to any subsequent withdrawals or
surrender, subject to the $500,000 cumulative limit.
[103] What happens to the remaining benefits if American Skandia makes such a
payment in connection with a partial withdrawal? A partial withdrawal during the
first ten Policy Years for which we grant a medically-related waiver has the
same impact on the remaining benefits that results from any other partial
withdrawal.
Risks
[104] 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 of having to waive monthly
charges we would otherwise deduct under the guaranteed continuation provision.
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. You bear a liquidity risk because you may not
make partial withdrawals except under limited circumstances and in limited
amounts during the first ten (10) Policy Years, although amounts are available
as loans. Any irrevocable beneficiary bears the risk as to the Death Proceeds,
which may be affected by investment performance of the investment options, the
age at which the Insured dies (if at such time the amount paid is based on the
Minimum Required Death Benefit), any loan or withdrawal activity by the Owner
prior to the Insured's death or payment of an accelerated death benefit.
Other Rights
[105] 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
[106] 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
[107] 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 taxes. What
we do provide are some brief summary answers to the following questions about
Federal income taxes.
[108] Will my Beneficiary pay taxes on the Death Proceeds? Under most
circumstances, the Beneficiary does not pay any income tax on the Death
Proceeds.
[109] Is gain in the Policy taxed every year? Generally, any gain in the Policy
is not taxed currently. However, the treatment of gain when a MEC is assigned is
discussed below.
[110] How are amounts that I receive before the Insured's death taxed? If your
Policy is not being treated as a MEC, amounts you receive as a partial
withdrawal or if you surrender the Policy are deemed for income tax purposes to
come first from your basis in the Policy. That means you may withdraw your basis
before you are considered to have withdrawn any gain. Any gain withdrawn is
taxed as ordinary income. Under most circumstances, taking a loan does not
result in any income tax consequences.
[111] Under what circumstances might the Policy or any amounts taken out be
treated differently for income tax purposes? The tax treatment of any life
insurance policy and any distribution while the Insured is alive will be
different if the policy is deemed: (1) not to qualify as life insurance under
the Code; or (2) to be a MEC. The Code defines life insurance in such a way as
to limit the amount of money that can be put into a life insurance policy and
receive the tax preferences provided for life insurance. We expect to administer
the Policies such that the death benefits will always receive the treatment
accorded life insurance death benefits under the Code. However, the Code has a
second, more restrictive limit as to how much money may be contributed if the
taxpayer is to receive all the tax benefits for life insurance policies under
the Code, such as tax-free loans and "first-in/first-out" treatment of
distributions. If the amount contributed violates this second, more restrictive
limit, the Policy will be treated as a MEC and will not receive many of the tax
preferences of life insurance policies. This second limit, sometimes known as
the "7-pay test", is defined as paying more during the first seven years of a
policy than the amount that would be paid if the policy provided for paid up
benefits after seven level annual premiums. Any changes to a Policy which is
considered, for tax purposes, to be a "material" change, including, but not
limited to, a change in the Specified Amount, require us to test the Policy
again for compliance with the 7-pay test based on the changes to the Policy.
[112] How is a "MEC" treated differently from other life insurance policies?
Some of the key ways in which a MEC is treated differently from other life
insurance policies are: (a) amounts you receive as a partial withdrawal, loan,
or if you surrender the Policy are deemed for income tax purposes to come first
from any gain in the tax year received ("last in/first out" treatment); (b)
distributions of gain before the taxpayer's age 59 1/2 are subject to a 10%
penalty unless an exception applies; and (c) assignments or pledges as
collateral for a loan are deemed a distribution. Gain subsequent to an
assignment or pledge may be treated as if it is distributed each year. However,
death benefits paid from a MEC are treated the same as from other life insurance
policies.
Available Information
[113] 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. 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.
Reinstatement
You may apply for reinstatement of the Policy if it lapses. We must receive this
application In Writing at our Office within 5 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
We currently do not require that the Cash Value of the Policy be paid out as of
any "maturity date". There is an assumed maturity date for purposes of
compliance with various state insurance requirements and for purposes of meeting
certain tests under the Code. Should we come to believe that the Cash Value must
be paid out as of the assumed maturity date in order to comply with state or
Federal requirements, then a Policy will mature as of the Policy Anniversary on
which the Insured is Age 100. If there are two Insureds, a Policy "matures" as
of the Policy Anniversary on which the younger Insured is Age 100 or would have
been Age 100 if the younger Insured is then deceased. If we must implement a
maturity date, 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. Certain rights and benefits under the Policy may be restricted after Age
100.
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:
(1) "Scheduled" transactions such as monthly deductions, transfers and
distributions are "priced" according to the Unit Price next computed
after the date such transactions 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. However, we price scheduled
periodic payments which you authorize to be transferred from an account
at another financial institution for additional Premiums or loan
repayments as "unscheduled" transactions, because we cannot control the
administrative processing of the other financial institution.
(2) "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 additional
Premiums, loan repayments, and payments to keep a Policy in effect
during a grace period or a reinstatement payment.
(3) 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, depending in part on whether your Policy is treated as a MEC. 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 Policy 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.
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. However, we will charge the premium tax and DAC tax on
the amount of this "inherited" loan as if it was received as Premium. For
purposes of determining the Assessable Premium, the amount of the inherited loan
will not be treated as commissionable Premium.
The amount of this inherited loan in your Policy when established will be equal
to the loan that was in effect before you surrendered your prior policy. As of
the Policy Date, your Account Value will reflect any transferred "Premium" plus
the amount of the inherited loan. That portion of your Account Value equal to
the inherited loan amount will be allocated to the Loan Account as collateral
for the loan. By reflecting the inherited loan amount in the Account Value, the
sum of the Specified Amount and the Account Value initially will be more under
Option B than it would be without the loan. Also, there will be a corresponding
increase in the Minimum 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. All charges that
are calculated as a percentage of your Account Value will increase because the
Account Value will reflect the amount of the loan allocated to the Loan Account.
Withdrawals of amounts to pay loans transferred to an Exchange Policy from any
prior policy may have adverse taxable consequences. You should consult your tax
advisor before purchasing an Exchange Policy with the intention to make such a
withdrawal or before requesting such a withdrawal.
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.
We are taxed as a life insurance company under Part I, subchapter L, of the
Code.
Under most circumstances, the Beneficiary does not pay any Federal income tax on
the Death Proceeds.
Under most circumstances: (a) any gain in the Policy is not taxed currently; and
(b) any amounts you receive as a partial withdrawal or if you surrender the
Policy are deemed for income tax purposes to come first from your basis in the
Policy, with any gain withdrawn taxed as ordinary income; and (c) if you assign
or pledge any portion of the Policy, the transaction is not treated as a
distribution subject to taxation.
The tax treatment of the Policy and any distribution while the Insured is alive
will be different if the Policy is deemed to be a MEC. Some of the key ways in
which a MEC is treated differently from other life insurance Policies are: (a)
amounts your receive as a partial withdrawal, loan, or if you surrender the
Policy are deemed for income tax purposes to come first from any gain in the tax
year received; (b) distributions of gain before the taxpayer's age 59 1/2 are
subject to a 10% penalty unless an exception applies; and (c) assignments or
pledges as collateral for a loan are deemed a taxable distribution to the extent
of any gain.
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.
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.
Continuing the Policy Beyond the Implied Maturity Date: We believe that a Policy
will continue to be treated as life insurance and, if applicable, as a MEC, if
it remains in force beyond the Policy's assumed maturity date. 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 such date, 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 audited financial statement included in this Prospectus and Registration
Statement are presented in accordance with generally accepted accounting
principles. These statements were audited by Ernst & Young LLP, independent
auditors for the period ended December 31, 1997, and by Deloitte & Touche LLP
for the periods ended December 31, 1996, 1995, 1994 and 1993. We rely on their
respective authority 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 7.0% 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.
We may structure on-going sales compensation and the on-going service fees such
that no fee is payable based on the value in Fixed Allocations. If that were to
occur, it is possible that your representative may receive on-going service fee
compensation, but only in relation to value maintained in variable investment
options.
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 the deductions for taxes, the cost of insurance charges or the
contingent deferred sales charge. 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 amount and timing of Premium
payments, the Specified Amount, the Death Benefit option and the Policy Date;
and (c) assumptions about a lack of transfers, loans, loan repayments and
withdrawals as well as no changes to the Specified Amount and Death Benefit
option 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 G, we provide hypothetical illustrations of how
exercise of the accelerated death benefit provision affects the values of a
Policy.
<PAGE>
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.
<TABLE>
<CAPTION>
Name/ Position with American Skandia
Age Life Assurance Corporation Principal Occupation
<S> <C> <C> <C> <C>
Gordon C. Boronow* Deputy Chief Executive Deputy Chief Executive
45 Officer and President Officer and President:
Director (since July, 1991), American Skandia Life
Assurance Corporation
Nancy F. Brunetti Director (since February, 1996) Executive Vice President and
36 Chief Operating Officer:
American Skandia Information
Services and Technology Corporation
Malcolm M. Campbell Director (since April, 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 Corporate Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Lincoln R. Collins Executive Vice President and Executive Vice President, and
37 Chief Operating Officer Chief Operating Officer:
Director (since February, 1996) 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
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 October, 1994) American Skandia Life
Assurance Corporation
Gunnar J. Moberg Director (since November, 1994) Director - Marketing and Sales,
43 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
David R. Monroe Treasurer, Vice President Treasurer, Vice President
36 and Controller and 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.
Rodney D. Runestad Vice President Vice President:
48 American Skandia Life
Assurance Corporation
Anders O. Soderstrom Director (since October, 1994) President and
38 Chief Information Officer:
American Skandia Information
Services and Technology Corporation
Amanda C. Sutyak Director (since July, 1991) Vice President:
40 American Skandia
Marketing, Incorporated
C. Ake Svensson Director (since December, 1994) Vice President, Corporate
47 Controller and Treasurer:
American Skandia Investment
Holding Corporation
Mr. Svensson joined us in 1994. He previously held the position of Senior Vice
President with Nordenbanken.
Bayard F. Tracy Director (since October, 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.
</TABLE>
- --------
* Trustees of American Skandia Trust, one of the underlying mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.
<PAGE>
Financial Statements for American Skandia Life Assurance Corporation and
American Skandia Life Assurance Corporation Separate Account F
American Skandia Life Assurance Corporation Separate Account F has not been in
existence for twelve (12) months. Therefore, there are no audited financial
statements as of the date.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------------ ---------------------
(unaudited)
ASSETS
- ------
Investments:
Fixed maturities - at amortized cost $ 8,296,514 $ 9,366,671
Fixed maturities - at fair value 132,385,354 108,323,668
Investment in mutual funds - at fair value 6,872,319 6,710,851
Policy loans 557,433 687,267
------------------ ---------------------
Total investments 148,111,620 125,088,457
Cash and cash equivalents 22,687,636 81,974,204
Accrued investment income 2,296,345 2,441,671
Fixed assets 310,742 356,153
Deferred acquisition costs 692,244,653 546,703,051
Reinsurance receivable 12,125,256 6,342,938
Receivable from affiliates 1,379,884 1,910,895
Income tax receivable - current 10,191,421 1,047,493
Income tax receivable - deferred 22,449,368 26,174,369
State insurance licenses 4,450,000 4,562,500
Other assets 2,807,528 2,524,581
Separate account assets 14,698,628,982 12,095,163,569
------------------ ---------------------
Total Assets $ 15,617,683,435 $ 12,894,289,881
================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------
LIABILITIES:
Reserve for future contractowner benefits $ 39,363,630 $ 43,204,443
Policy reserves 31,607,153 24,414,999
Drafts outstanding 19,767,193 19,277,706
Accounts payable and accrued expenses 86,062,118 71,190,019
Payable to affiliates 20,121,151 584,283
Future fees payable to parent 271,655,055 233,033,818
Short-term borrowing 10,000,000 10,000,000
Surplus notes 213,000,000 213,000,000
Separate account liabilities 14,698,628,982 12,095,163,569
------------------ ---------------------
Total Liabilities 15,390,205,282 12,709,868,837
------------------ ---------------------
SHAREHOLDER'S EQUITY:
Common stock, $80 par, 25,000 shares
authorized, issued and outstanding 2,000,000 2,000,000
Additional paid-in capital 157,289,714 151,527,229
Retained earnings 64,446,673 30,225,784
Accumulated other comprehensive income 3,741,766 668,031
------------------ ---------------------
Total Shareholder's Equity 227,478,153 184,421,044
------------------ ---------------------
Total Liabilities and Shareholder's Equity $ 15,617,683,435 $ 12,894,289,881
================== =====================
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
----------------------- -----------------------
REVENUES
- --------
Annuity charges and fees $ 133,729,829 $ 85,051,449
Fee income 36,913,358 19,309,148
Net investment income 8,140,502 6,026,646
Annuity premium income 80,801 795,042
Net realized capital gains 123,610 84,617
Other 260,427 188,111
----------------------- -----------------------
Total Revenues 179,248,527 111,455,013
----------------------- -----------------------
BENEFITS AND EXPENSES
- ---------------------
Benefits:
Annuity benefits 907,877 1,464,570
Change in annuity policy reserves 593,800 (280,205)
Cost of minimum death benefit reinsurance 3,645,055 3,256,884
Return credited to contractowners (7,164,052) (7,540,458)
----------------------- -----------------------
(2,017,320) (3,099,209)
----------------------- -----------------------
Expenses:
Underwriting, acquisition and other insurance expenses 109,857,341 64,884,324
Amortization of state insurance licenses 112,500 112,500
Interest expense 29,502,465 18,066,407
----------------------- -----------------------
139,472,306 83,063,231
----------------------- -----------------------
Total Benefits and Expenses 137,454,986 79,964,022
----------------------- -----------------------
Income from operations before income taxes 41,793,541 31,490,991
Income tax expense 7,572,652 10,226,817
----------------------- -----------------------
Net income $ 34,220,889 $ 21,264,174
======================= =======================
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
----------------------- ------------------------
REVENUES:
- --------
Annuity charges and fees $ 48,646,807 $ 33,219,774
Fee income 13,685,731 7,545,509
Net investment income 2,469,003 2,031,187
Annuity premium income - 215,042
Net realized capital gains (losses) (46,051) 20,553
Other 112,637 122,056
----------------------- ------------------------
Total Revenues 64,868,127 43,154,121
----------------------- ------------------------
BENEFITS AND EXPENSES:
- ---------------------
Benefits:
Annuity benefits 348,870 248,959
Change in annuity policy reserves 190,769 (1,454,354)
Cost of minimum death benefit reinsurance 970,746 1,445,511
Return credited to contractowners (148,310) (2,824,484)
----------------------- ------------------------
1,362,075 (2,584,368)
----------------------- ------------------------
Expenses:
Underwriting, acquisition and other insurance expenses 36,365,815 26,701,795
Amortization of state insurance licenses 37,500 37,500
Interest expense 10,705,254 7,024,476
----------------------- ------------------------
47,108,569 33,763,771
----------------------- ------------------------
Total benefits and expenses 48,470,644 31,179,403
----------------------- ------------------------
Income from operations before income taxes 16,397,483 11,974,718
Income tax expense 2,223,798 3,353,306
----------------------- ------------------------
Net income $ 14,173,685 $ 8,621,412
======================= ========================
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
NINE MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1997
-------------------------- -----------------------
(unaudited)
Common Stock, balance at beginning and end of period $ 2,000,000 $ 2,000,000
-------------------------- -----------------------
Additional paid-in capital:
Balance at beginning of period 151,527,229 122,250,117
Additional contributions 5,762,485 29,277,112
-------------------------- -----------------------
Balance at end of period 157,289,714 151,527,229
-------------------------- -----------------------
Retained earnings:
Balance at beginning of period 30,225,784 2,678,251
Net income 34,220,889 27,547,533
-------------------------- -----------------------
Balance at end of period 64,446,673 30,225,784
-------------------------- -----------------------
Accumulated other comprehensive income:
Balance at beginning of period 668,031 (583,337)
Change in other comprehensive income 3,073,735 1,251,368
-------------------------- -----------------------
Balance at end of period 3,741,766 668,031
-------------------------- -----------------------
Total Shareholder's Equity $ 227,478,153 $ 184,421,044
========================== =======================
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
----------------------- -------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 34,220,889 $ 21,264,174
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in policy reserves 7,192,154 3,570
Amortization of bond discount 74,805 56,397
Amortization of insurance licenses 112,500 112,500
Change in receivable from/payable to affiliates 20,067,879 63,494,692
Change in income tax receivable/payable (9,143,928) 1,209,562
Increase in other assets (282,947) (2,063,551)
(Increase)/decrease in accrued investment income 145,326 (46,663)
(Increase)/decrease in reinsurance receivable (5,782,318) 2,287,168
Increase in deferred acquisition costs, net (145,541,602) (145,984,394)
(Increase)/decrease in income tax receivable - 3,725,001 (7,859,728)
deferred
Increase in accounts payable and accrued expenses 14,872,099 25,630,696
Increase in drafts outstanding 489,487 -
Change in foreign currency translation, net 124,555 (80,986)
Realized gain on sale of investments (123,610) (84,617)
----------------------- -----------------------
Net cash used in operating activities (79,849,710) (42,061,179)
----------------------- -----------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of fixed maturity investments (21,660,049) (13,723,543)
Proceeds from sale and maturity of fixed maturity investments 4,049,150 5,755,550
Purchase of shares in mutual funds (6,411,575) (4,248,877)
Proceeds from sale of shares in mutual funds 6,250,087 1,318,458
Net purchase of mutual funds - (7,900,000)
Decrease in policy loans 129,834 -
Change in investments of separate account assets (3,149,627,509) (2,779,722,388)
----------------------- -------------------------
Net cash used in investing activities (3,167,270,062) (2,798,520,800)
----------------------- -------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Capital contributions from parent 5,762,485 947,944
Increase in future fees payable to parent 38,621,237 53,825,601
Proceeds from life annuity sales 3,143,449,482 2,784,972,447
----------------------- -------------------------
Net cash provided by financing activities 3,187,833,204 2,839,745,992
----------------------- -------------------------
Net decrease in cash and cash equivalents (59,286,568) (835,987)
----------------------- -------------------------
Cash and cash equivalents at beginning of period 81,974,204 14,199,412
----------------------- -------------------------
Cash and cash equivalents at end of period $ 22,687,636 $ 13,363,425
======================= =========================
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Income taxes paid $ 14,618,966 $ 17,776,982
======================= =========================
Interest paid $ 6,227,483 $ 11,711,001
======================= =========================
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements
of American Skandia Life Assurance Corporation (the Company)
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
nine-month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to
the consolidated financial statements and footnotes thereto in
the Company's audited consolidated financial statements for
the year ended December 31, 1997.
