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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT
TRUSTS WHICH ARE CURRENTLY
ISSUING SECURITIES
PURSUANT TO SECTION 8(B) OF THE
INVESTMENT COMPANY ACT OF 1940
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT R
OF
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES
ONLY FOR PURPOSES OF INFORMATION PROVIDED HEREIN
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ORGANIZATION AND GENERAL INFORMATION
1. (a)Furnish name of the trust and the Internal Revenue Service Employer
Identification Number.
Lincoln Life Flexible Premium Variable Life Account R of The Lincoln
National Life Insurance Company ("Account"). The Account has no
Internal Revenue Service Employer Identification number.
(b)Furnish title of each class or series of securities issued by the
trust.
Flexible Premium Variable Life Insurance Policies On the Lives of Two
Insureds ("Policies"). Policy provisions may vary in some states to
comply with applicable law.
2. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each depositor of the
trust.
The Lincoln National Life Insurance Company ("Company")
1300 South Clinton Street, P.O. Box 1110
Fort Wayne, IN 46802
Internal Revenue Service Employer
Identification Number: 35-0472300
3. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each custodian or trustee
of the trust indicating for which class or series of securities each
custodian or trustee is acting.
Not applicable.
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4. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each principal underwriter
currently distributing securities of the trust.
The Lincoln National Life Insurance Company ("Company")
1300 South Clinton Street, P.O. Box 1110
Fort Wayne, IN 46802
Internal Revenue Service Employer
Identification Number: 35-0472300
5. Furnish name of state or other sovereign power, the laws which govern with
respect to the organization of the trust.
Indiana.
6. (a)Furnish the dates of execution and termination of any indenture or
agreement currently in effect under the terms of which the trust was
organized and issued or proposes to issue securities.
The Account was established under Indiana law pursuant to a resolution of
the Board of Directors of the Company dated November 4, 1982. The
Account will continue in existence until the Company's Board of Directors
directs that it be terminated.
(b)Furnish the dates of execution and termination of any indenture or
agreement currently in effect pursuant to which the proceeds of payments
on securities issued or to be issued by the trust are held by the
custodian or trustee.
Not applicable.
7. Furnish in chronological order the following information with respect to
each change of name of the trust since January 1, 1930.
Not applicable.
8. State the date on which the fiscal year of the trust ends.
December 31.
MATERIAL LITIGATION
9. Furnish a description of any pending legal proceedings, material with
respect to the security holders of the trust by reason of the nature of
the claim or the amount thereof, to which the trust, the depositor, or
the principal underwriter is a party or of which the assets of the trust
are the subject, including the substance of the claims involved in such
proceeding and the title of the proceeding. Furnish a similar statement
with respect to any pending administrative proceeding commenced by a
governmental authority or any such proceeding or legal proceeding known
to be contemplated by a governmental authority. Include any proceeding
which, although immaterial itself, is representative of, or one of, a
group which in the aggregate is
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material.
To be filed by amendment.
II.
GENERAL DESCRIPTION OF THE TRUST
AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING THE SECURITIES
OF THE TRUST AND THE RIGHTS OF HOLDERS
10. Furnish a brief statement with respect to the following matters for each
class or series of securities issued by the trust:
(a)Whether the securities are of the registered or bearer type.
The Policies which are to be issued are of the registered type, insofar
as the Policies are personal to the owners of the Policies ("Owners"
or "policyowners"), and the records concerning the policyowners are
maintained by or on behalf of the Company.
(b)Whether the securities are of the cumulative or distributive type.
The Policies are of the cumulative type, providing for no distribution of
income, dividends, or capital gains. Such amounts are not separately
identifiable but are reflected in the accumulation value and may be
reflected in the death benefit under a Policy at any time, depending on
the death benefit option chosen.
(c)The rights of security holders with respect to withdrawal or redemption.
A Policy may be cancelled within the right-to-examine period in
accordance with applicable state law. In most states, the Policy must be
returned within 10 days (in some states, 20 or longer) after receipt by
the Owner of the Policy and the Company's notice to the Owner of this
right. If the Policy is cancelled in a timely fashion, the Company will
refund the premiums paid, without interest, unless state law requires
otherwise. The initial premium is held in the Money Market Fund of the
Account and not allocated to the other Funds of the Account even if the
policyowner so directed until the expiration of the right-to-examine
period. Refunds will usually occur within seven days of notice of
cancellation although a refund of premiums paid by check may be delayed
until the check clears a policyowner's bank.
At any time before the death of the second of the two Insureds to die
(the "Second Death"), a policyowner may fully or partially surrender a
Policy by sending a written request to the Company at its Administrative
Office, Hartford, CT 06152-2249. The amount of a partial surrender may
be no less than the minimum amount set forth in the Policy, currently
$500, and not more than 90% of the Surrender Value at the end of the
valuation period in which the election becomes or would become effective.
The amount available for a full
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surrender is the Surrender Value at the end of the valuation period
during which the surrender request is received at the Administrative
Office. Accumulation Value in the Account available for surrender on
any given valuation day reflects total net premiums (premiums paid
less a premium load of 8%), investment performance through the date of
the request, other charges incurred in connection with a Policy, and
any partial surrenders. No partial surrender will be permitted which
would result in a Specified Amount lower than the then current minimum
(presently $250,000) for which a Policy would be issued. The
Accumulation Value will vary daily. The method for calculating
Accumulation Value is described in Item 10(i)(3).
If a Policy is being totally surrendered, it must be returned to the
Company along with the request. Any unpaid charges and indebtedness will
be deducted from or added to the Accumulation Value.
Payment of a Policy's Surrender Value in connection with a full
surrender, or a portion of Net Accumulation Value, in connection with a
partial surrender, will normally occur within seven (7) days after
receipt of a written request at the Administrative Office. Payment may
be postponed whenever: (i) the New York Stock Exchange is closed, other
than customary week-end and holiday closings, or trading on the New York
Stock Exchange is restricted as determined by the Securities and Exchange
Commission ("Commission"); (ii) the Commission by order permits
postponement for the protection of policyowners; (iii) an emergency
exists, as determined by the Commission, as a result of which disposal
of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Account's assets. A
policyowner may elect to have the Surrender Value paid in a lump sum or
under one of the settlement options referred to in Item 10(i)(7).
Upon the Second Death, the designated beneficiary is entitled to receive
the death benefit proceeds under a Policy. The death benefit and death
benefit proceeds are described in Item 10(i)(2).
See Item 13 for a discussion of applicable surrender charges.
(d)The rights of security holders with respect to conversion, transfer,
partial redemption, and similar matters.
At any time within 24 months of the issuance of a Policy, if both
Insureds are still living, the policyowner may convert a Policy to a
second-to-die life insurance policy then being offered by the Company,
providing benefits which do not depend on the investment experience of a
separate account. The new policy will have, at the policyowner's
election, the same specified amount or the same net amount at risk (death
benefit less Accumulation Value) as the Policy as well as the same issue
ages, policy date and rate class as the Policy. No evidence of
insurability is required for such an exchange unless the election of the
policyowner results in an increase in the net amount at risk.
A policyowner may obtain policy loans, as described in Item 21.
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A policyowner may make surrenders, as described in Item 10(c), subject to
a $25 transaction charge on a partial surrender, as described in Item 13.
A policyowner may allocate net premiums (premiums paid less the 8%
premium load) among (a) the sub-accounts of the Account (the "Variable
Sub-Accounts") and (b) the Fixed Account (also a "Sub-Account"), as
described in Item 15.
Transfers among the Sub-Accounts are permitted subject to certain
conditions. Up to 20% of Policy values held in the Fixed Account (as of
the preceding Policy Anniversary) may be transferred during a 30 day
period following each Policy Anniversary to one or more of the Variable
Sub-Accounts. Transfers to the Fixed Account or to another Variable
Sub-Account from one or more of the Variable Sub-Accounts may be made at
any time. The first 12 transfer requests in a policy year are free of
any transfer charge. A $25 transfer charge may be imposed for the 13th
and each subsequent transfer request in a policy year. Any value
remaining in the Fixed Account or a Variable Sub-Account after a
transfer must be at least $500. Transfers resulting from policy loans
and the exercise of conversion rights will not be subject to any
charge and will not count against the number of free transfer requests.
The Company will implement all transfers and determine all values at
the end of the valuation period during which the transfer request is
received and recorded. The Company may, at any time, revoke or modify
the transfer privilege.
(e) If the trust is the issuer of periodic plan certificates, the substance
of the provisions of any indenture or agreement with respect to lapses or
defaults by security holders in making principal payments, and with
respect to reinstatement.
The duration of a Policy depends upon the Net Accumulation Value. Except
as noted below, a Policy will lapse only when the Net Accumulation Value
is insufficient to cover the monthly deduction on the monthly anniversary
day.
If the Net Accumulation Value is insufficient to cover the monthly
deduction, unless the No-Lapse Provision has been selected and is in
effect, the Company will notify a policyowner of the minimum payment
needed to keep the Policy in force. A policyowner will have a grace
period of 61 days for the Company to receive sufficient payments. The
notice will be sent at least 31 days before the end of the grace period.
If the Company does not receive a sufficient payment within the grace
period, lapse of the Policy will result. If a sufficient payment is
received during the grace period, any resulting net premium will be
allocated among the Variable and Fixed Sub-Accounts based on the most
recent previous premium payment, unless the Company agrees to accept
instructions otherwise, and any monthly deductions due will be charged
to the Variable and Fixed Sub-Accounts.
If the No Lapse Provision has been selected the Owner is required to
pay, on or before each Monthly Anniversary Day, the monthly No Lapse
premium as specified in the POLICY SPECIFICATIONS. As long as the sum
of all premium payments less any indebtedness and partial surrenders is
at least equal to the sum of the No Lapse Premiums due since the Date of
Issue, the policy will not lapse even if the Net Accumulation Value is
insufficient to meet the Monthly Deductions.
A Grace Period of 61 days will be granted if on any Monthly
Anniversary Day it is determined that the No Lapse Provision premium
requirement has not been met. Within 31 days of the beginning of that
Grace Period, Lincoln Life will notify the Owner of the amount of
premium necessary to either a) maintain the No Lapse Provision in force
for at least two months, or b) maintain the policy in force for at
least two months, as specified under the GRACE PERIOD provision. The
Owner will have the option to pay either amount.
The No Lapse Provision will terminate if (a) the No Lapse Premium
requirements are not met, (b) there is an increase in the Specified
Amount, and or (c) there is a change in the Death Benefit Option.
Once the No Lapse Provision is terminated, it cannot be reinstated.
The Company may allow reinstatement at any time within both
Insureds' lifetime(s); reinstatement will require evidence of
insurability of both Insureds satisfactory to the Company and
the payment of an amount which will keep the Policy in force for
at least two months.
(f) The substance of the provisions of any indenture or agreement with
respect to voting rights, together with the names of any persons other
than security holders given the right to exercise voting rights
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pertaining to the trust's securities or the underlying securities and the
relationship of such persons to the trust.
To the extent required by law, the Company will vote the shares of the
various mutual funds held in the Account (the "Funds") at regular and
special shareholder meetings of the Funds in accordance with instructions
received from persons having voting interest in the corresponding
Variable Sub-Accounts. If, however, the Investment Company Act of 1940
("1940 Act") or any regulation thereunder would be amended or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote the Fund(s) shares in its own
right, it may elect to do so.
The number of votes which a policyowner has the right to instruct will be
calculated separately for each Variable Sub-Account. This number will be
determined by dividing the Policy's Accumulation Value in a Sub-Account
by the net asset value per share of the corresponding Fund. In
determining the number of votes, fractional shares will be recognized.
The number of votes that a policyowner has the right to instruct will be
determined as of the date coincident with the date established by the
Fund for determining shareholders eligible to vote at the meeting of the
Fund, but not more than 60 days before the meeting of the Fund. Voting
instructions will be solicited by written communication at least 14 days
prior to such meeting in accordance with procedures established by the
Fund. Each person having a voting interest in the Fund will receive
appropriate proxy materials and reports.
The Company will vote the Fund shares as to which no timely instructions
are received in proportion to the voting instructions from others with an
interest in the particular Sub-Account. Voting instructions to abstain on
any item to be voted upon will be applied to reduce the votes eligible to
be cast by the Company.
The Company may, if required by State insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares
be voted so as to cause a change in the sub-classification or investment
objectives of the Fund or to approve or disapprove an investment advisory
contract for a Fund. A change would be disapproved only if the proposed
change is contrary to state law or prohibited by state regulatory
authorities or we determine that the change would have an adverse effect
on the Sub-Account in that the proposed investment policy for a Fund may
result in overly speculative or unsound investments. In the event the
Company disregards voting instructions, a summary of that action and the
reasons for such action will be included in the next annual report to
policyowners.
(g) Whether security holders must be given notice of any change in:
(1) the composition of the assets of the trust.
The Company reserves the right, subject to compliance with applicable
law:
(i) to make additions to, deletions from, or substitutions for the
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Fund shares that are held or purchased by the Account;
(ii) to eliminate the shares of any Fund and to substitute shares of
another open-end, registered investment company, if the shares of
that Fund are no longer available for investment, or if in its
judgment further investment in that Fund should become
inappropriate in view of the investment objectives of the
Account;
(iii) to eliminate one or more Sub-Accounts, if, in its sole
discretion, marketing, tax or investment conditions warrant;
(iv) to operate the Account as a management company under the 1940
Act;
(v) to deregister the Account under the 1940 Act in the event such
registration is no longer required; and
(vi) to combine the Account with one or more of the Company's other
separate accounts as may be established.
In no event will any of the changes described above be made without
notice to policyowners in accordance with the 1940 Act and without
obtaining, as necessary, prior approval of the Commission.
(2) the terms and conditions of the securities issued by the trust.
No changes in the terms and conditions of a Policy that adversely
affect a policyowner's rights will be made without notice to the
policyowner.
(3) the provisions of any indenture or agreement of the trust.
Not applicable.
(4) the identity of the depositor, trustee or custodian.
The Account has no trustee or custodian. There is no provision
requiring notice to, or consent of, security holders, with respect to
a change in the identity of the depositor.
(h) Whether the consent of security holders is required in order for action
to be taken concerning any change in:
(1) the composition of the assets of the trust.
Consent of policyowners is not required when changing the underlying
securities of the Account. However, to change such securities,
approval of the Commission is required by Section 26(b) of the 1940
Act. Except as required by Federal or State law or regulation, no
action will be taken by the Company which will adversely affect the
rights of policyowners without their consent.
(2) the terms and conditions of the securities issued by the trust.
No changes in the terms and conditions of a Policy that affect a
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policyowner's rights will be made without notice to the policyowner.
The Company reserves the right to amend the Policy without policyowner
consent as may be necessary to comply with applicable law.
(3) the provisions of any indenture or agreement of the trust.
Not applicable.
(4) the identity of the depositor, trustee or custodian.
See Item 10(g)(4).
(i) Any other principal feature of the securities issued by the trust or any
other principal right, privilege or obligation not covered by
subdivisions (a) to (g) or by any other item in this form.
(1) PREMIUM PAYMENTS. The policyowner may make premium payments in any
amount and at any frequency, subject to the basic premium
requirements and certain restrictions stated in the Policy.
A policyowner may also determine a planned periodic premium payment
schedule that provides for the payment of a level premium at a fixed
interval for a specified period of time. A policyowner need not make
premium payments in accordance with such planned periodic premium
schedule and the failure to make a planned payment will not itself
cause a Policy to lapse. A policyowner may make unscheduled premium
payments subject to restrictions listed in the Policy. If the No
Lapse Provision is in effect, the policyowner will be required to
pay a stipulated cumulative premium by each Monthly Anniversary Day
in order to keep the provision in effect.
A premium load of 8.0% will be deducted from each premium payment.
Unless the policyowner directs otherwise, additional premium
payments made by a policyowner while there is indebtedness will be
treated first as loan repayments with no premium load deducted, to
the extent not required to be first applied to keep the Policy from
lapsing. A premium paid to prevent lapse will have the premium load
deducted.
In the application for a Policy, a policyowner can allocate net
premium payments among the Fixed and Variable Sub-Accounts. The
net premium will be allocated on the first valuation day following
the expiration of the right-to-examine period (see Item 10(c)) in
accordance with the directions in the application. Net premiums paid
thereafter will be allocated in accordance with the policyowner's
instructions in the application or subsequent directions by the
policyowner. Percentages must be in whole numbers allocated to a
particular Fixed or Variable Sub-Account.
(2) GENERAL DESCRIPTION OF BASIC POLICY BENEFITS. (A) DEATH BENEFIT. As
long as the Policy remains in force, the Company will, upon receipt
of proof of the death of both Insureds, pay the death benefit
proceeds of the Policy, reduced by any outstanding indebtedness and
due and unpaid charges, to the named beneficiary in accordance with
the designated death benefit option. Death benefits will be
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determined at the end of the valuation period during which the
Second Death occurs. The proceeds may be paid in a lump sum or under
one or more of the settlement options which are added by rider.
The Policies provide two death benefit options: Death Benefit Option
1 ("Option 1") and Death Benefit Option 2 ("Option 2"). Generally,
the death benefit option is designated in the application. Absent
such a designation, Option 1 is in effect. The death benefit under
Option 1 is the greater of the specified amount of the Policy or a
specified percentage (the "corridor percentage") times the
Accumulation Value (in the latter case, the Policy would be "in
the Corridor"). The death benefit under Option 2 is equal to the
greater of the specified amount plus the Accumulation Value of the
Policy or the corridor percentage times the Accumulation Value.
(b) SPECIFIED AMOUNT. A policyowner may increase or decrease the specified
amount if both Insureds are still living. For any increase, the Company
will require satisfactory evidence of insurability of both Insureds. The
effective date of the increase will be the monthly anniversary day on or
following approval of the increase by the Company. No decrease may reduce
the specified amount to less than $250,000. Any decrease will be applied
first to the most recent coverage under the Policy, then to the next most
recent, and so forth.
Generally, the death benefit option in effect may be changed by sending a
written request for change to the Administrative Office. The death
benefit may not be changed if it would result in a specified amount less
than $250,000. The effective date of any change will be the monthly
anniversary day on or following receipt of the request.
The specified amount will be changed when a change in death benefit
option is made. If the change is from Option 1 to Option 2, the new
specified amount will equal the Death Benefit, less the Accumulation
Value. If the change is from Option 2 to Option 1, the new specified
amount will equal the Death Benefit as of the date of the change.
