As Filed with the Securities and Exchange Commission on July 28, 1998
Registration No. 333-45727
811-08635
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 3 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 [X]
Variable Account A
(Exact Name of Registrant)
Keyport Benefit Life Insurance Company
(Name of Depositor)
125 High Street, Boston, Massachusetts 02110
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: 617-526-1400
Bernard R. Beckerlegge, Esq.
Keyport Benefit Life Insurance Company
125 High Street
Boston, MA 02110
(Name and Address of Agent for Service)
Copies to:
Joan E. Boros, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on [date] pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a)(1) of Rule 485
( ) on [date] pursuant to paragraph (a)(1) of Rule 485
Title of Securities Being Registered: Variable Portion of the Contracts
Funded Through the Separate Account.
No filing fee is due because an indefinite amount of securities is deemed
to have been registered in reliance on Section 24(f) of the Investment
Company Act of 1940.
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Exhibit List on Page ____
CONTENTS OF REGISTRATION STATEMENT
The Facing Sheet
The Contents Page
Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
Items 24 - 32
The Signatures
Exhibits
VARIABLE ACCOUNT A
KEYPORT BENEFIT LIFE INSURANCE COMPANY
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-4
N-4 Item Caption in Prospectus
1. Cover Page
2. Glossary of Special Terms
3. Summary of Expenses
4. [Condensed Financial Information]
Performance Information
5. Keyport Benefit and the Variable Account
Eligible Funds
6. Deductions
7. Allocations of Purchase Payments
Transfer of Variable Account Value
Substitution of Eligible Funds and Other Variable Account
Changes
Modification of the Certificate
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Certificate Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Benefits
Suspension of Payments
Inquiries by Certificate Owners
8. Annuity Provisions
9. Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Annuity Options
10. Purchase Payments and Applications
Variable Account Value
Valuation Periods
Net Investment Factor
Sales of the Certificates
11. Partial Withdrawals and Surrender
Option A: Income For a Fixed Number of Years
Right to Revoke
12. Tax Status
13. Legal Proceedings
14. Table of Contents - Statement of Additional Information
Caption in Statement of Additional Information
15. Cover Page
16. Table of Contents
17. Keyport Benefit Life Insurance Company
18. Safekeeping of Assets, Experts
19. Not applicable
20. Principal Underwriter
21. Investment Performance
22. Variable Annuity Benefits
23. Financial Statements
This Amendment No. 3 to the Registration Statement on Form N-4 which
initially became effective on June 25, 1998 (the "Registration Statement")
is being filed pursuant to Rule 485(a) under the Securities Act of 1933, as
amended, to supplement the Registration Statement with a separate
prospectus and statement of additional information ("SAI"), and related
exhibits, describing a generic form of the Group Flexible Premium Deferred
Annuity Contract. This Amendment relates only to the prospectus, SAI, and
exhibits included in this Amendment and does not otherwise delete, amend,
or supersede any information contained in Pre-Effective Amendment No. 1 and
Post-Effective Amendment Nos. 1 and 2 to the Registration Statement.
PART A
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The information contained within double rows of asterisks is
provided at the request of the staff of the Securities and
Exchange Commission. It is not and will not be part of any
documents delivered to purchasers or existing owners, and is
included solely for purposes of clarifying the content of this
registration statement. In addition, throughout the prospectus
and statement of additional information ("SAI") that follow there
are similar inserts that specifically summarize the parameters of
change for the particular design feature.
This registration statement includes a prospectus and SAI that
describes a generic form of the Group Flexible Premium Deferred
Annuity Contracts (the "Contracts") that are the subject of the
registration statement. The prospectus and SAI contain numerous
bracketed portions to indicate those portions which may be
included or eliminated in any particular form of the Contracts,
including but not limited to those, as follows:
death benefits;
funding media;
withdrawal rights;
transfer privileges;
annuity options;
other features
such as dollar cost averaging,
asset allocation,
systematic withdrawals, and
Account rebalancing.
In all cases variations in other bracketed features, such as issue and
annuity ages and interest rates, will be in conformity with state
insurance law. Bracketed features representing maximum limits for
which a range is not provided will not exceed, but may be less than,
the amount shown. Bracketed features representing minimum limits for
which a range is not provided will not be less than, but may exceed,
the amount shown.
The prospectus and SAI also include bracketed references to the fees
and charges to be imposed under the particular form of the Contract.
Of course, in each case, Keyport Benefit only will impose such charges
in a manner and subject to the conditions of applicable rules. In
connection with the various charges under the Contracts, Keyport
Benefit and its separate accounts will comply with the requirements of
Section 26(e) and will rely upon and be limited by such rules as 0-
1(e), 6c-8, and 22d-2 under the Investment Company Act of 1940, as
amended, and in compliance with their respective requirements. Any
descriptions of the potential range of fees and charges should be read
in the context of such rules requirements.
Each form of the Contracts will be offered pursuant to a separate
prospectus and a separate or combined SAI, as appropriate. The content
of all prospectuses and SAIs will be identical with respect to
contractual and securities law related features to those contained in
this registration statement, except for provisions that are bracketed
and which will vary within the parameters established herein, and
except for non-material changes consistent with the requirements of
Rule 485(b) under the 1933 Act ("Rule 485(b)").
Except as provided for by Rule 485(b), each prospectus and SAI and
related exhibits will be filed pursuant to Rule 485(a) with a request
for expedited or selective review consistent with precedent and the
fact that all relevant disclosure is included in this Post-Effective
Amendment No. 3.
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GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
Variable Account A
OF
KEYPORT BENEFIT LIFE INSURANCE COMPANY
This prospectus offers Group Variable Annuity Contracts (the "Contracts")
and the related Certificates (the "Certificates") that are designed to fund
benefits under certain group arrangements including those that qualify for
special tax treatment under the Internal Revenue Code of 1986 (the "Code").
As required by certain states, the Certificates may be offered as
individual contracts. Unless otherwise noted or the context so requires
all references to the Certificates include the Contracts and the individual
Contracts. The Certificates are offered on a flexible payment basis.
The variable annuity Contract (form number DVA(1)/NY) and the Certificates
described in this prospectus provide for accumulation of Certificate Values
on a variable basis, [and also on a fixed basis], and payments of periodic
annuity payments on [either a variable or] a fixed basis. The Certificates
are designed for use by individuals for retirement planning purposes.
This prospectus generally describes only the variable features of the
Certificate [(for a summary of the fixed features, see Appendix A on Page
xx)]. If the Certificate Owner elects to have Certificate Values
accumulated on a variable basis, Purchase Payments will be allocated to a
segregated investment account of Keyport Benefit Life Insurance Company
("Keyport Benefit"), designated Variable Account A ("Variable Account").
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The terms XXXXX Trust, YYYYY Fund, and XX-1 Sub-Account are
included to indicate that disclosure relevant to an actual
Eligible Fund will be provided. The actual names of the Eligible
Funds and corresponding Sub-Accounts will be included in the
subsequent forms of the prospectus and SAI.
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The Variable Account invests in shares of the following Eligible Funds of
[The XXXXX Trust ("XXXXX Trust")] at their net asset value: [X-1, X-2 and X-
3]. The Variable Account also invests in shares of the following Eligible
Funds of [The YYYYY Fund ("YYYYY Fund")] at their net asset value: [Y-1, Y-
2, Y-3].
The Variable Account may offer other forms of the Contracts and
Certificates with features, and fees and charges which vary from the
Certificates, and provide for investment in other Sub-Accounts which may
invest in different or additional mutual funds. Other Contracts and
Certificates will be described in separate prospectuses and statements of
additional information. The agent selling the Contracts and Certificates
has information concerning the eligibility for and the availability of the
other forms of the Contracts and Certificates.
A Statement of Additional Information dated the same as this prospectus has
been filed with the Securities and Exchange Commission and is herein
incorporated by reference. It is available, at no charge, by writing the
Principal Underwriter, Keyport Financial Services Corp., at 125 High
Street, Boston, MA 02110, by calling Keyport Benefit's Service Office at
(800) 437-4466, or by returning the postcard on the back cover of this
prospectus. A table of contents for the Statement of Additional
Information is on Page xx.
The Certificates may be sold by or through banks or other depository
institutions. The Contract and Certificates: are not insured by the FDIC;
are not a deposit or other obligation of, or guaranteed by, the depository
institution; and are subject to investment risks, including the possible
loss of principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH THE INFORMATION A PROSPECTIVE INVESTOR SHOULD
KNOW BEFORE INVESTING. THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE
REFERENCE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE OR
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS
AUTHORIZED BY KEYPORT BENEFIT TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THIS OFFERING, AND IF GIVEN OR MADE, SUCH UNAUTHORIZED
INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON.
The date of this prospectus is _______________, [1998]
TABLE OF CONTENTS
Page
Glossary of Special Terms
Summary of Expenses
Synopsis
[Condensed Financial Information]
Performance Information
Keyport Benefit and the Variable Account
[Year 2000 Matters]
Purchase Payments and Applications
Investments of the Variable Account
Allocations of Purchase Payments
Eligible Funds
Transfer of Variable Account Value
Substitution of Eligible Funds and
Other Variable Account Changes
Deductions
[Deductions for Certificate Maintenance Charge]
Deductions for Mortality and Expense Risk Charge
[Deductions for Daily Distribution Charge]
[Deductions for Daily Administrative Charge]
[Deductions for Contingent Deferred Sales Charge]
[Deductions for Transfers of Variable Account Value]
Deductions for Premium Taxes
Deductions for Income Taxes
Total Variable Account Expenses
Other Services
The Certificates
Variable Account Value
Valuation Periods
Net Investment Factor
Modification of the Certificate
Right to Revoke
Death Provisions for Non-Qualified Certificates
Death Provisions for Qualified Certificates
Certificate Ownership
Assignment
Partial Withdrawals and Surrender
Annuity Provisions
Annuity Benefits
Income Date and Annuity Option
Change in Income Date and Annuity Option
Annuity Options
Variable Annuity Payment Values
Proof of Age, Sex, and Survival of Annuitant
Suspension of Payments
Tax Status
Introduction
[Recent Developments]
Taxation of Annuities in General
Qualified Plans
[Tax-Sheltered Annuities]
Individual Retirement Annuities
[Corporate Pension and Profit-Sharing Plans]
[Deferred Compensation Plans with Respect to
Service for State and Local Governments]
Variable Account Voting Privileges
Sales of the Certificates
Legal Proceedings
Inquiries by Certificate Owners
Table of Contents_Statement of Additional Information
[Appendix A_The Fixed Account [(also known as the Modified
Guaranteed Annuity Account)]
[Appendix [B]_Telephone Instructions]
GLOSSARY OF SPECIAL TERMS
Accumulation Unit: An accounting unit of measure used to calculate Variable
Account Value.
Annuitant: The Annuitant is the natural person to whom any annuity payments
will be made starting on the Income Date. The Annuitant may not be over
age [90] on the Certificate Date (age [75] for Qualified Certificates [and
age [90] for [Roth IRA] Qualified Certificates]).
Certificate Anniversary: The same month and day as the Certificate Date in
each subsequent year of the Certificate.
Certificate Date: The effective date of the Certificate; it is shown on the
Certificate Schedule.
Certificate Owner: The person (or persons in the case of joint ownership)
who possesses all the ownership rights under the Certificate. The primary
Certificate Owner may not be over age [90] on the Certificate Date (age
[75] for Qualified Certificates [, age [90] for [Roth IRA] Qualified
Certificates] and age [90] for a joint Owner).
Certificate Value: The [sum of the] Variable Account Value [and the Fixed
Account Value].
Certificate Withdrawal Value: The Certificate Value [increased or
decreased by a limited Market Value Adjustment] less any premium taxes
[and] [Certificate Maintenance Charge] [and] [applicable Contingent
Deferred Sales Charges].
Certificate Year: Any period of 12 months commencing with the Certificate
Date and each Certificate Anniversary thereafter shall be a Certificate
Year.
[Covered Person: The person(s) identified on the Certificate Schedule whose
death may result in an Adjustment of Certificate Value [and waiver of any
Contingent Deferred Sales Charges] [and a waiver of any Market Value
Adjustment] [or whose medically necessary stay in a hospital or nursing
facility may allow the Certificate Owner to be eligible for either a total
or partial waiver of the Contingent Deferred Sales Charge].]
Designated Beneficiary: The person who may be entitled to receive benefits
following the death of the Annuitant, Certificate Owner, or joint
Certificate Owner. The Designated Beneficiary will be the first person
among the following who is alive on the date of death: primary Certificate
Owner; joint Certificate Owner; primary beneficiary; contingent
beneficiary; and if none of the above is alive, the primary Certificate
Owner's estate. If the primary Certificate Owner and joint Certificate
Owner are both alive, they will be the Designated Beneficiary together.
Eligible Funds: The mutual funds that are eligible investments for the
Variable Account under the Certificates.
[Fixed Account: Part of Keyport Benefit's general account to which Purchase
Payments may be allocated or Certificate Values may be transferred.]
[Fixed Account Value: The value of all Fixed Account amounts accumulated
under the Certificate prior to the Income Date.]
[Guarantee Period Anniversary: An anniversary of a Guarantee Period's
Start Date.]
[Guarantee Period Month: The first Guarantee Period Month is the monthly
period which begins on the Start Date. Subsequent Guarantee Period Months
begin on the same day in the ensuing months.]
[Guarantee Period Year: The first Guarantee Period Year is the annual
period which begins on the Start Date. Subsequent Guarantee Period Years
begin on each Guaranteed Period Anniversary.]
In Force: The status of the Certificate before the Income Date so long as
it is not totally surrendered, the Certificate Value under a Certificate
does not go to zero, and there has not been a death of the Annuitant or any
Certificate Owner that will cause the Certificate to end within at most
five years of the date of death.
Income Date: The date on which annuity payments are to begin.
Non-Qualified Certificate: Any Certificate that is not issued under a
Qualified Plan.
Office: Keyport Benefit's executive office, which is 125 High Street,
Boston, Massachusetts 02110.
Qualified Certificate: Certificates issued under Qualified Plans.
Qualified Plan: A retirement plan established pursuant to the provisions of
Sections 401, 403(b), 408(b) or 408A of the Internal Revenue Code. Keyport
Benefit treats Section 457 plans as Qualified Plans.
Service Office: Keyport Benefit's Service Office which is 125 High Street,
Boston, Massachusetts 02110.
[Start Date: The date an amount is first allocated to a Guarantee Period].
Variable Account: A separate investment account of Keyport Benefit into
which Purchase Payments under the Certificates may be allocated. The
Variable Account is divided into Sub-Accounts ("Sub-Account") that
correspond to the Eligible Funds in which they invest.
Variable Account Value: The value of all Variable Account amounts
accumulated under the Certificate prior to the Income Date.
Written Request: A request written on a form satisfactory to Keyport
Benefit, signed by the Certificate Owner and a disinterested witness, and
filed at Keyport Benefit's Service Office.
SUMMARY OF EXPENSES
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Summary of Expenses will be completed in each Rule 485(a) filing.
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The expense summary format below, including the examples, was adopted by
the Securities and Exchange Commission to assist the owner of a variable
annuity certificate in understanding the transaction and operating expenses
the owner will directly or indirectly bear under a certificate. The values
reflect expenses of the Variable Account as well as the Eligible Funds
under the Certificates. The expenses shown for the Eligible Funds and the
examples should not be considered a representation of future expenses.
Certificate Owner Transaction Expenses
Sales Load Imposed on Purchases: 0%
Maximum Contingent Deferred Sales Charge
(as a percentage of Purchase Payments): [7%1
Years from Date of Payment Sales Charge
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or later 0%]
Maximum Total Certificate Owner Transaction Expenses[2]
(as a percentage of purchase payments): [7%]
Annual Certificate Maintenance Charge[3] $[36]
[The Certificate Maintenance Charge will be waived before the Income Date
if:
(i) it is the first Certificate Anniversary,
[(ii)] the Certificate Value is greater than or equal to [$40,000] on
the Certificate Anniversary date this charge is imposed, or
[(iii)] Purchase Payments of at least [$2,500] have been made in the
prior Certificate Year and there has been no partial withdrawal in the
prior Certificate Year.]
[The Certificate Maintenance Charge will be waived on or after the Income
Date for the current year if:
(i) variable annuity Option A (Income for a Fixed Number of Years) is
applicable; and
(ii) at the time of the first payment of the year, the present value
of all remaining payments (See "Option A" on Page xx) is greater than or
equal to [$40,000].]
Variable Account Annual Expenses
(as a percentage of average net assets)
Mortality and Expense Risk Charge: [1.25%]
[Distribution Charge:] [ .15%]
[Administrative Charge:] [ .15%]
Total Variable Account Annual Expenses: [1.55%]
[XXXXX Trust and YYYYY Fund] Annual Expenses[4]
(as a percentage of average net assets)
Management Other Total Fund
Fees Expenses Operating
(After Any (After Any Expenses (After
Waiver and/or Waiver and/or Any Waiver and/or
Fund Reimbursement)[5] Reimbursement)[5] Reimbursement)[5]
The above expenses for the Eligible Funds were provided by the Funds.
Keyport Benefit has not independently verified the accuracy of the
information.
Example #1 _ Assuming surrender of the Certificate at the end of the
periods shown.6
A $1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
Example #2 _ Assuming annuitization of the Certificate at the end of the
periods shown. 6
A $1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
Example #3 _ Assuming the Certificate stays in force through the periods
shown.
A $1,000 investment in each Sub-Account listed would be subject to the same
expenses shown in Example #2, assuming 5% annual return on assets.
[Example -- Whether the Certificate stays in force through the periods
shown or is surrendered or annuitized[6] at the end of the periods shown, a
$1,000 investment in each Sub-Account listed would be subject to the
expenses shown, assuming 5% annual return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years]
[1Contingent Deferred Sales Charges are deducted only if the Certificate is
totally or partially surrendered. A surrender will not incur the Charge
percentage shown as follows:
1. In any Certificate Year, Certificate Owners may withdraw an
aggregate amount, not to exceed, at the time of withdrawal, the
Certificate's earnings, which equal: (a) the Certificate Value, less
(b) the portion of the Purchase Payments not previously withdrawn.
2. In any Certificate Year after the first, Certificate Owners may
withdraw, in addition to the amount available in 1., the amount by
which 10% of the Certificate Value as of the preceding Certificate
Anniversary exceeds the amount available in 1.]
[2This charge will be waived on the first Certificate Anniversary and in
certain other instance (see "Deductions for Certificate Maintenance
Charge").]
3[Keyport Benefit reserves the right to impose a transfer fee after prior
notice to Certificate Owners, but currently does not impose any charge.]
Premium taxes are not shown. Keyport Benefit deducts the amount of premium
taxes, if any, when paid unless Keyport Benefit elects to defer such
deduction.
4[The XXXXX Trust] expenses are for [ ]. [The YYYYY Fund] expenses
[are estimated and] reflect the [YYYYY Fund's] Manager's agreement to
reimburse expenses above certain limits (see footnote 5).