Certain reclassifications have been made to prior year amounts
to conform with the current year presentation.
B. New Accounting Pronouncement
----------------------------
As of January 1, 1998 the Company adopted Statement of
Financial Accounting Standards ("SFAS") 130, "Reporting
Comprehensive Income". SFAS 130 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 Unaudited Consolidated Financial Statements
September 30, 1998
The components of comprehensive income, net of tax, for the nine months ended
September 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
---- ----
Net income $34,220,889 $21,264,174
Other comprehensive income:
Unrealized investment gains and
losses 3,198,290 765,734
Foreign currency translation (124,555) (52,641)
-------------------- -------------------
Other comprehensive income 3,073,735 713,093
-------------------- -------------------
Comprehensive income $37,294,624 $21,977,267
==================== ===================
The components of accumulated other comprehensive income, net of tax,
as of September 30, 1998 and December 31, 1997 were as follows:
1998 1997
---- ----
Unrealized investment gains and
losses $4,152,359 $ 954,069
Foreign currency translation (410,593) (286,038)
------------------- --------------------
Accumulated other comprehensive
income $3,741,766 $ 668,031
=================== ====================
</TABLE>
2. FOREIGN ENTITY
The Company has a 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. Total shareholder's equity of Skandia Vida,
S.A. de C.V. is $5,465,303 as of September 30, 1998.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
3. SURPLUS NOTES
The Company has issued surplus notes to American Skandia Investment Holding
Corporation (the "Parent") in exchange for cash. Surplus notes outstanding
as of September 30, 1998 were as follows.
Issue Date Amount Interest Rate
---------- ------ -------------
December 29, 1993 $20,000,000 6.84%
February 18, 1994 10,000,000 7.28%
March 28, 1994 10,000,000 7.90%
September 30, 1994 15,000,000 9.13%
December 28, 1994 14,000,000 9.78%
December 19, 1995 10,000,000 7.52%
December 20, 1995 15,000,000 7.49%
December 22, 1995 9,000,000 7.47%
June 28, 1996 40,000,000 8.41%
December 30, 1996 70,000,000 8.03%
------------
Total $213,000,000
============
Payment of interest and repayment of principal for these notes is subject
to certain conditions and requires approval by the Insurance Commissioner
of the State of Connecticut. As of September 30, 1998, $12,593,944 of
accrued interest on surplus notes was not approved for payment under these
criteria.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
4. FUTURE FEES PAYABLE TO PARENT
On December 17, 1996, the Company sold to its Parent, effective September
1, 1996, certain rights to receive future fees and charges expected to be
realized on the variable portion of a designated block of deferred annuity
contracts issued during the period from January 1, 1994 through June 30,
1996 (Transaction 1996-1). In addition, the Company entered into the
following similar transactions during 1997 and 1998:
Closing Effective Contract Issue
Transaction Date Date Period
----------- -------- --------- -----------------
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
In connection with these transactions, the Parent, through a trust, issued
collateralized notes in private placements 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 80% (100% for Transaction 1997-3) 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 Company did not sell the right to
receive future fees and charges after the expiration of the surrender
charge period.
The proceeds from the sales have been recorded as liabilities and are being
amortized over the remaining surrender charge period of the designated
contracts using the interest method. The present value of the transactions
(discounted at 7.5%) as of the Effective Date was as follows:
Present Value as
Transaction of Effective Date
----------- -----------------
1996-1 $50,221,438
1997-1 58,766,633
1997-2 77,551,736
1997-3 58,193,264
1998-1 61,179,515
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
Payments representing fees and charges realized during the period
January 1, 1998 through September 30, 1998 in the aggregate amount of
$47,989,273 were made by the Company to the Parent. Interest expense of
$16,008,724 has been included in the statement of operations.
Expected payments of future fees payable to Parent are as follows:
Year Ending
December 31, Amount
----------- ------
1998 $ 12,351,641
1999 51,188,963
2000 53,840,643
2001 52,032,259
2002 46,756,435
2003 35,839,640
2004 18,262,429
2005 1,383,045
-------------
Total $271,655,055
=============
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 Agreements subject to certain terms and conditions.
5. 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
business. The reinsurance is effected under quota share contracts.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
In addition, the Company reinsures certain mortality risks pertaining
to the Guaranteed Minimum Death Benefit feature in the variable annuity
products.
The effect of the reinsurance agreements on the Company's operations
was to reduce annuity charges and fee income, death benefit expense,
and reserve exposure. The effect of reinsurance is summarized as
follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
<S> <C> <C> <C>
Annuity Increase in Annuity Return Credited
Charges & Fees Policy Reserves to Contractowners
-------------- ------------------- -----------------
Gross $155,314,801 $ 6,113,204 ($7,164,052)
Ceded (21,584,972) (5,519,404) -
------------- ------------ ------------
Net $133,729,829 $ 593,800 ($7,164,052)
============= ============ ============
Nine Months Ended September 30, 1997
Annuity Increase in Annuity Return Credited
Charges & Fees Policy Reserves to Contractowners
-------------- ------------------- -----------------
Gross $101,999,925 ($ 1,110,474) ($7,561,239)
Ceded 16,948,476 (830,269) 20,781
-------------- ------------- ------------
Net $ 85,051,449 ($ 280,205) ($7,540,458)
============== ============== ============
</TABLE>
Such ceded reinsurance does not relieve the Company from 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
agreement.
6. SUBSEQUENT EVENT
On November 10, 1998 the Company sold to its Parent, effective October
1, 1998, certain rights to receive future fees and charges expected to
be realized on the variable portion of a designated block of deferred
annuity contracts issued during the period May 1, 1997 through August
31, 1998. In connection with this transaction, 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.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
Under the terms of the Purchase Agreement, the rights sold provide for
the Parent to receive 80% of future mortality and expense charges and
contingent deferred sales charges expected to be realized over the
remaining surrender charge period of the designated contracts
(generally, 8 years). The Company did not sell the right to receive
future fees and charges after the expiration of the surrender charge
period.
The proceeds from the sale will be recorded as a liability and will be
amortized over the remaining surrender charge period of the designated
contracts using the interest method. The present value at October 1,
1998 (discounted at 7.0%), of future fees and charges expected to be
realized on the designated contracts was $68,573,258.
Expected payments of future fees payable to Parent are as follows:
Period Ending
December 31, Amount
------------- ------
1998 $ 1,842,961
1999 7,742,574
2000 8,362,986
2001 9,087,882
2002 9,985,657
2003 10,586,804
2004 10,877,346
2005 8,663,401
2006 1,423,647
-----------
Total $68,573,258
===========
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>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine months ended September 30, 1998
American Skandia Life Assurance Corporation (the Company) is a stock insurance
company domiciled in Connecticut with licenses in all 50 states. It is a
wholly-owned subsidiary of American Skandia Investment Holding Corporation,
whose ultimate parent is Skandia Insurance Company Ltd., a Swedish company.
The Company mainly is in the business of issuing annuity policies, and has been
so since its business inception in 1988. The Company currently offers the
following annuity products: a) certain deferred annuities that are registered
with the Securities and Exchange Commission, including variable annuities and
fixed interest rate annuities that include a market value adjustment feature; b)
certain other fixed deferred annuities that are not registered with the
Securities and Exchange Commission; c) non-registered group variable annuities
designed as funding vehicles for certain qualified retirement plans; and d)
fixed and adjustable immediate annuities.
In April, the Company began offering a term life insurance product in support of
an affiliate's mutual fund products. In May, the Company launched its first
variable life insurance product. Early in 1999, the Company expects to release
its second variable life insurance product. Consistent sales activity is not
anticipated until more state approvals are secured and the launch of the second
variable life insurance product is completed.
The Company markets its products through an internal field marketing staff to
broker-dealers, financial planners and in conjunction with financial
institutions such as banks that are permitted directly, or through affiliates,
to sell annuities.
Results of Operations
---------------------
The Company's long term business plan was developed reflecting the current sales
and marketing approach. The sales volume for the nine month periods ended
September 30, 1998 and 1997 was $3,143 million and $2,785 million, respectively,
an increase of 13%. This increase is a direct result of the marketing efforts by
the Company coupled with an overall increase in the variable annuity
marketplace. Assets grew $2,723 million or 21% since December 31, 1997. This
increase is a direct result of the sales volume increasing separate account
assets and deferred acquisition costs combined with the strong first quarter
stock market performance partially offset by the impact of the third quarter
stock market decline, which impacted the growth in separate account assets.
Liabilities grew $2,680 million or 21% since December 31, 1997 as a result of
the reserves required for the increased sales activity as well as an increase in
borrowings and reinsurance to support the acquisition costs of the Company's
variable annuity business.
<PAGE>
The Company experienced a net gain of $34.2 million after tax for the current
period which was $12.9 million greater than the same period last year. This gain
is a result of the strong sales activity for the nine months ended September 30,
1998, expense levels consistent with sales activity, with the exception of
development activities, and an increased asset base, which generates additional
fee revenue.
Revenues:
Increasing annuity sales volume results in greater assets under management.
Growth in assets under management has resulted in a 57% increase in annuity
charges & fees for the nine-month period ended September 30, 1998. This is
compared to an increase of 71% for the nine-month period ended September 30,
1997.
Fee income includes income earned for transfer agency type activities. This
income increased 91% for the nine month period ended September 30, 1998 compared
to an increase of 70% for the nine month period ended September 30, 1997. These
increases are driven by the continued increase in assets under management.
Net investment income increased 35% for the nine-month period ended September
30, 1998. This is compared to an increase of 498% for the nine-month period
ended September 30, 1997. These increases are a result of increased general
account investment holdings for the periods.
Annuity premium income represents sales of immediate annuities with life
contingencies.
Benefits:
Annuity benefits represent payments on annuity contracts with mortality risks,
immediate annuities with life contingencies and supplementary contracts with
life contingencies.
The increase in annuity policy reserves represents the change in reserves for
immediate annuities with life contingencies, supplementary contracts with life
contingencies and the guaranteed minimum death benefit on variable annuities.
The Company reinsures the guaranteed minimum death benefit exposure on most of
its variable annuity contracts. For the periods ended September 30, 1998 and
1997, the costs associated with reinsuring the minimum death benefit reserve
exceeded the change in the minimum death benefit reserve by approximately $1.6
million and $0.5 million, respectively.
Return credited to contractowners represents revenues on variable and market
value adjusted annuities offset by benefit payments and change in reserves
required on this business. Also included are benefit payments and change in
reserves on immediate annuities and supplemental contracts without significant
mortality risks. The result for the current period reflects a higher than
expected separate account investment return on the market value adjusted
contracts in support of the benefits and required reserves. The positive
performance is consistent with the performance during the nine months ended
September 30, 1997.
<PAGE>
Expenses:
Underwriting, acquisition and other insurance expenses consists of $168.9
million of commissions and $86.6 million of general expenses offset by the net
capitalization of deferred acquisition costs totaling $145.6 million. This
compares to $140 million of commissions and $70.8 million of general expenses
offset by the net capitalization of deferred acquisition costs totaling $145.9
million for the same period last year.
Interest expense increased 63% over the same period last year as a result of the
securitization (future fees payable to Parent) transactions during 1997 and
1998. This compares to an increase in interest expense of 138% for the nine
months ended September 30, 1997, which was the result of the 1996 increase in
surplus notes of $110 million and the 1996 and 1997 securitization transactions.
Income tax expense was $7.6 million for the period ended September 30, 1998,
compared with $10.2 million for the same period last year. The effective federal
income tax rates for the periods were 18% and 32%, respectively. The 1998
effective rate was lower than the federal statutory income tax rate due to
permanent differences and 1997 provision to return differences. The 1997
effective rate was lower than the statutory rate due to permanent differences.
Management believes that based on the taxable income produced in 1997 and the
first nine months of 1998 as well as the continued growth in annuity products,
the Company will produce sufficient taxable income in the future to realize its
deferred tax assets.
Liquidity and Capital Resources
-------------------------------
The liquidity requirement of the Company was met by cash from insurance
operations, investment activities, cash flow from the December 30, 1997 and June
30, 1998 sales of future fee revenue, intercompany advances and reinsurance.
The Company had significant growth during the nine-month period in 1998. The
sales volume of $3,143 million was made up of approximately 97% variable
annuities, most of which carry a contingent deferred sales charge. This type of
product causes a temporary cash strain in that 100% of the proceeds are invested
in separate accounts supporting the product leaving a cash (but not capital)
strain caused by the acquisition costs for the new business. This cash strain
required the Company to look beyond the insurance operations and investments of
the Company. To this end, the Company extended its reinsurance agreements
(initiated in 1993, 1994 and 1995). The reinsurance agreements are modified
coinsurance arrangements where the reinsurer shares in the experience of a
specific book of business. The income and expense items presented above are net
of reinsurance.
In addition, since December 1996, the Company has entered into a series of
transactions in which the rights to receive future fees and charges expected to
be realized on the variable portion of a designated block of deferred annuity
contracts through their surrender charge period have been sold to the Parent.
These transactions, designated as another means of financing growth, are
discussed in more detail at Notes 4 and 6 of the Notes to Unaudited Consolidated
Financial Statements.
<PAGE>
While the tremendous growth of this young organization has depended on capital
support from its parent, the Company expects to use borrowing, reinsurance and
the sale of future fee revenues to fund the cash strain anticipated from the
acquisition costs on expected future sales volume.
As of September 30, 1998 and December 31, 1997, shareholder's equity was $227.5
million and $184.4 million, respectively, which includes the carrying value of
the state insurance licenses in the amount of $4.5 million and $4.6 million
respectively.
The Company has long term surplus notes and short term borrowing with its
parent. No dividends have been paid to its parent company.
Year 2000 Compliance
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 inability to process transactions correctly or engage in normal
business activities.
The American Skandia's deferred annuity operational business partners report
that all critical interfaces are or are expected to be Year 2000 compliant by
the end of 1998. All investment managers and sub-advisors are required by the
Securities and Exchange Commission to publicly disclose their Year 2000 status
in 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 expects to receive written
assurances that these firms will be Year 2000 compliant by the end of 1998.
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 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
Administration system. This project was completed recently and a certificate 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 Year 2000 compliance have
not had 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 expected to be at the most
compliant level available by the end of 1998. 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.
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.