(3) CALCULATION OF EACH VARIABLE SUB-ACCOUNT'S VALUE. When the initial
premium has been paid, the Policy's value in a Variable Sub-Account
will equal the portion of the net premium allocated to the
Sub-Account reduced by the portion of the first monthly deduction
allocated to that Sub-Account. Thereafter, on each valuation day,
the Policy's account value in each Variable Sub-Account will equal:
(a) The Policy's Accumulation Value in the Sub-Account on the
preceding valuation day, adjusted for changes in Fund net
asset value, Fund dividends and other distributions and
changes in the Sub-Account's liabilities for the current
valuation period; plus
(b) Any net premium payments received during the current valuation
period which are allocated to the Sub-Account; plus
(c) All account values transferred to the Sub-Account from the Fixed
Account or Loan Account or from another Sub-Account during the
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current valuation period; minus
(d) All account values transferred from the Sub-Account to the Fixed
Account or Loan Account or to another Sub-Account during the
current valuation period; minus
(e) All partial surrenders from the Sub-Account during the current
valuation period; minus
(f) The portion of the monthly deduction allocated to the Sub-
Account during the current valuation period.
A Policy's Accumulation Value equals the sum of a Policy's value in
each Variable Sub-Account plus the Policy's Fixed Account Value,
plus the Loan Account Value. Because Accumulation Value is dependent
upon a number of variables, including the investment experience of
the chosen Fund(s), the frequency and amount of premium payments,
transfers and surrenders, and charges assessed in connection with
the Policy, the Policy's Accumulation Value cannot be predetermined.
(4) INVESTMENT PERFORMANCE. Each Sub-Account has its own distinct
variable accumulation unit value. Premium Payments allocated to
each Variable Sub-Account are converted into Variable Accumulation
Units. This is done by dividing each Premium Payment by the value
of a Variable Accumulation Unit calculated at the end of the
Valuation Period during which the Premium Payment is allocated to
the Variable Sub-Account. The Variable Accumulation Unit value for
each Variable Sub-Account was or will be established by Lincoln
Life at the inception of the Variable Sub-Account. It may increase
or decrease from Valuation Period to Valuation Period. The
Accumulation Unit Value for a Variable Sub-Account for any later
Valuation Period is determined as follows:
1. The total value of Fund shares held in the Variable Sub-Account
is calculated by multiplying the number of Fund shares owned by
the Variable Sub-Account at the beginning of the Valuation Period
by the net asset value per share of the Fund at the end of the
Valuation Period, and adding any dividend or other
distribution of the Fund if an ex-dividend date occurs during
the Valuation Period; minus
2. The liabilities of the Variable Sub-Account at the end of the
Valuation Period; such liabilities include daily charges imposed
on the Variable Sub-Account, and may include a charge or credit
with respect to any taxes paid or reserved for by Lincoln Life
that Lincoln Life determines result from the operations of the
Variable Account; and
3. The result of (2) is divided by the number of Variable
Sub-Account Variable Accumulation Units outstanding at the
beginning of the Valuation Period.
The daily charges imposed on a Variable Sub-Account for any
Valuation Period are equal to the daily mortality and expense risk
charge multiplied by the number of calendar days in the Valuation
Period.
(5) LOAN PROVISIONS. See Item 21.
(6) PAYMENT OF BENEFITS. Death benefits will be determined as of the
time of the Second Death once the Company receives due proof of
death of both Insureds, and will ordinarily be paid within seven
days after such receipt. Payment of the benefits under the Policy may
be postponed if the Policy is contested, or whenever: (i) the New
York Stock Exchange is closed other than customary week-end and
holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Commission; (ii) the Commission by
order permits postponement for the protection of policyowners; or
(iii) an emergency exists, as determined by the Commission, as a
result of which disposal of securities held by a Variable Sub-Account
is not reasonably practicable, or it is not reasonably practicable to
determine the value of the Account's net assets.
(7) SETTLEMENT OPTIONS. The benefits under a Policy will be paid in a
lump sum unless another arrangement is made. Settlement options are
added to the Policy with a rider which permits the Policyowner
and beneficiaries, subject to a prior action of the Policyowner, to
decide the form in which the benefits
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will be paid. The settlement options include: payments for a fixed
period; life income with a guaranteed fixed period; interest only;
and periodic payments of a fixed amount.
(8) OPTIONAL INSURANCE BENEFIT. No optional insurance benefits may be
added to a Policy by rider at this time.
INFORMATION CONCERNING THE SECURITIES UNDERLYING THE TRUST'S SECURITIES
11. Describe briefly the kind or type of securities comprising the unit of
specified securities in which security holders have an interest. (If the
unit consists of a single security issued by an investment company, name
such investment company and furnish a description of the type of securities
comprising the portfolio of such investment company.)
The Account invests, at the policyowner's option, in securities of one or
more of the Funds (see Item 10(f)), each of which is a mutual fund
registered with the Commission as an open-end diversified management
company. Each Sub-Account invests solely in shares of one of the nineteen
Funds. Each Fund is a series or portfolio of a corporation or a
Massachusetts business trust registered under the 1940 Act. See Item 12(a).
The nineteen Funds and their investment objectives are as follows:
AIM V.I. CAPITAL APPRECIATION FUND (Small Cap Stocks): Seeks to provide
capital appreciation through investments in common stocks, with emphasis
on medium-sized and smaller emerging growth companies.
AIM V.I. DIVERSIFIED INCOME FUND (Fixed Income - Intermediate Term Bonds):
Seeks to achieve a high level of current income primarily by investing in
a diversified portfolio of foreign and U.S. government and corporate debt
securities, including lower rated high yield debt securities (commonly known
as "JUNK BONDS").
AIM V.I. GROWTH FUND (Large Cap Stocks): Seeks to provide growth of
capital through investments primarily in common stocks of leading U.S.
companies considered by its adviser to have strong earnings momentum.
AIM V.I. VALUE FUND (Large Cap Stocks): Seeks to achieve long-term growth
of capital by investing primarily in equity securities judged by its
adviser to be undervalued relative to the current or projected earnings of
the companies issuing the securities, or relative to current market values
of assets owned by the companies issuing the securities or relative to the
equity markets generally. Income is secondary objective.
CIGNA VP MONEY MARKET FUND (Money Market): Seeks to provide as high a level
of current income as is consistent with the preservation of capital and
liquidity and the maintenance of a stable $1.00 per share net asset value by
investing in short-term money market instruments.
CIGNA VP S&P 500 INDEX FUND (Large Cap Stocks): Seeks to achieve its
objective of long-term growth of capital by attempting to replicate the
composition and total return, reduced by fund expenses, of the Standard and
Poor's 500 Composite Stock Price Index.
FIDELITY VIP II ASSET MANAGER PORTFOLIO (Balanced or Return): Seeks high
total return with reduced risk over the long-term by allocating its assets
among domestic and foreign stocks, bonds and short-term fixed-income
instruments.
FIDELITY VIP EQUITY-INCOME PORTFOLIO (Large Cap Stocks): Seeks reasonable
income by investing primarily in income-producing equity securities, with
some potential for capital appreciation, seeking to exceed the composite
yield on the securities comprising the Standard and Poor's 500 Composite
Stock Price Index.
FIDELITY VIP II INVESTMENT GRADE BOND PORTFOLIO (Fixed Income- Intermediate
Term Bonds): Seeks high current income by investing primarily in
fixed-income securities such as bonds, notes and debentures.
MFS EMERGING GROWTH SERIES (Large Cap Stocks): Seeks to provide long-term
growth of capital by investing primarily in common stocks of foreign and
domestic issuers. Seeks to provide long-term growth of capital by investing
in common stocks of small and medium-sized companies which have the
potential for growth.
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MFS TOTAL RETURN SERIES (Balanced or Total Return): Seeks primarily to
provide above average income (compared to a portfolio entirely invested in
equity securities) consistent with the prudent employment of capital and
secondarily to provide a reasonable opportunity for growth of capital and
income.
MFS UTILITIES SERIES (Specialty): Seeks capital growth and current income
(income above that available from a portfolio invested entirely in equity
securities) by investing, under normal circumstances, at least 65% of its
assets in equity and debt securities of utility companies.
MFS WORLD GOVERNMENTS SERIES (International Fixed Income): Seeks not only
preservation, but also growth, of capital together with moderate current
income through a professionally managed, internationally diversified
portfolio consisting primarily of debt securities and to a lesser extent
equity securities.
TEMPLETON ASSET ALLOCATION FUND (Balanced or Total Return): Seeks a high
level of total return through a flexible policy of investing in stocks
of companies in any nation, debt securities of companies and governments
of any nation, and in money market instruments. Assets are allocated
among different investments depending upon worldwide market and economic
conditions.
TEMPLETON INTERNATIONAL FUND (International Stocks): Seeks long-term capital
growth through a flexible policy of investing in stocks and debt obligations
of companies and governments outside the United States.
TEMPLETON STOCK FUND (Balanced or Total Return): Seeks a high level of total
return through a flexible policy of investing in stocks of companies in any
nation, debt securities of companies and governments of any nation, and in
money market instruments. Assets are allocated among different investments
depending upon worldwide market and economic conditions.
OCC SMALL CAP PORTFOLIO (Small Cap Stocks): Seeks capital appreciation
through investments in a diversified portfolio of equity securities of
companies with market capitalization of under $1 billion.
OCC MANAGED PORTFOLIO (Balanced or Total Return): Seeks growth of capital
over time through investment in a portfolio of common stocks, bonds and cash
equivalents, the percentage of which will vary based on management's
assessment of relative investment values.
OCC GLOBAL EQUITY PORTFOLIO (International Stocks): Seeks long-term capital
appreciation through a global investment strategy primarily involving equity
securities.
12. If the trust is the issuer of periodic payment plan certificates and if any
underlying securities were issued by another investment company, furnish the
following information for each such company:
(a) Name of Company.
AIM Variable Insurance Funds, Inc. ("AIM V.I. Fund"), managed by AIM
Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173;
CIGNA Variable Products Group ("CIGNA Funds"), managed by CIGNA
Investments, Inc., 900 Cottage Grove Road, Hartford, CT 06152;
Variable Insurance Products Fund I ("Fidelity Trust I") and Variable
Insurance Products Fund II ("Fidelity Trust II"), managed by Fidelity
Management & Research Company, 82 Devonshire Street, Boston, MA 02103;
MFS Variable Insurance Trust ("MFS Trust"), managed by Massachusetts
Financial Services Company, 500 Boylston Street, Boston, MA 02116;
OCC Accumulation Trust ("OCC Trust"), managed by OpCap
<PAGE>
Advisors, One World Financial Center, New York, NY 10281;
Templeton Variable Products Series Fund ("Templeton Series"), managed by
Templeton Investment Counsel, Inc., 500 E. Broward Blvd., Broward
Financial Centre, Suite 1200, Fort Lauderdale, Florida 33394-3091.
(b) Name and principal business address of depositor.
Not applicable.
(c) Name and principal business address of trustee or custodian.
AIM V.I. Fund: State Street Bank and Trust Co., 225 Franklin Street,
Boston, MA 02110;
CIGNA Variable Products Group: State Street Bank and Trust Co., 225
Franklin Street, Boston, MA 02110;
Fidelity Trust I: EQUITY INCOME PORTFOLIO -- The Chase Manhattan Bank,
N.A., 1211 Avenue of the Americas, New York, NY 10036;
Fidelity Trust II: INVESTMENT GRADE BOND PORTFOLIO -- The Bank of New
York, New York, NY; ASSET MANAGER PORTFOLIO -- The Chase Manhattan
Bank, N.A., 1211 Avenue of the Americas, New York, NY 10036;
MFS Trust: Investors Bank & Trust Company, 89 South Street, Boston, MA
02110;
OCC Trust: State Street Bank and Trust Company, P.O. Box 8505, Boston, MA
02266-8505;
Templeton Series: The Chase Manhattan Bank, N.A., Chase Metrotech Center,
Brooklyn, NY 11245.
(d) Name and principal business address of principal underwriter.
AIM V.I. Fund: AIM Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, TX 77046-1173;
CIGNA Financial Services, Inc., 900 Cottage Grove Road, Hartford, CT
06152;
Fidelity Trust I & II: Fidelity Distribution Corporation, 82 Devonshire
Street, Boston, MA 02109;
MFS Trust: MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA
02116;
OCC Trust: OCC Distributors, One World Financial Center, New York, NY
10281;
Templeton Series: Franklin Templeton Distributors, Inc., P.O. Box 33030,
St. Petersburg, Florida 33733-8030.
(e) The period during which the securities of such company have been the
<PAGE>
underlying securities.
Not applicable.
INFORMATION CONCERNING LOAD, FEES, CHARGES AND EXPENSES
13.(a) Furnish the following information with respect to each load, fee, expense
or charge to which (1) principal payments, (2) underlying securities, (3)
distributions, (4) cumulated or reinvested distributions or income, and
(5) redeemed or liquidated assets of the trust's securities are subject:
(A) the nature of such load, fee, expense or charge;
(B) the amount thereof;
(C) the name of the person to whom such amounts are paid and his
relationship to the trust;
(D) the nature of the services performed by such person in
consideration for such load, fee, expense or charge.
(1) PRINCIPAL PAYMENTS
A deduction of 8.0% of the premium will be made from each premium
payment. The deduction represents sales load plus an amount the Company
currently deems sufficient to pay state taxes and federal tax
liabilities.
(2) UNDERLYING SECURITIES
No load, fee, expense or charge is assessed in connection with the
purchase of the underlying securities for the Account.
(3) DISTRIBUTIONS
No load, fee, expense or charge is assessed in connection with
distributions, except for a $25 transaction fee with respect to partial
surrenders.
(4) CUMULATED OR REINVESTED DISTRIBUTIONS OR INCOME
All income and other distributions earned by each Fund are reinvested,
without charge, at net asset value in shares of the Fund.
(5) REDEEMED OR LIQUIDATED ASSETS
For charges associated with total surrenders, see Item 13(e)(5).
(b) For each installment payment type of periodic payment plan certificate of
the trust, furnish the following information with respect to sales load and
other deductions from principal payments.
Not applicable.
(c) State the amount of sales load as a percentage of the net amount invested.
<PAGE>
State the amount of total deductions as a percentage of the net amount
invested for each type of security issued by the trust.
Approximately 8.82% (8/92).
(d) Explain fully the reasons for any differences in the price at which
securities are offered generally to the public, and the price at which
securities are offered for any class of transactions to any class or group
of individuals, including officers, directors or employees of the
depositor, trustee, custodian or principal underwriter.
Not applicable.
(e) Furnish a brief description of any loads, fees, expenses or charges not
covered in Item 13(a) which may be paid by security holders in connection
with the trust or its securities.
(1) MORTALITY AND EXPENSE RISK CHARGE. The Company charges the Variable Sub-
Accounts for the mortality and expense risks the Company assumes. The
charge is made daily at an effective annual rate of .80% (guaranteed
not to exceed .90%) of the value of each Variable Sub-Account's assets.
The mortality risk assumed is that insureds may live for a shorter
period of time than estimated and, therefore, a greater amount of death
benefit proceeds will be payable sooner than anticipated. The expense
risk assumed is that expenses incurred in issuing and administering the
Policies will be greater than estimated.
(2) ACCUMULATION VALUE TRANSFER CHARGE. After the twelfth transfer request
during any one policy year, a charge of $25 may be imposed for each
transfer request and deducted pro rata from the Fixed or Variable
Sub-Account(s) from which the transfer is being made.
(3) TAXES. Currently no charge is made to the Account for Federal income
taxes that may be attributable to the Account. The Company may, however,
make such a charge in the future. Charges for other taxes, if any,
attributable to the Account may also be made.
(4) MONTHLY DEDUCTION. Charges will be deducted monthly from the
Accumulation Value of each Policy to compensate the Company for certain
administrative costs, and for the cost of insurance and optional
benefits added by rider. The monthly deduction will be deducted on each
monthly anniversary day and allocated among the funding vehicles used
(Variable and Fixed Sub-Accounts) based on the proportionate values in
each funding vehicle. The monthly charges consist of the following:
(A) MONTHLY ADMINISTRATIVE CHARGE. The Company has responsibility for the
administration of the Policy and the Account. Annual administrative
expenses include premium billing and collection, recordkeeping,
processing death benefit claims, cash surrenders and Policy changes,
reporting and overhead costs. As reimbursement for administrative
expenses related to the maintenance of each Policy and the Account,
the Company assesses a monthly administrative fee of $12.50 during
the first Policy Year and, currently
<PAGE>
$5 thereafter (guaranteed not to exceed $10). In addition, a monthly
administrative fee of $0.09 per $1,000 of Specified Amount is
deducted for the first twenty years of the Policy and as to an
increase in Specified Amount, for the first twenty years following
such increase, and, if the No Lapse Provision is selected, an
additional fee of $0.01 per $1000 of Specified Amount is deducted so
long as the No Lapse Provision is in effect.
(B) COST OF INSURANCE CHARGE. Because the cost of insurance depends upon
a number of variables, this charge can vary from month to month. The
Company will determine the monthly cost of insurance charge by
multiplying the applicable cost of insurance rate by the Net Amount
at Risk for each policy month. The Net Amount at Risk for a policy
month is (a) the death benefit at the beginning of the policy month,
less (b) the Accumulation Value at the beginning of the policy month.
The Net Amount at Risk may be affected by changes in the Accumulation
Value or the Specified Amount of a Policy.
The cost of insurance rate is based on gender classification,
attained age, underwriting class and years since issue. The actual
monthly cost of insurance rates will be based on the Company's
expectations as to future experience. They will not, however, be
greater than the guaranteed cost of insurance rates set forth in the
Policy. These guaranteed rates are based on the applicable 1980
Commissioners Standard Ordinary Mortality Tables, Age Nearest
Birthday (1980 CSO, Male or Female) or, for unisex rates, on the 1980
CSO-B Table and the Insureds' attained ages at the nearest birthday.
Any change in the cost of insurance rates will apply to all persons
of the same age, gender classification and underwriting class whose
Policies have been in force for the same length of time.
(C) OPTIONAL INSURANCE BENEFITS CHARGE. The monthly deduction will
include deductions for any optional insurance benefits added to a
Policy by rider.
(5) SURRENDER CHARGE. A $25 surrender charge will be imposed on a partial
surrender. A surrender charge, which is a function of the Insureds'
ages, the number of years since issue and the Specified Amount, is also
deducted upon a full surrender before the fifteenth anniversary of the
Issue Date or, with respect to any increase in Specified Amount before
the fifteenth anniversary of the increase.
(f) State whether the depositor, principal underwriter, custodian or trustee,
or any affiliated person of the foregoing may receive profits or other
benefits not included in answer to Item 13(a) or 13(e) through the sale or
purchase of the trust's securities or underlying securities or interests in
underlying securities, and describe fully the nature and extent of such
profits or benefits.