[5[YYYYY Fund's] manager has agreed until [a/bb/cc] to reimburse all
expenses, including management fees, in excess of the following percentage
of the average annual net assets of each Fund, so long as such
reimbursement would not result in the Fund's inability to qualify as a
regulated investment company under the Internal Revenue Code. The total
percentages shown in the table for [YY-1, YY-2 and YY-3] are after expense
reimbursement. Each percentage shown in the parentheses is what the total
for 199[ ] would be in the absence of expense reimbursement: for [YY-1 -
xxx%; for YY-2 - xxx%; and for YYY-3 -xxx%].]
6The annuity is designed for retirement planning purposes. Surrenders
prior to the Income Date are not consistent with the long-term purposes of
the Certificate and the applicable tax laws.
The examples should not be considered a representation of past or future
expenses and charges of the Sub-Accounts. Actual expenses may be greater
or less than those shown. Similarly, the assumed 5% annual rate of return
is not an estimate or a guarantee of future investment performance. See
"Deductions" in this prospectus, ["How the Funds are Managed"] in the
prospectus for [XXXXX Trust], and ["Trust Management Organizations"] and
["Expenses of the Funds"] in the prospectus for [YYYYY Fund].
SYNOPSIS
The following Synopsis should be read in conjunction with the detailed
information in this prospectus and the Statement of Additional Information.
Please refer to the Glossary of Special Terms for the meaning of certain
defined terms. Variations from the information appearing in this prospectus
due to individual state requirements are described in supplements which are
attached to this prospectus, or in endorsements to the Certificates, as
appropriate.
The Certificate allows Certificate Owners to allocate Purchase Payments to
the Variable Account [and also to the Fixed Account.] The Variable Account
is a separate investment account maintained by Keyport Benefit. [The Fixed
Account is part of Keyport Benefit's "general account", which consists of
all Keyport Benefit's assets except the Variable Account and the assets of
other separate accounts maintained by Keyport Benefit.] Certificate Owners
may allocate payments to, and receive annuity payments from the Variable
Account [and/or the Fixed Account]. If the Certificate Owner allocates
payments to the Variable Account, the accumulation values and annuity
payments will fluctuate according to the investment experience of the Sub-
Accounts chosen. [If the Certificate Owner allocates payments to the Fixed
Account, the accumulation values will increase at guaranteed interest rates
and annuity payments will be of a fixed amount. [Fixed Account Values are
subject to a limited market value adjustment]. (See ""Keyport Benefit and
the Variable Account" on Page xx for more information on the Variable
Account [and Appendix A on Page xx for more information on the Fixed
Account].) [If the Certificate Owner allocates payments to both Accounts,
then the accumulation values and annuity payments will be variable in part
and fixed in part.]
The Certificate permits Purchase Payments to be made on a flexible Purchase
Payment basis. The minimum initial payment is $[5,000] [and [$2,000] for
individual retirement annuities]. The minimum amount for each subsequent
payment is $[1,000] or such lesser amount as Keyport Benefit may permit
from time to time [(currently $250)]. (See "Purchase Payments and
Applications" on Page x.)
There are no deductions made from Purchase Payments for sales charges at
the time of purchase. [A Contingent Deferred Sales Charge may be deducted
in the event of a total or partial surrender (see "Partial Withdrawals and
Surrender" on Page xx). The Contingent Deferred Sales Charge is based on a
graded table of charges. The charge will not exceed [7]% of that portion
of the amount surrendered that represents Purchase Payments made during the
[seven] years immediately preceding the request for surrender. (See
"Deductions for Contingent Deferred Sales Charge" on Page xx.)]
Keyport Benefit deducts a Mortality and Expense Risk Charge, which is equal
on an annual basis to [1.25]% of the average daily net asset values in the
Variable Account attributable to the Certificates. (See "Deductions for
Mortality and Expense Risk Charge" on Page xx.) [Keyport Benefit also
deducts a daily Distribution Charge which is equal on an annual basis to
[.15%] of the same values. (See "Deductions for Daily Distribution Charge"
on Page xx.)] [Keyport Benefit deducts a Daily Administrative Charge which
is equal on an annual basis to [.15]% of the same values. (See "Deductions
for Daily Administrative Charge" on Page xx.)]
[Keyport Benefit deducts an annual Certificate Maintenance Charge
(currently $[36.00]) from the Variable Account Value for administrative
expenses. Prior to the Income Date, Keyport Benefit reserves the right to
change this charge for future years. [Keyport Benefit will in certain
instances waive this charge.] (See "Deductions for Certificate Maintenance
Charge" on Page xx.)]
Keyport Benefit reserves the right to deduct a charge of [$50] for each
transfer in excess of [12] per Certificate Year [but currently does not do
so]. [(See "Transfer of Variable Account Value" on Page xx.)] [(See "Recent
Developments" on Page xx.)]
Premium taxes will be charged against the Certificate Value. Currently such
premium taxes range from 0% to 5.0%. (See "Deductions for Premium Taxes"
on Page xx.)
There are no federal income taxes on increases in the value of a
Certificate until a distribution occurs, in the form of a lump sum payment,
annuity payments, or the making of a gift or assignment of the Certificate.
A federal penalty tax (currently 10%) may also apply. (See "Tax Status" on
Page xx.)
The Certificate allows the Certificate Owner to revoke the Certificate
generally within 10 days of delivery (see "Right to Revoke" on Page xx).
Since Keyport Benefit will refund the Certificate Value, the Certificate
Owner will bear the investment risk during the revocation period.
The full financial statements for [the Variable Account and] Keyport
Benefit are in the Statement of Additional Information.
PERFORMANCE INFORMATION
The Variable Account may from time to time advertise certain performance
information concerning its various Sub-Accounts.
[Certain of the Eligible Funds have been available for contracts for
periods prior to the commencement of the offering of the Certificates
described in this prospectus. Any performance information for such periods
will be based on historical results of the Eligible Funds being applied to
the Certificate for the specified time periods.]
Performance information is not intended to indicate either past performance
under an actual Certificate or future performance.
The Sub-Accounts may advertise total return information for various periods
of time. Total return performance information is based on the overall
percentage change in value of a hypothetical investment in the specific Sub-
Account over a given period of time.
Average annual total return information shows the average percentage change
in the value of an investment in the Sub-Account from the beginning date of
the measuring period to the end of that period. This standardized version
of average annual total return reflects all historical investment results,
less all charges and deductions applied against the Sub-Account and a
Certificate [(including any Contingent Deferred Sales Charge that would
apply if a Certificate Owner surrendered the Certificate at the end of each
period indicated)]. Average total return does not take into account any
premium taxes and would be lower if these taxes were included.
In order to calculate average annual total return, Keyport Benefit divides
the change in value of a Sub-Account under a Certificate surrendered on a
particular date by a hypothetical $1,000 investment in the Sub-Account made
by the Certificate Owner at the beginning of the period illustrated. The
resulting total rate for the period is then annualized to obtain the
average annual percentage change during the period. Annualization assumes
that the application of a single rate of return each year during the period
will produce the ending value, taking into account the effect of
compounding.
The Sub-Accounts may present additional total return information computed
on a different basis.
[First, the Sub-Accounts may present total return information computed on
the same basis as described above, except deductions will not include the
Contingent Deferred Sales Charge. This presentation assumes that the
investment in the Certificate continues beyond the period when the
Contingent Deferred Sales Charge applies, consistent with the long-term
investment and retirement objectives of the Certificate. The total return
percentage will thus be higher under this method than the standard method
described above.]
[Second,] the Sub-Accounts may present total return information calculated
by dividing the change in a Sub-Account's Accumulation Unit value over a
specified time period by the Accumulation Unit value of that Sub-Account at
the beginning of the period. This computation results in a 12-month change
rate or, for longer periods, a total rate for the period which Keyport
Benefit annualizes in order to obtain the average annual percentage change
in the Accumulation Unit value for that period. The change percentages do
not take into account [the Contingent Deferred Sales Charge, the
Certificate Maintenance Charge and] premium tax charges. The percentages
would be lower if these charges were included.
The [XX-1] Sub-Account is a money market Sub-Account that also may
advertise yield and effective yield information. The yield of the Sub-
Account refers to the income generated by an investment in the Sub-Account
over a specifically identified 7-day period. This income is annualized by
assuming that the amount of income generated by the investment during that
week is generated each week over a 52-week period and is shown as a
percentage. The yield reflects the deduction of all charges assessed
against the Sub-Account and a Certificate but does not take into account
[Contingent Deferred Sales Charges and] premium tax charges. The yield
would be lower if these charges were included.
The effective yield of the [XX-1] Sub-Account is calculated in a similar
manner but, when annualizing such yield, income earned by the Sub-Account
is assumed to be reinvested. This compounding effect causes effective
yield to be higher than yield.
KEYPORT BENEFIT AND THE VARIABLE ACCOUNT
Keyport Benefit Life Insurance Company was organized under the laws of the
State of New York in 1987 as a stock life insurance company, and is a
wholly-owned subsidiary of Keyport Life Insurance Company. The executive
offices of Keyport Benefit are at 125 High Street, Boston, Massachusetts
02110. The home office is located at 100 Manhattanville Road, Purchase, New
York 10577. Keyport Benefit is admitted to conduct life insurance business
in New York and Rhode Island.
The Variable Account was established by Keyport Benefit pursuant to the
provisions of New York Law on February 6, 1998. The Variable Account meets
the definition of "separate account" under the federal securities laws. The
Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. Such
registration does not involve supervision of the management of the Variable
Account or Keyport Benefit by the Securities and Exchange Commission.
[Keyport Benefit has been rated [A+ (Superior)] by A.M. Best and Company,
independent analysts of the insurance industry.] [Standard & Poor's ("S &
P") has rated Keyport Benefit [AA] for [excellent] financial security,[
Moody's has rated Keyport [A1] for [good] financial strength] [and Duff &
Phelps has rated Keyport Benefit [AA-] for [very high] claims paying
ability]. The Best's [A+] rating is in the [highest] rating category,
which also includes [A++]. S & P [and Duff & Phelps] has [have] [one]
rating category above [AA] [and Moody's has two rating categories above A].
Within the S & P [AA] category, [only AA+ is higher]. [The Moody's ["1"]
modifier signifies that Keyport Benefit is in the [higher] end of the [A]
category] [while the Duff & Phelps ["-"] modifier signifies that Keyport
Benefit is at the [lower] end of the [AA] category.] These ratings merely
reflect the opinion of the rating company as to the relative financial
strength of Keyport Benefit and Keyport Benefit's ability to meet its
contractual obligations to its policyholders. Even though assets in the
Variable Account are held separately from Keyport Benefit's other assets,
ratings of Keyport Benefit may still be relevant to Certificate Owners
since not all of Keyport Benefit's contractual obligations relate to
payments based on those segregated assets (e.g., see "Death Provisions" for
Keyport Benefit's obligation after certain deaths to increase the
Certificate Value if it is less than Death Benefit Amount or otherwise
enhance the death benefit with interest).]
[Keyport Benefit is a member of the Insurance Marketplace Standards
Association ("IMSA"), and as such may use the IMSA logo and membership in
IMSA in advertisements. Being a member means that Keyport Benefit has
chosen to participate in IMSA's Life Insurance Ethical Market Conduct
Program.]
Keyport Benefit is one of the Liberty Financial Companies. Keyport Benefit
is ultimately controlled by Liberty Mutual Insurance Company of Boston,
Massachusetts, a multi-line insurance and financial services institution.
Obligations under the Certificates are the obligations of Keyport Benefit.
Although the assets of the Variable Account are the property of Keyport
Benefit, these assets are held separately from the other assets of Keyport
Benefit and are not chargeable with liabilities arising out of any other
business Keyport Benefit may conduct. Income, capital gains and/or capital
losses, whether or not realized, from assets allocated to the Variable
Account are credited to or charged against the Variable Account without
regard to the income, capital gains, and/or capital losses arising out of
any other business Keyport Benefit may conduct. Thus, Keyport Benefit does
not guarantee the investment performance of the Variable Account. The
Variable Account Value and the amount of variable annuity payments will
vary with the investment performance of the investments in the Variable
Account.
[YEAR 2000 MATTERS
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous
results by or at the Year 2000. This potential problem has become known as
the "Year 2000 issue". The Year 2000 issue affects virtually all companies
and organizations.
Computer applications which are affected by the Year 2000 issue could
impact Keyport Benefit's business functions in various ways, ranging from a
complete inability to perform critical business functions to a loss of
productivity in varying degrees. Likewise, the failure of some computer
applications could have no impact on critical business functions.
Keyport Benefit is assessing and addressing the Year 2000 issue by
implementing a four-step plan. The first two steps involve inventorying all
the computer applications which support Keyport Benefit's business
functions and prioritizing computer applications which are affected by the
Year 2000 issue based upon the degree of impact each has on the functioning
of Keyport Benefit's business units. The first two steps of the plan are
substantially complete.
The final two steps of the four-step plan involve remediation of affected
computer applications (i.e., repairing or replacing programs, including
those which interface with third-party computer applications that have
unremediated Year 2000 issues, and appropriate testing) and reinstallation
of computer applications. For computer applications which are "mission
critical" (i.e., their failure would result in the complete inability to
perform critical business functions), Keyport Benefit expects to complete
the final two steps of the plan by December 31, 1998. Remediation and
reinstallation of non-critical computer applications is scheduled to be
completed by December 31, 1999.
Keyport Benefit believes that the Year 2000 issue could have a material
impact on Keyport Benefit's operations if the four-step plan is not timely
implemented. However, based upon the progress that is being made, Keyport
Benefit believes that the timetable for implementing the plan will be met
and that the Year 2000 issue will not pose significant operational problems
for its computer systems.
Keyport Benefit does not expect that the cost of addressing the Year 2000
issue will be material to its financial condition or its results of
operations.]
PURCHASE PAYMENTS AND APPLICATIONS
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The minimums and maximums described in the following paragraph
may vary within any limits permitted under state insurance law
and Keyport Benefit's administrative guidelines in existence at
the time of issuance of the Certificate.
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The initial Purchase Payment is due on the Certificate Date. The minimum
initial Purchase Payment is $[5,000] [and [$2,000] for individual
retirement annuities]. Additional Purchase Payments can be made at the
Certificate Owner's option. Each subsequent Purchase Payment must be at
least $[1,000] or such lesser amount as Keyport Benefit may permit from
time to time [(currently $250)]. Keyport Benefit may reject any Purchase
Payment.
If the application for a Certificate is in good order and it calls for
amounts to be allocated to the Variable Account, Keyport Benefit will apply
the initial Purchase Payment to the Variable Account and credit the
Certificate with Accumulation Units within two business days of receipt.
If the application for a Certificate is not in good order, Keyport Benefit
will attempt to get it in good order within five business days. If it is
not complete at the end of this period, Keyport Benefit will inform the
applicant of the reason for the delay and that the Purchase Payment will be
returned immediately unless the applicant specifically consents to Keyport
Benefit's keeping the Purchase Payment until the application is complete.
Once the application is complete, the Purchase Payment will be applied
within two business days of its completion. Keyport Benefit has reserved
the right to reject any application.
Keyport Benefit confirms, in writing, to the Certificate Owner the
allocation of all Purchase Payments and the re-allocation of values after
any requested transfer. Keyport Benefit must be notified immediately by
the Certificate Owner of any processing error.
Keyport Benefit will permit others to act on behalf of an applicant in
certain instances, including the following two examples. First, Keyport
Benefit will accept an application for a Certificate that contains a
signature signed under a power of attorney if a copy of that power of
attorney is submitted with the application. Second, Keyport Benefit will
issue a Certificate that is replacing an existing life insurance or annuity
policy that was issued by Keyport Benefit or an affiliated company without
having previously received a signed application from the applicant.
Certain dealers or other authorized persons such as employers and Qualified
Plan fiduciaries will inform Keyport Benefit of an applicant's answers to
the questions in the application by telephone or by order ticket and cause
the initial Purchase Payment to be paid to Keyport Benefit. If the
information is in good order, Keyport Benefit will issue the Certificate
with a copy of an application completed with that information. The
Certificate will be delivered to the Certificate Owner with a letter from
Keyport Benefit that will give the Certificate Owner an opportunity to
respond to Keyport Benefit if any of the application information is
incorrect. Alternatively, Keyport Benefit's letter may request the
Certificate Owner to confirm the correctness of the information by signing
either a copy of the application or a Certificate delivery receipt that
ratifies the application in all respects (in either case, a copy of the
signed document would be returned to Keyport Benefit for its permanent
records). All purchases are confirmed, in writing, to the applicant by
Keyport Benefit. Keyport Benefit's liability under a Certificate extends
only to amounts so confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
Allocations of Purchase Payments
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The percentage of required allocations to each Sub-Account may vary
from 1% to 10%.
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Purchase payments applied to the Variable Account will be invested in one
or more of the Eligible Fund Sub-Accounts designated as permissible
investments in accordance with the selection made by the Certificate Owner
in the application. Any selection must specify the percentage of the
Purchase Payment that is allocated to each Sub-Account [or must specify the
asset allocation model selected. (See "Other Services, the Programs" on
Page xx)]. The percentage for each Sub-Account, if not zero, must be at
least [10]% and must be a whole number. A Certificate Owner may change the
allocation percentages without fee, penalty or other charge. Allocation
changes must be made by Written Request unless the Certificate Owner has by
Written Request authorized Keyport Benefit to accept telephone allocation
instructions from the Certificate Owner or from a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney. By
authorizing Keyport Benefit to accept telephone changes, a Certificate
Owner agrees to accept and be bound by the conditions and procedures
established by Keyport Benefit from time to time. The current conditions
and procedures are in Appendix [B] and Certificate Owners authorizing
telephone allocation instructions will be notified, in advance, of any
changes.
The Variable Account is segmented into Sub-Accounts. Each Sub-Account
contains the shares of one of the Eligible Funds and such shares are
purchased at net asset value. Eligible Funds and Sub-Accounts may be added
or withdrawn as permitted by applicable law. The Sub-Accounts in the
Variable Account and the corresponding Eligible Funds currently are as
follows:
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TEXT HERE WILL DESCRIBE ELIGIBLE FUNDS AND CORRESPONDING SUB-
ACCOUNTS
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Eligible Funds of [XXXXX Trust] Sub-Accounts
[XX-1] [XX-1 Sub-Account]
[XX-2] [XX-2 Sub-Account]
[XX-3] [XX-3 Sub-Account]
Eligible Funds of [YYYYY Fund] Sub-Accounts
[YY-1] [YY-1 Sub-Account]
[YY-2] [YY-2 Sub-Account]
[YY-3] [YY-3 Sub-Account]
Eligible Funds
The Eligible Funds which are the permissible investments of the Variable
Account are the separate funds of [XXXXX Trust, the separate funds of YYYYY
Fund], and any other mutual funds with which Keyport Benefit and the
Variable Account may enter into a participation agreement for the purpose
of making such mutual funds available as Eligible Funds under certain
Certificates.
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TEXT HERE WILL DESCRIBE INDIVIDUAL INVESTMENT ADVISERS
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The investment objectives of the Eligible Funds are briefly described
below. More detailed information, including investor considerations
related to the risks of investing in a particular Eligible Fund, may be
found in the current prospectus for that Fund. An investor should read
that prospectus carefully before selecting a fund for investing. The
prospectus is available, at no charge, from a salesperson or by writing
Keyport Benefit' Service Office at the address shown on Page 1 or by
calling (800) 437-4466.