<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 statement 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, 1997, and the
related consolidated statements of operations, shareholder's equity, and cash
flows for the year 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 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 1997 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Skandia Life Assurance Corporation at December 31, 1997, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/Ernst & Young LLP
- --------------------
Hartford, Connecticut
February 20, 1998
<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 statement of financial condition
of American Skandia Life Assurance Corporation and subsidiary (a wholly-owned
subsidiary of Skandia Insurance Company Ltd.) as of December 31, 1996, and the
related consolidated statements of operations, shareholder's equity, and cash
flows for each of the two years in the period 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 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, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of American Skandia Life
Assurance Corporation and subsidiary as of December 31, 1996, and the results of
their operations and their cash flows for each of the two years in the period
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
<TABLE>
<CAPTION>
<S> <C> <C>
AS OF DECEMBER 31,
1997 1996
--------------- --------------
ASSETS
Investments:
Fixed maturities - at amortized cost $ 9,366,671 $ 10,090,369
Fixed maturities - at fair value 108,323,668 87,369,724
Investment in mutual funds - at fair value 6,710,851 2,637,731
Policy loans 687,267 159,482
--------------- --------------
Total investments 125,088,457 100,257,306
Cash and cash equivalents 81,974,204 45,332,131
Accrued investment income 2,441,671 1,958,546
Fixed assets 356,153 229,780
Deferred acquisition costs 628,051,995 438,640,918
Reinsurance receivable 3,120,221 2,167,818
Receivable from affiliates 1,910,895 691,532
Income tax receivable - current 1,047,493 -
Income tax receivable - deferred 26,174,369 17,217,582
State insurance licenses 4,562,500 4,712,500
Other assets 2,524,581 2,047,689
Separate account assets 12,095,163,569 7,734,439,793
--------------- --------------
Total Assets $12,972,416,108 $8,347,695,595
=============== ==============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Reserve for future contractowner benefits $ 43,204,443 $ 36,245,936
Policy reserves 24,414,999 21,238,749
Income tax payable - 1,124,151
Drafts outstanding 19,277,706 13,032,719
Accounts payable and accrued expenses 71,190,019 65,471,294
Payable to affiliates 584,283 685,724
Future fees payable to parent 233,033,818 47,111,936
Payable to reinsurer 78,126,227 79,000,262
Short-term borrowing 10,000,000 10,000,000
Surplus notes 213,000,000 213,000,000
Separate account liabilities 12,095,163,569 7,734,439,793
--------------- --------------
Total Liabilities 12,787,995,064 8,221,350,564
--------------- --------------
SHAREHOLDER'S EQUITY:
Common stock, $80 par, 25,000 shares
authorized, issued and outstanding 2,000,000 2,000,000
Additional paid-in capital 151,527,229 122,250,117
Unrealized investment gains and losses, net 954,069 (319,631)
Foreign currency translation, net (286,038) (263,706)
Retained earnings 30,225,784 2,678,251
--------------- --------------
Total Shareholder's Equity 184,421,044 126,345,031
--------------- --------------
Total Liabilities and Shareholder's Equity $12,972,416,108 $8,347,695,595
=============== ==============
</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 OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
------------ ------------ -----------
REVENUES:
Annuity charges and fees $121,157,846 $69,779,522 $38,837,358
Fee income 27,587,231 16,419,690 6,205,719
Net investment income 8,181,073 1,585,819 1,600,674
Annuity premium income 920,042 125,000 -
Net realized capital gains 87,103 134,463 36,774
Other 80,999 5,640 8,750
------------ ----------- -----------
Total Revenues 158,014,294 88,050,134 46,689,275
------------ ----------- -----------
BENEFITS AND EXPENSES:
Benefits:
Annuity benefits 2,033,275 613,594 555,421
Increase/(decrease) in annuity policy reserves 37,270 634,540 (6,778,756)
Cost of minimum death benefit reinsurance 4,544,697 2,866,835 2,056,606
Return credited to contractowners (2,018,635) 672,635 10,612,858
------------ ----------- -----------
4,596,607 4,787,604 6,446,129
------------ ----------- -----------
Expenses:
Underwriting, acquisition and other insurance expenses 90,346,952 49,737,147 35,764,392
Amortization of state insurance licenses 150,000 150,000 150,000
Interest expense 24,895,456 10,790,716 6,499,414
------------ ----------- -----------
115,392,408 60,677,863 42,413,806
------------ ----------- -----------
Total Benefits and Expenses 119,989,015 65,465,467 48,859,935
------------ ----------- -----------
Income (loss) from operations
before income taxes 38,025,279 22,584,667 (2,170,660)
Income tax expense (benefit) 10,477,746 (4,038,357) 397,360
------------ ----------- -----------
Net income (loss) $ 27,547,533 $26,623,024 $(2,568,020)
============ =========== ===========
</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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
Common stock, balance at beginning and end of year $ 2,000,000 $ 2,000,000 $ 2,000,000
------------ ------------ ------------
Additional paid-in capital:
Balance at beginning of year 122,250,117 81,874,666 71,623,932
Additional contributions 29,277,112 40,375,451 10,250,734
------------ ------------ ------------
Balance at end of year 151,527,229 122,250,117 81,874,666
------------ ------------ ------------
Unrealized investment gains and losses:
Balance at beginning of year (319,631) 111,359 (41,655)
Change in unrealized investment gains and losses, net 1,273,700 (430,990) 153,014
------------ ------------ ------------
Balance at end of year 954,069 (319,631) 111,359
------------ ------------ ------------
Foreign currency translation:
Balance at beginning of year (263,706) (328,252) -
Change in foreign currency translation, net (22,332) 64,546 (328,252)
------------ ------------ ------------
Balance at end of year (286,038) (263,706) (328,252)
------------ ------------ ------------
Retained earnings (deficit):
Balance at beginning of year 2,678,251 (23,944,773) (21,376,753)
Net income (loss) 27,547,533 26,623,024 (2,568,020)
------------ ------------ ------------
Balance at end of year 30,225,784 2,678,251 (23,944,773)
------------ ------------ ------------
Total Shareholder's Equity $184,421,044 $126,345,031 $ 59,713,000
============ ============ ============
</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 FLOWS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
--------------- --------------- --------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income/(loss) $ 27,547,533 26,623,024 (2,568,020)
Adjustments to reconcile net income/(loss) to net cash
used in operating activities:
Increase/(decrease) in policy reserves 3,176,250 1,852,259 (4,667,765)
Amortization of bond discount 72,986 27,340 23,449
Amortization of insurance licenses 150,000 150,000 150,000
Change in receivable from/payable to affiliates (1,320,804) 540,484 (347,884)
Change in income tax receivable/payable (2,171,644) 1,688,001 (600,849)
Increase in other assets (603,265) (661,084) (372,120)
Increase in accrued investment income (483,125) (1,764,472) (20,420)
Increase in reinsurance receivable (952,403) (179,776) (1,988,042)
Increase in deferred acquisition costs, net (189,411,077) (168,418,535) (96,212,774)
Increase in income tax receivable - deferred (9,630,603) (16,903,477) -
Increase in accounts payable and accrued expenses 5,718,725 32,322,727 945,483
Increase in drafts outstanding 6,244,987 13,032,719 -
Change in foreign currency translation, net (34,356) (77,450) (328,252)
Realized gain on sale of investments (87,103) (134,463) (36,774)
--------------- --------------- --------------
Net cash used in operating activities (161,783,899) (111,902,703) (106,023,968)
--------------- --------------- --------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of fixed maturity investments (28,905,493) (96,812,903) (614,289)
Proceeds from sale and maturity of fixed maturity investments 10,755,550 8,947,390 100,000
Purchase of shares in mutual funds (5,595,342) (2,160,347) (1,566,194)
Proceeds from sale of shares in mutual funds 1,415,576 1,273,640 867,744
Increase in policy loans (527,785) (104,427) (37,807)
Change in investments of separate account assets (3,691,031,470) (2,789,361,685) (1,609,415,439)
--------------- --------------- ---------------
Net cash used in investing activities (3,713,888,964) (2,878,218,332) (1,610,665,985)
--------------- --------------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Capital contributions from parent 29,277,112 40,375,451 10,250,734
Surplus notes - 110,000,000 34,000,000
Increase in future fees payable to parent 185,921,882 47,111,936 -
Increase/(decrease) in payable to reinsurer (874,035) 14,004,792 24,890,064
Proceeds from annuity sales 3,697,989,977 2,795,114,603 1,628,486,076
--------------- --------------- ---------------
Net cash provided by financing activities 3,912,314,936 3,006,606,782 1,697,626,874
--------------- --------------- ---------------
Net increase/(decrease) in cash and cash equivalents 36,642,073 16,485,747 (19,063,079)
--------------- --------------- ---------------
Cash and cash equivalents at beginning of year 45,332,131 28,846,384 47,909,463
--------------- --------------- ---------------
Cash and cash equivalents at end of year $ 81,974,204 45,332,131 28,846,384
=============== =============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Income taxes paid $ 22,307,992 11,177,120 995,496
=============== =============== ===============
Interest paid $ 16,915,835 7,094,767 540,319
=============== =============== ===============
</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, 1997
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 annuity products and issues its products through
its affiliated broker/dealer company, American Skandia Marketing,
Incorporated. The Company currently issues variable, fixed, market
value adjusted and immediate annuities.
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. Total shareholder's equity of Skandia
Vida, S.A. de C.V. is $1,509,146 as of December 31, 1997.
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 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") 130,
"Reporting Comprehensive Income", which is effective for fiscal
years beginning after December 15, 1997. SFAS 130 sets standards
for the reporting and display of comprehensive income and its
components in financial statements. Application of the new rules
will not impact the Company's financial position or net income. The
Company expects to adopt this pronouncement in the first quarter of
1998, which will include the presentation of comprehensive income
for prior periods presented for comparative purposes, as required
by SFAS 130. The primary element of comprehensive income applicable
to the Company is changes in unrealized gains and losses on
securities classified as available for sale.
<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
shareholder's equity.
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 shareholder's equity.
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 million 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 $95,823 and $32,641 at December 31, 1997
and 1996, respectively. Depreciation expense for the years ended
December 31, 1997 and 1996 was $63,182 and $28,892, respectively.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
G. Recognition of Revenue and Contract Benefits
Annuity contracts without significant mortality risk, as defined by
SFAS 97, "Accounting and Reporting by Insurance Enterprises for
Certain Long-Duration Contracts", are classified as investment
contracts (variable, market value adjusted and certain immediate
annuities) and those with mortality risk (immediate annuities) as
insurance products. The policy for revenue and contract benefit
recognition is described below.
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 is 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 6.5% to 8.25% at
both December 31, 1997 and 1996.
Annuity sales were $3,697,990,000, $2,795,114,000 and
$1,628,486,000 for the years ended December 31, 1997, 1996 and
1995, respectively. Annuity contract assets under management were
$12,119,191,000, $7,764,891,000 and $4,704,044,000 at December 31,
1997, 1996 and 1995, respectively.
H. 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. These costs include commissions, cost 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.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
Details of the deferred acquisition costs and related amortization
for the years ended December 31, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Balance at beginning of year $438,640,918 $270,222,383 $174,009,609
Acquisition costs deferred
during the year 262,257,543 190,995,588 106,063,698
Acquisition costs amortized
during the year 72,846,466 22,577,053 9,850,924
------------ ------------ ------------
Balance at end of year $628,051,995 $438,640,918 $270,222,383
============ ============ ============
</TABLE>
I. Separate Accounts
Assets and liabilities in Separate Accounts are shown as separate
captions in the consolidated statements of financial condition.
Separate Account assets consist principally of long term bonds,
investments in mutual funds and short-term securities, all of
which are carried at fair value.
Included in Separate Account liabilities are $773,066,633 and
$644,233,883 at December 31, 1997 and 1996, respectively, relating
to annuity contracts for which the contractholder is guaranteed a
fixed rate of return. Separate Account assets of $773,066,633 and
$644,233,883 at December 31, 1997 and 1996, respectively,
consisting of long term bonds, short term securities, transfers
due from general account and cash are held in support of these
annuity contracts, pursuant to state regulation.
J. 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.
Fair values of certain financial instruments, such as future fees
payable to the 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)
K. Income Taxes
The Company is included in the consolidated federal income tax
return of Skandia U.S. 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 the 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.
L. 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 operations 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 included in shareholder's equity.
M. 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.
N. 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 business. The reinsurance is effected
under quota share contracts.
The Company also reinsures certain mortality risks. These risks
result from the guaranteed minimum death benefit feature in the
variable annuity products.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
3. 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, 1997 and 1996 are shown
below. All securities held at December 31, 1997 are publicly traded.
Investments in fixed maturities as of December 31, 1997 consisted of
the following:
Held-to-Maturity
----------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
U.S. Government
Obligations $3,789,498 $71,197 $ 8,517 $3,852,178
Obligations of State and
Political Subdivisions 50,000 - - 50,000
Corporate Securities 5,527,173 1,949 19,487 5,509,635
----------- ------- -------- -----------
Totals $9,366,671 $73,146 $28,004 $9,411,813
========== ======= ======= ==========
Available-for-Sale
------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
U.S. Government
Obligations $ 14,999,291 $ 201,664 - $15,200,955
Obligations of
State and Political
Subdivisions 202,224 318 - 202,542
Corporate
Securities 91,469,384 1,505,656 54,869 92,920,171
-------------- ----------- -------- ------------
Totals $106,670,899 $1,707,638 $54,869 $108,323,668
============ ========== ======= ============
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The amortized cost and fair value of fixed maturities, by contractual
maturity, at December 31, 1997 are shown below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Held-to-Maturity Available-for-Sale
---------------- ------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- ----- --------- -----
Due in one year or less $1,049,977 $1,050,001 $ 2,990,584 $ 2,992,050
Due after one through five years 8,062,630 8,105,822 26,857,218 27,121,041
Due after five through ten years 254,064 255,990 76,823,097 78,210,577
---------- ---------- ------------ ------------
Total $9,366,671 $9,411,813 $106,670,899 $108,323,668
========== ========== ============ ============
</TABLE>
Investments in fixed maturities as of December 31, 1996 consisted of
the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Held-to-Maturity
----------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
U.S. Government
Obligations $ 4,299,803 $88,268 $22,937 $ 4,365,134
Obligations of
State and Political
Subdivisions 250,119 229 - 250,348
Corporate
Securities 5,540,447 - 62,660 5,477,787
----------- ---------- -------- -----------
Totals $10,090,369 $88,497 $85,597 $10,093,269
=========== ======= ======= ===========
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
<TABLE>
<CAPTION>
Available for Sale
------------------
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
U.S. Government
Obligations $14,508,780 - $ 79,745 $14,429,035
Obligations of
State and Political
Subdivisions 202,516 26 - 202,542
Other Government
Obligations 5,047,790 - 7,440 5,040,350
Corporate
Securities 68,101,413 83,312 486,928 67,697,797
----------- ------- -------- -----------
Totals $87,860,499 $83,338 $574,113 $87,369,724
=========== ======= ======== ===========
</TABLE>
Proceeds from sales of fixed maturities during 1997, 1996 and 1995 were
$5,055,550, $8,732,390 and $0, respectively. Proceeds from maturities
during 1997, 1996 and 1995 were $5,700,000, $215,000 and $100,000,
respectively.
The cost, gross unrealized gains (losses) and fair value of investments
in mutual funds at December 31, 1997 and 1996 are shown below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
---- ---------- ---------- -----
1997 $6,895,821 $43,506 $228,476 $6,710,851
========== ======= ======== ==========
1996 $2,638,695 $59,278 $ 60,242 $2,637,731
========== ======= ========= ==========
</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>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Fixed Maturities:
Gross gains $ 9,800 $ - $ -
Gross losses - - -
Investment in Mutual Funds:
Gross gains 115,824 139,814 65,236
Gross losses (38,521) (5,351) (28,462)
---------- ----------- --------
Totals $ 87,103 $134,463 $36,774
========= ======== =======
</TABLE>
4. NET INVESTMENT INCOME
The sources of net investment income for the years ended December 31,
1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Fixed maturities $6,616,560 $ 836,591 $ 629,743
Cash and cash equivalents 1,153,790 684,653 986,932
Investment in mutual funds 553,864 143,737 59,895
Policy loans 28,243 5,274 4,025
---------- ---------- ----------
Total investment income 8,352,457 1,670,255 1,680,595
Investment expenses 171,384 84,436 79,921
---------- ---------- ----------
Net investment income $8,181,073 $1,585,819 $1,600,674
========== ========== ==========
</TABLE>
5. INCOME TAXES
The significant components of income tax expense (benefit) are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Current tax expense $20,108,348 $12,865,120 $397,360
Deferred tax benefit (9,630,602) (16,903,477) -
----------- ---------- --------
Total income tax expense (benefit) $10,477,746 $(4,038,357) $397,360
=========== ============ ========
</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, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
---- ----
Deferred Tax (Liabilities):
Deferred acquisition costs ($159,765,795) ($103,072,477)
Payable to reinsurer (25,369,078) (23,025,326)
Policy fees (656,311) (491,640)
Unrealized investment gains and losses (513,731) 172,109
------------- --------------
Total (186,304,915) (126,417,334)
------------ ------------
Deferred Tax Assets:
Net separate account liabilities 175,872,109 121,092,798
Reserve for future contractowner benefits 15,121,555 12,686,078
Other reserve differences 10,534,160 4,527,886
Deferred compensation 7,186,789 4,392,526
Surplus notes interest 2,728,676 548,730
Foreign exchange translation 154,020 141,996
Other 881,975 244,902
------------- -------------
Total 212,479,284 143,634,916
------------ ------------
Net deferred tax balance $ 26,174,369 $ 17,217,582
============ ============
</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 $9,324,853 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>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Income (loss) before taxes $38,025,279 $22,584,667 ($2,170,660)
Income tax rate 35% 35% 35%
----------- ----------- -----------
Tax expense at federal
statutory income tax rate 13,308,848 7,904,633 (759,731)
Tax effect of:
Change in valuation allowance - (9,324,853) 1,680,339
Dividend received deduction (4,585,000) (2,266,051) (477,139)
Other 866,973 (707,685) (48,821)
State income taxes 886,925 355,599 2,712
----------- ----------- -----------
Income tax expense (benefit) $10,477,746 ($ 4,038,357) $ 397,360
=========== =========== ===========
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
6. 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, an
affiliated company; and likewise, the Company has charged operating
costs to American Skandia Investment Services, Incorporated, an
affiliated company. The total cost to the Company for these items was
$5,572,404, $11,581,114 and $12,687,337 for the years ended December
31, 1997, 1996 and 1995, respectively. Income received for these items
was $3,224,645, $1,148,364 and $396,573 for the years ended December
31, 1997, 1996 and 1995, respectively. Amounts receivable from
affiliates under these arrangements were $548,887 and $548,792 as of
December 31, 1997 and 1996, respectively. Amounts payable to affiliates
under these arrangements were $263,742 and $619,089 as of December 31,
1997 and 1996, respectively.
7. FUTURE FEES PAYABLE TO PARENT
On December 17, 1996, the Company sold to its Parent, effective
September 1, 1996, certain rights to receive future fees and charges
expected to be realized on the variable portion of a designated block
of deferred annuity contracts issued during the period from January 1,
1994 through June 30, 1996 (Transaction 1996-1). In addition, the
Company entered into the following similar transactions during 1997:
Closing Effective Contract Issue
Transaction Date Date Period
----------- ------- --------- --------------
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
In connection with these transactions, the Parent, through a trust,
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 80% (100% for Transaction 1997-3) 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 (6.0 to 8.0 years). 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 (discounted at 7.5%) as of the respective Effective
Date was as follows:
Present
Transaction Value
----------- -------
1996-1 $ 50,221,438
1997-1 58,766,633
1997-2 77,551,736
1997-3 58,193,264
Payments representing fees and charges realized during the period
January 1, 1997 through December 31, 1997 in the aggregate amount of
$22,250,158, were made by the Company to the Parent. Interest expense
of $6,842,469 has been included in the statement of operations.
Expected payments of future fees payable to Parent are as follows:
Year Ending
December 31, Amount
------------ ------
1998 $ 39,637,610
1999 41,845,736
2000 43,500,530
2001 40,738,800
2002 34,533,624
2003 22,835,020
2004 9,490,399
2005 452,099
--------------
Total $ 233,033,818
==============
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)
8. LEASES
The Company leases office space under a lease agreement established in
1989 with American Skandia Information Services and Technology
Corporation. The lease expense for 1997, 1996 and 1995 was $2,427,502,
$1,583,391 and $1,218,806, respectively. Future minimum lease payments
per year and in aggregate as of December 31, 1997 are as follows:
1998 $ 2,371,509
1999 2,595,272
2000 2,753,324
2001 2,753,324
2002 2,753,324
2003 and thereafter 21,465,933
------------
Total $34,692,686
9. RESTRICTED ASSETS
In order 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
$3,756,572 and $3,766,564 as of December 31, 1997, and 1996,
respectively. These deposits are required to be maintained for the
protection of contractowners within the individual states.
10. RETAINED EARNINGS AND DIVIDEND RESTRICTIONS
Statutory basis shareholder's equity was $294,585,500, $275,835,076 and
$132,493,899 at December 31, 1997, 1996 and 1995, respectively.
The statutory basis net loss was $8,970,459, $5,405,179 and $7,183,003
for the years ended December 31, 1997, 1996 and 1995, respectively.
Under state insurance laws, the maximum amount of dividends that can be
paid to shareholders without prior approval of the state insurance
departments is subject to restrictions relating to statutory surplus
and net gain from operations. At December 31, 1997, no amounts may be
distributed without prior approval.
11. EMPLOYEE BENEFITS
In 1989, the Company established 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 $1,220,214, $850,111 and $627,161 for the years ended
December 31, 1997, 1996 and 1995, respectively.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
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. A new plan is
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 is $15,720,067 and $9,212,369 as
of December 31, 1997 and 1996, respectively. Payments under this plan
were $1,118,803, $601,603 and $0 for the years ended December 31, 1997,
1996, and 1995, respectively.