Neither the Company nor any affiliated person of the Company may receive
any profit or any other benefit from premium payments under the Policies or
the investments held in the Account not included in answer to Item 13(a) or
(e) through the sale or purchase of the Policies or shares of the Funds,
except that (1) the Company may receive a profit to the extent that the
cost of insurance built into a Policy exceeds the actual cost of insurance
needed to pay benefits, (2) favorable mortality or expense experience may
cause the insurance provided under a Policy to be
<PAGE>
profitable to the Company, (3) on Policy loans, the Company may derive a
profit on the difference between interest charged and interest credited;
(4) the Company will compensate certain other persons, including Company
agents, for services rendered in connection with the distribution of a
Policy, as described in Item 38, but such payments will be made from the
Company's general account and (5) the Company may receive fees from the
Funds or their advisers for making the Funds available under the Policies
or providing administrative services.
(g) State the percentage that the aggregate annual charges and deductions for
maintenance and other expenses of the trust bear to the dividend and
interest income from the trust property during the period covered by the
financial statements filed herewith.
Not applicable.
INFORMATION CONCERNING THE OPERATIONS OF THE TRUST
14. Describe the procedure with respect to applications (if any) and the
issuance and authentication of the trust's securities, and state the
substance of the provisions of any indenture or agreement pertaining
thereto.
Persons wishing to purchase a Policy must complete an application. A Policy
may only be issued upon receipt of evidence of insurability of both
Insureds satisfactory to the Company. Acceptance is subject to the
Company's underwriting rules and the Company reserves the right to reject
any application or to place one or both Insureds into a special
underwriting category. The Company generally will issue a Policy only to
Insureds between the ages of 18 and 80. Policies will be issued in
accordance with the state insurance laws.
Interests in the Fixed and Variable Sub-Accounts may also be acquired by
transfers, as described in Item 10(d).
15. Describe the procedure with respect to the receipt of payments from
purchasers of the trust's securities and the handling of the proceeds
thereof, and state the substance of the provisions of any indenture or
agreement pertaining thereto.
Applicants for the Policy will be asked to select one or more of the
applicable funding vehicles to which net premium payments are to be
allocated, and the applicable percentage (a whole number) to be allocated
to each such funding vehicle. That allocation can be changed at any time
with respect to future premium payments upon receipt of written notice at
the Administrative Office at no charge. Premiums will be allocated as the
policyowner has directed. All premiums paid, after the first premium
payment, must be sent directly to the Administrative Office and will be
deemed received when actually received at the Administrative Office.
16. Describe the procedure with respect to the acquisition of underlying
securities and the disposition thereof, and state the substance of the
provisions of any indenture or agreement pertaining thereto.
<PAGE>
On each valuation day of each Fund, the Account purchases or redeems shares
in each Fund based on a netting of all transactions for that day, including
the amount of net premiums invested in the applicable Variable Sub-Account,
transfers, policy loans and loan repayments, surrender payments, charges,
and payment of benefits to be effected on that day.
17. (a) Describe the procedure with respect to withdrawal or redemption by
security holders.
The procedures with respect to surrenders or redemption by security
holders are described in response to Items 10 (c), (d), (e) and (i).
(b) Furnish the names of any persons who may redeem or repurchase, or are
required to redeem or repurchase, the trust's securities or underlying
securities from security holders, and the substance of the provisions of
any indenture or agreement pertaining thereto.
The Company is required to process all surrender requests as described
in Item 10(c). Each Fund will redeem its shares upon the Company's
request in accordance with the 1940 Act. Redeemed shares are retired
although they may later be reissued if a Fund's governing documents
permit.
(c) Indicate whether repurchased or redeemed securities will be canceled or
may be resold.
A Policy, once totally surrendered, may not be resold.
18. (a) Describe the procedure with respect to the receipt, custody and
disposition of the income and other distributable funds of the trust and
state the substance of the provisions of any indenture or agreement
pertaining thereto.
All dividend and capital gains distributions (if any) of the Funds will
be automatically reinvested in additional Funds shares at their net
asset value. Pursuant to the Policy, the Company will make distributions
from the Account in connection with death benefit proceeds, policy
loans, and full and partial surrenders. Applicable procedures for such
distributions are described in the answers to Items 10(c), 10(i)(6), and
21.
(b) Describe the procedure, if any, with respect to the reinvestment of
distributions to security holders and state the substance of the
provisions of any indenture or agreement pertaining thereto.
Not applicable.
(c) If any reserves or special funds are created out of income or principal,
state with respect to each such reserve or fund the purpose and ultimate
disposition thereof, and describe the manner of handling of same.
Net premium payments placed in the Account constitute reserves for
benefits under the Policies.
(d) Submit a schedule showing the periodic and special distributions which
have been made to security holders during the three years covered by the
<PAGE>
financial statements filed herewith. State for each such distribution
the aggregate amount and amount per share. If distributions from sources
other than current income have been made, identify each such other
source and indicate whether such distribution represents the return of
principal payments to security holders. If payments other than cash were
made, describe the nature thereof, the account charged and the basis of
determining the amount of such charge.
No distributions have been made.
19. Describe the procedure with respect to the keeping of records and accounts
of the trust, the making of reports and the furnishing of information to
security holders, and the substance of the provisions of any indenture or
agreement pertaining thereto.
The Company will have primary responsibility for all administration of the
Policies and the Account. The administrative services provided include
preparation of the Policies, maintenance of policyowners' records and all
accounting, valuation, regulatory and reporting services required by the
Company.
The Company will send such reports of the Account and the Funds as are
presently required by the 1940 Act and regulations promulgated thereunder.
The Company will also mail to policyowners, at the last known address of
record at the Administrative Office, any reports required by state law.
Each person having a voting interest will receive proxy material, reports,
and other materials relating to the Funds.
20. State the substance of the provisions of any indenture or agreement
concerning the trust with respect to the following:
(a) Amendments to such indenture or agreement.
Not applicable.
(b) The extension or termination of such indenture or agreement.
Not applicable.
(c) The removal or resignation of the trustee or custodian, or the failure
of the trustee or custodian to perform its duties, obligations and
functions.
Not applicable.
(d) The appointment of a successor trustee and the procedure if a successor
trustee is not appointed. Not applicable.
(e) The removal or resignation of the depositor, or the failure of the
depositor to perform its duties, obligations and functions.
The Company acts as depositor. There are no provisions relating to the
removal or resignation of the depositor or the failure of the depositor
<PAGE>
to perform its duties, obligations and functions.
(f) The appointment of a successor depositor and the procedure if a
successor depositor is not appointed.
There are no provisions relating to the appointment of a successor
depositor and the procedure if a successor depositor is not appointed.
21. (a) State the substance of the provisions of any indenture or agreement with
respect to loans to security holders.
So long as the Policy remains in force, a policyowner may borrow money
from the Company using a Policy as the only security for the loan. The
maximum amount that may be borrowed is 90% of the Surrender Value at
the time of the loan. The loan may be repaid in whole or in part at
any time while the Policy is in force.
An amount equal to the loan plus interest will be withdrawn from the
funding vehicles being used in proportion to the value of each funding
vehicle, and transferred to the Loan Account until the loan is repaid.
The interest rate charged on policy loans will be at the rate of 8% per
year in arrears. If unpaid when due, interest will be added to the
amount of the loan and will become part of the loan and bear interest at
the same rate.
The Loan Account will be credited with interest which may vary, but will
not be less than the loan interest rate less 2% per year in the first
ten Policy Years and 1% thereafter.
Indebtedness equals the total of all policy loans and accrued interest
on the loans. If at any time indebtedness exceeds the Accumulation
Value, unless a No Lapse Provision is in effect, a grace period will
begin, and the Company will notify a policyowner and any assignee of
record at least 31 days before the end of the grace period. If a
sufficient payment to eliminate such excess indebtedness is not received
by the Company within 61 days after the grace period begins, the Policy
will lapse and terminate without value. The Policy, however, may later
be reinstated subject to certain conditions.
Indebtedness may be repaid any time while the Policy is in force.
Additional premium payments made by the policyowner while there is
indebtedness will (unless the policyowner directs otherwise) be
applied first to reduce indebtedness, unless it must first be applied
to prevent the Policy from lapsing. If not repaid, the Company may
deduct indebtedness from any amount payable under the Policy. As
indebtedness is repaid, the value in the Loan Account securing the
indebtedness will be transferred from the Loan Account to the Variable
and Fixed Sub-Accounts in the same proportion in which net premium
payments are then being allocated, at the end of the valuation period
during which the repayment is received.
<PAGE>
(b) Furnish a brief description of any procedure or arrangement by which
loans are made available to security holders by the depositor, principal
underwriter, trustee or custodian, or any affiliated person of the
foregoing.
The portion of a policy loan attributable to the Variable Sub-Accounts
will normally be paid within seven days after receipt of written
request. The Company may postpone payment of any such policy loan
whenever: (i) the New York Stock Exchange is closed other than customary
weekend and holiday closings, or trading on the New York Stock Exchange
is restricted as determined by the Commission; (ii) the Commission by
order permits postponement for the protection of policyowners; (iii) an
emergency exists, as determined by the Commission, as a result of which
disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of any Variable Sub-
Account's net assets. In addition, the Company may delay the payment of
policy loans secured by Accumulation Value that the policyowner paid by
check until such time as the check has cleared a policyowner's bank.
See also paragraph (a) of this Item.
(c) If such loans are made, furnish the aggregate amount of loans
outstanding at the end of the last fiscal year, the amount of interest
collected during the last fiscal year allocated to the depositor,
principal underwriter, trustee or custodian or affiliated person of the
foregoing and the aggregate amount of loans in default at the end of the
last fiscal year covered by financial statements filed herewith.
Not applicable.
22. State the substance of the provisions of any indenture or agreement with
respect to limitations on the liabilities of the depositor, trustee or
custodian, or any party to such indenture or agreement.
There are no such provisions.
23. Describe any bonding arrangement for officers, directors, partners or
employees of the depositor or principal underwriter of the trust, including
the amount of coverage and the type of bond.
A blanket bond with a per event limit of $25 million and an annual policy
aggregate limit of $50 million covers all of the officers and employees of
the Company.
24. State the substance of any other material provisions of any indenture or
agreement concerning the trust or its securities and a description of any
other material functions or duties of the depositor, trustee or custodian
not stated in Item 10 or Items 14 to 23 inclusive.
INCONTESTABILITY. The Company cannot contest the Policy as to the initial
specified amount after it has been in force during the lifetime of both
Insureds for two years from the date of issue. A new two year
contestability period will apply to each increase in specified amount
beginning on the effective date of each such increase and will apply to
material misrepresentations made in the application for the increase. If
the Policy is reinstated, a new two year contestability period (apart from
any remaining
<PAGE>
contestability period) will apply from the date of the application for
reinstatement and will apply only to statements made in the application for
reinstatement.
SUICIDE. If the Second Death results from suicide, while sane or insane,
within two years from the issue date, the only benefit paid upon the Second
Death will be the sum of: a) premiums paid, minus the amount of any partial
surrenders, minus any outstanding loan balance. In the event of lapse of a
Policy, the suicide period will be measured from the effective date of
reinstatement. If the Second Death results from suicide, while sane or
insane, within two years after the effective date of any increase in
insurance or any reinstatement, the Company's total liability with respect
to such increase or reinstatement will be a refund of the monthly charges
for its cost of insurance.
MISSTATEMENT OF AGE. If the age of either insured is misstated, the death
benefit will be adjusted based on what the cost of insurance charge for the
most recent monthly deduction would have purchased based on the correct
age.
III.
ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS
OF DEPOSITOR
ORGANIZATION AND OPERATIONS OF DEPOSITOR
25. State the form or organization of the depositor of the trust, the name of
the state or other sovereign power under the laws of which the depositor
was organized and the date of organization.
The Company was incorporated under the laws of Indiana in 1905.
26. (a) Furnish the following information with respect to all fees received by
the depositor of the trust in connection with the exercise of any
functions or duties concerning securities of the trust during the period
covered by the financial statements filed herewith.
Not applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by the depositor from any underlying
investment company or any affiliated person or investment adviser of
such company.
Pursuant to Fund Participation Agreements with the investment advisers
to the Fund Groups, the depositor anticipates receiving asset-based fees
from the advisers or their affiliated persons for making the Funds
available providing certain services such as individual contract
recordkeeping.
27. Describe the general character of the business engaged in by the depositor
including a statement as to any business other than that of depositor of
the trust. If the depositor acts or has acted in any capacity with respect
to any investment company or companies other than the trust, state the name
or names of such company or companies, their relationship, if any, to the
trust, and the nature of the depositor's activities therewith. If the
depositor has ceased to act in such named capacity, state the date of and
circumstance surrounding such cessation.
<PAGE>
The Company is principally engaged in offering group and individual life
and health insurance policies and annuity contracts. It is licensed to do
business in all states except New York, and in the District of Columbia,
Guam and the Virgin Islands. The Company is also the depositor of other
separate accounts registered with the Commission as unit investment trusts
which fund or will fund variable annuity contracts or variable life
insurance policies of the Company.
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR
28. (a) Furnish as at latest practicable date the following information with
respect to the depositor of the trust, with respect to each officer,
director, or partner of the depositor, and with respect to each natural
person directly or indirectly owning, controlling or holding with power
to vote 5% or more of the outstanding voting securities of the
depositor.
(i) name and principal business address;
(ii) nature of relationship or affiliation with depositor or the trust;
(iii) ownership of all securities of the depositor;
(iv) ownership of all securities of the trust;
(v) other companies of which each person named above is presently
officer, director or partner.
See the table below. See also Item 29.
(b) Furnish a brief statement of the business experience during the last
five years of each officer, director or partner of the depositor.
DIRECTORS AND OFFICERS OF THE COMPANY
EXECUTIVE OFFICERS AND DIRECTORS
LINCOLN NATIONAL LIFE INSURANCE CO.
<TABLE>
<CAPTION>
NAME, ADDRESS AND POSITION(S)
WITH APPLICANT PRINCIPAL OCCUPATIONS LAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------
<S> <C>
LAWRENCE T. ROWLAND Executive Vice President [10/96-present] (formerly Senior Vice President
EXECUTIVE VICE PRESIDENT AND [1/93-10/96], Vice President [10/91-1/93]), Lincoln National Life
DIRECTOR Insurance Co.
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- -----------------------------------------------------------------------------------------------------------
KEITH J. RYAN Vice President, Chief Financial Officer and Assistant Treasurer
VICE PRESIDENT, CHIEF [1/96-present]. Formerly: Controller [6/95-12/95], Business Controls
FINANCIAL OFFICER AND Director [11/90-6/95], Lincoln National Life Insurance Co.
ASSISTANT TREASURER
- -----------------------------------------------------------------------------------------------------------
RICHARD C. VAUGHAN Executive Vice President and Chief Financial Officer [1/95-present]
DIRECTOR (formerly Senior Vice President [6/92-1/95]), Lincoln National Corp.
200 East Berry Street
Fort Wayne, Ind. 46802
- -----------------------------------------------------------------------------------------------------------
MICHAEL R. WALKER Vice President [1/96-present], Lincoln National Life Insurance Co.
VICE PRESIDENT Formerly: Vice President [3/96-1/96], Employers Health Insurance Co.:
Vice President [7/85-3/93], Baker Hughes, Inc.
- -----------------------------------------------------------------------------------------------------------
ROY V. WASHINGTON Vice President [7/96-present], Lincoln National Life Insurance Co.
VICE PRESIDENT (formerly, Associate Counsel [2/95-7/96]). Formerly: Director of
Compliance [8/94-2/95], Lincoln Investment Management Inc.; Compliance
Consultant [8/89-8/94], Lincoln National Corp.
- -----------------------------------------------------------------------------------------------------------
MICHAEL L. WRIGHT Senior Vice President [3/95-present], Lincoln National Life Insurance Co.
SENIOR VICE PRESIDENT Formerly: Executive Vice President and Chief Operating Officer
[11/88-3/95], The Associate Group.
- -----------------------------------------------------------------------------------------------------------
NANCY J. ALFORD Vice President [4/96-present], (formerly Second Vice President
VICE PRESIDENT [1/90-4/96]), Lincoln National Life Insurance Co.
- -----------------------------------------------------------------------------------------------------------
ROLAND C. BAKER President [1/95-present], First Penn-Pacific Life Insurance Co. Formerly:
VICE PRESIDENT AND DIRECTOR Chairman and CFO [7/88-1/95], Baker, Ralish, Shipley & Politzer, Inc.
1801 S. Meyers Road
Oakbrook Terrace, Ill. 60181
- -----------------------------------------------------------------------------------------------------------
JON A. BOSCIA President and Chief Executive Officer [10/96-present] (formerly Chief
PRESIDENT, DIRECTOR AND Operating Officer [5/94-10/96]), Lincoln National Life Insurance Co.
CHIEF EXECUTIVE OFFICER Formerly: President [7/91-5/94] Lincoln Investment Management Inc.
- -----------------------------------------------------------------------------------------------------------
C. LAWRENCE EDRIS Vice President [3/94-Present] (formerly Senior Vice President
VICE PRESIDENT [11/87-3/94]), Lincoln National Life Insurance Co.
- -----------------------------------------------------------------------------------------------------------
MELANIE T. HALL Vice President [1/96-Present] (formerly Second Vice President
VICE PRESIDENT [6/95-1/96]), Lincoln National Life Insurance Co. Formerly: Assistant
Vice President [1/95-6/95], LNC Equity Sales Corporation, Assistant Vice
President [12/93-1/95], Lincoln Investment Management, Inc.; Assistant
Vice President [12/92-12/93], Lincoln National Life Insurance Co.
- -----------------------------------------------------------------------------------------------------------
J. MICHAEL HEMP President [11/96-Present], Lincoln Financial Advisors Corp.; Vice
VICE PRESIDENT President [10/95-Present], Lincoln National Life Insurance Co. Formerly:
Regional Chief Executive Officer [11/79-10/95], Lincoln Dallas RMO.
- -----------------------------------------------------------------------------------------------------------
JACK D. HUNTER Executive Vice President [5/86-Present] and General Counsel
EXECUTIVE VICE PRESIDENT, [3/75-Present], Lincoln National Corporation and Executive Vice President
GENERAL COUNSEL AND [8/86-Present] and General Counsel [3/75-Present], The Lincoln National
DIRECTOR Life Insurance Company
200 East Berry Street
Fort Wayne, Ind. 46802
- -----------------------------------------------------------------------------------------------------------
STEPHEN H. LEWIS Senior Vice President [5/94-present] Lincoln National Life Insurance Co.
VICE PRESIDENT Formerly: President [2/85-5/94], First Penn-Pacific Life Insurance Co.
- -----------------------------------------------------------------------------------------------------------
H. THOMAS MCMEEKIN President [5/94-present], Lincoln Investment Management, Inc. (formerly
DIRECTOR Executive Vice President [2/92-11/92], Senior Vice President
200 East Berry Street [11/87-2/92]; Executive Vice President [5/94-Present], Lincoln National
Fort Wayne, Ind. 46802 Corporation (formerly Senior Vice President [11/92-5/94])
- -----------------------------------------------------------------------------------------------------------
IAN M. ROLLAND Chairman [1/92-present], Chief Executive Officer [5/77-present] and
DIRECTOR President [12/75-1/92], Lincoln National Corp. Formerly: Chairman
200 East Berry Street [1/92-5/94], Chief Executive Officer [7/77-5/94] and President
Fort Wayne, Ind. 46802 [3/83-1/93], Lincoln National Life Insurance Co.