Eligible Funds of [XXXXX Trust]
and Variable Account Sub-Accounts Investment Objective
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TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
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Eligible Funds of [YYYYY Fund]
and Variable Account Sub-Accounts Investment Objective
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TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES
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There is no assurance that the Eligible Funds will achieve their stated
objectives.
[XXXXX and YYYYY] Funds are funding vehicles for variable annuity contracts
and variable life insurance policies offered by separate accounts of
Keyport Benefit and of insurance companies affiliated and unaffiliated with
Keyport Benefit. The risks involved in this "mixed and shared funding" are
disclosed in the Trust's and Fund's prospectus under the caption ["The
Trust"] and [SALES AND REDEMPTIONS,] respectively.
Transfer of Variable Account Value
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The number of transfers will vary between zero (0) and the
maximum number that Keyport Benefit determines is consistent with
interpretations of applicable tax law restrictions on contract
owner control which may permit an unlimited number of transfers.
The transfer charge, if any, imposed on transfers in excess of
the stipulated number will not exceed $50. The maximum number of
free transfers, assuming the imposition of a transfer charge,
will be 12. The minimum amount that may be transferred will
range between $0 and $500, and the minimum required remaining Sub-
Account Value ranges between $0 and $100.
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Certificate Owners may transfer Variable Account Value from one Sub-Account
to another Sub-Account [and/or to the Fixed Account]. [See "Recent
Developments".][Currently [x] transfers are permitted.][ The minimum amount
of Variable Account Value that may be transferred is [$500] and the
remaining Variable Account Value in the Sub-Account is [$100].]
The Certificate allows Keyport Benefit to charge a transfer fee [of [n]]
and to limit the number of transfers that can be made in a specified time
period. Certificate Owners should be aware that transfer limitations may
prevent a Certificate Owner from making a transfer on the date he or she
wants to, with the result that the Certificate Owner's future Certificate
Value may be lower than it would have been had the transfer been made on
the desired date.
Currently, Keyport Benefit [has no limit on the number or frequency of
transfers and it] is [not] charging a transfer fee [of [n] for each
transfer in excess of [xx] per Certificate Year.] For transfers under
different Certificates that are being requested under powers of attorney
with a common attorney-in-fact or that are, in Keyport Benefit's
determination, based on the recommendation of a common investment adviser
or broker/dealer, there is a transfer limitation of one transfer every 30
days or such shorter period as Keyport Benefit may permit.
Keyport Benefit is also limiting each transfer to a maximum of $500,000 or
such greater amount as Keyport Benefit may permit. All transfers requested
for a Certificate on the same day will be treated as a single transfer and
the total combined transfer amount will be subject to the $500,000
limitation. If the $500,000 limitation is exceeded, no amount of the
transfer will be executed by Keyport Benefit.
In applying the $500,000 limitation, Keyport Benefit may treat as one
transfer all transfers requested by a Certificate Owner for multiple
Certificates he or she owns. If the $500,000 limitation is exceeded for
multiple transfers requested on the same day that are treated as a single
transfer, no amount of the transfer will be executed by Keyport Benefit.
In applying the $500,000 limitation to transfers requested by a common
attorney-in-fact or investment adviser, Keyport Benefit will treat as one
transfer all transfers requested under different Certificates that are
being requested under powers of attorney with a common attorney-in-fact or
that are, in Keyport Benefit's determination, based on the recommendation
of a common investment adviser or broker/dealer. If the $500,000
limitation is exceeded for multiple transfers requested on the same day
that are treated as a single transfer, no amount of the transfer will be
executed by Keyport Benefit. If a transfer is executed under one
Certificate and, within the next 30 days, a transfer request for another
Certificate is determined by Keyport Benefit to be related to the executed
transfer under this paragraph's rules, the transfer request will not be
executed by Keyport Benefit. In order for it to be executed, it would need
to be requested again after the 30 day period has expired and it, along
with any other transfer requests that are collectively treated as a single
transfer, would need to total less than $500,000.
Keyport Benefit's interest in applying these limitations is to protect the
interests of both Certificate Owners who are not engaging in significant
transfer activity and Certificate Owners who are engaging in such activity.
Keyport Benefit has determined that the actions of Certificate Owners
engaging in significant transfer activity among Sub-Accounts may cause an
adverse effect on the performance of the Eligible Fund for the Sub-Account
involved. The movement of Sub-Account values from one Sub-Account to
another may prevent the appropriate Eligible Fund from taking advantage of
investment opportunities because it must maintain a liquid position in
order to handle redemptions. Such movement may also cause a substantial
increase in Fund transaction costs which must be indirectly borne by
Certificate Owners.
Certificate Owners will be notified, in advance, of the imposition of any
transfer fee or of a change in the limitation on the number of transfers.
The fee will not exceed [$50].
Transfers must be made by Written Request unless the Certificate Owner has
by Written Request authorized Keyport Benefit to accept telephone transfer
requests from the Certificate Owner or from a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney. By
authorizing Keyport Benefit to accept telephone transfer instructions, a
Certificate Owner agrees to accept and be bound by the conditions and
procedures established by Keyport Benefit from time to time. The current
conditions and procedures are in Appendix [B] and Certificate Owners
authorizing telephone transfers will be notified, in advance, of any
changes. Written transfer requests may be made by a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney.
Transfer requests received by Keyport Benefit before the close of trading
on the New York Stock Exchange (currently 4:00 PM Eastern Time) will be
initiated at the close of business that day. Any requests received later
will be initiated at the close of the next business day. Each request from
a Certificate Owner to transfer value will be executed by both redeeming
and acquiring Accumulation Units on the day Keyport Benefit initiates the
transfer.
If 100% of any Sub-Account's value is transferred and the allocation
formula for Purchase Payments includes that Sub-Account, then the
allocation formula for future Purchase Payments will automatically change
unless the Certificate Owner instructs otherwise. For example, if the
allocation formula is 50% to Sub-Account A and 50% to Sub-Account B and all
of Sub-Account A's value is transferred to Sub-Account B, the allocation
formula will change to 100% to Sub-Account B unless the Certificate Owner
instructs otherwise.
Substitution of Eligible Funds and Other Variable Account Changes
If the shares of any of the Eligible Funds should no longer be available
for investment by the Variable Account or if in the judgment of Keyport
Benefit's management further investment in such fund shares should become
inappropriate in view of the purpose of the Certificate, Keyport Benefit
may add or substitute shares of another Eligible Fund or of another mutual
fund for Eligible Fund shares already purchased under the Certificate. No
substitution of Fund shares in any Sub-Account may take place without prior
approval of the Securities and Exchange Commission and notice to
Certificate Owners, to the extent required by the Investment Company Act of
1940.
Keyport Benefit has also reserved the right, subject to compliance with the
law as currently applicable or subsequently changed: (a) to operate the
Variable Account in any form permitted under the Investment Company Act of
1940 or in any other form permitted by law; (b) to take any action
necessary to comply with or obtain and continue any exemptions from the
Investment Company Act of 1940 or to comply with any other applicable law;
(c) to transfer any assets in any Sub-Account to another Sub-Account, or to
one or more separate investment accounts, or to Keyport Benefit's general
account; or to add, combine or remove Sub-Accounts in the Variable Account;
and (d) to change the way Keyport Benefit assesses charges, so long as the
aggregate amount is not increased beyond that currently charged to the
Variable Account and the Eligible Funds in connection with the
Certificates.
DEDUCTIONS
[Deductions for Certificate Maintenance Charge
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The Certificate Maintenance Charge will not exceed a maximum
dollar amount of $100. Under certain forms of the Certificate
Keyport Benefit may not impose any Certificate Maintenance
Charge. The amount of purchase payments necessary to support a
waiver of the charge ranges between $1000 and $5000.
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Keyport Benefit has responsibility for all administration of the
Certificates and the Variable Account. This administration includes, but
is not limited to, preparation of the Certificates, maintenance of
Certificate Owners' records, and all accounting, valuation, regulatory and
reporting requirements. Keyport Benefit assesses a Certificate Maintenance
Charge for such services during the accumulation and annuity payment
periods. At the present time the Certificate Maintenance Charge is
$[36.00] per Certificate Year. PRIOR TO THE INCOME DATE THE CERTIFICATE
MAINTENANCE CHARGE IS NOT GUARANTEED AND MAY BE CHANGED BY KEYPORT BENEFIT.
[The Certificate Maintenance Charge will be waived if:
[(i)] it is the first Certificate Anniversary,]
[(ii)] the Certificate Value is greater than or equal to [$40,000] on the
Certificate Anniversary date this charge is imposed, or
[(iii)] Purchase Payments of at least [$2,000] have been made in the prior
Certificate Year and there has been no partial withdrawal in the prior
Certificate Year.]
[The Certificate Maintenance Charge will be waived on and after the Income
Date for the current year if:
(i) variable annuity Option A is applicable; and
(ii) at the time of the first payment of the year, the present value of all
of the remaining payments (see "Option A" on Page xx) is greater than or
equal to [$40,000].]
Prior to the Income Date, the full amount of the charge will be deducted
from the Variable Account Value on each Certificate Anniversary and on the
date of any total surrender not falling on the Certificate Anniversary. On
the Income Date, a pro-rata portion of the charge due on the next
Certificate Anniversary will be deducted from the Variable Account Value.
This pro-rata charge covers the period from the prior Certificate
Anniversary to the Income Date. For example, if the Income Date occurs 73
days after that prior anniversary, then one-fifth (i.e., 73 days/365 days)
of the annual charge would be deducted on the Income Date. The charge will
be deducted from each Sub-Account in the proportion that the value of each
bears to the Variable Account Value.
Once annuity payments begin on the Income Date or once they begin after
surrender benefits are applied under a settlement option, the yearly cost
of the Certificate Maintenance Charge for a payee's annuity will be the
same as the yearly amount in effect immediately before the annuity payments
begin. Keyport Benefit may not later change the amount of the Certificate
Maintenance Charge deducted from the annuity payments. The charge will be
deducted on a pro-rata basis from each annuity payment. For example, if
annuity payments are monthly, then one-twelfth of the annual charge will be
deducted from each payment.
*****************************************************************
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The Mortality and Expense Risk Charge as stated in the body of
the prospectus will vary between 35 and 125 basis points. The
variations will depend upon the precise combination of features
incorporated into the particular form of the Certificate.
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Deductions for Mortality and Expense Risk Charge
Although variable annuity payments made to Annuitants will vary in
accordance with the investment performance of the investments of the
Variable Account, they will not be affected by the mortality experience
(death rate) of persons receiving such payments or of the general
population. Keyport Benefit guarantees the Death Benefits described below
(see "Death Provisions"). [Keyport Benefit assumes an expense risk that the
asset-based Administrative Charge will be insufficient to cover the
anticipated portion of Keyport Benefit's administrative expenses.] [Keyport
Benefit assumes an expense risk since the Certificate Maintenance Charge
after the Income Date will stay the same and not be affected by variations
in expenses.]
To compensate it for assuming these mortality and expense risks, for each
Valuation Period Keyport Benefit deducts from each Sub-Account a Mortality
and Expense Risk Charge equal on an annual basis to [.35 - 1.25]% of the
average daily net asset value of the Sub-Account. The charge is deducted
during both the accumulation and annuity periods (i.e., both before and
after the Income Date). Less than the full charge will be deducted from
Sub-Account values attributable to Certificates issued to employees of
Keyport Benefit and other persons specified in "Sales of the Certificates".
[Deductions for Daily Distribution Charge
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A daily Distribution Charge may not apply to all forms of the
Certificate. It will be imposed at a maximum rate of 15 basis
points of net assets when such imposition combined with any
contingent deferred sales charge does not result in the
imposition of sales charges that exceed 9% of Purchase Payments.
*****************************************************************
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Keyport Benefit also deducts from each Sub-Account each Valuation Period a
daily Distribution Charge equal on an annual basis to 0.[15]% of the
average daily net asset value of the Sub-Account. This charge compensates
Keyport Benefit for certain sales distribution expenses relating to the
Certificate.
This charge will not be deducted from Sub-Account values attributable to
Certificates that have reached the maximum cumulative distribution charge
limit defined below and to Certificates issued to employees of Keyport
Benefit and other persons specified in "Sales of the Certificates". The
charge is also not deducted from Sub-Account values attributable to Annuity
Units. Keyport Benefit may decide not to deduct the charge from Sub-
Account values attributable to a Certificate issued in an internal exchange
or transfer of an annuity contract of Keyport Benefit's general account.]
[Deductions for Daily Administrative Charge
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A daily Administrative Charge may not apply to all forms of the
Certificate. The maximum daily Administrative Charge will be 15 basis
points. This charge may be adjusted giving consideration to the amount
of the Certificate Maintenance Charge.
*****************************************************************
*****************************************************************
Keyport Benefit also deducts from each Sub-Account each Valuation Period an
Administrative Charge equal on an annual basis to 0.[15]% of the average
daily net asset value of the Sub-Account. This charge compensates Keyport
Benefit for a portion of the administrative expenses relating to the
Contract and the Certificate.]
[Deductions for Contingent Deferred Sales Charge
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The Contingent Deferred Sales Charge may not apply to all forms
of the Certificate. The Contingent Deferred Sales Charge,
including any amounts deducted through the daily Sales Charge,
will not exceed 9% of Purchase Payments. The Contingent Deferred
Sales Charge, not including any amount deducted through the daily
Sales Charge, will in no event exceed a duration of 7 years and
7%.
*****************************************************************
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A sales charge is not deducted from the Certificate's Purchase Payments
when initially received. However, a Contingent Deferred Sales Charge may
be deducted upon a surrender.
In order to determine whether a Contingent Deferred Sales Charge will be
due upon a partial or total surrender, Keyport Benefit maintains a separate
set of records. These records identify the date and amount of each
Purchase Payment made to the Certificate and the Certificate Value over
time.
Certificate Owners will be permitted to make partial surrenders during the
Accumulation Period without incurring a Contingent Deferred Sales Charge,
as follows:
1. In any Certificate Year, Certificate Owners may withdraw an
aggregate amount not to exceed, at the time of the withdrawal, the
Certificate's earnings, which equal: (a) the Certificate Value, less (b)
the portion of the Purchase Payments not previously withdrawn.
2. In any Certificate Year after the first, Certificate Owners may
withdraw, in addition to the amount available in 1., the amount by which
10% of the Certificate Value as of the preceding Certificate Anniversary
exceeds the amount available in 1.
Contingent Deferred Sales Charges, as discussed below, will be deducted
with respect to withdrawals in excess of these amounts.
In computing the applicable charge amounts, the amount of any surrender in
any Certificate Year after the first as set forth in 2. above, will be
deducted from the Purchase Payments in chronological order from the oldest
to the most recent until the amount is fully deducted. Any amount so
deducted will not be subject to a charge.
The following additional amounts will be deducted from the Purchase
Payments in the same chronological order: the amount of any surrender in
the first Certificate Year in excess of the amount set forth in 1. above
and the amount of any surrender in any later Certificate Year in excess of
the combined amount set forth in 1. and 2. above. The Contingent Deferred
Sales Charge for each Purchase Payment from which a deduction is made will
be equal to (a) multiplied by (b), where:
(a) is the amount so deducted; and
(b) is the applicable percentage for the number of years that have elapsed
from the date of that payment to the date of surrender. Years are
measured from the month and day of payment to the same month and day
in each subsequent calendar year. The percentages applicable to each
Purchase Payment during the [seven] years after the date of its
payment are: [7% during year 1; 6% during year 2; 5% during year 3; 4%
during year 4; 3% during year 5; 2% during year 6; 1% during year 7;]
and 0% thereafter.
The applicable Contingent Deferred Sales Charges for each Purchase Payment
are then totalled. The lesser of this total amount and the Certificate's
maximum cumulative distribution charge will be deducted from the
Certificate Value in the same manner as the surrender amount. The maximum
cumulative distribution charge is equal to (a) less (b), where (a) is 9% of
the total Purchase Payments made to the Certificate and (b) is the sum of
all prior Contingent Deferred Sale Charge deductions from the Certificate
Value [and all prior Variable Account daily distribution charges applicable
to the Certificate from the 0.15% distribution charge factor.] After each
surrender, Keyport Benefit's records will be adjusted to reflect any
deductions made from the applicable Purchase Payments.
Example: Two Purchase Payments were made one year apart for $5,000 and
$7,000. The Certificate Value has grown to an assumed $13,200 when the
Certificate Owner decides to withdraw $8,000. The Certificate Value at the
beginning of the Certificate Year of surrender was $13,000. The Contingent
Deferred Sales Charge percentages at the time of surrender are an assumed
5% for the $5,000 payment and 6% for the $7,000 payment. The portion of
the surrender representing the Certificate's earnings ($13,200 less
$12,000, or $1,200) would not be subject to charges. Since $1,200 is less
than the amount guaranteed not to have charges (10% of $13,000, or $1,300),
an additional $100 would not be subject to charges. This $100 would be
deducted from the oldest Purchase Payment, reducing it from $5,000 to
$4,900. The $1,200 increase in value plus the additional $100 leaves
$6,700 ($8,000 - 1,200 - 100) to be deducted. This $6,700 would be
deducted from the $4,900 of the first payment still left and $1,800 of the
second payment. The total Contingent Deferred Sales Charge would be $4,900
multiplied by the applicable 5% and $1,800 times the applicable 6%, or a
total of $353. The distribution charge records would now reflect $0 for
the 1st payment and $5,200 for the 2nd payment. The $8,000 requested plus
the $353 charge would be deducted from Certificate Values under the rules
specified in the "Partial Withdrawals and Surrender" on Page x.
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The maximum compensation payable on the sale of Certificates is 7.00%
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The Contingent Deferred Sales Charge, when it is applicable, will be used
to cover the expenses of selling the Certificate, including compensation
paid to selling dealers and the cost of sales literature. Any expenses not
covered by the charge will be paid from Keyport Benefit's general account,
which may include monies deducted from the Variable Account for the
Mortality and Expense Risk Charge. A dealer selling the Certificate may
receive up to [6.25%] of Purchase Payments [with additional compensation
later based on the Certificate Value of those payments. During certain
time periods selected by Keyport Benefit and [KFSC], the percentage may
increase to [7.00]%.] [In addition, under certain circumstances, Keyport
Benefit or certain of its affiliates, under a marketing support agreement
with [KFSC] may pay certain sellers for other services not directly related
to the sale of the Certificates such as special marketing support
allowances.]
The Contingent Deferred Sales Charge will be waived in the event a Covered
Person is confined in a medical facility in accordance with the provisions
and conditions of an endorsement relating to such confinements.
The Contingent Deferred Sales Charge will be eliminated under Certificates
issued to employees of Keyport Benefit and other persons specified in
"Sales of the Certificates".
[Keyport Benefit may reduce or change to 0% any Contingent Deferred Sales
Charge percentage under a Certificate issued in an internal exchange or
transfer of an annuity contract of Keyport Benefit's general account.]
[Keyport Benefit may allow, under the Systematic Withdrawal Program and
under other permitted circumstances, all or part of the amount in 2. above
to also be available in the first Certificate Year. If so, the amount in 2.
above will be calculated by substituting the initial Purchase Payment for
the Certificate Value.]