In 1994, the Company established 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
$269,616 in 1997, $244,601 in 1996 and $139,209 in 1995.
12. REINSURANCE
The effect of the reinsurance agreements on the Company's operations
was to reduce annuity charges and fee income, death benefit expense and
policy reserves. The effect of reinsurance for the years ended December
31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997
<S> <C> <C> <C> <C>
Annuity Change in Annuity Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- ----------------- -----------------
Gross $144,417,045 $955,677 ($1,971,959)
Ceded 23,259,199 918,407 46,676
------------ --------- ----------
Net $121,157,846 $ 37,270 ($2,018,635)
============ ========= ==========
1996
Annuity Change in Annuity Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- ----------------- -----------------
Gross $87,369,693 $814,306 $779,070
Ceded 17,590,171 179,766 106,435
----------- -------- --------
Net $69,779,522 $634,540 $672,635
=========== ======== ========
1995
Annuity Change in Annuity Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- ----------------- -----------------
Gross $50,334,280 ($4,790,714) $10,945,831
Ceded 11,496,922 1,988,042 332,973
----------- ---------- -----------
Net $38,837,358 ($6,778,756) $10,612,858
=========== ========== ===========
</TABLE>
Such ceded reinsurance does not relieve the Company from 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)
13. SURPLUS NOTES
The Company has issued surplus notes to its Parent in exchange for cash.
Surplus notes outstanding as of December 31, 1997, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
Interest for the
Years Ended December 31,
------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest
Issue Date Amount Rate 1997 1996 1995
---------- ------ ---- ---- ---- ----
December 29, 1993 $ 20,000,000 6.84% $ 1,387,000 $ 1,390,800 $1,387,000
February 18, 1994 10,000,000 7.28% 738,111 740,133 738,111
March 28, 1994 10,000,000 7.90% 800,972 803,167 800,972
September 30, 1994 15,000,000 9.13% 1,388,521 1,392,325 1,388,521
December 28, 1994 14,000,000 9.78% 1,388,217 1,392,020 1,392,008
December 19, 1995 10,000,000 7.52% 762,444 764,533 27,156
December 20, 1995 15,000,000 7.49% 1,139,104 1,142,225 37,450
December 22, 1995 9,000,000 7.47% 681,638 683,505 18,675
June 28, 1996 40,000,000 8.41% 3,410,722 1,747,411 -
December 30, 1996 70,000,000 8.03% 5,699,069 31,228 -
------------ ----------- ------------ ----------
Total $213,000,000 $17,395,798 $10,087,347 $5,789,893
============ =========== =========== ==========
</TABLE>
All surplus notes mature 7 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, 1997 and
1996, $7,796,218 and $1,567,800, respectively, of accrued interest on
surplus notes was not approved for payment under these criteria.
14. SHORT-TERM BORROWING
The Company has a $10,000,000 loan from the parent which matures on
March 10, 1998 and bears interest at 6.39%. The total interest expense
to the Company was $641,532, $642,886 and $709,521 and for the years
ended December 31, 1997, 1996 and 1995, respectively, of which $200,575
and $206,361 was payable as of December 31, 1997 and 1996,
respectively.
15. CONTRACT WITHDRAWAL PROVISIONS
Approximately 98% of the Company's separate account liabilities are
subject to discretionary withdrawal with market value adjustment by
contractholders. Separate account assets which are carried at market
value are adequate to pay such withdrawals which are generally subject
to surrender charges ranging from 8.5% to 1% for contracts held less
than 8 years.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table summarizes information with respect to the
operations of the Company on a quarterly basis:
<TABLE>
<CAPTION>
Three Months Ended
------------------
<S> <C> <C> <C> <C> <C>
1997 March 31 June 30 September 30 December 31
---- -------- ------- ------------ -----------
Premiums and other insurance
revenues $30,185,820 $34,055,549 $41,102,381 $44,402,368
Net investment income 1,368,683 2,626,776 2,031,187 2,154,427
Net realized capital gains 20,604 43,460 20,553 2,486
----------- ----------- ----------- -----------
Total revenues $31,575,107 $36,725,785 $43,154,121 $46,559,281
=========== =========== =========== ===========
Benefits and expenses $18,319,281 $30,465,338 $31,179,403 $40,024,993
=========== =========== =========== ===========
Net income $ 8,995,975 $ 3,646,787 $ 8,621,412 $ 6,283,359
============ ============ ============ ============
Three Months Ended
------------------
1996 March 31 June 30 September 30 December 31
---- -------- ------- ------------ -----------
Premiums and other insurance
revenues $16,605,765 $20,452,733 $22,366,166 $26,933,702
Net investment income 455,022 282,926 270,092 577,779
Net realized capital gains 92,072 13,106 5,606 23,679
----------- ----------- ----------- -----------
Total revenues $17,152,859 $20,748,765 $22,641,864 $27,535,160
=========== =========== =========== ===========
Benefits and expenses $12,725,411 $ 9,429,735 $17,007,137 $25,191,857
=========== ============ =========== ===========
Net income $ 2,658,941 $ 7,695,490 $ 2,538,513 $14,470,976
============ ============ ============ ===========
Three Months Ended
------------------
1995 March 31 June 30 September 30 December 31
---- -------- ------- ------------ -----------
Premiums and other insurance
revenues $ 8,891,903 $10,066,478 $11,960,530 $14,189,048
Net investment income 551,690 434,273 293,335 321,376
Net realized capital gains (losses) (16,082) (370) 44,644 8,582
------------ ----------- ----------- -----------
Total revenues $ 9,427,511 $10,500,381 $12,298,509 $14,519,006
============ =========== =========== ===========
Benefits and expenses $11,438,798 $ 9,968,595 $11,600,587 $15,908,087
=========== ============ =========== ===========
Net income (loss) ($ 2,026,688) $ 531,486 $ 678,312 ($ 1,751,130)
============= ============= ============= ============
</TABLE>
As described in Note 5, the valuation allowance relating to deferred
income taxes was released during the three months ended December 31,
1996.
<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 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 Specified Amount you seek; (e) which
Death Benefit option (A or B) is to apply; and (f) the amount and timing of
Premiums you intend to pay. 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 personalized
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. We may also provide personalized hypothetical
illustrations that assume future loans, withdrawals, loan repayments, Premium
payments on other than the Policy Date and Policy Anniversaries, changes after
the Policy Date in the Death Benefit option on in the Specified Amount or
varying assumed rates of return. Certain of these illustrations may not be
available as of the date of this Prospectus. 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. Hypothetical
illustrations are shown for both Death Benefit options. 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 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 1.10% hypothetical expense ratio is
the average of the actual total annual expenses for all
available Portfolios as of December 31, 1997. 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 1.10% hypothetical expense
ratio, when deducted from the hypothetical average gross rates
of return equals a hypothetical average net rate of return of
-1.10%, 4.90% and 10.90%, 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 current 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. Premium taxes are assessed at the rate of 2.5%
6. 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.
7. The Age(s) and, where applicable, gender of the Insured(s)
shown in each illustration.
8. The Insured(s) is/are eligible for the no tobacco use risk
class.
9. The Premium payments and Specified Amount are as shown in each
illustration. It is assumed that Premium payments are
allocated on the first day of the Policy Year shown.
10. Neither the Death Benefit Option nor the Specified Amount is
changed after the Policy Date.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
A - Level $100,000 45 Female Single 12% No Usage
(10.9% net)
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
- ------------- ---------------- ----------------------------------------------------- -----------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
----------------------------------------------------- -----------------------------------------------
--------------- ------------ ----------- ------------ -------------- ----------- ------------ -------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,657 $0 $100,000 $4,703 $4,237 $0 $100,000 $4,623 $4,157
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
2 4,657 0 100,000 9,828 8,990 0 100,000 9,660 8,822
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
3 4,657 0 100,000 15,417 14,299 0 100,000 15,151 14,033
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
4 4,657 0 100,000 21,511 20,207 0 100,000 21,140 19,836
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
5 4,657 0 100,000 28,158 26,761 0 100,000 27,676 26,279
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
6 4,657 0 100,197 35,410 34,013 0 100,000 34,811 33,414
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
7 4,657 0 118,794 43,300 41,997 0 116,708 42,540 41,236
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
8 N/A 0 124,948 46,963 45,985 0 122,380 45,997 45,019
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
9 N/A 0 131,480 50,944 50,292 0 128,327 49,722 49,070
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
10 N/A 0 138,411 55,272 54,946 0 134,564 53,736 53,410
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
11 N/A 0 146,352 60,220 60,220 0 141,671 58,293 58,293
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
12 N/A 0 154,805 65,622 65,622 0 149,154 63,226 63,226
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
13 N/A 0 164,613 71,879 71,879 0 157,033 68,568 68,568
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
14 N/A 0 175,088 78,746 78,746 0 166,155 74,728 74,728
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
15 N/A 0 186,278 86,283 86,283 0 175,807 81,433 81,433
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
16 N/A 0 198,246 94,558 94,558 0 186,020 88,726 88,726
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
17 N/A 0 211,047 103,633 103,633 0 196,824 96,648 96,648
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
18 N/A 0 224,772 113,587 113,587 0 208,253 105,239 105,239
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
19 N/A 0 239,523 124,507 124,507 0 220,345 114,538 114,538
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
20 N/A 0 255,395 136,489 136,489 0 233,139 124,595 124,595
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
25 N/A 0 354,060 215,991 215,991 0 309,178 188,612 188,612
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
30 N/A 0 495,145 340,920 340,920 0 410,012 282,303 282,303
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
35 N/A 0 699,602 533,152 533,152 0 543,829 414,440 414,440
- ------------- ---------------- --------------- ---------- ----------- ------------ -------------- ----------- ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
A - Level $100,000 45 Female Single 6% No Usage
(4.9% net)
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------- --------------
- ------------- ----------------- ---------------------------------------------------- -----------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
---------------------------------------------------- -----------------------------------------------
--------------- ------------- ----------- ---------- ------------- ------------ ------------ -------
Withdrawal Death Account Cash Withdrawal Death Account Cash Value
Benefit Value Value Benefit Value
- ------------- ----------------- --------------- ------------- ----------- ---------- ------------- ------------ ------------ -------
- ------------- ----------------- --------------- ------------- ----------- ---------- ------------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,657 $0 $100,000 $4,445 $3,979 $0 $100,000 $4,367 $3,902
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
2 4,657 0 100,000 9,030 8,192 0 100,000 8,870 8,031
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
3 4,657 0 100,000 13,760 12,643 0 100,000 13,512 12,394
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
4 4,657 0 100,000 18,641 17,337 0 100,000 18,300 16,996
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
5 4,657 0 100,000 23,678 22,281 0 100,000 23,240 21,843
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
6 4,657 0 100,000 28,877 27,480 0 100,000 28,337 26,940
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
7 4,657 0 100,000 34,242 32,938 0 100,000 33,598 32,294
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
8 N/A 0 100,000 35,106 34,128 0 100,000 34,339 33,361
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
9 N/A 0 100,000 35,991 35,340 0 100,000 35,080 34,428
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
10 N/A 0 100,000 36,900 36,574 0 100,000 35,821 35,495
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
11 N/A 0 100,000 37,985 37,985 0 100,000 36,708 36,708
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
12 N/A 0 100,000 39,104 39,104 0 100,000 37,603 37,603
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
13 N/A 0 100,000 40,258 40,258 0 100,000 38,509 38,509
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
14 N/A 0 100,000 41,451 41,451 0 100,000 39,427 39,427
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
15 N/A 0 100,000 42,682 42,682 0 100,000 40,353 40,353
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
16 N/A 0 100,000 43,955 43,955 0 100,000 41,285 41,285
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
17 N/A 0 100,000 45,265 45,265 0 100,000 42,215 42,215
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
18 N/A 0 100,000 46,616 46,616 0 100,000 43,134 43,134
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
19 N/A 0 100,000 48,008 48,008 0 100,000 44,030 44,030
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
20 N/A 0 100,000 49,445 49,445 0 100,000 44,897 44,897
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
25 N/A 0 100,000 57,258 57,258 0 100,000 48,672 48,672
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
30 N/A 0 100,000 66,126 66,126 0 100,000 50,446 50,446
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
35 N/A 0 102,068 77,784 77,784 0 100,000 46,096 46,096
- ------------- ----------------- --------------- ----------- ----------- ---------- ------------- ------------ ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
A - Level $100,000 45 Female Single 0% No Usage
(-1.1% net)
- --------------------- ------------------ ----------------- ------------------ ------------------ ------------------- ---------------
- ------------- ----------------- -------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- -------------------------------------------------
--------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,657 $0 $100,000 $4,188 $3,722 $0 $100,000 $4,112 $3,646
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
2 4,657 0 100,000 8,262 7,424 0 100,000 8,110 7,271
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
3 4,657 0 100,000 12,227 11,109 0 100,000 11,995 10,877
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
4 4,657 0 100,000 16,085 14,781 0 100,000 15,772 14,468
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
5 4,657 0 100,000 19,839 18,442 0 100,000 19,442 18,045
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
6 4,657 0 100,000 23,494 22,097 0 100,000 23,008 21,611
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
7 4,657 0 100,000 27,049 25,745 0 100,000 26,471 25,167
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
8 N/A 0 100,000 26,098 25,120 0 100,000 25,407 24,429
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
9 N/A 0 100,000 25,162 24,511 0 100,000 24,335 23,683
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
10 N/A 0 100,000 24,242 23,916 0 100,000 23,253 22,927
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
11 N/A 0 100,000 23,431 23,431 0 100,000 22,249 22,249
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
12 N/A 0 100,000 22,628 22,628 0 100,000 21,224 21,224
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
13 N/A 0 100,000 21,833 21,833 0 100,000 20,181 20,181
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
14 N/A 0 100,000 21,046 21,046 0 100,000 19,117 19,117
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
15 N/A 0 100,000 20,266 20,266 0 100,000 18,028 18,028
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
16 N/A 0 100,000 19,493 19,493 0 100,000 16,905 16,905
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
17 N/A 0 100,000 18,720 18,720 0 100,000 15,736 15,736
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
18 N/A 0 100,000 17,946 17,946 0 100,000 14,504 14,504
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
19 N/A 0 100,000 17,172 17,172 0 100,000 13,189 13,189
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
20 N/A 0 100,000 16,396 16,396 0 100,000 11,778 11,778
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
25 N/A 0 100,000 12,281 12,281 0 100,000 2,922 2,922
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
30 N/A 0 100,000 7,137 7,137
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- --------------- ---------- ----------- ----------- ------------- ------------ ------------ ---------
35 N/A
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
B-Variable $100,000 55 Male Single 12% Tobacco Usage
(10.9% net)
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- ------------- ----------------- -------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
---------------------------------------------------- -----------------------------------------------
--------------- ------------ ----------- ----------- ------------- -------------- ----------- ------
Withdrawal Death Account Cash Value Withdrawal Death Benefit Account Cash
Benefit Value Value Value
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $8,622 $0 $108,266 $8,266 $7,404 $0 $107,461 $7,461 $6,598
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
2 8,622 0 117,231 17,231 15,679 0 115,441 15,441 13,889
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
3 8,622 0 126,958 26,958 24,889 0 123,980 23,980 21,911
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
4 8,622 0 137,517 37,517 35,103 0 133,120 33,120 30,706
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
5 8,622 0 148,983 48,983 46,396 0 142,902 42,902 40,315
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
6 8,622 0 161,437 61,437 58,851 0 153,362 53,362 50,776
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
7 8,622 0 174,966 74,966 72,552 0 164,536 64,536 62,122
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
8 N/A 0 180,536 80,536 78,725 0 167,327 67,327 65,516
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
9 N/A 0 186,556 86,556 85,349 0 170,073 70,073 68,866
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
10 N/A 0 193,068 93,068 92,464 0 172,742 72,742 72,139
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
11 N/A 0 200,520 100,520 100,520 0 175,618 75,618 75,618
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
12 N/A 0 208,553 108,553 108,553 0 178,404 78,404 78,404
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
13 N/A 0 217,222 117,222 117,222 0 181,075 81,075 81,075
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
14 N/A 0 226,586 126,586 126,586 0 183,603 83,603 83,603
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
15 N/A 0 237,405 137,405 137,405 0 185,937 85,937 85,937
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
16 N/A 0 249,184 149,184 149,184 0 188,013 88,013 88,013
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
17 N/A 0 261,944 161,944 161,944 0 189,744 89,744 89,744
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
18 N/A 0 275,785 175,785 175,785 0 191,024 91,024 91,024
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
19 N/A 0 290,815 190,815 190,815 0 191,739 91,739 91,739
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
20 N/A 0 307,153 207,153 207,153 0 191,765 91,765 91,765
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
25 N/A 0 412,257 312,257 312,257 0 177,625 77,625 77,625
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
30 N/A 0 568,079 468,079 468,079 0 124,410 24,410 24,410
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
35 N/A 0 796,491 696,491 696,491
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
B - Variable $100,000 55 Male Single 6% Tobacco Usage
(4.9% net)
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- ------------- ----------------- -------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- -------------------------------------------------
------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
Withdrawal Death Account Cash Value Withdrawal Death Benefit Account Cash
Benefit Value Value Value
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $8,622 0 107,802 7,802 6,940 0 107,021 7,021 6,159
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
2 8,622 0 115,808 15,808 14,256 0 114,116 14,116 12,564
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
3 8,622 0 124,022 24,022 21,953 0 121,281 21,281 19,211
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
4 8,622 0 132,452 32,452 30,038 0 128,507 28,507 26,093
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
5 8,622 0 141,105 41,105 38,519 0 135,786 35,786 33,199
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
6 8,622 0 149,988 49,988 47,402 0 143,097 43,097 40,511
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
7 8,622 0 159,105 59,105 56,691 0 150,416 50,416 48,002
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
8 N/A 0 159,821 59,821 58,010 0 149,071 49,071 47,261
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
9 N/A 0 160,507 60,507 59,300 0 147,395 47,395 46,188
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
10 N/A 0 161,163 61,163 60,559 0 145,347 45,347 44,744
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
11 N/A 0 162,038 62,038 62,038 0 143,078 43,078 43,078
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
12 N/A 0 162,822 62,822 62,822 0 140,373 40,373 40,373
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
13 N/A 0 163,510 63,510 63,510 0 137,201 37,201 37,201
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
14 N/A 0 164,098 64,098 64,098 0 133,527 33,527 33,527
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
15 N/A 0 164,585 64,585 64,585 0 129,297 29,297 29,297
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
16 N/A 0 164,964 64,964 64,964 0 124,446 24,446 24,446
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
17 N/A 0 165,161 65,161 65,161 0 118,890 18,890 18,890
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
18 N/A 0 165,169 65,169 65,169 0 112,533 12,533 12,533
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
19 N/A 0 164,980 64,980 64,980 0 105,275 5,275 5,275
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
20 N/A 0 164,587 64,587 64,587
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
25 N/A 0 158,089 58,089 58,089
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
30 N/A 0 138,117 38,117 38,117
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
35 N/A
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- -------------- ----------- --------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
B - Variable $100,000 55 Male Single 0% Tobacco Usage
(-1.1% net)
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- ------------- ----------------- -------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- -------------------------------------------------
------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
Withdrawal Death Benefit Account Cash Withdrawal Death Benefit Account Cash
Value Value Value Value
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $8,622 0 107,339 7,339 6,477 0 106,582 6,582 5,720
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
2 8,622 0 114,439 14,439 12,887 0 112,845 12,845 11,293
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
3 8,622 0 121,306 21,306 19,237 0 118,789 18,789 16,719
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
4 8,622 0 127,945 27,945 25,531 0 124,413 24,413 21,999
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
5 8,622 0 134,364 34,364 31,777 0 129,716 29,716 27,129
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
6 8,622 0 140,567 40,567 37,980 0 134,683 34,683 32,096
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
7 8,622 0 146,556 46,556 44,142 0 139,299 39,299 36,885
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
8 N/A 0 144,185 44,185 42,374 0 135,392 35,392 33,582
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
9 N/A 0 141,825 41,825 40,618 0 131,308 31,308 30,101
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
10 N/A 0 139,477 39,477 38,873 0 127,023 27,023 26,420
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
11 N/A 0 137,291 37,291 37,291 0 122,624 22,624 22,624
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
12 N/A 0 135,033 35,033 35,033 0 117,979 17,979 17,979
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
13 N/A 0 132,706 32,706 32,706 0 113,081 13,081 13,081
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
14 N/A 0 130,310 30,310 30,310 0 107,916 7,916 7,916
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
15 N/A 0 127,848 27,848 27,848 0 102,458 2,458 2,458
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
16 N/A 0 125,320 25,320 25,320
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
17 N/A 0 122,658 22,658 22,658
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
18 N/A 0 119,864 19,864 19,864
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
19 N/A 0 116,942 16,942 16,942
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
20 N/A 0 113,894 13,894 13,894
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
25 N/A
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
30 N/A
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
35 N/A
- ------------- ----------------- ------------ -------------- ----------- ---------- ------------- -------------- ----------- --------
</TABLE>
o It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified ssue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
B-Variable $100,000 55 Male Single 12% Tobacco Usage
(10.9% net)
- --------------------- ------------------ ---------------- ------------------ ------------------ ------------------- ----------------
- ------------- --------------- -------------------------------------------------- ---------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- ---------------------------------------------------
------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $8,622 $0 $108,266 $8,266 $7,404 $0 $107,461 $7,461 $6,598
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
2 8,622 0 117,231 17,231 15,679 0 115,441 15,441 13,889
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
3 8,622 0 126,958 26,958 24,889 0 123,980 23,980 21,911
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
4 8,622 0 137,517 37,517 35,103 0 133,120 33,120 30,706
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
5 8,622 0 148,983 48,983 46,396 0 142,902 42,902 40,315
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
6 8,622 0 161,437 61,437 58,851 0 153,362 53,362 50,776
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
7 8,622 0 174,966 74,966 72,552 0 164,536 64,536 62,122
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
8 N/A 0 180,536 80,536 78,725 0 167,327 67,327 65,516
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
9 N/A 0 186,556 86,556 85,349 0 170,073 70,073 68,866
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
10 N/A 0 193,068 93,068 92,464 0 172,742 72,742 72,139
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
11 N/A 5,000 195,018 95,018 95,018 5,000 170,116 70,116 70,116
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
12 N/A 5,000 197,026 97,026 97,026 5,000 166,875 66,875 66,875
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
13 N/A 5,000 199,097 99,097 99,097 5,000 162,947 62,947 62,947
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
14 N/A 5,000 201,237 101,237 101,237 5,000 158,247 58,247 58,247
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
15 N/A 5,000 203,453 103,453 103,453 5,000 152,667 52,667 52,667
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
16 N/A 5,000 205,751 105,751 105,751 5,000 146,074 46,074 46,074
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
17 N/A 5,000 208,066 108,066 108,066 5,000 138,310 38,310 38,310
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
18 N/A 5,000 210,398 110,398 110,398 5,000 129,191 29,191 29,191
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
19 N/A 5,000 212,749 112,749 112,749 5,000 118,515 18,515 18,515
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
20 N/A 5,000 215,121 115,121 115,121 5,000 106,064 6,064 6,064
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
25 N/A 0 262,751 162,751 162,751
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
30 N/A 0 326,621 226,621 226,621
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
35 N/A 0 406,287 306,287 306,287
- ------------- --------------- ------------- ------------ ----------- ----------- -------------- ------------ ------------- ---------
</TABLE>
o It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
<TABLE>
<CAPTION>
.
