<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 6, 1998
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2 / /
FARM BUREAU LIFE VARIABLE ACCOUNT II
(Exact Name of Registrant)
FARM BUREAU LIFE INSURANCE COMPANY
(Name of Depositor)
5400 University Avenue
West Des Moines, Iowa 50266
(Address of Principal Executive Office)
------------------------
STEPHEN M. MORAIN, ESQUIRE
5400 University Avenue
West Des Moines, Iowa 50266
(Name and Address of Agent for Service of Process)
------------------------
COPY TO:
STEPHEN E. ROTH, ESQUIRE
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
------------------------
Approximate date of proposed public offering: As soon as practicable after
the effective date of this Registration Statement.
Securities being offered: Flexible Premium Variable Life Insurance Policies.
The Registrant hereby amends this Registration Statement on such dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
Item No. of Form N-8B-2 Caption in Prospectus
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<C> <S>
1. Cover Page
2. Cover Page
3. Not Applicable
4. Distribution Policies
5. Farm Bureau Life Insurance Company; The Variable Account
6. The Variable Account
7. Not Required
8. Not Required
9. Legal Proceedings
10. Summary; The Variable Account; Investment Options; Charges and Deductions; Policy Benefits; Voting
Rights; General Provisions
11. Summary; Investment Options
12. Summary; Investment Options
13. Summary; Charges and Deductions; Investment Options
14. Summary; Premiums
15. Premiums
16. Premiums; Investment Options
17. Summary; Charges and Deductions; Policy Benefits; Investment Options
18. Investment Options; Premiums
19. General Provisions; Voting Rights
20. Not Applicable
21. Policy Benefits; General Provisions
22. Not Applicable
23. Safekeeping of the Variable Account's Assets
24. General Provisions
25. Farm Bureau Life Insurance Company
26. Not Applicable
27. Farm Bureau Life Insurance Company
28. Executive Officers and Directors of Farm Bureau Life Insurance Company
29. Farm Bureau Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Distribution of the Policies
36. Not Required
37. Not Applicable
38. Summary; Distribution of the Policies
39. Summary; Distribution of the Policies
40. Not Applicable
41. Farm Bureau Life Insurance Company; Distribution of the Policies
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Item No. of Form N-8B-2 Caption in Prospectus
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<C> <S>
42. Not Applicable
43. Not Applicable
44. Premiums
45. Not Applicable
46. Policy Benefits
47. Investment Options
48. Not Applicable
49. Not Applicable
50. The Variable Account
51. Cover Page; Summary; Charges and Deductions; Policy Benefits; Premiums
52. Investment Options
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
</TABLE>
ii
<PAGE>
[Logo]
VARIABLE UNIVERSAL LIFE
[LOGO]
July , 1998
Prospectus for:
Flexible Premium Variable
Life Insurance Policies
issued by
Farm Bureau Life
Insurance Company
-------------------------------------------
Call Toll-Free
1-800-247-4170
225-5810 (Des Moines)
<PAGE>
PROSPECTUS
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Farm Bureau Life Variable Account II
Flexible Premium Variable Life Insurance Policy
- --------------------------------------------------------------------------------
This Prospectus describes a flexible premium variable life insurance policy (the
"Policy") issued by Farm Bureau Life Insurance Company (the "Company"). This
type of life insurance is also commonly called variable universal life. The
Policy is designed to provide lifetime insurance protection to age 115. The
Policy permits the policyowner to vary premium payments and adjust the death
proceeds payable under the Policy. The Policy has been designed for maximum
flexibility in meeting changing insurance needs.
The minimum specified amount for which a Policy will be issued is normally
$50,000. The Policy provides for the payment of the death proceeds upon the
death of the insured and for a net surrender value or net accumulated value that
can be obtained upon surrender or partial withdrawal of the Policy. Death
proceeds may, and accumulated value will, vary with the investment experience of
Farm Bureau Life Variable Account II (the "Variable Account"). THE POLICYOWNER
BEARS THE ENTIRE INVESTMENT RISK; THERE IS NO GUARANTEED MINIMUM ACCUMULATED
VALUE. The Policy also provides for loans using the Policy as collateral. The
Policy will remain in force so long as net accumulated value or net surrender
value is sufficient to pay certain monthly charges imposed in connection with
the Policy.
A policyowner may allocate net premiums under a Policy to one or more of the
subaccounts of the Variable Account. Each Subaccount invests exclusively in
shares of the corresponding Investment Options of EquiTrust Variable Insurance
Series Fund: ; : or
: . The accompanying prospectus for each Fund
describes the investment objectives and attendant risks of each Investment
Option. [Information on additional Investment Options to be provided by
amendment.]
A policyowner may also allocate net premiums to the Declared Interest Option.
The Declared Interest Option is supported by the Company's General Account.
Accumulated value allocated to the Declared Interest Option is credited with
interest at a declared annual rate guaranteed to be at least 4.0%.
This Prospectus generally describes only the portion of the Policy involving the
Variable Account. For a brief summary of the Declared Interest Option, see "THE
DECLARED INTEREST OPTION."
A Policy may be treated as a modified endowment contract depending upon the
amount of premiums paid in relation to the death benefit provided under such
Policy. If a Policy is a modified endowment contract, any loan, partial
withdrawal, surrender and/or assignment of the Policy could result in adverse
tax consequences and/or penalties. (See "FEDERAL TAX MATTERS.")
It may not be advantageous to purchase a Policy as a replacement for another
type of life insurance or as a means to obtain additional insurance protection
if the purchaser already owns another flexible premium variable life insurance
policy.
THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR EACH
FUND'S INVESTMENT OPTIONS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
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Issued By
Farm Bureau Life Insurance Company
5400 University Avenue
West Des Moines, Iowa 50266
THE DATE OF THIS PROSPECTUS IS JULY , 1998.
<PAGE>
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TABLE OF CONTENTS
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PAGE
DEFINITIONS........................................................... 3
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SUMMARY OF THE POLICY................................................. 5
The Policy........................................ 5
The Variable Account.............................. 5
The Declared Interest Option...................... 5
Premiums.......................................... 5
Policy Benefits................................... 6
Charges........................................... 7
Distribution of the Policies...................... 8
Tax Treatment..................................... 8
Cancellation Privilege............................ 8
Illustrations..................................... 8
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FARM BUREAU LIFE INSURANCE COMPANY AND THE VARIABLE ACCOUNT........... 9
Farm Bureau Life Insurance Company................ 9
Iowa Farm Bureau Federation....................... 9
The Variable Account.............................. 9
Investment Options................................ 9
Addition, Deletion or Substitution of 12
Investments.......................................
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THE POLICY............................................................ 13
Purpose of the Policy............................. 13
Purchasing the Policy............................. 13
Premiums.......................................... 14
Policy Lapse and Reinstatement.................... 16
Examination of Policy (Cancellation Privilege).... 16
Special Transfer Privilege........................ 17
Exchange Privilege................................ 17
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POLICY BENEFITS....................................................... 18
Accumulated Value Benefits........................ 19
Transfers......................................... 21
Loan Benefits..................................... 21
Death Proceeds.................................... 23
Accelerated Payments of Death Proceeds............ 26
Benefits at Maturity.............................. 26
Payment Options................................... 26
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CHARGES AND DEDUCTIONS................................................ 28
Premium Expense Charge............................ 28
Monthly Deduction................................. 28
Transfer Charge................................... 30
Partial Withdrawal Fee............................ 30
Surrender Charge.................................. 30
Variable Account Charges.......................... 30
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THE DECLARED INTEREST OPTION.......................................... 31
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GENERAL PROVISIONS.................................................... 32
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DISTRIBUTION OF THE POLICIES.......................................... 35
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FEDERAL TAX MATTERS................................................... 35
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ADDITIONAL INFORMATION................................................ 39
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FINANCIAL STATEMENTS.................................................. 46
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APPENDIX A............................................................ A-1
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APPENDIX B............................................................ B-1
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The Policy is not available in all States.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
THE PURPOSE OF THIS VARIABLE LIFE INSURANCE POLICY IS TO PROVIDE INSURANCE
PROTECTION. NO CLAIM IS MADE THAT THE POLICY IS IN ANY WAY SIMILAR OR COMPARABLE
TO AN INVESTMENT IN A MUTUAL FUND.
2
<PAGE>
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DEFINITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ACCUMULATED VALUE............ The total amount invested under the Policy. It is the sum of the values of
the Policy in each subaccount of the Variable Account plus the value of the
Policy in the Declared Interest Option.
ATTAINED AGE................. The Insured's age on his or her last birthday on the Policy Date plus the
number of Policy Years since the Policy Date.
BENEFICIARY.................. The person or entity named by the Policyowner in the application or by
later designation to receive the death proceeds upon the death of the
Insured.
BUSINESS DAY................. Each day that the New York Stock Exchange is open for trading, except the
day after Thanksgiving, the Thursday before Christmas (in 1998) and any day
on which the Home Office is closed because of a weather-related or
comparable type of emergency and is unable to segregate orders and
redemption requests received on that day.
COMPANY...................... Farm Bureau Life Insurance Company.
DECLARED INTEREST OPTION..... A part of the Company's General Account Net Premiums may be allocated, and
Accumulated Value may be transferred, to the Declared Interest Option.
Accumulated Value in the Declared Interest Option is credited with interest
at a declared annual rate guaranteed to be at least 4.0%.
DUE PROOF OF DEATH........... Proof of death that is satisfactory to the Company. Such proof may consist
of the following if acceptable to the Company:
(a) A certified copy of the death certificate;
(b) A certified copy of a court decree reciting a finding of death; or
(c) Any other proof satisfactory to the Company.
FUND......................... An open-end diversified management investment company in which the Variable
Account invests.
GENERAL ACCOUNT.............. The assets of the Company other than those allocated to the Variable
Account or any other separate account.
GRACE PERIOD................. The 61-day period beginning on the date the Company sends notice to the
Policyowner that Net Accumulated Value or Net Surrender Value is
insufficient to cover the monthly deduction.
HOME OFFICE.................. The principal offices of the Company at 5400 University Avenue, West Des
Moines, Iowa 50266.
INSURED...................... The person upon whose life the Policy is issued.
INVESTMENT OPTION............ A separate investment portfolio of a Fund.
ISSUE DATE................... The date which the Policy is issued and mailed to the Policyowner.
MATURITY DATE................ The Insured's Attained Age 115. It is the date on which the Policy
terminates and the Policy's Accumulated Value less Policy Debt becomes
payable to the Policyowner or the Policyowner's estate.
MONTHLY DEDUCTION DAY........ The same date in each month as the Policy Date. The monthly deduction is
made on the Business Day coinciding with or immediately following the
Monthly Deduction Day. (See "CHARGES AND DEDUCTIONS--Monthly Deduction.")
NET ASSET VALUE.............. The total current value of each Subaccount's securities, cash, receivables
and other assets less liabilities.
NET ACCUMULATED VALUE........ The Accumulated Value of the Policy reduced by any outstanding Policy Debt
and increased by any unearned loan interest.
NET PREMIUM.................. The amount of premium remaining after the premium expense charge (see
"CHARGES AND DEDUCTIONS--Premium Expense Charge") has been deducted. This
amount will be allocated, according to the Policyowner's instructions,
among the Subaccounts of the Variable Account and the Declared Interest
Option.
NET SURRENDER VALUE.......... The Surrender Value minus any Policy Debt plus any unearned loan interest.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
PARTIAL WITHDRAWAL FEE....... A fee assessed at the time of any partial withdrawal, equal to the lesser
of $25 or 2% of the amount withdrawn.
POLICY....................... The flexible premium variable life insurance policy offered by the Company
and described in this Prospectus, which term includes the Policy described
in this Prospectus, the Policy application, any supplemental applications
and any endorsements.
POLICY ANNIVERSARY........... The same date in each year as the Policy Date.
POLICY DATE.................. The date set forth on the Policy data page which is used to determine
Policy Years, Policy Months and Policy Anniversaries. The Policy Date may,
but will not always, coincide with the effective date of insurance coverage
under the Policy. (See "THE POLICY--Purchasing the Policy.")
POLICY DEBT.................. The sum of all outstanding Policy Loans and any due and unpaid Policy Loan
interest.
POLICY LOAN.................. An amount borrowed by the Policyowner from the Company for which the Policy
serves as the sole security. Interest on Policy Loans is payable in advance
(for the remainder of the Policy Year) upon taking a Policy Loan and upon
each Policy Anniversary thereafter (for the following Policy Year) until
the Policy Loan is repaid.
POLICY MONTH................. A one-month period beginning on a Monthly Deduction Day and ending on the
day immediately preceding the next Monthly Deduction Day.
POLICYOWNER.................. The person who owns a Policy. The original Policyowner is named in the
application.
POLICY YEAR.................. A twelve-month period that starts on the Policy Date or on a Policy
Anniversary.
SPECIFIED AMOUNT............. The minimum death benefit payable under a Policy so long as the Policy
remains in force. The Specified Amount as of the Policy Date is set forth
on the data page in each Policy.
SUBACCOUNT................... A subdivision of the Variable Account which invests exclusively in shares
of a designated Investment Option of a Fund.
SURRENDER CHARGE............. A charge assessed at the time of any surrender during the first six Policy
Years and for six years following an increase in Specified Amount.
SURRENDER VALUE.............. The Accumulated Value minus the Surrender Charge.
TARGET PREMIUM............... A premium amount specified by the Company. It is used to calculate the
premium expense charge during time periods when the Company has declared a
premium expense charge less than the 7.0% guaranteed premium expense
charge. The Company may declare a lower percentage of premium expense
charge on premiums paid in excess of the Target Premium during a Policy
Year. It is also used to calculate compensation to registered
representatives.
UNIT VALUE................... The value determined by dividing each Subaccount's Net Asset Value by the
number of units outstanding at the time of calculation.
VALUATION PERIOD............. The period between the close of business (3:00 p.m. central time) on a
Business Day and the close of business on the next Business Day.
VARIABLE ACCOUNT............. Farm Bureau Life Variable Account II, a separate investment account
established by the Company to receive and invest the Net Premiums paid
under the Policies.
</TABLE>
4
<PAGE>
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SUMMARY OF THE POLICY
- --------------------------------------------------------------------------------
THE FOLLOWING SUMMARY OF PROSPECTUS INFORMATION SHOULD
BE READ IN CONJUNCTION WITH THE DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE
INDICATED, THE DESCRIPTION OF THE POLICY CONTAINED IN
THIS PROSPECTUS ASSUMES THAT THE POLICY IS IN FORCE AND
THAT THERE IS NO OUTSTANDING POLICY DEBT.
- --------------------------------------------------------------------------------
THE POLICY
Under the Policy, subject to certain limitations, the
Policyowner has flexibility in determining the frequency
and amount of premiums. (See "THE POLICY-- Premiums.")
The amount and/or duration of the life insurance coverage
and the Accumulated Value of the Policy is not guaranteed
and may increase or decrease, depending upon the
investment experience of the assets supporting the
Policy. Accordingly, the Policyowner bears the investment
risk of any depreciation of, but reaps the benefit of any
appreciation in, the value of the underlying assets. As
long as the Policy remains in force, the Policy will
provide for death proceeds payable to the Beneficiary
upon the Insured's death, the accumulation of Accumulated
Value, withdrawal and surrender options and policy loan
privileges. The minimum Specified Amount for which a
Policy will be issued is normally $50,000, although the
Company may in its discretion issue Policies with
Specified Amounts of less than $50,000.
- --------------------------------------------------------------------------------
THE VARIABLE ACCOUNT
Net Premiums will first be allocated to the Declared
Interest Option as of the Issue Date. Once the Company
Receives a signed notice from the Policyowner that the
Policy has been received and accepted, the Accumulated
Value in the Declared Interest Option automatically will
be allocated, without charge, among the Subaccounts and
the Declared Interest Option in accordance with the
Policyowner's allocation instructions. Net Premiums
received after the Company receives the signed notice are
allocated, in accordance with the instructions of the
Policyowner, to the Variable Account, the Declared
Interest Option, or both. (See "THE POLICY--
Premiums--ALLOCATIONS OF NET PREMIUMS.") The Variable
Account consists of fifteen Subaccounts: the Value Growth
Subaccount, the High Grade Bond Subaccount, the High
Yield Bond Subaccount, the Money Market Subaccount, the
Blue Chip Subaccount, the Subaccount, the
Subaccount, the Subaccount, the
Subaccount, the Subaccount, the
Subaccount, the Subaccount,
the Subaccount, the
Subaccount and the Subaccount. Each
Subaccount invests exclusively in shares of the
corresponding Investment Option.
Accumulated Value will, and death proceeds may, vary with
the investment experience of the Subaccounts, as well as
with the frequency and amount of premium payments, any
partial withdrawals and any charges imposed in connection
with the Policy. (See "POLICY BENEFITS--Accumulated Value
Benefits.")
- --------------------------------------------------------------------------------
THE DECLARED INTEREST
OPTION
As an alternative to the Variable Account, the
Policyowner may allocate or transfer all or a portion of
the Accumulated Value to the Declared Interest Option,
which guarantees a specified minimum rate of return. (See
"THE DECLARED INTEREST OPTION.")
- --------------------------------------------------------------------------------
PREMIUMS
The Company may require the Policyowner to pay an initial
premium that, when reduced by the premium expense charge
(see "CHARGES AND DEDUCTIONS-- Premium Expense Charge"),
will be sufficient to pay the monthly deduction for the
first Policy Month. Each Policyowner will determine a
planned periodic premium schedule. The Policyowner is not
required to pay premiums in accordance with the planned
periodic premium schedule. (See "THE
POLICY--Premiums--PLANNED PERIODIC PREMIUMS.") The
schedule will provide for a premium payment of a level
amount at a fixed interval over a specified period of
time. Failure to pay premiums in accordance with the
schedule will not itself cause the Policy to lapse. (See
"THE POLICY--Policy Lapse and Reinstatement--LAPSE.")
Subject to certain restrictions, unscheduled premium
payments may also be made. (See "THE POLICY--
Premiums--UNSCHEDULED PREMIUMS.")
A Policy will lapse during the first three Policy Years
when Net Accumulated Value is insufficient on a Monthly
Deduction Day to cover the monthly deduction, or after
three Policy Years when Net Surrender Value is
insufficient on a Monthly Deduction Day to cover the
monthly deduction (see "CHARGES AND DEDUCTIONS--Monthly
5
<PAGE>
Deduction"), and a Grace Period expires without a
sufficient payment (see "THE POLICY--Policy Lapse and
Reinstatement--LAPSE"). With respect to premiums,
therefore, the Policy differs in two important ways from
a conventional life insurance policy. First, the failure
to pay a planned periodic premium will not in itself
automatically cause the Policy to lapse. Second, a Policy
can lapse even if planned periodic premiums or premiums
in other amounts have been paid.
- --------------------------------------------------------------------------------
POLICY BENEFITS
ACCUMULATED VALUE BENEFITS. The Policy provides for an
Accumulated Value. The Accumulated Value will reflect
the amount and frequency of premium payments, the
investment experience of the chosen subaccounts of the
Variable Account, the interest earned on the Accumulated
Value in the Declared Interest Option, any Policy Loans,
any partial withdrawals and the charges imposed in
connection with the Policy. The entire investment risk
for amounts allocated to the Variable Account is borne by
the Policyowner; the Company does not guarantee a minimum
Accumulated Value. (See "POLICY BENEFITS--Accumulated
Value Benefits--CALCULATION OF ACCUMULATED VALUE.")
The Policyowner may, at any time, surrender a Policy and
receive the Net Surrender Value. Subject to certain
limitations, the Policyowner may also obtain a partial
withdrawal of Net Accumulated Value (minimum $500) at any
time prior to the Maturity Date. Partial withdrawals will
reduce both the Accumulated Value and death proceeds
payable under the Policy. (See "POLICY
BENEFITS--Accumulated Value Benefits--SURRENDER AND
WITHDRAWAL PRIVILEGES.") A charge will be assessed upon
surrender or partial withdrawal. (See "CHARGES AND
DEDUCTIONS--Partial Withdrawal Fee, and --Surrender
Charge.")
TRANSFERS. A Policyowner may transfer amounts (minimum
$100) among the subaccounts of the Variable Account an
unlimited number of times in a Policy Year; however, only
one transfer per Policy Year may be made between the
Declared Interest Option and the Variable Account. The
first transfer in a Policy Year is free; subsequent
transfers in that Policy Year will be assessed a charge
of $25. The transfer charge, unless paid in cash, will be
deducted from the amount transferred. (See "POLICY
BENEFITS--Transfers.") A transfer from the Variable
Account to the Declared Interest Option requested in
connection with the exercise of the special transfer
privilege under the Policy (see "THE POLICY--Special
Transfer Privilege") will not be considered a transfer
for purposes of the one-transfer limit or the $25 charge.
POLICY LOANS. So long as a Policy is in force and has a
positive Net Surrender Value, the Policyowner may borrow
up to 90% of the Policy's Net Surrender Value as of the
end of the Valuation Period during which the request for
the Policy Loan is received at the Home Office, less any
previously outstanding Policy Debt. (See "POLICY
BENEFITS-- Loan Benefits.") A loan taken from, or secured
by, a Policy may have federal income tax consequences.
(See "FEDERAL TAX MATTERS--Policy Proceeds.")
DEATH PROCEEDS. The Policies provide for the payment of
death proceeds following receipt by the Company (at its
Home Office) of Due Proof of Death of the Insured. The
Policy contains two death benefit options. Under Option
A, the death benefit is the greater of the sum of the
Specified Amount and the Policy's Accumulated Value, or
the Accumulated Value multiplied by the specified amount
factor for the Insured's Attained Age, as set forth in
the Policy. Under Option B, the death benefit is the
greater of the Specified Amount, or the Accumulated Value
multiplied by the specified amount factor for the
Insured's Attained Age, as set forth in the Policy. For
this purpose, all calculations are made as of the end of
the Business Day coinciding with or immediately following
the date of death.
Under either death benefit option, so long as the Policy
remains in force, the death benefit will not be less than
the Specified Amount of the Policy on the date of death.
The death benefit may, however, exceed the Specified
Amount. The amount by which the death benefit exceeds the
Specified Amount depends upon the death benefit option
chosen and the Accumulated Value of the Policy. (See
"POLICY BENEFITS-- Death Proceeds.") To determine the
death proceeds, the death benefit will be reduced by any
outstanding Policy Debt and increased by any unearned
loan interest
6
<PAGE>
and any premiums paid after the date of death. The
proceeds may be paid in a lump sum or in accordance with
a payment option. (See "POLICY BENEFITS--Payment
Options.")
Anytime after the first Policy Year, the Policyowner may,
subject to certain restrictions, adjust the death benefit
payable under the Policy by increasing or decreasing the
Specified Amount. (See "POLICY BENEFITS--Death
Proceeds--CHANGE IN EXISTING COVERAGE.") In addition, the
Policyowner may, at any time, change the death benefit
option in effect. (See "POLICY BENEFITS--Death
Proceeds--CHANGE IN DEATH BENEFIT OPTION.")
BENEFITS AT MATURITY. If the Insured is alive and the
Policy is in force on the Maturity Date, the Policyowner
will be paid the Accumulated Value of the Policy as of
the end of the Business Day coinciding with or
immediately following the Maturity Date, reduced by any
outstanding Policy Debt.
- --------------------------------------------------------------------------------
CHARGES
PREMIUM EXPENSE CHARGE. The Net Premium equals the
premium paid less a premium expense charge. The premium
expense charge is equal to a maximum charge of 7% of each
premium up to the Target Premium, and 2% of each premium
in excess of the Target Premium. The premium expense
charge is used to compensate the Company for expenses
incurred in connection with the distribution of the
Policies and for premium taxes imposed by various states
and subdivisions thereof. (See "CHARGES AND
DEDUCTIONS--Premium Expense Charge.")
ACCUMULATED VALUE CHARGES. Accumulated Value will be
reduced each Policy Month on the Monthly Deduction Day
by a monthly deduction equal to the sum of a cost of
insurance charge, the cost of any additional insurance
benefits added by rider and a policy expense charge of
$5.00 per month (guaranteed not to exceed $7.00 per
month). In addition, during the first twelve Policy
Months and during the twelve Policy Months immediately
following an increase in Specified Amount, the monthly
deduction will include a first year monthly
administrative charge. This charge is $0.05 per $1,000 of
Specified Amount or increase in Specified Amount, and is
guaranteed not to exceed $0.07 per $1,000 of Specified
Amount. Also, during the first twelve Policy Months, the
monthly deduction will include a first year monthly
expense charge of $5.00 per month (guaranteed not to
exceed $7.00 per month). The monthly deduction will vary
in amount from month to month. (See "CHARGES AND
DEDUCTIONS--Monthly Deduction.")
Upon partial withdrawal of a Policy, a fee of the lesser
of $25 or 2% of the amount withdrawn will be assessed. At
the time of surrender, a charge will apply during the
first six Policy Years, as well as during the first six
Policy Years following an increase in Specified Amount.
The surrender charge is an amount per $1,000 of Specified
Amount which varies by age, sex, underwriting category
and Policy Year. The surrender charge applicable to each
Policyowner will be listed in the Policy. (See "CHARGES
AND DEDUCTIONS--Partial Withdrawal Fee, and --Surrender
Charge.") During a Policy Year, a $25 charge may be
assessed for the second and subsequent transfers of
assets among the Subaccounts and between the Variable
Account and the Declared Interest Option. (See "CHARGES
AND DEDUCTIONS--Transfer Charge.")
CHARGES AGAINST THE VARIABLE ACCOUNT. A daily charge at
the rate of .0024548% of the average daily net assets of
each Subaccount will be imposed to compensate the Company
for certain mortality and expense risks incurred in
connection with the Policies. (See "CHARGES AND
DEDUCTIONS--Variable Account Charges.") This corresponds
to an effective annual rate of 0.90%. (This charge is
guaranteed not to exceed .0028618% of the average daily
net assets of each Subaccount, which corresponds to an
effective annual rate of 1.05%.)
Currently, no charge is made to the Variable Account for
federal income taxes that may be attributable to the
Variable Account. The Company may, however, make such a
charge in the future.
INVESTMENT OPTION EXPENSES. In addition, because the
Variable Account purchases shares of the selected
Investment Options, the value of the net assets of the
Variable Account will reflect the investment advisory fee
and other expenses incurred by each
7
<PAGE>
Investment Option. The fees and expenses for 1997 were as
indicated in the table below. (See "CHARGES AND
DEDUCTIONS--Variable Account Charges--INVESTMENT OPTION
EXPENSES.")
<TABLE>
<CAPTION>
ADVISORY OTHER TOTAL
INVESTMENT OPTION FEE EXPENSES EXPENSES
- ------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
Value Growth
High Grade Bond
High Yield Bond
Blue Chip
Money Market
Investment Option F
Investment Option G
Investment Option H
Investment Option I
Investment Option J
Investment Option K
Investment Option L
Investment Option M
Investment Option N
Investment Option O
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF THE
POLICIES
The Policies will be distributed by registered
representatives of EquiTrust Marketing Services, Inc.,
("EquiTrust Marketing") a broker-dealer having a selling
agreement with EquiTrust Marketing or a broker-dealer
having a selling agreement with such broker-dealer.
EquiTrust Marketing Services, Inc. (formerly FBL
Marketing Services, Inc.), a wholly-owned indirect
subsidiary of FBL Financial Group, Inc., is registered as
a broker-dealer with the Securities and Exchange
Commission and is a member of the National Association of
Securities Dealers, Inc.
- --------------------------------------------------------------------------------
TAX TREATMENT
If a Policy is issued on the basis of a standard premium
class, while there is some uncertainty, the Company
believes that the Policy should qualify as a life
insurance contract for federal income tax purposes. If a
Policy is issued on a substandard basis, it is not clear
whether or not the Policy would qualify as a life
insurance contract for federal income tax purposes.
Assuming that a Policy qualifies as a life insurance
contract for federal income tax purposes, the Accumulated
Value under a Policy should be subject to the same
federal income tax treatment as accumulated value under a
conventional fixed-benefit Policy. Under existing tax
law, the Policyowner is not deemed to be in constructive
receipt of Accumulated Values under a Policy until there
is a distribution from the Policy. Like death benefits
payable under conventional life insurance policies, death
proceeds payable under a Policy should be completely
excludable from the gross income of the Beneficiary. As a
result, the Beneficiary generally will not be taxed on
these proceeds. (See "FEDERAL TAX MATTERS.")
- --------------------------------------------------------------------------------
CANCELLATION
PRIVILEGE
The Policyowner is granted a 20-day period following
receipt of the Policy in which to examine and return the
Policy. The Policyowner will receive the greater of
premiums paid or the Policy's Accumulated Value plus an
amount approximately equal to any charges which have been
deducted from premiums, Accumulated Value and the
Variable Account. (See "THE POLICY--Examination of Policy
(Cancellation Privilege).")
- --------------------------------------------------------------------------------
ILLUSTRATIONS
Sample projections of hypothetical Policy values are
included starting at page A-1 of this Prospectus. These
projections of hypothetical values may be helpful in
understanding the long-term effects of different levels
of investment performance, charges and deductions,
electing one or the other death benefit option and
generally in comparing this Policy to other life
insurance policies. NONETHELESS, THE ILLUSTRATIONS ARE
BASED ON HYPOTHETICAL INVESTMENT RATES OF RETURN AND ARE
NOT A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
Actual rates of return may be more or less than those
reflected in the illustrations and, therefore, actual
values will be different from those illustrated.
This Prospectus describes only those aspects of the
Policy that relate to the Variable Account, except where
Declared Interest Option matters are specifically
mentioned. For a brief summary of the aspects of the
Policy relating to the Declared Interest Option, see "THE
DECLARED INTEREST OPTION."