[Deductions for Transfers of Variable Account Value
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The charge for transfers will range from zero to an amount not to
exceed $50.
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The Certificate allows Keyport Benefit to charge a transfer fee. Currently
no fee is being charged. Certificate Owners will be notified, in advance,
of the imposition of any fee. The fee will not exceed $[50].]
Deductions for Premium Taxes
Keyport Benefit deducts the amount of any premium taxes levied by any state
or governmental entity when paid unless Keyport Benefit elects to defer
such deduction. Such premium taxes depend, among other things, on the type
of Certificate (Qualified or Non-Qualified), on the state of residence of
the Certificate Owner, the state of residence of the Annuitant, the status
of Keyport Benefit within such states, and the insurance tax laws of such
states. For New York Certificates, the current premium tax rate is 0%.
Deductions for Income Taxes
Keyport Benefit will deduct from any amount payable under the Certificate
any income taxes that a governmental authority requires Keyport Benefit to
withhold with respect to that amount. See "Income Tax Withholding" and "Tax-
Sheltered Annuities".
Total Variable Account Expenses
The Variable Account's total expenses in relation to the Certificate will
be [the Certificate Maintenance Charge,] the Mortality and Expense Risk
Charge, [the daily Distribution Charge,] [and the Daily Administrative
Charge.]
The value of the assets in the Variable Account will reflect the value of
Eligible Fund shares and therefore the deductions from and expenses paid
out of the assets of the Eligible Funds. These deductions and expenses are
described in the Eligible Fund prospectus.
[OTHER SERVICES
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Each of the following Programs may or may not be offered under
any form of the Certificate. If only one Program is offered, the
plural nature of the first two paragraphs will be adjusted
accordingly. The minimum amount that may be transferred under the
Dollar Cost Averaging Program ranges between $75 and $750. The
required notice period for the Rebalancing Program will not
exceed thirty days. The minimum Purchase Payment for the
Systematic Investment Program ranges between $50 and $1000. The
minimum amount that may be withdrawn under the Systematic
Withdrawal Program ranges between $100 and $250.
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[The Program[s]]. Keyport Benefit offers several investment related
programs which are available only prior to the Income Date: [Asset
Allocation]; [Dollar Cost Averaging]; [Systematic Investment]; and
[Systematic Withdrawal] Programs. [A Rebalancing Program is available prior
to and after the Income Date.] Under each Program that utilizes transfers,
the related transfers between and among Sub-Accounts [and the Fixed
Account] are not counted as one of the [twelve] free transfers. Each of
the Programs has its own requirements, as discussed below. Keyport Benefit
reserves the right to terminate any Program.
If the Certificate Owner has submitted the required telephone authorization
form, certain changes may be made by telephone. For those Programs
involving transfers, Owners may change instructions by telephone with
regard to which Sub-Accounts [or the Fixed Account] Certificate Value may
be transferred. The current conditions and procedures are described in
Appendix [B].
[Dollar Cost Averaging Program. Keyport Benefit offers a Dollar Cost
Averaging program that Certificate Owners may participate in by Written
Request. The program periodically transfers Accumulation Units from the
[XX-1] Sub-Account [or the One-Year Guarantee Period of the Fixed Account]
to other Sub-Accounts selected by the Certificate Owner. The program
allows a Certificate Owner to invest in Variable Sub-Accounts over time
rather than having to invest in those Sub-Accounts all at once. The
program is available for initial and subsequent Purchase Payments and for
Certificate Value transferred into the [XX-1] Sub-Account [or the One-Year
Guarantee Period.] Under the program, Keyport Benefit makes automatic
transfers on a periodic basis out of the [XX-1] Sub-Account [or the One-
Year Guarantee Period] into one or more of the other available Sub-Accounts
(Keyport Benefit reserves the right to limit the number of Sub-Accounts the
Certificate Owner may choose but there are currently no limits).
The Certificate Owner by Written Request must specify the [XX-1] Sub-
Account [or the One-Year Guarantee Period] from which the transfers are to
be made, the monthly amount to be transferred [(minimum $750)] and the Sub-
Account(s) to which the transfers are to be made. The first transfer will
occur at the close of the Valuation Period designated by Keyport Benefit
that is within 30 days after the receipt of the Certificate Owner's Written
Request. Each succeeding transfer will occur at the close of the same
Valuation Period of the subsequent chosen interval one month later (e.g.,
if monthly transfers are selected and the first transfer occurs on April 8,
the second transfer will occur at the close of the Valuation Period that
includes May 8). When the remaining value is less than the monthly
transfer amount, that remaining value will be transferred and the program
will end. Before this final transfer, the Certificate Owner may extend the
program by allocating additional Purchase Payments to the [XX-1] Sub-
Account [or the One-Year Guarantee Period] or by transferring Certificate
Value to the [XX-1] Sub-Account [or the One-Year Guarantee Period.] The
Certificate Owner may, by Written Request or by telephone, change the
monthly amount to be transferred, change the Sub-Account(s) to which the
transfers are to be made, or end the program. The program will
automatically end if the Income Date occurs. Keyport Benefit reserves the
right to end the program at any time by sending the Certificate Owner a
notice one month in advance.
Written or telephone instructions must be received by Keyport Benefit by
the end (currently 4:00 PM Eastern Time) of the business day preceding the
next scheduled transfer in order to be in effect for that transfer.
Telephone instructions are subject to the conditions and procedures
established by Keyport Benefit from time to time. The current conditions
and procedures appear in Appendix [B], and Certificate Owners in a dollar
cost averaging program will be notified, in advance, of any changes.]
[Asset Allocation Program
Certificate Owners may select from five asset allocation model portfolios
separately developed by Ibbotson Associates and Standard & Poor's. (Model
A - Capital Preservation, Model B - Income and Growth, Model C - Moderate
Growth, Model D - Growth, and Model E - Aggressive Growth.) If a
Certificate Owner elects one of the models, initial and subsequent Purchase
Payments will automatically be allocated among the Sub-Accounts in the
model. Only one model may be used in a Certificate at a time. Certificate
Owners may use a questionnaire and scoring system to determine the model
which corresponds to their risk tolerance and time horizons.
Periodically Ibbotson Associates and Standard & Poor's will review the
models and may determine that a reconfiguration of the Sub-Accounts and
percentage allocations among those Sub-Accounts is appropriate. Certificate
Owners will receive notification prior of any reconfiguration.
[The Fixed Account is not available in any asset allocation model. A
Certificate Owner may allocate initial or subsequent Purchase Payments, or
Certificate Value, between an asset allocation model and the Fixed
Account.]]
[Rebalancing Program. In accordance with the Certificate Owner's election
of the relative Purchase Payments percentage allocations, Keyport Benefit
will automatically rebalance the Certificate Value of each Sub-Account
[either] [monthly,] [quarterly,] [semi-annually,] [or] [annually]. On the
last day of the [period selected] [month] [calendar quarter] [year],
Keyport Benefit will automatically rebalance the Certificate Value in each
of the Sub-Accounts to match the current Purchase Payments percentage
allocations. The Program may be terminated at any time and the percentages
may be altered by Written Request. The requested change must be received
at the Service Office [thirty (30)] days prior to the end of the [period
selected] [month] [calendar quarter] [year]. [Certificate Value allocated
to the Fixed Account is not subject to automatic rebalancing.] After the
Income Date, automatic rebalancing applies only to variable annuity
payments and Keyport Benefit will rebalance the number of Annuity Units in
each Sub-Account. Annuity Units are used to calculate the amount of each
Sub-Account annuity payment; see "Variable Annuity Benefits") in the
Statement of Additional Information.]
[Systematic Investment Program. Purchase Payments under Non-Qualified
Certificates may be made by monthly deductions from the bank account [or
payroll] of any Certificate Owner that has completed and returned to
Keyport Benefit a Systematic Investment Program application and
authorization form. The application and authorization form may be obtained
from Keyport Benefit or from the sales representative. Each Systematic
Investment Program Purchase Payment is subject to a minimum of $50.]
[Systematic Withdrawal Program. To the extent permitted by law, Keyport
Benefit will make monthly, quarterly, semi-annually or annual distributions
of a predetermined dollar amount to a Certificate Owner that has enrolled
in the Systematic Withdrawal Program. Under the Program, all distributions
will be made directly to the Certificate Owner and will be treated for
federal tax purposes as any other withdrawal or distribution of Certificate
Value. (See "Tax Status".) A Certificate Owner may specify the amount of
each partial withdrawal, subject to a minimum of [$50]. [Systematic
withdrawals may [only] be made from the Sub-Accounts [and the [One] Year
Guarantee Period of the Fixed Account.]] [In each Certificate Year,
portions of Certificate Value may be withdrawn without the imposition of
any Contingent Deferred Sales Charge ("Free Withdrawal Amount"). If
withdrawals pursuant to the Program are greater than the Free Withdrawal
Amount, the amount of the withdrawals greater than the Free Withdrawal
Amount will be subject to the applicable Contingent Deferred Sales Charge.
Any unrelated voluntary partial withdrawal a Certificate Owner makes during
a Certificate Year will be aggregated with withdrawals pursuant to the
Program to determine the applicability of any Contingent Deferred Sales
Charge under the Certificate provisions regarding partial withdrawals.]
Unless the Certificate Owner specifies the Sub-Account or Sub-Accounts [or
the Fixed Account] from which withdrawals of Certificate Value shall be
made or if the amount in a specified Sub-Account is less than the
predetermined amount, Keyport Benefit will make withdrawals under the
Program from the Sub-Accounts [and the Fixed Account] in amounts
proportionate to the amounts in the Sub-Accounts [and the Fixed Account.]
All withdrawals under the Program will be effected by canceling the number
of Accumulation Units equal in value to the amount to be distributed to the
Certificate Owner [and any applicable Contingent Deferred Sales Charge].
[The Program may be combined with all other Programs [except the Systematic
Investment Program].]
[It may not be advisable to participate in the Systematic Withdrawal
Program and incur a Contingent Deferred Sales Charge when making additional
Purchase Payments under the Certificate.]]
THE CERTIFICATES
Variable Account Value
The Variable Account Value for a Certificate is the sum of the value of
each Sub-Account to which values are allocated under a Certificate. The
value of each Sub-Account is determined at any time by multiplying the
number of Accumulation Units attributable to that Sub-Account by the
Accumulation Unit value for that Sub-Account at the time of determination.
The Accumulation Unit value is an accounting unit of measure used to
determine the change in an Accumulation Unit's value from Valuation Period
to Valuation Period.
Each Purchase Payment that is made results in additional Accumulation Units
being credited to the Certificate and the appropriate Sub-Account
thereunder. The number of additional units for any Sub-Account will equal
the amount allocated to that Sub-Account divided by the Accumulation Unit
value for that Sub-Account at the time of investment.
Valuation Periods
The Variable Account is valued each Valuation Period using the net asset
value of the Eligible Fund shares. A Valuation Period is the period
commencing at the close of trading on the New York Stock Exchange on each
Valuation Date and ending at the close of trading for the next succeeding
Valuation Date. A Valuation Date is each day that the New York Stock
Exchange is open for business. The New York Stock Exchange is currently
closed on weekends, New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Net Investment Factor
Variable Account Value will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect value, Keyport Benefit utilizes an Accumulation Unit
value. Each Sub-Account has its own Accumulation Units and value per Unit.
The Unit value applicable during any Valuation Period is determined at the
end of that period.
When Keyport Benefit first purchased Eligible Fund shares on behalf of the
Variable Account, Keyport Benefit valued each Accumulation Unit at a
specified dollar amount. The Unit value for each Sub-Account in any
Valuation Period thereafter is determined by multiplying the value for the
prior period by a net investment factor. This factor may be greater or
less than 1.0; therefore, the Accumulation Unit may increase or decrease
from Valuation Period to Valuation Period. Keyport Benefit calculates a
net investment factor for each Sub-Account by dividing (a) by (b) and then
subtracting (c) (i.e., (a/b) _ c), where:
(a) is equal to:
(i) the net asset value per share of the Eligible Fund at the
end of the Valuation Period; plus
(ii) the per share amount of any distribution made by the
Eligible Fund if the "ex-dividend" date occurs during that same
Valuation Period.
(b) is the net asset value per share of the Eligible Fund at the end of
the prior Valuation Period.
(c) is equal to:
(i) the Valuation Period equivalent of the Mortality
and Expense Risk Charge; plus
[(ii) the Valuation Period equivalent of the daily
Distribution Charge; plus]
[(iii) the Valuation Period equivalent of the daily
Administrative Charge; plus]
[(iv)] a charge factor, if any, for any tax provision
established by Keyport Benefit as a result of the operations
of that Sub-Account.
[If a Certificate ever reaches the maximum cumulative sales charge limit
defined in "Deductions for Contingent Deferred Sales Charge", Unit values
without (c)(ii) above will be used thereafter.] For Certificates issued to
employees of Keyport Benefit and other persons specified in "Sales of the
Certificates", Unit values with [.35]% in (c)(i) above [and without (c)(ii)
above will be used. Unit values without (c)(ii) above may be used for
certain Certificates issued in an internal exchange or transfer (see
"Deductions for Daily Distribution Charges".]
Modification of the Certificate
Only Keyport Benefit's President or Secretary may agree to alter the
Certificate or waive any of its terms. Any changes must be made in writing
and with the Certificate Owner's consent, except as may be required by
applicable law.
Right to Revoke
The Certificate Owner may return the Certificate within 10 days after he or
she receives it by delivering or mailing it to Keyport Benefit's Service
Office. The return of the Certificate by mail will be effective when the
postmark is affixed to a properly addressed and postage-prepaid envelope.
The returned Certificate will be treated as if Keyport Benefit never issued
it and Keyport Benefit will refund the Certificate Value.
DEATH PROVISIONS FOR NON-QUALIFIED CERTIFICATES
Death of Primary Owner, Joint Owner or Certain Non-Owner Annuitant
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One or more of the three Death Benefit options described below
may be included under any form of the Certificate.
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These provisions apply if, before the Income Date while the Certificate is
In Force, the primary Certificate Owner or any joint Certificate Owner dies
(whether or not the decedent is also the Annuitant) or the Annuitant dies
under a Certificate with a non-natural Certificate Owner such as a trust.
The Designated Beneficiary will control the Certificate after such a death.
If the decedent's surviving spouse (if any) is the sole Designated
Beneficiary, the surviving spouse will automatically become the new sole
primary Certificate Owner as of the decedent's date of death. And, if the
Annuitant is the decedent, the new Annuitant will be any living contingent
annuitant, otherwise the surviving spouse. The Certificate may continue
until another death occurs (i.e., until the death of the Annuitant, primary
Certificate Owner or joint Certificate Owner). Except for this paragraph,
all of "Death Provisions" will apply to that subsequent death.
In all other cases, the Certificate may continue up to five years from the
date of death. During this period, the Designated Beneficiary may exercise
all ownership rights, including the right to make transfers or partial
surrenders or the right to totally surrender the Certificate for its
Surrender Value. If the Certificate is still in effect at the end of the
five-year period, Keyport Benefit will automatically end it then by paying
the Certificate Value to the Designated Beneficiary. If the Designated
Beneficiary is not then alive, Keyport Benefit will pay any person(s) named
by the Designated Beneficiary in a Written Request; otherwise the
Designated Beneficiary's estate.
The Covered Person under this paragraph shall be [the decedent if he or she
is the first to die of] the primary Certificate Owner, [Joint Certificate
Owner], [Annuitant], or, if there is a non-natural Certificate Owner such
as a trust, the Annuitant shall be the Covered Person. If the Covered
Person dies, the Certificate Value will be increased, as provided below, if
it is less than the Death Benefit Amount ("DBA"). The DBA is:
[[1]. The DBA at issue is the initial Purchase Payment. Thereafter, it is
the prior death benefit plus any additional Purchase Payments, less any
partial withdrawals, including any applicable surrender charge.]
[[2]. The DBA at issue is the initial Purchase Payment. Thereafter, the
DBA is calculated for each Valuation Period by adding any additional
Purchase Payments, and deducting any partial withdrawals, including any
applicable surrender charge. This resulting amount is the "net Purchase
Payment death benefit". The Certificate Value for each Certificate
Anniversary (the "Anniversary Value") before the [81st] birthday of the
Covered Person is determined. Each Anniversary Value is increased by any
Purchase Payments made after that anniversary. This resultant value is
then decreased by an amount calculated at the time of any partial
withdrawal made after that anniversary. The amount is calculated by taking
the amount of any partial withdrawal, and dividing by the Certificate Value
immediately preceding the partial withdrawal, and then multiplying by the
Anniversary Value immediately preceding the withdrawal. The greatest
Anniversary Value, as so adjusted, (the "greatest Anniversary Value") is
the DBA unless the net Purchase Payment death benefit is higher. The net
Purchase Payment death benefit will be the DBA if such amount is higher
than the greatest Anniversary Value.]
[[3]. The DBA at issue is the initial Purchase Payment. Thereafter, the
DBA is calculated for each Valuation Period by applying a death benefit
interest rate to the previously calculated DBA, adding any Purchase
Payments made during the current Valuation Period and deducting any partial
withdrawals, including any applicable surrender charge, taken during the
current Valuation Period. The death benefit interest rate is applied to
each Purchase Payment until it equals the Maximum Guaranteed Death Benefit.
Initially, the Maximum Guaranteed Death Benefit will be a multiple of the
initial and additional Purchase Payments made, each computed separately,
determined as of the date of death based on such factors as the then
stipulated interest rate or the net rate of return of certain Sub-Accounts
[or the Fixed Account], as described below. Thereafter, the Maximum
Guaranteed Death Benefit as of the effective date of a partial withdrawal
is reduced first by the amount of the withdrawal representing earnings and
second in proportion to the reduction in Certificate Value for any partial
withdrawal representing Purchase Payments.
The death benefit interest rate compounded annually will be a stipulated
interest rate, except that with regard to amounts in the Sub-Accounts
investing in money market, short term bond or income Funds or [the General
Account (the "Fixed Account")] the interest rate applied will be the net
rate of return for such Funds, respectively, if it is less than the
stipulated death benefit interest rate.]
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The period of time during which the Surrender Charge may be waived
following death ranges between 60 and 180 days.
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When Keyport Benefit receives due proof of the Covered Person's death,
Keyport Benefit will compare, as of the date of death, the Certificate
Value to the DBA. If the Certificate Value was less than the DBA, Keyport
Benefit will increase the current Certificate Value by the amount of the
difference. Note that while the amount of the difference is determined as
of the date of death, that amount is not added to the Certificate Value
until Keyport Benefit receives due proof of death. The amount to be
credited will be allocated to the Variable Account [and/or the Fixed
Account] based on the Purchase Payment allocation selection that is in
effect when Keyport Benefit receives due proof of death. [Whether or not
the Certificate Value is increased because of this minimum death provision,
the Designated Beneficiary may, by the later of the 90th day after the
Covered Person's death and the 60th day after Keyport Benefit is notified
of the death, surrender the Certificate for the Certificate Withdrawal
Value without any applicable Contingent Deferred Sales Charge being
deducted. For a surrender after the applicable 90 or 60 day period and for
a surrender at any time after the death of a non-Covered Person, any
applicable Contingent Deferred Sales Charge would be deducted.] If the
Certificate is not surrendered, it will continue for the time period
specified above.