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
B - Variable $100,000 55 Male Single 6% Tobacco Usage
(4.9% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- ------------ ----------------------------------------------------- ---------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
----------------------------------------------------- ----------------------------------------------------
-------------- ------------- ----------- ------------ -------------- ------------ ------------- ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $8,622 $0 $107,802 $7,802 $6,940 $0 $107,021 $7,021 $6,159
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
2 8,622 0 115,808 15,808 14,256 0 114,116 14,116 12,564
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
3 8,622 0 124,022 24,022 21,953 0 121,281 21,281 19,211
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
4 8,622 0 132,452 32,452 30,038 0 128,507 28,507 26,093
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
5 8,622 0 141,105 41,105 38,519 0 135,786 35,786 33,199
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
6 8,622 0 149,988 49,988 47,402 0 143,097 43,097 40,511
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
7 8,622 0 159,105 59,105 56,691 0 150,416 50,416 48,002
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
8 N/A 0 159,821 59,821 58,010 0 149,071 49,071 47,261
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
9 N/A 0 160,507 60,507 59,300 0 147,395 47,395 46,188
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
10 N/A 0 161,163 61,163 60,559 0 145,347 45,347 44,744
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
11 N/A 5,000 156,831 56,831 56,831 5,000 137,870 37,870 37,870
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
12 N/A 5,000 152,218 52,218 52,218 5,000 129,767 29,767 29,767
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
13 N/A 5,000 147,313 47,313 47,313 5,000 121,001 21,001 21,001
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
14 N/A 5,000 142,105 42,105 42,105 5,000 111,528 11,528 11,528
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
15 N/A 5,000 136,584 36,584 36,584 5,000 101,287 1,287 1,287
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
16 N/A 5,000 130,739 30,739 30,739
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
17 N/A 5,000 124,484 24,484 24,484
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
18 N/A 5,000 117,805 17,805 17,805
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
19 N/A 5,000 110,686 10,686 10,686
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
20 N/A 5,000 103,111 3,111 3,111
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
25 N/A
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
30 N/A
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
35 N/A
- ------------- -------------- ------------ ------------- ----------- ------------ -------------- ------------ ------------- ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
B - Variable $100,000 55 Male Single 0% Tobacco Usage
(-1.1% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- ------------- ------------------------------------------------------ -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
------------------------------------------------------ -------------------------------------------------
--------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash
Benefit Value Benefit Value Value
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $8,622 $0 $107,339 $7,339 $6,477 $0 $106,582 $6,582 $5,720
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
2 8,622 0 114,439 14,439 12,887 0 112,845 12,845 11,293
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
3 8,622 0 121,306 21,306 19,237 0 118,789 18,789 16,719
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
4 8,622 0 127,945 27,945 25,531 0 124,413 24,413 21,999
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
5 8,622 0 134,364 34,364 31,777 0 129,716 29,716 27,129
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
6 8,622 0 140,567 40,567 37,980 0 134,683 34,683 32,096
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
7 8,622 0 146,556 46,556 44,142 0 139,299 39,299 36,885
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
8 N/A 0 144,185 44,185 42,374 0 135,392 35,392 33,582
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
9 N/A 0 141,825 41,825 40,618 0 131,308 31,308 30,101
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
10 N/A 0 139,477 39,477 38,873 0 127,023 27,023 26,420
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
11 N/A 5,000 132,378 32,378 32,378 5,000 117,711 17,711 17,711
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
12 N/A 5,000 125,317 25,317 25,317 5,000 108,262 8,262 8,262
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
13 N/A 5,000 118,294 18,294 18,294
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
14 N/A 5,000 111,308 11,308 11,308
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
15 N/A 5,000 104,356 4,356 4,356
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
16 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
17 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
18 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
19 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
20 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
25 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
30 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
35 N/A
- ------------- ------------- --------------- ------------ ------------- ----------- --------------- ------------ ----------- --------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
A - Level $100,000 65 Male Single 12% No Usage
(10.9% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- --------------- ---------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
---------------------------------------------------- -------------------------------------------------
--------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $10,063 $0 $100,000 $9,970 $8,963 $0 $100,000 $8,524 $7,517
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
2 10,063 0 100,000 20,841 19,029 0 100,000 17,821 16,009
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
3 10,063 0 100,000 32,718 30,303 0 100,000 28,017 25,602
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
4 10,063 0 100,000 45,720 42,902 0 100,000 39,262 36,444
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
5 10,063 0 100,000 59,979 56,960 0 100,000 51,737 48,718
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
6 10,063 0 111,143 75,570 72,551 0 100,000 65,666 62,647
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
7 10,063 0 133,195 92,458 89,640 0 116,342 80,759 77,941
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
8 N/A 0 141,432 100,148 98,034 0 121,998 86,386 84,273
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
9 N/A 0 150,287 108,461 107,052 0 127,930 92,326 90,917
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
10 N/A 0 159,824 117,452 116,748 0 134,153 98,587 97,883
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
11 N/A 0 170,785 127,693 127,693 0 141,247 105,608 105,608
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
12 N/A 0 182,528 138,742 138,742 0 148,719 113,044 113,044
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
13 N/A 0 195,116 150,672 150,672 0 156,591 120,922 120,922
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
14 N/A 0 209,659 164,381 164,381 0 164,884 129,275 129,275
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
15 N/A 0 225,346 179,285 179,285 0 173,621 138,132 138,132
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
16 N/A 0 242,296 195,499 195,499 0 182,824 147,513 147,513
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
17 N/A 0 260,483 213,015 213,015 0 193,482 158,224 158,224
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
18 N/A 0 280,063 231,958 231,958 0 204,767 169,595 169,595
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
19 N/A 0 301,204 252,463 252,463 0 216,717 181,647 181,647
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
20 N/A 0 324,077 274,680 274,680 0 229,374 194,412 194,412
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
25 N/A 0 469,163 416,861 416,861 0 304,912 270,920 270,920
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
30 N/A 0 679,353 634,154 634,154 0 406,009 378,997 378,997
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
35 N/A 0 995,821 992,572 992,572 0 543,808 542,034 542,034
- ------------- --------------- --------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy Year
shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
A - Level $100,000 65 Male Single 6% No Usage
(4.9% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- ----------------- -------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- -------------------------------------------------
------------ ------------- ----------- ----------- ------------ ------------- ------------ ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- ----------------- ------------ ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- ----------------- ------------ ------------- ----------- ----------- ------------ ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $10,063 $0 $100,000 $9,418 $8,412 $0 $100,000 $8,010 $7,004
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
2 10,063 0 100,000 19,131 17,320 0 100,000 16,260 14,449
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
3 10,063 0 100,000 29,166 26,751 0 100,000 24,791 22,376
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
4 10,063 0 100,000 39,552 36,734 0 100,000 33,650 30,833
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
5 10,063 0 100,000 50,318 47,299 0 100,000 42,892 39,873
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
6 10,063 0 100,000 61,498 58,479 0 100,000 52,581 49,562
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
7 10,063 0 105,234 73,049 70,231 0 100,000 62,801 59,983
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
8 N/A 0 105,708 74,852 72,739 0 100,000 63,103 60,990
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
9 N/A 0 106,255 76,683 75,274 0 100,000 63,225 61,816
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
10 N/A 0 106,882 78,546 77,842 0 100,000 63,131 62,426
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
11 N/A 0 108,025 80,769 80,769 0 100,000 63,047 63,047
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
12 N/A 0 109,195 83,000 83,000 0 100,000 62,692 62,692
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
13 N/A 0 110,393 85,247 85,247 0 100,000 62,015 62,015
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
14 N/A 0 111,624 87,517 87,517 0 100,000 60,953 60,953
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
15 N/A 0 112,895 89,818 89,818 0 100,000 59,411 59,411
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
16 N/A 0 114,219 92,158 92,158 0 100,000 57,257 57,257
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
17 N/A 0 115,539 94,484 94,484 0 100,000 54,300 54,300
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
18 N/A 0 116,883 96,807 96,807 0 100,000 50,275 50,275
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
19 N/A 0 118,277 99,137 99,137 0 100,000 44,814 44,814
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
20 N/A 0 119,735 101,484 101,484 0 100,000 37,411 37,411
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
25 N/A 0 127,796 113,550 113,550
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
30 N/A 0 136,428 127,351 127,351
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
35 N/A 0 148,217 147,733 147,733
- ------------- --------------- -------------- ------------- ----------- ----------- ------------ ------------- ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy
Year shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
A - Level $100,000 65 Male Single 0% No Usage
(-1.1% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- -------------- ----------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
--------------------------------------------------- -------------------------------------------------
------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
Withdrawal Death Account Cash Value Withdrawal Death Benefit Account Cash
Benefit Value Value Value
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $10,063 $0 $100,000 $8,866 $7,860 $0 $100,000 $7,498 $6,492
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
2 10,063 0 100,000 17,487 15,676 0 100,000 14,764 12,953
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
3 10,063 0 100,000 25,881 23,466 0 100,000 21,818 19,403
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
4 10,063 0 100,000 34,064 31,246 0 100,000 28,683 25,865
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
5 10,063 0 100,000 42,053 39,034 0 100,000 35,375 32,356
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
6 10,063 0 100,000 49,863 46,844 0 100,000 41,912 38,893
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
7 10,063 0 100,000 57,478 54,661 0 100,000 48,315 45,497
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
8 N/A 0 100,000 55,289 53,176 0 100,000 44,644 42,531
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
9 N/A 0 100,000 53,061 51,652 0 100,000 40,593 39,184
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
10 N/A 0 100,000 50,788 50,083 0 100,000 36,073 35,369
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
11 N/A 0 100,000 48,661 48,661 0 100,000 31,124 31,124
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
12 N/A 0 100,000 46,369 46,369 0 100,000 25,476 25,476
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
13 N/A 0 100,000 43,897 43,897 0 100,000 18,989 18,989
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
14 N/A 0 100,000 41,229 41,229 0 100,000 11,487 11,487
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
15 N/A 0 100,000 38,343 38,343 0 100,000 2,724 2,724
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
16 N/A 0 100,000 35,221 35,221
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
17 N/A 0 100,000 31,647 31,647
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
18 N/A 0 100,000 27,569 27,569
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
19 N/A 0 100,000 22,922 22,922
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
20 N/A 0 100,000 17,630 17,630
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
25 N/A
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
30 N/A
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
35 N/A
- ------------- ---------------- ------------- ------------ ------------ ----------- ------------- -------------- ----------- --------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy
Year shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------- ------------------ ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- ------------------- ------------------ ------------------ ------------------ ------------------ ------------------- ----------------
- ------------------- ------------------ ------------------ ------------------ ------------------ ------------------- ----------------
A - Level $100,000 55 Male Joint 12% No Usage
52 Female (-10.9% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- --------------- ---------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- -------------------------------------------------
------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash
Benefit Value Benefit Value Value
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,676 $0 $100,000 $4,947 $4,480 $0 $100,000 $4,947 $4,480
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
2 4,676 0 100,000 10,334 9,492 0 100,000 10,334 9,492
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
3 4,676 0 100,000 16,198 15,076 0 100,000 16,198 15,076
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
4 4,676 0 100,000 22,583 21,274 0 100,000 22,583 21,274
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
5 4,676 0 100,000 29,536 28,133 0 100,000 29,536 28,133
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
6 4,676 0 100,000 37,108 35,705 0 100,000 37,108 35,705
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
7 4,676 0 112,190 45,347 44,038 0 112,190 45,347 44,038
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
8 N/A 0 117,641 49,357 48,375 0 117,641 49,357 48,375
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
9 N/A 0 123,357 53,702 53,047 0 123,357 53,702 53,047
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
10 N/A 0 129,350 58,404 58,077 0 129,350 58,404 58,077
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
11 N/A 0 136,178 63,742 63,742 0 136,178 63,742 63,742
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
12 N/A 0 143,413 69,553 69,553 0 143,366 69,530 69,530
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
13 N/A 0 151,894 76,282 76,282 0 151,687 76,178 76,178
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
14 N/A 0 160,997 83,670 83,670 0 160,491 83,407 83,407
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
15 N/A 0 170,778 91,784 91,784 0 169,806 91,261 91,261
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
16 N/A 0 181,304 100,697 100,697 0 179,661 99,784 99,784
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
17 N/A 0 192,644 110,488 110,488 0 190,087 109,022 109,022
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
18 N/A 0 204,883 121,249 121,249 0 201,119 119,021 119,021
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
19 N/A 0 218,122 133,078 133,078 0 212,790 129,824 129,824
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
20 N/A 0 232,471 146,083 146,083 0 225,137 141,475 141,475
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
25 N/A 0 325,189 232,979 232,979 0 298,495 213,854 213,854
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
30 N/A 0 464,352 368,517 368,517 0 395,882 314,178 314,178
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
35 N/A 0 673,025 575,054 575,054 0 525,457 448,967 448,967
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------- --------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy
Year shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
A - Level $100,000 55 Male Joint 6% No Usage
52 Female (4.9% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- --------------- ---------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
---------------------------------------------------- -------------------------------------------------
--------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,676 $0 $100,000 $4,682 $4,215 $0 $100,000 $4,682 $4,215
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
2 4,676 0 100,000 9,506 8,665 0 100,000 9,506 8,665
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
3 4,676 0 100,000 14,476 13,353 0 100,000 14,476 13,353
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
4 4,676 0 100,000 19,594 18,284 0 100,000 19,594 18,284
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
5 4,676 0 100,000 24,864 23,462 0 100,000 24,864 23,462
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
6 4,676 0 100,000 30,292 28,890 0 100,000 30,292 28,890
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
7 4,676 0 100,000 35,883 34,573 0 100,000 35,883 34,573
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
8 N/A 0 100,000 36,947 35,965 0 100,000 36,947 35,965
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
9 N/A 0 100,000 38,023 37,369 0 100,000 38,023 37,369
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
10 N/A 0 100,000 39,108 38,780 0 100,000 39,108 38,780
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
11 N/A 0 100,000 40,356 40,356 0 100,000 40,356 40,356
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
12 N/A 0 100,000 41,613 41,613 0 100,000 41,613 41,613
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
13 N/A 0 100,000 42,897 42,897 0 100,000 42,870 42,870
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
14 N/A 0 100,000 44,220 44,220 0 100,000 44,122 44,122
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
15 N/A 0 100,000 45,583 45,583 0 100,000 45,361 45,361
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
16 N/A 0 100,000 46,990 46,990 0 100,000 46,580 46,580
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
17 N/A 0 100,000 48,443 48,443 0 100,000 47,769 47,769
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
18 N/A 0 100,000 49,944 49,944 0 100,000 48,915 48,915
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
19 N/A 0 100,000 51,498 51,498 0 100,000 50,003 50,003
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
20 N/A 0 100,000 53,107 53,107 0 100,000 51,013 51,013
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
25 N/A 0 100,000 61,930 61,930 0 100,000 53,920 53,920
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
30 N/A 0 100,000 72,355 72,355 0 100,000 48,922 48,922
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
35 N/A 0 100,000 84,269 84,269 0 100,000 17,230 17,230
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy
Year shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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
Flexible Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
Issue State: Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
Death Benefit Option Specified Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Amount Joint Life of Return Classification
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
A - Level $100,000 55 Male Joint 0% No Usage
52 Female (-1.10% net)
- --------------------- ---------------- ------------------ ------------------ ------------------ ------------------- ----------------
- ------------- --------------- ---------------------------------------------------- -------------------------------------------------
Policy Year Premium Current Charges Guaranteed Charges
Payments*
-------------------------------------------------- -------------------------------------------------
------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
Withdrawal Death Account Cash Value Withdrawal Death Account Cash Value
Benefit Value Benefit Value
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $4,676 $0 $100,000 $4,417 $3,950 $0 $100,000 $4,417 $3,950
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
2 4,676 0 100,000 8,710 7,868 0 100,000 8,710 7,868
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
3 4,676 0 100,000 12,880 11,757 0 100,000 12,880 11,757
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
4 4,676 0 100,000 16,929 15,620 0 100,000 16,929 15,620
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
5 4,676 0 100,000 20,859 19,456 0 100,000 20,859 19,456
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
6 4,676 0 100,000 24,673 23,270 0 100,000 24,673 23,270
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
7 4,676 0 100,000 28,371 27,061 0 100,000 28,371 27,061
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
8 N/A 0 100,000 27,528 26,546 0 100,000 27,528 26,546
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
9 N/A 0 100,000 26,679 26,024 0 100,000 26,679 26,024
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
10 N/A 0 100,000 25,817 25,490 0 100,000 25,817 25,490
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
11 N/A 0 100,000 25,036 25,036 0 100,000 25,036 25,036
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
12 N/A 0 100,000 24,246 24,246 0 100,000 24,218 24,218
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
13 N/A 0 100,000 23,460 23,460 0 100,000 23,353 23,353
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
14 N/A 0 100,000 22,679 22,679 0 100,000 22,429 22,429
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
15 N/A 0 100,000 21,901 21,901 0 100,000 21,433 21,433
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
16 N/A 0 100,000 21,126 21,126 0 100,000 20,347 20,347
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
17 N/A 0 100,000 20,356 20,356 0 100,000 19,154 19,154
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
18 N/A 0 100,000 19,591 19,591 0 100,000 17,828 17,828
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
19 N/A 0 100,000 18,834 18,834 0 100,000 16,336 16,336
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
20 N/A 0 100,000 18,084 18,084 0 100,000 14,638 14,638
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
25 N/A 0 100,000 14,145 14,145 0 100,000 891 891
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
30 N/A 0 100,000 7,097 7,097
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
35 N/A
- ------------- ----------------- ------------- ------------ ----------- ----------- ------------- ------------ ------------ ---------
</TABLE>
* It is assumed that Premiums are applied at the beginning of the Policy
Year shown.