8
<PAGE>
- --------------------------------------------------------------------------------
FARM BUREAU LIFE INSURANCE COMPANY
AND THE VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
FARM BUREAU LIFE
INSURANCE COMPANY
The Company is a stock life insurance company which was
incorporated in the State of Iowa on October 30, 1944.
One hundred percent of the outstanding voting shares of
the Company are owned by FBL Financial Group, Inc. At
December 31, 1997, 66.36% of the outstanding voting
shares of FBL Financial Group, Inc. was owned by Iowa
Farm Bureau Federation. The Company is principally
engaged in the offering of life insurance policies,
disability income insurance policies and annuity
contracts and is admitted to do business in fifteen
states--Arizona, Colorado, Idaho, Iowa, Kansas,
Minnesota, Montana, Nebraska, New Mexico, North Dakota,
Oklahoma, South Dakota, Utah, Wisconsin and Wyoming. The
principal offices of the Company are at 5400 University
Avenue, West Des Moines, Iowa 50266.
- --------------------------------------------------------------------------------
IOWA FARM BUREAU
FEDERATION
Iowa Farm Bureau Federation is an Iowa not-for-profit
corporation, the members of which are county Farm Bureau
organizations and their individual members. Iowa Farm
Bureau Federation is primarily engaged, through various
divisions and subsidiaries, in the formulation, analysis
and promotion of programs (at local, state, national and
international levels) that are designed to foster the
educational, social and economic advancement of its
members. The principal offices of Iowa Farm Bureau
Federation are at 5400 University Avenue, West Des
Moines, Iowa 50266.
- --------------------------------------------------------------------------------
THE VARIABLE ACCOUNT
The Variable Account was established by the Company as a
separate account on January 6, 1998. The Variable Account
will receive and invest the Net Premiums paid under the
Policies. In addition, the Variable Account may receive
and invest net premiums for any other variable life
insurance policies issued in the future by the Company.
Although the assets in the Variable Account are the
property of the Company, the assets in the Variable
Account attributable to the Policies generally are not
chargeable with liabilities arising out of any other
business which the Company may conduct. The assets of the
Variable Account are available to cover the general
liabilities of the Company only to the extent that the
Variable Account's assets exceed its liabilities arising
under the Policies and any other policies supported by
the Variable Account. The Company has the right to
transfer to the General Account any assets of the
Variable Account which are in excess of such reserves and
other Policy liabilities.
The Variable Account currently is divided into fifteen
Subaccounts but may, in the future, include additional
subaccounts. Each Subaccount invests exclusively in
shares of a single corresponding Investment Option.
Income and realized and unrealized gains or losses from
the assets of each Subaccount are credited to or charged
against, that Subaccount without regard to income, gains
or losses from any other Subaccount.
The Variable Account has been registered as a unit
investment trust under the Investment Company Act of 1940
and meets the definition of a separate account under the
federal securities laws. Registration with the Securities
and Exchange Commission does not involve supervision of
the management or investment practices or policies of the
Variable Account or the Company by the Commission. The
Variable Account is also subject to the laws of the State
of Iowa which regulate the operations of insurance
companies domiciled in Iowa.
- --------------------------------------------------------------------------------
INVESTMENT OPTIONS
The Variable Account invests in shares of the Investment
Options. The Investment Options currently include the
Value Growth Portfolio, High Grade Bond Portfolio, High
Yield Bond Portfolio, Money Market Portfolio and Blue
Chip Portfolio of EquiTrust Variable Insurance Series
Fund, the Portfolio,
Portfolio, Portfolio,
Portfolio and Portfolio of
, and the Portfolio,
Portfolio, Portfolio,
Portfolio and Portfolio
of
9
<PAGE>
. The Variable Account may, in the
future, provide for additional investment options. Each
Investment Option has its own investment objectives and
the income and losses for each Investment Option will be
determined separately.
The investment objectives and policies of each Investment
Option are summarized below. There is no assurance that
any Investment Option will achieve its stated objectives.
More detailed information, including a description of
risks, may be found in the prospectus for each Investment
Option, which must accompany or precede this Prospectus
and which should be read carefully and retained for
future reference.
EQUITRUST VARIABLE INSURANCE SERIES FUND
VALUE GROWTH PORTFOLIO. This Portfolio seeks
long-term capital appreciation. The Portfolio pursues
its objective by investing primarily in equity
securities of companies that the investment adviser
believes have a potential to earn a high return on
equity and/or in equity securities that the
investment adviser believes are undervalued by the
market place. Such equity securities may include
common stock, preferred stock and securities
convertible or exchangeable into common stock.
HIGH GRADE BOND PORTFOLIO. This Portfolio seeks as
high a level of current income as is consistent with
a high grade portfolio of debt securities. The
Portfolio will pursue this objective by investing
primarily in debt securities rated AAA, AA or A by
Standard & Poor's Corporation and/or Aaa, Aa or A by
Moody's Investors Service, Inc., and in securities
issued or guaranteed by the United States government
or its agencies or instrumentalities.
HIGH YIELD BOND PORTFOLIO. This Portfolio seeks, as a
primary objective, as high a level of current income
as is consistent with investment in a portfolio of
fixed-income securities rated in the lower categories
of established rating services. As a secondary
objective, the Portfolio seeks capital appreciation
when consistent with its primary objective. The
Portfolio pursues these objectives by investing
primarily in fixed-income securities rated Baa or
lower by Moody's Investors Service, Inc. and/or BBB
or lower by Standard & Poor's Corporation, or in
unrated securities of comparable quality. AN
INVESTMENT IN THIS PORTFOLIO MAY ENTAIL GREATER THAN
ORDINARY FINANCIAL RISK. (See the Fund Prospectus
"PRINCIPAL RISK FACTORS--Special Considerations--High
Yield Bonds.")
MONEY MARKET PORTFOLIO. This Portfolio seeks maximum
current income consistent with liquidity and
stability of principal. The Portfolio will pursue
this objective by investing in high quality
short-term money market instruments. AN INVESTMENT IN
THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO
ASSURANCE THAT THE MONEY MARKET PORTFOLIO WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
BLUE CHIP PORTFOLIO. This Portfolio seeks growth of
capital and income. The Portfolio pursues this
objective by investing primarily in common stocks of
well-capitalized, established companies. Because this
Portfolio may be invested heavily in particular
stocks or industries, an investment in this Portfolio
may entail relatively greater risk of loss.
10
<PAGE>
PORTFOLIO.
PORTFOLIO.
PORTFOLIO.
PORTFOLIO.
PORTFOLIO.
PORTFOLIO.
PORTFOLIO.
PORTFOLIO.
11
<PAGE>
PORTFOLIO.
PORTFOLIO.
EquiTrust Variable Insurance Series Fund currently sells
shares only to the Variable Account and to separate
accounts of the Company supporting other variable life
insurance policies and variable annuity contracts.
EquiTrust Variable Insurance Series Fund may in the
future sell shares to other separate accounts of the
Company or its life insurance company affiliates
supporting other variable insurance products, or to
variable life insurance and variable annuity separate
accounts of insurance companies not affiliated with the
Company. The other Funds currently sell shares: (a) to
the Variable Account as well as to separate accounts of
insurance companies that may or may not be affiliated
with the Company or each other; and (b) to separate
accounts to serve as the underlying investment for both
variable insurance policies and variable annuity
contracts. The Company currently does not foresee any
disadvantages to Policyowners arising from the sale of
shares to support variable annuity contracts and variable
life insurance policies, or from shares being sold to
separate accounts of insurance companies that may or may
not be affiliated with the Company. However, the Company
intends to monitor events in order to identify any
material irreconcilable conflicts that might possibly
arise. In that event, it would determine what action, if
any, should be taken in response to those events or
conflicts. In addition, if the Company believes that a
Fund's response to any of those events or conflicts
insufficiently protects Policyowners, it will take
appropriate action on its own, including withdrawing the
Variable Account's investment in that Fund. (See the Fund
prospectuses for more detail.)
Each Fund is registered with the Securities and Exchange
Commission as an open-end, diversified management
investment company. Such registration does not involve
supervision of the management or investment practices or
policies of the Fund by the Securities and Exchange
Commission.
[Additional information on Investment Options to be
provided by amendment .]
- --------------------------------------------------------------------------------
ADDITION, DELETION OR
SUBSTITUTION OF
INVESTMENTS
The Company reserves the right, subject to compliance
with applicable law, to make additions to, deletions from
or substitutions for the shares of the Investment Options
that are held by the Variable Account or that the
Variable Account may purchase. If the shares of an
Investment Option are no longer available for investment
or if, in its judgment, further investment in any
Investment Option should become inappropriate in view of
the purposes of the Variable Account, the Company
reserves the right to dispose of the shares of any
Investment Option and to substitute shares of another
Investment Option. The Company will not substitute any
shares attributable to a Policyowner's Accumulated Value
in the Variable Account without notice to and prior
approval of the Securities and Exchange Commission, to
the extent required by the Investment Company Act of 1940
or other applicable law. Nothing contained in
12
<PAGE>
this Prospectus shall prevent the Variable Account from
purchasing other securities for other series or classes
of policies, or from permitting a conversion between
series or classes of policies on the basis of requests
made by Policyowners.
The Company also reserves the right to establish
additional subaccounts of the Variable Account, each of
which would invest in shares of a new Investment Option
with a specified investment objective. New subaccounts
may be established when, in the sole discretion of the
Company, marketing, tax or investment conditions warrant,
and any new subaccounts may be made available to existing
Policyowners on a basis to be determined by the Company.
Subject to obtaining any approvals or consents required
by applicable law, the assets of one or more Subaccounts
may be transferred to any other Subaccount(s), or one or
more Subaccounts may be eliminated or combined with any
other Subaccount(s) if, in the sole discretion of the
Company, marketing, tax or investment conditions warrant.
In the event of any such substitution or change, the
Company may, by appropriate endorsement, make such
changes in these and other policies as may be necessary
or appropriate to reflect such substitution or change. If
deemed by the Company to be in the best interests of
persons having voting rights under the Policies, the
Variable Account may be operated as a management company
under the Investment Company Act of 1940, may be
deregistered under that Act in the event such
registration is no longer required, or, subject to
obtaining any approvals or consents required by
applicable law, may be combined with other Company
separate accounts. To the extent permitted by applicable
law, the Company may also transfer the assets of the
Variable Account associated with the Policies to another
separate account. In addition, the Company may, when
permitted by law, restrict or eliminate any voting rights
of Policyowners or other persons who have voting rights
as to the Variable Account. (See "ADDITIONAL
INFORMATION--Voting Rights.")
- --------------------------------------------------------------------------------
THE POLICY
- --------------------------------------------------------------------------------
PURPOSE OF THE POLICY
The Policy is designed to provide the Policyowner with
both lifetime insurance protection and significant
flexibility in connection with the amount and frequency
of premium payments and the level of death proceeds
payable under a Policy. Unlike conventional life
insurance, the Policyowner is not required to pay
scheduled premiums to keep a Policy in force, but may,
subject to certain limitations, vary the frequency and
amount of premium payments. Moreover, the Policy allows a
Policyowner to adjust the level of death proceeds payable
under a Policy, without having to purchase a new policy,
by increasing or decreasing the Specified Amount. Thus,
as insurance needs or financial conditions change, the
Policyowner has the flexibility to adjust death proceeds
and vary premium payments.
The Policy varies from conventional fixed-benefit life
insurance in a number of additional respects. Because the
death proceeds may, and the Accumulated Value will, vary
with the investment experience of the chosen Subaccounts,
the Policyowner bears the investment risk of any
depreciation of, but reaps the benefit of any
appreciation in, the value of the underlying assets. As a
result, whether or not a Policy continues in force may
depend in part upon the investment experience of the
chosen Subaccounts. The failure to pay a planned periodic
premium will not necessarily cause the Policy to lapse,
but the Policy could lapse even if planned periodic
premiums have been paid, depending upon the investment
experience of the Variable Account.
Life Insurance is not a short-term investment.
Prospective policyowners should consider their need for
insurance coverage and the Policy's long-term investment
potential. A prospective policyowner who already has life
insurance coverage should consider whether or not
changing or adding to existing coverage would be
advantageous. Generally, it is not advisable to purchase
another policy to replace an existing policy.
- --------------------------------------------------------------------------------
PURCHASING THE POLICY
Before it will issue a Policy, the Company must receive a
completed application, including payment of the initial
premium, at its Home Office. A Policy ordinarily will
13
<PAGE>
be issued only for Insureds who are 0 to 80 years of age
at their last birthday and who supply satisfactory
evidence of insurability to the Company. Acceptance is
subject to the Company's underwriting rules and the
Company may, in its sole discretion, reject any
application or premium for any reason. The minimum
Specified Amount for which a Policy will be issued is
normally $50,000, although the Company may, in its
discretion, issue Policies with Specified Amounts of less
than $50,000.
The Policy Date will be the later of (i) the date of the
initial application, or (ii) if additional medical or
other information is required pursuant to the Company's
underwriting rules, the date all such additional
information is received by the Company at its Home
Office. The Policy Date may also be any other date
mutually agreed to by the Company and the Policyowner. If
the later of (i) and (ii) above is the 29th, 30th or 31st
of any month, the Policy Date will be the 28th of such
month. The Policy Date is the date used to determine
Policy Years, Policy Months and Policy Anniversaries. The
Policy Date may, but will not always, coincide with the
effective date of insurance coverage under the Policy.
The effective date of insurance coverage under the Policy
will be the later of (i) the Policy Date, (ii) if an
amendment to the initial application is required pursuant
to the Company's underwriting rules, the date the Insured
signs the last such amendment, or (iii) the date on which
the full initial premium is received by the Company at
its Home Office.
- --------------------------------------------------------------------------------
PREMIUMS
Subject to certain limitations, a Policyowner has
flexibility in determining the frequency and amount of
premiums.
PREMIUM FLEXIBILITY. Unlike conventional insurance
policies, the Policy frees the Policyowner from the
requirement that premiums be paid in accordance with a
rigid and inflexible premium schedule. The Company may
require the Policyowner to pay an initial premium that,
when reduced by the premium expense charge (see "CHARGES
AND DEDUCTIONS--Premium Expense Charge"), will be
sufficient to pay the monthly deduction for the first
Policy Month. Thereafter, subject to the minimum and
maximum premium limitations described below, a
Policyowner may also make unscheduled premium payments at
any time prior to the Maturity Date.
The Company offers a conversion program for its term
insurance or Executive Term policies. Under the program,
owners of a term policy issued by the Company can elect
to convert their term insurance policy to a permanent
insurance policy, including the Policy, at any time
between the first and sixth policy anniversaries of their
term policy. Upon conversion, the Company will credit to
the initial premium for the Policy an amount equal to the
annual premium paid on the term policy, up to a limit of
$5.00 per $1,000 of their term insurance face amount.
Custom Term II contains a Premium Credit Benefit that
allows the policy owner credit towards the purchase of a
Policy at any time between the first and sixth policy
anniversaries of their term policy. Upon exercise of this
benefit, the Company will credit to the initial premium
for the Policy an amount equal to the annual premium paid
on the term policy, up to a limit of $5.00 per $1,000 of
the term insurance face amount. The existing Custom Term
II policy need not be canceled to use this benefit. These
credits will be treated as a premium for purposes of
Policy provisions applicable to premiums, such as
deduction of the premium expense charge. Please see your
registered representative for more information. A
commission is paid to a registered representative upon a
conversion.
PLANNED PERIODIC PREMIUMS. Each Policyowner will
determine a planned periodic premium schedule that
provides for the payment of a level premium over a
specified period of time on a quarterly, semi-annual or
annual basis. The Company may, at its discretion, permit
planned periodic payments to be made on a monthly basis.
Periodic reminder notices ordinarily will be sent to the
Policyowner for each planned periodic premium. Depending
on the duration of the planned periodic premium schedule,
the timing of planned payments could affect the tax
status of the Policy. (See "FEDERAL TAX MATTERS.")
The Policyowner is not required to pay premiums in
accordance with the planned periodic premium schedule.
Furthermore, the Policyowner has considerable
14
<PAGE>
flexibility to alter the amount, frequency and the time
period over which planned periodic premiums are paid;
however, no planned periodic payment may be less than
$100 without the Company's consent. Changes in the
planned premium schedule may have federal income tax
consequences. (See "FEDERAL TAX MATTERS.")
The payment of a planned periodic premium will not
guarantee that the Policy remains in force. Instead, the
duration of the Policy depends upon the Policy's
Accumulated Value. Thus, even if planned periodic
premiums are paid by the Policyowner, the Policy will
nevertheless lapse if, during the first three Policy
Years, Net Accumulated Value or, after three Policy
Years, Net Surrender Value is insufficient on a Monthly
Deduction Day to cover the monthly deduction (see
"CHARGES AND DEDUCTIONS--Monthly Deduction") and a Grace
Period expires without a sufficient payment (see "THE
POLICY--Policy Lapse and Reinstatement--LAPSE").
UNSCHEDULED PREMIUMS. Each unscheduled premium payment
must be at least $100; however, the Company may, in its
discretion, waive this minimum requirement. The Company
reserves the right to limit the number and amount of
unscheduled premium payments. An unscheduled premium
payment may have federal income tax consequences. (See
"FEDERAL TAX MATTERS.")
PREMIUM LIMITATIONS. In no event may the total of all
premiums paid, both planned periodic and unscheduled,
exceed the applicable maximum premium limitation imposed
by federal tax laws. Because the maximum premium
limitation is in part dependent upon the Specified Amount
for each Policy, changes in the Specified Amount may
affect this limitation. If at any time a premium is paid
which would result in total premiums exceeding the
applicable maximum premium limitation, the Company will
accept only that portion of the premium which will make
total premiums equal the maximum. Any part of the premium
in excess of that amount will be returned and no further
premiums will be accepted until allowed by the applicable
maximum premium limitation.
PAYMENT OF PREMIUMS. Payments made by the Policyowner
will be treated first as payment of any outstanding
Policy Debt unless the Policyowner indicates that the
payment should be treated otherwise. Where no indication
is made, any portion of a payment that exceeds the amount
of any outstanding Policy Debt will be treated as a
premium payment.
NET PREMIUMS. The Net Premium is the amount available
for investment. The Net Premium equals the premium paid
less the premium expense charge. (See "CHARGES AND
DEDUCTIONS--Premium Expense Charge.")
ALLOCATION OF NET PREMIUMS. In the application for a
Policy, the Policyowner can allocate Net Premiums or
portions thereof to the Subaccounts, to the Declared
Interest Option, or both. Notwithstanding the allocation
in the application, the Net Premiums will first be
allocated to the Declared Interest Option as of the Issue
Date. When the Company receives, at its Home Office, a
notice signed by the Policyowner that the Policy has been
received and accepted, the Policy's Accumulated Value in
the Declared Interest Option automatically will be
allocated, without charge, among the Subaccounts and the
Declared Interest Option in accordance with the
Policyowner's percentage allocation in the application.
The Policyowner does not waive his cancellation privilege
by sending the signed notice of receipt and acceptance of
the Policy to the Company (see "THE POLICY--Examination
of Policy (Cancellation Privilege)").
Net Premiums received after the date the Company receives
the signed notice will be allocated in accordance with
the Policyowner's percentage allocation in the
application or the most recent written instructions of
the Policyowner. The minimum percentage of each premium
that may be allocated to any subaccount of the Variable
Account or to the Declared Interest Option is 10%; no
fractional percentages will be permitted. The allocation
for future Net Premiums may be changed without charge, at
any time while the Policy is in force, by providing the
Company with written notice on
15
<PAGE>
a form acceptable to the Company signed by the
Policyowner. The change will take effect on the date the
written notice is received at the Home Office and will
have no effect on prior cash values.
- --------------------------------------------------------------------------------
POLICY LAPSE AND
REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the
failure to make a planned periodic premium payment will
not itself cause a Policy to lapse. Lapse will only occur
during the first three Policy Years when Net Accumulated
Value is insufficient on a Monthly Deduction Day to cover
the monthly deduction, or after three Policy Years when
Net Surrender Value is insufficient on a Monthly
Deduction Day to cover the monthly deduction (see
"CHARGES AND DEDUCTIONS--Monthly Deduction"), and a Grace
Period expires without a sufficient payment. Insurance
coverage will continue during the Grace Period, but the
Policy will be deemed to have no Accumulated Value for
purposes of Policy Loans and surrenders during such Grace
Period. The death proceeds payable during the Grace
Period will equal the amount of the death proceeds
payable immediately prior to the commencement of the
Grace Period, reduced by any due and unpaid monthly
deductions.
To avoid lapse and termination of the Policy without
value, the Company must receive from the Policyowner
during the Grace Period a premium payment that, when
reduced by the premium expense charge (see "CHARGES AND
DEDUCTIONS-- Premium Expense Charge"), will be at least
equal to three times the monthly deduction due on the
Monthly Deduction Day immediately preceding the Grace
Period (see "CHARGES AND DEDUCTIONS--Monthly Deduction").
A Grace Period of 61 days will commence on the date the
Company sends a notice of any insufficiency to the
Policyowner.
REINSTATEMENT. Prior to the Maturity Date, a lapsed
Policy may be reinstated at any time within five years
of the Monthly Deduction Day immediately preceding the
Grace Period which expired without payment of the
required premium. Reinstatement is effected by submitting
the following items to the Company:
1. A written application for reinstatement signed by the
Policyowner and the Insured;
2. Evidence of insurability satisfactory to the Company;
3. A premium that, after the deduction of the premium
expense charge, is at least sufficient to keep the
Policy in force for three months; and
4. An amount equal to the monthly cost of insurance for
the two Policy Months prior to lapse.
(State law may limit the premium to be paid on
reinstatement to an amount less than that described.) To
the extent that the first year monthly administrative
charge was not deducted for a total of twelve Policy
Months prior to lapse, such charge will continue to be
deducted following reinstatement of the Policy until such
charge has been assessed, both before and after the
lapse, for a total of 12 Policy Months. (See "CHARGES AND
DEDUCTIONS--Monthly Deduction.") The Company will not
reinstate a Policy surrendered for its Net Surrender
Value. The lapse of a Policy with loans outstanding may
have adverse tax consequences (see "FEDERAL TAX
MATTERS--Policy Proceeds").
The effective date of the reinstated Policy will be the
Monthly Deduction Day coinciding with or next following
the date the Company approves the application for
reinstatement.
- --------------------------------------------------------------------------------
EXAMINATION OF POLICY
(CANCELLATION
PRIVILEGE)
The Policyowner may cancel the Policy by delivering or
mailing written notice or sending a telegram to the
Company at its Home Office, and returning the Policy to
the Company at its Home Office before midnight of the
twentieth day after the Policyowner receives the Policy.
Notice given by mail and return of the Policy by mail are
effective on being postmarked, properly addressed and
postage prepaid.
With respect to all Policies, the Company will refund,
within seven days after receipt of satisfactory notice of
cancellation and the returned Policy at its Home Office,
the
16
<PAGE>
greater of premiums paid or the Policy's Accumulated
Value plus an amount approximately equal to any charges
which have been deducted from premiums, Accumulated Value
and the Variable Account.
- --------------------------------------------------------------------------------
SPECIAL TRANSFER
PRIVILEGE
A Policyowner may, at any time prior to the Maturity Date
while the Policy is in force, convert the Policy to a
flexible premium fixed-benefit life insurance policy by
requesting that all of the Accumulated Value in the
Variable Account be transferred to the Declared Interest
Option. The Policyowner may exercise this special
transfer privilege once each Policy Year. Once a
Policyowner exercises the special transfer privilege, all
future premium payments automatically will be credited to
the Declared Interest Option, until such time as the
Policyowner requests a change in allocation. No charge
will be imposed for any transfers resulting from the
exercise of the special transfer privilege.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
The Company will permit the owner of a flexible premium
fixed-benefit life insurance policy issued by the Company
or Western Farm Bureau Life Insurance Company (a company
held by the same holding company as the Company)
("fixed-benefit policy"), within 12 months of the Policy
Date shown in such policy, to exchange his fixed-benefit
policy for a Policy on the life of the Insured. After the
first 12 months of the Policy Date shown in the
fixed-benefit policy (forms #434-112 and #834-112 only),
the Company will permit the owner of such policy to
exchange his fixed-benefit policy for a Policy when the
owner applies for an increase of $25,000 or more in
Specified Amount.
The Policy Date will be the date the application for the
Policy is signed. If an exchange occurs in the first 12
months, the Policy will have a Specified Amount equal to
the specified amount of the fixed-benefit policy and will
require no evidence of insurability to exercise the
exchange privilege. The Insured will be placed in the
premium class applicable to the initial specified amount
under the fixed-benefit policy, unless there has been an
underwritten increase in specified amount, in which event
the Insured will be placed, with respect to the entire
Specified Amount under the Policy, in the premium class
applicable to such increase in specified amount.
If an exchange occurs after the first 12 months, the
Policy will have a Specified Amount equal to the
specified amount of the fixed-benefit policy plus the
increase to purchase a Policy, and the increase will
require underwriting to exercise the exchange privilege.
The Insured will be placed in the premium class
applicable to the initial specified amount under the
fixed-benefit policy, unless there has been an
underwritten increase in specified amount, in which event
the Insured will be placed, with respect to the entire
amount exchanged, in the premium class applicable to such
increase in specified amount. With regard to the increase
in Specified Amount, the Insured will be placed in the
premium class applicable to the increase.
The net cash value of the fixed-benefit policy will
initially be allocated to the Declared Interest Option.
When the Company receives, at its Home Office, a notice
signed by the Policyowner that the Policy has been
received and accepted, the Policy's accumulated value in
the Declared Interest Option automatically will be
allocated, without charge, among the Subaccounts and the
Declared Interest Option pursuant to the allocation
instructions set forth in the application for the Policy.
The Company will waive the premium expense charge (see
"CHARGES AND DEDUCTIONS--Premium Expense Charge") on the
net cash value of the fixed-benefit policy applied to the
Policy pursuant to an exchange. In addition, the Company
will assess the First Year Monthly Administrative Charge
(see "CHARGES AND DEDUCTIONS--Monthly Deduction--FIRST
YEAR MONTHLY ADMINISTRATIVE CHARGE") only to the extent
that 12 monthly per $1,000 charges under the fixed-
benefit policy have not been assessed. An increase in
Specified Amount related to a fixed-benefit policy
exchanged after the first 12 months will be assessed the
First Year Monthly Administrative Charge. Otherwise,
charges and deductions will be made in the manner and
amounts described elsewhere in the Prospectus.
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<PAGE>
With regard to an exchange after the first 12 months of
the fixed-benefit policy, the incontestable and suicide
provisions of the Policy will apply only to the increased
amount of coverage, except for any period remaining on
the fixed-benefit policy.
An exchanging owner will not be permitted to carry over
an outstanding loan under his fixed-benefit policy. Any
outstanding loan and loan interest must be repaid prior
to the date of exchange. If not repaid prior to the date
of exchange, the amount of the outstanding loan and
interest thereon will be reflected in the net cash value
of the fixed-benefit policy. To the extent a
fixed-benefit policy with an outstanding loan is
exchanged for an unencumbered Policy, the exchanging
owner could recognize income at the time of the exchange
up to the amount of such loan (including any due and
unpaid interest on such loan). (See "FEDERAL TAX
MATTERS--Tax Treatment of Policy Benefits.")
Riders issued on the original fixed-benefit policy which
are not offered in the Policy will not be available on
the new Policy. Riders which are available may be
exchanged to the new Policy.
Registered representatives will receive commissions on
the increase in face amount only.
The Policy differs from a fixed-benefit policy in many
significant respects. Most importantly, the Accumulated
Value under this Policy may consist, entirely or in part,
of Subaccount value which fluctuates in response to the
net investment return of the Variable Account. In
contrast, the cash values under a fixed-benefit policy
always reflect interest credited by the Company. While a
minimum rate of interest is guaranteed, the Company in
the past has credited interest at higher rates.
Accordingly, cash values under a fixed-benefit policy
reflect changing current interest rates and do not vary
with the investment performance of the Variable Account.
Other significant differences between the Policy and a
fixed-benefit policy include: (1) additional charges
applicable under the Policy not found in a fixed-benefit
policy; (2) different surrender charges; (3) different
death benefits; and (4) differences in federal and state
laws and regulations applicable to each of the types of
policies.
Owners of a fixed-benefit policy should carefully
consider whether it will be advantageous to replace a
fixed-benefit policy with a Policy. It may not be
advantageous to exchange a fixed-benefit policy for a
Policy (or to surrender in full or in part a
fixed-benefit policy and use the surrender or partial
surrender proceeds to purchase a Policy).
The Company believes that an exchange of a fixed-benefit
policy for a Policy generally should be treated as a
nontaxable exchange within the meaning of Section 1035 of
the Internal Revenue Code of 1986, as amended. A Policy
purchased in exchange will generally be treated as a
newly issued contract as of the effective date of the
Policy. This could have various tax consequences. (See
"FEDERAL TAX MATTERS--Tax Treatment of Policy Benefits.")
If you surrender your fixed-benefit policy in whole or in
part and after receipt of the proceeds you use the
surrender proceeds or partial surrender proceeds to
purchase a Policy, it will not be treated as a
non-taxable exchange. The surrender proceeds will
generally be includible in income.
Owners of a fixed-benefit policy should consult their tax
advisers before exchanging a fixed-benefit policy for
this Policy, or before surrendering in whole or in part
their fixed-benefit policy and using the proceeds to
purchase a Policy.