- -----------------------------------------------------------------------------------------------------------
ARTHUR S. ROSS Vice President [8/91-present], Lincoln National Life Insurance Co.
VICE PRESIDENT
- -----------------------------------------------------------------------------------------------------------
</TABLE>
COMPANIES OWNING SECURITIES OF DEPOSITOR
29. Furnish as at latest practicable date the following information with
respect to each company which directly or indirectly owns, controls or
holds power to vote 5% or more of the outstanding voting securities of the
depositor: (a) name and principal business address; (b) nature of business;
(c) ownership of all securities of the depositor.
<PAGE>
CONTROLLING PERSONS
30. Furnish as at latest practicable date the following information with
respect to any person, other than those covered by Items 28, 29, and 42 who
directly or indirectly controls the depositor.
None.
COMPENSATION OF OFFICERS AND DIRECTORS OF DEPOSITOR COMPENSATION OF OFFICERS
31. Furnish the following information with respect to the remuneration for
services paid by the depositor during the last fiscal year covered by
financial statements filed herewith:
(a) directly to each of the officers or partners of the depositor directly
receiving the three highest amounts of remuneration;
(b) directly to all officers or partners of the depositor as a group
exclusive of persons whose remuneration is included under Item 31(a),
stating separately the aggregate amount paid by the depositor itself and
the aggregate amount paid by all the subsidiaries;
(c) indirectly or through subsidiaries to each of the officers or partners
of the depositor.
Not applicable with respect to the Account. As of this date, the Account
had not yet commenced operations.
COMPENSATION OF DIRECTORS
32. Furnish the following information with respect to the remuneration for
services, exclusive of remuneration reported under Item 31, paid by the
depositor during the last fiscal year covered by financial statements filed
herewith:
(a) the aggregate direct remuneration to directors;
(b) indirectly or through subsidiaries to directors.
Not applicable with respect to the Account. See Item 31.
COMPENSATION TO EMPLOYEES
33. (a) Furnish the following information with respect to the aggregate amount
of remuneration for services of all employees of the depositor
(exclusive of persons whose remuneration is reported in Items 31 and 32)
who received remuneration in excess of $10,000 during the last fiscal
year covered by financial statements filed herewith from the depositor
and any of its subsidiaries.
Not applicable with respect to the Account. See Item 31.
<PAGE>
(b) Furnish the following information with respect to the remuneration for
services paid directly during the last fiscal year covered by financial
statements filed herewith to the following classes of persons (exclusive
of those persons covered by Item 33(a)): (1) Sales managers, branch
managers, district managers and other persons supervising the sale of
registrant's securities; (2) Salesmen, sales agents, canvassers and
other persons making solicitations but not in supervisory capacity; (3)
Administrative and clerical employees; and (4) Others (specify). If a
person is employed in more than one capacity, classify according to
predominant type of work.
Not applicable with respect to the Account. See Item 31.
COMPENSATION TO OTHER PERSONS
34. Furnish the following information with respect to the aggregate amount of
compensation for services paid any person (exclusive of persons whose
remuneration is reported in Items 31, 32 and 33), whose aggregate
compensation in connection with services rendered with respect to the trust
in all capacities exceeded $10,000 during the last fiscal year covered by
financial statements filed herewith from the depositor and any of its
subsidiaries.
Not applicable with respect to the Account. See Item 31.
IV.
DISTRIBUTION AND REDEMPTION OF SECURITIES
DISTRIBUTION OF SECURITIES
35. Furnish the names of the states in which sales of the trust's securities
(A) are currently being made, (B) are presently proposed to be made, and
(C) have been discontinued, indicating by appropriate letter the status
with respect to each state.
No sales are currently being made. It is proposed that Policies will
initially be offered in all jurisdictions where the Company has the
authority to sell the Policies. The sale of the Policies has not been
discontinued in any states.
36. If sales of the trust's securities have at any time since January 1, 1936
been suspended for more than a month describe briefly the reasons for such
suspension.
Not applicable.
37. (a) Furnish the following information with respect to each instance where
subsequent to January 1, 1937, any federal or state governmental
officer, agency, or regulatory body denied authority to distribute
securities of the trust, excluding a denial which was merely a
procedural step prior to any determination by such officer, etc., and
which denial was subsequently rescinded.
(1) Name of officer, agency or body.
<PAGE>
(2) Date of denial.
(3) Brief statement of reason given for revocation.
Not applicable.
(b) Furnish the following information with regard to each instance where,
subsequent to January 1, 1937, the authority to distribute securities of
the trust has been revoked by any federal or state governmental officer,
agency or regulatory body.
Not applicable.
38. (a) Furnish a general description of the method of distribution of
securities of the trust.
As the Account's principal underwriter, the Company plans to distribute
the Policies through its own agents and through selling agreements with
other broker-dealers and insurance agencies. The Company is a
broker-dealer registered with the Commission, and is a member of the
National Association of Securities Dealers, Inc. ("NASD").
(b) State the substance of any current selling agreement between each
principal underwriter and the trust or the depositor, including a
statement as to the inception and termination dates of the agreement,
any renewal and termination provisions, and any assignment provisions.
Not applicable.
(c) State the substance of any current agreements or arrangements of each
principal underwriter with dealers, agents, salesmen, etc., with respect
to commissions and overriding commissions, territories, franchises,
qualifications and revocations. If the trust is the issuer of periodic
payment plan certificates, furnish schedules of commissions and the
bases thereof. In lieu of a statement concerning schedules of
commissions, such schedules of commissions may be filed as Exhibit
A(3)(c).
Not applicable.
INFORMATION CONCERNING PRINCIPAL UNDERWRITER
39. (a) State the form of organization of each principal underwriter of
securities of the trust, the name of the state of other sovereign power
under the laws of which each underwriter was organized and the date of
organization.
The Company is an Indiana corporation incorporated in 1905.
(b) State whether any principal underwriter currently distributing
securities of the trust is a member of the National Association of
Securities Dealers, Inc.
Not applicable.
<PAGE>
40. (a) Furnish the following information with respect to all fees received by
each principal underwriter of the trust from the sale of securities of
the trust and any other functions in connection therewith exercised by
such underwriter in such capacity or otherwise during the period covered
by the financial statements filed herewith.
Not applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by each principal underwriter from any
underlying investment company or any affiliated person or investment
adviser of such company:
(1) The nature of such fee or participation.
(2) The name of the person making payment.
(3) The nature of the services rendered in consideration for such fee or
participation.
(4) The aggregate amount received during the last fiscal year covered by
the financial statements filed herewith.
Not applicable.
41. (a) Describe the general character of the business engaged in by each
principal underwriter, including a statement as to any business other
than the distribution of securities of the trust. If a principal
underwriter acts or has acted in any capacity with respect to any
investment company or companies other than the trust, state the name or
names of such company or companies, their relationship, if any, to the
trust and the nature of such activities. If a principal underwriter has
ceased to act in such named capacity, state the date of and the
circumstances surrounding such cessation.
See Item 27.
(b) Furnish as at latest practicable date the address of each branch office
of each principal underwriter currently selling securities of the trust
and furnish the name and residence address of the person in charge of
such office.
Not applicable.
(c) Furnish the number of individual salesmen of each principal underwriter
through whom any of the securities of the trust were distributed for the
last fiscal year of the trust covered by the financial statements filed
herewith and furnish the aggregate amount of compensation received by
such salesmen in such year.
Not applicable.
42. Furnish as at latest practicable date the following information with
respect to each principal underwriter currently distributing securities of
the trust and with respect to each of the officers, directors or partners
of such underwriter: (a) name and principal business address; (b) position
with
<PAGE>
principal underwriter; (c) ownership of securities of the trust.
Not applicable.
43. Furnish, for the last fiscal year covered by the financial statements filed
herewith, the amount of brokerage commissions received by any principal
underwriter who is a member of a national securities exchange and who is
currently distributing the securities of the trust or effecting
transactions for the trust in the portfolio securities of the trust.
Not applicable.
OFFERING PRICE OR ACQUISITION VALUATION OF SECURITIES OF THE TRUST
44. (a) Furnish the following information with respect to the method of
valuation used by the trust for purpose of determining the offering
price to the public of securities issued by the trust or the valuation
of shares or interests in the underlying securities acquired by the
holder of a periodic payment plan certificate:
(1) The source of quotations used to determine the value of portfolio
securities.
Each Fund's shares are valued at net asset value as supplied to the
Company by the Fund or its agent.
(2) Whether opening, closing, bid, asked or any other price is used.
See Item 44(a)(1) and 16.
(3) Whether price is as of the day of sale or as of any other time.
See Item 16.
(4) A brief description of the methods used by registrant for
determining other assets and liabilities including accrual for
expenses and taxes (including taxes on unrealized appreciation).
The Account's assets and liabilities (such as charges against the
Account) are valued in accordance with generally-accepted accounting
principles on an accrual basis. The Company does not currently
intend to create a reserve for its Federal income taxes.
(5) Other items which registrant adds to the net asset value in
computing offering price of its securities.
Not applicable.
(6) Whether adjustments are made for fractions:
(i) before adding distributor's compensation (load); and
(ii) after adding distributor's compensation (load).
<PAGE>
Not applicable because the Account does not compute per-unit
values and sales loads in the manner presupposed by this Item
and Item 44(b). Appropriate adjustments will be made for
fractions in all computations.
(b) Furnish a specimen schedule showing the components of the offering price
of the trust's securities as the latest practicable date.
No Policies have yet been offered for sale to the public.
(c) If there is any variation in the offering price of the trust's
securities to any person or classes of persons other than underwriters,
state the nature and amount of such variation and indicate the person or
classes of persons to whom such offering is made.
The Company does not require a premium payment of a fixed amount at
fixed intervals for a specified time period. A policyowner may, subject
to the limitations set forth in Item 10(i), pay premiums at any
frequency in any amount. Nonetheless, policyowners will need to pay
sufficient premiums to maintain adequate surrender value to pay monthly
charges, including the cost of insurance. The cost of insurance will
vary, depending upon the insureds' ages, gender classification,
underwriting classification and years since issue. In addition, there
will be additional charges if optional insurance benefits are elected.
45. Furnish the following information with respect to any suspension of the
redemption rights of the securities issued by the trust during the three
fiscal years covered by the financial statements filed herewith.
Not applicable.
REDEMPTION VALUATION OF SECURITIES OF THE TRUST
46. (a) Furnish the following information with respect to the method of
determining the redemption or withdrawal valuation of securities issued
by the trust:
(1) The source of quotations used to determine the value of portfolio
securities.
See Item 44(a)(1).
(2) Whether opening, closing, bid, asked or any other price is used.
See Item 44(a)(2).
(3) Whether price is as of the day of sale or as of any other time.
As of the day a request for surrender is received at the
Administrative Office.
(4) A brief description of the methods used by registrant for
determining other assets and liabilities including accrual for
expenses and taxes (including taxes on unrealized appreciation).
<PAGE>
See Item 44(a)(4) and 18(c).
(5) Other items which registrant deducts from the net asset value in
computing redemption value of its securities:
See Item 10(c).
(6) Whether adjustments are made for fractions.
Not applicable.
(b) Furnish a specimen schedule showing the components of the redemption
price to the holders of the trust's securities as at latest practicable
date.
No Policies have yet been offered for sale to the public.
PURCHASE AND SALE OF INTERESTS IN UNDERLYING SECURITIES FROM AND TO SECURITY
HOLDERS.
47. Furnish a statement as to the procedure with respect to the maintenance of
a position in the underlying securities or interests in the underlying
securities, the extent and nature thereof and the person who maintains such
a position. Include a description of the procedure with respect to the
purchase of underlying securities or interests in underlying securities
from security holders who exercise redemption or withdrawal rights and the
sale of such underlying securities and interests in the underlying
securities to other security holders. State whether the method of valuation
of such underlying securities or interests in underlying securities differs
from that set forth in Items 44 and 46. If any item of expenditure included
in the determination of the valuation is not or may not actually be
incurred or expended, explain the nature of such item and who may benefit
from the transaction.
The Company will invest net premiums, through the Account, in shares of the
underlying Funds at net asset value and allocate them to Variable Sub-
Accounts designated by a policyowner. Shares of the Funds are currently
sold only to the Company and to other life insurance companies to support
their obligations under variable annuity and variable life insurance
contracts, or to qualified plans, and are not sold directly to the general
public. The Company may redeem sufficient shares of the appropriate Fund
to pay death benefits, benefits at maturity, or surrender proceeds, or for
other purposes contemplated by the Policies. In addition, if a policyowner
elects to transfer Accumulation Value among the Sub-Accounts, the Company
may redeem shares held in any Variable Sub-Account from which a transfer
is made and purchase shares for any Variable Sub-Account into which
Accumulation Value is transferred. See Item 10(c).
V.
INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Furnish the following information as to each trustee or custodian of the
trust:
<PAGE>
(a) Name and principal business address.
(b) Form or organization.
(c) State or other sovereign power under the laws of which the trustee or
custodian was organized.
(d) Name of governmental supervising or examining authoity.
Not applicable.
49. State the basis for payment of fees or expenses of the trustee or custodian
for services rendered with respect to the trust and its securities, and the
aggregate amount thereof for the last fiscal year. Indicate the person
paying such fees or expenses. If any fees or expenses are prepaid, state
the unearned amount.
Not applicable.
50. State whether the trustee or custodian or any other person has or may
create a lien on the assets of the trust and, if so, give full particulars,
outlining the substance of the provisions of any indenture or agreement
with respect thereto.
The assets of the Account are not chargeable with liabilities arising out
of any other business that the Company may conduct except to the extent
such assets exceed liabilities arising under the variable portion of the
Policy. The income, capital gains, and capital losses of each Variable Sub-
Account are credited to or charged against the assets held in that Variable
Sub-Account in accordance with the terms of each Policy, without regard to
the income, capital gains and capital losses of any other Variable Sub-
Account.
VI.
INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
51. Furnish the following information with respect to insurance of holders of
securities:
(a) The name and address of the insurance company.
The name and address of the Company are set forth in the answer to
Item 2.
(b) The types of Policies and whether individual or group Policies.
The Policy is an individual flexible premium variable life insurance
policy.
Under circumstances described in Item 10(d), a Policy may be converted
to a permanent life insurance policy with death benefits that do not
vary based on the performance of a separate account. The Policies are
issued on an individual basis.
<PAGE>
(c) The types of risks insured and excluded.
The Company assumes the risk that the deductions made for mortality
risks will prove inadequate to cover actual mortality costs. The Company
also assumes the risk that deductions for expenses may be inadequate.
(d) The coverage of the Policies.
See Paragraph (c) of this Item. The minimum specified amount is
$250,000. Death benefit proceeds will be reduced by any outstanding
indebtedness and any due and unpaid charges and increased by any
unearned loan interest.
(e) The Beneficiaries of such Policies and the uses to which the proceeds of
Policies must be put.
The recipient of the benefits of the insurance undertakings described in
Item 51(c) is either the owner or the beneficiary under a Policy. There
are no restrictions on the use of the proceeds other than those
established by a policyowner.
(f) The terms and manners of cancellation and of reinstatement.
The insurance undertakings described in Item 51(c) are an integral part
of a Policy and may not be terminated while a Policy remains in effect.
(g) The method of determining the amount of premiums to be paid by holders
of securities.
See Items 13(a) and 13(d) for the amount of charges imposed. See Items
10(c), 10(i) and 44(c) for the manner in which the premium is
determined.
(h) The amount of aggregate premiums paid to the insurance company during
the last fiscal year.
Not applicable.
(i) Whether any person other than the insurance company receives any part of
such premiums, the name of each such person and the amounts involved,
and the nature of the services rendered therefor.
No person other than the Company receives any part of the premiums.
(j) The substance of any other material provisions of any indenture or
agreement of the trust relating to insurance.
None.
VII.
POLICY OF REGISTRANT
52. (a) Furnish the substance of the provisions of any indenture or agreement
with respect to the conditions upon which and the method of selection by
<PAGE>
which particular portfolio securities must or may be eliminated from
assets of the trust or must or may be replaced by other portfolio
securities. If an investment adviser or other person is to be employed
in connection with such selection, elimination of substitution, state
the name of such person, the nature of any affiliation to the depositor,
trustee or custodian, and any principal underwriter, and the amount of
remuneration to be received for such services. If any particular person
is not designated in the indenture or agreement, describe briefly the
method of selection of such person.
See Items 10(g) and 10(h) as regards the Company's right to substitute
any other investment for shares of any Fund.
(b) Furnish the following information with respect to each transaction
involving the elimination of any underlying security during the period
covered by the financial statements filed herewith.
Not applicable.
(c) Describe the policy of the trust with respect to the substitution and
elimination of the underlying securities of the trust with respect to:
(1) the grounds for elimination and substitution;
(2) the type of securities which may be substituted;
(3) whether the acquisition of such substituted security or securities
would constitute the concentration of investment in a particular
industry or group of industries or would conform to a policy of
concentration of investment in a particular industry or group of
industries;
(4) whether such substituted securities may be the securities of another
investment company; and
(5) the substance of the provisions of any indenture or agreement which
authorize or restrict the policy of the registrant in this regard.
See Items 10(g) and 10(h).
(d) Furnish a description of any policy (exclusive of policies covered by
paragraphs (a) and (b) herein) of the trust which is deemed a matter of
fundamental policy and which is elected to be treated as such.
None.
53. (a) State the taxable status of the trust.
The Company does not initially expect to incur any income tax upon the
earnings or the realized gains attributable to the Account. Accordingly,
the Company does not intend to create a reserve for its Federal income
taxes attributable to the Account. If, however, the Company determines
that it may incur such taxes, it may assess a charge for those taxes
from the Account.
<PAGE>
Under current laws the Company may incur state and local taxes (in
addition to premium taxes) in several states, and will incur certain
federal tax liabilities in connection with the Policies. The premium
load of 8% is intended in part to defray such obligations.
(b) State whether the trust qualified for the last taxable year as a
regulated investment company as defined in Section 851 of the Internal
Revenue Code of 1954, and state its present intention with respect to
such qualification during the current taxable year.
Not applicable. See Item 53(a).
VIII.
FINANCIAL AND STATISTICAL INFORMATION
54. If the trust is not the issuer of periodic payment plan certificates,
furnish the following information with respect to each class or series of
its securities.
Not applicable.