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 TIMING AND AMOUNT OF PREMIUM PAYMENTS, 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>
Appendix B
Multiple Factors for Determination of Minimum Required Death Benefits
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Attained Male Male Female Female Unisex Unisex
Age No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
0 12.397150 10.326608 14.422882 12.900426 12.752665 10.747003
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
1 12.281011 10.173837 14.219565 12.682064 12.622613 10.584213
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
2 11.944420 9.873755 13.822804 12.312452 12.275281 10.272427
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
3 11.608026 9.576235 13.425879 11.944611 11.928125 9.963139
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
4 11.275017 9.283405 13.033047 11.581885 11.584496 9.658649
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
5 10.943625 8.994070 12.646363 11.225854 11.243683 9.358448
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
6 10.613523 8.708009 12.264732 10.875640 10.904071 9.061429
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
7 10.285545 8.425756 11.888608 10.531568 10.567564 8.768864
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
8 9.960465 8.147792 11.518416 10.193939 10.234821 8.481165
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
9 9.640696 7.875658 11.155708 9.863913 9.907346 8.199307
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
10 9.328187 7.610564 10.800626 9.541559 9.587222 7.924630
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
11 9.024495 7.353454 10.453314 9.226944 9.276084 7.658162
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
12 8.732865 7.106340 10.116701 8.922270 8.976663 7.401637
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
13 8.455766 6.870706 9.791287 8.627858 8.691024 7.156329
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
14 8.194431 6.647223 9.477396 8.343893 8.420677 6.923124
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
15 7.948562 6.435568 9.175211 8.070450 8.165496 6.701818
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
16 7.714094 6.246422 8.883354 7.811850 7.921336 6.502004
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
17 7.490138 6.067126 8.601325 7.562219 7.687389 6.311977
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
18 7.274496 5.895056 8.328033 7.321110 7.461943 6.129648
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
19 7.065325 5.728867 8.063146 7.088105 7.243557 5.953258
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
20 6.861498 5.567158 7.806353 6.861998 7.030582 5.781913
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 6.661689 5.409013 7.556857 6.642566 6.822482 5.614335
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 6.464827 5.253449 7.314462 6.429238 6.617668 5.449969
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 6.270740 5.099678 7.078536 6.222198 6.416306 5.287912
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 6.079311 4.947887 6.849383 6.021253 6.218203 5.128317
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 5.890773 4.797878 6.626824 5.826215 6.023851 4.971129
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 5.705061 4.649694 6.410687 5.636912 5.832787 4.816319
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 5.522918 4.504047 6.201135 5.453667 5.645733 4.664588
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 5.344702 4.361361 5.997646 5.276008 5.463015 4.516169
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 5.170696 4.221976 5.800350 5.103956 5.284886 4.371391
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 5.001118 4.086280 5.609316 4.937495 5.111533 4.230649
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 4.836129 3.954443 5.424064 4.776572 4.942883 4.093967
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 4.676007 3.826576 5.244646 4.620762 4.779230 3.961464
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 4.520784 3.702740 5.070851 4.470023 4.620609 3.833206
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 4.370604 3.583050 4.902678 4.324427 4.467172 3.709211
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 4.225402 3.467472 4.740086 4.183858 4.318852 3.589463
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 4.085093 3.356027 4.583009 4.048184 4.175562 3.474000
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 3.949574 3.248695 4.431658 3.917849 4.037194 3.362813
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 3.818948 3.145558 4.286008 3.792821 3.903859 3.256009
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 3.693047 3.046509 4.145854 3.673023 3.775382 3.153481
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 3.571699 2.951480 4.010985 3.558248 3.651587 3.055171
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 3.454905 2.860432 3.881423 3.448543 3.532475 2.960985
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 3.342463 2.773188 3.756916 3.343654 3.417839 2.870809
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 3.234173 2.689614 3.637126 3.243178 3.307470 2.784405
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 3.129912 2.609567 3.521744 3.146758 3.201170 2.701641
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 3.029545 2.532933 3.410489 3.054071 3.098812 2.622375
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 2.932987 2.459510 3.303265 2.964946 3.000322 2.546415
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 2.840080 2.389070 3.199885 2.879159 2.905491 2.473500
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 2.750664 2.321493 3.100236 2.796501 2.814223 2.403493
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 2.664624 2.256655 3.004135 2.716871 2.726361 2.336322
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 2.581837 2.194450 2.911517 2.640207 2.641791 2.271834
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Attained Male Male Female Female Unisex Unisex
Age No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
51 2.502248 2.134815 2.822301 2.566385 2.560472 2.209993
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 2.425813 2.077737 2.736388 2.495281 2.482339 2.150760
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
53 2.352497 2.023196 2.653759 2.426911 2.407370 2.094125
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 2.282259 1.971185 2.574320 2.361226 2.335514 2.040067
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 2.215004 1.921608 2.497847 2.298001 2.266658 1.988479
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 2.150642 1.874324 2.424206 2.237062 2.200708 1.939205
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 2.089042 1.829175 2.353160 2.178161 2.137500 1.892075
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 2.030021 1.786006 2.284468 2.121005 2.076847 1.846924
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 1.973500 1.744665 2.217943 2.065412 2.018657 1.803580
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 1.919420 1.705055 2.153574 2.011324 1.962862 1.761948
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 1.867716 1.667166 2.091397 1.958835 1.909431 1.722036
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 1.818314 1.631023 2.031523 1.908129 1.858319 1.683884
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 1.771223 1.596648 1.974085 1.859458 1.809549 1.647549
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 1.726411 1.564046 1.919205 1.812976 1.763101 1.613051
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 1.683806 1.533171 1.866819 1.768644 1.718910 1.580343
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 1.643300 1.503897 1.816773 1.726292 1.676876 1.549292
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 1.604764 1.476075 1.768842 1.685680 1.636838 1.519731
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 1.568051 1.449538 1.722784 1.646485 1.598627 1.491461
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 1.533054 1.424158 1.678405 1.608508 1.562130 1.464331
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 1.499720 1.399895 1.635655 1.571689 1.527285 1.438291
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
71 1.468047 1.376751 1.594582 1.536121 1.494089 1.413351
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 1.438063 1.354779 1.555314 1.502053 1.462589 1.389586
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 1.409834 1.334059 1.518005 1.469679 1.432868 1.367100
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 1.383379 1.314626 1.482760 1.439131 1.404950 1.345937
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 1.358636 1.296498 1.449578 1.410430 1.378783 1.326116
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 1.335469 1.279631 1.418378 1.383477 1.354239 1.307580
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 1.313718 1.263864 1.388992 1.358100 1.331154 1.290152
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 1.293202 1.248999 1.361233 1.334088 1.309345 1.273628
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 1.273759 1.234861 1.334950 1.311271 1.288648 1.257826
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 1.255309 1.221364 1.310065 1.289565 1.268984 1.242660
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
81 1.237839 1.208496 1.286574 1.268966 1.250340 1.228120
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
82 1.221387 1.196307 1.264515 1.249510 1.232759 1.214254
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
83 1.206024 1.184882 1.243944 1.231249 1.216310 1.201144
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
84 1.191790 1.174263 1.224859 1.214302 1.201025 1.188858
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
85 1.178654 1.164403 1.207192 1.198599 1.186864 1.177349
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
86 1.166512 1.155169 1.190822 1.184011 1.173721 1.166496
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
87 1.155226 1.146356 1.175596 1.170379 1.161453 1.156126
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
88 1.144611 1.137856 1.161343 1.157508 1.149880 1.146117
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
89 1.134451 1.129578 1.147875 1.145194 1.138803 1.136350
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
90 1.124540 1.121277 1.134998 1.133196 1.128023 1.126599
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
91 1.114649 1.112675 1.122488 1.121417 1.117328 1.116680
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
92 1.104523 1.103442 1.110106 1.109599 1.106476 1.106325
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
93 1.093858 1.093346 1.097598 1.097460 1.095193 1.095309
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
94 1.082392 1.082252 1.084722 1.084722 1.083237 1.083449
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
95 1.070054 1.070054 1.071362 1.071362 1.070535 1.070696
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
96 1.057074 1.057074 1.057701 1.057701 1.057307 1.057384
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
97 1.044319 1.044319 1.044548 1.044548 1.044405 1.044433
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
98 1.034629 1.034629 1.034629 1.034629 1.034629 1.034629
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
99 1.025648 1.025648 1.025648 1.025648 1.025648 1.025648
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Minimum Required Death Benefit is determined by treating the Account Value
as if it were a net single premium. We determine the Minimum Required Death
Benefit by multiplying 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 a standard insurance industry method to derive the applicable rate for both
Insureds.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Appendix C
Premium Tax Rates*
--------------------------- ----------------- -------------------------- ----------------
STATE TAX RATE STATE TAX RATE
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Alabama 2.70% Nebraska 1.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Alaska 2.70% Nevada 3.50%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Arizona 2.00% New Hampshire 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Arkansas 2.50% New Jersey 2.10%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
California 2.35% New Mexico 3.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Colorado 2.15% New York 0.70%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Connecticut 1.75% North Carolina 1.90%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Delaware 2.00% North Dakota 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
District of Columbia 2.25% Ohio 2.50%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Florida 1.75% Oklahoma 2.25%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Georgia 2.25% Oregon 2.25%**
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Hawaii 2.75% Pennsylvania 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Idaho 2.75% Rhode Island 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Illinois 2.00% South Carolina 0.75%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Indiana 2.00% South Dakota 2.50%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Iowa 2.00% Tennessee 1.90%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Kansas 2.00% Texas 1.75%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Kentucky 2.00% Utah 2.25%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Louisiana 2.25% Vermont 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Maine 2.00% Virginia 2.25%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Maryland 2.00% Washington 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Massachusetts 2.00% West Virginia 3.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Michigan N/A Wisconsin 2.00%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Minnesota 2.00% Wyoming 0.75%
--------------------------- ----------------- ------ -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Mississippi 3.00% Puerto Rico 4.00%
--------------------------- ----------------- -------------------------- ----------------
--------------------------- ----------------- ------ -------------------------- ----------------
Missouri 2.00% Virgin Islands 5.00%
--------------------------- ----------------- -------------------------- ----------------
--------------------------- ----------------- ------
Montana 2.75%
--------------------------- -----------------
</TABLE>
* The above Premium Tax rates are current as of the date of this Prospectus.
These rates are subject to change.
** Oregon does not allow us to apply the premium tax charge to a contract
owner's premium payments. Therefore, the amount of the premium tax charge
is 0.0%.