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POLICY BENEFITS
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While a Policy is in force, it provides for certain
benefits prior to the Maturity Date. Subject to certain
limitations, the Policyowner may at any time obtain all
or a portion of the Net Accumulated Value by surrendering
or taking a partial withdrawal from the Policy. (See
"POLICY BENEFITS--Accumulated Value Benefits--SURRENDER
AND WITHDRAWAL PRIVILEGES.") In addition, the Policyowner
has certain policy loan
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<PAGE>
privileges under the Policies. (See "POLICY
BENEFITS--Loan Benefits--POLICY LOANS.") The Policy also
provides for the payment of death proceeds upon the death
of the Insured under one of two death benefit options
selected by the Policyowner (see "POLICY BENEFITS--Death
Proceeds--DEATH BENEFIT OPTIONS"), and benefits upon the
maturity of a Policy (see "POLICY BENEFITS--Benefits at
Maturity").
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ACCUMULATED VALUE
BENEFITS
SURRENDER AND WITHDRAWAL PRIVILEGES. At any time prior
to the Maturity Date while the Policy is in force, a
Policyowner may surrender the Policy or make a partial
withdrawal by sending a written request to the Company at
its Home Office. A surrender charge will apply to any
surrender during the first six Policy Years, as well as
during the first six years following an increase in
Specified Amount. A Partial Withdrawal Fee equal to the
lesser of $25 or 2% of the amount withdrawn will be
payable upon each partial withdrawal to cover the cost of
processing a partial withdrawal. (See "CHARGES AND
DEDUCTIONS--Partial Withdrawal Fee, and --Surrender
Charge.") Surrender and withdrawal proceeds ordinarily
will be mailed to the Policyowner within seven days after
the Company receives a signed request for a surrender at
its Home Office, although payments may be postponed under
certain circumstances. (See "GENERAL
PROVISIONS--Postponement of Payments.")
SURRENDERS. The amount payable upon surrender of the
Policy is the Net Surrender Value at the end of the
Valuation Period during which the request is received.
This amount may be paid in a lump sum or under one of the
payment options specified in the Policy, as requested by
the Policyowner. (See "POLICY BENEFITS--Payment
Options.") Upon surrender, all insurance in force will
terminate. For a discussion of the tax consequences
associated with Surrenders, see "FEDERAL TAX MATTERS."
PARTIAL WITHDRAWALS. A Policyowner may obtain a portion
of the Policy's Net Accumulated Value. The amount
requested for partial withdrawal must be at least $500
and cannot exceed the lesser of (1) the Net Accumulated
Value less $500, or (2) 90% of the Net Accumulated Value.
The Partial Withdrawal Fee will be deducted from the
remaining Accumulated Value. The Policyowner may request
that the proceeds of a partial withdrawal be paid in a
lump sum or under one of the payment options specified in
the Policy. (See "POLICY BENEFITS--Payment Options.")
A partial withdrawal (together with the Partial
Withdrawal Fee) will be allocated among the Subaccounts
and the Declared Interest Option in accordance with the
written instructions of the Policyowner. If no such
instructions are received with the request for partial
withdrawal, the partial withdrawal will be allocated
among the Subaccounts and the Declared Interest Option in
the same proportion that the Accumulated Value in each of
the Subaccounts and the Accumulated Value in the Declared
Interest Option, reduced by any outstanding Policy Debt,
bear to the total Accumulated Value on the date the
request is received at the Home Office.
Partial withdrawals will affect both the Policy's
Accumulated Value and the death proceeds payable under
the Policy. The Policy's Accumulated Value will be
reduced by the amount of the partial withdrawal. If the
death benefit payable under either death benefit option
both before and after the partial withdrawal is equal to
the Accumulated Value multiplied by the specified amount
factor set forth in the Policy, a partial withdrawal will
result in a reduction in death proceeds equal to the
amount of the partial withdrawal, multiplied by the
specified amount factor then in effect. If the death
benefit is not so affected by the specified amount
factor, the reduction in death proceeds will be equal to
the partial withdrawal. (See "POLICY BENEFITS--Death
Proceeds.")
Partial withdrawals will reduce the Policy's Specified
Amount by the amount of Accumulated Value withdrawn if
Option B is in effect at the time of the withdrawal. If
Option A is in effect at the time of the withdrawal,
there will be no effect on Specified Amount. (See "POLICY
BENEFITS--Death Proceeds--DEATH BENEFIT OPTIONS.") The
Specified Amount remaining in force after a partial
withdrawal may not be less than the minimum Specified
Amount for the Policy in effect on the date of the
partial
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<PAGE>
withdrawal, as published by the Company. As a result, the
Company will not process any partial withdrawal that
would reduce the Specified Amount below this minimum. If
increases in the Specified Amount previously have
occurred, a partial withdrawal will first reduce the
Specified Amount of the most recent increase, then the
next most recent increases successively, then the
coverage under the original application. Thus, a partial
withdrawal may either increase or decrease the amount of
the cost of insurance charge, depending upon the
particular circumstances. (See "CHARGES AND
DEDUCTIONS--Monthly Deduction--COST OF INSURANCE.") For a
discussion of the tax consequences associated with
partial withdrawals, see "FEDERAL TAX MATTERS."
NET ACCUMULATED VALUE. Net Accumulated Value equals the
Policy's Accumulated Value reduced by any outstanding
Policy Debt and increased by any unearned loan interest.
CALCULATION OF ACCUMULATED VALUE. The Policy provides
for the accumulation of Accumulated Value. Accumulated
Value will be determined on each Business Day. A Policy's
Accumulated Value will reflect a number of factors,
including Net Premiums paid, partial withdrawals, Policy
Loans, charges assessed in connection with the Policy,
the interest earned on the Accumulated Value in the
Declared Interest Option and the investment performance
of the Subaccounts to which the Accumulated Value is
allocated. There is no guaranteed minimum Accumulated
Value. The Accumulated Value of the Policy is equal to
the sum of the Accumulated Values in each Subaccount,
plus the Accumulated Value in the Declared Interest
Option, including amounts transferred to the Declared
Interest Option to secure outstanding Policy Debt.
As of the Issue Date, the Policy's Accumulated Value
equals the initial Net Premium less the monthly deduction
made on the Policy Date.
On the Business Day coinciding with or immediately
following the date the Company receives notice that the
Policy has been received and accepted by the Policyowner,
the Policy's Accumulated Value (all of which is in the
Declared Interest Option) will be transferred
automatically among the Subaccounts and the Declared
Interest Option in accordance with such percentage
allocation instructions. At the end of each Valuation
Period thereafter, the Accumulated Value in a Subaccount
will equal:
(1) The total Subaccount units represented by the
Accumulated Value at the end of the preceding
Valuation Period, multiplied by the Subaccount's
unit value for the current Valuation Period; PLUS
(2) Any Net Premiums received during the current
Valuation Period which are allocated to the
Subaccount; PLUS
(3) All Accumulated Values transferred to the
Subaccount from the Declared Interest Option or
from another Subaccount during the current
Valuation Period; MINUS
(4) All Accumulated Values transferred from the
Subaccount to another Subaccount or to the
Declared Interest Option during the current
Valuation Period, including amounts transferred to
the Declared Interest Option to secure Policy
Debt; MINUS
(5) All partial withdrawals (and any portion of the
Partial Withdrawal Fee) deducted from the
Subaccount during the current Valuation Period;
MINUS
(6) The portion of any monthly deduction charged to
the Subaccount during the current Valuation Period
to cover the Policy Month following the Monthly
Deduction Day.
The Policy's total Accumulated Value in the Variable
Account equals the sum of the Policy's Accumulated Value
in each Subaccount.
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<PAGE>
UNIT VALUE. Each Subaccount has a Unit Value. When Net
Premiums are allocated to, or other amounts are
transferred into, a Subaccount, a number of units are
purchased based on the Unit Value of the Subaccount as of
the end of the Valuation Period during which the transfer
is made. Likewise, when amounts are transferred out of a
Subaccount, units are redeemed on the same basis. On any
day, a Policy's Accumulated Value in a Subaccount is
equal to the number of units held in such Subaccount,
multiplied by the Unit Value of such Subaccount on that
date.
For each Subaccount, the Unit Value was initially set at
$10 when the Subaccount first purchased shares of the
designated Investment Option. The Unit Value for each
subsequent valuation period is calculated by dividing (a)
by (b) where:
(a) is (1) the Net Asset Value of the Subaccount at
the end of the preceding Valuation Period, plus
(2) the investment income and capital gains,
realized or unrealized, credited to the net assets
of that Subaccount during the Valuation Period for
which the Unit Value is being determined, minus
(3) the capital losses, realized or unrealized,
charged against those assets during the Valuation
Period, minus (4) any amount charged against the
Subaccount for taxes, or any amount set aside
during the Valuation Period by the Company as a
provision for taxes attributable to the operation
or maintenance of that Subaccount; and minus (5) a
charge equal to .0024548% of the average daily net
assets of the Subaccount for each day in the
Valuation Period. This corresponds to an effective
annual rate of 0.90% of the average daily net
assets of the Subaccount for mortality and expense
risks incurred in connection with the Policies.
(This charge is guaranteed not to exceed .0028618%
of the average daily net assets on each
Subaccount, which corresponds to an effective
annual rate of 1.05%.)
(b) is the number of units outstanding at the end of
the preceding Valuation Period.
The Unit Value for a Valuation Period applies for each
day in the period. The assets in the Variable Account
will be valued at their fair market value in accordance
with accepted accounting practices and applicable laws
and regulations.
- --------------------------------------------------------------------------------
TRANSFERS
Policyowners may transfer amounts among the Subaccounts
an unlimited number of times in a Policy Year; however,
only one transfer per Policy Year may be made between the
Declared Interest Option and the Variable Account.
Transfers are made by written request to the Home Office
or, if the Policyowner has elected the "Telephone
Transfer Authorization" on the supplemental application,
by calling the Home Office toll-free at (800) 247-4170.
The amount of the transfer must be at least $100 or the
total Accumulated Value in the Subaccount or in the
Declared Interest Option (reduced, in the case of the
Declared Interest Option, by any outstanding Policy
Debt), if less than $100. The Company may, at its
discretion, waive the $100 minimum requirement. The
transfer will be effective as of the end of the Valuation
Period during which the request is received at the Home
Office.
The first transfer in each Policy Year will be made
without charge; each time amounts are subsequently
transferred in that Policy Year, a transfer charge of $25
may be assessed. The transfer charge, unless paid in
cash, will be deducted from the amount transferred. Once
a Policy is issued, the amount of the transfer charge is
guaranteed for the life of the Policy. (See "CHARGES AND
DEDUCTIONS--Transfer Charge.")
For purposes of these limitations and charges, all
transfers effected on the same day will be considered a
single transfer.
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LOAN BENEFITS
POLICY LOANS. So long as the Policy remains in force and
has a positive Net Surrender Value, a Policyowner may
borrow money from the Company at any time using the
Policy as the sole security for the Policy Loan. A loan
taken from, or secured by, a Policy may have federal
income tax consequences. (See "FEDERAL TAX MATTERS.")
The maximum amount that may be borrowed at any time is
90% of the Net Surrender Value as of the end of the
Valuation Period during which the request for the Policy
Loan is received at the Home Office. The Company's claim
for repayment of Policy Debt has priority over the claims
of any assignee or other person.
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<PAGE>
During any time that there is outstanding Policy Debt,
payments made by the Policyowner will be treated first as
payment of outstanding Policy Debt, unless the
Policyowner indicates that the payment should be treated
otherwise. Where no indication is made, any portion of a
payment that exceeds the amount of any outstanding Policy
Debt will be treated as a premium payment.
ALLOCATION OF POLICY LOAN. When a Policy Loan is made,
an amount equal to the Policy Loan will be segregated
within the Declared Interest Option as security for the
Policy Loan. If, immediately prior to the Policy Loan,
the Accumulated Value in the Declared Interest Option
less Policy Debt outstanding is less than the amount of
such Policy Loan, the difference will be transferred from
the subaccounts of the Variable Account, which have
Accumulated Value, in the same proportions that the
Policy's Accumulated Value in each Subaccount bears to
the Policy's total Accumulated Value in the Variable
Account. Accumulated Values will be determined as of the
end of the Valuation Period during which the request for
the Policy Loan is received at the Home Office.
Loan proceeds will normally be mailed to the Policyowner
within seven days after receipt of a written request.
Postponement of a Policy Loan may take place under
certain circumstances. (See "GENERAL
PROVISIONS--Postponement of Payments.")
Amounts segregated within the Declared Interest Option as
security for Policy Debt will bear interest at an
effective annual rate set by the Company. (See "POLICY
BENEFITS--Loan Benefits--EFFECT ON INVESTMENT
PERFORMANCE.")
LOAN INTEREST CHARGED. The interest rate charged on
Policy Loans is not fixed. The maximum annual loan
interest rate will be the higher of the "Published
Monthly Average of the Composite Yield on Seasoned
Corporate Bonds" as published by Moody's Investors
Service, Inc. or any successor thereto, for the calendar
month ending two months before the date on which the rate
is determined; or 5.5%. The Company may at any time elect
to change the interest rate. The Company will send notice
of any change in rate to the Policyowner. The new rate
will take effect on the Policy Anniversary coinciding
with or next following the date the rate is changed.
Interest is payable in advance at the time any Policy
Loan is made (for the remainder of the Policy Year) and
on each Policy Anniversary thereafter (for the entire
Policy Year) so long as there is Policy Debt outstanding.
Interest payable at the time a Policy Loan is made will
be subtracted from the loan proceeds. Thereafter,
interest not paid when due will be added to the existing
Policy Debt and bear interest at the same rate charged
for Policy Loans. The amount equal to unpaid interest
will be segregated within the Declared Interest Option in
the same manner that amounts for Policy Loans are
segregated within the Declared Interest Option. (See
"POLICY BENEFITS-- Loan Benefits--ALLOCATION OF POLICY
LOAN.")
Because interest is charged in advance, any interest that
has not been earned will be added to the death benefit
payable at the Insured's death and to the Accumulated
Value upon complete surrender, and will be credited to
the Accumulated Value in the Declared Interest Option
upon repayment of Policy Debt.
EFFECT ON INVESTMENT PERFORMANCE. Amounts transferred
from the Variable Account as security for Policy Debt
will no longer participate in the investment performance
of the Variable Account. All amounts held in the Declared
Interest Option as security for Policy Debt will be
credited with interest on each Monthly Deduction Day at
an effective annual rate equal to the greater of 4.0% or
the current effective loan interest rate minus no more
than 3.0%, as determined and declared by the Company. No
additional interest will be credited to these amounts.
The interest credited will remain in the Declared
Interest Option unless and until transferred by the
Policyowner to the Variable Account, but will not be
segregated within the Declared Interest Option as
security for Policy Debt.
From time to time, the Company may allow, by Company
practice, a loan spread of 0% on the gain in a Policy in
effect a minimum of ten years.
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<PAGE>
Even though Policy Debt may be repaid in whole or in part
at any time prior to the Maturity Date if the Policy is
still in force, Policy Loans will affect the Accumulated
Value of a Policy and may affect the death proceeds
payable. The effect could be favorable or unfavorable
depending upon whether the investment performance of the
Subaccount(s) from which the Accumulated Value was
transferred is less than or greater than the interest
rates actually credited to the Accumulated Value
segregated within the Declared Interest Option as
security for Policy Debt while Policy Debt is
outstanding. In comparison to a Policy under which no
Policy Loan was made, Accumulated Value will be lower
where such interest rates credited were less than the
investment performance of the Subaccount(s), but will be
greater where such interest rates were greater than the
performance of the Subaccount(s). In addition, death
proceeds will reflect a reduction of the death benefit by
any outstanding Policy Debt.
POLICY DEBT. Policy Debt equals the sum of all unpaid
Policy Loans and any due and unpaid policy loan
interest. Policy Debt is not included in Net Accumulated
Value and therefore Net Accumulated Value is reduced by
the amount of any Policy Debt. If, during the first three
Policy Years, Net Accumulated Value or, after three
Policy Years, Net Surrender Value is insufficient on a
Monthly Deduction Day to cover the monthly deduction (see
"Charges and Deductions--Monthly Deduction"), the Company
will notify the Policyowner. To avoid lapse and
termination of the Policy without value (see "THE
POLICY--Policy Lapse and Reinstatement--LAPSE"), the
Policyowner must, during the Grace Period, make a premium
payment that, when reduced by the premium expense charge
(see "CHARGES AND DEDUCTIONS--Premium Expense Charge"),
will be at least equal to three times the monthly
deduction due on the Monthly Deduction Day immediately
preceding the Grace Period (see "CHARGES AND
DEDUCTIONS--Monthly Deduction"). Therefore the greater
the Policy Debt under a Policy, the more likely it would
be to lapse.
REPAYMENT OF POLICY DEBT. Policy Debt may be repaid in
whole or in part any time during the Insured's life and
before the Maturity Date so long as the Policy is in
force. Any Policy Debt not repaid is subtracted from the
death benefit payable at the Insured's death, from
Surrender Value upon surrender or from the maturity
benefit. Any payments made by a Policyowner will be
treated first as the repayment of any outstanding Policy
Debt, unless the Policyowner indicates otherwise. Upon
repayment of Policy Debt, the portion of the Accumulated
Value in the Declared Interest Option securing the repaid
portion of the Policy Debt will no longer be segregated
within the Declared Interest Option as security for
Policy Debt, but will remain in the Declared Interest
Option unless and until transferred to the Variable
Account by the Policyowner.
For a discussion of the tax consequences associated with
Policy Loans and lapses, see "FEDERAL TAX MATTERS."
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DEATH PROCEEDS
So long as the Policy remains in force, the Policy
provides for the payment of death proceeds upon the death
of the Insured. Proceeds will be paid to the primary
Beneficiary or a contingent Beneficiary. One or more
primary Beneficiaries or contingent Beneficiaries may be
named. If no Beneficiary survives the Insured, the death
proceeds will be paid to the Policyowner or his estate.
Death proceeds may be paid in a lump sum or under a
payment option. (See "POLICY BENEFITS--Payment Options.")
To determine the death proceeds, the death benefit will
be reduced by any outstanding Policy Debt and increased
by any unearned loan interest and any premiums paid after
the date of death. Proceeds will ordinarily be mailed
within seven days after receipt by the Company of Due
Proof of Death. Payment may, however, be postponed under
certain circumstances. (See "GENERAL PROVISIONS--
Postponement of Payments.") The Company pays interest on
those proceeds, at an annual rate of no less than 3.0% or
any rate required by law, from the date of death to the
date payment is made.
DEATH BENEFIT OPTIONS. Policyowners designate in the
initial application one of two death benefit options
offered under the Policy. The amount of the death benefit
payable under a Policy will depend upon the option in
effect at the time of the
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<PAGE>
Insured's death. Under Option A, the death benefit will
be equal to the greater of (i) the sum of the current
Specified Amount and the Accumulated Value, or (ii) the
Accumulated Value multiplied by the specified amount
factor. Accumulated Value will be determined as of the
end of the Business Day coinciding with or immediately
following the date of death. The specified amount factor
is 2.50 for an Insured Attained Age 40 or below on the
date of death. For Insureds with an Attained Age over 40
on the date of death, the factor declines with age as
shown in the Specified Amount Factor Table in Appendix B.
Accordingly, under Option A, the death proceeds will
always vary as the Accumulated Value varies (but will
never be less than the Specified Amount). Policyowners
who prefer to have favorable investment performance and
additional premiums reflected in increased death benefits
generally should select Option A.
Under Option B, the death benefit will be equal to the
greater of the current Specified Amount or the
Accumulated Value (determined as of the end of the
Business Day coinciding with or immediately following the
date of death) multiplied by the specified amount factor.
The specified amount factor is the same as under Option
A. Accordingly, under Option B the death benefit will
remain level at the Specified Amount unless the
Accumulated Value multiplied by the specified amount
factor exceeds the current Specified Amount, in which
case the amount of the death benefit will vary as the
Accumulated Value varies. Policyowners who are satisfied
with the amount of their insurance coverage under the
Policy and who prefer to have favorable investment
performance and additional premiums reflected in higher
Accumulated Value, rather than increased death benefits,
generally should select Option B.
Examples illustrating Option A and Option B can be found
in Appendix B.
CHANGE IN DEATH BENEFIT OPTION. The death benefit option
in effect may be changed at any time by sending a
written request for the change to the Company at its Home
Office. The effective date of such a change will be the
Monthly Deduction Day coinciding with or immediately
following the date the change is approved by the Company.
A change in death benefit options may have federal income
tax consequences. (See "FEDERAL TAX MATTERS.")
If the death benefit option is changed from Option A to
Option B, the current Specified Amount will not change.
If the benefit option is changed from Option B to Option
A, the current Specified Amount will be reduced by an
amount equal to the Accumulated Value on the effective
date of the change. A change in the death benefit option
may not be made if it would result in a Specified Amount
which is less than the minimum Specified Amount in effect
on the effective date of the change or if after the
change the Policy would no longer qualify as life
insurance under federal tax law.
No charges will be imposed in connection with a change in
death benefit option; however, a change in death benefit
option will affect the cost of insurance charges. (See
"CHARGES AND DEDUCTIONS--Monthly Deduction--COST OF
INSURANCE.")
CHANGE IN EXISTING COVERAGE. After a Policy has been in
force for one Policy Year, a Policyowner may adjust the
existing insurance coverage by increasing or decreasing
the Specified Amount. To make a change, the Policyowner
must send a written request to the Company at its Home
Office. Any change in the Specified Amount may affect the
cost of insurance rate and the net amount at risk, both
of which will affect a Policyowner's cost of insurance
charge. (See "CHARGES AND DEDUCTIONS-- Monthly
Deduction--COST OF INSURANCE RATE, and --NET AMOUNT AT
RISK.") If decreases in the Specified Amount cause the
premiums paid to exceed the maximum premium limitations
imposed by federal tax law (see "THE POLICY--Premiums--
PREMIUM LIMITATIONS"), the decrease will be limited to
the extent necessary to meet these requirements. A change
in existing coverage may have federal income tax
consequences. (See "FEDERAL TAX MATTERS--Tax Treatment of
Policy Benefits.")
Any decrease in the Specified Amount will become
effective on the Monthly Deduction Day coinciding with or
immediately following the date the request is approved by
the Company. The decrease will first reduce the Specified
Amount
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<PAGE>
provided by the most recent increase, then the next most
recent increases successively, then the Specified Amount
under the original application. The Specified Amount
following a decrease can never be less than the minimum
Specified Amount for the Policy in effect on the date of
the decrease. A Specified Amount decrease will not reduce
the Surrender Charge.
To apply for an increase, evidence of insurability
satisfactory to the Company must be provided. Any
approved increase will become effective on the Monthly
Deduction Day coinciding with or immediately following
the date the request is approved by the Company. An
increase will not become effective, however, if the
Policy's Accumulated Value on the effective date would
not be sufficient to cover the deduction for the
increased cost of the insurance for the next Policy
Month. A Specified Amount increase is subject to its own
Surrender Charge.
CHANGES IN INSURANCE PROTECTION. A Policyowner may
increase or decrease the pure insurance protection
provided by a Policy--the difference between the death
benefit and the Accumulated Value--in one of several ways
as insurance needs change. These ways include increasing
or decreasing the Specified Amount of insurance, changing
the level of premium payments and, to a lesser extent,
partially withdrawing Accumulated Value. Although the
consequences of each of these methods will depend upon
the individual circumstances, they may be summarized as
follows:
(a) A decrease in the Specified Amount will, subject
to the applicable specified amount factor
limitations (see "POLICY BENEFITS--Death
Proceeds-- DEATH BENEFIT OPTIONS"), decrease the
pure insurance protection and the cost of
insurance charges under the Policy without
generally reducing the Accumulated Value.
(b) An increase in the Specified Amount may increase
the amount of pure insurance protection, depending
on the amount of Accumulated Value and the
resultant applicable specified amount factor. If
the insurance protection is increased, the cost of
insurance charge generally will increase as well.
(c) If Option B is elected, an increased level of
premium payments will increase the Accumulated
Value and reduce the pure insurance protection,
until the Accumulated Value multiplied by the
applicable specified amount factor exceeds the
Specified Amount. Increased premiums should also
increase the amount of funds available to keep the
Policy in force.
(d) If Option B is elected, a reduced level of
premium payments generally will increase the
amount of pure insurance protection, depending on
the applicable specified amount factor. It also
will result in a reduced amount of Accumulated
Value and will increase the possibility that the
Policy will lapse.
(e) A partial withdrawal will reduce the death
benefit. (See "POLICY BENEFITS--Accumulated Value
Benefits--SURRENDER AND WITHDRAWAL PRIVILEGES.")
However, it only affects the amount of pure
insurance protection if the death benefit payable
is based on the specified amount factor, because
otherwise the decrease in the benefit is offset by
the amount of Accumulated Value withdrawn. The
primary use of a partial withdrawal is to withdraw
cash and reduce Accumulated Value.
In comparison, an increase in the death benefit due to
the operation of the specified amount factor occurs
automatically and is intended to help assure that the
Policy remains qualified as life insurance under federal
tax law. The calculation of the death benefit based upon
the specified amount factor occurs only when the
Accumulated Value of a Policy reaches a certain
proportion of the Specified Amount (which may or may not
occur). Additional premium payments, favorable investment
performance and large initial premiums tend to increase
the likelihood of the specified amount factor becoming
operational after the first few Policy Years. Such
increases will be temporary, however, if the investment
performance becomes unfavorable and/or premium payments
are stopped or decreased.
25
<PAGE>
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ACCELERATED PAYMENTS
OF DEATH PROCEEDS
In the event that the Insured becomes terminally ill (as
defined below), the Policyowner (if residing in a state
that has approved such an endorsement) may, by written
request and subject to the conditions stated below, have
the Company pay all or a portion of the accelerated death
benefit immediately to the Policyowner. If not attached
to the Policy beforehand, the Company will issue an
accelerated death benefit endorsement (the "Endorsement")
providing for this right.
For this purpose, an Insured is terminally ill when a
physician (as defined by the Endorsement) certifies that
he or she has a life expectancy of 12 months or less.
The accelerated death benefit is equal to the Policy's
death benefit as described on page 6, up to a maximum of
$250,000 (the $250,000 maximum applies in aggregate to
all policies issued by the Company on the Insured), less
an amount representing a discount for 12 months at the
interest rate charged for loans under the Policy. The
accelerated death benefit does not include the amount of
any death benefit payable under a rider that covers the
life of someone other than the Insured.
In the event that there is a loan outstanding under the
Policy on the date that the Policyowner requests a
payment under the Endorsement, the accelerated death
benefit is reduced by a portion of the outstanding loan
in the same proportion that the requested payment under
the Endorsement bears to the total death benefit under
the Policy. If the amount requested by the Policyowner to
be paid under the Endorsement is less than the total
death benefit under the Policy and the Specified Amount
of the Policy is equal to or greater than the minimum
Specified Amount, the Policy will remain in force with
all values and benefits under the Policy being reduced in
the same proportion that the new Policy benefit bears to
the Policy benefit before exercise of the Endorsement.
There are several other restrictions associated with the
Endorsement. These are: (1) the Endorsement is not valid
if the Policy is within five years of being matured, (2)
the consent of any irrevocable beneficiary or assignee is
required to exercise the Endorsement, (3) the Company
reserves the right, in its sole discretion, to require
the consent of the Insured or of any beneficiary,
assignee, spouse or other party of interest before
permitting the exercise of the Endorsement, (4) the
Company reserves the right to obtain the concurrence of a
second medical opinion as to whether any Insured is
terminally ill and (5) the Endorsement is not effective
where (a) the Insured or the Policyowner would be
otherwise required by law to use the Endorsement to meet
the claims of creditors, or (b) the Insured would be
otherwise required by any government agency to exercise
the Endorsement in order to apply for, obtain or keep a
government benefit or entitlement.
The Endorsement will terminate at the earlier of the end
of the grace period for which any premium is unpaid, upon
receipt in the Home Office of a written request from the
Policyowner to cancel the Endorsement or upon termination
of the Policy.
Pursuant to the recently enacted Health Insurance
Portability and Accountability Act of 1996, the Company
believes that for federal income tax purposes, an
accelerated death benefit payment received under an
accelerated death benefit endorsement should be fully
excludable from the gross income of the beneficiary, as
long as the beneficiary is the insured under the Policy.
However, the Policyowner should consult a qualified tax
adviser about the consequences of adding this Endorsement
to a Policy or requesting an accelerated death benefit
payment under this Endorsement.
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BENEFITS AT MATURITY
If the Insured is alive and the Policy is in force on the
Maturity Date, the Company will pay to the Policyowner
the Policy's Accumulated Value as of the end of the
Business Day coinciding with or immediately following the
Maturity Date, reduced by any outstanding Policy Debt.
(See "POLICY BENEFITS--Loan Benefits--REPAYMENT OF POLICY
DEBT.") Benefits at maturity may be paid in a lump sum or
under a payment option. The Maturity Date is Attained Age
115.
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Death proceeds and Accumulated Value paid at maturity, or
upon surrender or partial
PAYMENT OPTIONS
withdrawal of a Policy, may be paid in whole or in part
under a payment option. There
26
<PAGE>
are currently five payment options available. Payments
may also be made under any new payment option available
at the time proceeds become payable. In addition,
proceeds may be paid in any other manner acceptable to
the Company.
An option may be designated in the application or by
notifying the Company in writing at its Home Office.
During the life of the Insured, the Policyowner may
select a payment option; in addition, during that time
the Policyowner may change a previously selected option
by sending written notice to the Company requesting the
cancellation of the prior option and the designation of a
new option. If the Policyowner has not chosen an option
prior to the Insured's death, the Beneficiary may choose
an option. The Beneficiary may change a payment option by
sending a written request to the Company, provided that a
prior option chosen by the Policyowner is not in effect.
If no option is chosen, the Company will pay the proceeds
of the Policy in one sum. The Company will also pay the
proceeds in one sum if, (i) the proceeds are less than
$2,000; (ii) periodic payments would be less than $20; or
(iii) the payee is an assignee, estate, trustee,
partnership, corporation or association.