55. If the trust is the issuer of periodic payment plan certificates, a
transcript of a hypothetical account shall be filed in approximately the
following form on the basis of the certificate calling for the smallest
amount of payments. The schedule shall cover a certificate of the type
currently being sold assuming that such certificate had been sold at a date
approximately ten years prior to the date of registration or at the
approximate date of organization of the trust.
Not applicable.
56. If the trust is the issuer of periodic payment plan certificates, furnish
by years for the period covered by the financial statements filed herewith
in respect of certificates sold during each period, the following
information for each fully paid type and each installment payment type of
periodic payment plan certificate currently being issued by the trust.
Not applicable.
57. If the trust is the issuer of periodic payment plan certificates, furnish
by years for the period covered by the financial statements filed herewith
the following information for each installment payment type of periodic
payment plan certificate currently being issued by the trust.
Not applicable.
58. If the trust is the issuer of periodic payment plan certificates, furnish
the following information for each installment payment type of periodic
payment plan certificate outstanding as at the latest practicable date.
Not applicable.
59. Financial statements:
<PAGE>
(a) FINANCIAL STATEMENTS OF THE TRUST
Not applicable. The Trust is newly organized.
(c) FINANCIAL STATEMENTS OF THE DEPOSITOR
To be furnished by amendment.
IX.
EXHIBITS
A. (1) Resolution of the Board of Directors of the Company authorizing
establishment of the Account, and Memorandum "Establishment of
Seperate Account".
(2) Not applicable.
(3) (a) See Exhibit 3(b).
(b) Form of selling agreement among depositor as principal underwriter
and selling dealers. (to be provided by amendment)
(c) Schedule of sales commissions (to be provided by amendment).
(4) Not applicable.
(5) Proposed form of Policy, Form #LN650, together with Settlement Option
Rider, Form #LR650LL.
(6) (a) Certificate of Incorporation of the Company.*
(b) By-laws of the Company.*
(7) Not applicable.
(8) (a) Fund participation agreements between the depositor and certain of
the underlying investment companies and affiliated persons (to be
provided by amendment).
(b) Service Agreement between the Company and Delaware Management
Company, incorporated by reference to Registration Statement on
Form S-6, File No. 333-40745, filed November 21, 1997.
(9) Not applicable.
(10) Application (to be provided by amendment).
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
* Incorporated by reference to Registration Statement on Form N-4, File No.
333-27783, filed by the Company on December 5, 1996
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
depositor of the registrant has caused this registration statement on Form
N-8B-2 to be duly signed on behalf of the registrant in the City of Fort
Wayne and State of Indiana on the 23rd day of December, 1997.
<PAGE>
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT R
(Name of registrant)
[SEAL] BY: The Lincoln National Life Insurance Company
(Depositor)
BY: G. Michael Antrobus
---------------------------------------------
Second Vice President
The Lincoln National Life Insurance Company
Attest:
Michael Smith
- -------------------------------------------
Second Vice President
The Lincoln National Life Insurance Company
<PAGE>
ESTABLISHMENT OF SEGREGATED INVESTMENT ACCOUNT
OF
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Pursuant to the authority given me by Resolution No. 82-28 of the Board of
Directors of The Lincoln National Life Insurance Company (the "Company") dated
November 4, 1982, I hereby establish a segregated investment account designated
as "Lincoln Life Variable Annuity Account R" (the "Separate Account"). The
Separate Account is to be used in connection with the issuance by the Company of
certain flexible premium variable life insurance policies (the "Policies").
The Separate Account will be registered as a unit investment trust with the
Securities and Exchange Commission ("SEC") and will invest in shares of
investment companies which are registered with the SEC.
The establishment and operation of the Separate Account will be in
accordance with the applicable provisions of the Indiana Insurance Code
("IIC") and all rules and regulations issued pursuant thereto. In
particular, but not by way of limitation, the Separate Account shall not be
chargeable with liabilities arising out of any other business the Company may
conduct and which has no specific relation to or dependence upon the Separate
Account. The Policies issued in connection with the Separate Account are
subject to review by the Commissioner of Insurance of the State of Indiana.
The Separate Account's investment objectives, policies, and limitations
shall be in accordance with (1) the registration statement for the Policies
filed with the SEC; and (2) applicable provisions of IIC and all other
applicable legal requirements.
/s/ Jon A. Boscia
------------------------------
Jon A. Boscia
Chief Executive Officer
Effective Date:
December 18, 1997
- ---------------------
<PAGE>
BOARD RESOLUTION
OF
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
ADOPTED NOVEMBER 4, 1982
82-28 RESOLVED, That the resolution relating to the establishment of
segregated investment accounts, adopted by the Board of Directors on
September 12, 1968, is hereby rescinded effective this date; and
RESOLVED FURTHER, That the chief executive officers of the
Company is hereby authorized in his discretion from time to time to
establish one or more segregated investment accounts in accordance
with the provisions of the Indiana Insurance Law, for such purpose or
purposes as he may determine and as may be appropriate under the
Indiana Insurance Law; and
RESOLVED FURTHER, That if in the opinion of legal counsel of the
Company it is necessary or desirable to register any of such accounts
under the Investment Company Act of 1940 or to register a security
issued by any such account under the Securities Act of 1933, or to
make application for exemption from registration, the chief executive
officer or such other officers as he may designate are hereby
authorized to accomplish any such registration or to make any such
application for exemption, and to perform all other acts as may be
desirable or necessary in connection with the conduct of business of
the Company with respect to any such account.
<PAGE>
Insureds JOHN DOE Policy Number SPECIMEN
JANE DOE
Initial Specified Amount $500,000 May 15, 1998 Date of Issue
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
A Stock Company Home Office Location: Fort Wayne, Indiana
ADMINISTRATOR MAILING ADDRESS: [THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
ROUTING S249
HARTFORD, CT 06152-2249]
The Lincoln National Life Insurance Company ("Lincoln Life") agrees to pay the
Death Benefit Proceeds to the Beneficiary upon receipt of due proof of the death
of the second Insured to die. Such payment shall be made as provided under
GENERAL PROVISIONS, PAYMENT OF PROCEEDS. Lincoln Life further agrees to pay the
surrender value to the Owner upon surrender of the policy.
RIGHT TO EXAMINE THE POLICY. The policy may be returned to the insurance agent
through whom it was purchased or to Lincoln Life 10 days after receipt of the
policy (20 days after its receipt where required by law for policies issued in
replacement of other insurance). During this period (the "Right-to-Examine
Period"), any premium paid will be placed in the Money Market Fund and, if the
policy is so returned, it will be deemed void from the Date of Issue and Lincoln
Life will refund all premium paid. If the policy is not returned, the premium
payment will be processed as set forth in PREMIUM AND REINSTATEMENT PROVISIONS,
ALLOCATION OF NET PREMIUM PAYMENTS.
ANY BENEFITS AND VALUES PROVIDED BY THE POLICY BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
THE DEATH BENEFIT PROCEEDS ON THE DATE OF ISSUE EQUAL THE INITIAL SPECIFIED
AMOUNT OF THE POLICY. THEREAFTER, THE DEATH BENEFIT PROCEEDS MAY VARY UNDER THE
CONDITIONS DESCRIBED UNDER INSURANCE COVERAGE PROVISIONS.
The policy is issued and accepted subject to the terms set forth on the
following pages, which are made a part of the policy. In consideration of the
application and the payment of premiums as provided, the policy is executed by
Lincoln Life as of the Date of Issue.
/s/ Jon A. Boscia
Registrar
PRESIDENT
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY ON THE LIVES OF TWO INSUREDS
Non-Participating Variable life insurance payable upon death of the
second Insured to die.
Adjustable Death Benefit.
Surrender Value payable upon surrender of the policy.
Flexible premiums payable to when the younger Insured reaches or
would have reached Age 100 or
the death of the second Insured to die, whichever is earlier.
Investment results reflected in policy benefits.
Premium Payments and Supplementary Coverages as shown in the
Policy Specifications.
<PAGE>
TABLE OF CONTENTS
PAGE*
POLICY SPECIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
LIST OF VARIABLE SUB-ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . .5
SCHEDULE 1: SURRENDER CHARGES . . . . . . . . . . . . . . . . . . . . . . . .7
SCHEDULE 2: EXPENSE CHARGES AND FEES. . . . . . . . . . . . . . . . . . . . .8
SCHEDULE 3: TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES PER $1,000 . .9
SCHEDULE 4: CORRIDOR PERCENTAGES TABLE. . . . . . . . . . . . . . . . . . . 10
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PREMIUM AND REINSTATEMENT PROVISIONS . . . . . . . . . . . . . . . . . . . . 13
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS . . . . . . . . . . . . . . 15
VARIABLE ACCOUNT PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 16
POLICY VALUES PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
TRANSFER PRIVILEGE PROVISION . . . . . . . . . . . . . . . . . . . . . . . . 19
NONFORFEITURE AND SURRENDER VALUE PROVISIONS . . . . . . . . . . . . . . . . 20
LOAN PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
INSURANCE COVERAGE PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 22
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Followed by Optional Methods of Settlement and Any Riders
*Pages 4 and 6 are intentionally "blank."
2
<PAGE>
POLICY SPECIFICATIONS
Date of Issue MAY 15, 1998 Policy Number SPECIMEN
Insureds JOHN DOE Issue Age 35
Premium Class STANDARD
JANE DOE Issue Age 32
Premium Class STANDARD
Initial Specified Amount $500,000 Minimum Specified Amount $250,000
Monthly Anniversary Day 15
LN650 FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
BENEFIT AMOUNT: See Initial Specified Amount
EFFECTIVE DATE: May 15, 1998 [Date initial premium is applied]
DEATH BENEFIT OPTION: Death Benefit Option is 1. (SEE INSURANCE COVERAGE
PROVISIONS).
PREMIUM PAYMENTS: Initial premium paid with application $1,429
Planned Premium $ 3,090
Additional premium payments may vary by frequency
or amount.
PAYMENT MODE: Annually
NO LAPSE PREMIUM: A payment of at least $257.50 is due as of each Monthly
Anniversary Day since the Date of Issue. If such
cumulative premium payments are paid, it will prevent the
policy from lapsing. SEE PREMIUM AND REINSTATEMENT
PROVISIONS, NO LAPSE PROVISION.
NOTE: Unless the No Lapse Provision is in effect, the policy will terminate
before the younger Insured reaches or would have reached Age 100 if the
actual premiums paid and investment experience are insufficient to
continue coverage to such a date.
LIMITS ON ALLOCATION OF NET PREMIUM PAYMENTS: All allocations of Net Premium
Payments must be made in whole percentages and in aggregate must total 100%.
LIMITS ON TRANSFERS FROM THE FIXED ACCOUNT: Transfers from the Fixed Account
shall be made only within the 30 day period after an anniversary of the Date of
Issue. The amount of all such transfers in any such 30 day period shall not
exceed 20% of the Fixed Account Value as of the immediately preceding
anniversary of the Date of Issue. Lincoln Life may limit the dollar amount of
such transfers. SEE TRANSFER PRIVILEGE PROVISION.
GUARANTEED MINIMUM LOAN INTEREST RATES: The annual rate at which interest is
credited on the Loan Account Value may vary but will never be less than 6% on
and before the 10th Policy Anniversary and not less than 7% thereafter. (As of
the Date of Issue, the annual rate at which interest is credited on the Loan
Account Value will be 7% on and before the 10th Policy Anniversary and 8%
thereafter.)
OWNER: The Insureds
BENEFICIARY: Margaret Doe, Daughter, if surviving both Insureds
3
<PAGE>
THIS PAGE INTENTIONALLY BLANK
<PAGE>
LIST OF VARIABLE SUB-ACCOUNTS
<TABLE>
<CAPTION>
FUND GROUPS VARIABLE SUB-ACCOUNTS
<S> <C>
[AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund
CIGNA VARIABLE PRODUCTS GROUP CIGNA VP Money Market Fund
CIGNA VP S&P 500 Index Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND Equity-Income Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II Asset Manager Portfolio
Investment Grade Bond Portfolio
MFS-Registered Trademark- VARIABLE INSURANCE TRUST MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
MFS World Governments Series
OCC ACCUMULATION TRUST Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio]
TEMPLETON VARIABLE PRODUCTS SERIES FUND Templeton Asset Allocation Fund Class I
Templeton International Fund Class I
Templeton Stock Fund Class I
</TABLE>
NOTE: NET PREMIUM PAYMENTS MAY ALSO BE ALLOCATED TO THE FIXED ACCOUNT.
SEPARATE ACCOUNT: Lincoln Life Flexible Premium Variable Life Account R.
5
<PAGE>
THIS PAGE INTENTIONALLY BLANK
<PAGE>
SCHEDULE 1: SURRENDER CHARGES
The charge assessed upon full surrender of the policy will be the lesser of the
Surrender Charge shown or the then current Net Accumulation Value. Upon either
a partial surrender or a decrease in Specified Amount, no surrender charge is
applied. An additional surrender charge table will apply to each increase in
Specified Amount permitted by Lincoln Life.
Surrender Charge as of
Policy Year Beginning of Policy Year
---------------------- ------------------------
0 $2,020.00
1 2,020.00
2 1,962.00
3 1,884.00
4 1,807.00
5 1,729.00
6 1,632.00
7 1,450.00
8 1,269.00
9 1,088.00
10 907.00
11 725.00
12 544.00
13 363.00
14 181.00
15 and thereafter 0.00
The procedures for full and partial surrenders and the imposition of surrender
charges for full surrenders are described in greater detail in NONFORFEITURE AND
SURRENDER VALUE PROVISIONS.
A transaction fee of $25 is assessed for each partial surrender and will be
processed as set forth in NONFORFEITURE AND SURRENDER VALUE PROVISIONS, PARTIAL
SURRENDER.
7
<PAGE>
SCHEDULE 2: EXPENSE CHARGES AND FEES
PREMIUM LOAD. Lincoln Life will deduct a Premium Load of 8.0% from each premium
payment.
MONTHLY ADMINISTRATIVE FEE. A Monthly Deduction is made on each Monthly
Anniversary Day from the Net Accumulation Value. (SEE POLICY VALUES PROVISIONS,
MONTHLY DEDUCTION.) It includes an administrative fee charge, Cost of Insurance
charges and any charges for supplemental riders or optional benefits.
The monthly administrative fee as of the Date of Issue of the policy consists
of:
(a) a fee of $12.50 per month during the first Policy Year and $5.00 per month
during subsequent Policy Years. This fee may be changed by Lincoln Life after
the first Policy Year based on its expectations of future expenses, but the
amount of such fee is guaranteed not to exceed $10.00 per month; and
(b) a charge of $0.09 per $1,000 of initial Specified Amount or an increase in
Specified Amount will be deducted monthly for the first twenty Policy Years
from the Date of Issue and the first twenty Policy Years following an increase
in Specified Amount.
In addition, if the No Lapse Provision is in effect, a charge of $0.01 per
$1,000 of Specified Amount will be deducted monthly for as long as the No Lapse
Provision is in effect.
CHARGES AND FEES ASSOCIATED WITH THE VARIABLE SUB-ACCOUNTS. Lincoln Life
imposes a mortality and expense risk ("M&E") charge, which is calculated as a
percentage of the value of the Variable Sub-Accounts. The M&E charge is
deducted from each Variable Sub-Account at the end of each Valuation Period.
This charge may be changed by Lincoln Life from time to time, but it is
guaranteed not to exceed a daily rate equivalent to an annual rate of 0.90% of a
Variable Sub-Account s value. As of the Date of Issue of the policy, this
charge was equal to an annual rate of .80% of a Variable Sub-Account's value.
Fund operating expenses may be deducted by each Fund as set forth in its
prospectus.
TRANSFER FEE. A transaction fee of $25 may be applied by Lincoln Life to each
transfer request in excess of 12 made during any Policy Year. A single transfer
request, either In Writing or by telephone, may consist of multiple
transactions.
8
<PAGE>
SCHEDULE 3: TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
(MONTHLY RATES PER $1,000 OF NET AMOUNT AT RISK)
SPECIAL NOTE: The Cost of Insurance Rate is the monthly rate charged under the
policy. The Cost of Insurance Rate varies based on the sex,
issue age (nearest birthday), duration and premium class of each
Insured. It is determined under an actuarial formula, on file
with the insurance supervisory official of the jurisdiction in
which the policy is delivered, that reflects one-alive and both
alive probabilities. The rates set forth in the table below
reflect the amount of the Flat Extra or the Risk Factor
(substandard risk classification rates), if any, shown in the
POLICY SPECIFICATIONS, and are based on the 1980 CSO Tables. The
monthly Cost of Insurance Rate charged under the policy shall not
exceed the applicable rate set forth in the table below for each
respective duration (number of years from the Date of Issue).
MONTHLY MONTHLY MONTHLY
DURATION RATE DURATION RATE DURATION RATE
-------- ------- -------- ------- -------- -------
1 0.000255 2 0.000812 3 0.001471
4 0.002239 5 0.003179 6 0.004319
7 0.005723 8 0.007423 9 0.009504
10 0.011998 11 0.014987 12 0.018426
13 0.022453 14 0.027117 15 0.032525
16 0.038750 17 0.046192 18 0.054929
19 0.065288 20 0.077486 21 0.091747
22 0.108619 23 0.127776 24 0.149675
25 0.174402 26 0.202244 27 0.233535
28 0.269512 29 0.311366 30 0.360877
31 0.419730 32 0.489946 33 0.571976
34 0.665795 35 0.772171 36 0.892098
37 1.026150 38 1.179951 39 1.359657
40 1.571045 41 1.820886 42 2.114438
43 2.453583 44 2.836841 45 3.265740
46 3.741661 47 4.267789 48 4.855635
49 5.520031 50 6.269863 51 7.114259
52 8.058703 53 9.091792 54 10.203369
55 11.385377 56 12.634074 57 13.950328
58 15.343913 59 16.834785 60 18.472779
61 20.339516 62 22.573392 63 25.430002
64 29.281829 65 34.418148 66 41.212040
67 57.813939 68 83.333330
9
<PAGE>
SCHEDULE 4: CORRIDOR PERCENTAGES TABLE
The amount of the Death Benefit Proceeds must satisfy certain requirements under
the Internal Revenue Code if the policy is to qualify as insurance for Federal
income tax purposes. The amount of the Death Benefit Proceeds required to be
paid under the Internal Revenue Code to maintain the policy as life insurance
under each of the Death Benefit Options (SEE INSURANCE COVERAGE PROVISIONS,
DEATH BENEFIT OPTIONS) is equal to the product of the Accumulation Value and the
applicable Corridor Percentage set forth below.