<PAGE>
<TABLE>
<CAPTION>
Appendix D
Guaranteed Maximum Monthly Cost of Insurance Charges
(Per $1,000 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>
0 N/A 0.21943 N/A 0.15680 N/A 0.20690
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
1 N/A 0.08587 N/A 0.07002 N/A 0.08253
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
2 N/A 0.08253 N/A 0.06669 N/A 0.07920
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
3 N/A 0.08086 N/A 0.06502 N/A 0.07753
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
4 N/A 0.07753 N/A 0.06418 N/A 0.07503
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
5 N/A 0.07336 N/A 0.06252 N/A 0.07086
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
6 N/A 0.06919 N/A 0.06085 N/A 0.06752
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
7 N/A 0.06502 N/A 0.05918 N/A 0.06418
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
8 N/A 0.06252 N/A 0.05835 N/A 0.06168
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
9 N/A 0.06168 N/A 0.05751 N/A 0.06085
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
10 N/A 0.06252 N/A 0.05668 N/A 0.06168
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
11 N/A 0.06752 N/A 0.05835 N/A 0.06585
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
12 N/A 0.07669 N/A 0.06085 N/A 0.07336
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
13 N/A 0.08921 N/A 0.06418 N/A 0.08420
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
14 N/A 0.10339 N/A 0.06835 N/A 0.09671
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
15 N/A 0.14678 N/A 0.08003 N/A 0.13343
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
16 0.12341 0.16348 0.07503 0.08420 0.11340 0.14761
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
17 0.13092 0.17516 0.07753 0.08837 0.12007 0.15847
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
18 0.13593 0.18435 0.08003 0.09254 0.12508 0.16598
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
19 0.13927 0.19019 0.08253 0.09504 0.12758 0.17182
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
20 0.14010 0.19353 0.08420 0.09755 0.12925 0.17433
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
21 0.13843 0.19353 0.08587 0.09922 0.12758 0.17516
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
22 0.13593 0.19019 0.08670 0.10172 0.12592 0.17266
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
23 0.13259 0.18685 0.08837 0.10422 0.12341 0.17015
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
24 0.12925 0.18184 0.09004 0.10672 0.12174 0.16681
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
25 0.12508 0.17600 0.09171 0.10923 0.11841 0.16264
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
26 0.12258 0.17266 0.09421 0.11340 0.11674 0.16097
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
27 0.12091 0.17099 0.09588 0.11674 0.11590 0.16014
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
28 0.12007 0.17099 0.09838 0.12091 0.11590 0.16097
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
29 0.12007 0.17349 0.10172 0.12592 0.11674 0.16431
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
30 0.12091 0.17767 0.10422 0.13176 0.11757 0.16848
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
31 0.12341 0.18351 0.10756 0.13676 0.12007 0.17433
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
32 0.12675 0.19103 0.11090 0.14261 0.12341 0.18184
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
33 0.13176 0.20105 0.11507 0.15012 0.12842 0.19103
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
34 0.13760 0.21274 0.12007 0.15847 0.13426 0.20189
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
35 0.14428 0.22694 0.12592 0.16765 0.14094 0.21525
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
36 0.15179 0.24365 0.13426 0.18184 0.14845 0.23112
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
37 0.16181 0.26455 0.14428 0.19855 0.15847 0.25118
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
38 0.17266 0.28795 0.15513 0.21776 0.16932 0.27374
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
39 0.18435 0.31471 0.16681 0.23864 0.18101 0.29966
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
40 0.19855 0.34565 0.18101 0.26371 0.19520 0.32892
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
41 0.21358 0.37912 0.19604 0.29046 0.21024 0.36155
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
42 0.22945 0.41595 0.21107 0.31721 0.22611 0.39586
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
43 0.24700 0.45614 0.22611 0.34398 0.24282 0.43353
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
44 0.26622 0.50054 0.24115 0.37075 0.26120 0.47457
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
45 0.28795 0.54747 0.25786 0.39920 0.28210 0.51814
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
46 0.31136 0.59611 0.27541 0.42850 0.30384 0.56257
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
47 0.33645 0.64897 0.29464 0.45865 0.32809 0.61037
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
48 0.36406 0.70606 0.31471 0.49132 0.35402 0.66324
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
49 0.39418 0.76823 0.33729 0.52736 0.38247 0.71950
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
50 0.42850 0.83717 0.36238 0.56592 0.41511 0.78252
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
51 0.46786 0.91542 0.39000 0.60702 0.45195 0.85315
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
52 0.51311 1.00385 0.42181 0.65401 0.49467 0.93310
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
</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>
53 0.56508 1.10418 0.45698 0.70606 0.54328 1.02323
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
54 0.62296 1.21390 0.49300 0.75899 0.59695 1.12105
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
55 0.68759 1.33137 0.53155 0.81363 0.65653 1.22488
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
56 0.75815 1.45576 0.57011 0.86746 0.72034 1.33390
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
57 0.83297 1.58711 0.60786 0.91795 0.78756 1.44814
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
58 0.91627 1.72544 0.64562 0.96763 0.86157 1.56676
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
59 1.00975 1.87419 0.68843 1.02071 0.94405 1.69402
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
60 1.11430 2.04023 0.73882 1.08393 1.03756 1.83677
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
61 1.23079 2.22793 0.80101 1.16324 1.14299 1.99933
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
62 1.36520 2.43997 0.87839 1.26543 1.26543 2.18524
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
63 1.51760 2.67741 0.97352 1.38974 1.40497 2.39462
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
64 1.68723 2.93784 1.08056 1.52861 1.56082 2.62421
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
65 1.87334 3.21456 1.19617 1.67535 1.73224 2.86728
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
66 2.07518 3.50512 1.31615 1.82487 1.91589 3.12050
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
67 2.29200 3.80704 1.43883 1.96952 2.11100 3.37961
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
68 2.52819 4.12480 1.56591 2.11612 2.32277 3.64901
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
69 2.79077 4.47081 1.70761 2.27577 2.55733 3.94097
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
70 3.08859 4.85418 1.87419 2.46480 2.82343 4.26531
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
71 3.42979 5.28688 2.07774 2.70487 3.13085 4.63554
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
72 3.82529 5.77849 2.32790 2.99983 3.49039 5.06102
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
73 4.27492 6.32638 2.62850 3.35194 3.90095 5.53811
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
74 4.77158 6.93067 2.97572 3.75491 4.35707 6.06583
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
75 5.30544 7.58071 3.36491 4.19721 4.84979 6.63340
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
76 5.87268 8.25007 3.78792 4.66975 5.37438 7.21630
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
77 6.46947 8.92720 4.24348 5.16594 5.92694 7.80752
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
78 7.09996 9.61687 4.73909 5.69326 6.51244 8.40996
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
79 7.78481 10.34362 5.29130 6.27099 7.15044 9.04868
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
80 8.54724 11.13282 5.92338 6.92258 7.86386 9.74764
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
81 9.40950 12.00893 6.65582 7.66774 8.67463 10.53067
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
82 10.39222 12.98984 7.50735 8.52251 9.60297 11.41509
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
83 11.49454 14.06239 8.47766 9.51961 10.64778 12.40384
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
84 12.69876 15.19327 9.55942 10.61310 11.79409 13.46161
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
85 13.98062 16.34562 10.74439 11.78934 13.02257 14.56335
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
86 15.32651 17.49176 12.02797 13.04182 14.32180 15.69269
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
87 16.71801 18.68355 13.41230 14.36087 15.68277 16.87966
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
88 18.15088 19.94243 14.90282 15.75618 17.10606 18.14273
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
89 19.64755 21.21197 16.51661 17.23007 18.61282 19.45081
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
90 21.23307 22.51166 18.27329 18.89299 20.23099 20.86976
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
91 22.94951 23.88390 20.22265 20.71856 22.00462 22.41430
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
92 24.87000 25.50217 22.45280 22.78828 24.01445 24.21829
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
93 27.20132 27.62219 25.14857 25.28210 26.46176 26.49646
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
94 30.42887 30.59761 28.73601 28.73601 29.81058 29.68976
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
95 35.49221 35.49221 34.15814 34.15814 34.99881 34.83495
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
96 44.51507 44.51507 43.54279 43.54279 44.15278 44.03236
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
97 62.83141 62.83141 62.19404 62.19404 62.59184 62.51382
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
98 83.33333 83.33333 83.33333 83.33333 83.33333 83.33333
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
99 83.33333 83.33333 83.33333 83.33333 83.33333 83.33333
-------------- ---------------- ---------------- ----------------- ---------------- ---------------- ----------------
</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 Smoker/Non-Smoker Table, age
last birthday unless unisex charges apply. If unisex charges apply, a unisex
variation of that table is used. The amounts shown are per $1,000 of Net Amount
at Risk.
We derive the cost of insurance charges for joint life cases using a standard
insurance industry method based on the applicable cost of insurance charge for
both Insureds. Guaranteed maximum cost of insurance charges for specific
proposed joint Insureds are available upon request.
<PAGE>
<TABLE>
<CAPTION>
Appendix E
Current Monthly Cost of Insurance Rates
(per $1,000 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>
0 N/A 0.05834 N/A 0.02167 N/A 0.05250
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
1 N/A 0.05834 N/A 0.02167 N/A 0.05250
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
2 N/A 0.05834 N/A 0.02167 N/A 0.05250
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
3 N/A 0.05834 N/A 0.02167 N/A 0.05250
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
4 N/A 0.05834 N/A 0.02167 N/A 0.05250
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
5 N/A 0.05834 N/A 0.02167 N/A 0.05250
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
6 N/A 0.05884 N/A 0.02233 N/A 0.05300
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
7 N/A 0.05934 N/A 0.02300 N/A 0.05350
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
8 N/A 0.05984 N/A 0.02367 N/A 0.05400
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
9 N/A 0.06034 N/A 0.02433 N/A 0.05450
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
10 N/A 0.06084 N/A 0.02500 N/A 0.05500
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
11 N/A 0.06550 N/A 0.02667 N/A 0.05934
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
12 N/A 0.07017 N/A 0.02833 N/A 0.06367
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
13 N/A 0.07484 N/A 0.03000 N/A 0.06800
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
14 N/A 0.07951 N/A 0.03167 N/A 0.07234
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
15 N/A 0.08417 N/A 0.03333 N/A 0.07667
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
16 0.05017 0.08451 0.02350 0.03350 0.04600 0.07701
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
17 0.05034 0.08484 0.02367 0.03367 0.04617 0.07734
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
18 0.05050 0.08517 0.02383 0.03383 0.04634 0.07767
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
19 0.05067 0.08551 0.02400 0.03400 0.04650 0.07801
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
20 0.05084 0.08584 0.02417 0.03417 0.04667 0.07834
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 0.05100 0.08634 0.02417 0.03417 0.04684 0.07884
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 0.05117 0.08684 0.02417 0.03417 0.04700 0.07934
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 0.05134 0.08734 0.02417 0.03417 0.04717 0.07984
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 0.05150 0.08784 0.02417 0.03417 0.04734 0.08034
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 0.05167 0.08834 0.02417 0.03417 0.04750 0.08084
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 0.05217 0.08917 0.02433 0.03500 0.04800 0.08151
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 0.05267 0.09001 0.02450 0.03583 0.04850 0.08217
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 0.05317 0.09084 0.02467 0.03667 0.04900 0.08284
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 0.05367 0.09168 0.02483 0.03750 0.04950 0.08351
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 0.05417 0.09251 0.02500 0.03833 0.05000 0.08417
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 0.05467 0.09351 0.02600 0.04017 0.05050 0.08534
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 0.05517 0.09451 0.02700 0.04200 0.05100 0.08651
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 0.05567 0.09551 0.02800 0.04384 0.05150 0.08767
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 0.05617 0.09651 0.02900 0.04567 0.05200 0.08884
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 0.05667 0.09751 0.03000 0.04750 0.05250 0.09001
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 0.06017 0.10718 0.03250 0.05350 0.05584 0.09918
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 0.06367 0.11685 0.03500 0.05950 0.05917 0.10835
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 0.06717 0.12652 0.03750 0.06550 0.06250 0.11751
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 0.07067 0.13619 0.04000 0.07151 0.06584 0.12668
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 0.07417 0.14585 0.04250 0.07751 0.06917 0.13585
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 0.08051 0.16619 0.04700 0.08667 0.07534 0.15436
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 0.08684 0.18653 0.05150 0.09584 0.08151 0.17286
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 0.09318 0.20688 0.05600 0.10501 0.08767 0.19137
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 0.09951 0.22722 0.06050 0.11418 0.09384 0.20988
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 0.10584 0.24756 0.06500 0.12335 0.10001 0.22839
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 0.11568 0.27458 0.07101 0.13535 0.10918 0.25323
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 0.12552 0.30159 0.07701 0.14736 0.11835 0.27808
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 0.13535 0.32861 0.08301 0.15936 0.12752 0.30293
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 0.14519 0.35563 0.08901 0.17136 0.13669 0.32777
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 0.15502 0.38265 0.09501 0.18337 0.14585 0.35262
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
51 0.17036 0.41984 0.10418 0.20087 0.16036 0.38682
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 0.18570 0.45704 0.11335 0.21838 0.17486 0.42101
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
<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>
53 0.20104 0.49424 0.12252 0.23589 0.18937 0.45521
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 0.21638 0.53145 0.13168 0.25340 0.20387 0.48941
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 0.23172 0.56866 0.14085 0.27091 0.21838 0.52361
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 0.25140 0.60837 0.15019 0.28675 0.23656 0.55981
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 0.27107 0.64809 0.15953 0.30259 0.25473 0.59602
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 0.29075 0.68781 0.16886 0.31843 0.27291 0.63223
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 0.31043 0.72753 0.17820 0.33428 0.29108 0.66845
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 0.33011 0.76725 0.18754 0.35012 0.30926 0.70466
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 0.35880 0.81049 0.20404 0.37898 0.33611 0.74589
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 0.38748 0.85373 0.22055 0.40783 0.36297 0.78712
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 0.41617 0.89697 0.23706 0.43669 0.38982 0.82835
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 0.44486 0.94022 0.25356 0.46555 0.41667 0.86959
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 0.47356 0.98347 0.27007 0.49441 0.44353 0.91083
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 0.52361 1.08534 0.28308 0.52861 0.48790 1.00234
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 0.57366 1.18724 0.29609 0.56282 0.53228 1.09386
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 0.62372 1.28916 0.30910 0.59702 0.57667 1.18540
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 0.67379 1.39110 0.32210 0.63123 0.62105 1.27696
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 0.72386 1.49306 0.33511 0.66544 0.66544 1.36854
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
71 0.86608 1.65457 0.43719 0.76976 0.80164 1.52148
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 1.00835 1.81613 0.53929 0.87410 0.93788 1.67447
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 1.15066 1.97774 0.64141 0.97846 1.07415 1.82750
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 1.29300 2.13940 0.74355 1.08284 1.21046 1.98058
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 1.43539 2.30112 0.84571 1.18724 1.34681 2.13371
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 1.71862 2.50844 1.10171 1.40698 1.62597 2.34281
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 2.00200 2.71586 1.35784 1.62681 1.90529 2.55200
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 2.28555 2.92335 1.61410 1.84674 2.18476 2.76127
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 2.56925 3.13094 1.87049 2.06676 2.46439 2.97063
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 2.85312 3.33861 2.12701 2.28688 2.74418 3.18008
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
81 3.32267 3.75471 2.39506 2.56456 3.18344 3.57557
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
82 3.79266 4.17116 2.66324 2.84239 3.62308 3.97138
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
83 4.26310 4.58795 2.93157 3.12037 4.06311 4.36749
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
84 4.73397 5.00509 3.20004 3.39851 4.50352 4.76392
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
85 5.20529 5.42258 3.46866 3.67680 4.94433 5.16066
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
86 5.73672 5.93114 3.84876 4.07857 5.45307 5.65311
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
87 6.26872 6.44021 4.22914 4.48065 5.96234 6.14604
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
88 6.80128 6.94980 4.60982 4.88306 6.47212 6.63946
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
89 7.33440 7.45990 4.99078 5.28579 6.98242 7.13336
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
90 7.86809 7.97053 5.37204 5.68885 7.49323 7.62774
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
91 8.30914 8.40607 5.81866 6.14284 7.93497 8.06604
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
92 8.75057 8.84200 6.26568 6.59724 8.37709 8.50472
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
93 9.19240 9.27830 6.71310 7.05205 8.81961 8.94378
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
94 9.63461 9.71497 7.16091 7.50727 9.26251 9.38323
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
95 10.07720 10.15203 7.60913 7.96291 9.70580 9.82305
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
96 13.71848 13.82108 10.48581 10.94483 13.23197 13.38855
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
97 17.38611 17.51689 13.37897 13.94444 16.78285 16.97932
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
98 21.08037 21.23974 16.28874 16.96191 20.35871 20.59562
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
99 24.80156 24.98994 19.21527 19.99739 23.95981 24.23773
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
THE AMOUNTS SHOWN ABOVE ARE CURRENT RATES PER $1,000 OF NET AMOUNT AT RISK AS OF
THE DATE OF THIS PROSPECTUS. TO DETERMINE THE CURRENT MONTHLY COST OF INSURANCE
CHARGE WE MULTIPLY THESE RATES BY THE NET AMOUNT AT RISK. TO THAT PRODUCT, WE
ADD THE CURRENT COST OF INSURANCE FEE. THE AMOUNTS SHOWN ABOVE ARE CURRENT RATES
PER $1,000 OF NET AMOUNT AT RISK.
Current monthly cost of insurance rates for specific proposed
joint Insureds are available on request.
- --------------------------------------------------------------------------------
<PAGE>
Appendix F
Description of the Calculation of Current Monthly Cost of Insurance Charges
We determine the current monthly cost of insurance rate, the currently monthly
cost of insurance fee and any underwriting factor as follows:
1. Current monthly cost of insurance rate: The rate depends on a number
of factors, as follows.
a. For Policies with One Insured: The rates depend on the risk class
of the Insured(s), the Age and, where permissible, gender of the
Insured.
b. For Policies with Two Insureds: The rates depend on the age of
the younger insured, and on the number of smokers insured (0,1 or
2).
2. Current monthly cost of insurance fee: The cost of insurance fee is
calculated using a "constant" of $12.00.
3. Underwriting factor: We reserve the right to multiply the current
cost of insurance rate by an underwriting factor. The underwriting factor for
Policies that are fully underwritten would be one, which results in no change to
the rate.
The following is an example of how we calculate the monthly cost of insurance
deduction. Assume for this example that: (1) the Policy is issued using Option A
with a Specified Amount of $80,000; (2) on the applicable Monthly Processing
Day, the Death Benefit equals the Specified Amount; (3) the then current Account
Value is $10,000; (4) there is one male Insured, who is currently Age 55; and
(5) the Policy is issued in the no tobacco use risk class in a situation where
gender can be used in determining cost of insurance charges.
(a) We look up the current monthly cost of insurance rate for the
Insured. As of the date of this Prospectus, the current monthly cost of
insurance rate for a 55 year old male nonsmoker Insured is $.23172 per thousand
of Net Amount at Risk.
(b) If applicable, we multiply the rate shown in (a) times the
applicable current underwriting factor.
(c) We multiply (a), or, if applicable, the result of (b), times the
Net Amount at Risk*. The result is 16.16.
(d) We add the current "constant" of $12.00 to (c), resulting in
$28.16.
(e) We look up the contractually guaranteed maximum monthly cost of
insurance charge for the Insured. In this case, we look up the charge for a 55
year old male in the no tobacco use class. That charge is .68759 per $1,000 Net
Amount at Risk.
(f) We multiply the rate shown in (e) times the Net Amount at Risk*.
The result is 47.95.
(g) We compare the result in (d) and (f). The lower of the two amounts
is the current monthly cost of insurance for the Insured. In this example, the
current cost of insurance is, therefore, $28.16.
* We determine the Net Amount at Risk by subtracting the Account Value from the
Death Benefit discounted to the beginning of the Policy Month at the rate of 4%
per year. In this example, the Amount at Risk is $69,739.