Amounts paid under a payment option are paid pursuant to
a payment contract and will not depend upon the
investment performance of the Variable Account. Proceeds
applied under a payment option earn interest at a rate
guaranteed to be no less than 3.0% compounded yearly. The
Company may be crediting higher interest rates on the
effective date of the payment contract. The Company may,
but is not obligated to, declare additional interest to
be applied to such funds.
If a payee dies, any remaining payments will be paid to a
contingent payee. At the death of the last payee, the
commuted value of any remaining payments will be paid to
the last payee's estate. A payee may not withdraw funds
under a payment option unless the Company has agreed to
such withdrawal in the payment contract. The Company
reserves the right to defer a withdrawal for up to six
months and to refuse to allow partial withdrawals of less
than $250.
Payments under Options 2, 3, 4 or 5 will begin as of the
date of the Insured's death, on surrender or on the
Maturity Date. Payments under Option 1 will begin at the
end of the first interest period after the date proceeds
are otherwise payable.
OPTION 1--INTEREST INCOME. Periodic payments of
interest earned from the proceeds will be paid.
Payments can be annual, semi-annual, quarterly or
monthly, as selected by the payee, and will begin at
the end of the first period chosen. Proceeds left
under this plan will earn interest at a rate
determined by the Company, in no event less than 3.0%
compounded yearly. The payee may withdraw all or part
of the proceeds at any time.
OPTION 2--INCOME FOR A FIXED TERM. Periodic payments
will be made for a fixed term not longer than 30
years. Payments can be annual, semi-annual, quarterly
or monthly. Guaranteed amounts payable under the plan
will earn interest at a rate determined by the
Company, in no event less than 3.0% compounded
yearly.
OPTION 3--LIFE INCOME WITH TERM CERTAIN. Equal
periodic payments will be made for a guaranteed
minimum period elected. If the payee lives longer
than the minimum period, payments will continue for
his or her life. The minimum period can be 0, 5, 10,
15 or 20 years. Guaranteed amounts payable under this
plan will earn interest at a rate determined by the
Company, in no event less than 3.0% compounded
yearly.
OPTION 4--INCOME OF A FIXED AMOUNT. Equal periodic
payments of a definite amount will be paid. Payments
can be annual, semi-annual, quarterly or monthly. The
amount paid each period must be at least $20 for each
$1,000 of proceeds. Payments will continue until the
proceeds are exhausted. The last payment will equal
the amount of any unpaid proceeds. Unpaid proceeds
will earn interest at a rate determined by the
Company, in no event less than 3.0% compounded
yearly.
OPTION 5--JOINT AND TWO-THIRDS SURVIVOR MONTHLY LIFE
INCOME. Equal monthly payments will be made for as
long as two payees live. The guaranteed amount
payable under this plan will earn interest at a
minimum rate of 3.0%
27
<PAGE>
compounded yearly. When one payee dies, payments of
two-thirds of the original monthly payment will be
made to the surviving payee. Payments will stop when
the surviving payee dies.
ALTERNATE PAYMENT OPTION. In lieu of one of the
above options, the accumulated value, net surrender
value or death benefit, as applicable, may be settled
under any other payment option made available by the
Company or requested and agreed to by the Company.
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CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
Charges will be deducted in connection with the Policy to
compensate the Company for providing the insurance
benefits set forth in the Policy and any additional
benefits added by rider, for distributing and
administering the Policy, for applicable taxes and for
assuming certain risks in connection with the Policy. The
nature and amount of these charges are described more
fully below.
- --------------------------------------------------------------------------------
PREMIUM EXPENSE
CHARGE
Prior to allocation of Net Premiums among the Subaccounts
and the Declared Interest Option, premiums paid will be
reduced by a premium expense charge. The premium less the
premium expense charge equals the Net Premium.
The premium expense charge is 7.0% of each premium up to
the Target Premium (or 2% for each premium over the
Target Premium) and is intended to compensate the Company
for expenses incurred in distributing the Policy,
including agent sales commissions, the cost of printing
prospectuses and sales literature, and advertising costs
and to compensate for the amount the Company considers
necessary to pay all taxes on premiums received by
insurance companies imposed by various states and
subdivisions thereof. Premium taxes charged by the
various states currently range from 1% to 3%.
The premium expense charge in any Policy Year is not
necessarily related to actual distribution expenses in
that year. Instead, the Company expects to incur the
majority of distribution expenses in the early Policy
Years and to recover any deficiency over the life of the
Policy and from the Company's general assets, including
amounts derived from the mortality and expense risk
charge.
- --------------------------------------------------------------------------------
MONTHLY DEDUCTION
Charges will be deducted monthly from the Accumulated
Value of each Policy ("monthly deduction") to compensate
the Company for the cost of insurance coverage and any
additional benefits added by rider (See "GENERAL
PROVISIONS-- Additional Insurance Benefits"), for
underwriting and start-up expenses in connection with
issuing a Policy and for certain administrative costs.
The monthly deduction will be deducted on the Policy Date
and on each Monthly Deduction Day. (If the Monthly
Deduction Day falls on Thanksgiving, the Friday following
Thanksgiving or the weekend following Thanksgiving, the
monthly deduction will be deducted on the preceding
Business Day.) It will be deducted from the Declared
Interest Option and each Subaccount in the same
proportion that the Policy's Net Accumulated Value in the
Declared Interest Option and the Policy's Accumulated
Value in each Subaccount bear to the total Net
Accumulated Value of the Policy. For purposes of making
deductions from the Declared Interest Option and the
Subaccounts, Accumulated Values will be determined as of
the end of the Business Day coinciding with or
immediately following the Monthly Deduction Day. (If the
Monthly Deduction Day falls on Thanksgiving, the Friday
following Thanksgiving or the weekend following
Thanksgiving, Accumulated Values will be determined as of
the end of the preceding Business Day.) Because portions
of the monthly deduction, such as the cost of insurance,
can vary from month to month, the monthly deduction
itself will vary in amount from month to month.
The monthly deduction will be made on the Business Day
coinciding with or immediately following each Monthly
Deduction Day and will equal:
(a) the cost of insurance for the Policy; plus
(b) the cost of any optional insurance benefits added
by rider; plus
(c) the monthly policy expense charge.
28
<PAGE>
During the first twelve Policy Months and during the
twelve Policy Months immediately following an increase in
Specified Amount, the monthly deduction will include a
first year monthly administrative charge.
COST OF INSURANCE. This charge is designed to compensate
the Company for the anticipated cost of paying death
proceeds to Beneficiaries of those Insureds who die prior
to the Maturity Date. The cost of insurance is determined
on a monthly basis, and is determined separately for the
initial Specified Amount and for any subsequent increases
in Specified Amount. The Company will determine the
monthly cost of insurance charge by dividing the
applicable cost of insurance rate, or rates, by 1,000 and
multiplying the result by the net amount at risk for each
Policy Month.
NET AMOUNT AT RISK. Under Option A the net amount at
risk for a Policy Month is equal to (a) divided by (b),
and under Option B the net amount at risk for a Policy
Month is equal to (a) divided by (b), minus (c), where:
(a) is the Specified Amount;
(b) is 1.0032737;(1) and
(c) is the Accumulated Value.
The Specified Amount and the Accumulated Value will be
determined as of the end of the Business Day coinciding
with or immediately following the Monthly Deduction Day.
The net amount at risk is determined separately for the
initial Specified Amount and any increases in Specified
Amount. In determining the net amount at risk for each
Specified Amount, the Accumulated Value will be first
considered a part of the initial Specified Amount. If the
Accumulated Value exceeds the initial Specified Amount,
it will be considered to be a part of any increase in the
Specified Amount in the same order as the increases
occurred.
COST OF INSURANCE RATE. The cost of insurance rate for
the initial Specified Amount will be based on the
Insured's sex, premium class and Attained Age. For any
increase in Specified Amount, the cost of insurance rate
will be based on the Insured's sex, premium class and age
at last birthday on the effective date of the increase.
Actual cost of insurance rates may change and will be
determined by the Company based on its expectations as to
future mortality experience. However, the actual cost of
insurance rates will never be greater than the guaranteed
maximum cost of insurance rates set forth in the Policy.
These guaranteed rates are based on the 1980
Commissioners' Standard Ordinary Non-Smoker and Smoker
Mortality Table. Current cost of insurance rates are
generally less than the guaranteed maximum rates. Any
change in the cost of insurance rates will apply to all
persons of the same age, sex and premium class whose
Policies have been in force the same length of time.
The cost of insurance rates generally increase as the
Insured's Attained Age increases. The premium class of an
Insured also will affect the cost of insurance rate. The
Company currently places Insureds into a standard premium
class or into premium classes involving a higher
mortality risk. In an otherwise identical Policy,
Insureds in the standard premium class will have a lower
cost of insurance rate than those in premium classes
involving higher mortality risk. The standard premium
class is also divided into two categories: tobacco and
non-tobacco. (The Company may offer preferred classes in
addition to the standard tobacco and non-tobacco
classes.) Non-tobacco-using Insureds will generally have
a lower cost of insurance rate than similarly situated
Insureds who use tobacco, and preferred Insureds will
generally have a lower cost of insurance rate than
similarly situated standard Insureds.
The cost of insurance rate is determined separately for
the initial Specified Amount and for the amount of any
increase in Specified Amount. In calculating the cost of
insurance charge, the rate for the premium class on the
Policy Date will be applied to the net amount at risk for
the initial Specified Amount; for each increase in
Specified Amount, the rate for the premium class
applicable to the increase will be used.
- --------------
(1)Dividing by 1.0032737 reduces the net amount at risk, solely for the purposes
of computing the cost of insurance, by taking into account assumed monthly
earnings at an annual rate of 4.0%.
29
<PAGE>
However, if the death benefit is calculated as the Cash
Value times the specified amount factor, the rate for the
premium class for the most recent increase that required
evidence of insurability will be used for the amount of
death benefit in excess of the total Specified Amount.
ADDITIONAL INSURANCE BENEFITS. The monthly deduction
will include charges for any additional benefits
provided by rider. (See "GENERAL PROVISIONS--Additional
Insurance Benefits.")
MONTHLY POLICY EXPENSE CHARGE. The Company has primary
responsibility for the administration of the Policy and
the Variable Account. Policy expenses include premium
billing and collection, recordkeeping, processing death
benefit claims, cash withdrawals, surrenders and Policy
changes, and reporting and overhead costs. As
reimbursement for policy expenses related to the
maintenance of each Policy and the Variable Account, the
Company assesses a monthly policy expense charge against
each Policy. This charge currently is $5.00 per Policy
Month and is guaranteed not to exceed $7 per Policy
Month.
FIRST YEAR MONTHLY ADMINISTRATIVE CHARGE. Monthly
administrative charges will be deducted from Accumulated
Value as part of the monthly deduction during the first
twelve Policy Months and during the twelve Policy Months
immediately following an increase in Specified Amount.
The charge will compensate the Company for first year
underwriting, processing and start-up expenses incurred
in connection with the Policy and the Variable Account.
These expenses include the cost of processing
applications, conducting medical examinations,
determining insurability and the Insured's premium class,
and establishing policy records. The first year monthly
administrative charge currently is $0.05 per $1,000 of
Specified Amount, or increase in Specified Amount and is
guaranteed not to exceed $0.07 per $1,000 of Specified
Amount.
FIRST YEAR MONTHLY EXPENSE CHARGE. A monthly expense
charge will be deducted from Accumulated Value as part
of the monthly deduction during the first twelve Policy
Months. This charge currently is $5 per Policy Month and
is guaranteed not to exceed $7 per Policy Month.
- --------------------------------------------------------------------------------
TRANSFER CHARGE
A transfer charge of $25 may be imposed for the second
and each subsequent transfer during a Policy Year to
compensate the Company for the costs in effectuating the
transfer. The transfer charge, unless paid in cash, will
be deducted from the amount transferred. Once a Policy is
issued, the amount of this charge is guaranteed for the
life of the Policy. The transfer charge will not be
imposed on transfers that occur as a result of Policy
Loans, the exercise of the special transfer privilege or
the initial allocation of Accumulated Value among the
Subaccounts and the Declared Interest Option following
acceptance of the Policy by the Policyowner.
Currently there is no charge for changing the net premium
allocation instructions.
- --------------------------------------------------------------------------------
PARTIAL WITHDRAWAL
FEE
Upon partial withdrawal of a Policy, a fee equal to the
lesser of $25 or 2% of the amount withdrawn will be
assessed to compensate the Company for costs incurred in
accomplishing the withdrawal. The fee will be deducted
from Accumulated Value.
- --------------------------------------------------------------------------------
SURRENDER CHARGE
At the time of surrender, a Surrender Charge will apply
during the first six Policy Years, as well as during the
first six years following an increase in Specified
Amount. The Surrender Charge is an amount per $1,000 of
Specified Amount, declining to $0 in the seventh year.
The Surrender Charge varies by age, sex, underwriting
category and Policy Year. The Surrender Charge is level
within each Policy Year. At the time of a requested
decrease in Specified Amount, the full original Surrender
Charge stays in place. The Surrender Charge may be waived
after the first Policy Year if the insured is terminally
ill or stays in a qualified nursing care center for 90
days.
At the time of a partial withdrawal, no Surrender Charge
applies.
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VARIABLE ACCOUNT
CHARGES
MORTALITY AND EXPENSE RISK CHARGE. The Company deducts a
daily mortality and expense risk charge from each
Subaccount at an effective annual rate of 0.90% of the
average daily net assets of the Subaccounts and is
guaranteed not to exceed 1.05% of the average daily net
assets of the Subaccounts.
30
<PAGE>
The mortality risk assumed by the Company is that
Insureds may die sooner than anticipated and therefore,
the Company may pay an aggregate amount of life insurance
proceeds greater than anticipated. The expense risk
assumed is that expenses incurred in issuing and
administering the Policies will exceed the amounts
realized from the administrative charges assessed against
the Policies.
FEDERAL TAXES. Currently no charge is made to the
Variable Account for federal income taxes that may be
attributable to the Variable Account. The Company may,
however, make such a charge in the future. Charges for
other taxes, if any, attributable to the Account may also
be made. (See "FEDERAL TAX MATTERS--Taxation of the
Company.")
INVESTMENT OPTION EXPENSES. The value of net assets of
the Variable Account will reflect the investment
advisory fee and other expenses incurred by each
Investment Option. The investment advisory fee and other
expenses applicable to each Investment Option are listed
in the "SUMMARY OF THE POLICY" and described in the
prospectus for each Fund's Investment Option.
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THE DECLARED INTEREST OPTION
- --------------------------------------------------------------------------------
Policyowners may allocate Net Premiums and transfer
Accumulated Value to the Declared Interest Option.
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE DECLARED INTEREST OPTION HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND THE
DECLARED INTEREST OPTION HAS NOT BEEN REGISTERED AS AN
INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940. ACCORDINGLY, NEITHER THE DECLARED INTEREST OPTION
NOR ANY INTERESTS THEREIN ARE SUBJECT TO THE PROVISIONS
OF THESE ACTS AND, AS A RESULT, THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE
DISCLOSURES IN THIS PROSPECTUS RELATING TO THE DECLARED
INTEREST OPTION. DISCLOSURES REGARDING THE DECLARED
INTEREST OPTION MAY, HOWEVER, BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES
LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF
STATEMENTS MADE IN PROSPECTUSES.
- --------------------------------------------------------------------------------
GENERAL DESCRIPTION
The Declared Interest Option is supported by the General
Account. The General Account consists of all assets owned
by the Company other than those in the Variable Account
and other separate accounts. Subject to applicable law,
the Company has sole discretion over the investment of
the assets of the General Account.
A Policyowner may elect to allocate Net Premiums to the
Declared Interest Option, the Variable Account, or both.
The Policyowner may also transfer Accumulated Value from
the Subaccounts to the Declared Interest Option, or from
the Declared Interest Option to the Subaccounts. The
allocation or transfer of funds to the Declared Interest
Option does not entitle a Policyowner to share in the
investment experience of the General Account. Instead,
the Company guarantees that Accumulated Value in the
Declared Interest Option will accrue interest at an
effective annual rate of at least 4.0%, independent of
the actual investment experience of the General Account.
- --------------------------------------------------------------------------------
THE POLICY
This Prospectus describes a flexible premium variable
life insurance policy. This Prospectus is generally
intended to serve as a disclosure document for the
aspects of the Policy involving the Variable Account. For
complete details regarding the Declared Interest Option,
see the Policy itself.
31
<PAGE>
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DECLARED INTEREST
OPTION ACCUMULATED
VALUE
Net premiums allocated to the Declared Interest Option
are credited to the Policy. The Company bears the full
investment risk for these amounts. The Company guarantees
that interest credited to each Policyowner's Accumulated
Value in the Declared Interest Option will not be less
than an effective annual rate of 4.0%. The Company may,
in its sole discretion, credit a higher rate of interest,
although it is not obligated to credit interest in excess
of 4.0% per year, and might not do so. Any interest
credited on the Policy's Accumulated Value in the
Declared Interest Option in excess of the guaranteed rate
of 4.0% per year will be determined in the sole
discretion of the Company and may be changed at any time
by the Company, in its sole discretion. The Policyowner
assumes the risk that the interest credited may not
exceed the guaranteed minimum rate of 4.0% per year. The
interest credited to the Policy's Accumulated Value in
the Declared Interest Option that equals Policy Debt may
be greater than 4.0%, but will in no event be greater
than the current effective loan interest rate minus no
more than 3.0%. From time to time, the Company may allow,
by Company practice, a loan spread of 0% on the gain in a
Policy in effect a minimum of ten years. The Accumulated
Value in the Declared Interest Option will be calculated
no less frequently than each Monthly Deduction Day.
The Company guarantees that, at any time prior to the
Maturity Date, the Accumulated Value in the Declared
Interest Option will not be less than the amount of the
Net Premiums allocated or Accumulated Value transferred
to the Declared Interest Option, plus interest at the
rate of 4.0% per year, plus any excess interest which the
Company credits, less the sum of all policy charges
allocable to the Declared Interest Option and any amounts
deducted from the Declared Interest Option in connection
with partial withdrawals or transfers to the Variable
Account.
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TRANSFERS, PARTIAL
WITHDRAWALS,
SURRENDERS AND POLICY
LOANS
Amounts may be transferred between the Subaccounts and
the Declared Interest Option. A transfer charge of $25
may be imposed in connection with the transfer unless
such transfer is the first transfer requested by the
Policyowner during such Policy Year. Unless paid in cash,
the transfer charge will be deducted from the amount
transferred. A Policyowner may make only one transfer
between the Variable Account and the Declared Interest
Option in each Policy Year. No more than 50% of the Net
Accumulated Value in the Declared Interest Option may be
transferred from the Declared Interest Option unless the
balance in the Declared Interest Option immediately after
the transfer will be less than $1,000. If the balance in
the Declared Interest Option after a transfer would be
less than $1,000, the full Net Accumulated Value in the
Declared Interest Option may be transferred. A
Policyowner may also make partial withdrawals, surrenders
and obtain Policy Loans from the Declared Interest Option
at any time prior to the Policy's Maturity Date.
Transfers, partial withdrawals and surrenders from, and
payments of Policy Loans allocated to, the Declared
Interest Option may be delayed for up to six months.
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT
The Policy is issued in consideration of the statements
in the application and the payment of the initial
premium. The Policy, the application, and any
supplemental applications and endorsements make up the
entire contract. In the absence of fraud, the statements
made in an application or supplemental application will
be treated as representations and not as warranties. No
statement will void the Policy or be used in defense of a
claim unless contained in the application or any
supplemental application.
- --------------------------------------------------------------------------------
INCONTESTABILITY
The Policy is incontestable, except for fraudulent
statements made in the application or supplemental
applications, after it has been in force during the
lifetime of the Insured for two years from the Policy
Date or date of reinstatement. Any increase in Specified
Amount will be incontestable only after it has been in
force during the lifetime of the Insured for two years
from the effective date of the increase.
32
<PAGE>
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CHANGE OF PROVISIONS
The Company reserves the right to change the Policy, in
the event of future changes in the federal tax law, to
the extent required to maintain the Policy's
qualification as life insurance under federal tax law.
Except as provided in the foregoing paragraph, no one can
change any part of the Policy except the Policyowner and
the President, a Vice President, the Secretary or an
Assistant Secretary of the Company. Both must agree to
any change and such change must be in writing. No agent
may change the Policy or waive any of its provisions.
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MISSTATEMENT OF AGE
OR SEX
If the Insured's age or sex was misstated in the
application, each benefit and any amount to be paid under
the Policy will be adjusted to reflect the correct age
and sex.
- --------------------------------------------------------------------------------
SUICIDE EXCLUSION
If the Policy is in force and the Insured commits
suicide, while sane or insane, within one year from the
Policy Date, life insurance proceeds payable under the
Policy will be limited to all premiums paid, reduced by
any outstanding Policy Debt and any partial withdrawals,
and increased by any unearned loan interest. If the
Policy is in force and the Insured commits suicide, while
sane or insane, within one year from the effective date
of any increase in Specified Amount, any increase in the
death benefit resulting from the requested increase in
specified amount will not be paid. Instead, the Company
will refund to the Policyowner an amount equal to the
total cost of insurance applied to the increase.
- --------------------------------------------------------------------------------
ANNUAL REPORT
At least once each year, an annual report will be sent to
each Policyowner. The report will show the current death
benefit, the Accumulated Value in each Subaccount and in
the Declared Interest Option, outstanding Policy Debt and
premiums paid, partial withdrawals made and charges
assessed since the last report. The report will also
include any other information required by state law or
regulation. Further, the Company will send the
Policyowner the reports required by the Investment
Company Act of 1940.
- --------------------------------------------------------------------------------
NON-PARTICIPATION
The Policy does not participate in the Company's profits
or surplus earnings. No dividends are payable.
- --------------------------------------------------------------------------------
OWNERSHIP OF ASSETS
The Company shall have the exclusive and absolute
ownership and control over assets, including the assets
of the Variable Account.
- --------------------------------------------------------------------------------
WRITTEN NOTICE
Any written notice should be sent to the Company at its
Home Office. The notice should include the policy number
and the Insured's full name. Any notice sent by the
Company to a Policyowner will be sent to the address
shown in the application unless an appropriate address
change form has been filed with the Company.
- --------------------------------------------------------------------------------
POSTPONEMENT OF
PAYMENTS
The Company will usually mail the proceeds of complete
surrenders, partial withdrawals and Policy Loans within
seven days after the Policyowner's signed request is
received at the Home Office. The Company will usually
mail death proceeds within seven days after receipt of
Due Proof of Death and maturity benefits within seven
days of the Maturity Date. However, payment of any amount
upon surrender or partial withdrawal, payment of any
Policy Loan, and payment of death proceeds or benefits at
maturity may be postponed whenever:
a) the New York Stock Exchange is closed other than
customary weekend and holiday closings, or trading
on the New York Stock Exchange is restricted as
determined by the Securities and Exchange
Commission;
b) the Securities and Exchange Commission by order
permits postponement for the protection of
Policyowners; or
c) an emergency exists, as determined by the
Securities and Exchange Commission, as a result of
which disposal of the securities is not reasonably
practicable or it is not reasonably practicable to
determine the value of the net assets of the
Variable Account.
Transfers may also be postponed under these
circumstances.
33
<PAGE>
Payments under the Policy which are derived from any
amount paid to the Company by check or draft may be
postponed until such time as the Company is satisfied
that the check or draft has cleared the bank upon which
it is drawn.
- --------------------------------------------------------------------------------
CONTINUANCE OF
INSURANCE
The insurance under a Policy will continue until the
earliest of:
a) the end of the Grace Period following the Monthly
Deduction Day on which the Net Accumulated Value
during the first three Policy Years, or Net
Surrender Value after three Policy Years, is less
than the monthly deduction for the following
Policy Month;
b) the date the Policyowner surrenders the Policy
for its entire Net Accumulated Value;
c) the death of the Insured; or
d) the Maturity Date.
Any rider to a Policy will terminate on the date
specified in the rider.
- --------------------------------------------------------------------------------
OWNERSHIP
The Policy belongs to the Policyowner. The original
Policyowner is the person named as owner in the
application. Ownership of the Policy may change according
to the ownership option selected as part of the original
application or by a subsequent endorsement to the Policy.
During the Insured's lifetime, all rights granted by the
Policy belong to the Policyowner, except as otherwise
provided for in the Policy.
Special ownership rules may apply if the Insured is under
legal age (as defined by state law in the state in which
the Policy is delivered) on the Policy Date.
The Policyowner may assign the Policy as collateral
security. The Company assumes no responsibility for the
validity or effect of any collateral assignment of the
Policy. No assignment will bind the Company unless in
writing and until received by the Company at its Home
Office. The assignment is subject to any payment or
action taken by the Company before it received the
assignment at the Home Office.
- --------------------------------------------------------------------------------
THE BENEFICIARY
The primary Beneficiaries and contingent Beneficiaries
are designated by the Policyowner in the application. If
changed, the primary Beneficiary or contingent
Beneficiary is as shown in the latest change filed with
the Company. One or more primary or contingent
Beneficiaries may be named in the application. In such
case, the proceeds will be paid in equal shares to the
survivors in the appropriate beneficiary class, unless
requested otherwise by the Policyowner.
Unless a payment option is chosen, the proceeds payable
at the Insured's death will be paid in a lump sum to the
primary Beneficiary. If the primary Beneficiary dies
before the Insured, the proceeds will be paid to the
contingent Beneficiary. If no Beneficiary survives the
Insured, the proceeds will be paid to the Policyowner or
the Policyowner's estate.
- --------------------------------------------------------------------------------
CHANGING THE
POLICYOWNER OR
BENEFICIARY
During the Insured's life, the Policyowner and the
Beneficiary may be changed. To make a change, written
request must be sent to the Company at its Home Office.
The request and the change must be in a form satisfactory
to the Company and must actually be received and recorded
by the Company. The change will take effect as of the
date the request is signed by the Policyowner. The change
will be subject to any payment made before the change is
recorded by the Company. The Company may require return
of the Policy for endorsement.
- --------------------------------------------------------------------------------
ADDITIONAL INSURANCE
Subject to certain requirements, one or more of the
following additional insurance
BENEFITS
benefits may be added to a Policy by rider: (i) Cost of
Living Increase; (ii) Waiver of Charges; (iii) Other
Adult Universal Life Insurance; (iv) Children's Term
Insurance and (v) Guaranteed Insurability Option. The
cost of any additional insurance benefits will be
deducted as part of the monthly deduction. (See "CHARGES
AND DEDUCTIONS--Monthly Deduction.") Detailed information
concerning available riders may be obtained from the
agent selling the Policy.
34
<PAGE>
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DISTRIBUTION OF THE POLICIES
- --------------------------------------------------------------------------------
The Policies will be sold by individuals who in addition
to being licensed as life insurance agents for the
Company, are registered representatives of the principal
underwriter of the Policies, EquiTrust Marketing, a
broker-dealer having a selling agreement with EquiTrust
Marketing or a broker-dealer having a selling agreement
with such broker-dealer. EquiTrust Marketing (formerly
FBL Marketing Services, Inc.), a corporation organized on
May 7, 1970, under the laws of the State of Delaware, is
registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as a
broker-dealer and is a member of the National Association
of Securities Dealers, Inc. EquiTrust Marketing currently
receives annual compensation of $100 per registered
representative for acting as principal underwriter.
For Policies sold in states other than Kansas, writing
agents will receive commissions based on a commission
schedule and rules. The Company may pay agents first year
commissions at a rate not exceeding 50% of Target
Premiums and 4% above Target Premiums paid in the first
Policy Year. Agents will be paid renewal commissions at a
rate equal to 5% of Target Premiums and 4% above Target
Premiums paid after the first Policy Year. Additional
commissions at a rate not exceeding 50% of the increase
in Target Premiums may be paid during the first year
following an increase in Specified Amount.
For Policies sold in Kansas, writing agents will receive
commissions based on a commission schedule and rules. The
Company may pay agents first year commissions at a rate
not exceeding 60% of Target Premiums and 3% above Target
Premiums paid in the first Policy Year. Agents will be
paid renewal commissions at a rate equal to 4% of Target
Premiums and 3% above Target Premiums paid after the
first Policy Year. Additional commissions at a rate not
exceeding 60% of the increase in Target Premiums may be
paid during the first year following an increase in
Specified Amount.
These commissions (and other distribution expenses, such
as production incentive bonuses, agent's insurance and
pensions benefits, agency management compensation and
bonuses and expense allowances) are paid by the Company.
They do not result in any additional charges against the
Policy that are not described above under "CHARGES AND
DEDUCTIONS."
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FEDERAL TAX MATTERS
- --------------------------------------------------------------------------------
INTRODUCTION
The following discussion is general and is not intended
as tax advice. Any person concerned about these tax
considerations should consult a competent tax adviser.
This discussion is based on the Company's understanding
of the present federal income tax laws as they are
currently interpreted by the Internal Revenue Service. No
representation is made as to the likelihood of
continuation of these current laws and interpretations,
and various changes have been proposed that would alter
these laws in ways that would have significant adverse
impacts. It should be further understood that the
following discussion is not exhaustive and does not
purport to be complete or to cover all situations and
that special rules not described in this Prospectus may
be applicable in certain situations. Moreover, no attempt
has been made to consider any applicable state or other
tax laws.
- --------------------------------------------------------------------------------
TAX STATUS OF THE
POLICY
Section 7702 of the Internal Revenue Code of 1986, as
amended (the "Code") includes a definition of a life
insurance contract for federal tax purposes. The
Secretary of the Treasury (the "Treasury") is authorized
to prescribe regulations interpreting and implementing
section 7702 and has issued proposed regulations on
certain aspects of section 7702. If a Policy were
determined not to be a life insurance contract for
purposes of section 7702, such Policy would not provide
most of the tax advantages normally provided by a life
insurance policy.