Payment of Benefits. Instead of receiving a lump sum, the Certificate
Owner or any Designated Beneficiary may direct by Written Request that
Keyport Benefit pay any benefit of $5,000 or more under an annuity payment
option that meets the following: (a) the first payment to the Designated
Beneficiary must be made no later than one year after the date of death;
(b) payments must be made over the life of the Designated Beneficiary or
over a period not extending beyond that person's life expectancy; and (c)
any payment option that provides for payments to continue after the death
of the Designated Beneficiary will not allow the successor payee to extend
the period of time over which the remaining payments are to be made.
Death of Certain Non-Certificate Owner Annuitant. These provisions apply
if, before the Income Date while the Certificate is In Force, (a) the
Annuitant dies, (b) the Annuitant is not a Certificate Owner, and (c) the
Certificate Owner is a natural person. The Certificate will continue after
the Annuitant's death. The new Annuitant will be any living contingent
annuitant, otherwise the primary Certificate Owner. If the Annuitant is the
first to die of the Certificate's primary Certificate Owner, Joint
Certificate Owner and Annuitant, then the Annuitant is the Covered Person
and the Certificate Value will be increased, as provided below, if it is
less than the Death Benefit Amount ("DBA"), as defined above. When Keyport
Benefit receives due proof of the Annuitant's death, Keyport Benefit will
compare, as of the date of death, the Certificate Value to the DBA. If the
Certificate Value was less than the DBA, Keyport Benefit will increase the
current Certificate Value by the amount of the difference. Note that while
the amount of the difference is determined as of the date of death, that
amount is not added to the Certificate Value until Keyport Benefit receives
due proof of death. The amount to be credited will be allocated to the
Variable Account [and/or the Fixed Account] based on the Purchase Payment
allocation selection that is in effect when Keyport Benefit receives due
proof of death. Whether or not the Certificate Value is increased because
of this minimum death provision, the Certificate Owner may surrender the
Certificate within 90 days of the date of the Annuitant's death for the
Certificate Withdrawal Value [without any applicable Contingent Deferred
Sales Charge being deducted]. [For a surrender after 90 days, any
applicable Contingent Deferred Sales Charge would be deducted.]
DEATH PROVISIONS FOR QUALIFIED CERTIFICATES
Death of Annuitant. If the Annuitant dies before the Income Date while the
Certificate is In Force, the Designated Beneficiary will control the
Certificate after such a death. The Certificate Value will be increased,
as provided below, if it is less than the Death Benefit Amount ("DBA") as
defined above. When Keyport Benefit receives due proof of the Annuitant's
death, Keyport Benefit will compare, as of the date of death, the
Certificate Value to the DBA. If the Certificate Value was less than the
DBA, Keyport Benefit will increase the current Certificate Value by the
amount of the difference. Note that while the amount of the difference is
determined as of the date of death, that amount is not added to the
Certificate Value until Keyport Benefit receives due proof of death. The
amount to be credited will be allocated to the Variable Account [and/or the
Fixed Account] based on the Purchase Payment allocation selection that is
in effect when Keyport Benefit receives due proof of death. [Whether or
not the Certificate Value is increased because of this minimum death
provision, the Designated Beneficiary may, by the later of the 90th day
after the Annuitant's death and the 60th day after Keyport Benefit is
notified of the death, surrender the Certificate for the Certificate
Withdrawal Value without any applicable Contingent Deferred Sales Charge
being deducted. For a surrender after the applicable 90 or 60 day period,
any applicable Contingent Deferred Sales Charge would be deducted.]
If the Certificate is not surrendered, it may continue for the time period
permitted by the Internal Revenue Code provisions applicable to the
particular Qualified Plan. During this period, the Designated Beneficiary
may exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to totally surrender the Certificate for
its Certificate Withdrawal Value. If the Certificate is still in effect at
the end of the period, Keyport Benefit will automatically end it then by
paying the Certificate Withdrawal Value [(without the deduction of any
applicable Contingent Deferred Sales Charge)] to the Designated
Beneficiary. If the Designated Beneficiary is not alive then, Keyport
Benefit will pay any person(s) named by the Designated Beneficiary in a
Written Request; otherwise the Designated Beneficiary's estate.
Payment of Benefits. Instead of receiving a lump sum, the Certificate
Owner or any Designated Beneficiary may direct by Written Request that
Keyport Benefit pay any benefit of $5,000 or more under an annuity payment
option that meets the following: (a) the first payment to the Designated
Beneficiary must be made no later than one year after the date of death;
(b) payments must be made over the life of the Designated Beneficiary or
over a period not extending beyond that person's life expectancy; and (c)
any payment option that provides for payments to continue after the death
of the Designated Beneficiary will not allow the successor payee to extend
the period of time over which the remaining payments are to be made.
CERTIFICATE OWNERSHIP
The Certificate Owner shall be the person designated in the application.
The Certificate Owner may exercise all the rights of the Certificate.
Joint Certificate Owners are permitted but not contingent Certificate
Owners.
The Certificate Owner may by Written Request change the Certificate Owner,
primary beneficiary, contingent beneficiary or contingent annuitant. An
irrevocably-named person may be changed only with the written consent of
such person.
Because a change of Certificate Owner by means of a gift (i.e., a transfer
without full and adequate consideration) may be a taxable event, a
Certificate Owner should consult a competent tax adviser as to the tax
consequences resulting from such a transfer.
Any Qualified Certificate may have limitations on transfer of ownership. A
Certificate Owner should consult the Plan Administrator and a competent tax
adviser as to the tax consequences resulting from such a transfer.
ASSIGNMENT
The Certificate Owner may assign the Certificate at any time. A copy of
any assignment must be filed with Keyport Benefit. The Certificate Owner's
rights and those of any revocably-named person will be subject to the
assignment. Any Qualified Certificate may have limitations on
assignability.
Because an assignment may be a taxable event, a Certificate Owner should
consult a competent tax adviser as to the tax consequences resulting from
any such assignment.
PARTIAL WITHDRAWALS AND SURRENDER
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The minimum amount to be withdrawn will range between $100 and
$500 and required Certificate Value following a withdrawal will
range between $500 to $2500.
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The Certificate Owner may make partial withdrawals from the Certificate.
Keyport Benefit must receive a Written Request and the minimum amount to be
withdrawn must be at least [$300] or such lesser amount as Keyport Benefit
may permit in conjunction with a Systematic Withdrawal Program. If the
Certificate Value after a partial withdrawal would be below $[2,500],
Keyport Benefit will treat the request as a withdrawal of only the excess
amount over $[2,500]. [The amount withdrawn will include any applicable
Contingent Deferred Sales Charge and therefore the amount actually
withdrawn may be greater than the amount of the surrender check requested.]
Unless the request specifies otherwise, the total amount withdrawn will be
deducted from all Sub-Accounts of the Variable Account in the ratio that
the value in each Sub-Account bears to the total Variable Account Value.
[If there is no value, or insufficient value, in the Variable Account, then
the amount surrendered, or the insufficient portion, will be deducted from
the Fixed Account in the ratio that each Guarantee Period's value bears to
the total Fixed Account Value.]
The Certificate Owner may totally surrender the Certificate by making a
Written Request. Surrendering the Certificate will end it. Upon
surrender, the Certificate Owner will receive the Certificate Withdrawal
Value.
Keyport Benefit will pay the amount of any surrender within seven days of
receipt of such request. Alternatively, the Certificate Owner may purchase
for himself or herself an annuity option with any surrender benefit of at
least $5,000. Keyport Benefit's consent is needed to choose an option if
the Certificate Owner is not a natural person.
Annuity options based on life contingencies cannot be surrendered after
annuity payments have begun. Option A, which is not based on life
contingencies, may be surrendered if a variable payout has been selected.
Because of the potential tax consequences of a full or partial surrender, a
Certificate Owner should consult a competent tax adviser regarding a
surrender.
ANNUITY PROVISIONS
Annuity Benefits
If the Annuitant is alive on the Income Date and the Certificate is In
Force, payments will begin under the annuity option or options the
Certificate Owner has chosen. The amount of the payments will be
determined by applying the Certificate Value [increased or decreased by a
limited Market Value Adjustment of Fixed Account Value described in
Appendix A](less any premium taxes not previously deducted [and less any
applicable Certificate Maintenance Charge]) on the Income Date in
accordance with the option selected.
Income Date and Annuity Option
The Certificate Owner may select an Income Date and an Annuity Option at
the time of application. If the Certificate Owner does not select a
Annuity Option, Option B will automatically be designated. If the
Certificate Owner does not select an Income Date for the Annuitant, the
Income Date will automatically be the earlier of (i) the later of the
Annuitant's 90th birthday and the 10th Certificate Anniversary and (ii) any
maximum date permitted under state law.
Change in Income Date and Annuity Option
The Certificate Owner may choose or change an Annuity Option or the Income
Date by making a Written Request to Keyport Benefit at least 30 days prior
to the Income Date. However, any Income Date must be: (a) for fixed
annuity options, not earlier than the first Certificate Anniversary; and
(b) not later than the earlier of (i) the later of the Annuitant's 90th
birthday and the 10th Certificate Anniversary and (ii) any maximum date
permitted under state law.
Annuity Options
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Keyport Benefit does not currently anticipate offering any
additional variable annuity options, but may offer additional
fixed annuity options. Any additional variable annuity options
would be limited to those that could be added by a filing
pursuant to Rule 497 or Rule 485(b).
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The Annuity Options are:
Option A: Income for a Fixed Number of Years;
Option B: Life Income with 10 Years of Payments Guaranteed; and
Option C: Joint and Last Survivor Income.
Other options may be arranged by mutual consent. Each option is available
in two forms--as a variable annuity for use with the Variable Account and
as a fixed annuity for use with [Keyport Benefit's general account] [Fixed
Account]. Variable annuity payments will fluctuate while fixed annuity
payments will not. The dollar amount of each fixed annuity payment will be
determined by deducting from the Certificate Value [increased or decreased
by a limited Market Value Adjustment described in Appendix A] any premium
taxes not previously deducted and any applicable Certificate Maintenance
Charge and then dividing the remainder by $1,000 and multiplying the result
by the greater of: (a) the applicable factor shown in the appropriate table
in the Certificate; or (b) the factor currently offered by Keyport Benefit
at the time annuity payments begin. This current factor may be based on
the sex of the payee unless to do so would be prohibited by law.]
If no Annuity Option is selected, Option B will automatically be applied.
Unless the Certificate Owner chooses otherwise, Variable Account Value,
less any premium taxes not previously deducted [and less any applicable
Certificate Maintenance Charge] will be applied to a variable annuity
option [and Fixed Account Value [increased or decreased by a limited Market
Value Adjustment described in Appendix A] less any premium taxes not
previously deducted will be applied to a fixed annuity option.] Whether
variable or fixed, the same Certificate Value applied to each option will
produce a different initial annuity payment as well as different subsequent
payments.
The payee is the person who will receive the sum payable under an annuity
option. Any annuity option that provides for payments to continue after
the death of the payee will not allow the successor payee to extend the
period of time over which the remaining payments are to be made.
If the amount available to apply under any variable or fixed option is less
than $5,000, Keyport Benefit has reserved the right to pay such amount in
one sum to the payee in lieu of the payment otherwise provided for.
Annuity payments will be made monthly unless quarterly, semi-annual or
annual payments are chosen by Written Request. However, if any payment
provided for would be or becomes less than $100, Keyport Benefit has the
right to reduce the frequency of payments to such an interval as will
result in each payment being at least $100.
Option A: Income For a Fixed Number of Years. Keyport Benefit will pay an
annuity for a chosen number of years, not fewer than 5 nor over [50] [(a
period of years over 30 may be chosen only if it does not exceed the
difference between age 100 and the Annuitant's age on the date of the first
payment)]. [Option A is referred to as Preferred Income Plan (PIP).] At
any time while variable annuity payments are being made, the payee may
elect to receive the following amount: (a) the present value of the
remaining payments, commuted at the interest rate used to create the
annuity factor for this option (this interest rate is [5%] per year, unless
[3]% per year is chosen by Written Request at the time the option is
selected); [less (b) any Contingent Deferred Sales Charge due by treating
the value defined in (a) as a total surrender. (See "Deductions for
Contingent Deferred Sales Charge".] Instead of receiving a lump sum, the
payee may elect another payment option and the amount applied to the option
will not be reduced by the charge defined in (b) above. If, at the death
of the payee, Option A payments have been made for fewer than the chosen
number of years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity,
this interest rate is [5%] per year, unless [3]% per year has been
chosen by the payee at the time the option is selected.
The Mortality and Expense Risk Charge is deducted during the Option A
payment period if a variable payout has been selected, but Keyport Benefit
has no mortality risk during this period.
[Keyport Benefit has available a "level monthly" payment option that can be
chosen for variable payments under Option A. Under this option, the monthly
payment amount changes every twelve months instead of every month as would
be the case under the standard monthly payment frequency. The "level
monthly" option converts an annual payment amount into twelve equal monthly
payments as follows. Each annual payment will be determined as described
below in "Variable Annuity Payment Values". Each annual payment will then
be placed in Keyport Benefit's general account, from which it will be paid
out in twelve equal monthly payments. The sum of the twelve monthly
payments will exceed the annual payment amount because of an interest rate
factor used by Keyport Benefit that will vary from year to year. If the
payments are commuted, (1) the commutation method described above for
calculating the present value of remaining payments applies to any
remaining annual payments and (2) any unpaid monthly payments out of the
current twelve will be commuted at the interest rate that was used to
determine those twelve current monthly payments.]
See "Annuity Payments" on Page x for the manner in which Option A may be
taxed.
Option B: Life Income with 10 Years of Payments Guaranteed. Keyport
Benefit will pay an annuity during the lifetime of the payee. If, at the
death of the payee, payments have been made for less than 10 years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used to
create the annuity factor for this option. For the variable annuity,
this interest rate is [5%] per year, unless [3]% per year had been
chosen by the payee at the time the option was selected.
The amount of the annuity payments will depend on the age of the payee on
the Income Date and it may also depend on the payee's sex.
Option C: Joint and Last Survivor Income. Keyport Benefit will pay an
annuity for as long as either the payee or a designated second natural
person is alive. The amount of the annuity payments will depend on the age
of both persons on the Income Date and it may also depend on each person's
sex. IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT
IF BOTH PAYEES DIE AFTER THE RECEIPT OF THE FIRST PAYMENT OR TO RECEIVE
ONLY TWO ANNUITY PAYMENTS IF BOTH PAYEES DIE AFTER RECEIPT OF THE SECOND
PAYMENT AND SO ON.
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The frequency with which Certificate Owners may transfer the Sub-Accounts
from which variable annuity payments are made with vary between 0 and an
unlimited number of times during periods varying between 1 and 12 months.
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Variable Annuity Payment Values
The amount of the first variable annuity payment is determined by Keyport
Benefit using an annuity purchase rate that is based on an assumed annual
investment return of [5%] per year, unless [3]% is chosen by Written
Request. Subsequent variable annuity payments will fluctuate in amount and
reflect whether the actual investment return of the selected Sub-Account(s)
(after deducting the Mortality and Expense Risk Charge) is better or worse
than the assumed investment return. The total dollar amount of each
variable annuity payment will be equal to: (a) the sum of all Sub-Account
payments; [less (b) the pro-rata amount of the annual Certificate
Maintenance Charge.] Currently, a payee may instruct Keyport Benefit to
change the Sub-Account(s) used to determine the amount of the variable
annuity payments [unlimited] [1] time[s] every [6] months.
Proof of Age, Sex, and Survival of Annuitant
Keyport Benefit may require proof of age, sex or survival of any payee upon
whose age, sex or survival payments depend. If the age or sex has been
misstated, Keyport Benefit will compute the amount payable based on the
correct age and sex. If income payments have begun, any underpayments
Keyport Benefit may have made will be paid in full with the next annuity
payment. Any overpayments, unless repaid in one sum, will be deducted from
future annuity payments until Keyport Benefit is repaid in full.
SUSPENSION OF PAYMENTS
Keyport Benefit reserves the right to postpone surrender payments from the
Fixed Account for up to six months. Keyport Benefit reserves the right to
suspend or postpone any type of payment from the Variable Account for any
period when: (a) the New York Stock Exchange is closed other than customary
weekend or holiday closings; (b) trading on the Exchange is restricted; (c)
an emergency exists as a result of which it is not reasonably practicable
to dispose of securities held in the Variable Account or determine their
value; or (d) the Securities and Exchange Commission permits delay for the
protection of security holders. The applicable rules and regulations of
the Securities and Exchange Commission shall govern as to whether the
conditions described in (b) and (c) exist.
TAX STATUS
Introduction
The Certificate is designed for use by individuals in retirement plans
which may or may not be Qualified Plans under the provisions of the
Internal Revenue Code (the "Code"). The ultimate effect of federal income
taxes on the Certificate Value, on annuity payments, and on the economic
benefit to the Certificate Owner, Annuitant or Designated Beneficiary
depends on the type of retirement plan for which the Certificate is
purchased and upon the tax and employment status of the individual
concerned. The discussion contained herein is general in nature and is not
intended as tax advice. Each person concerned should consult a competent
tax adviser. No attempt is made to consider any applicable state or other
tax laws. Moreover, the discussion herein is based upon Keyport Benefit's
understanding of current federal income tax laws as they are currently
interpreted. No representation is made regarding the likelihood of
continuation of those current federal income tax laws or of the current
interpretations by the Internal Revenue Service.
[Recent Developments
The President has proposed and Congress will be considering certain changes
to the Code that would have significant adverse tax consequences for
exchanges of variable annuities and transfers between sub-accounts, and the
calculation of the taxable portion of a full surrender or partial
withdrawals. It is impossible to predict whether any of the proposed
changes to the Code will be enacted or in what form.]
Taxation of Annuities in General
Section 72 of the Code governs taxation of annuities in general. There are
no income taxes on increases in the value of a Certificate until a
distribution occurs, in the form of a full surrender, a partial surrender,
an assignment or gift of the Certificate, or annuity payments. A trust or
other entity owning a Non-Qualified Certificate other than as an agent for
an individual is taxed differently; increases in the value of a Certificate
are taxed yearly whether or not a distribution occurs.
Surrenders, Assignments and Gifts. A Certificate Owner who fully
surrenders his or her Certificate is taxed on the portion of the payment
that exceeds his or her cost basis in the Certificate. For Non-Qualified
Certificates, the cost basis is generally the amount of the Purchase
Payments made for the Certificate and the taxable portion of the surrender
payment is taxed as ordinary income. For Qualified Certificates, the cost
basis is generally zero and the taxable portion of the surrender payment is
generally taxed as ordinary income subject to special 5-year income
averaging for lump-sum distributions received before January 1, 2000. A
Designated Beneficiary receiving a lump sum surrender benefit after the
death of the Annuitant or Certificate Owner is taxed on the portion of the
amount that exceeds the Certificate Owner's cost basis in the Certificate.
If the Designated Beneficiary elects to receive annuity payments within 60
days of the decedent's death, different tax rules apply. See "Annuity
Payments" below. For Non-Qualified Certificates, the tax treatment
applicable to Designated Beneficiaries may be contrasted with the income-
tax-free treatment applicable to persons inheriting and then selling mutual
fund shares with a date-of-death value in excess of their basis.