ATTAINED AGE OF CORRIDOR ATTAINED AGE OF CORRIDOR
THE YOUNGER PERCENTAGE THE YOUNGER PERCENTAGE
INSURED (NEAREST INSURED (NEAREST
BIRTHDAY) BIRTHDAY)
0-40 250 61 128
- ---------------------------------------------------------------------------
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
- ---------------------------------------------------------------------------
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
- ---------------------------------------------------------------------------
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75-90 105
55 150 91 104
- ---------------------------------------------------------------------------
56 146 92 103
57 142 93 102
58 138 94 101
59 134 95-99 100
60 130
- ---------------------------------------------------------------------------
10
<PAGE>
DEFINITIONS
ACCUMULATION VALUE. The sum of (i) the Fixed Account value, (ii) the Variable
Account value, and (iii) the Loan Account value under the policy.
ADMINISTRATOR MAILING ADDRESS. The Administrator Mailing Address for the policy
is indicated on the front cover.
AGE. The age of the subject person at her or his nearest birthday.
COST OF INSURANCE. SEE POLICY VALUES PROVISIONS, COST OF INSURANCE.
COST OF INSURANCE RATES. This term is defined in SCHEDULE 3.
DATE OF ISSUE. The date on which coverage under the policy becomes effective.
The Date of Issue is shown on the POLICY SPECIFICATIONS.
DEATH BENEFIT PROCEEDS. The amount payable to the Beneficiary upon the Second
Death (defined below) in accordance with the Death Benefit Option elected, after
deduction of the amount necessary to repay any loans in full and overdue
deductions. The two Death Benefit Options are described in INSURANCE COVERAGE
PROVISIONS, DEATH BENEFIT OPTIONS.
DUE PROOF OF DEATH. A certified copy of an official death certificate, a
certified copy of a decree of a court of competent jurisdiction as to the
finding of death, or any other proof of death satisfactory to Lincoln Life.
EFFECTIVE DATE. The date on which the initial premium is applied. The
Effective Date is shown in the POLICY SPECIFICATIONS.
FIXED ACCOUNT. The account under which principal is guaranteed and interest is
credited at a rate of not less than 4% per year. SEE POLICY VALUES PROVISION,
INTEREST CREDITED UNDER FIXED ACCOUNT. Fixed Account assets are general assets
of Lincoln Life and are held in Lincoln Life's general account.
FUND(S). The Funds in the Variable Sub-Account portfolios to which the Owner
may allocate Net Premium Payments or transfers and in the shares of which such
allocations shall be invested.
FUND GROUP. Each of the open-end management investment companies registered
under the 1940 Act, one or more of the portfolios (funds) of which fund the
Variable Sub-Accounts.
GRACE PERIOD. SEE PREMIUM AND REINSTATEMENT PROVISIONS, GRACE PERIOD.
HOME OFFICE. The term "Home Office" means The Lincoln National Life Insurance
Company.
IN WRITING. With respect to any notice to Lincoln Life, this term means a
written form satisfactory to Lincoln Life and received by it at the
Administrator Mailing Address. With respect to any notice by Lincoln Life to
the Owner, any assignee or other person, this term means written notice by
ordinary mail to such person at the most recent address in Lincoln Life's
records.
11
<PAGE>
DEFINITIONS (CONTINUED)
LOAN ACCOUNT. The account in which policy indebtedness (outstanding loans and
interest) accrues once it is transferred out of the Fixed and/or Variable
Sub-Accounts. The Loan Account is part of Lincoln Life's general account.
MONTHLY ANNIVERSARY DAY. The Day of the month, as shown in the POLICY
SPECIFICATIONS, when Lincoln Life makes the Monthly Deduction, or the next
Valuation Day if that day is not a Valuation Day or is nonexistent for that
month.
MONTHLY DEDUCTION. The Monthly Deduction is made from the Net Accumulation
Value; this deduction includes the Cost of Insurance, an administrative expense
charge and charges for supplemental riders or benefits, if applicable. (SEE
POLICY VALUES PROVISIONS, MONTHLY DEDUCTION).
MORTALITY AND EXPENSE RISK (M&E) RATE. A daily rate assessed, by Lincoln Life
as a percentage of the value of the Variable Sub-Accounts for its assumption of
mortality and expense risks. In no event shall the daily M&E Rate exceed the
maximum rate specified in SCHEDULE 2.
NET ACCUMULATION VALUE. The Accumulation Value less the Loan Account Value.
NET PREMIUM PAYMENT. The portion of a premium payment, after deduction of the
Premium Load as specified in SCHEDULE 2, available for allocation to the Fixed
and/or Variable Sub-Accounts.
1940 ACT. The Investment Company Act of 1940, as amended.
NO LAPSE PREMIUM: The premium required to be paid each Monthly Anniversary Day
on a cumulative basis to prevent the policy from lapsing, if the No Lapse
Provision is elected. (SEE PREMIUM AND REINSTATEMENT PROVISIONS, NO LAPSE
PROVISION.)
NYSE. New York Stock Exchange.
POLICY ANNIVERSARY. The day of the year the policy was issued, or the next
Valuation Day if that day is not a Valuation Day or is nonexistent for that
year.
POLICY YEAR. Each twelve-month period, beginning on the Date of Issue, during
which the policy is in effect.
RIGHT-TO-EXAMINE PERIOD. SEE RIGHT TO EXAMINE THE POLICY, on the Cover of the
Policy.
SEC. The Securities and Exchange Commission.
SECOND DEATH. The death of the second of the two Insureds to die.
SUB-ACCOUNT. The investment options available under this policy, including
Variable Sub-Accounts and
the Fixed Account.
12
<PAGE>
DEFINITIONS (CONTINUED)
SURRENDER VALUE. SEE NONFORFEITURE AND SURRENDER VALUE PROVISIONS, SURRENDER
VALUE.
VALUATION DAY. Any day on which the NYSE is open for business, except a day
during which trading on the NYSE is restricted or on which an SEC-determined
emergency exists or on which the valuation or disposal of securities is not
reasonably practicable, as determined under applicable law.
VALUATION PERIOD. The period beginning immediately after the close of business
on a Valuation Day and ending at the close of business on the next Valuation
Day.
VARIABLE ACCOUNT. The account consisting of all Variable Sub-Account(s)
invested in shares of the Fund(s). Variable Account assets are separate account
assets of Lincoln Life, the investment performance of which is kept separate
from that of the general assets of Lincoln Life. Variable Account assets are
not chargeable with the general liabilities of Lincoln Life.
VARIABLE ACCUMULATION UNIT. A unit of measure used to calculate the value of a
Variable Sub-Account.
PREMIUM AND REINSTATEMENT PROVISIONS
PREMIUMS. The first premium shall be paid on or before the Effective Date.
Additional premium may be paid, with the consent of Lincoln Life and subject to
the requirements under ADDITIONAL PREMIUMS, at any time before the younger
Insured reaches or would have reached Age 100. There is no minimum premium
requirement. However, except as provided under the NO LAPSE PROVISION, the
policy will lapse subject to the terms set forth in the GRACE PERIOD if the Net
Accumulation Value is insufficient to pay a Monthly Deduction.
PAYMENT OF PREMIUM. The initial premium is payable at the Administrator Mailing
Address or to an authorized representative of Lincoln Life. All subsequent
premium payments are payable at the Administrator Mailing Address.
PLANNED PREMIUM. If the Owner chooses to make periodic premium payments,
Lincoln Life shall send premium reminder notices In Writing for the amounts and
with the frequency elected by the Owner. Changes in the amounts or frequency of
such payments will be subject to consent of Lincoln Life.
ADDITIONAL PREMIUM. In addition to any planned premium, it is possible to make
additional premium payments of no less than $100 at any time before the younger
Insured reaches or would have reached Age 100. Lincoln Life reserves the right
to limit the amount or frequency of any such additional premium payments. If a
payment of any additional premium would increase the difference between the
Accumulation Value and the Specified Amount, Lincoln Life may reject the
additional premium payment unless evidence of insurability is furnished to
Lincoln Life and it agrees to accept the risk for both Insureds or any surviving
Insured. If a payment of additional premium would cause the policy to cease to
qualify as insurance for federal income tax purposes, Lincoln Life may reject
all or such excess portion of the additional premium. Any payment received by
Lincoln Life shall be applied to repay any outstanding loans and to that extent
shall not be treated as premium, unless Lincoln Life is specifically instructed
otherwise In Writing by the Owner.
13
<PAGE>
PREMIUM AND REINSTATEMENT PROVISIONS (CONTINUED)
ALLOCATION OF NET PREMIUM PAYMENTS. Net Premium Payments may be allocated to
the Fixed and/or Variable Sub-Accounts under the policy subject to POLICY
SPECIFICATIONS, LIMITS ON ALLOCATION OF NET PREMIUM PAYMENTS. The Net
Premium Payment associated with the initial premium payment and any Net
Premium Payments received during the Right-to-Examine Period shall be
allocated upon the expiration of the Right-to-Examine Period in accordance
with the allocation percentages specified in the application. Subsequent Net
Premium Payments shall be allocated on the same basis as the most recent Net
Premium Payment unless Lincoln Life is otherwise instructed In Writing.
NO LAPSE PROVISION. If the No Lapse Provision has been selected, the Owner is
required to pay, on or before each Monthly Anniversary Day, the monthly No Lapse
Premium as specified in the POLICY SPECIFICATIONS. As long as the sum of all
premium payments less any indebtedness and partial surrenders is at least equal
to the sum of the No Lapse Premiums due since the Date of Issue, the policy will
not lapse even if the Net Accumulation Value is insufficient to meet the Monthly
Deductions.
A period of 61 days will be granted for the No Lapse Provision if on any Monthly
Anniversary Day it is determined that the No Lapse Premium requirement has not
been met. At least 31 days before the end of that period, Lincoln Life will
notify the Owner of the amount of premium necessary to maintain the No Lapse
Provision.
The No Lapse Provision will terminate if (a) the No Lapse Premium requirements
are not met, (b) there is an increase in the Specified Amount, or (c) there is a
change in the Death Benefit Option. Once the No Lapse Provision is terminated,
it cannot be reinstated.
GRACE PERIOD. Except as provided under the NO LAPSE PROVISION, if on any
Monthly Anniversary Day the Net Accumulation Value is insufficient to cover the
current Monthly Deduction, or if the amount of indebtedness exceeds the
Surrender Value, Lincoln Life shall send a notice In Writing to the Owner and
any assignee of record. Such notice shall state the amount which must be paid
to avoid termination. The Net Premium Payment due will be at least equal to a)
the amount by which the Monthly Deduction Amount exceeds the Net Accumulation
Value, or b) the amount by which the indebtedness exceeds the Surrender Value,
and c) enough additional premium to maintain the policy in force for at least
two months.
If the amounts set forth in the notice are not paid to Lincoln Life on or before
the day that is the later of (a) 31 days after the date of mailing of the
notice, and (b) 61 days after the Monthly Anniversary Day with respect to which
such notice applies (together, the "Grace Period"), then the policy shall
terminate. All coverage under the policy will then lapse without value.
REINSTATEMENT. After the policy has lapsed due to the failure to make a
necessary payment before the end of an applicable Grace Period, the policy
may be reinstated if both Insureds are living provided (a) the policy has not
been surrendered, (b) there is an application for reinstatement In Writing, (c)
evidence of insurability is furnished to Lincoln Life and it agrees to accept
the risk as to both Insureds, (d) enough premium is paid to keep the policy in
force for at least 2 months, and (e) any accrued loan interest is paid. The
reinstated policy shall be effective as of the Monthly Anniversary Day after the
date on which Lincoln Life approves the application for reinstatement. The
surrender charges set forth in SCHEDULE 1 will be reinstated as of the Policy
Year in which the policy lapsed.
14
<PAGE>
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
OWNER. The Owner on the Date of Issue will be the person designated in the
POLICY SPECIFICATIONS. If no person is designated as Owner, the Insureds will
be the Owner.
RIGHTS OF OWNER. So long as one of the Insureds is alive and except as provided
below, the Owner may exercise all rights and privileges under the policy
including the right to: (a) release or surrender the policy to Lincoln Life,
(b) agree with Lincoln Life to any change in or amendment to the policy, (c)
transfer all rights and privileges to another person, (d) change the
Beneficiary, and (e) assign the policy.
The Owner may exercise any rights and privileges under the policy without the
consent of any designated Beneficiary if the Owner has reserved the right to
change the Beneficiary. If there is an assignment of the policy recorded with
Lincoln Life, the Owner may exercise the rights and privileges under the policy
only with the consent of the recorded assignee.
Unless provided otherwise, if the Owner is a person other than an Insured and
dies before the Second Death, all of the rights and privileges of the Owner
under the policy shall vest in the Owner's executors, administrators or assigns.
TRANSFER OF OWNERSHIP. The Owner may transfer all rights and privileges of the
Owner. On the date of transfer, the transferee shall become the Owner and shall
have all the rights and privileges of the Owner. The Owner may revoke any
transfer before the date of transfer.
A transfer, or a revocation of transfer, shall be In Writing and shall take
effect the later of the date of transfer specified by the Owner or the date it
is recorded by Lincoln Life, and any payment made or any action taken or allowed
by Lincoln Life before such time in reliance on the recorded ownership of the
policy shall be without prejudice to Lincoln Life.
Unless otherwise directed by the Owner, with the consent of any assignee
recorded with Lincoln Life, a transfer shall not affect the interest of any
Beneficiary designated before the date of transfer.
ASSIGNMENT. Assignment of the policy shall be In Writing and shall be effective
when Lincoln Life receives it. Lincoln Life shall not be responsible for the
validity or sufficiency of any assignment. An assignment of the policy shall
remain effective only so long as the assignment remains in force. If an
assignment so provides, it shall transfer the interest of any designated
transferee or of any Beneficiary if the Owner has reserved the right to change
the Beneficiary.
15
<PAGE>
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
BENEFICIARY. The Beneficiary on the Date of Issue shall be the person
designated in the POLICY SPECIFICATIONS. Unless provided otherwise, the
interest of any Beneficiary who dies before the Second Death shall vest in the
Owner or the Owner's executors, administrators or assigns.
CHANGE OF BENEFICIARY. The Beneficiary may be changed from time to time.
Unless provided otherwise, the right to change the Beneficiary is reserved to
the Owner. A request for change of Beneficiary shall be In Writing, signed by
the Owner and, if the right to change the Beneficiary has not been reserved to
the Owner, signed by the existing Beneficiary. A change of Beneficiary shall be
effective, retroactive to the date of request, only when the change recorded by
Lincoln Life, and any payment made or any action taken or allowed by Lincoln
Life before such time in reliance on its records as to the identity of the
Beneficiary shall be without prejudice to Lincoln Life.
VARIABLE ACCOUNT PROVISIONS
VARIABLE ACCOUNT AND VARIABLE SUB-ACCOUNTS. Assets invested on a variable basis
are held in the separate account ("Variable Account") which is designated on
page 5 of the policy. The separate account was established by a resolution of
Lincoln Life's Board of Directors as a "separate account" under the insurance
law of the State of Indiana, Lincoln Life's state of domicile and is registered
as a unit investment trust under the 1940 Act. The assets of the Variable
Account (except assets in excess of the reserves and other contract liabilities
of the Variable Account) shall not be chargeable with liabilities arising out of
any other business conducted by Lincoln Life and the income, gains or losses
from the Variable Account assets shall be credited or charged against the
Variable Account without regard to the income, gains or losses of Lincoln Life.
The Variable Account assets are owned and controlled exclusively by Lincoln
Life, and Lincoln Life is not a trustee with respect to such assets.
The Variable Account is divided into Variable Sub-Accounts. The assets of each
Variable Sub-Account shall be invested fully and exclusively in shares of the
appropriate Fund for such Variable Sub-Account. The investment performance of
each Variable Sub-Account shall reflect the investment performance of the
appropriate Fund. For each Variable Sub-Account, Lincoln Life shall maintain
Variable Accumulation Units as a measure of the investment performance of the
Fund shares held in such Variable Sub-Account.
Subject to any vote by persons entitled to vote thereon under the 1940 Act,
Lincoln Life may elect to operate the Variable Account as a management company
instead of a unit investment trust under the 1940 Act or, if registration under
the 1940 Act is no longer required, to deregister the Variable Account. In the
event of such a change, Lincoln Life shall endorse the policy to reflect the
change and may take any other necessary or appropriate action required to effect
the change. Any changes in the investment policies of the Variable Account
shall first be approved by the Indiana Insurance Commissioner and approved or
filed, as required, in any other state or other jurisdiction where the policy
was issued.
INVESTMENTS OF THE VARIABLE SUB-ACCOUNTS. All amounts allocated or transferred
to a Variable Sub-Account will be used to purchase shares of the appropriate
Fund. Each Fund Group shall at all times be registered under the 1940 Act as an
open-end management investment company. The Funds available for investment and
for which Variable Sub-Accounts have been established as of the Date of Issue
are listed in the application and on page 5 of the policy. Lincoln Life, after
due consideration of appropriate
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<PAGE>
VARIABLE ACCOUNT PROVISIONS (CONTINUED)
factors, may add additional Funds and Fund Groups at any time or may eliminate
or substitute Funds or Fund Groups in accordance with FUND WITHDRAWAL AND
SUBSTITUTED SECURITIES. Any and all distributions made by a Fund will be
reinvested in additional shares of that Fund at net asset value. Deductions by
Lincoln Life from a Variable Sub-Account will be made by redeeming a number of
Fund shares at net asset value equal in total value to the amount to be
deducted.
INVESTMENT RISK. Fund share values fluctuate, reflecting the risks of changing
economic conditions and the ability of a Fund Group's investment adviser or
sub-adviser to manage that Fund and anticipate changes in economic conditions.
As to the Variable Account assets, the Owner bears the entire investment risk of
gain or loss.
FUND WITHDRAWAL AND SUBSTITUTED SECURITIES. If a particular Fund ceases to be
available for investment, or Lincoln Life determines that further investment in
the particular Fund is not appropriate in view of the purposes of the Variable
Account (including without limitation that it is not appropriate in light of
legal, regulatory or federal income tax considerations), Lincoln Life may
withdraw the particular Fund as a possible investment in the Variable Account
and may substitute shares of a new or different Fund for shares of the withdrawn
Fund. Lincoln Life shall obtain any necessary regulatory or other approvals.
Lincoln Life may make appropriate endorsements to the policy to the extent
reasonably required to reflect any withdrawal or substitution.
POLICY VALUES PROVISIONS
ACCUMULATION VALUE. The Accumulation Value equals the sum of (i) the Fixed
Account value, (ii) the Variable Account value, and (iii) the Loan Account
value. At any point in time, therefore, the Accumulation Value reflects (a) Net
Premium Payments made, (b) the amount of any partial surrenders, (c) any
increases or decreases as a result of market performance in the Variable
Sub-Accounts, (d) interest credited under the Fixed Account, (e) interest
credited under the Loan Account, and (f) all expenses and fees as specified
under SCHEDULE 2.