35
<PAGE>
With respect to a Policy issued exclusively on the basis
of a standard premium class, while there is some
uncertainty due to the limited guidance on section 7702,
the Company believes that in light of the proposed
regulations such a Policy should meet the section 7702
definition of a life insurance contract. However, with
respect to a Policy issued in whole or in part on a
substandard basis (i.e., a premium class involving higher
than standard mortality risk), it is not clear whether or
not such a Policy would satisfy section 7702,
particularly if the Policyowner pays the full amount of
premiums permitted under the Policy. If it is
subsequently determined that a Policy does not satisfy
section 7702, the Company will take whatever steps are
appropriate and necessary to attempt to cause such a
Policy to comply with section 7702, including possibly
refunding any premiums paid that exceed the limitations
allowable under section 7702 (together with interest or
other earnings on any such premiums refunded as required
by law). For these reasons, the Company reserves the
right to modify the Policy as necessary to attempt to
qualify it as a life insurance contract under section
7702.
Section 817(h) of the Code authorizes the Treasury to set
standards by regulation or otherwise for the investments
of the Account to be "adequately diversified" in order
for the Policy to be treated as a life insurance contract
for federal tax purposes. The Variable Account, through
each Fund, intends to comply with the diversification
requirements prescribed in Regulations section 1.817-5,
which affect how each Fund's assets may be invested.
Although the investment adviser of EquiTrust Variable
Insurance Series Fund is an affiliate of the Company, the
Company does not have control over the Fund or its
investments. Nonetheless, the Company believes that each
Investment Option in which the Variable Account owns
shares will be operated in compliance with the
requirements prescribed by the Treasury.
In certain circumstances, owners of variable life
insurance contracts may be considered the owners, for
federal income tax purposes, of the assets of the
separate account used to support their contracts. In
those circumstances, income and gains from the separate
account assets would be includable in the variable
contract owner's gross income. The IRS has stated in
published rulings that a variable contract owner will be
considered the owner of separate account assets if the
contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment
control over the assets. The Treasury Department also
announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do
not provide guidance concerning the circumstances in
which investor control of the investments of a segregated
asset account may cause the investor (I.E., the
Policyowner), rather than the insurance company, to be
treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by
way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular
subaccounts without being treated as owners of the
underlying assets."
The ownership rights under the Policy are similar to, but
different in certain respects from, those described by
the IRS in rulings in which it was determined that policy
owners were not owners of separate account assets. For
example, a Policyowner has additional flexibility in
allocating premium payments and policy values. These
differences could result in a Policyowner being treated
as the owner of a pro rata portion of the assets of the
Variable Account. In addition, the Company does not know
what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has
stated it expects to issue. The Company therefore
reserves the right to modify the Policy as necessary to
attempt to prevent a Policyowner from being considered
the owner of a pro rata share of the assets of the
Variable Account.
The following discussion assumes that the Policy will
qualify as a life insurance contract for federal income
tax purposes.
- --------------------------------------------------------------------------------
TAX TREATMENT OF
POLICY BENEFITS
IN GENERAL. The Company believes that the proceeds and
cash value increases of a Policy should be treated in a
manner consistent with a fixed-benefit life insurance
36
<PAGE>
policy for federal income tax purposes. Thus, the death
benefit under the Policy should be excludable from the
gross income of the Beneficiary under section 101(a)(l)
of the Code.
A change in a Policy's Specified Amount, the payment of
an unscheduled premium, a Policy loan, a partial
withdrawal, a surrender, a lapse with outstanding
indebtedness, a change in death benefit options, the
exchange of a Policy for a fixed-benefit policy (see "THE
POLICY--Special Transfer Privilege") and the assignment
of a Policy or the exercise of the right to change
Policyowners (see "GENERAL PROVISIONS-- Changing the
Policyowner or Beneficiary") may have tax consequences
depending upon the circumstances. In addition, federal
estate and state and local estate, inheritance, and other
tax consequences of ownership or receipt of Policy
proceeds depend upon the circumstances of each
Policyowner or Beneficiary. A competent tax adviser
should be consulted for further information.
Pursuant to the recently enacted Health Insurance
Portability and Accountability Act of 1996, the Company
believes that for federal income tax purposes, an
accelerated death benefit payment received under an
accelerated death benefit endorsement should be fully
excludable from the gross income of the beneficiary, as
long as the beneficiary is the insured under the Policy.
However, the Policyowner should consult a qualified tax
adviser about the consequences of adding this Endorsement
to a Policy or requesting an accelerated death benefit
payment under this Endorsement.
The Company further believes that an exchange of a
fixed-benefit policy issued by the Company for a Policy
as provided under "THE POLICY--Exchange Privilege"
generally should be treated as a non-taxable exchange of
life insurance policies within the meaning of section
1035 of the Code. However, in certain circumstances, the
exchanging owner may receive a cash distribution that
might have to be recognized as income to the extent there
was gain in the fixed-benefit policy. Moreover, to the
extent a fixed-benefit policy with an outstanding loan is
exchanged for an unencumbered Policy, the exchanging
owner could recognize income at the time of the exchange
up to the amount of such loan (including any due and
unpaid interest on such loan). An exchanging owner should
consult a tax adviser as to whether an exchange of a
fixed-benefit policy for the Policy will have tax
consequences to such owner.
The Policies may be used in various arrangements,
including nonqualified deferred compensation or salary
continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary
depending on the particular facts and circumstances of
each individual arrangement. Therefore, if it is
contemplated that a Policy may be used in any arrangement
the value of which depends in part on its tax
consequences, a qualified tax adviser should be consulted
regarding the tax attributes of the particular
arrangement.
Generally, the Policyowner will not be deemed to be in
constructive receipt of the cash value, including
increments thereof, under the Policy until there is a
distribution. The tax consequences of distributions from,
and loans taken from or secured by, a Policy depend on
whether the Policy is classified as a "modified endowment
contract."
Whether a Policy is or is not a modified endowment
contract, upon a complete surrender or lapse of a Policy,
or when benefits are paid at such Policy's maturity date,
if the amount received plus the amount of indebtedness
exceeds the total investment in the Policy, the excess
will generally be treated as ordinary income subject to
tax.
MODIFIED ENDOWMENT CONTRACTS. A Policy may be treated as
a modified endowment contract depending upon the amount
of premiums paid in relation to the death benefit
provided under such Policy. The premium limitation rules
for determining whether a Policy is a modified endowment
contract are extremely complex. In general, however, a
Policy will be a modified endowment contract if the
accumulated premiums paid at any time during the first
seven policy years exceeds the sum of the net level
premiums which would have been paid on or before such
time if the Policy
37
<PAGE>
provided for paid-up future benefits after the payment of
seven level annual premiums. In addition, if a Policy is
"materially changed," it may cause such Policy to be
treated as a modified endowment contract. The material
change rules for determining whether a Policy is a
modified endowment contract are also extremely complex.
In general, however, the determination whether a Policy
will be a modified endowment contract after a material
change generally depends upon the relationship among the
death benefit at the time of such change, the cash value
at the time of such change and the additional premiums
paid in the seven policy years starting with the date on
which the material change occurs.
Due to the Policy's flexibility, classification of a
Policy as a modified endowment contract will depend upon
the circumstances of each Policy. Accordingly, a
prospective Policyowner should contact a competent tax
adviser before purchasing a Policy to determine the
circumstances under which the Policy would be a modified
endowment contract. In addition, a Policyowner should
contact a competent tax adviser before paying any
unscheduled premiums or changing the planned premium
schedule or making any other change to, including an
exchange of, a Policy to determine whether such premium
or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified
endowment contract.
DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED
ENDOWMENT CONTRACTS. Policies classified as modified
endowment contracts are subject to the following tax
rules: First, all distributions, including distributions
upon surrender and benefits paid at maturity, from such a
Policy are treated as ordinary income subject to tax up
to the amount equal to the excess (if any) of the cash
value immediately before the distribution over the
investment in the Policy (described below) at such time.
Second, loans taken from, or secured by, such a Policy
are treated as distributions from such a Policy and taxed
accordingly. In this regard, the Internal Revenue Service
could take the position that capitalized interest on such
loans are to be treated as a taxable distribution. Third,
a 10 percent additional tax is imposed on the portion of
any distribution from, or loan taken from or secured by,
such a Policy that is included in income except where the
distribution or loan is made on or after the Policyowner
attains age 59 1/2, is attributable to the Policyowner's
becoming disabled, or is part of a series of
substantially equal periodic payments for the life (or
life expectancy) of the Policyowner or the joint lives
(or joint life expectancies) of the Policyowner and the
Policyowner's Beneficiary.
If a Policy becomes a modified endowment contract after
it is issued, distributions made during the policy year
in which it becomes a modified endowment contract,
distributions in any subsequent policy year and
distributions within two years before the Policy becomes
a modified endowment contract will be subject to the tax
treatment described above. This means that a distribution
from a Policy that is not a modified endowment contract
could later become taxable as a distribution from a
modified endowment contract.
DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED
ENDOWMENT CONTRACTS. Distributions from a Policy that is
not classified as a modified endowment contract are
generally treated as first recovering the investment in
the policy (described below) and then, only after the
return of all such investment in the policy, as
distributing taxable income. An exception to this general
rule occurs in the case of a partial withdrawal, a
decrease in the Specified Amount, or any other change
that reduces benefits under the Policy in the first 15
years after the Policy is issued and that results in a
cash distribution to the Policyowner in order for the
Policy to continue complying with the section 7702
definitional limits. In that case, such distribution will
be taxed in whole or in part as ordinary income (to the
extent of any gain in the Policy) under rules prescribed
in section 7702.
Loans from, or secured by, a Policy that is not a
modified endowment contract are not treated as
distributions. Instead, such loans are treated as
indebtedness of the Policyowner.
38
<PAGE>
Finally, neither distributions (including distributions
upon surrender or lapse) nor loans from, or secured by, a
Policy that is not a modified endowment contract are
subject to the 10 percent additional tax.
POLICY LOAN INTEREST. Interest paid on any loan under a
Policy may not be deductible. Therefore, a Policyowner
should consult a competent tax adviser before deducting
any Policy loan interest.
INVESTMENT IN THE POLICY. Investment in the policy means
(i) the aggregate amount of any premiums or other
consideration paid for a Policy, minus (ii) the aggregate
amount received under the Policy which is excluded from
the gross income of the Policyowner (except that the
amount of any loan from, or secured by, a Policy that is
a modified endowment contract, to the extent such amount
is excluded from gross income, will be disregarded), plus
(iii) the amount of any loan from, or secured by, a
Policy that is a modified endowment contract to the
extent that such amount is included in the gross income
of the Policyowner.
MULTIPLE POLICIES. All modified endowment contracts that
are issued by the Company (or its affiliates) to the
same Policyowner during any calendar year are treated as
one modified endowment contract for purposes of
determining the amount includable in gross income under
section 72(e).
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TAXATION OF THE
COMPANY
At the present time, the Company makes no charge to the
Variable Account, or to the Policy for any Federal, state
or local taxes (other than state premium taxes) that it
incurs that may be attributable to such Account or to the
Policies. The Company, however, reserves the right in the
future to make a charge for any such tax or other
economic burden resulting from the application of the tax
laws that it determines to be properly attributable to
the Variable Account or to the Policies.
- --------------------------------------------------------------------------------
EMPLOYMENT-RELATED
BENEFIT PLANS
The Supreme Court held in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an
employer's deferred compensation plan could not, under
Title VII of the Civil Rights Act of 1964, vary between
men and women on the basis of sex. In addition,
legislative, regulatory or decisional authority of some
states may prohibit use of sex-distinct mortality tables
under certain circumstances. The Policy described in this
Prospectus contains guaranteed cost of insurance rates
and guaranteed purchase rates for certain payment options
that distinguish between men and women. Accordingly,
employers and employee organizations should consider, in
consultation with legal counsel, the impact of NORRIS,
and Title VII generally, on any employment-related
insurance or benefit program for which a Policy may be
purchased.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
SAFEKEEPING OF THE
VARIABLE ACCOUNT'S
ASSETS
The Company holds the assets of the Variable Account. The
assets are kept physically segregated and held separate
and apart from the General Account. The Company maintains
records of all purchases and redemptions of shares by
each Investment Option for each corresponding Subaccount.
Additional protection for the assets of the Variable
Account is afforded by a blanket fidelity bond issued by
Chubb Insurance Group in the amount of $5,000,000
covering all the officers and employees of the Company.
- --------------------------------------------------------------------------------
VOTING RIGHTS
To the extent required by law, the Company will vote the
Fund shares held in the Variable Account at regular and
special shareholder meetings of the Funds in accordance
with instructions received from persons having voting
interests in the corresponding Subaccounts. If, however,
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,
the Company determines that it is permitted to vote the
Fund shares in its own right, it may elect to do so.
The number of votes which a Policyowner has the right to
instruct are calculated separately for each Subaccount
and are determined by dividing a Policy's Accumulated
Value in a Subaccount by the net asset value per share of
the
39
<PAGE>
corresponding Investment Option in which the Subaccount
invests. Fractional shares will be counted. The number of
votes of the Investment Option which the Policyowner has
the right to instruct will be determined as of the date
coincident with the date established by that Investment
Option for determining shareholders eligible to vote at
such meeting of the Fund. Voting instructions will be
solicited by written communications prior to such meeting
in accordance with procedures established by each Fund.
Each person having a voting interest in a Subaccount will
receive proxy materials, reports and other materials
relating to the appropriate Investment Option.
The Company will vote Fund shares attributable to
Policies as to which no timely instructions are received
(as well as any Fund shares held in the Variable Account
which are not attributable to Policies) in proportion to
the voting instructions which are received with respect
to all Policies participating in each Investment Option.
Voting instructions to abstain on any item to be voted
upon will be applied on a PRO RATA basis to reduce the
votes eligible to be cast on a matter.
Fund shares may also be held by separate accounts of
other affiliated and unaffiliated insurance companies.
The Company expects that those shares will be voted in
accordance with instructions of the owners of insurance
policies and contracts issued by those other insurance
companies. Voting instructions given by owners of other
insurance policies will dilute the effect of voting
instructions of Policyowners.
DISREGARD OF VOTING INSTRUCTIONS. The Company may, when
required by state insurance regulatory authorities,
disregard voting instructions if the instructions require
that the shares be voted so as to cause a change in the
sub-classification or investment objective of an
Investment Option or to approve or disapprove an
investment advisory contract for an Investment Option. In
addition, the Company itself may disregard voting
instructions in favor of changes initiated by a
Policyowner in the investment policy or the investment
adviser of an Investment Option if the Company reasonably
disapproves of such changes. A change would be
disapproved only if the proposed change is contrary to
state law or prohibited by state regulatory authorities,
or the Company determined that the change would have an
adverse effect on the General Account in that the
proposed investment policy for an Investment Option may
result in overly speculative or unsound investments. In
the event the Company does disregard voting instructions,
a summary of that action and the reasons for such action
will be included in the next annual report to
Policyowners.
- --------------------------------------------------------------------------------
STATE REGULATION OF
THE COMPANY
The Company, a stock life insurance company organized
under the laws of Iowa, is subject to regulation by the
Iowa Insurance Department. An annual statement is filed
with the Iowa Insurance Department on or before March lst
of each year covering the operations and reporting on the
financial condition of the Company as of December 31st of
the preceding year. Periodically, the Iowa Insurance
Department examines the liabilities and reserves of the
Company and the Variable Account and certifies their
adequacy, and a full examination of operations is
conducted periodically by the National Association of
Insurance Commissioners.
In addition, the Company is subject to the insurance laws
and regulations of other states within which it is
licensed or may become licensed to operate. Generally,
the insurance department of any other state applies the
laws of the state of domicile in determining permissible
investments.
40
<PAGE>
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OFFICERS AND
DIRECTORS OF FARM
BUREAU LIFE INSURANCE
COMPANY
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH THE COMPANY* LAST FIVE YEARS**
- ------------------------------ --------------------------------------------------
<S> <C>
Kenneth R. Ashby, Director Farmer; President, Utah Farm Bureau Federation and
affiliated companies and Ashby's Valley View
Farms; Vice President and Director, Utah Farm
Bureau Insurance Co.; Director, Millard County
Water Conservancy District, American Farm Bureau
Federation and affiliated companies, Multi States
Farmers Service Co., FBL Financial Group, Inc. and
Universal Assurors Life Insurance Company
Al Christopherson, Director Farmer; President, Minnesota Farm Bureau
Federation; Director, FBL Financial Group, Inc.,
Universal Assurors Life Insurance Company, Farm
Bureau Mutual Insurance Company and FBL Insurance
Brokerage, Inc.
Ernest A. Glienke, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc., Utah Farm
Bureau Insurance Company and FBL Financial
Services, Inc.
Philip A. Hemesath, Director Farmer
Craig D. Hill, Director Farmer; President, CAPA Hill, Inc.; Director, Farm
Bureau Mutual Insurance Company, FBL Insurance
Brokerage, Inc., Utah Farm Bureau Insurance
Company and FBL Financial Services, Inc.
Daniel L. Johnson, Director Farmer; Farm Bureau Mutual Insurance Company, FBL
Insurance Brokerage, Inc. and FBL Financial
Services, Inc.
Richard G. Kjerstad, Director Farmer; President and Director, South Dakota Farm
Bureau Federation and South Dakota Farm Bureau
Mutual Insurance Company; Director, FBL Financial
Group, Inc. and Universal Assurors Life Insurance
Company
</TABLE>
- --------------
* The principal business address of each person listed, unless otherwise
indicated, is 5400 University Avenue, West
Des Moines, Iowa 50266.
** The principal occupation shown reflects the principal employment of each
individual during the past five years.
Corporate positions may, in some instances, have changed during the period.
41
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH THE COMPANY* LAST FIVE YEARS**
- ------------------------------ --------------------------------------------------
<S> <C>
Lindsey D. Larsen, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc., Utah Farm
Bureau Insurance Company and FBL Financial
Services, Inc.
David R. Machacek, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc., and FBL
Financial Services, Inc.
Donald O. Narigon, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc., and FBL
Financial Services, Inc.
Bryce P. Neidig, Director Farmer; President, Nebraska Farm Bureau
Federation, Nebraska Farm Bureau Services, Inc.,
Farm Bureau Insurance Company of Nebraska,
Nebraska Farm Bureau Insurance Agency, Inc.;
Director, American Agriculture Insurance Company,
American Agriculture Insurance Agency, Inc.,
American Farm Bureau Service Company, American
Farm Bureau Federation, American Agricultural
Communications Systems, Inc., Western Agricultural
Insurance Co., Western Agricultural Management
Corp., FBL Financial Group, Inc., Blue Cross/Blue
Shield of Nebraska and Universal Assurors Life
Insurance Company
Charles E. Norris, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc. and FBL
Financial Services, Inc.
Keith R. Olsen, Director Farmer
Bennett M. Osmonson, Director Farmer
Howard D. Poulson, Director Farmer; President, Wisconsin Farm Bureau
Federation, Rural Mutual Insurance Company and
Midwest Livestock Producers; Director, FBL
Financial Group, Inc. and Universal Assurors Life
Insurance Company
Sally A. Puttmann, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc. and FBL
Financial Services, Inc.
</TABLE>
- --------------
* The principal business address of each person listed, unless otherwise
indicated, is 5400 University Avenue, West
Des Moines, Iowa 50266.
** The principal occupation shown reflects the principal employment of each
individual during the past five years.
Corporate positions may, in some instances, have changed during the period.
42
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH THE COMPANY* LAST FIVE YEARS**
- ------------------------------ --------------------------------------------------
<S> <C>
Beverly L. Schnepel, Director Farmer; Director, Farm Bureau Mutual Insurance
Company, FBL Insurance Brokerage, Inc. and FBL
Financial Services, Inc.
F. Gary Steiner, Director Farmer; Director, Wisconsin Farm Bureau Insurance
Company and Bank of Alma (Alma, WI)
Edward M. Wiederstein, Farmer; Chairman and Director, FBL Financial
President and Director Group, Inc.; President and Director, Iowa Farm
Bureau Federation, FBL Insurance Brokerage, Inc.,
Farm Bureau Mutual Insurance Company, Utah Farm
Bureau Insurance Company, FBL Financial Services,
Inc., Universal Assurors Life Insurance Company
and Farm Bureau Agricultural Business Corporation;
Director, Multi-Pig Corporation, Western
Agricultural Insurance Company, Western Ag
Insurance Agency, Inc., Western Farm Bureau Life
Insurance Company and American Ag Insurance
Company
Craig A. Lang, Vice President Farmer; Director, Growmark, Inc., Western Farm
and Director Bureau Life Insurance Company, Utah Farm Bureau
Insurance Company, Vice President and Director,
Farm Bureau Mutual Insurance Company, FBL
Insurance Brokerage, Inc. and FBL Financial
Services, Inc., Vice President, Universal Assurors
Life Insurance Company
</TABLE>
- --------------
* The principal business address of each person listed, unless otherwise
indicated, is 5400 University Avenue, West
Des Moines, Iowa 50266.
** The principal occupation shown reflects the principal employment of each
individual during the past five years.
Corporate positions may, in some instances, have changed during the period.
43
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH THE COMPANY* LAST FIVE YEARS**
- ------------------------------ --------------------------------------------------
<S> <C>
Richard D. Harris, Senior Vice Senior Vice President and Secretary- Treasurer,
President and Farm Bureau Mutual Insurance Company, FBL
Secretary-Treasurer Insurance Brokerage, Inc., Universal Assurors Life
Insurance Company, Utah Farm Bureau Insurance
Company, Western Farm Bureau Life Insurance
Company, FBL Financial Services, Inc. and FBL
Financial Group, Inc.; Senior Vice President and
Assistant Secretary- Treasurer, South Dakota Farm
Bureau Mutual Insurance Company
Stephen M. Morain, Senior Vice Senior Vice President and General Counsel, FBL
President and General Financial Group, Inc.
Counsel
Thomas R. Gibson, Chief Chief Executive Officer, FBL Financial Group, Inc.
Executive Officer
William J. Oddy, Executive Chief Operating Officer, FBL Financial Group, Inc.
Vice President and General
Manager
Timothy J. Hoffman, Vice Vice President, Chief Property/Casualty Officer,
President FBL Financial Group, Inc.
Richard D. Warming, Chief Chief Investment Officer and Assistant Treasurer,
Investment Officer and FBL Financial Group, Inc.
Assistant Treasurer
James W. Noyce, Chief Chief Financial Officer, FBL Financial Group, Inc.
Financial Officer
Barbara J. Moore, Vice Vice President-Property/Casualty Operations, FBL
President Financial Group, Inc.
JoAnn W. Rumelhart, Vice Vice President-Life Operations, FBL Financial
President-Life Operations Group, Inc.
Monte R. Roumpf, Vice Vice President-Corporate Administration, FBL
President Financial Group, Inc.
Lynn E. Wilson, Vice Vice President-Life Sales, FBL Financial Group,
President- Inc.
Life Sales
F. Walter Tomenga, Vice Vice President-Corporate Affairs and Marketing
President Services, FBL Financial Group, Inc.
Robert L. Tatge, Vice Vice President-Property/Casualty Operations, FBL
President Financial Group, Inc.
Lou Ann Sandburg, Vice Vice President, Investments, FBL Financial Group,
President, Investments Inc.
Thomas E. Burlingame, Vice Vice President-Associate General Counsel, FBL
President-Associate General Financial Group, Inc.
Counsel
Kathryn Coleson Horner, Accounting Vice President, FBL Financial Group,
Accounting Vice President Inc.
</TABLE>
- --------------
* The principal business address of each person listed, unless otherwise
indicated, is 5400 University Avenue, West
Des Moines, Iowa 50266.
** The principal occupation shown reflects the principal employment of each
individual during the past five years.
Corporate positions may, in some instances, have changed during the period.
44
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION
WITH THE COMPANY* LAST FIVE YEARS**
- ------------------------------ --------------------------------------------------
<S> <C>
Dennis M. Marker, Investment Investment Vice President, Administration, FBL
Vice President, Financial Group, Inc.
Administration
Paul Grinvalds, Financial Financial Planning Vice President, Appointed
Planning Vice President Actuary, FBL Financial Group, Inc.
James P. Brannen, Tax and Tax and Investment Accounting Vice President, FBL
Investment Accounting Vice Financial Group, Inc.
President
Ronald J. Palmer, Agency Agency Services Vice President, FBL Financial
Services Vice President Group, Inc.
Christopher G. Daniels, Life Life Product Development and Pricing Vice
Product Development and President, FBL Financial Group, Inc.
Pricing Vice President
James M. Mincks, Human Human Resources Vice President, FBL Financial
Resources Vice President Group, Inc.
Kermit J. Larson, Agency Vice Agency Vice President, Farm Bureau Life Insurance
President Company
Larry W. Riley, Agency Vice Agency Vice President, Farm Bureau Life Insurance
President Company
John F. Mottet, Agency Vice Agency Vice President, Farm Bureau Life Insurance
President Company
Richard J. January, Senior Senior Agency Vice President, Farm Bureau Life
Agency Vice President Insurance Company
Cyrus S. Winters, Senior Senior Agency Vice President, Farm Bureau Life
Agency Vice President Insurance Company
Michael J. Tousley, Senior Senior Agency Vice President, Farm Bureau Life
Agency Vice President Insurance Company
Ronnie G. Lee, Agency Vice Agency Vice President, Farm Bureau Life Insurance
President Company
</TABLE>
- --------------
* The principal business address of each person listed, unless otherwise
indicated, is 5400 University Avenue, West
Des Moines, Iowa 50266.
** The principal occupation shown reflects the principal employment of each
individual during the past five years.
Corporate positions may, in some instances, have changed during the period.
45
<PAGE>
- --------------------------------------------------------------------------------
LEGAL MATTERS
Sutherland, Asbill & Brennan LLP of Washington, D.C. has
provided advice on certain legal matters relating to
federal securities laws applicable to the issuance of the
flexible premium variable life insurance policy described
in this Prospectus. All matters of Iowa law pertaining to
the Policy, including the validity of the Policy and the
Company's right to issue the Policy under Iowa Insurance
Law, have been passed upon by Stephen M. Morain, Senior
Vice President and General Counsel of the Company.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable
Account is a party or to which the assets of the Variable
Account are subject. The Company is not involved in any
litigation that is of material importance in relation to
its total assets or that relates to the Variable Account.
- --------------------------------------------------------------------------------
EXPERTS
The financial statements of the Company at December 31,
1997 and 1996 and for each of the three years in the
period ended December 31, 1997, appearing herein, have
been audited by Ernst & Young LLP, independent auditors,
as set forth in their respective report thereon appearing
elsewhere herein and are included in reliance upon such
report given upon the authority of such firms as experts
in accounting and auditing.
Actuarial matters included in this Prospectus have been
examined by Christopher G. Daniels, FSA, MAAA, Life
Product Development and Pricing Vice President, as stated
in the opinion filed as an exhibit to the registration
statement.
[Financial statements to be provided by amendment .]
- --------------------------------------------------------------------------------
OTHER INFORMATION
A registration statement has been filed with the
Securities and Exchange Commission under the Securities
Act of 1933, as amended, with respect to the Policy
offered hereby. This Prospectus does not contain all the
information set forth in the registration statement and
the amendments and exhibits to the registration
statement, to all of which reference is made for further
information concerning the Variable Account, the Company
and the Policy offered hereby. Statements contained in
this Prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete
statement of the terms thereof, reference is made to such
instruments as filed.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated balance sheets of the Company at
December 31, 1997 and 1996 and the related consolidated
statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period
ended December 31, 1997, appearing herein, have been
audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon appearing elsewhere
herein.
It is anticipated that the Variable Account will commence
operations in 1998; accordingly, no financial statements
currently exist for the variable account.
[Financial statements to be provided by amendment .]
46
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF
DEATH BENEFITS AND
ACCUMULATED VALUES
The following tables illustrate how the death benefits,
Accumulated Values and Surrender Values of a Policy may
vary over an extended period of time at certain ages,
assuming hypothetical gross rates of investment return
for the Investment Options equivalent to constant gross
annual rates of 0%, 6% and 12%. The hypothetical rates of
investment return are for purposes of illustration only
and should not be deemed a representation of past or
future rates of investment return. Actual rates of return
for a particular Policy may be more or less than the
hypothetical investment rates of return and will depend
on a number of factors including the investment
allocations made by a Policyowner. Also, values would be
different from those shown if the gross annual investment
returns averaged 0%, 6% and 12% over a period of years
but fluctuated above and below those averages for
individual Policy Years.
The amounts shown are as of the end of each Policy Year.
The tables assume that the assets in the Investment
Options are subject to an annual expense ratio of % of
the average daily net assets. This annual expense ratio
is based on the average of the expense ratios of each of
the Investment Options available under the Policy for the
last fiscal year and take into account current expense
reimbursement arrangements. The fees and expenses of each
Investment Option vary, and in 1997 the total fees and
expenses ranged from an annual rate of % to an annual
rate of % of average daily net assets. For information
on Investment Option expenses, see the prospectuses for
the Investment Options.
The tables reflect deduction of the premium expense
charge, the monthly Policy expense charge, the first-year
monthly administrative charge, the first-year monthly
expense charge, the daily charge for the Company's
assumption of mortality and expense risks, and cost of
insurance charges for the hypothetical Insured. The
current charges and the higher guaranteed maximum charges
the Company may charge are reflected in separate tables
on each of the following pages.