Partial withdrawals received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Certificate
Value exceeds Purchase Payments. Then, to the extent the Certificate Value
does not exceed Purchase Payments, such withdrawals are treated as a non-
taxable return of principal to the Certificate Owner. For partial
withdrawals under a Qualified Certificate, payments are treated first as a
non-taxable return of principal up to the cost basis and then a taxable
return of income. Since the cost basis of Qualified Certificates is
generally zero, partial surrender amounts will generally be fully taxed as
ordinary income.
A Certificate Owner who assigns or pledges a Non-Qualified Certificate is
treated as if he or she had received the amount assigned or pledged and
thus is subject to taxation under the rules applicable to partial
withdrawals or surrenders. A Certificate Owner who gives away the
Certificate (i.e., transfers it without full and adequate consideration) to
anyone other than his or her spouse is treated for income tax purposes as
if he or she had fully surrendered the Certificate.
A special computational rule applies if Keyport Benefit issues to the
Certificate Owner, during any calendar year, (a) two or more Certificates
or (b) one or more Certificates and one or more of Keyport Benefit's other
annuity contracts. Under this rule, the amount of any distribution
includable in the Certificate Owner's gross income is to be determined
under Section 72(e) of the Code by treating all the Keyport Benefit
contracts as one contract. Keyport Benefit believes that this means the
amount of any distribution under one Certificate will be includable in
gross income to the extent that at the time of distribution the sum of the
values for all the Certificates or contracts exceeds the sum of the cost
bases for all the contracts.
Annuity Payments. The non-taxable portion of each variable annuity payment
is determined by dividing the cost basis of the Certificate by the total
number of expected payments while the non-taxable portion of each fixed
annuity payment is determined by an "exclusion ratio" formula which
establishes the ratio that the cost basis of the Certificate bears to the
total expected value of annuity payments for the term of the annuity. The
remaining portion of each payment is taxable. Such taxable portion is
taxed at ordinary income rates. For Qualified Certificates, the cost basis
is generally zero. With annuity payments based on life contingencies, the
payments will become fully taxable once the payee lives longer than the
life expectancy used to calculate the non-taxable portion of the prior
payments. Because variable annuity payments can increase over time and
because certain payment options provide for a lump sum right of
commutation, it is possible that the IRS could determine that variable
annuity payments should not be taxed as described above but instead should
be taxed as if they were received under an agreement to pay interest. This
determination would result in a higher amount (up to 100%) of certain
payments being taxable.
With respect to the "level monthly" payment option available under Annuity
Option A, pursuant to which each annual payment is placed in Keyport
Benefit's general account and paid out with interest in twelve equal
monthly payments, it is possible the IRS could determine that receipt of
the first monthly payout of each annual payment is constructive receipt of
the entire annual payment. Thus, the total taxable amount for each annual
payment would be accelerated to the time of the first monthly payout and
reported in the tax year in which the first monthly payout is received.
Penalty Tax. Payments received by Certificate Owners, Annuitants, and
Designated Beneficiaries under Certificates may be subject to both ordinary
income taxes and a penalty tax equal to 10% of the amount received that is
includable in income. The penalty tax is not imposed on amounts received:
(a) after the taxpayer attains age 59-1/2; (b) in a series of substantially
equal payments made for life or life expectancy; (c) after the death of the
Certificate Owner (or, where the Certificate Owner is not a human being,
after the death of the Annuitant); (d) if the taxpayer becomes totally and
permanently disabled; or (e) under a Non-Qualified Certificate's annuity
payment option that provides for a series of substantially equal payments,
provided only one Purchase Payment is made to the Certificate, the
Certificate is not issued as a result of a Section 1035 exchange, and the
first annuity payment begins in the first Certificate Year.
Income Tax Withholding. Keyport Benefit is required to withhold federal
income taxes on taxable amounts paid under Certificates unless the
recipient elects not to have withholding apply. Keyport Benefit will
notify recipients of their right to elect not to have withholding apply.
See "Tax-Sheltered Annuities" (TSAs) for an alternative type of
withholding that may apply to distributions from TSAs that are eligible for
rollover to another TSA or an individual retirement annuity or account
(IRA).
Section 1035 Exchanges. A Non-Qualified Certificate may be purchased with
proceeds from the surrender of an existing annuity contract. Such a
transaction may qualify as a tax-free exchange pursuant to Section 1035 of
the Code. It is Keyport Benefit's understanding that in such an event: (a)
the new Certificate will be subject to the distribution-at-death rules
described in "Death Provisions for Non-Qualified Certificates"; (b)
Purchase Payments made between August 14, 1982 and January 18, 1985 and the
income allocable to them will, following an exchange, no longer be covered
by a "grandfathered" exception to the penalty tax for a distribution of
income that is allocable to an investment made over ten years prior to the
distribution; and (c) Purchase Payments made before August 14, 1982 and the
income allocable to them will, following an exchange, continue to receive
the following "grandfathered" tax treatment under prior law: (i) the
penalty tax does not apply to any distribution; (ii) partial withdrawals
are treated first as a non-taxable return of principal and then a taxable
return of income; and (iii) assignments are not treated as surrenders
subject to taxation. Keyport Benefit's understanding of the above is
principally based on legislative reports prepared by the Staff of the
Congressional Joint Committee on Taxation. [See "Recent Developments".]
Diversification Standards. The U.S. Secretary of the Treasury has issued
regulations that set standards for diversification of the investments
underlying variable annuity contracts (other than pension plan contracts).
The Eligible Funds are designed to be managed to meet the diversification
requirements for the Certificate as those requirements may change from time
to time. If the diversification requirements are not satisfied, the
Certificate would not be treated as an annuity contract. As a consequence
to the Certificate Owner, income earned on a Certificate would be taxable
to the Certificate Owner in the year in which diversification requirements
were not satisfied, including previously non-taxable income earned in prior
years. As a further consequence, Keyport Benefit would be subjected to
federal income taxes on assets in the Variable Account.
The Secretary of the Treasury announced in September 1986 that he expects
to issue regulations which will prescribe the circumstances in which a
Certificate Owner's control of the investments of a segregated asset
account may cause the Certificate Owner, rather than the insurance company,
to be treated as the owner of the assets of the account. The regulations
could impose requirements that are not reflected in the Certificate.
Keyport Benefit, however, has reserved certain rights to alter the
Certificate and investment alternatives so as to comply with such
regulations. Since the regulations have not been issued, there can be no
assurance as to the content of such regulations or even whether application
of the regulations will be prospective. For these reasons, Certificate
Owners are urged to consult with their own tax advisers.
Qualified Plans
The Certificate is designed for use with several types of Qualified Plans.
The tax rules applicable to participants in such Qualified Plans vary
according to the type of plan and the terms and conditions of the plan
itself. Therefore, no attempt is made herein to provide more than general
information about the use of the Certificate with the various types of
Qualified Plans. Participants under such Qualified Plans as well as
Certificate Owners, Annuitants, and Designated Beneficiaries are cautioned
that the rights of any person to any benefits under such Qualified Plans
may be subject to the terms and conditions of the plans themselves
regardless of the terms and conditions of the Certificate issued in
connection therewith. Following are brief descriptions of the various
types of Qualified Plans and of the use of the Certificate in connection
therewith. Purchasers of the Certificate should seek competent advice
concerning the terms and conditions of the particular Qualified Plan and
use of the Certificate with that Plan.
[Tax-Sheltered Annuities
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts
and, subject to certain contribution limitations, exclude the amount of
Purchase Payments from gross income for tax purposes. However, such
Purchase Payments may be subject to Social Security (FICA) taxes. This
type of annuity contract is commonly referred to as a "Tax-Sheltered
Annuity" (TSA).
Section 403(b)(11) of the Code contains distribution restrictions.
Specifically, benefits may be paid, through surrender of the Certificate or
otherwise, only (a) when the employee attains age 59-1/2, separates from
service, dies or becomes totally and permanently disabled (within the
meaning of Section 72(m)(7) of the Code) or (b) in the case of hardship. A
hardship distribution must be of employee contributions only and not of any
income attributable to such contributions. Section 403(b)(11) does not
apply to distributions attributable to assets held as of December 31, 1988.
Thus, it appears that the law's restrictions would apply only to
distributions attributable to contributions made after 1988, to earnings on
those contributions, and to earnings on amounts held as of 12/31/88. The
Internal Revenue Service has indicated that the distribution restrictions
of Section 403(b)(11) are not applicable when TSA funds are being
transferred tax-free directly to another TSA issuer, provided the
transferred funds continue to be subject to the Section 403(b)(11)
distribution restrictions.
Keyport Benefit will notify a Certificate Owner who has requested a
distribution from a Certificate if all or part of such distribution is
eligible for rollover to another TSA or to an individual retirement annuity
or account (IRA). Any amount eligible for rollover treatment will be
subject to mandatory federal income tax withholding at a 20% rate if the
Certificate Owner receives the amount rather than directing Keyport Benefit
by Written Request to transfer the amount as a direct rollover to another
TSA or IRA.]
Individual Retirement Annuities
Sections 408(b) and 408A of the Code permit eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" and "Roth IRA", respectively. These individual
retirement annuities are subject to limitations on the amount which may be
contributed, the persons who may be eligible, and on the time when
distributions may commence. In addition, distributions from certain types
of Qualified Plans may be placed on a tax-deferred basis into a Section
408(b) Individual Retirement Annuity.
[Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. Such retirement
plans may permit the purchase of the Certificate to provide benefits under
the plans.]
[Deferred Compensation Plans With Respect to Service for State and Local
Governments
Section 457 of the Code, while not actually providing for a Qualified Plan
as that term is normally used, provides for certain deferred compensation
plans that enjoy special income tax treatment with respect to service for
tax-exempt organizations, state governments, local governments, and
agencies and instrumentalities of such governments. The Certificate can be
used with such plans. Under such plans, a participant may specify the form
of investment in which his or her participation will be made. However, all
such investments are owned by and subject to the claims of general
creditors of the sponsoring employer.]
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with its view of present applicable law, Keyport Benefit will
vote the shares of the Eligible Funds held in the Variable Account at
regular and special meetings of the shareholders of the Eligible Funds in
accordance with instructions received from persons having the voting
interest in the Variable Account. Keyport Benefit will vote shares for
which it has not received instructions in the same proportion as it votes
shares for which it has received instructions.
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended or if the present interpretation thereof should change,
and as a result Keyport Benefit determines that it is permitted to vote the
shares of the Eligible Funds in its own right, it may elect to do so.
The person having the voting interest under a Certificate prior to the
Income Date shall be the Certificate Owner. The number of shares held in
each Sub-Account which are attributable to each Certificate Owner is
determined by dividing the Certificate Owner's Variable Account Value in
each Sub-Account by the net asset value of the applicable share of the
Eligible Fund. The person having the voting interest after the Income Date
under an annuity payment option shall be the payee. The number of shares
held in the Variable Account which are attributable to each payee is
determined by dividing the reserve for the annuity payments by the net
asset value of one share. During the annuity payment period, the votes
attributable to a payee decrease as the reserves underlying the payments
decrease.
The number of shares in which a person has a voting interest will be
determined as of the date coincident with the date established by the
respective Eligible Fund for determining shareholders eligible to vote at
the meeting of the Fund and voting instructions will be solicited by
written communication prior to such meeting in accordance with the
procedures established by the Eligible Fund.
Each person having the voting interest in the Variable Account will receive
periodic reports relating to the Eligible Fund(s) in which he or she has an
interest, proxy material and a form with which to give such voting
instructions with respect to the proportion of the Eligible Fund shares
held in the Variable Account corresponding to his or her interest in the
Variable Account.
SALES OF THE CERTIFICATES
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Another registered broker-dealer that is an affiliate of Keyport
Benefit may serve as the principal underwriter of the
Certificates.
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[Keyport Financial Services Corp. ("KFSC")] serves as the Principal
Underwriter for the Certificate described in this prospectus. The
Certificate will be sold by salespersons who represent Keyport Benefit, an
affiliate of KFSC, as variable annuity agents and who are registered
representatives of broker/dealers who have entered into distribution
agreements with [KFSC]. [KFSC] is registered under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. It is located at [125 High Street, Boston, Massachusetts
02110].
Certificates may be sold with lower or no dealer compensation (1) to a
person who is an officer, director, or employee of Keyport Benefit, or an
affiliate of Keyport Benefit, [a trustee or officer of an Eligible Fund,]
[an employee of the investment adviser or sub-investment adviser of an
Eligible Fund,] [or an employee or associated person of an entity which has
entered into a sales agreement with the Principal Underwriter for the
distribution of Certificates,] or (2) to any Qualified Plan established for
such a person. Such Certificates may be different from the Certificates
sold to others in that [(1) they are not subject to the deduction for the
[Certificate Maintenance Charge,] the asset-based Distribution Charge] [or
the Contingent Deferred Sales Charge] and (2)] they have a Mortality and
Expense Risk Charge of 0[.35]% per year.
***************************************************************************
*
***************************************************************************
*
The exchange program, including the crediting of interest equal to 3%,
only applies to the particular version of the Contract and
Certificates that were initially declared effective in Post-Effective
No. 1 on July 22, 1998. The exchange program will not be made
available under any other current or future version of the Contract
and Certificates contained in this Registration Statement.
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*
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*
[Certificates may be sold with lower or no dealer compensation as part of
an exchange program for other fixed ("Old FA") and variable ("Old VA")
annuity contracts previously issued by Keyport Benefit. A Certificate
issued in exchange for an Old VA will be issued with an exchange
endorsement. One effect of the endorsement is that no contingent deferred
sales charge will be assessed under the Old VA at the time of the exchange
and that any Contingent Deferred Sales Charge assessed under the
Certificate in relation to the initial Purchase Payment (i.e., the amount
exchanged) will be calculated based on the actual time of each purchase
payment under the Old VA. The endorsement also provides that the refund
amount described in "Right to Revoke" will not be made if the Certificate
is returned. Instead, Keyport Benefit will return the Old VA to the owner
and treat it as if no exchange had occurred. Additionally, under an
exchange program in which there is no dealer compensation, Keyport Benefit
will credit the initial Purchase Payment upon receipt with additional
interest equal to 3% of the Purchase Payment. Interest credited represents
an allowance for future deductions of the Mortality and Expense Risk Charge
consistent with anticipated cost savings. Such interest will be allocated
on a pro-rata basis to the Sub-Accounts selected by the Certificate Owner.
The interest will be deducted from the Certificate Value payable in the
event the Certificate is returned pursuant to the "Right to Revoke"
provision.] [See Recent Developments".]
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the
Principal Underwriter are a party. Keyport Benefit is engaged in various
kinds of routine litigation which in its judgment is not of material
importance in relation to the total capital and surplus of Keyport Benefit.
INQUIRIES BY CERTIFICATE OWNERS
Certificate Owners with questions about their Certificates may write
Keyport Benefit's Service Office, 125 High Street, Boston, MA 02110, or
call (800) 367-3653.
TABLE OF CONTENTS_STATEMENT OF ADDITIONAL INFORMATION
Page
Keyport Benefit Life Insurance Company
Variable Annuity Benefits
Variable Annuity Payment Values
Re-Allocating Sub-Account Payments
Safekeeping of Assets
Principal Underwriter
Experts
Investment Performance
Average Annual Total Return for a Certificate
that is Surrendered and for a Certificate that Continues
Change in Accumulation Unit Value
Yields for [XX-1] Sub-Account
Financial Statements
Keyport Benefit Life Insurance Company
******************************************************************
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The Certificate may or may not provide for a Fixed Account Option.
******************************************************************
******************************************************************
[APPENDIX A
THE FIXED ACCOUNT [(ALSO KNOWN AS THE MODIFIED GUARANTEED ANNUITY ACCOUNT)]
Introduction
This Appendix describes the Fixed Account option available under the
Certificate.
[FIXED ACCOUNT VALUES PROVIDED BY THE CERTIFICATE ARE SUBJECT TO A MARKET
VALUE ADJUSTMENT, THE OPERATION OF WHICH MAY RESULT IN UPWARD OR DOWNWARD
ADJUSTMENTS IN AMOUNTS TRANSFERRED AND AMOUNTS PAID (INCLUDING WITHDRAWALS,
SURRENDERS, DEATH BENEFITS, AND AMOUNTS APPLIED TO PURCHASE ANNUITY
PAYMENTS) TO A CERTIFICATE OWNER OR OTHER PAYEE. IN NO EVENT WILL THE
DOWNWARD MARKET VALUE ADJUSTMENT ELIMINATE INTEREST AT THE RATE OF 3% PER
YEAR APPLIED TO THE AMOUNT ALLOCATED TO A GUARANTEED PERIOD. PAYMENTS MADE
FROM FIXED ACCOUNT VALUES AT THE END OF THEIR GUARANTEE PERIOD ARE NOT
SUBJECT TO THE MARKET VALUE ADJUSTMENT.]
Purchase Payments allocated to the Fixed Account option become part of
Keyport Benefit's general account. Because of applicable exemptive and
exclusionary provisions, interests in the Fixed Account options have not
been registered under the Securities Act of 1933 ("1933 Act"), nor is the
general account an investment company under the Investment Company Act.
Accordingly, neither the general account, the Fixed Account option, nor any
interest therein, are subject to regulation under the 1933 Act or the
Investment Company Act. Keyport Benefit understands that the Securities
and Exchange Commission has not reviewed the disclosure in the prospectus
relating to the general account and the Fixed Account option.
Investments in the Fixed Account and Capital Protection Plus
Purchase Payments will be allocated to the Fixed Account in accordance with
the selection made by the Certificate Owner in the application. Any
selection must specify that percentage of the Purchase Payment that is to
be allocated to each Guarantee Period of the Fixed Account. The
percentage, if not zero, must be at least 10%. The Certificate Owner may
change the allocation percentages without fee, penalty or other charge.
Allocation changes must be made by Written Request unless the Certificate
Owner has by Written Request authorized Keyport Benefit to accept telephone
allocation instructions from the Certificate Owner. By authorizing Keyport
Benefit to accept telephone changes, a Certificate Owner agrees to accept
and be bound by the conditions and procedures established by Keyport
Benefit from time to time. The current conditions and procedures are in
Appendix [B] and Certificate Owners authorizing telephone allocation
instructions will be notified, in advance, of any changes.
Keyport Benefit currently offers Guarantee Periods of 1, [3, 5, and 7]
years. Keyport Benefit may change at any time the number of Guarantee
Periods it offers under newly-issued and in-force Certificates, as well as
the length of those Guarantee Periods. If Keyport Benefit stops offering a
particular Guarantee Period, existing Fixed Account Value in such Guarantee
Period would not be affected until the end of the Period (at that time, a
Period of the same length would not be a transfer option). Each Guarantee
Period currently offered is available for initial and subsequent Purchase
Payments and for transfers of Certificate Value.