FIXED ACCOUNT VALUE. The Fixed Account value, if any, with respect to the
policy, at any point in time, is equal to the sum of the Net Premium Payments
allocated or other amounts (net of any charges) transferred to the Fixed Account
plus interest credited to such account less the Monthly Deductions applied to
such account and less any partial surrenders or amounts transferred from the
Fixed Account.
INTEREST CREDITED UNDER FIXED ACCOUNT. Lincoln Life will credit interest to the
Fixed Account daily. The interest rate applied to the Fixed Account will be the
greater of: (a) a compounded daily rate of 0.010746% (equivalent to a
compounded annual rate of 4%), or (b) a rate determined by Lincoln Life from
time to time. Such rate will be established on a prospective basis.
LOAN ACCOUNT VALUE. The Loan Account value, if any, with respect to the policy,
is the amount of any outstanding loan(s), including accrued interest on the
loan(s). SEE LOAN PROVISIONS, LOAN ACCOUNT.
INTEREST RATE CREDITED ON LOAN ACCOUNT. The interest rate credited on the Loan
Account may vary, but will not be less than the loan interest rate less 2% per
year during Policy Years 1 through 10 and less 1% per year thereafter. (SEE the
POLICY SPECIFICATIONS for the rate in effect as of the Date of Issue).
VARIABLE ACCOUNT VALUE. The Variable Account value, if any, with respect to the
policy, for any Valuation Period is equal to the sum of the then stated values
of all Variable Sub-Accounts under the policy. The stated value of each
Variable
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<PAGE>
POLICY VALUES PROVISIONS (CONTINUED)
Sub-Account is determined by multiplying the number of Variable Accumulation
Units, if any, credited or debited to such Variable Sub-Account with respect to
the policy by the Variable Accumulation Unit Value of the particular Variable
Sub-Account for such Valuation Period.
VARIABLE ACCUMULATION UNIT VALUE. Net Premium Payments, or portions thereof,
allocated, or amounts transferred, to each Variable Sub-Account are converted
into Variable Accumulation Units. The Variable Accumulation Unit value for a
Variable Sub-Account for any Valuation Period after the inception of the
Variable Sub-Account is determined as follows:
1. The total value of Fund shares held in the Variable Sub-Account is
calculated by multiplying the number of Fund shares owned by the Variable
Sub-Account at the beginning of the Valuation Period by the net asset value
per share of the Fund at the end of the Valuation Period and adding any
dividend or other distribution of the Fund earned during the Valuation
Period; minus
2. The liabilities of the Variable Sub-Account at the end of the Valuation
Period; such liabilities include daily charges imposed on the Variable
Sub-Account and may include a charge or credit with respect to any taxes
paid or reserved for by Lincoln Life that Lincoln Life determines result
from the operations of the Variable Account; and
3. The result of (2) is divided by the number of Variable Accumulation Units
for that Variable Sub-Account outstanding at the beginning of the Valuation
Period.
The daily charges imposed on a Variable Sub-Account for any Valuation Period are
equal to the M&E charge multiplied by the number of calendar days in the
Valuation Period.
The accumulation unit value may increase or decrease from Valuation Period to
Valuation Period.
COST OF INSURANCE. The Cost of Insurance is determined monthly. Such cost is
calculated as (1), multiplied by the result of (2) minus (3), where:
(1) is the Cost of Insurance Rate as described in NONFORFEITURE PROVISIONS,
COST OF INSURANCE RATES,
(2) is the Death Benefit at the beginning of the policy month, divided by
1.0032737, and
(3) is the Accumulation Value at the beginning of the policy month prior to the
deduction for the monthly Cost of Insurance.
COST OF INSURANCE RATES. The Cost of Insurance Rates are determined from time
to time by Lincoln Life based on its expectations of future mortality and vary
as set forth in SCHEDULE 3. The actuarial formula used to make such
determination has been filed with the insurance supervisory official of the
jurisdiction in which the policy is delivered. Any change in Cost of Insurance
Rates will apply to all individuals of the same class as the Insured. The Cost
of Insurance Rates shall not exceed the amounts described in SCHEDULE 3.
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<PAGE>
POLICY VALUES PROVISIONS (CONTINUED)
MONTHLY DEDUCTION. Each month, on the Monthly Anniversary Day, Lincoln Life
will deduct the Monthly Deduction by withdrawing the amount from the Fixed and
Variable Sub-Accounts in proportion to which the balances invested in such Fixed
and Variable Sub-Accounts bear to the Net Accumulation Value as of the date on
which the deduction is made. The Monthly Deduction for a policy month will be
calculated as Charge (1) plus Charge (2) where:
CHARGE (1) is the Cost of Insurance (as described in COST OF INSURANCE) and
the cost of any supplemental riders or optional benefits, and
CHARGE (2) is the Monthly Administrative Fee as described under SCHEDULE 2.
The amount of the Monthly Deduction will be deducted from the Fixed and Variable
Sub-Accounts in the same proportion that the value of each account bears to the
Net Accumulation Value as of the date on which the deduction is made.
BASIS OF COMPUTATIONS. The Cost of Insurance Rates are guaranteed to be no
greater than that calculated based on the applicable 1980 Commissioners Standard
Ordinary Mortality Table (Age nearest birthday).
All policy values are at least equal to that required by the jurisdiction in
which the policy is delivered. A detailed statement of the method of computing
values has been filed with the insurance supervisory official of that
jurisdiction.
TRANSFER PRIVILEGE PROVISION
TRANSFER PRIVILEGE. At any time while the policy is in force, other than during
the Right-to-Examine Period, the Owner has the right to transfer amounts among
the Fixed and Variable Sub-Accounts then available under the policy. All such
transfers are subject to the following provisions. Transfers may be made In
Writing, or by telephone if telephone transfers have been previously authorized
In Writing. Transfer requests must be received at the Administrator Mailing
Address prior to the time of day set forth in the prospectus and provided the
NYSE is open for business, in order to be processed as of the close of business
on the date the request is received; otherwise, the transfer will be processed
on the next business day the NYSE is open for business. Lincoln Life shall not
be responsible for (a) any liability for acting in good faith upon any transfer
instructions given by telephone, or (b) the authenticity of such instructions.
A single transfer request, either In Writing or by telephone, may consist of
multiple transactions.
Transfers from the Fixed Sub-Account are subject to the POLICY SPECIFICATIONS,
LIMITS ON TRANSFERS. Transfers to the Fixed Sub-Account will earn interest as
specified under POLICY VALUES PROVISIONS, INTEREST CREDITED UNDER FIXED ACCOUNT.
Transfers involving Variable Sub-Accounts will reflect the purchase or
cancellation of Variable Accumulation Units having an aggregate value equal to
the dollar amount being transferred to or from a particular Variable
Sub-Account. The purchase or cancellation of such units shall be made using
Variable Accumulation Unit values of the applicable Variable Sub-Account for the
Valuation Period during which the transfer is effective.
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<PAGE>
TRANSFER PRIVILEGE PROVISION (CONTINUED)
Unless otherwise changed by Lincoln Life to be less restrictive, transfers shall
be subject to the following conditions: (a) Up to 12 transfer requests may be
made during any Policy Year without charge, however, for each transfer request
in excess of 12, a transfer fee as set forth in SCHEDULE 2 may be deducted on a
pro-rata basis from the Fixed and/or Variable Sub-Accounts from which the
transfer is being made; (b) The amount being transferred may not be less than
$100 unless the entire value of the Fixed or Variable Sub-Account is being
transferred; (c) The amount being transferred may not exceed Lincoln Life's
maximum amount limit then in effect; (d) Transfers among the Variable
Sub-Accounts or from a Variable Sub-Account to the Fixed Account can be made at
any time; (e) Transfers involving Variable Sub-Account(s) shall be subject to
such additional terms and conditions as may be imposed by the Funds; and (f) Any
value remaining in the Fixed or a Variable Sub-Account following a transfer may
not be less than $100; and .
NONFORFEITURE AND SURRENDER VALUE PROVISIONS
SURRENDER. Surrender of the policy is effective on the business day of receipt
by Lincoln Life of the policy and a request for surrender In Writing, provided
that at the time of such receipt the policy is in force.
SURRENDER VALUE. The amount payable on surrender of the policy (the "Surrender
Value") shall be the Net Accumulation Value less any Surrender Charges as
determined under the provision of SCHEDULE 1.
The Surrender Value shall be paid by Lincoln Life in a lump sum or as provided
under the OPTIONAL METHOD OF SETTLEMENT rider. Any deferment of payments by
Lincoln Life will be subject to GENERAL PROVISIONS, DEFERMENT OF PAYMENTS.
Unless otherwise agreed to by the Owner and Lincoln Life, if at least one
Insured is still living when the younger Insured becomes or would have become
age 100 and the policy has not been surrendered, the Variable Account Value, if
any, will be transferred to the Fixed Account on the next Monthly Anniversary
Day after the younger Insured becomes or would have become age 100. No further
Monthly Deductions will be made and the policy will remain in force until it is
surrendered or the Death Benefit Proceeds become payable.
PARTIAL SURRENDER. A partial surrender may be made from the Policy on any
Valuation Day in accordance with the following as long as the policy is in
force. A partial surrender must be requested In Writing or, if previously
authorized, by telephone. A partial surrender may only be made if the amount of
the partial surrender, including the transaction fee, is (a) not less than $525;
(b) not more than 90% of the Surrender Value of the policy as of the end of the
Valuation Period ending on the Valuation Day on which the request is accepted by
Lincoln Life; and (c) would not cause the Specified Amount to decline below the
Minimum Specified Amount set forth in the POLICY SPECIFICATIONS. The amount of
the partial surrender and the $25 transaction fee shall be withdrawn from the
Fixed and/or Variable Sub-Accounts in proportion to the balances invested in
such Sub-Accounts.
Any surrender results in a withdrawal of funds from all of the Fixed and/or
Variable Sub-Accounts. Any surrender from a Variable Sub-Account will result in
the cancellation of Variable Accumulation Units which have an aggregate value on
the date of the surrender equal to the total amount by which the Variable
Sub-Account is reduced. The cancellation of such units will be based on the
Variable Accumulation Unit value of the Variable Sub-Account determined at the
close of the Valuation Period during which the surrender is effective.
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<PAGE>
NONFORFEITURE AND SURRENDER VALUE PROVISIONS CONTINUED)
EFFECT OF PARTIAL SURRENDERS ON ACCUMULATION VALUE AND SPECIFIED AMOUNT. As of
the end of the Valuation Day on which there is a partial surrender, (a) the
Accumulation Value shall be reduced by the sum of (i) the amount of the partial
surrender, plus (ii) the transaction fee specified in SCHEDULE 1; and (b) if
DEATH BENEFIT OPTION 1 is in effect, the Specified Amount shall be reduced by
the amount of the partial surrender.
LOAN PROVISIONS
POLICY LOANS. If the policy has Surrender Value, Lincoln Life will grant a loan
against the policy provided: (a) a proper loan agreement is executed and (b) a
satisfactory assignment of the policy to Lincoln Life is made. The loan may be
for any amount up to 90% of the then current Surrender Value. The amount
borrowed will be paid within seven days of Lincoln Life's receipt of such
request, except as Lincoln Life may be permitted to defer the payment of amounts
as specified under GENERAL PROVISIONS, DEFERMENT OF PAYMENTS.
The minimum loan amount is $500. Lincoln Life reserves the right to modify this
amount in the future. Lincoln Life will withdraw such loan from the Fixed
and/or Variable Sub-Accounts in proportion to the then current account values,
unless the Owner instructs Lincoln Life otherwise.
LOAN ACCOUNT. The amount of any loan will be transferred out of the Fixed
and/or Variable Sub-Accounts as described above. Such amount will become part of
the Loan Account Value. The outstanding loan balance at any time includes
accrued interest on the loan.
LOAN REPAYMENT. The outstanding loan balance (i.e. indebtedness) may be repaid
at any time during the lifetime of either Insured, however, the minimum loan
repayment is $100 or the amount of the outstanding indebtedness, if less. The
Loan Account will be reduced by the amount of any loan repayment. Any repayment
of indebtedness, other than loan interest, will be allocated to the Fixed and/or
Variable Sub-Accounts in the same proportion in which Net Premium Payments are
currently allocated, unless the Owner and Lincoln Life agree otherwise In
Writing.
INTEREST RATE CHARGED ON LOAN ACCOUNT. Interest charged on the Loan Account
will be at a rate equivalent to 8% per year, payable in arrears.
Interest charged on the Loan Account is payable annually on each Policy
Anniversary or as otherwise agreed In Writing by the Owner and Lincoln Life.
Such loan interest amount, if not paid when due, will be transferred out of the
Fixed and/or Variable Sub-Accounts in proportion to the then current Net
Accumulation Value and into the Loan Account, unless both the Owner and Lincoln
Life agree otherwise.
INDEBTEDNESS. The term "indebtedness" means money which is owed on this policy
due to an outstanding loan and interest accrued thereon. A loan, whether or not
repaid, will have a permanent effect on the Net Accumulation Value and on the
Death Benefit Proceeds. Any indebtedness at time of settlement will reduce the
proceeds payable under the policy. A policy loan reduces the then current Net
Accumulation Value under the policy while repayment of a loan will cause an
increase in the then current Net Accumulation Value.
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<PAGE>
LOAN PROVISIONS (CONTINUED)
If at any time the total indebtedness against the policy, including interest
accrued but not due, equals or exceeds the then current Accumulation Value less
surrender charge, a notice will be sent at least 31 days before the end of the
grace period to the Owner and to assignees, if any, that this policy will
terminate unless the indebtedness is repaid. The policy will thereupon
terminate without value subject to the conditions in PREMIUM AND REINSTATEMENT
PROVISIONS, GRACE PERIOD.
INSURANCE COVERAGE PROVISIONS
DATE OF COVERAGE. The date of coverage will be the Date of Issue provided the
initial premium has been paid (1) while both Insureds are alive and (2) prior to
any change in health and insurability as represented in the application.
For any insurance that has been reinstated, the date of coverage will be the
Monthly Anniversary Day that coincides with or next follows the day the
application for reinstatement is approved by Lincoln Life, provided both of the
Insureds are alive on such day. (SEE PREMIUM AND REINSTATEMENT PROVISIONS,
REINSTATEMENT.)
TERMINATION OF COVERAGE. All coverage under the policy terminates on the first
to occur of the following:
1. Surrender of the policy;
2. Death of the second of the Insureds to die; and
3. Failure to pay the amount of premium necessary to avoid termination before
the end of any applicable Grace Period.
No action by Lincoln Life after such a termination of the policy, including any
Monthly Deduction made after termination of coverage, shall constitute a
reinstatement of the policy or waiver of the termination. Any such deduction
will be refunded.
DEATH BENEFIT PROCEEDS. If both Insureds die while the policy is in force,
Lincoln Life shall pay Death Benefit Proceeds equal to the sum of the greater of
(i) the amount determined under the Death Benefit Option in effect at the time
of the Second Death, or (ii) an amount determined by Lincoln Life equal to that
required by the Internal Revenue Code to maintain the contract as a life
insurance policy (SEE SCHEDULE 4).
DEATH BENEFIT OPTIONS. Following are the Death Benefit Options available under
the policy:
DEATH BENEFIT OPTION 1:
THE SPECIFIED AMOUNT. The Specified Amount on the Second Death, less any
partial surrenders.
DEATH BENEFIT OPTION 2:
SUM OF THE SPECIFIED AMOUNT AND THE ACCUMULATION VALUE. The sum of the
Specified Amount plus the Accumulation Value as of the Valuation Day
immediately after the Second Death.
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<PAGE>
INSURANCE COVERAGE PROVISIONS (CONTINUED)
Unless DEATH BENEFIT OPTION 2 is elected, the Owner will be deemed to have
elected DEATH BENEFIT OPTION 1.
CHANGES IN SPECIFIED AMOUNT AND DEATH BENEFIT OPTION. Unless provided otherwise,
a change in Specified Amount or Death Benefit Option may be effected any time
while this policy is in force, subject to (a) the consent of Lincoln Life, b)
all such changes must be requested In Writing on a form satisfactory to Lincoln
Life and filed at the Administrator Mailing Address, and (c) the following
conditions:
CHANGES IN SPECIFIED AMOUNT:
1. If a decrease in the Specified Amount is requested, the decrease will
become effective on the Monthly Anniversary Day that coincides with or next
follows receipt of the request provided any requirements as determined by
Lincoln Life are met.
In such event, Lincoln Life will reduce the existing Specified Amount
against the most recent increase first, then against the next most recent
increases successively, and finally, against insurance provided under the
original application; however, Lincoln Life reserves the right to limit the
amount of any decrease so that the Specified Amount will not be less than
the Minimum Specified Amount shown in the POLICY SPECIFICATIONS.
2. If an increase in the Specified Amount is requested:
(a) a supplemental application must be submitted and evidence of
insurability of both Insureds satisfactory to Lincoln Life must be
furnished; and
(b) any other requirements as determined by Lincoln Life must be met.
If Lincoln Life approves the request, the increase will become effective
upon (i) the Monthly Anniversary Day that coincides with or next follows
the date the request is approved by Lincoln Life and (ii) the deduction
from the Accumulation Value (in proportion to the then current account
values of the Fixed and/or Variable Sub-Accounts) of the first month's Cost
of Insurance for the increase, provided both Insureds are alive on such
day.
CHANGES IN DEATH BENEFIT OPTION:
1. On a change from DEATH BENEFIT OPTION 1 to DEATH BENEFIT OPTION 2:
The Specified Amount will be reduced by the Accumulation Value as of the
Monthly Anniversary Day that coincides with or next follows date of receipt
of the request for change.
2. On a change from Death BENEFIT OPTION 2 to DEATH BENEFIT OPTION 1:
The Specified Amount will be increased by the Accumulation Value and the
date of the change will be the Monthly Anniversary Day that coincides with
or next follows the date of receipt of the request for change.
Lincoln Life will not allow a decrease in the amount of insurance below the
minimum amount required to maintain this contract as a life insurance policy
under the Internal Revenue Code.
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<PAGE>
GENERAL PROVISIONS
THE POLICY. The policy and the application for the policy constitute the entire
contract between the parties. All statements made in the application shall, in
the absence of fraud, be deemed representations and not warranties. No
statement may be used in defense of a claim under the policy unless it is
contained in the application and a copy of the application is attached to the
policy when issued.
Only the President, a Vice President, an Assistant Vice President, a Secretary,
a Director or an Assistant Director of Lincoln Life may execute or modify the
policy.
The policy is executed at the Administrator Mailing Address located on the front
cover of the policy.
NON-PARTICIPATION. The policy is not entitled to share in surplus distribution.
NOTICE OF CLAIM. Due Proof of Death must be furnished to Lincoln Life as soon
as reasonably practicable after the death of each Insured. Such notice shall be
given to Lincoln Life In Writing by or on behalf of the Owner.