Applying the current charges and the average Investments
Option fees and expenses of % of average net assets,
the gross annual rates of investment return of 0%, 6% and
12% would produce net annual rates of return of %,
% and %, respectively, during the six Policy Years,
and %, % and %, respectively, after that.
The hypothetical values shown in the tables do not
reflect any charges for federal income taxes against the
Variable Account since the Company is not currently
making such charges. However, such charges may be made in
the future and, in that event, the gross annual
investment rate of return would have to exceed 0%, 6% or
12% by an amount sufficient to cover tax charges in order
to produce the death benefits and Accumulated Values
illustrated. (See "FEDERAL TAX MATTERS--Taxation of the
Company.")
The tables illustrate the Policy values that would result
based upon the hypothetical investment rates of return if
premiums are paid as indicated, if all Net Premiums are
allocated to the Variable Account and if no Policy Loans
have been made. The tables are also based on the
assumptions that the Policyowner has not requested an
increase or decrease in Specified Amount, and that no
partial withdrawals or transfers have been made.
For comparative purposes, the second column of each table
shows the amount to which the premiums would accumulate
if an amount equal to those premiums were invested to
earn interest at 5% compounded annually.
* * *
Upon request, the Company will provide a comparable
illustration based upon the proposed insured's age, sex
and premium class, the Specified Amount or premium
requested, and the proposed frequency of premium
payments.
[Additional Investment Options and Illustrations to be
provided by amendment.]
A-1
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B
- --------------------------------------------------------------------------------
DEATH BENEFIT OPTIONS
OPTION A EXAMPLE. For purposes of this example, assume
that the Insured's Attained Age is between 0 and 40 and
that there is no outstanding Policy Debt. Under Option A,
a Policy with a Specified Amount of $50,000 will
generally provide a death benefit of $50,000 plus
Accumulated Value. Thus, for example, a Policy with a
Accumulated Value of $5,000 will have a death benefit of
$55,000 ($50,000 + $5,000); a Accumulated Value of
$10,000 will provide a death benefit of $60,000 ($50,000
+ $10,000). The death benefit, however, must be at least
2.50 multiplied by the Accumulated Value. As a result, if
the Accumulated Value of the Policy exceeds $33,333, the
death benefit will be greater than the Specified Amount
plus Accumulated Value. Each additional dollar of
Accumulated Value above $33,333 will increase the death
benefit by $2.50. A Policy with a Specified Amount of
$50,000 and a Accumulated Value of $40,000 will provide a
death benefit of $100,000 ($40,000 x 2.50); a Accumulated
Value of $60,000 will provide a death benefit of $150,000
($60,000 x 2.50).
Similarly, any time Accumulated Value exceeds $33,333,
each dollar taken out of Accumulated Value will reduce
the death benefit by $2.50. If, for example, the
Accumulated Value is reduced from $40,000 to $35,000
because of partial withdrawals, charges, or negative
investment performance, the death benefit will be reduced
from $100,000 to $87,500. If at any time, however,
Accumulated Value multiplied by the specified amount
factor is less than the Specified Amount plus the
Accumulated Value, then the death benefit will be the
current Specified Amount plus Accumulated Value of the
Policy.
The specified amount factor becomes lower as the
Insured's Attained Age increases. If the Attained Age of
the Insured in the example above were, for example, 50
(rather than under 40), the specified amount factor would
be 1.85. The amount of the death benefit would be the sum
of the Accumulated Value plus $50,000 unless the
Accumulated Value exceeded $58,824 (rather than $33,333),
and each dollar then added to or taken from the
Accumulated Value would change the death benefit by $1.85
(rather than $2.50).
OPTION B EXAMPLE. For purposes of this example, assume
that the Insured's Attained Age is between 0 and 40 and
that there is no outstanding Policy Debt. Under Option B,
a Policy with a $50,000 Specified Amount will generally
pay $50,000 in death benefits. However, because the death
benefit must be equal to or be greater than 2.50
multiplied by the Accumulated Value, any time the
Accumulated Value of the Policy exceeds $20,000, the
death benefit will exceed the $50,000 Specified Amount.
Each additional dollar added to Accumulated Value above
$20,000 will increase the death benefit by $2.50. A
Policy with a $50,000 Specified Amount and a Accumulated
Value of $30,000 will provide death proceeds of $75,000
($30,000 x 2.50); a Accumulated Value of $40,000 will
provide a death benefit of $100,000 ($40,000 x 2.50); a
Accumulated Value of $50,000 will provide a death benefit
of $125,000 ($50,000 x 2.50).
Similarly, so long as Accumulated Value exceeds $20,000,
each dollar taken out of Accumulated Value will reduce
the death benefit by $2.50. If, for example, the
Accumulated Value is reduced from $25,000 to $20,000
because of partial withdrawals, charges, or negative
investment performance, the death benefit will be reduced
from $62,500 to $50,000. If at any time, however, the
Accumulated Value multiplied by the specified amount
factor is less than the Specified Amount, the death
benefit will equal the current Specified Amount of the
Policy.
The specified amount factor becomes lower as the
Insured's Attained Age increases. If the Attained Age of
the Insured in the example above were, for example, 50
(rather than between 0 and 40), the specified amount
factor would be 1.85. The death proceeds would not exceed
the $50,000 Specified Amount unless the Accumulated Value
exceeded approximately $27,028 (rather than $20,000), and
each dollar then added to or taken from the Accumulated
Value would change the life insurance proceeds by $1.85
(rather than $2.50).
B-1
<PAGE>
<TABLE>
<CAPTION>
SPECIFIED AMOUNT FACTOR TABLE
- -----------------------------------------------------
ATTAINED AGE SPECIFIED AMOUNT FACTOR
- ------------------------ ---------------------------
<S> <C>
40 or younger 2.50
41 2.43
42 2.36
43 2.29
44 2.22
45 2.15
46 2.09
47 2.03
48 1.97
49 1.91
50 1.85
51 1.78
52 1.71
53 1.64
54 1.57
55 1.50
56 1.46
57 1.42
58 1.38
59 1.34
60 1.30
61 1.28
62 1.26
63 1.24
64 1.22
65 1.20
66 1.19
67 1.18
68 1.17
69 1.16
70 1.15
71 1.13
72 1.11
73 1.09
74 1.07
75 to 90 1.05
91 1.04
92 1.03
93 1.02
94 to 114 1.01
115 1.00
</TABLE>
B-2
<PAGE>
[LOGO]
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE
[LOGO]
WEST DES MOINES, IOWA 50266
737- ( )
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING
Article XII of the Company's By-Laws provides for the indemnification by the
Company of any person who is a party or who is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a director or
officer of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. Article
XII also provides for the indemnification by the Company of any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its factor by reason of the fact that he is or was a director or officer of
the Company, or is or was serving at the request of the Company as a director,
offer, employee or agent of another corporation, partnership, joint venture,
trust or another enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification will be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the Company
unless and only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication of liability
but in view of all circumstances of the case, such person is fairly and
reasonable entitled to indemnity for such expenses which such court shall deem
proper.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATIONS PURSUANT TO SECTION 26(E)(2)(A)
The Company represents that the aggregate charges under the Contracts are
reasonable in relation to the services rendered, the expenses to be incurred and
the risks assumed by the Company.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
A reconciliation and tie-in of information shown in the Prospectus with the
items of Form N-8B-2.
The Prospectus consisting of pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representations pursuant to Section 26(a)(2)(A).
The signatures.
Written consents of the following persons:
Wendy L. Carlson
Messrs. Sutherland, Asbill & Brennan, LLP
Ernst & Young LLP, Independent Auditors
Christopher G. Daniels, FSA, MSAA, Consulting Actuary
The following exhibits:
<TABLE>
<S> <C> <C>
1.A. 1. * Certified Resolution of the Board of Directors of the Company
establishing the Variable Account.
2. None.
3. (a) Form of Principal Underwriting Agreement
(b)(I) Forms of Career Agent's Contract.
(ii) Forms of Financed Career Agent's Contract.
(c) Commission schedules. (See Exhibits 3(b)(I) and 3(b)(ii)
above.)
4. None.
5. * (a) Form of Policy
(b) State variation of Form of Policy.
(c) Form of Application.
6. * (a) Articles of Incorporation of the Company.
* (b) By-Laws of the Company.
7. None.
8. None.
9. Form of Participation Agreement.
10. Form of Application (see Exhibit 1.A.(5)(c) above.)
2. * Opinion and Consent of Wendy L. Carlson
3. None.
4. Not applicable.
5. Not applicable.
6. *Opinion and Consent of Christopher G. Daniels, FSA, MSAA, Consulting
Actuary.
7. (a) Consent of Ernst & Young LLP.
*(b) Consent of Messrs. Sutherland, Asbill & Brennan, L.L.P.
8. Memorandum describing the Company's conversion procedure (included in
Exhibit 9 hereto).
9. Memorandum describing the Company's issuance, transfer and redemption
procedures for the Policy.
10. *Powers of Attorney
</TABLE>
- ------------------------
* Attached as an exhibit.
[Remaining exhibits to be filed by amendment.]
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Farm Bureau Life Variable Account II, has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of West Des Moines, State of Iowa, on the 6th day of
January, 1998.
Farm Bureau Life Insurance Company
Farm Bureau Life Variable Account II
By: /s/ Edward M. Wiederstein
-----------------------------
Edward M. Wiederstein
President
Farm Bureau Life Insurance
Company
Attest:
Richard D. Harris
Senior Vice President &
Secretary State Treasurer
Farm Bureau Life Insurance
Company
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities
indicated on the dates set forth below.
Signature Title Date
- --------- ----- ----
/s/ Edward M. Wiederstein
- ------------------------- January 6, 1998
Edward M. Wiederstein President and Director
[Principal Executive
Officer]
/s/ Richard D. Harris
- ------------------------- January 6, 1998
Richard D. Harris Senior Vice President
Secretary Treasurer
[Principal Accounting Officer]
/s/ James W. Noyce
- ------------------------- January 6, 1998
James W. Noyce Chief Financial Officer
[Principal Accounting Officer]
/s/ Craig A. Lang
- ------------------------- January 6, 1998
Craig A. Lang Vice President and Director
<PAGE>
- ------------------------- January 6, 1998
Kenneth R. Ashby Director
/s/ Al Christopherson
- ------------------------- January 6, 1998
Al Christopherson Director
/s/ Ernest A. Glienke
- ------------------------- January 6, 1998
Ernest A. Glienke Director
/s/ Philip A. Hemesath
- ------------------------- January 6, 1998
Philip A. Hemesath Director
/s/ Craig D. Hill
- ------------------------- January 6, 1998
Craig D. Hill Director
/s/ Daniel L. Johnson
- ------------------------- January 6, 1998
Daniel L. Johnson Director
- ------------------------- January 6, 1998
Richard G. Kjerstad Director
/s/ Lindsey D. Larson
- ------------------------- January 6, 1998
Lindsey D. Larson Director
/s/ David R. Machacek
- ------------------------- January 6, 1998
David R. Machacek Director
/s/ Donald O. Narigon
- ------------------------- January 6, 1998
Donald O. Narigon Director
- ------------------------- January 6, 1998
Bryce P. Neidig Director
/s/ Charles E. Norris
- ------------------------- January 6, 1998
Charles E. Norris Director
- ------------------------- January 6, 1998
Keith R. Olsen Director
- ------------------------- January 6, 1998
Bennett M. Osmonson Director
<PAGE>
- ------------------------- January 6, 1998
Howard D. Poulson Director
/s/ Sally A. Puttmann
- ------------------------- January 6, 1998
Sally A. Puttmann Director
/s/ Beverly L. Schnepel
- ------------------------- January 6, 1998
Beverly L. Schnepel Director
- ------------------------- January 6, 1998
F. Gary Steiner Director
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Farm Bureau Life
Variable Account II, has duly caused this registration statement to be signed
on its behalf by the undersigned thereunto duly authorized in the City of West
Des Moines, State of Iowa, on the 6th day of January, 1998.
Farm Bureau Life Variable Account II
(Registrant)
By: Farm Bureau Life Insurance Company
(Depositor)
By: /s/ Edward M. Wiederstein
------------------------------------
Edward M. Wiederstein
President
Farm Bureau Life Insurance Company
* By /s/ Stephen M. Morain Attorney-In-Fact, pursuant to Power of Attorney.
-----------------
Stephen M. Morain
<PAGE>
RESOLUTIONS ADOPTED BY
THE BOARD OF DIRECTORS OF
FARM BUREAU LIFE INSURANCE COMPANY
January 6, 1998
RESOLVED, that the Board of Directors of Farm Bureau Life Insurance Company (the
"Company"), hereby establishes a separate account, pursuant to the provisions of
Section 508A.1 of the Insurance Laws of the State of Iowa, designated Farm
Bureau Life Variable Account II (hereinafter the "Variable Account"), for the
following use and purposes, and subject to such conditions as hereinafter set
forth; and
FURTHER RESOLVED, that the Variable Account is established for the purpose of
providing for the issuance by the Company of certain variable life insurance
policies (the "Policies"), and shall constitute a funding medium to support
reserves under such Policies issued by the Company; and
FURTHER RESOLVED, that the income, gains and losses, realized or unrealized,
from assets allocated to the Variable Account shall be credited to or charged
against the Variable Account, without regard to other income, gains or losses of
the Company; and
FURTHER RESOLVED, that the assets of the Variable Account equal to the reserves
and other liabilities under the Policies and any other variable life insurance
policies issued through the Variable Account may not be charged with liabilities
arising out of any other business the Company may conduct; and
FURTHER RESOLVED, that the Variable Account shall be divided into investment
subaccounts (the "Subaccounts"), each of which shall invest in the shares of a
mutual fund portfolio, and net premiums under the Policies shall be allocated
among the Subaccounts in accordance with instructions received from owners of
the Policies; and
FURTHER RESOLVED, that the Executive Committee be, and hereby is, authorized
to add or remove any Subaccount of the Variable Account or add or remove any
mutual fund portfolio as may hereafter be deemed necessary or appropriate; and
FURTHER RESOLVED, that the income, gains and losses, realized or unrealized,
from assets allocated to each Subaccount of the Variable Account shall be
credited to or charged against such Subaccount of the Variable Account, without
regard to other income, gains or losses of any other Subaccount of the Variable
Account; and
1
<PAGE>
FURTHER RESOLVED, that the Executive Committee be, and it hereby is,
authorized to invest such amount or amounts of the Company's cash in the
Variable Account or in any Subaccount thereof or in any mutual fund portfolio
as may be deemed necessary or appropriate to facilitate the commencement of
the Variable Account's and/ or the mutual fund portfolio's operations and/or
to meet any minimum capital requirements under the Investment Company Act of
1940, as amended (the "1940 Act"); and
FURTHER RESOLVED, that the Chief Executive Officer, Chief Operating Officer, and
Chief Financial Officer (hereafter, the "empowered officers") and each of them,
with full power to act without the others, be, and they hereby are, severally
authorized to transfer cash from time to time from the Company's general account
to the Variable Account, or from the Variable Account to the general account, as
deemed necessary or appropriate and consistent with the terms of the Policies;
and
FURTHER RESOLVED, that the Board of Directors of the Company reserves the right
to change the designation of the Variable Account hereafter to such other
designation as it may deem necessary or appropriate; and
FURTHER RESOLVED, that the empowered officers and each of them, with full
power to act without the others, with such assistance from the Company's
independent certified public accountants, legal counsel and independent
consultants or others as they may require, be, and they hereby are, severally
authorized and directed to take all action necessary to: (a) register the
Variable Account as a unit investment trust under the 1940 Act; (b) register
the Policies under the Securities Act of 1933 (the "1933 Act"); and (c) take
all other actions that are necessary in connection with the offering of the
Policies for sale and the operation of the Variable Account in order to
comply with the 1940 Act, the 1933 Act, the Securities Exchange Act of 1934
and other applicable Federal laws, including the filing of any registration
statements, any undertakings, no-action requests, consents, applications for
exemptions from the 1940 Act or other applicable federal laws, and any
amendments to the foregoing as the empowered officers of the Company shall
deem necessary or appropriate; and
FURTHER RESOLVED, that the empowered officers and each of them, with full power
to act without the others, are severally authorized to prepare, execute and
cause to be filed with the Securities and Exchange Commission on behalf of the
Variable Account, and by the Company as sponsor and depositor, a Notification of
Registration on Form N-8A, a registration statement on Form N-8B-2, and a
registration statement on Form S-6 registering the Variable Account under the
1940 Act and registering the Policies under the 1933 Act, and any and all
amendments to the foregoing on behalf of the Variable Account and the Company
and on behalf of and as attorneys-in-fact for the empowered officers and/ or any
other officer of the Company; and
FURTHER RESOLVED, that Stephen M. Morain, Senior Vice President and General
Counsel (and any successor to such position), is duly appointed as agent for
service under any such registration statement, duly authorized to receive
communications and notices from the Securities and Exchange Commission with
respect thereto; and
2
<PAGE>
FURTHER RESOLVED, that the empowered officers and each of them, with full power
to act without the others, are severally authorized on behalf of the Variable
Account and on behalf of the Company to take any and all such action that each
of them may deem necessary or advisable in order to offer and sell the Policies,
including any registrations, filings and qualifications both of the Company, its
officers, agents and employees, and of the Policies, under the insurance and
securities laws of any of the states of the United States of America or other
jurisdictions, and in connection therewith to prepare, execute, deliver and file
all such applications, requests, undertakings, reports, covenants, resolutions,
applications for exemptions, consents to service of process and other papers and
instruments as may be required under such laws, and to take any and all further
action which such officers or legal counsel of the Company may deem necessary or
desirable (including entering into whatever agreements and contracts may be
necessary) in order to maintain such registrations or qualifications for as long
as the officers or legal counsel deem it to be in the best interests of the
Variable Account and the Company; and
FURTHER RESOLVED, that the empowered officers and each of them, with full power
to act without the others, be, and they hereby are, severally authorized in the
names and on behalf of the Variable Account and the Company: (a) to execute and
file irrevocable written consents on the part of the Variable Account and of the
Company to be used in such states wherein such consents to service of process
may be required under the insurance or securities laws therein in connection
with the registration or qualification of the Policies; and (b) to appoint the
appropriate state official, or such other person as may be allowed by insurance
or securities laws, agent of the Variable Account and of the Company for the
purpose of receiving and accepting process; and
FURTHER RESOLVED, that the empowered officers and each of them, with full power
to act without the others, be, and hereby are, severally authorized to establish
procedures under which the Company will provide voting rights for owners of the
Policies with respect to securities owned by the Variable Account; and
FURTHER RESOLVED, that the empowered officers and each of them, with full power
to act without the others, are hereby severally authorized to execute such
agreement or agreements as deemed necessary and appropriate (a) with a qualified
entity under which such entity will be appointed principal underwriter and
distributor for the Policies, (b) with one or more qualified entities to provide
administrative services in connection with the establishment and maintenance
3
<PAGE>
of the Variable Account and the administration of the Policies, and (c) with the
designated mutual fund portfolios and/ or the principal underwriter and
distributor of such mutual fund portfolios for the purchase and redemption of
portfolio shares; and
FURTHER RESOLVED, that the empowered officers and each of them, with full power
to act without the others, are hereby severally authorized to execute and
deliver such agreements and other documents and do such acts and things as each
of them may deem necessary or desirable to carry out the foregoing resolutions
and the intent and purposes thereof.
FURTHER RESOLVED, that the Company hereby adopts and establishes the following
Standards of Suitability for its officers, employees, and agents with respect to
the suitability of the Policies for applicants:
1. No recommendation shall be made to an applicant to purchase a Policy,
and no Policy shall be issued, in the absence of reasonable grounds to
believe that the purchase of the Policy is suitable for the applicant
on the basis of information furnished after reasonable inquiry of the
applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and any other information
known to the Company or to the agent making the recommendation;
2. A good faith, reasonable inquiry shall be made as to the facts and
circumstances concerning a prospective Policy owner's insurance and
financial needs and no recommendation shall be made that the
prospective Policy owner purchase a Policy when such a purchase is not
reasonable consistent with the information that is known or reasonably
should be known to the Company or its agents. In making such
recommendation, factors which may be considered are: age, earnings,
marital status, number and age of dependents, the value of savings or
other assets, and current life insurance program.
Additionally, the Company's agents, as registered representatives, will be
subject to supervision by a registered broker-dealer with respect to suitability
and other sales practices under the NASD Conduct Rules of NASD Regulation, Inc;
and
FURTHER RESOLVED, that the Company hereby adopts and establishes the following
Standards of Conduct for itself and its officers, directors, and employees
(each, an "Employee) with respect to the purchase or sale of investments of the
Variable Account:
No Employee shall:
1. Employ any device, scheme or artifice to defraud the Variable Account
or the owners of the Policies;
2. Make any untrue statement of a material fact with respect to the
investments of the Variable Account or omit to state a material fact
necessary in order to make
4
<PAGE>
the statements made, in light of the circumstances in which they were
made, not misleading;
3. Engage in any act, practice or course of business that operates or
would operate as a fraud or deceit upon the Variable Account or the
owners of the Policies;
4. Engage in any manipulative practice with respect to the Variable
Account or the owners of the Policies;
5. Sell to, or purchase from the Variable Account any securities or other
property, except as permitted under applicable laws, rules,
regulations, order, or other interpretation of any government, agency,
or self-regulatory organization.
6. Purchase or allow to be purchased for the Variable Account any
securities of which the Company or an affiliated company is the
issuer, except as permitted under applicable laws, rules, regulations,
order, or other interpretation of any government, agency, or
self-regulatory organization.
7. Accept any compensation other than regular salary or wages from the
Company or an affiliated company for the sale or purchase of
investment securities to or from the Variable Account except as
permitted under applicable laws, rules, regulations, orders, or other
interpretations of any government, agency or self-regulatory
organization;
8. Engage in any joint transaction, participation or common undertaking
whereby the Company or an affiliated company participates with the
Variable Account in any transaction in which the Company or an
affiliated company obtains an advantage in the price or quality of
the item purchased, the service received or in the cost of such
service, and the Variable Account or the owners of the Policies are
disadvantaged in any of these respects by the same transaction; or
9. Borrow money or securities from the Variable Account other than under
a Policy loan provision.
FURTHER RESOLVED, that the Company shall require any third party providing
administrative services to the Variable Account to adopt Standards of Conduct
encompassing the standards set forth above.
5
<PAGE>
NON-PARTICIPATING
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
DEATH PROCEEDS PAYABLE AT THE INSURED'S DEATH PRIOR TO THE MATURITY DATE.
FLEXIBLE PREMIUMS PAYABLE FOR THE INSURED'S LIFE OR UNTIL THE MATURITY DATE. THE
AMOUNT OF THE DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY VARY UNDER
THE CONDITIONS DESCRIBED IN THE DEATH BENEFIT PROVISIONS. THE CASH VALUE IN THE
VARIABLE ACCOUNT IS BASED ON THE INVESTMENT EXPERIENCE OF THAT ACCOUNT AND MAY
INCREASE OR DECREASE DAILY. IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT. THE
VARIABLE FEATURES OF THIS POLICY ARE DESCRIBED ON PAGES 13 THROUGH 15.
Farm Bureau Life Insurance Company will pay the benefits of this policy subject
to all of its terms.
RIGHT TO EXAMINE POLICY
The owner may cancel this policy by delivering or mailing a written notice or
sending a telegram or fax to the agent through whom it was purchased or the Farm
Bureau Life Insurance Company, 5400 University Avenue, West Des Moines, Iowa
50266-5997 and by returning the policy or contract before midnight of the
twentieth day after the date you receive the policy. Notice given by mail and
return of the policy or contract by mail are effective on being postmarked,
properly addressed and postage prepaid. Farm Bureau Life will refund within
seven days after it receives notice of cancellation and the returned policy an
amount equal to the greater of the premiums paid or the sum of:
a) the accumulated value of the policy on the date the policy is received at
our home office;
b) any premium expense charges which were deducted from premiums;
c) monthly deductions made on the policy date and any monthly deduction day;
and
d) amounts approximating daily charges against the variable account.
Signed for and on behalf of Farm Bureau Life Insurance Company at its home
office at 5400 University Avenue, West Des Moines, Iowa 50266-5997, effective as
of the date of issue of this policy.
/s/ Edward M. Wiederstein /s/ Richard D. Harris
President Secretary
Farm Bureau Life Insurance Company
5400 University Avenue
West Des Moines, Iowa 50266-5997
[LOGO]
<PAGE>
This policy is a legal contract between the owner and Farm Bureau Life Insurance
Company.
READ YOUR POLICY CAREFULLY
INDEX OF MAJOR POLICY PROVISIONS
POLICY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3
Insured; Insuring Age; Sex; Policy Number; Policy Date; Owner(s); Date of Issue;
Death Benefit Option; Maturity Date; Specified Amount at Issue; Schedule of
Forms and Premiums; Schedule of Current Charges; Schedule of Current Surrender
Charges.
TABLE OF GUARANTEED MAXIMUM MONTHLY INSURANCE RATES PER $1000. . . . . Page 6
SPECIFIED AMOUNT FACTORS . . . . . . . . . . . . . . . . . . . . . . . Page 7
SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . Page 8
1.1 You or Your; 1.2 Age; 1.3 Net Accumulated Value; 1.4 Age; 1.5 Attained Age;
1.6 Business Day; 1.7 Declared Interest Option; 1.8 Eligible for Waiver of
Surrender Charge; 1.9 Fund; 1.10 General Account; 1.11 Home Office; 1.12 Monthly
Deduction Day; 1.13 Net Premium; 1.14 Partial Withdrawal Fee; 1.15 Policy
Anniversary; 1.16 Policy Date; 1.17 Policy Year; 1.18 Premium Expense Charge
1.19 Qualified Physician; 1.20 Qualified Nursing Care Center; 1.21 SEC; 1.22
Surrender Charge; 1.23 Surrender Value; 1.24 Net Surrender Value; 1.25 Valuation
Period; 1.26 Variable Account; 1.27 We, Our, Us or the Company.
SECTION 2 - THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . Page 9
2.1 Death Proceeds 2.2 Death Benefit Options; 2.3 Contract; 2.4 Modification;
2.5 Incontestable Clause; 2.6 Misstatement of Age or Sex; 2.7 Suicide; 2.8
Return of Policy and Policy Settlement; 2.9 Maturity Proceeds; 2.10 Termination;
2-11 Non-Participation.
SECTION 3 - OWNERSHIP AND BENEFICIARIES. . . . . . . . . . . . . . . . Page 11
3.1 Ownership; 3.2 Beneficiary; 3.3 Change of Owner or Beneficiary; 3.4
Assignment.
SECTION 4 - PREMIUMS AND REINSTATEMENT . . . . . . . . . . . . . . . . Page 11
4.1 Premium Payment; 4.2 Payment Frequency; 4.3 Grace Period; 4.4 Reinstatement;
4.5 Unscheduled Premiums; 4.6 Premium Limitations; 4.7 Premium Application; 4.8
Allocation of Premium.
SECTION 5 - POLICY CHANGE. . . . . . . . . . . . . . . . . . . . . . . Page 12
5.1 Change of Specified Amount; 5.2 Specified Amount Decrease; 5.3 Specified
Amount Increase; 5.4 Change of Death Benefit Option; 5.5 Life Insurance
Qualification.
SECTION 6 - VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . Page 13
6.1 Variable Account; 6.2 Subaccounts; 6.3 Fund Portfolios; 6.4 Transfers; 6.5
Special Transfer Privilege.
SECTION 7 - ACCUMULATED VALUE BENEFITS . . . . . . . . . . . . . . . . Page 15
7.1 Accumulated Value Determination; 7.2 Net Accumulated Value Determination;
7.3 Surrender Value; 7.4 Net Surrender Value; 7.5 Variable Accumulated Value;
7.6 Account Units; 7.7 Unit Value; 7.8 Declared Interest Option Accumulated
Value; 7.9 Declared Interest Option Interest; 7.10 Monthly Deduction; 7.11 Cost
of Insurance; 7.12 Cost of Insurance Rate; 7.13 Basis of Values; 7.14 Surrender;
7.15 Waiver of Surrender Charge; 7.16 Partial Withdrawal; 7.17 Use of Payment
Option; 7.18 Delay of Payment; 7.19 Continuance of Insurance; 7.20 Annual
Report.
SECTION 8 - POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . Page 19
8.1 Cash Loan; 8.2 Loan Value; 8.3 Loan Interest; 8.4 Loan Allocation; 8.5 Loan
Repayment.
SECTION 9 - PAYMENT OF PROCEEDS . . . . . . . . . . . . . . . . . . . Page 20
9.1 Choice of Options; 9.2 Payment Options; 9.3 Interest and Mortality; 9.4
Requirements; 9.5 Effective Date; 9.6 Death of Payee; 9.7 Withdrawal of
Proceeds; 9.8 Claims of Creditors.
PAYMENT OPTION TABLES . . . . . . . . . . . . . . . . . . . . . . . . Page 22
Any additional benefits and endorsements which apply to this policy are listed
on page 3 and are described in the forms which follow page 22 of this policy.