[Keyport Benefit offers a Capital Protection Plus program that a
Certificate Owner may request. Under this program, Keyport Benefit will
allocate part of the Purchase Payment to the Guarantee Period selected by
the Certificate Owner so that such part, based on that Guarantee Period's
interest rate in effect on the date of allocation, will equal at the end of
the Guarantee Period the total Purchase Payment. The rest of the Purchase
Payment will be allocated to the Sub-Account(s) of the Variable Account
based on the Certificate Owner's allocation. If any part of the Fixed
Account Value is surrendered or transferred before the end of the Guarantee
Period, the Value at the end of that Period will not equal the original
Purchase Payment amount.
For an example of Capital Protection Plus, assume Keyport Benefit receives
a Purchase Payment of $10,000 when the interest rate for the 7-year
Guarantee Period is 6.75% per year. Keyport Benefit will allocate $6,331
to that Guarantee Period because $6,331 will increase at that interest rate
to $10,000 after 7 years. The remaining $3,669 of the payment will be
allocated to the Sub-Account(s) selected by the Certificate Owner.]
Fixed Account Value
The Fixed Account Value at any time is equal to:
(a) all Purchase Payments allocated to the Fixed Account plus the interest
subsequently credited on those payments; plus
(b) any Variable Account Value transferred to the Fixed Account plus the
interest subsequently credited on the transferred value; less
(c) any prior partial withdrawals from the Fixed Account, including any
charges therefor; less
(d) any Fixed Account Value transferred to the Variable Account.
Interest Credits
Keyport Benefit will credit interest daily (based on an annual compound
interest rate) to Purchase Payments allocated to the Fixed Account at rates
declared by Keyport Benefit for Guarantee Periods of one or more years from
the month and day of allocation. Any rate set by Keyport Benefit will be
at least [3%] per year.
Keyport Benefit's method of crediting interest means that Fixed Account
Value might be subject to different rates for each Guarantee Period the
Certificate Owner has selected in the Fixed Account. For purposes of this
section, Variable Account Value transferred to the Fixed Account and Fixed
Account Value renewed for another Guarantee Period shall be treated as a
Purchase Payment allocation.
[Application of Market Value Adjustment
Any surrender, withdrawal, transfer, or application to an Annuity Option of
Fixed Account Value from a Guarantee Period of three years or more is
subject to a limited Market Value Adjustment, unless: (1) the effective
date of the transaction is at the end of the Guarantee Period; or (2) the
effective date of a surrender is within 90 days of the date of death of the
first Covered Person to die.
If a Market Value Adjustment applies to either a surrender or the
application to an Annuity Option, then any negative Market Value Adjustment
amount will be deducted from the Certificate Value and any positive Market
Value Adjustment amount will be added to the Certificate Value. If a Market
Value Adjustment applies to either a partial withdrawal or a transfer, then
any negative Market Value Adjustment amount will be deducted from the
partial withdrawal or transfer amount after the withdrawal or transfer
amount has been deducted from the Fixed Account Value, and any positive
Market Value Adjustment amount will be added to the applicable amount after
it has been deducted from the Fixed Account Value.
No Market Value Adjustment is ever applicable to Guarantee Periods of fewer
than three years.
Effect of Market Value Adjustment
A Market Value Adjustment reflects the change in prevailing current
interest rates since the beginning of a Guarantee Period. The Market Value
Adjustment may be positive or negative, but any negative Adjustment may be
limited in amount (see Market Value Adjustment Factor below).
Generally, if the Treasury Rate for the Guarantee Period is lower than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the limited
Market Value Adjustment will result in a reduction of the amount being
surrendered, withdrawn, transferred, or applied to an Annuity Option.
Similarly, if the Treasury Rate for the Guarantee Period is higher than the
Treasury Rate for a new Guarantee Period with a length equal to the time
remaining in the Guarantee Period, then the application of the Market Value
Adjustment will result in an increase in the amount being surrendered,
withdrawn, transferred, or applied to an Annuity Option.
The Market Value Adjustment will be applied before the deduction of any
applicable surrender charges or applicable taxes.
Market Value Adjustment Factor
The Market Value Adjustment is computed by multiplying the amount being
surrendered, withdrawn, transferred, or applied to a Payment Option, by the
Market Value Adjustment Factor. The Market Value Adjustment Factor is
calculated as the larger of Formula (1) or (2):
(1) [(1+a)/(1+b)](n/12) - 1
where:
"a" is the Treasury Rate for the number of Guarantee Period Years in the
Guarantee Period;
"b" is the Treasury Rate for a period equal to the time remaining (rounded
up to the next whole number of Guarantee Period Years) to the expiration of
the Guarantee Period; and
"n" is the number of complete Guarantee Period Months remaining before the
expiration of the Guarantee Period.
(2) [(1.03)/(1+i)](y+d/#) - 1
where:
"i" is the Guaranteed Interest Rate for the Guarantee Period;
"y" is the number of complete Guarantee Period Years that have elapsed in
Your Guarantee Period;
"d" is the number of days since the last Guarantee Period Anniversary or,
if "y" is zero, the number of days since the start of the Guarantee Period;
and
"#" is the number of days in the current Guarantee Period Year (i.e., the
sum of "d" and the number of days until the next Guarantee Period
Anniversary).
In Formulas (1) and (2), all references to Guarantee Period, Guarantee
Period Anniversary, Guarantee Period Month, and Guarantee Period Year
relate to the Guarantee Period from which is being taken the amount being
surrendered, withdrawn, transferred, or applied to an Annuity Option.
As stated above, the Formula (2) amount will apply only if it is greater
than the Formula (1) amount. This will occur only when the Formula (1)
amount is negative and the Formula (2) amount is a smaller negative number.
Formula (2) thus ensures that a full (normal) negative Market Value
Adjustment of Formula (1) will not apply to the extent it would decrease
the Guarantee Period's Fixed Account Value (before the deduction of any
applicable surrender charges or any applicable taxes) below the following
amount:
(a) the amount allocated to the Guarantee Period; less
(b) any prior systematic or partial withdrawal amounts; less
(c) any prior amounts transferred to the Variable Account or
to another Guarantee Period in the Fixed Account; plus
(d) interest on the above items (a) through (c) credited
annually at a rate of 3% per year.
Treasury Rates
The Treasury Rate for a Guarantee Period is the interest rate in the
Treasury Constant Maturity Series, as published by the Federal Reserve
Board, for a maturity equal to the number of years specified in "a" and "b"
in Formula (1) above. Weekly Series are published at the beginning of the
following week. To determine "a", Keyport Benefit uses the weekly Series
first published on or after the most recent Determination Date which occurs
on or before the Start Date for the Guarantee Period, except that if the
Start Date is the same as the Determination Date or the date of
publication, or any date in between, Keyport Benefit instead uses the
weekly Series first published after the prior Determination Date. To
determine "b", Keyport Benefit uses the Weekly Series first published on or
after the most recent Determination Date which occurs on or before the date
on which the Market Value Adjustment Factor is calculated, except that if
the calculation date is the same as the Determination Date or the date of
publication, or any date in between, Keyport Benefit instead uses the
weekly Series first published after the prior Determination Date. The
Determination Dates are the last business day prior to the first and
fifteenth of each calendar month.
If the number of years specified in "a" or "b" is not equal to a maturity
in the Treasury Constant Maturity Series, the Treasury Rate will be
determined by straight line interpolation between the interest rates of the
next highest and next lowest maturities.
If the Treasury Constant Maturity Series becomes unavailable, Keyport
Benefit will adopt a comparable constant maturity index or, if such a
comparable index also is not available, Keyport Benefit will replicate
calculation of the Treasury Constant Maturity Series Index based on U.S.
Treasury Security coupon rates.
End of A Guarantee Period
Keyport Benefit will notify a Certificate Owner in writing at least 30 days
prior to the end of a Guarantee Period. At the end of the Guarantee Period,
Keyport Benefit will automatically transfer the Guarantee Period's Fixed
Account Value to the Money Market Sub-Account of the Variable Account
unless Keyport Benefit previously received a Certificate Owner's Written
Request of: (1) election of a new Guarantee Period from among those being
offered by Keyport Benefit at that time; or (2) instructions to transfer
the ending Guarantee Period's Fixed Account Value to one or more Sub-
Accounts of the Variable Account. A new Guarantee Period cannot be longer
than the number of years remaining until the Income Date.]
Transfers of Fixed Account Value
******************************************************************
******************************************************************
The limits on the number of transfers will range between unlimited
transfers and 12 per year. The limitations on transfers from the Fixed
Account will range between 10% and 50%.
******************************************************************
******************************************************************
The Certificate Owner may transfer Fixed Account Value from one Guarantee
Period to another or to one or more Sub-Accounts of the Variable Account
subject to any applicable Market Value Adjustment. If the Fixed Account
Value represents multiple Guarantee Periods, the transfer request must
specify from which values the transfer is to be made.
The Certificate allows Keyport Benefit to limit the number of transfers
that can be made in a specified time period. Currently, Keyport Benefit is
limiting Variable Account and Fixed Account transfers to generally [xx]
transfers per calendar year with a $500,000 per transfer dollar limit. See
"Transfer of Variable Account Value". Transfers from the Fixed Account to
the Variable Account are limited to [50%] of the Fixed Account Value at the
beginning of the Certificate Year. This limitation will be waived if a
Systematic Withdrawal Program is in effect. These limitations will not
apply to any transfer made at the end of a Guarantee Period. Certificate
Owners will be notified, in advance, of a change in the limitation on the
number of transfers.
Transfer requests must be by Written Request unless the Certificate Owner
has authorized Keyport Benefit by Written Request to accept telephone
transfer instructions from the Certificate Owner or from a person acting
for the Certificate Owner as an attorney-in-fact under a power of attorney.
By authorizing Keyport Benefit to accept telephone transfer instructions, a
Certificate Owner agrees to accept and be bound by the conditions and
procedures established by Keyport Benefit from time to time. The current
conditions and procedures are in Appendix [B] and Certificate Owners
authorizing telephone transfers will be notified, in advance, of any
changes. Written transfer requests may be made by a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney.
Transfer requests received by Keyport Benefit before the close of trading
on the New York Stock Exchange (currently 4:00 PM Eastern Time) will be
executed at the close of business that day. Any requests received later
will be executed at the close of the next business day.
The amount of the transfer will be deducted from the specified values in
the manner stated in the next section below.
If 100% of a Guarantee Period's value is transferred and the current
allocation for Purchase Payments includes that Guarantee Period, then the
allocation formula for future Purchase Payments will automatically change
unless the Certificate Owner instructs otherwise. For example, if the
allocation formula is 50% to the one-year Guarantee Period and 50% to Sub-
Account A and all Fixed Account Value is transferred to Sub-Account A, the
allocation formula will change to 100% to Sub-Account A.
[APPENDIX [B]
TELEPHONE INSTRUCTIONS
Telephone Transfers of Certificate Values
1. If there are joint Certificate Owners, both must authorize Keyport
Benefit to accept telephone instructions but either Certificate Owner may
give Keyport Benefit telephone instructions.
2. All callers will be required to identify themselves. Keyport Benefit
reserves the right to refuse to act upon any telephone instructions in
cases where the caller has not sufficiently identified himself/herself to
Keyport Benefit's satisfaction.
3. Neither Keyport Benefit nor any person acting on its behalf shall be
subject to any claim, loss, liability, cost or expense if it or such person
acted in good faith upon a telephone instruction, including one that is
unauthorized or fraudulent; however, Keyport Benefit will employ reasonable
procedures to confirm that a telephone instruction is genuine and, if
Keyport Benefit does not, Keyport Benefit may be liable for losses due to
an unauthorized or fraudulent instruction. The Certificate Owner thus
bears the risk that an unauthorized or fraudulent instruction that is
executed may cause the Certificate Value to be lower than it would be had
no instruction been executed.
4. All conversations will be recorded with disclosure at the time of the
call.
5. The application for the Certificate may allow a Certificate Owner to
create a power of attorney by authorizing another person to give telephone
instructions. Unless prohibited by state law, such power will be treated
as durable in nature and shall not be affected by the subsequent
incapacity, disability or incompetency of the Certificate Owner. Either
Keyport Benefit or the authorized person may cease to honor the power by
sending written notice to the Certificate Owner at the Certificate Owner's
last known address. Neither Keyport Benefit nor any person acting on its
behalf shall be subject to liability for any act executed in good faith
reliance upon a power of attorney.
6. Telephone authorization shall continue in force until (a) Keyport
Benefit receives the Certificate Owner's written revocation, (b) Keyport
Benefit discontinues the privilege, or (c) Keyport Benefit receives written
evidence that the Certificate Owner has entered into a market timing or
asset allocation agreement with an investment adviser or with a
broker/dealer.
7. Telephone transfer instructions received by Keyport Benefit at 800-367-
3653 before the close of trading on the New York Stock Exchange (currently
4:00 P.M. Eastern Time) will be initiated that day based on the unit value
prices calculated at the close of that day. Instructions received after
the close of trading on the NYSE will be initiated the following business
day.
8. Once instructions are accepted by Keyport Benefit, they may not be
canceled.
9. All transfers must be made in accordance with the terms of the
Certificate and current prospectus. If the transfer instructions are not
in good order, Keyport Benefit will not execute the transfer and will
notify the caller within 48 hours.
10. If 100% of any Sub-Account's value is transferred and the allocation
formula for Purchase Payments includes that Sub-Account, then the
allocation formula for future Purchase Payments will change accordingly
unless Keyport Benefit receives telephone instructions to the contrary.
For example, if the allocation formula is 50% to Sub-Account A and 50% to
Sub-Account B and all of Sub-Account A's value is transferred to Sub-
Account B, the allocation formula will change to 100% to Sub-Account B
unless Keyport Benefit is instructed otherwise.
Telephone Changes to Purchase Payment Allocation Percentages
Numbers 1-6 above are applicable.]
PROSPECTUS
[DATE]
Distributed by:
[Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712]
Issued by:
Keyport Benefit Life Insurance Company
100 Manhattanville Road, Purchase, NY 10577
Keyport Benefit Service Office
125 High Street
Boston, MA 02110-2712
Service Hotline 800-367-3653 (Press 3)
Yes. I would like to receive the Keyport Benefit [NAME OF ANNUITY]
Statement of Additional Information.
Yes. I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Yes. I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Name
Address
City, State Zip
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 6719 BOSTON, MA
POSTAGE WILL BE PAID BY ADDRESSEE
KEYPORT BENEFIT LIFE INSURANCE COMPANY
SERVICE OFFICE
125 HIGH STREET
BOSTON, MA 02110-9773
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
PART B
STATEMENT OF ADDITIONAL INFORMATION
GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT A
OF
KEYPORT BENEFIT LIFE INSURANCE COMPANY ("Keyport Benefit")
This Statement of Additional Information (SAI) is not a prospectus but it
relates to, and should be read in conjunction with, the variable annuity
prospectus dated , [1998]. The SAI is incorporated
by reference into the prospectus. The prospectus is available, at no
charge, by writing Keyport Benefit at 125 High Street, Boston, MA 02110 or
by calling (800) 437-4466.
TABLE OF CONTENTS
Page
Keyport Benefit Life Insurance Company............................
Variable Annuity Benefits.........................................
Variable Annuity Payment Values.................................
Re-Allocating Sub-Account Payments..............................
Safekeeping of Assets ............................................
Principal Underwriter.............................................
Experts...........................................................
Investment Performance............................................
Average Annual Total Return for a Certificate that is
Surrendered and for a Certificate that Continues..............
Change in Accumulation Unit Value...............................
Yields for [XX-1] Sub-Account ..................................
Financial Statements..............................................
Keyport Benefit Life Insurance Company..........................
The date of this statement of additional information is , [998]
KEYPORT BENEFIT LIFE INSURANCE COMPANY
Liberty Mutual Insurance Company ("Liberty Mutual") is the ultimate
corporate parent of Keyport Benefit. Liberty Mutual Insurance Company is a
multi-line insurance company. For additional information about Keyport
Benefit, see page ___ of the prospectus.
VARIABLE ANNUITY BENEFITS
Variable Annuity Payment Values
For each variable payment option, the total dollar amount of each periodic
payment will be equal to: (a) the sum of all Sub-Account payments; less
[(b) the pro-rata amount of the annual Certificate Maintenance Charge.]
The first payment for each Sub-Account will be determined by deducting [any
applicable Certificate Maintenance Charge and] any applicable state premium
taxes and then dividing the remaining value of that Sub-Account by $1,000
and multiplying the result by the greater of: (a) the applicable factor
from the Certificate's annuity table for the particular payment option; or
(b) the factor currently offered by Keyport Benefit at the time annuity
payments begin. This current factor may be based on the sex of the payee
unless to do so would be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number
of Annuity Units remains fixed for the annuity payment period. Each Sub-
Account payment after the first one will be determined by multiplying (a)
by (b), where: (a) is the number of Sub-Account Annuity Units; and (b) is
the Sub-Account Annuity Unit value for the Valuation Period that includes
the date of the particular payment.
Variable annuity payments will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect annuity payments, Keyport Benefit uses an Annuity Unit
value. Each Sub-Account has its own Annuity Units and value per Unit. The
Annuity Unit value applicable during any Valuation Period is determined at
the end of such period.
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**
The formula for the net investment factor will vary depending upon
whether certain asset charges are imposed, as explained in the notes
in the Prospectus. With regard to the AIR, the AIR will vary within
the limits permitted under state insurance law, but no less than 3%.
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**
When Keyport Benefit first purchased the Eligible Fund shares of [XXX Trust
and YYY Fund] on behalf of the Variable Account, Keyport Benefit valued
each Annuity Unit for each Sub-Account at a specified dollar amount. The
Unit value for each Sub-Account in any Valuation Period thereafter is
determined by multiplying the value for the prior period by a net
investment factor. This factor may be greater or less than 1.0; therefore,
the Annuity Unit may increase or decrease from Valuation Period to
Valuation Period. For each assumed annual investment rate (AIR), Keyport
Benefit calculates a net investment factor for each Sub-Account by dividing
(a) by (b), where:
(a) is equal to the net investment factor as defined in the
prospectus [without any deduction for the sales charge defined in
(c)(ii) of the net investment factor formula]; and
(b) is the assumed investment factor for the current Valuation
Period. The assumed investment factor adjusts for the interest
assumed in determining the first variable annuity payment. Such
factor for any Valuation Period shall be the accumulated value,
at the end of such period, of $1.00 deposited at the beginning of
such period at the assumed annual investment rate (AIR). The AIR
for Annuity Units based on the Contract's annuity tables is [5]%
per year. [An AIR of 3% per year is also currently available
upon Written Request.]
With a particular AIR, payments after the first one will increase or
decrease from month to month based on whether the actual annualized
investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed AIR
percentage. If a given amount of Sub-Account value is applied to a
particular payment option, the initial payment will be smaller if a [3]%
AIR is selected instead of a [5]% AIR but, all other things being equal,
the subsequent [3]% AIR payments have the potential for increasing in
amount by a larger percentage and for decreasing in amount by a smaller
percentage. For example, consider what would happen if the actual
annualized investment return (see the first sentence of this paragraph) is
[9]%, [5]%, [3]%, or 0% between the time of the first and second payments.