PAYMENT OF PROCEEDS. Proceeds, as used in this policy, means the amount payable
(a) upon the surrender of this policy, or (b) upon the Second Death.
The amount payable upon receipt of due proof of the Second Death will be the
Death Benefit Proceeds as of the date of death. (SEE INSURANCE COVERAGE
PROVISIONS, DEATH BENEFIT PROCEEDS.) Death Benefit Proceeds are payable at the
Administrator Mailing Address upon the Second Death subject to the receipt of
Due Proof of Death for both Insureds. If the Second Death occurs during the
GRACE PERIOD, Lincoln Life will pay the Death Benefit Proceeds for the Death
Benefit Option in effect immediately prior to the GRACE PERIOD reduced by any
overdue monthly deductions.
If the policy is surrendered, the proceeds will be the Surrender Value described
in NONFORFEITURE AND SURRENDER VALUE PROVISIONS.
The proceeds are subject to the further adjustments described in the following
provisions:
1. Misstatement of Age or Sex;
2. Incontestability; and
3. Suicide.
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<PAGE>
GENERAL PROVISIONS (CONTINUED)
When settlement is made, Lincoln Life may require return of the policy.
DEFERMENT OF PAYMENTS. Any amounts payable as a result of loans, surrender, or
partial surrenders will be paid within 7 days of Lincoln Life's receipt of such
request. However, payment of amounts from the Variable Sub-Accounts may be
postponed when the NYSE is closed or when the SEC declares an emergency.
Additionally, Lincoln Life reserves the right to defer the payment of such
amounts from the Fixed Account for a period not to exceed 6 months from the date
written request is received by Lincoln Life; during any such deferred period,
the amount payable will bear interest as required by law.
MISSTATEMENT OF AGE OR SEX. If the age or sex of either of the Insureds is
misstated, Lincoln Life will adjust all benefits to the amounts that would have
been purchased for the correct ages and sexes according to the basis specified
in the "Table of Guaranteed Maximum Life Insurance Rates."
SUICIDE. If the second of the Insureds to die commits suicide, while sane or
insane, within 2 years from the Date of Issue, the Death Benefit Proceeds will
be limited to a refund of premiums paid, less (a) any indebtedness against the
policy and (b) the amount of any partial surrenders. If the second of the
Insureds to die commits suicide, while sane or insane, within 2 years from the
date of any increase in the Specified Amount, the Death Benefit Proceeds with
respect to such increase will be limited to a refund of the monthly charges for
the cost of such additional insurance and the amount of insurance will be
limited to the amount of Death Benefit Proceeds applicable before such increase
was made provided that the increase became effective at least 2 years from the
Date of Issue of the policy.
INCONTESTABILITY. Except for nonpayment of Monthly Deductions, this policy will
be incontestable after it has been in force during the lifetime of both Insureds
for 2 years from its Date of Issue. This means that Lincoln Life will not use
any misstatement in the application to challenge a claim or avoid liability
after that time. Any increase in the Specified Amount effective after the Date
of Issue will be incontestable only after such increase has been in force for 2
years during the lifetime of both Insureds.
The basis for contesting an increase in Specified Amount will be limited to
material misrepresentations made in the supplemental application for the
increase. The basis for contesting after reinstatement will be (a) limited for a
period of 2 years from the date of reinstatement and (b) limited to material
misrepresentations made in the reinstatement application.
ANNUAL REPORT. Lincoln Life will send a report to the Owner at least once a year
without charge. The report will show the Accumulation Value as of the reporting
date and the amounts deducted from or added to the Accumulation Value since the
last report. The report will also show (a) the current Death Benefit Proceeds,
(b) the current policy values, (c) premiums paid and all deductions made since
the last report, and (d) outstanding policy loans.
PROJECTION OF BENEFITS AND VALUES. Lincoln Life will provide a projection of
illustrative future Death Benefit Proceeds and values to the Owner at any time
upon written request and payment of a service fee, if any.
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<PAGE>
GENERAL PROVISIONS (CONTINUED)
CHANGE OF PLAN. Within the first 2 Policy Years the Owner may exchange the
policy without any evidence of insurability for any one of the permanent
survivorship life insurance policies then being issued by Lincoln Life to the
same class to which this policy belongs. The request for the exchange must be
In Writing and received by Lincoln Life within 24 months from the Date of Issue
of the policy. Unless otherwise agreed to between the Owner and Lincoln Life,
the new policy shall have the same amount of insurance and surrender value as
this policy as of the date of exchange, its Date of Issue shall be the date of
exchange, the Insureds under the policy shall be the Insureds under the new
policy, and the issue ages of the Insureds under the new policy shall be the
then attained Ages of the Insureds (as of the date of exchange). If only one
Insured is alive at the time of exchange, such permanent life insurance policy
issued will be a single life policy.
If at any time while both Insureds are alive, a change in the Internal Revenue
Code would result in a less favorable tax treatment of the insurance provided
under the policy or if the Insureds are legally divorced while the policy is in
force, the Owner may exchange the policy for separate single life policies on
each of the Insureds subject to the following conditions: (a) evidence of
insurability satisfactory to Lincoln Life is furnished, (b) the Amount of
Insurance of each new policy is not larger than one half of the Amount of
Insurance then in force under the policy, (c) the premium for each new policy is
determined according to Lincoln Life's rates then in effect for that policy
based on each Insured's then attained age and sex, and (d) any other
requirements as determined by Lincoln Life are met. The new policy will not
take effect until the date all such requirements are met.
POLICY CHANGES - APPLICABLE LAW. This policy must qualify initially and
continue to qualify as life insurance under the Internal Revenue Code in order
for the Owner to receive the tax treatment accorded to life insurance under
Federal law. Therefore, to maintain this qualification to the maximum extent
permitted by law, Lincoln Life reserves the right to return any premium payments
that would cause this policy to fail to qualify as life insurance under
applicable tax law as interpreted by Lincoln Life. Further, Lincoln Life
reserves the right to make changes in this policy or to make distributions from
the policy to the extent it deems necessary, in its sole discretion, to continue
to qualify this policy as life insurance. Any such changes will apply uniformly
to all policies that are affected. The Owner will be given advance written
notice of such changes.
26
<PAGE>
LINCOLN NATIONAL LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY ON THE LIVES OF TWO INSUREDS
Non-Participating Variable life insurance payable upon death of the second
Insured to die.
Adjustable Death Benefit.
Surrender Value payable upon surrender of the policy.
Flexible premiums payable to when the younger Insured reaches or would have
reached Age 100 or
the death of the second Insured to die, whichever is earlier.
Investment results reflected in policy benefits.
Premium Payments and Supplementary Coverages as shown in the Policy
Specifications.
<PAGE>
Optional Methods of Settlement
This rider is made part of the policy to which it is attached as of the Date of
Issue. Upon written request, the Company will agree to pay in accordance with
any one of the options shown below all or part of the net proceeds that may be
payable under the policy.
While the Insured is alive, the request, including the designation of the payee,
may be made by the Owner. At the time the Death Benefit Proceeds become payable
under the policy, the request, including the designation of the payee, may then
be made by the Beneficiary. Once Income Payments have begun, the policy cannot
be surrendered and the payee cannot be changed, nor can the settlement option be
changed.
PAYMENT DATES. The first Income Payment under the settlement option selected
will become payable on the date proceeds are settled under the option.
Subsequent payments will be made on the first day of each month in accordance
with the manner of payment selected.
MINIMUM PAYMENT AMOUNT. The settlement option elected must result in an Income
Payment at least equal to the minimum payment amount in accordance with the
Company's rules then in effect. If at any time payments are less than the
minimum payment amount, the Company has the right to change the frequency to an
interval that will provide the minimum payment amount. If any amount due is
less than the minimum per year, the Company may make other arrangements that are
equitable.
INCOME PAYMENTS. Income Payments will remain constant pursuant to the terms of
the settlement option(s) selected. The amount of each Income Payment shall be
determined in accordance with the terms of the settlement option and the
table(s) set forth in this rider, as applicable. The mortality table used is
the 1983 Individual Annuitant Mortality (IAM) Table "a" and 3% interest. In
determining the settlement amount, the settlement age of the payee will be
reduced by one year when the first installment is payable during the 1990's,
reduced by two years when the first installment is payable during the decade
2000-2009, and so on.
FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during the
lifetime of the payee, ceasing with the last payment due prior to the death of
the payee.
SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing monthly
income to the payee for a fixed period of 60, 120, 180, or 240 months (as
selected), and for as long thereafter as the payee shall live.
THIRD OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.
FOURTH OPTION: AS A DEPOSIT AT INTEREST. The Company will retain the proceeds
while the payee is alive and will pay interest annually thereon at a rate of not
less than 3% per year. Upon the payee's death, the amount on deposit will be
paid.
EXCESS INTEREST. At the sole discretion of the Company, excess interest may be
paid or credited from time to time in addition to the payments guaranteed under
any Optional Method of Settlement.
ADDITIONAL OPTIONS. Any proceeds payable under the policy may also be settled
under any other method of settlement offered by the Company at the time of the
request.
LINCOLN NATIONAL LIFE INSURANCE COMPANY
Jon A. Boscia
PRESIDENT
LR650 LL Page 1
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000
APPLIED - MALE
Settlement age of Number of instalments certain
payee nearest
birthday 60 120 180 240
- ---------------------------------------------------------
Age Life Annuity
10 $2.87 $2.87 $2.87 $2.87 $2.87
11 2.89 2.89 2.89 2.88 2.88
12 2.90 2.90 2.90 2.90 2.90
13 2.92 2.92 2.91 2.91 2.91
14 2.93 2.93 2.93 2.93 2.92
15 2.95 2.95 2.95 2.94 2.94
16 2.96 2.96 2.96 2.96 2.96
17 2.98 2.98 2.98 2.98 2.97
18 3.00 3.00 3.00 2.99 2.99
19 3.02 3.02 3.01 3.01 3.01
20 3.04 3.04 3.03 3.03 3.03
21 3.06 3.05 3.05 3.05 3.05
22 3.08 3.08 3.07 3.07 3.07
23 3.10 3.10 3.09 3.09 3.09
24 3.12 3.12 3.12 3.11 3.11
25 3.14 3.14 3.14 3.14 3.13
26 3.17 3.17 3.16 3.16 3.15
27 3.19 3.19 3.19 3.19 3.18
28 3.22 3.22 3.22 3.21 3.20
29 3.25 3.25 3.24 3.24 3.23
30 3.28 3.28 3.27 3.27 3.26
31 3.31 3.31 3.30 3.30 3.29
32 3.34 3.34 3.33 3.33 3.32
33 3.37 3.37 3.37 3.36 3.35
34 3.41 3.41 3.40 3.39 3.38
Settlement age of Number of instalments certain
payee nearest
birthday 60 120 180 240
- ---------------------------------------------------------
Age Life Annuity
35 $3.44 $3.44 $3.44 $3.43 $3.41
36 3.48 3.48 3.48 3.46 3.45
37 3.52 3.52 3.52 3.50 3.48
38 3.57 3.56 3.56 3.54 3.52
39 3.61 3.61 3.60 3.58 3.56
40 3.66 3.65 3.65 3.63 3.60
41 3.71 3.70 3.69 3.67 3.64
42 3.76 3.75 3.74 3.72 3.68
43 3.81 3.81 3.79 3.77 3.73
44 3.87 3.86 3.85 3.82 3.77
45 3.93 3.92 3.90 3.87 3.82
46 3.99 3.98 3.96 3.92 3.87
47 4.05 4.05 4.02 3.98 3.92
48 4.12 4.11 4.09 4.04 3.97
49 4.19 4.18 4.15 4.10 4.03
50 4.27 4.26 4.22 4.17 4.08
51 4.34 4.33 4.30 4.23 4.14
52 4.43 4.41 4.37 4.30 4.20
53 4.51 4.50 4.45 4.37 4.26
54 4.60 4.59 4.54 4.45 4.32
55 4.70 4.68 4.62 4.53 4.39
56 4.80 4.78 4.72 4.61 4.45
57 4.91 4.89 4.82 4.69 4.51
58 5.03 5.00 4.92 4.78 4.58
59 5.15 5.12 5.03 4.87 4.65
Settlement age of Number of instalments certain
payee nearest
birthday 60 120 180 240
- ---------------------------------------------------------
Age Life Annuity
60 $5.28 $5.25 $5.14 $4.96 $4.71
61 5.43 5.39 5.27 5.06 4.78
62 5.58 5.53 5.39 5.16 4.84
63 5.74 5.69 5.53 5.26 4.90
64 5.91 5.85 5.66 5.36 4.96
65 6.10 6.03 5.81 5.46 5.02
66 6.30 6.21 5.96 5.56 5.08
67 6.51 6.41 6.12 5.66 5.13
68 6.73 6.62 6.28 5.77 5.18
69 6.97 6.84 6.44 5.86 5.23
70 7.23 7.07 6.61 5.96 5.27
71 7.51 7.32 6.79 6.05 5.31
72 7.80 7.58 6.96 6.14 5.34
73 8.12 7.85 7.14 6.23 5.37
74 8.46 8.14 7.32 6.31 5.40
75 8.82 8.45 7.50 6.38 5.42
76 9.21 8.76 7.67 6.45 5.44
77 9.63 9.10 7.84 6.51 5.45
78 10.08 9.44 8.01 6.57 5.47
79 10.56 9.80 8.17 6.62 5.48
80 11.07 10.17 8.33 6.66 5.49
81 11.62 10.55 8.48 6.70 5.49
82 12.20 10.94 8.61 6.73 5.50
83 12.82 11.33 8.74 6.76 5.50
84 13.47 11.73 8.86 6.79 5.51
85 14.17 12.12 8.97 6.81 5.51
LR650 Page 2
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH $1,000
APPLIED - FEMALE
Settlement age of Number of instalments certain
payee nearest
birthday 60 120 180 240
- ---------------------------------------------------------
Age Life Annuity
10 $2.80 $2.80 $2.80 $2.80 $2.80
11 2.81 2.81 2.81 2.81 2.81
12 2.82 2.82 2.82 2.82 2.82
13 2.83 2.83 2.83 2.83 2.83
14 2.85 2.85 2.85 2.84 2.84
15 2.86 2.86 2.86 2.86 2.86
16 2.87 2.87 2.87 2.87 2.87
17 2.89 2.89 2.89 2.88 2.88
18 2.90 2.90 2.90 2.90 2.90
19 2.92 2.92 2.92 2.91 2.91
20 2.93 2.93 2.93 2.93 2.93
21 2.95 2.95 2.95 2.95 2.94
22 2.96 2.96 2.96 2.96 2.96
23 2.98 2.98 2.98 2.98 2.98
24 3.00 3.00 3.00 3.00 2.99
25 3.02 3.02 3.02 3.02 3.01
26 3.04 3.04 3.04 3.03 3.03
27 3.06 3.06 3.06 3.06 3.05
28 3.08 3.08 3.08 3.08 3.07
29 3.10 3.10 3.10 3.10 3.09
30 3.13 3.13 3.12 3.12 3.12
31 3.15 3.15 3.15 3.14 3.14
32 3.18 3.18 3.17 3.17 3.16
33 3.20 3.20 3.20 3.20 3.19
34 3.23 3.23 3.23 3.22 3.22
Settlement age of Number of instalments certain
payee nearest
birthday 60 120 180 240
- ---------------------------------------------------------
Age Life Annuity
35 $3.26 $3.26 $3.26 $3.25 $3.24
36 3.29 3.29 3.29 3.28 3.27
37 3.32 3.32 3.32 3.31 3.30
38 3.35 3.35 3.35 3.34 3.33
39 3.39 3.39 3.38 3.38 3.37
40 3.42 3.42 3.42 3.41 3.40
41 3.46 3.46 3.46 3.45 3.43
42 3.50 3.50 3.50 3.49 3.47
43 3.54 3.54 3.54 3.53 3.51
44 3.59 3.59 3.58 3.57 3.55
45 3.64 3.63 3.63 3.61 3.59
46 3.68 3.68 3.67 3.66 3.63
47 3.73 3.73 3.72 3.71 3.68
48 3.79 3.79 3.77 3.76 3.72
49 3.84 3.84 3.83 3.81 3.77
50 3.90 3.90 3.89 3.86 3.82
51 3.97 3.96 3.95 3.92 3.88
52 4.03 4.03 4.01 3.98 3.93
53 4.10 4.10 4.08 4.04 3.99
54 4.18 4.17 4.15 4.11 4.04
55 4.25 4.25 4.22 4.18 4.11
56 4.34 4.33 4.30 4.25 4.17
57 4.42 4.41 4.38 4.32 4.23
58 4.52 4.51 4.47 4.40 4.30
59 4.61 4.60 4.56 4.48 4.37
Settlement age of Number of instalments certain
payee nearest
birthday 60 120 180 240
- ---------------------------------------------------------
Age Life Annuity
60 $4.72 $4.70 $4.66 $4.57 $4.44
61 4.83 4.81 4.76 4.66 4.51
62 4.95 4.93 4.87 4.75 4.58
63 5.08 5.05 4.98 4.85 4.65
64 5.21 5.18 5.10 4.95 4.72
65 5.36 5.32 5.22 5.05 4.79
66 5.51 5.47 5.36 5.16 4.86
67 5.67 5.63 5.50 5.26 4.93
68 5.85 5.80 5.65 5.37 5.00
69 6.04 5.98 5.80 5.49 5.06
70 6.25 6.18 5.97 5.60 5.12
71 6.47 6.39 6.14 5.71 5.18
72 6.71 6.62 6.32 5.83 5.23
73 6.98 6.86 6.50 5.94 5.28
74 7.26 7.12 6.69 6.04 5.32
75 7.57 7.40 6.89 6.14 5.35
76 7.90 7.69 7.09 6.24 5.39
77 8.26 8.01 7.29 6.33 5.41
78 8.65 8.34 7.49 6.41 5.43
79 9.08 8.70 7.69 6.49 5.45
80 9.54 9.07 7.89 6.55 5.47
81 10.03 9.47 8.08 6.61 5.48
82 10.58 9.88 8.26 6.66 5.49
83 11.16 10.31 8.43 6.70 5.49
84 11.80 10.75 8.59 6.74 5.50
85 12.48 11.20 8.74 6.77 5.50
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
Numbers of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
- -----------------------------------------------------
5 $211.99 $17.91
6 179.22 15.14
7 155.83 13.16
8 138.31 11.68
9 124.69 10.53
10 113.82 9.61
11 104.93 8.86
12 97.54 8.24
Number of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
- -----------------------------------------------------
13 91.29 7.71
14 85.95 7.26
15 81.33 6.87
16 77.29 6.53
17 73.74 6.23
18 70.59 5.96
19 67.78 5.73
Number of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
- -----------------------------------------------------
20 65.26 5.51
25 55.76 4.71
30 49.53 4.18
LR650 Page 3