<PAGE>
POLICY DATA
Insured [John Doe]
Insuring Age [35]
Sex [Male]
Policy Number [23456789]
Policy Date [07-01-1998]
Owner(s) [John Doe]
Date of Issue [07-01-1998]
Death Benefit Option [Option A]
Maturity Date [07-01-2078]
Specified Amount at Issue [$1,000,000.00]
Reserve Interest Rate [4.00]
Summary of Current Specified Amount
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Description Specified Amount Effective Date Premium Class
[AT ISSUE $1,000,000.00 07-01-1998 NON-TOBACCO]
(will show if rated)
Schedule of Forms and Premiums
<CAPTION>
<S> <C> <C> <C> <C>
Current
Original Target
Form No. Description Amount or No. of Units Effective Date Premium
[434-114(06-98) Non-Par Flexible $100,000,000.00 07-01-1998 $XXX.XX]
Premium Variable Life
[434-085(06-98) Living Benefit
</TABLE>
3
<PAGE>
POLICY DATA
Schedule of Current Charges
Premium Expense Charge [7% of each premium up to Target Premium]
[2% of each premium over Target Premium]
Policy Expense Charge [$5.00 per month]
First Year Administrative Charge [$5.00 per month, plus
(applies to the first 12 monthly $0.05 per $1,000 of specified amount]
deductions following issue and
the first 12 months following
any increase in specified amount)
Partial Withdrawal Fee [$25 per withdrawal]
Transfer Charge [$25 per transfer]
Mortality and Expense Risk [0.0024548% of the variable cash value per
Charge day (equivalent to 0.90% per year)]
Monthly Deduction Day [20th of each month]
Policy Loan Interest Rate Adjustable Loan Rate (as described
in Section 8.3 of your policy)
SCHEDULE OF INVESTMENT OPTIONS
General Account The general assets of Farm Bureau Life Insurance
Company
Separate Account(s) [Farm Bureau Life Variable Account II]
Subaccounts Fund
[A Subaccount Investment Option A
B Subaccount Investment Option B
C Subaccount Investment Option C
D Subaccount Investment Option D
E Subaccount Investment Option E
F Subaccount Investment Option F
G Subaccount Investment Option G
H Subaccount Investment Option H
I Subaccount Investment Option I
J Subaccount Investment Option J
K Subaccount Investment Option K
L Subaccount Investment Option L
M Subaccount Investment Option M
N Subaccount Investment Option N
O Subaccount Investment Option 0]
Net premiums will be allocated to the subaccounts or the declared interest
option in accordance with the net premium allocation percentages shown in the
application or in the most recent written instructions of the owner. For a full
description of the Separate Account and the designated subaccounts, please refer
to the current prospectus.
Form Number 434-114(06-98)
Policy Number 12345678
4
<PAGE>
POLICY DATA
Schedule of Current Surrender Charges
SURRENDER DATE SURRENDER CHARGE
[January 1, 1998-December 31, 1998 $XXXXX
January 1, 1999-December 31, 1999 $XXXXX
January 1, 2000-December 31, 2000 $XXXXX
January 1, 2001-December 21, 2001 $XXXXX
January 1, 2002-December 21, 2002 $XXXXX
January 1, 2003-December 21, 2003 $XXXXX
January 1, 2004-December 21, 2004 $XXXXX
January 1, 2005-December 21, 2005 $XXXXX
January 1, 2006 December 21, 2006 $XXXXX
January 1, 2007-December 21, 2007 $XXXXX
January 1, 2008-December 21, 2008 $00.00]
Form Number 434-114(06-98)
Policy Number 12345678
5
<PAGE>
POLICY DATA
TABLE OF GUARANTEED MAXIMUM MONTHLY INSURANCE RATES
PER $1,000 FOR TOBACCO AND NON-TOBACCO RATE CLASSES
Tobacco Non-Tobacco
------- -----------
Attained Male Female Male Female
Age Rate Rate Rate Rate
0 0.08584 0.07000
1 0.08584 0.07000
2 0.08251 0.06667
3 0.08084 0.06500
4 0.07751 0.06417
5 0.07334 0.06250
6 0.06917 0.06084
7 0.06500 0.05917
8 0.06250 0.05834
9 0.06167 0.05750
10 0.06250 0.05667
11 0.06750 0.05834
12 0.07667 0.06084
13 0.08917 0.06417
14 0.10334 0.06834
15 0.11335 0.07167
16 0.12335 0.07501
17 0.13085 0.07751
18 0.18420 0.09251 0.13585 0.08001
19 0.19004 0.09501 0.13919 0.08251
20 0.19337 0.09751 0.14002 0.08417
21 0.19337 0.09918 0.13835 0.08584
22 0.19004 0.10168 0.13585 0.08667
23 0.18670 0.10418 0.13252 0.08834
24 0.18170 0.10668 0.12918 0.09001
25 0.17586 0.10918 0.12502 0.09168
26 0.17253 0.11335 0.12252 0.09418
27 0.17086 0.11668 0.12085 0.09584
28 0.17086 0.12085 0.12001 0.09834
29 0.17336 0.12585 0.12001 0.10168
30 0.17753 0.13168 0.12085 0.10418
31 0.18337 0.13669 0.12335 0.10751
32 0.19087 0.14252 0.12668 0.11085
33 0.20087 0.15002 0.13168 0.11501
34 0.21255 0.15836 0.13752 0.12001
35 0.22672 0.16753 0.14419 0.12585
36 0.24339 0.18170 0.15169 0.13418
37 0.26424 0.19837 0.16169 0.14419
38 0.28758 0.21755 0.17253 0.15502
39 0.31427 0.23839 0.18420 0.16669
40 0.34512 0.26340 0.19837 0.18087
41 0.37848 0.29008 0.21338 0.19587
42 0.41517 0.31677 0.22922 0.21088
43 0.45521 0.34345 0.24673 0.22588
44 0.49942 0.37014 0.26590 0.24089
45 0.54613 0.39849 0.28758 0.25757
46 0.59452 0.42768 0.31093 0.27508
47 0.64709 0.45771 0.33595 0.29425
48 0.70383 0.49024 0.36347 0.31427
49 0.76559 0.52611 0.39349 0.33678
50 0.83403 0.56449 0.42768 0.36180
51 0.91166 0.60537 0.46688 0.38932
52 0.99933 0.65209 0.51193 0.42101
53 1.09871 0.70383 0.56365 0.45604
54 1.20729 0.75641 0.62122 0.49191
55 1.32342 0.81066 0.68547 0.53028
56 1.44626 0.86408 0.75557 0.56866
57 1.57581 0.91417 0.82985 0.60620
58 1.71209 0.96343 0.91250 0.64375
59 1.85845 1.01603 1.00518 0.68630
60 2.02158 1.07866 1.10873 0.73638
61 2.20569 1.15717 1.22400 0.79814
62 2.41331 1.25825 1.35684 0.87493
63 2.64531 1.38107 1.50727 0.96927
64 2.89921 1.51813 1.67447 1.07532
65 3.16834 1.66276 1.85761 1.18975
66 3.45020 1.80994 2.05588 1.30838
67 3.74229 1.95214 2.26847 1.42954
68 4.04883 2.09605 2.49957 1.55491
69 4.38161 2.25256 2.75591 1.69453
70 4.74911 2.43759 3.04592 1.85845
71 5.16235 2.67212 3.37720 2.05839
72 5.62985 2.95957 3.75992 2.30363
73 6.14841 3.30170 4.19334 2.59756
74 6.71732 3.69191 4.67004 2.93610
75 7.32578 4.11856 5.18003 3.31428
76 7.94851 4.57248 5.71919 3.72382
77 8.57456 5.04701 6.28340 4.16309
78 9.20818 5.54895 6.87612 4.63892
79 9.87149 6.09610 7.51607 5.16656
80 10.58674 6.70972 8.22375 5.76724
81 11.37459 7.40696 9.01810 6.45895
82 12.24906 8.20087 9.91569 7.25729
83 13.19603 9.11907 10.91280 8.15937
84 14.18421 10.11631 11.99040 9.15556
85 15.18033 11.17773 13.12418 10.23537
86 16.16034 12.29517 14.29994 11.39164
87 17.16810 13.45788 15.49991 12.62319
88 18.22020 14.67216 16.71910 13.93142
89 19.26842 15.93752 17.97489 15.32721
90 20.32834 17.34402 19.28574 16.82248
91 21.43307 18.86254 20.68243 18.45266
92 22.71710 20.55222 22.21791 20.28063
93 24.36888 22.54368 24.04369 22.43826
94 26.62992 25.22305 26.50346 25.22305
95 30.20740 29.24956 30.20740 29.24956
96 36.35803 35.72205 36.35803 35.72205
97 47.21180 46.86829 47.21180 46.86829
98 66.20701 66.09429 66.20701 66.09249
99-114 90.90909 90.90909 90.90909 90.90909
6
<PAGE>
POLICY DATA
SPECIFIED AMOUNT FACTORS
Attained Attained Attained
Age At Date Age At Date Age At Date
of Death Factor of Death Factor of Death Factor
0-40 2.50 59 1.34 78 1.05
41 2.43 60 1.30 79 1.05
42 2.36 61 1.28 80 1.05
43 2.29 62 1.26 81 1.05
44 2.22 63 1.24 82 1.05
45 2.15 64 1.22 83 1.05
46 2.09 65 1.20 84 1.05
47 2.03 66 1.19 85 1.05
48 1.97 67 1.18 86 1.05
49 1.91 68 1.17 87 1.05
50 1.85 69 1.16 88 1.05
51 1.78 70 1.15 89 1.05
52 1.71 71 1.13 90 1.05
53 1.64 72 1.11 91 1.04
54 1.57 73 1.09 92 1.03
55 1.50 74 1.07 93 1.02
56 1.46 75 1.05 94 1.01
57 1.42 76 1.05 95-114 1.01
58 1.38 77 1.05 115 1.00
7
<PAGE>
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SECTION 1 - DEFINITIONS
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1.1 YOU OR YOUR
means the person whose life is insured.
1.2 ACCUMULATED VALUE
means the policy's accumulated value which is calculated as:
a) the variable accumulated value, which is defined in section 7.5; plus
b) the declared interest option accumulated value which is defined in
section 7.8.
1.3 NET ACCUMULATED VALUE
means the policy's net accumulated value which is calculated as:
a) the accumulated value; less
b) the amount of any policy loan; less
c) any policy loan interest due; plus
d) any unearned loan interest.
1.4 AGE
means age at the last birthday.
1.5 ATTAINED AGE means your age at issue plus the number of policy years
since the policy date.
1.6 BUSINESS DAY
means a day when the New York Stock Exchange is open for trading, except for the
day after Thanksgiving, any other designated Company holidays, and any day the
home office is closed because of a weather-related or comparable type of
emergency. Assets are valued at the close of the business day.
1.7 DECLARED INTEREST OPTION
means an option pursuant to which accumulated value accrues interest at a
guaranteed minimum rate. The declared interest option is supported by the
general account.
1.8 ELIGIBLE FOR WAIVER OF SURRENDER CHARGE
means the insured:
a) is diagnosed by a Qualified Physician as having a terminal illness. A
terminal illness is any disease or medical condition which the Qualified
Physician expects will result in death within one year; or
b) stays in a Qualified Nursing Care Center for 90 days.
1.9 FUND
means the investment options shown on the policy data page. The corresponding
funds are registered with the SEC under the Investment Company Act of 1940 as
open-end diversified management investment companies or unit investment trusts.
1.10 GENERAL ACCOUNT
means all our assets other than those allocated to the variable account or any
other separate account. We have complete ownership and control of the assets of
the general account.
1.11 HOME OFFICE
means Farm Bureau Life Insurance Company at 5400 University Avenue, West Des
Moines, Iowa, 50266-5997.
1.12 MONTHLY DEDUCTION DAY
means the same date in each month as the policy date. The charges for this
policy are deducted on the business day on or next following the monthly
deduction day.
1.13 NET PREMIUM
means the amount of premium remaining after the premium expense charge has been
deducted. This amount will be allocated among the subaccounts of the variable
account and the declared interest option according to the allocations shown on
the policy data page or the most recent instructions received from the owner.
1.14 PARTIAL WITHDRAWAL FEE
means a fee of $25 that is applied at the time of any partial withdrawal.
1.15 POLICY ANNIVERSARY
means the same date in each year as the policy date.
1.16 POLICY DATE
means the policy date shown on the policy data page. This date is used to
determine policy years and any policy anniversaries.
1.17 POLICY YEAR
means the 12-month period that begins on the policy date or on a policy
anniversary.
1.18 PREMIUM EXPENSE CHARGE
means the premium expense charge shown on the policy data page. This amount may
go up or down, but is guaranteed to never exceed 7 percent.
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1.19 QUALIFIED PHYSICIAN:
means a licensed, medical practitioner performing within the scope of his/her
license. Such person must be someone other than you, the insured, or a member of
the immediate family of either you or the insured.
1.20 QUALIFIED NURSING CARE CENTER:
means a long term care center that is licensed to operate according to the laws
of their location. The following are qualified nursing care centers:
a) Skilled Nursing Center - means a center:
i) That provides skilled nursing care supervised by a licensed
physician;
ii) That provides 24-hour nursing care by, or supervised by, an
R.N.; and
iii) That keeps daily medical record of each patient.
b) Intermediate Care Center - means a center:
i) That provides 24-hour nursing care by, or supervised by an R.N.
or an L.P.N.; and
II) That keeps a daily medical record of each patient.
c) Hospital - means a center:
i) That operates for the care and treatment of sick or injured
persons as inpatients;
ii) That provides 24-hour nursing care by, or supervised by, an R.N.;
iii) That is supervised by a staff of licensed physicians; and
iv) That has medical, diagnostic, and major surgery capabilities or
access to such capabilities.
Qualified Nursing Care Center does not include:
a) Drug or alcohol treatment centers;
b) Home for the aged or mentally ill, community living centers, or places that
primarily provide domiciliary, residency or retirement care;
c) Places owned or operated by a member of the annuitant's immediate family.
1.21 SEC
means the Securities and Exchange Commission, a U.S. government agency.
1.22 SURRENDER CHARGE
means a fee that is applied at the time of a surrender. The surrender charge
will be the amount shown on the policy data page.
A specified amount increase has its own surrender charge period which begins on
the date of the increase. If a specified amount increase is made, the surrender
charges will be a composite of all charges which apply for each year.
1.23 SURRENDER VALUE
means the policy's surrender value which is calculated as:
a) the accumulated value; minus
b) the surrender charge.
1.24 NET SURRENDER VALUE
means the policy's net surrender value which is calculated as:
a) the surrender value; minus
b) any policy loan; minus
c) any policy loan interest due; plus
d) any unearned loan interest.
1.25 VALUATION PERIOD
means the period between the close of business on a business day and the close
of business on the next business day.
1.26 VARIABLE ACCOUNT
means the Separate Account shown on the policy data page. It is a unit
investment trust registered with the SEC under the Investment Company Act of
1940.
1.27 WE, OUR, US OR THE COMPANY
means the Farm Bureau Life Insurance Company.
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SECTION 2 - THE CONTRACT
- --------------------------------------------------------------------------------
2.1 DEATH PROCEEDS
We will pay the death proceeds to the beneficiary:
a) within seven days after receipt by us of due proof of your death;
b) if the policy is in force on the date of your death; and
c) subject to the terms and conditions of this policy.
The death proceeds will be the sum of:
a) the death benefit; and
b) any premiums paid after the date of death; and
c) any unearned policy loan interest on the date of death;
less:
a) any policy loan; and
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<PAGE>
b) any policy loan interest due;
plus any interest credited on this amount from the date of death to the date
of payment, the rate to be set by us but not less than 3% per year or any
rate required by law.
2.2 DEATH BENEFIT OPTIONS
The death benefit option in effect for this policy is shown on the policy
data page and is one of the following:
Option A -- The death benefit will be the greater of a) or b) where:
a) is the sum of the specified amount shown on the policy data page and the
accumulated value; and
b) is the accumulated value multiplied by the specified amount factor from the
table on the policy data page for your attained age.
Option B -- The death benefit will be the greater of a) or b) where:
a) is the specified amount shown on the policy data page; and
b) is the accumulated value multiplied by the specified amount factor from the
table on the policy data page for your attained age.
All values are determined as of the end of the business day on or next following
the date of death.
2.3 CONTRACT
This policy is a legal contract. We issue this policy in consideration of the
first premium and the statements in the application. The entire contract
consists of:
a) this basic policy;
b) any endorsements or additional benefit riders;
c) the attached copy of your application; and
d) any amendments, supplemental applications or other attached papers.
We rely on statements made in the application for the policy. These statements
in the absence of fraud are deemed representations and not warranties. No
statement will void this policy or be used in defense of a claim unless:
a) it is contained in the application; and
b) such application is attached to this policy.
2.4 MODIFICATION
No one can change any part of this policy except the owner and one of our
officers. Both must agree to a change, and it must be in writing. No agent may
change this policy or waive any of its provisions.
2.5 INCONTESTABLE CLAUSE
We will not contest payment of the death benefit for any reason other than fraud
after this policy has been in force during your lifetime for two years from the
date of issue shown on the policy data page.
Any requested increase in the specified amount will be incontestable only after
such increase has been in force during your lifetime for two years from the
effective date of such increase.
2.6 MISSTATEMENT OF AGE OR SEX
We have the right to correct benefits for misstated age or sex. In such an
event, benefits will be the amount the premium actually paid would have bought
at the correct age or sex.
2.7 SUICIDE
If, within one year of the policy date, you die by suicide, whether sane or
insane, our liability is limited to the premium paid plus any unearned loan
interest at the date of death, less any policy loan, any loan interest due and
any partial withdrawals.
Any increase in death benefits resulting from a requested increase in specified
amount will not be paid if the insured dies by suicide, while sane or insane,
within one year of the date of such increase. Instead, we will return to the
owner an amount equal to the cost of insurance for such increase in specified
amount.
2.8 RETURN OF POLICY AND POLICY SETTLEMENT
We reserve the right to have this policy sent to us for any:
a) modification; b) death settlement; c) surrender; d) assignment; e) change
of owner or beneficiary; f) election; or g) exercise of any policy privilege.
We will send a payment contract to replace this policy if any payment option is
chosen. All sums to be paid by us under this policy are considered paid when
tendered by us at our home office.
2.9 MATURITY PROCEEDS
If you are living on the maturity date and this policy is in force, we will pay
the proceeds to the owner. Such proceeds will be:
a) the accumulated value; less
b) any policy loan.
The maturity date will be your attained age 115.
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<PAGE>
All values are determined as of the end of the business day on or next following
the maturity date.
2.10 TERMINATION
This policy ends when any one of the following events occurs:
a) the owner requests that the policy be canceled;
b) you die;
c) the policy matures;
d) the policy is surrendered; or
e) the grace period ends without payment of the premium.
2.11 NON-PARTICIPATION
This policy does not share in the Company's surplus or profits.
- --------------------------------------------------------------------------------
SECTION 3 - OWNERSHIP AND BENEFICIARIES
- --------------------------------------------------------------------------------
3.1 OWNERSHIP
The original owner of this policy is shown on the policy data page. Ownership of
the policy may change according to the provisions indicated in the original
application or by a subsequent endorsement to the policy.
3.2 BENEFICIARY
Beneficiaries are as named in the application, unless changed by the owner. The
interests of any beneficiary in a class who dies before you will pass to any
survivors of the class, unless the policy provides otherwise. Secondary
beneficiaries will have the right to receive the proceeds only if no primary
beneficiary survives. If no beneficiary survives you, we will pay the proceeds
to the owner or the owner's estate.
In finding and identifying beneficiaries we may rely on sworn statements, other
facts, or evidence we deem satisfactory. Any benefits we pay based on such
information will be a valid discharge of our duty up to the amount paid.
3.3 CHANGE OF OWNER OR BENEFICIARY
While you live, a change of owner or beneficiary can be made at any time,
subject to the following rules:
a) the change must be in writing on a form acceptable to us;
b) it must be signed by the owner;
c) the form must be sent to our home office and recorded by us; and
d) the change will take effect on the date signed, but it will not apply to
any payment or action by us before we receive the form.
3.4 ASSIGNMENT
No assignment of this policy will bind us unless:
a) it is in writing on a form acceptable to us;
b) signed by the owner; and
c) received by us at our home office.
We will not be responsible for the validity of an assignment.
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SECTION 4 - PREMIUMS AND REINSTATEMENT
- --------------------------------------------------------------------------------
4.1 PREMIUM PAYMENT
Premium payments are flexible as to both timing and amount. Each premium is to
be paid at our home office.
4.2 PAYMENT FREQUENCY
The first premium is due on or prior to the policy date. We will send periodic
reminder notices to the owner upon request. The minimum amount for which such
notice will be sent will be $100. A reminder notice may be sent for different
periods, which may be 12, 6, 3 or 1 month intervals. The reminder notice period
may be changed upon request.
4.3 GRACE PERIOD
A grace period of 61 days will be allowed for payment of a premium that, when
reduced by the premium expense charge, is at least equal to three times the
monthly deduction charge due on such date. The grace period applies:
a) During the first three policy years, if the net accumulated value is not
large enough on any monthly deduction day to cover the monthly deduction
due; and
b) During the first three policy years, if you have taken out a policy loan
and during this period, the net surrender value is not large enough to
cover the monthly deduction due; and
c) During subsequent years, if the net surrender value is not large enough on
any monthly deduction day to cover the monthly deduction due.
The grace period begins on the date we send the owner of record written notice
of the required
11
<PAGE>
payment. Such premium shall be due on such monthly deduction day and if not
received by us within the grace period, all coverage under this policy will
terminate without value at the end of the 61-day period. If a claim by
death during the grace period becomes payable under the policy, any due and
unpaid monthly deductions will be deducted from the proceeds.
4.4 REINSTATEMENT
Prior to the maturity date, a lapsed policy which has not been surrendered for
its accumulated value may be reinstated at any time within 5 years of the
monthly deduction day immediately preceding the grace period which expired
without payment of the required premium, subject to the following rules:
a) You and the owner must send a written request to us.
b) You must provide proof of your good health and insurability satisfactory to
us.
c) A premium sufficient to keep the policy in force for three months must be
paid.
d) The owner must pay a charge equal to the cost of insurance for the coverage
provided during the 61-day grace period which was in effect prior to the
termination of this policy.
e) The effective date of the reinstated policy will be the monthly deduction
day on or next following the date we approve reinstatement.
4.5 UNSCHEDULED PREMIUMS
Unscheduled premium payments of at least $100 may be made at any time prior to
the maturity date. The Company may, in its discretion, waive the $100 minimum
requirements. The Company reserves the right to limit the number and amount of
unscheduled premium payments.
4.6 PREMIUM LIMITATIONS
The company reserves the right to limit the number and amount of premium
payments in order to maintain this policy's qualifications under federal tax
law. We will refund any portion of a premium payment that would cause the policy
to lose such qualification.
4.7 PREMIUM APPLICATION
While any policy loan is outstanding, unless the owner requests otherwise,
premium payments will be applied as a payment to reduce the outstanding balance
of the loan, When such loan has been repaid, the balance of any premium payment
remaining after payment of the loan, plus any subsequent payments, will be
allocated as described in the following provision.
4.8 ALLOCATION OF PREMIUM
The owner will determine the percentage of net premium that will be allocated to
each subaccount of the variable account and to the declared interest option. The
owner may choose to allocate all the net premium, a percentage or nothing to a
particular subaccount or to the declared interest option. Any allocation must be
for at least 10% of the net premium. A fractional percent may not be chosen.
Net premiums will initially be allocated to the declared interest option. When
we receive a notice signed by the owner that the policy has been received and
accepted, we will transfer part or all of the accumulated value in the declared
interest option to the subaccounts in accordance with the net premium allocation
percentages shown in the application. For any premium received after we receive
the signed form, the net premium will be allocated in accordance with the net
premium allocation percentages shown in the application or the most recent
written instructions of the owner.
The owner may change the allocation for future net premiums at any time, subject
to the following rules:
a) the policy must be in force;
b) there must be a net accumulated value;
c) the change must be in writing on a form acceptable to us;
d) the form must be signed by the owner; and
e) the change will take effect on the business day on or next following the
date we receive the signed form at our home office.
- --------------------------------------------------------------------------------
SECTION 5 - POLICY CHANGE
- --------------------------------------------------------------------------------
5.1 CHANGE OF SPECIFIED AMOUNT
The owner may change the specified amount at any time after the policy has been
in effect for one policy year, subject to the following rules:
a) The change must be in writing on a form acceptable to us.
b) It must be signed by the owner.
c) The change will take effect on the monthly deduction day coinciding with or
next following the date the request is approved by us.
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<PAGE>
d) We will issue a new the policy data page for any change in specified
amount.
5.2 SPECIFIED AMOUNT DECREASE
Any decrease in specified amount will reduce such amount in the following order:
a) the specified amount provided by the most recent increase will be reduced;
then
b) the next most recent increases will be reduced in succession; and
c) the initial specified amount will be reduced last.
A specified amount decrease will not reduce the surrender charge.
The total specified amount which remains in force after a requested decrease may
not be less than the minimum specified amount in effect for the policy on the
date of decrease, as published by us.
5.3 SPECIFIED AMOUNT INCREASE
In addition to the rules for change in specified amount, an increase in
specified amount is subject to the following:
a) proof of insurability acceptable to us; and
b) payment of the first month's cost of insurance or sufficient accumulated
value for deduction of such cost of insurance.
5.4 CHANGE OF DEATH BENEFIT OPTION
The owner may request to change the death benefit option. The change will take
effect on the monthly deduction day coinciding with or next following the date
we approve the request.
If Option A is changed to Option B, the current specified amount will not
change.
If Option B is changed to Option A, the current specified amount will be reduced
by an amount equal to the accumulated value on the effective date of the change.
5.5 LIFE INSURANCE QUALIFICATION
If following a requested change of specified amount or a change of death benefit
option, this policy would no longer qualify as life insurance under federal tax
law, we will limit the change to an amount that would maintain such
qualification. The Company reserves the right to change the policy, in the event
of future changes in the federal tax law, to the extent required to maintain the
policy's qualification as life insurance under federal tax law.
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SECTION 6 - VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
6.1 VARIABLE ACCOUNT
We own the assets of the variable account. We will value the assets of the
variable account each business day. The assets of such account will be kept
separate from the assets of our general account and any other separate accounts.
Income, and realized and unrealized gains or losses from assets in the variable
account will be credited to or charged against such account without regard to
our other income, gains or losses.
That portion of the assets of the variable account which equals the reserves and
other policy liabilities of the policies which are supported by the variable
account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our general account any assets of the
variable account which are in excess of such reserves and other policy
liabilities.
While the variable account is registered with the SEC and thereby subject to SEC
rules and regulations, it is also subject to the laws of the State of Iowa which
regulate the operations of insurance companies incorporated in Iowa. The
investment policy of the variable account will not be changed without the
approval of the Insurance Commissioner of the State of Iowa. The approval
process is on file with the insurance commissioner of the state in which this
policy was delivered.
We also reserve the right to transfer assets of the variable account, which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If this type of transfer is made, the term
"variable account," as used in this policy, shall then mean the variable account
to which the assets were transferred.
When permitted by law, we also reserve the right to:
a) deregister the variable account under the Investment Company Act of 1940;
b) manage the variable account under the direction of a committee;
c) restrict or eliminate any voting rights of
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<PAGE>
owners, or other persons who have voting rights as to the variable account;
and
d) combine the variable account with other separate accounts.
6.2 SUBACCOUNTS
The variable account is divided into subaccounts. The subaccounts are listed on
the policy data page. Subject to obtaining any approvals or consents required by
applicable law, we reserve the right to eliminate or combine any subaccounts and
the right to transfer the assets of one or more subaccounts to any other
subaccount. We also reserve the right to add new subaccounts and make such
subaccounts available to any class or series of policies as we deem appropriate.
Each new subaccount would invest in a new investment option of the Fund, or in
shares of another investment company. The owner will determine the percentage of
net premium that will be allocated to each subaccount in accordance with the
allocation of premium provision.
6.3 FUND INVESTMENT OPTIONS
The fund has several investment options each of which corresponds to one of the
subaccounts of the variable account. The investment options are listed on the
policy data page. Net premiums allocated to a subaccount will automatically be
invested in the fund investment option associated with that subaccount. The
owner will share only in the income, gains or losses of the investment option(s)
to which net premiums have been allocated through the subaccounts.
We have the right, subject to compliance with any applicable laws, to make:
a) additions to;
b) deletions from; or
c) substitutions for
the shares of a fund investment option that are held by the variable account
or that the account may purchase.
We also reserve the right to dispose of the shares of a investment option of the
fund listed on the policy data page and to substitute shares of another
investment option of such fund or another mutual fund investment option, if:
a) the shares of the investment option are no longer available for investment;
or
b) if in our judgment further investment in the investment option should
become inappropriate in view of the purposes of the variable account.
In the event of any substitution or change, we may, by appropriate endorsement,
make such changes in this and other policies as may be necessary or appropriate
to reflect the substitution or change.
6.4 TRANSFERS
The owner may transfer all or part of the accumulated value among the
subaccounts of the variable account and between the subaccounts and the declared
interest option, subject to the following rules:
a) The change must be in writing on a form acceptable to us.
b) The form must be signed by the owner.
c) The transfer will take effect as of the end of the valuation period during
which we receive the signed form at our Home Office.
d) The owner may transfer amounts among the subaccounts of the variable
account an unlimited number of times in a policy year.
e) The owner may transfer amounts between the declared interest option and the
variable account only once in a policy year.
f) The first transfer in each policy year will be made without a transfer
charge. Thereafter, each time amounts are transferred a transfer charge
will be imposed. This transfer charge is shown on the policy data page.
g) The accumulated value on the date of the transfer will not be affected by
the transfer except to the extent of the transfer charge. Unless paid in
cash, the transfer charge will be deducted on a pro rata basis from the
declared interest option and/or the subaccounts to which the transfer is
made.
h) The owner must transfer at least:
(1) a total of $100; or
(2) the total accumulated value in the subaccount or the total accumulated
value in the declared interest option less any policy loan, if the
total amount transferred is less than $100.
The following additional rules apply to transfers from the declared interest
option:
a) The accumulated value in the declared interest option after a transfer from
such option must at
14
<PAGE>
least equal the amount of all policy loans.
b) No more than 50% of the net accumulated value in the declared interest
option may be transferred unless the balance in the declared interest
option after the transfer, would be less than $1,000. If the balance in
the declared interest option would fall below $1,000, the full net
accumulated value in the declared interest option may be transferred.