<PAGE>
<TABLE>
<CAPTION>
Appendix G
Maximum Annual Assessable Premiums per $1,000 of Specified Amount
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Issue No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
0 N/A 15.29 N/A 12.23 N/A 14.69
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
1 N/A 15.50 N/A 12.43 N/A 14.90
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
2 N/A 15.97 N/A 12.80 N/A 15.35
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
3 N/A 16.46 N/A 13.19 N/A 15.82
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
4 N/A 16.98 N/A 13.61 N/A 16.32
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
5 N/A 17.53 N/A 14.04 N/A 16.84
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
6 N/A 18.10 N/A 14.49 N/A 17.39
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
7 N/A 18.71 N/A 14.96 N/A 17.97
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
8 N/A 19.35 N/A 15.46 N/A 18.58
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
9 N/A 20.02 N/A 15.98 N/A 19.23
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
10 N/A 20.72 N/A 16.52 N/A 19.90
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
11 N/A 21.45 N/A 17.08 N/A 20.60
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
12 N/A 22.21 N/A 17.67 N/A 21.32
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
13 N/A 22.99 N/A 18.27 N/A 22.06
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
14 N/A 23.78 N/A 18.90 N/A 22.82
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
15 N/A 24.58 N/A 19.55 N/A 23.59
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
16 20.48 25.33 17.75 20.19 19.94 24.32
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
17 21.09 26.09 18.33 20.86 20.55 25.06
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
18 21.72 26.85 18.94 21.55 21.17 25.81
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
19 22.36 27.63 19.56 22.26 21.81 26.58
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
20 23.03 28.44 20.21 23.00 22.47 27.36
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 23.72 29.26 20.87 23.76 23.15 28.18
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 24.44 30.13 21.57 24.55 23.87 29.03
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 25.19 31.03 22.29 25.37 24.61 29.91
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 25.98 31.98 23.03 26.22 25.40 30.84
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 26.81 32.98 23.81 27.10 26.21 31.82
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 27.68 34.03 24.62 28.02 27.07 32.84
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 28.60 35.13 25.45 28.96 27.97 33.91
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 29.55 36.28 26.32 29.94 28.91 35.03
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 30.55 37.49 27.21 30.96 29.88 36.20
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 31.59 38.74 28.14 32.01 30.90 37.41
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 32.67 40.05 29.11 33.10 31.96 38.67
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 33.79 41.40 30.11 34.22 33.06 39.98
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 34.96 42.81 31.15 35.39 34.20 41.33
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 36.17 44.26 32.23 36.60 35.39 42.74
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 37.43 45.77 33.34 37.84 36.61 44.19
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 38.73 47.32 34.50 39.14 37.88 45.69
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 40.07 48.93 35.69 40.47 39.20 47.24
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 41.46 50.58 36.92 41.83 40.55 48.84
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 42.89 52.28 38.18 43.23 41.95 50.48
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 44.38 54.03 39.49 44.67 43.40 52.16
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 45.90 55.83 40.83 46.13 44.89 53.89
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 47.48 57.66 42.20 47.62 46.42 55.66
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 49.10 59.55 43.62 49.15 48.00 57.47
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 50.78 61.48 45.07 50.70 49.63 59.32
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 52.50 63.45 46.57 52.29 51.32 61.21
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 54.28 65.47 48.12 53.93 53.05 63.14
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 56.11 67.54 49.71 55.60 54.83 65.13
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 58.00 69.66 51.35 57.31 56.67 67.17
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 59.96 71.85 53.04 59.08 58.57 69.26
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 61.97 74.09 54.79 60.88 60.53 71.41
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
51 64.05 76.41 56.58 62.74 62.55 73.61
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 66.19 78.78 58.43 64.64 64.63 75.88
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
Male Male Female Female Unisex Unisex
Issue No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
53 68.39 81.21 60.32 66.57 66.77 78.19
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 70.66 83.69 62.26 68.55 68.96 80.55
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 72.99 86.22 64.25 70.56 71.22 82.95
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 75.38 88.80 66.30 72.61 73.54 85.40
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 77.84 91.45 68.40 74.72 75.92 87.90
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 80.38 94.16 70.58 76.90 78.38 90.47
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 83.00 96.97 72.84 79.18 80.91 93.13
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 85.70 99.88 75.20 81.56 83.54 95.88
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 88.50 102.91 77.66 84.05 86.26 98.74
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 91.40 106.03 80.21 86.65 89.07 101.70
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 94.38 109.25 82.85 89.33 91.96 104.73
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 97.46 112.56 85.55 92.06 94.95 107.83
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 100.63 115.93 88.32 94.84 98.01 110.99
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 103.90 119.40 91.15 97.66 101.17 114.21
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 107.30 122.98 94.07 100.57 104.43 117.53
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 110.85 126.72 97.12 103.62 107.84 120.98
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 114.60 130.67 100.34 106.85 111.43 124.62
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 118.55 134.87 103.76 110.32 115.22 128.48
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
71 122.74 139.33 107.40 114.06 119.24 132.59
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 127.16 144.06 111.27 118.05 123.48 136.93
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 131.80 149.01 115.36 122.26 127.92 141.47
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 136.63 154.15 119.65 126.66 132.55 146.18
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 141.64 156.53 124.15 131.24 137.35 151.01
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 146.86 156.00 128.86 136.01 142.36 155.77
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 149.50 155.48 133.84 141.01 147.63 154.88
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 148.62 155.07 139.18 146.34 148.31 154.06
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 147.95 154.86 143.80 146.45 147.44 153.38
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 147.53 154.81 142.69 145.54 146.79 152.84
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
<PAGE>
Appendix H
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. Premiums of $5,000 per year were paid as of the first day of
each Policy Year, and the premium tax charged on each Premium
was 1.75%. DAC tax also was charged in relation to each
Premium.
2. Each Policy was issued on the No Tobacco Use class, cost of
insurance rates differ by gender and there is no change to the
current cost of insurance rates during the period covered by
the example.
3. The Death Benefit option in effect throughout the life of the
Policy is Option A.
4. The Specified Amount is $100,000 and has remained constant
since the Policy Date.
5. The provision is exercised as of the day preceding the 10th
Policy Anniversary.
6. The investment options in which Account Value was allocated
have grown on a constant basis since the Policy Date at an
annualized rate of 8% per year.
7. There have been no loans or loan repayments and no amounts
have been withdrawn.
8. 50% of the maximum available amount is taken pursuant to the
accelerated death benefit provision.
9. The 12-month interest rate discount used in the calculation of
the benefit assumes interest at 6% per year, compounded
yearly.
<TABLE>
<CAPTION>
------------------------- -------------------------
Female Age 45 Male Age 65
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Account Value Before the Accelerated Death Benefit is $61,659 $54,665
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Cash Value Before the Accelerated Death Benefit is Paid $61,193 $54,165
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available For a Loan Before the $55,074 $48,748
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Specified Amount Before the Accelerated Death Benefit $100,000 $100,000
is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Minimum Required Death Benefit Before the Accelerated $154,405 $75,622
Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Guaranteed Minimum Death Benefit Before the $58,916 $52,821
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Death Benefit Before the Accelerated Death Benefit is $154,405 $100,000
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available as the Accelerated Death $77,203 $50,000
Benefit
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Amount of Accelerated Death Benefit $38,601 $25,000
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Amount Paid as the Accelerated Death Benefit $36,416 $23,585
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Account Value After the Accelerated Death Benefit is $46,244 $40,999
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Cash Value After the Accelerated Death Benefit is Paid $45,778 $40,499
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available For a Loan After the $41,200 $36,449
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Specified Amount After the Accelerated Death Benefit $75,000 $75,000
is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Minimum Required Death Benefit After the Accelerated $115,804 $56,717
Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Guaranteed Minimum Death Benefit After the Accelerated $44,187 $39,616
Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
</TABLE>
<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
<TABLE>
<CAPTION>
The following exhibits which correspond to those required by paragraph
A of the instructions for exhibits to Form N-8B-2:
<S> <C> <C> <C> <C>
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 on April 24, 1998.
(c) Not applicable.
(4) Not applicable.
(5) Form of Flexible Premium Variable Life Insurance Policy
(a) Single Life Version incorporated by
reference to Registration Statement
No. 333-58703 filed via EDGAR
November 17, 1998.
(b) Last Survivor Version incorporated
by reference to Registration
Statement No. 333-58703 filed via
EDGAR November 17, 1998.
(6) Articles of Incorporation and By-laws of American Skandia Life Assurance
Corporation, incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement No. 33-87010, filed VIA EDGAR on March 2, 1998.
(7) Not applicable.
(8) Not applicable.
(9) Other material contracts. Not applicable
(10) Form of Application for Flexible Premium Variable Life Insurance
Policy. FILED HEREWITH
(11) Memorandum describing transfer and
redemption procedures is incorporated by
reference to Registration Statement No.
333-58703 filed VIA Edgar on July 8, 1998.
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 Schedule 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.
</TABLE>
<PAGE>
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.
<PAGE>
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 the 4th day of
January, 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
and 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, 1/4/99
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer)
/s/Thomas M. Mazzaferro Executive Vice President and 1/4/99
Thomas M. Mazzaferro Chief Financial Officer
(Principal Accounting Officer)
/s/David R. Monroe Treasurer, Vice President 1/4/99
David R. Monroe and 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.
<TABLE>
<CAPTION>
American Skandia American Skandia Life Assurance Corporation
<S> <C> <C> <C> <C> <C> <C>
Where To Invest { } Application for Life Insurance
1. Proposed Insured Section (Please Print) 2. Proposed Second Insured (Complete if Applicable)
Full Name Full Name
Address Address
Date of Birth State/Place of Birth Date of Birth State/Place of Birth
Social Security No. Social Security No.
Sex Male Female Sex Male Female
Driver's License No. State Driver's License No. State
Relationship to Proposed Insured
3. Owner (if other than Proposed Insured)
Name
Address
Relationship to Proposed Insured(s)
Social Security or Tax I.D. No.
Date of Birth (if applicable)
4. Beneficiary Designation (The Owner reserves the right to change the Beneficiaries unless otherwise indicated in
Special Instructions
Primary Beneficiary
Name Relationship to Proposed Insured(s) Allocation%
------------------------ -----%
----------------------- -----%
Contingent Beneficiary
Name Relationship to Proposed Insured(s) Allocation%
------------------------------ -----%
------------------------------ -----%
5. Policy Information
___ Single Pay ___ Annual Pay
Amount of Insurance $ ____________________________ Amount of Insurance $ ___________________________
Death Benefit Option: ____Level ____Variable
Amount of Premium $ ____________________________ Planned Premium $ _______________________________
I would like to pay Planned Premium (check one):
___ Annually ___ Semi-Annually ___Quarterly
___ Monthly(please indicate a voided check with Bank Drafting
form.)
__ A 1035 Exchange is being transferred from another insurance company for approximately $ __________
(Please include Transfer of Assets form with this Application.)
6. Questions for Proposed Insured(s)
Proposed Insured Proposed Second Insured
A Within the past 10 years have you been
treated for or been told you have the
following: cancer, heart disease or stroke? Yes No Yes No
B. Have you been diagnosed with or treated by a member of the medical
profession for an immune deficiency disorder, the Acquired Immune
Deficiency Syndrome (AIDS) or AIDS
Related Complex (ARC)? Yes No Yes No
C. Are you under age 20 or over
age 80? Yes No Yes No
D. Within the last 12 months have you
used any tobacco products? Yes No Yes No
E. Will a Temporary Life Insurance Agreement be completed with this Application*? Yes No
If question A, B, or C is answered yes by Proposed Insured or Proposed Second
Insured, then premium cannot be taken with this Application and the Temporary
Life Insurance Agreement not be accepted.
F. Will the insurance applied for replace any other life insurance or
annuities on the life/lives of the insured(s)? Yes No (If
yes, provide company, Policy #, individual insured, amount and attach
the required replacement forms.)
7. Contact Section
A representative may contact you for an interview to help determine your
eligibility for this coverage. For future communication, please provide a fax
number and e-mail address, if applicable.
Proposed Insured Proposed Second Insured
Best Time to Call: __________ Best Day: _____________ Best Time to Call: ________ Best Day: ________
Next Best Time to Call: _______ Next Best Day: _________ Next Best Time to Call: ____ Next Best Day: ____
Please call me at: ___ Home ___ Business Please call me at: ___ Home ___ Business
Home phone ( ) ______________________ Home phone ( ) _________________________
Business phone ( ) ___________________ Business phone ( ) _______________________
Fax Number ( ) _________________________ Fax Number ( ) __________________________
E-Mail Address ( ) _____________________ E-Mail Address ( ) _______________________
</TABLE>
8. Suitability
To be completed by the Owner
a. Do you believe that this Policy will meet your insurance and
financial objectives? Yes No
b. Do you understand that the Death Benefit, the Account Value and Cash
Value may increase or decrease depending on the investment experience of the
sub-accounts? Yes No
c. Do you understand that the initial premium may be allocated to the
Automatic sub-account (a money market account) until the Right
to Cancel period expires? Yes No
d. Did you receive a copy of the product prospectus for the Policy?
Yes No
9. Special Instructions
- -----------------------------------------------------------------------------
10. Declarations, Authorizations and Signatures
I declare and agree that: (1) All statements and answers made in all parts of
this Application are full, complete and true to the best of my knowledge and
belief, (2) This Application, any amendments to it, any Application Supplement
and any related medical examinations will become a part of the Policy and are
the basis for any insurance issued on this Application; (3) No agent or medical
examiner may accept risks or make or change any contract, or waive or change any
of American Skandia Life Assurance Corporation's (the "Company") rights or
requirements; (4) Unless otherwise provided in the Temporary Life Insurance
Agreement, any Policy issued based on this Application will not take effect
unless each Proposed Insured is alive and in the same condition of health as
described in this Application and any Application Supplement when the Policy is
delivered to the Owner and the full premium is paid.
I certify under penalty of perjury if allowed by law that my Social Security or
Tax Identification Number is correct.
I authorize any physician, medical practitioner, hospital, clinic, other medical
or medically-related facility, insuring or reinsuring company, the Medical
Information Bureau, Inc., consumer reporting agency, or employer having
information available as to diagnosis, treatment and prognosis with respect to
any physical or mental condition and/or treatment of me and any other
non-medical information about me to give the Company and/or its legal
representative any and all such information.
I understand that the policy has a Death Benefit that is based on account value,
which may include amounts held in variable investment options and/or a fixed
allocation, as well as a loan account, should I use the loan provision. Any
portion of the death benefit based on the account value in the variable
investment options depends on their investment performance, and may increase or
decrease and is, therefore, not guaranteed. I also understand that the policy
has an accelerated death benefit which will affect the values therein.
I understand that the information obtained by use of this Authorization will be
used by the Company to determine my eligibility for insurance and may be used to
obtain additional information to investigate any claim for benefits. Any
information obtained will not be released by the Company to any person or
organization except to reinsuring companies, the Medical Information Bureau,
Inc., or other persons or organizations performing business or legal services in
connection with this Application, claim, or as may otherwise be required by law,
lawfully required, or as I may authorize.
I understand that I have a right to receive a copy of this Authorization, that a
copy of this Authorization will be as valid as the original and that this
Authorization will be valid for two and one half years (30 months) from the date
shown below.
I have received the Notice of Insurance Information Practices and Notice
Regarding Medical Information Bureau.
I consent to a consumer report containing personal or credit information or both
that may be requested in connection with this Application.
The Owner agrees to be bound by all statements, answers and agreements made by
the Proposed Insured and any Proposed Second Insured.
Signed at _____________________________, on ________________ _________ _______
(city) (state) (month) (day) (year)
- -------------------------------------- ------------------------------------
Signature of Proposed Insured Signature of Proposed Second Insured, if
applicable
- -------------------------------------- ------------------------------------
Signature of Owner Signature of Licensed Agent/
(if other than insured) Registered Representative
NOTE: If the Owner is an entity, full name to be shown and to be signed by
an authorized individual with title shown.
11. Amendments to the Application (Home office use only)
- --------------------------------------------------------------------------------
12. Representative's Certification
Estimated annual income, net worth of Proposed Insured (both Proposed Insureds
if applicable.)
- --------------------------------------------------------------------------------
I CERTIFY:
1. to the best of my knowledge, the insurance applied for ___ will
___ will not (CHECK ONE) replace any life insurance or annuity on the life of
any Proposed Insured;
2. to the best of my knowledge there is nothing that may adversely affect
the insurability of any person proposed for insurance except as stated in this
Application;
3. that I asked each question separately; the answers were recorded as
given; and, they are complete and accurate to the best of my knowledge and
belief;
4. that I am a NASD Registered Representative;
5. that I have reviewed the purchase of this insurance Policy as to
suitability.
- -------------------------- --------------------------------
Signature of Licensed Agent/ Date
Registered Representative
- -------------------------- ---------------------- -----------
Agent's Name (Print) Agent Number Location
- -------------------------- ---------------------- -----------
Phone Number Fax Number Agency Broker/Dealer
Werner & Kennedy
1633 Broadway
New York, NY 10019
EMail: [email protected]
Telephone (212) 408-6900
Facsimile (212) 408-6950
(212) 408-6900
December 31, 1998
American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, Connecticut 06484
Re: Pre-effective Amendment No. 2 on Form S-6 filed by American Skandia
Life Assurance Corporation, Separate Account F, Registrant
Registration No.: 333-58703
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 Flexible 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
Pre-effective Amendment No. 2 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,
WERNER & KENNEDY
By: /s/ Michael A. Knoerzer
Michael A. Knoerzer
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, 1998 with respect to the consolidated
financial statements of American Skandia Life Assurance Corporation for the year
ended December 31, 1997 included in the Registration Statement (Form S-6 No.
333-58703) and related Prospectus, which is part of this registration.
/s/Ernst & Young LLP
Hartford, Connecticut
January 4, 1999
Exhibit 8b
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 2 to Registration
Statement No. 333-58703 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
January 4, 1999
American Skandia Life
Assurance Corporation
One Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 929-8071
December 30, 1998
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 flexible
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
William H. Strong, FSA, MAAA
Vice President
G:\legal\regstatement\fpvli\actuarialltr.doc
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0001047986
<NAME> ASLAC0998
<MULTIPLIER> 1
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 132,385,354
<DEBT-CARRYING-VALUE> 140,681,868
<DEBT-MARKET-VALUE> 140,806,646
<EQUITIES> 6,872,319
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 148,111,620
<CASH> 22,687,636
<RECOVER-REINSURE> 12,125,256
<DEFERRED-ACQUISITION> 692,244,653
<TOTAL-ASSETS> 15,617,683,435 <F1>
<POLICY-LOSSES> 70,970,783
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 213,000,000
0
0
<COMMON> 2,000,000
<OTHER-SE> 225,478,153
<TOTAL-LIABILITY-AND-EQUITY> 15,617,683,435 <F2>
80,801
<INVESTMENT-INCOME> 8,140,502
<INVESTMENT-GAINS> 123,610
<OTHER-INCOME> 260,427 <F3>
<BENEFITS> (2,017,320)
<UNDERWRITING-AMORTIZATION> 59,460,341
<UNDERWRITING-OTHER> 50,509,500
<INCOME-PRETAX> 41,793,541
<INCOME-TAX> 7,572,652
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,220,889
<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
$14,698,628,982.
<F2> Included in Total Liabilities and Equity are Liabilities Related to
Separate Accounts of $14,698,628,982.
<F3> Other income includes annuity charges and fees of $133,729,829 and fee
income of $36,913,358.
</FN>
</TABLE>