With an actual [9]% return, the [3]% AIR and [5]% AIR payments would both
increase in amount but the [3]% AIR payment would increase by a larger
percentage. With an actual [5]% return, the [3]% AIR payment would
increase in amount while the [5]% AIR payment would stay the same. With an
actual return of [3]%, the [3]% AIR payment would stay the same while the
[6]% AIR payment would decrease in amount. Finally, with an actual return
of 0%, the [3]% AIR and [5]% AIR payments would both decrease in amount but
the [3]% AIR payment would decrease by a smaller percentage. Note that the
changes in payment amounts described above are on a percentage basis and
thus do not illustrate when, if ever, the [3]% AIR payment amount might
become larger than the [5]% AIR payment amount. Note though that if Option
A (Income for a Fixed Number of Years) is selected and payments continue
for the entire period, the [3]% AIR payment amount will start out being
smaller than the [5]% AIR payment amount but eventually the [3]% AIR
payment amount will become larger than the [5]% AIR payment amount.
Re-Allocating Sub-Account Payments
***************************************************************************
***************************************************************************
**
The number of times that Sub-Account(s) used to determine the
amount of variable annuity payments will range between unlimited times
to once every twelve months. The minimum percentage per Sub-Account
will range between 1% and 10%.
***************************************************************************
***************************************************************************
**
The number of Annuity Units for each Sub-Account under any variable annuity
option will remain fixed during the entire annuity payment period unless
the payee makes a written request for a change. Currently, a payee can
instruct Keyport Benefit to change the Sub-Account(s) used to determine the
amount of the variable annuity payments [1] time[s] every [12] months. The
payee's request must specify the percentage of the annuity payment that is
to be based on the investment performance of each Sub-Account. The
percentage for each Sub-Account, if not zero, must be at least [10]% and
must be a whole number. At the end of the Valuation Period during which
Keyport Benefit receives the request, Keyport Benefit will: (a) value the
Annuity Units for each Sub-Account to create a total annuity value; (b)
apply the new percentages the payee has selected to this total value; and
(c) recompute the number of Annuity Units for each Sub-Account. This new
number of units will remain fixed for the remainder of the payment period
unless the payee requests another change.
SAFEKEEPING OF ASSETS
Keyport Benefit is responsible for the safekeeping of the assets of the
Variable Account.
Keyport Benefit has responsibility for providing all administration of the
Certificates and the Variable Account. This administration includes, but is
not limited to, preparation of the Contracts and Certificates, maintenance
of Certificate Owners' records, and all accounting, valuation, regulatory
and reporting requirements. Keyport Benefit has contracted with Keyport
Life Insurance Company, its corporate parent, to provide all administration
for the Contracts and Certificates, as its agent. Keyport Benefit pays
Keyport Life Insurance Company for the costs it incurs for providing those
administrative services.
PRINCIPAL UNDERWRITER
The Contract and Certificates, which are offered continuously, are
distributed by [Keyport Financial Services Corp. ("KFSC")], an affiliate.
EXPERTS
The financial statements of Keyport Benefit as of December 31, [1997] and
[1996] and for each of the years in the three-year period ended December
31, [1997] included herein, have been included herein in reliance on the
reports of [Ernst & Young LLP], independent certified public accountants,
and upon authority of said firm as experts in accounting and auditing.
INVESTMENT PERFORMANCE
The Variable Account may from time to time quote performance information
concerning its various Sub-Accounts. A Sub-Account's performance may also
be compared to the performance of sub-accounts used with variable annuities
offered by other insurance companies. This comparative information may be
expressed as a ranking prepared by Financial Planning Resources, Inc. of
Miami, FL (The VARDS Report), Lipper Analytical Services, Inc., or by
Morningstar, Inc. of Chicago, IL (Morningstar's Variable Annuity
Performance Report), which are independent services that compare the
performance of variable annuity sub-accounts. The rankings are done on the
basis of changes in accumulation unit values over time and do not take into
account any charges (such as sales charges or administrative charges) that
are deducted directly from contract values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926 on
capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term
performance of capital markets in order to illustrate general long-term
risk versus reward investment scenarios. Capital markets tracked by
Ibbotson Associates include common stocks, small company stocks, long-term
corporate bonds, long-term government bonds, U.S. Treasury Bills, and the
U.S. inflation rate. Historical total returns are determined by Ibbotson
Associates for: Common Stocks, represented by the Standard and Poor's
Composite Price Index (an unmanaged weighted index of 90 stocks prior to
March 1957 and 500 stocks thereafter of industrial, transportation, utility
and financial companies widely regarded by investors as representative of
the stock market); Small Company Stocks, represented by the fifth
capitalization quintile (i.e., the ninth and tenth deciles) of stocks on
the New York Stock Exchange for 1926-1981 and by the performance of the
Dimensional Fund Advisors Small Company 9/10 (for ninth and tenth deciles)
Fund thereafter; Long Term Corporate Bonds, represented beginning in 1969
by the Salomon Brothers Long-Term High-Grade Corporate Bond Index, which is
an unmanaged index of nearly all Aaa and Aa rated bonds, represented for
1946-1968 by backdating the Salomon Brothers Index using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon
Brothers in computing its Index, and represented for 1925-1945 through the
use of the Standard and Poor's monthly High-Grade Corporate Composite yield
data, assuming a 4% coupon and a 20-year maturity. Long-Term Government
Bonds, measured each year using a portfolio containing one U.S. government
bond with a term of approximately twenty years and a reasonably current
coupon; U.S. Treasury Bills, measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the shortest-term
bill having not less than one month to maturity; Inflation, measured by the
Consumer Price Index for all Urban Consumers, not seasonably adjusted,
since January, 1978 and by the Consumer Price Index before then. The stock
capital markets may be contrasted with the corporate bond and U.S.
government securities capital markets. Unlike an investment in stock, an
investment in a bond that is held to maturity provides a fixed rate of
return. Bonds have a senior priority to common stocks in the event the
issuer is liquidated and interest on bonds is generally paid by the issuer
before it makes any distributions to common stock owners. Bonds rated in
the two highest rating categories are considered high quality and present
minimal risk of default. An additional advantage of investing in U.S.
government bonds and Treasury bills is that they are backed by the full
faith and credit of the U.S. government and thus have virtually no risk of
default. Although government securities fluctuate in price, they are
highly liquid.
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**
Information regarding the Performance of the Certificates will be
included in the subsequent filings.
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**
[Average annual Total Return for A Certificate that is surrendered and for
a Certificate that Continues]
[Change in Accumulation Unit Value]
Yields for [XX-1 Sub-Account]
Yield and effective yield percentages for the [XX-1 Sub-Account] are
calculated using the method prescribed by the Securities and Exchange
Commission. Both yields reflect the deduction of the annual [1.25]% asset-
based Certificate charges. [Both yields also reflect, on an allocated
basis, the Certificate's annual $[36] Certificate Maintenance Charge.]
Both yields do not reflect [Contingent Deferred Sales Charges and] premium
tax charges. The yields would be lower if these charges were included.
The following are the standardized formulas:
Yield equals: (A - B - 1) X 365
C 7
Effective Yield Equals: (A - B)365/7 - 1
C
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = [hypothetical Certificate Maintenance Charge for the 7-day
period. The assumed annual [XX-1] Sub-Account charge is equal to
the $[36] Certificate charge multiplied by a fraction equal to
the average number of Certificates with [XX-1] Sub-Account value
during the 7-day period divided by the average total number of
Certificates during the 7-day period. This annual amount is
converted to a 7-day charge by multiplying it by 7/365. It is
then equated to an Accumulation Unit size basis by multiplying it
by a fraction equal to the average value of one [XX-1] Sub-
Account Accumulation Unit during the 7-day period divided by the
average Certificate Value in [XX-1] Sub-Account during the 7-day
period.]
C = the Accumulation Unit value at the beginning of the 7-day
period.
The yield formula assumes that the weekly net income generated by an
investment in the [XX-1] Sub-Account will continue over an entire year.
The effective yield formula also annualizes seven days of net income but it
assumes that the net income is reinvested over the year. This compounding
effect causes effective yield to be higher than the yield.
FINANCIAL STATEMENTS
The Variable Account has not yet commenced operations and therefore no
financial statements are included. The Financial Statements of Keyport
Benefit are provided as relevant to its ability to meet its financial
obligations under the Certificates.
FINANCIAL STATEMENTS
KEYPORT BENEFIT LIFE INSURANCE COMPANY
[To Be Filed by Amendment]
PART C
Item 24. Financial Statements and Exhibits
(a) Statutory-Basis Financial Statements:
Included in Part B:
++ Keyport Benefit Life Insurance Company (formerly American Benefit
Life Insurance Company):
Balance Sheets for the years ended December 31, 1997 and 1996.
Statements of Operations for the years ended December 31,
1997, 1996 and 1995.
Statements of Changes in Capital and Surplus for the years
ended December 31, 1997, 1996 and 1995.
Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995.
Notes to Financial Statements
(b) Exhibits:
** (1) Resolution of the Board of Directors establishing Variable
Account A
(2) Not applicable
** (3a) Form of Principal Underwriter's Agreement
** (3b) Specimen Agreement between Principal Underwriter and Dealer
** (4a) Form of Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company
** (4b) Form of Group Variable Annuity Certificate of Keyport
Benefit Life Insurance Company
** (4c) Form of Tax-Sheltered Annuity Endorsement
** (4d) Form of Individual Retirement Annuity Endorsement
** (4e) Form of Corporate/Keogh 401(a) Plan Endorsement
** (4f) Form of Unisex Endorsement
** (4g) Form of Qualified Plan Endorsement
*** (4h) Specimen Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company (M&N)
*** (4i) Specimen Variable Annuity Certificate of Keyport Benefit
Life Insurance Company (M&N)
**** (4j) Specimen Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company (KA)
**** (4k) Specimen Variable Annuity Certificate of Keyport Benefit
Life Insurance Company (KA)
+ (4l) Specimen Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company (KAV)
+ (4m) Specimen Variable Annuity Certificate of Keyport Benefit
Life Insurance Company (KAV)
** (5a) Form of Application for a Group Variable Annuity Contract
** (5b) Form of Application for a Group Variable Annuity Certificate
*** (6a) Articles of Incorporation of Keyport Benefit Life Insurance
Company
*** (6b) By-Laws of Keyport Benefit Life Insurance Company
(7) Not applicable
** (8a) Form of Participation Agreement
*** (8b) Participation Agreement Among Manning & Napier Insurance
Fund, Inc., Manning & Napier Investor Services, Inc., Manning
& Napier Advisors, Inc., and Keyport Benefit Life Insurance
Company
*** (8c) Participation Agreement By and Among Keyport Benefit
Life Insurance Company, Keyport Financial Services Corp.,
and SteinRoe Variable Investment Trust
**** (8d) Participation Agreement Among MFS Variable Insurance Trust,
Keyport Benefit Life Insurance Company, and Massachusetts
Financial Services Corp.
**** (8e) Participation Agreement Among The Alger American Fund,
Keyport Benefit Life Insurance Company, and Fred Alger and
Company, Incorporated
**** (8f) Participation Agreement Among Alliance Variable Products
Series Fund, Inc., Alliance Fund Distributors, Inc., Alliance
Capital Management L.P., and Keyport Benefit Life Insurance
Company
**** (8g) Participation Agreement By and Among Keyport Benefit Life
Insurance Company, Keyport Financial Services Corp., and
Liberty Variable Investment Trust
+ (8h) Participation Agreement By and Among AIM Variable Insurance
Funds, Inc., Keyport Benefit Life Insurance Company, on
Behalf of Itself and its Separate Accounts, and Keyport
Financial Services Corp.
** (9) Opinion and Consent of Counsel
++ (10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
++ (13) Schedule for Computations of Performance Quotations
* (15) Chart of Affiliations
** (16) Powers of Attorney
** (17) Specimen Tax-Sheltered Annuity Acknowledgement
** (18) Form of Administrative Services Agreement
*** (27) Financial Data Schedule
* Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (Files No. 333-1043; 811-7543) filed on or about
February 6, 1998.
** Incorporated by reference to Registration Statement (Files No. 333-
45727; 811-08635) filed on or about February 6, 1998.
*** Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement (Files No. 333-45727; 811-08635) filed on or
about June 15, 1998.
**** Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement (Files No. 333-45727; 811-08635) filed on or
about June 30, 1998.
+ Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement (Files No. 333-45727; 811-08635) filed on or
about July 23, 1998.
++ To be Filed by Amendment.
Item 25. Officers and Directors of the Depositor.
Name and Position and Offices
Business Address* with Depositor
William P. Donohue Director
Senior Advisor
Bentley Associates LP
1155 Avenue of the Americas
New York, NY 10036
Peter M. Lehrer Director
Opus Three Ltd.
550 Mamaroneck Ave.
Harrison, NY 10528
Jeff S. Liebmann Director
Partner
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092
Christopher C. York Director
Principal
C.C. York Company
200 Rector Place, 18-E
New York, NY 11280-1101
John W. Rosensteel Chairman of the Board, Director, President
and
Chief Executive Officer
Stephen B. Bonner Director and Executive Vice President
Paul H. LeFevre, Jr. Director and Executive Vice President
Bernard R. Beckerlegge Director, Senior Vice President and General
Counsel
Bernhard M. Koch Director, Senior Vice President and Chief
Financial Officer
Stewart R. Morrison Senior Vice President and Chief Investment
Officer
Francis E. Reinhart Senior Vice President and Chief Information
Officer
Mark R. Tully Senior Vice President and Chief Sales
Officer
Garth A. Bernard Vice President
Daniel C. Bryant Vice President and Assistant Secretary
James P. Greaton Vice President and Corporate Actuary
Jacob M. Herschler Vice President
Kenneth M. Hughes Vice President
James J. Klopper Vice President and Secretary
Jeffrey J. Lobo Vice President-Risk Management
Suzanne E. Lyons Vice President-Human Resources
Jeffery J. Whitehead Vice President and Treasurer
John G. Bonvouloir Assistant Vice President and Assistant
Treasurer
Alan R. Downey Assistant Vice President
Scott E. Morin Assistant Vice President and Controller
Edward M. Shea Assistant Vice President
Donald A. Truman Assistant Secretary
Daniel Yin Assistant Vice President
*125 High Street, Boston, Massachusetts 02110, unless noted otherwise
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant.
The Depositor controls the Registrant, and is a wholly-owned
subsidiary of Keyport Life Insurance Company, which controls KMA Variable
Account, Keyport 401 Variable Account, Keyport Variable Account I, and
Keyport Variable Account II.
The Depositor is under common control with Keyport Financial Services
Corp. (KFSC), a Massachusetts corporation functioning as a broker/dealer of
securities. KFSC files separate financial statements.
The Depositor is under common control with Liberty Advisory Services
Corp. (LASC), a Massachusetts corporation functioning as an investment
adviser. LASC files separate financial statements.
The Depositor is under common control with Independence Life and
Annuity Company ("Independence Life"), a Rhode Island corporation
functioning as a life insurance company. Independence Life files separate
financial statements.
Chart for the affiliations of the Depositor is incorporated by
reference to Post-Effective Amendment No. 7 to the Registration Statement
(Files No. 333-1043; 811-7543) filed on or about February 6, 1998.
Item 27. Number of Contract Owners.
None.
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter
are covered persons under Directors and Officers/Errors and Omissions
liability insurance policies. Insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to directors and
officers under such insurance policies, or otherwise, the Depositor has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Depositor of
expenses incurred or paid by a director or officer in the successful
defense of any action, suit or proceeding) is asserted by such director or
officer in connection with the variable annuity contracts, the Depositor
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters.
Keyport Financial Services Corp. (KFSC) is principal underwriter of
the SteinRoe Variable Investment Trust and the Liberty Variable Investment
Trust, which offer eligible funds for variable annuity and variable life
insurance contracts. KFSC is the principal underwriter for Variable
Account A of Keyport Benefit Life Insurance Company. KFSC is also principal
underwriter for Variable Account J and Variable Account K of Liberty Life
Assurance Company of Boston and for the KMA Variable Account, Variable
Account A and Keyport Variable Account-I of Keyport Life Insurance Company
and for the Independence Variable Annuity Account and Independence Variable
Life Account of Independence Life and Annuity Company, which are affiliated
companies of Keyport Benefit.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
John W. Rosensteel Chairman of the Board and President
James J. Klopper Director and Clerk
Francis E. Reinhart Director and Vice President-Administration
Rogelio P. Japlit Treasurer
Paul T. Holman Assistant Clerk
Donald A. Truman Assistant Clerk
*125 High Street, Boston, Massachusetts 02110.
Item 30. Location of Accounts and Records.
Keyport Benefit Life Insurance Company, 125 High St., Boston, MA 02110
Keyport Life Insurance Company, 125 High St., Boston, MA 02110
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement of
Additional Information.
The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
Registrant represents that it is relying on the November 28, 1988 no-
action letter (Ref. No. IP-6-88) relating to variable annuity contracts
offered as funding vehicles for retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code. Registrant further
represents that it has complied with the provisions of paragraphs (1) - (4)
of that letter. Specimen of acknowledgement form used to comply with
paragraph (4) is included as Exhibit 17 in this Registration Statement.
Representation
Depositor represents that the fees and charges deducted under the
contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
the Depositor. Further, this representation applies to each form of the
contract described in a prospectus and statement of additional information
included in this Registration Statement.
SIGNATURES
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has caused this Registration Statement to be
signed on its behalf, in the City of Boston and Commonwealth of
Massachusetts, on this 28th day of July, l998.
Variable Account A
(Registrant)
By: Keyport Benefit Life Insurance Company
(Depositor)
By: /s/ John W. Rosensteel*
John W. Rosensteel
President
*BY: /s/James J. Klopper July 28, 1998
James J. Klopper Date
Attorney-in-Fact
* James J. Klopper has signed this document on the indicated date on
behalf of Mr. Rosensteel pursuant to power of attorney duly executed by him
and included as part of Exhibit 16 in the Registration Statement on Form N-
4 filed on or about February 6, 1998 (Files No. 333-45727; 811-08635).
As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities and on the
dates indicated.
/s/JOHN W. ROSENSTEEL* /s/JOHN W. ROSENSTEEL*
JOHN W. ROSENSTEE. JOHN W. ROSENSTEEL
Chairman of the Board President
/s/BERNARD R. BECKERLEGGE* /s/BERNHARD M. KOCH*
BERNARD R. BECKERLEGGE BERNHARD M. KOCH
Director Chief Financial Officer
/s/STEPHEN B. BONNER*
STEPHEN B. BONNER
Director
/s/WILLIAM P. DONOHUE*
WILLIAM P. DONOHUE
Director
/s/BERNHARD M. KOCH*
BERNHARD M. KOCH
Director
/s/PAUL H. LEFEVRE, JR.*
PAUL H. LEFEVRE, JR.
Director
*BY: /s/James J. Klopper July 28, 1998
/s/PETER M. LEHRER* James J. Klopper Date
PETER M. LEHRER Attorney-in-Fact
Director
/s/JEFF S. LIEBMANN*
JEFF S. LIEBMANN
Director
/s/CHRISTOPHER C. YORK*
CHRISTOPHER C. YORK
Director
* James J. Klopper has signed this document on the indicated date on
behalf of each of the above Directors and Officers of the Depositor
pursuant to powers of attorney duly executed by such persons and included
as Exhibit 16 in the Registration Statement on Form N-4 filed on or about
February 6, 1998 (Files No. 333-45727; 811-08635).