6.5 SPECIAL TRANSFER PRIVILEGE
The owner may transfer, at any time, all of the amounts in the subaccounts to
the declared interest option. This policy will then become one in which the
benefits do not vary with the investment performance of the variable account.
The owner must tell us this special transfer privilege is being exercised. We
will then waive the transfer charge. The owner may exercise this special
transfer privilege once per policy year.
If the owner exercises this special transfer privilege, we will automatically
credit all future premium payments to the declared interest option until the
owner requests a change in the allocation. At the time of the transfer, there is
no effect on the policy's death benefit, accumulated value, specified amount, or
net amount at risk, or on your premium class or attained age.
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SECTION 7 - ACCUMULATED VALUE
BENEFITS
- --------------------------------------------------------------------------------
7.1 ACCUMULATED VALUE DETERMINATION
The accumulated value in the policy is equal to:
a) the variable accumulated value; plus
b) the declared interest option accumulated value.
7.2 NET ACCUMULATED VALUE DETERMINATION
The net accumulated value of this policy will be:
a) the accumulated value; less
b) the amount of any policy loan; less
c) any policy loan interest due; plus
d) any unearned loan interest.
7.3 SURRENDER VALUE
The surrender value of this policy will be:
a) the accumulated value; minus
b) the surrender charge.
7.4 NET SURRENDER VALUE
The net surrender value of this policy will be:
a) the surrender value; minus
b) any policy loan; minus
c) any policy loan interest due; plus
d) any unearned loan interest.
7.5 VARIABLE ACCUMULATED VALUE
On the business day on or next following the day we receive notice that the
owner has received and accepted the policy, the variable accumulated value is
the total amount of net premium, if any, credited to the subaccounts of the
variable account, minus the monthly deduction applicable to those subaccounts if
the net premium is allocated on a monthly deduction day. After such date, the
policy's variable accumulated value is equal to the sum of the policy's
accumulated value in each subaccount. The accumulated value in a subaccount is
equal to a) multiplied by b) where:
a) is the current number of account units; and
b) is the current unit value.
The variable accumulated value will vary from business day to business day
reflecting changes in a) and b) above.
7.6 ACCOUNT UNITS
When transactions are made which affect the variable accumulated value, dollar
amounts are converted to account units. The number of account units for a
transaction is found by dividing the dollar amount of the transaction by the
current unit value.
The number of account units for a subaccount
increases when:
a) net premiums are credited to that subaccount; or
b) transfers from the declared interest option or other subaccounts are
credited to that subaccount.
The number of account units for a subaccount
decreases when:
a) the owner takes out a policy loan from that subaccount;
b) the owner makes a surrender or partial withdrawal from that subaccount;
c) we take a portion of the monthly deduction from that subaccount; or
d) transfers are made from that subaccount to the declared interest option or
other subaccounts.
7.7 UNIT VALUE
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The unit value for each subaccount was set initially at $10.00 when the
subaccounts first purchased fund shares. The unit value for each subsequent
valuation period is calculated by dividing a) by b), where:
a) is:
(1) the net asset value of the net assets of the subaccount at the end of
the preceding valuation period; plus
(2) the investment income and capital gains, realized or unrealized,
credited to the net assets of that subaccount during the valuation
period for which the unit value is being determined; minus
(3) the capital losses, realized or unrealized, charged against those net
assets during the valuation period; minus
(4) any amount charged against the subaccount for taxes, or any amount set
aside during the valuation period by the Company as a provision for
taxes attributable to the operation or maintenance of that subaccount;
minus
(5) the mortality and expense risk charge shown on the policy data page.
This charge may go up or down but will never exceed 0.0028618% of the
daily net assets in that subaccount for each day in the valuation
period. The maximum charge corresponds to a charge of 1.05% per year
of the average daily net assets of the subaccount for mortality and
expense risks.
b) is the number of units outstanding at the end of the preceding valuation
period.
The unit value for a valuation period applies for each day in the period. We
will value the net assets in each subaccount at their fair market value in
accordance with accepted accounting practices and applicable laws and
regulations.
7.8 DECLARED INTEREST OPTION ACCUMULATED VALUE
The declared interest option accumulated value as of the policy date is the net
premium credited to the declared interest option as of that date minus the
monthly deduction applicable to the declared interest option for the first
policy month.
After the policy date, the declared interest option accumulated value is
computed as a) + b) + c) + d) - e) -f), where:
a) is the declared interest option value on the preceding monthly deduction
day plus any interest from the preceding monthly deduction day to the date
of calculation;
b) is the total of net premiums credited to the declared interest option since
the preceding monthly deduction day, plus interest from the date premiums
are credited to the date of calculation;
c) is the total of the transfers from the variable account to the declared
interest option since the preceding monthly deduction day, plus interest
from the date of transfer to the date of calculation;
d) is the total amount transferred from the variable account to the declared
interest option to secure policy loans since the preceding monthly
deduction day, plus interest from the date of transfer to the date of
calculation;
e) is the total of the transfers to the variable account from the declared
interest option since the preceding monthly deduction day, plus interest
from the date of transfer to the date of the calculation; and
f) is the total of surrenders or partial withdrawals from the declared
interest option since the preceding monthly deduction day, plus interest
from the date of surrender to the date of calculation.
If the date of calculation is a monthly deduction day, we also reduce the
declared interest option accumulated value by the applicable monthly deduction
for the policy month following the monthly deduction day.
7.9 DECLARED INTEREST OPTION INTEREST
The minimum interest rate applied to the declared interest option accumulated
value is an effective rate of 4.00% per year. Interest in excess of the minimum
rate may be applied. The amount of the excess interest and the manner in which
it is determined will be set by us.
The interest credited on the portion of the declared interest option accumulated
value which equals any policy loan will be equal to the greater of 4.00% or:
a) the current effective loan interest rate; minus
b) no more than 3.00%.
Interest will be credited to the declared interest
16
<PAGE>
option accumulated value on each monthly deduction day.
7.10 MONTHLY DEDUCTION
The monthly deduction is a charge made each monthly deduction day from the
declared interest option accumulated value and the variable accumulated value on
a proportionate basis as of the close of business on the monthly deduction day.
For the purpose of determining the proportion of the deduction, the declared
interest option accumulated value is reduced by the amount of any policy loans.
We make the deduction from each subaccount of the variable account based on each
subaccount's proportional percentage of the variable accumulated value.
The monthly deduction for a policy month will be computed as a) plus b) plus c)
plus d) plus e), where:
a) is the cost of insurance as described in the cost of insurance provision;
b) is the charge for all additional benefit riders attached to this policy;
c) is the monthly policy expense charge shown on the policy data page. This
amount may go up or down, but is guaranteed never to exceed $7; and
d) is the first year monthly per $1,000 charge shown on the policy data page.
This charge may go up or down, but is guaranteed not to exceed $0.07 per
$1,000.
This charge will be deducted for 12 months following issue of this
policy and during the 12 months following the effective date of an
increase in the specified amount. Should this policy lapse and later be
reinstated, to the extent that the monthly per $1,000 charge was not
deducted for a total of twelve policy months prior to lapse, the charges
will continue to be deducted following reinstatement of the policy until
such charge has been assessed, both before and after the lapse, for a
total of 12 policy months.
e) is the first year monthly policy expense charge shown on the policy data
page. This amount may go up or down, but is guaranteed never to exceed $7
per month.
7.11 COST OF INSURANCE
If the owner chooses death benefit option B, the cost of insurance is computed
as a) multiplied by the result of b) minus c). If death benefit option A is
chosen, the cost of insurance is computed as a) multiplied by b). In either
case:
a) is the cost of insurance rate as described in the cost of insurance rate
provisions, divided by 1000;
b) is the specified amount as described in the death benefit provisions as of
the close of business on the monthly deduction day, divided by 1.0032737;
and
c) is the accumulated value as of the close of business on the monthly
deduction day.
The cost of insurance is determined separately for the initial specified amount
and any increases made later. If the premium class for the initial specified
amount is different from that of any increases, the accumulated value will first
be considered a part of the initial specified amount. If the accumulated value
as of the close of business on the monthly deduction day exceeds the initial
specified amount, it will be considered to be a part of any increase in the
specified amount in the same order as the increases occurred.
7.12 COST OF INSURANCE RATE
The cost of insurance rate is subject to the following rules:
a) The rate for the initial specified amount is based on your sex, premium
class and attained age. For any increase in the specified amount, age will
be determined from your age as of your last birthdate on the effective date
of the increase.
b) The monthly rates will be determined by us based on our expectation as to
future mortality experience.
c) If we change the rates, we will change them for everyone in your premium
class.
d) The monthly guaranteed rates shown on the policy data page are based on the
1980 Commissioners' Standard Ordinary Smoker and Nonsmoker Mortality Table.
The monthly rate will never be more than the rates shown on the policy data
page.
7.13 BASIS OF VALUES
All reserves for the policy are based on the Commissioners' 1980 Standard
Ordinary Smoker and Non-Smoker Mortality Table with interest at the rate shown
on the policy data page.
All of the values are the same or more than the minimums set by the laws of the
state where the policy is delivered. We have filed a detailed
17
<PAGE>
statement of the way these values are determined with the insurance department
in that state. It shows the figures and methods used.
7.14 SURRENDER
While you live and prior to the maturity date, the owner may surrender the
policy subject to the following rules:
a) The request must be in writing to us.
b) The amount of any such surrender may be paid in cash or we will apply
part or all of it under a payment option.
c) We have the right to defer payment of a surrender from the declared
interest option for up to 6 months.
d) A surrender charge may apply. If the surrender charge is not paid in
cash, such charge will be deducted from the amount surrendered.
e) Upon surrender, all insurance in force will terminate.
7.15 WAIVER OF SURRENDER CHARGE
The owner may make a surrender of this policy without incurring a surrender
charge if the insured becomes eligible for waiver of the surrender charge.
The waiver of the surrender charge is subject to the following rules:
a) We must receive a written request on our form signed by the owner.
b) The policy must be in force or not providing benefits under any payment
option.
c) Proof must be provided that the conditions of eligibility requirements for
waiver of the surrender charge have been met, including an attending
physician's statement and any other proof we may require. We reserve
the right to seek a second medical opinion or have an examination
performed at our expense by a physician we choose.
e) The insured must become eligible for waiver of surrender charge after
the first policy year ends.
7.16 PARTIAL WITHDRAWAL
While you live and prior to the maturity date, the owner may obtain a partial
withdrawal of the net accumulated value, subject to the following rules:
a) The amount of any partial withdrawal must be at least $500 and may not
exceed the lesser of:
(1) the net accumulated value less $500; or
(2) 90% of the net accumulated value.
b) The death benefit will be reduced as a result of any partial withdrawal.
c) At the time of the partial withdrawal, if the death benefit option in
effect is:
(1) Option A: there will be no effect on the specified amount.
(2) Option B: the specified amount will be reduced by the amount of
accumulated value surrendered.
d) The specified amount remaining in force after a partial withdrawal may not
be less than the minimum specified amount for the policy in effect on the
date of the partial withdrawal, as published by the Company.
e) The accumulated value will be reduced by the amount of any partial
withdrawal and any partial withdrawal fee. The owner may tell us how to
allocate a partial withdrawal among the subaccounts and the declared
interest option. If the owner does not so instruct, we will allocate
the partial withdrawal among the subaccounts and the declared interest
option in the same proportion that the accumulated value in each of the
subaccounts and the accumulated value of the declared interest option
reduced by any outstanding policy loans bears to the total accumulated
value reduced by any outstanding policy loans on the date we receive
the request.
7.17 USE OF PAYMENT OPTION
If all of the accumulated value is applied under payment option 2, 3, 4 or 5,
the surrender charge will be reduced as follows:
a) if option 3 or 5 is used, the surrender charge will be zero; or
b) if option 2 or 4 is used, the surrender charge will be applied, however,
the surrender charge will be determined by adding the fixed number of years
for which payment will be made to the Surrender Date shown on the Policy
Data Page.
7.18 DELAY OF PAYMENT
Proceeds from surrenders, partial withdrawals, and policy loans will usually
be mailed to the owner within seven days after the owner's signed request is
received in our home office. We will usually mail any death claim proceeds
within seven days after we receive due proof of death. We will usually mail
the maturity proceeds within seven days after the maturity date. We have the
right to delay any payment whenever:
18
<PAGE>
a) the New York Stock Exchange is closed other than on customary weekend and a
holiday closing;
b) trading on the New York Stock Exchange is restricted as determined by
the SEC;
c) the SEC, by order, permits postponement for the protection of policyowners;
d) as a result of an emergency, as determined by the SEC, it is not reasonably
possible to dispose of securities; or
e) it is not reasonably possible to determine the value of the net assets of
the variable account.
We have the right to defer payment which is derived from any amount paid to
us by check or draft until we are satisfied the check or draft has been paid
by the bank on which it is drawn.
We also have the right to delay making a surrender, partial withdrawal, or
policy loan from the declared interest option for up to six months from the
date we receive the owner's request.
7.19 CONTINUANCE OF INSURANCE
The insurance under this policy will continue until the earlier of:
a) the end of any grace period during which a required premium payment is
not made;
b) the date the owner surrenders this policy for its entire net accumulated
value;
c) the date of your death; or
d) the date the policy matures.
This provision will not continue the policy beyond the maturity date or continue
any rider beyond its termination date as specified in the rider.
7.20 ANNUAL REPORT
At least once each year we will send a report, without charge, to the owner
which shows:
a) all premiums paid and charges made since the last report;
b) the current accumulated value including the value in each subaccount and
the declared interest option;
c) any partial withdrawals since the last report;
d) any policy loans; and
c) the current death benefit.
An illustrative report will be sent to the owner upon request. A fee may be
charged for this report.
- --------------------------------------------------------------------------------
SECTION 8 - POLICY LOANS
- --------------------------------------------------------------------------------
8.1 CASH LOAN
The owner may obtain a cash loan at any time on the sole security of this
policy, if:
a) the policy is in force;
b) there is a net surrender value.
We have the right to delay making a policy loan from the declared interest
option for up to six months from the date we receive the owner's request.
8.2 LOAN VALUE
The total of all loans may not exceed 90% of the net surrender value as of the
date of the most recent loan. For any loan that is made we will deduct interest
in advance on the requested loan to the next policy anniversary.
8.3 LOAN INTEREST
The loan interest rate is an annual rate. We may change this rate at the
beginning of each policy year. The annual loan interest is to be paid in advance
on each policy anniversary. Interest not paid when due will be added to the loan
and will bear interest at the same rate. Any change in the interest rate will
apply to any existing or new policy loans on this policy.
The maximum annual loan interest rate will be the higher of:
a) The Published Monthly Average of the Composite Yield on Seasoned Corporate
Bonds as published by Moody's Investors Service, Inc. or any successor
thereto, for the calendar month ending two months before the date on which
the rate is determined; or
b) 5.50%; but it will never exceed the usury rate, if applicable.
If the Monthly Average is no longer published, we will use a substantially
similar average which will be substituted by the insurance supervisory official
of the state in which this policy was delivered.
We will not make a change of less than 0.5% in this policy's loan interest rate.
We will inform you of the loan interest rate at the time a loan is made. Notice
of any loan interest rate change on existing loans will be made in advance of
the policy anniversary on which the change becomes effective.
19
<PAGE>
8.4 LOAN ALLOCATION
When the owner takes out a policy loan, an amount equal to the loan will be
segregated within the declared interest option as security for the loan. Amounts
held as security for the loan will first be allocated to the accumulated value
in the declared interest option. If the accumulated value in the declared
interest option less any existing policy loan is not sufficient to cover the
amount of the policy loan, the balance necessary will be transferred from the
subaccounts on a proportional basis. This transfer is not treated as a transfer
for the purpose of the transfer charge or the limit of one transfer in a policy
year.
A transfer will also be made from the subaccounts on a proportional basis for
any due and unpaid loan interest if the accumulated value in the declared
interest option is not sufficient to cover such interest.
8.5 LOAN REPAYMENT
All or part of any policy loan may be repaid at any time while the policy is
still in force. Loan amounts repaid will be allocated to the declared interest
option. The portion of the accumulated value in the declared interest option
securing the repaid portion of the loan will no longer be segregated within the
declared interest option as security for the loan, but will remain in the
declared interest option until transferred to the subaccounts by the owner.
Any outstanding policy loans will be deducted from the proceeds at death,
maturity or surrender.
- --------------------------------------------------------------------------------
SECTION 9 - PAYMENT OF PROCEEDS
- --------------------------------------------------------------------------------
9.1 CHOICE OF OPTIONS
The owner may choose to have the proceeds of this policy paid under a payment
option. After your death, the beneficiary may choose an option if the owner had
not done so before your death. If no payment option is chosen, we will pay the
proceeds of this policy in one sum. We may also fulfill our obligation under
this policy by paying the proceeds in one sum if:
a) the proceeds are less than $2,000;
b) periodic payments become less than $20; or
c) the payee is an assignee, estate, trustee,
partnership, corporation, or association.
9.2 PAYMENT OPTIONS
The choice of payment options are:
1) INTEREST INCOME -- The proceeds will be left with us to earn interest.
The interest will be paid every 1, 3, 6 or 12 months as the payee
chooses. The rate of interest will be determined by us. The payee may
withdraw all or part of the proceeds at any time.
2) INCOME FOR FIXED TERM -- The proceeds will be paid out in equal
installments for a fixed term of years.
3) LIFE INCOME WITH TERM CERTAIN -- The proceeds will be paid out in
equal installments for as long as the payee lives, but for not less
than a term certain. The owner or payee may choose one of the terms
certain shown in the payment option tables.
4) INCOME FOR FIXED AMOUNT -- The proceeds will be paid out in equal
installments of a specified amount. The payments will continue until
all proceeds plus interest have been paid out.
5) JOINT AND TWO-THIRDS TO SURVIVOR MONTHLY LIFE INCOME -- The proceeds
will be paid out in equal monthly installments for as long as two
joint payees live. When one payee dies, installments of two-thirds of
the first installment will be paid to the surviving payee. Payments
will stop when the surviving payee dies.
The proceeds may be paid in any other manner requested and agreed to by us, or
under any other payment options made available by the Company.
9.3 INTEREST AND MORTALITY
Proceeds applied under a payment option no longer earn interest at the rate
applied to the declared interest option or participate in the investment
experience of the variable account. The minimum interest rate used in computing
any payment option is 3% per year. Higher interest rates may be used on the
effective date of the payment contract. We may at any time declare additional
interest on these funds. The amount of additional interest and how it is
determined will be set by us.
The mortality table which is used for options 3) and 5) is the "1983 Table a"
individual annuity mortality table.
20
<PAGE>
9.4 REQUIREMENTS
For the owner to choose or change a payment option:
a) this contract must be in force;
b) the request must be in writing to us at our
home office; and
c) any prior option must be canceled.
After your death, and before this contract is settled, for a beneficiary to
choose or change a payment option:
a) a prior option by the owner cannot be in effect,
b) the request must be in writing to us at our
home office; and
c) any prior option must be canceled.
9.5 EFFECTIVE DATE
If a payment option has been chosen by the owner, it is effective on the date
the proceeds of this policy are due. If a beneficiary chooses a payment option,
it is effective on the date of election. The first payment under options 2, 3,
4, or 5 is due on the effective date. The first payment under payment option 1
is due at the end of the period chosen.
9.6 DEATH OF PAYEE
If a payee dies, any remaining payments will be paid to a contingent payee. If
no payee survives, we will pay the commuted value of any remaining payments to
the last payee's estate.
9.7 WITHDRAWAL OF PROCEEDS
The payee may not withdraw the funds under a payment option unless agreed to in
the payment contract. We have the right to defer a withdrawal for up to 6
months. We may also refuse to allow partial withdrawals of less than $250.
9.8 CLAIMS OF CREDITORS
Payments under any payment option will be exempt from the claims of creditors
to the maximum extent allowed by law.
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<PAGE>
Payment Option Tables
(Per $1,000 of proceeds)
- --------------------------------------------------------------------------------
Option 2 - Income for Fixed Term
Installments per $1,000 of Proceeds
- --------------------------------------------------------------------------------
Number of
Years Annual Monthly
- --------- ----------- ------------
5 211.99 17.91
10 113.82 9.61
15 81.33 6.87
20 65.26 5.51
25 55.76 4.71
30 49.53 4.18
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Guaranteed Settlement Option 5
Joint and Two-thirds to Survivor Monthly Life Income
Monthly Installments per $1,000 of Proceeds
- --------------------------------------------------------------------------------
Female Age
Male
Age 55 60 62 65 70
- ------ -----------------------------------------------------------------------
60 4.44 4.71 4.82 5.01 5.34
62 4.53 4.81 4.93 5.13 5.50
65 4.65 4.97 5.11 5.33 5.75
70 4.88 5.24 5.41 5.68 6.20
75 5.11 5.52 5.71 6.04 6.68
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GURANTEED SETTLEMENT OPTION 3
LIFE INCOME WITH TERM CERTAIN
MONTHLY INSTALLMENTS PER $1,000 PROCEEDS
- --------------------------------------------------------------------------------
MALE FEMALE
- --------------------------------------------------------------------------------
YEARS CERTAIN YEARS CERTAIN
Age 0 5 10 15 20 0 5 10 15 20
- --- ------------------------------------ -------------------------------------
55 $4.70 4.68 4.62 4.53 4.39 4.25 4.25 4.22 4.18 4.11
56 4.80 4.78 4.72 4.61 4.45 4.34 4.33 4.30 4.25 4.17
57 4.91 4.89 4.82 4.69 4.51 4.42 4.41 4.38 4.32 4.23
58 5.03 5.00 4.92 4.78 4.58 4.52 4.50 4.47 4.40 4.30
59 5.15 5.12 5.03 4.87 4.64 4.61 4.60 4.56 4.48 4.37
60 5.28 5.25 5.14 4.96 4.71 4.72 4.70 4.66 4.57 4.44
- --- ------------------------------------ -------------------------------------
61 5.42 5.39 5.26 5.06 4.78 4.83 4.81 4.76 4.66 4.51
62 5.57 5.53 5.39 5.16 4.84 4.95 4.93 4.86 4.75 4.58
63 5.74 5.69 5.52 5.26 4.90 5.07 5.05 4.98 4.85 4.65
64 5.91 5.85 5.66 5.36 4.96 5.21 5.18 5.10 4.95 4.72
65 6.10 6.03 5.81 5.46 5.02 5.35 5.32 5.22 5.05 4.79
- --- ------------------------------------ -------------------------------------
66 6.29 6.21 5.96 5.56 5.08 5.51 5.47 5.36 5.16 4.86
67 6.50 6.41 6.11 5.66 5.13 5.67 5.63 5.50 5.26 4.93
68 6.73 6.62 6.28 5.76 5.18 5.85 5.80 5.65 5.37 5.00
69 6.97 6.84 6.44 5.86 5.23 6.04 5.98 5.80 5.49 5.06
70 7.23 7.07 6.61 5.96 5.27 6.25 6.18 5.96 5.60 5.12
- --- ------------------------------------ -------------------------------------
71 7.51 7.32 6.78 6.05 5.31 6.47 6.39 6.14 5.71 5.18
72 7.80 7.58 6.96 6.14 5.34 6.71 6.62 6.31 5.83 5.23
73 8.12 7.85 7.14 6.23 5.37 6.97 6.86 6.50 5.94 5.28
74 8.45 8.14 7.32 6.31 5.40 7.26 7.12 6.69 6.04 5.32
75 8.82 8.44 7.49 6.38 5.42 7.56 7.39 6.89 6.14 5.35
- --------------------------------------------------------------------------------
22
<PAGE>
NON-PARTICIPATING
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
If you have any questions concerning this policy or if anyone
suggests that you change or replace this policy, please contact
your Farm Bureau Life agent or our home office. (515-225-5400)
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE [LOGO]
WEST DES MOINES, IOWA 50266-5997 FARM BUREAU
FINANCIAL SERVICES
- --------------------------------------------------------------------------------
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
WAIVER OF CHARGES RIDER
This rider is part of the policy to which it is attached.
- --------------------------------------------------------------------------------
SECTION 1 - DEFINITIONS
- --------------------------------------------------------------------------------
1.1 YOU OR YOUR
means the person whose life is insured under the policy.
1.2 EFFECTIVE DATE
means the date shown for this rider on the policy data page of the policy.
1.3 TOTAL DISABILITY
means continuous total disability caused by injury or sickness which:
a) starts after the effective date of this rider and while this rider is in
force;
b) starts before the policy anniversary on which you are age 65 while this
rider is in force; and
c) prevents you from engaging in the substantial and material duties of an
occupation:
i) For the first 24 months of such total disability, occupation means
your occupation at the time such total disability began.
ii) After 24 months of such total disability, occupation means any gainful
occupation for which you are reasonably fitted by education, training
or experience.
To be considered disabled you must be under the care of a physician and
receiving appropriate treatment. You will not be considered totally disabled
for any period during which you are engaged in any occupation for wage or
profit or for any period that you are not under the care of a physician.
1.4 WAITING PERIOD
means the number of days at the beginning of a period of total disability before
benefit payments begin.
1.5 COMPLICATIONS OF PREGNANCY
mean conditions whose diagnoses are distinct from normal pregnancy but are
adversely affected by pregnancy or are caused by pregnancy. These include,
but are not limited to acute nephritis, cardiac decompensation, toxemia,
eclampsia, non-elective abortion, caesarean section and ectopic pregnancy
which is terminated.
Complications of pregnancy do not include false labor, occasional spotting, rest
prescribed by a doctor, morning sickness, pre-eclampsia, or similar conditions
which make a pregnancy difficult but do not constitute a medically distinct
pregnancy complication. Elective induced abortion is also not a complication of
pregnancy.
- --------------------------------------------------------------------------------
SECTION 2 - THE CONTRACT
- --------------------------------------------------------------------------------
2.1 DISABILITY BENEFIT
We will waive the payment of monthly deductions under the policy during your
continuous total disability:
a) if the policy and this rider are in force on the date you become totally
disabled with all monthly deductions are paid;
b) upon receipt by us of due proof of your total disability;
c) after a 90 day period; and
d) subject to the terms and conditions of the policy and this rider.
2.2 AMOUNTS TO BE WAIVED
The waiting period begins on the date that you become totally disabled.
Monthly deductions falling due after the waiting period will be waived during
the insured's continuous total disability. After the waiting period is
satisfied, monthly deductions that were due and paid during the waiting
period will be refunded. Monthly deductions are waived until total disability
ends. If a monthly deduction is in default, benefits will be allowed if:
a) your total disability began before the due date or during the grace period
of the monthly deduction in default;
b) notice of claim was given within one year after such due date; and
<PAGE>
c) the first monthly deduction in default is paid with interest not to exceed
6% per year if your total disability began during the grace period of such
monthly deduction.
2.3 CLAIM PROCEDURES
Before any monthly deduction is waived, written notice of claim and proof of
total disability must be received by us:
a) while you live;
b) while your total disability continues; and
c) no later than one year after this rider terminates.
Waiver of any monthly deduction will be subject to the following rules:
a) We may require a medical examination by a physician of our choice, at our
expense.
b) If you fail to give us notice and proof of your total disability on time,
your rights to benefits will not be impaired if you prove you complied as
soon as reasonably possible.
2.4 PROOF OF CONTINUING DISABILITY
You must furnish proof, as often as we request, that your total disability
continues. We may require a medical examination by a physician of our choice,
at our expense, as part of such proof.
2.5 RISKS NOT ASSUMED
No monthly deduction will be waived if your disability results from:
a) suicide or any attempt at suicide, whether sane or insane, or any
intentionally self-inflicted injury;
b) war or any act of war, whether declared or undeclared;
c) committing or trying to commit a felonious act;
d) service while a member of any armed forces; or
e) pregnancy or childbirth except complications of pregnancy.
2.6 TERMINATION
All rights and benefits under this rider will terminate on the earliest of:
a) the policy anniversary on which you are age 65 (but this will not affect a
claim which began before such date);
b) the owner requests that the policy or this rider be cancelled;
c) the grace period specified in the policy ends without payment of the
monthly deductions, except as provided in the amounts to be waived
provision;
d) the continuation of the policy in force under a cash value option; or
e) conversion, expiry, maturity or termination of the policy.
2.7 POLICY PROVISIONS APPLY
The incontestable clause and cash value benefits provision of the policy, if
any, will not apply to this rider. All other provisions of the policy not in
conflict with this rider will apply to this rider. In the event of a conflict
between the provisions of the policy and this rider, the provisions of this
rider will prevail.
- --------------------------------------------------------------------------------
SECTION 3 - MONTHLY DEDUCTIONS AND
REINSTATEMENT
- --------------------------------------------------------------------------------
3.1 MONTHLY DEDUCTIONS
The table of percentages of monthly deductions for this rider as shown herein
are to be deducted on the same dates, in the same manner, and under the same
conditions as monthly deductions for the policy to which this rider is attached.
Monthly deductions for this rider are due until this rider terminates. The
monthly deductions for this rider are based on your attained age at the
beginning of each policy year. Any monthly deductions deducted after
termination, as provided in this rider, will not continue this rider in force
and will be refunded. The table on the following page shows the monthly
deduction as a percentage of the cost of insurance and charges for all
additional benefit riders attached to this policy
3.2 REINSTATEMENT
This rider may be reinstated along with the policy subject to the requirements
of the policy and the following:
a) You must provide proof of your good health and insurability satisfactory to
us.
b) All unpaid monthly deductions must be paid with interest. We will set the
interest rate, but it will not exceed 6% per year.
/s/ Edward M. Wiederstein
President
<PAGE>
TABLE OF PERCENTAGES OF
MONTHLY DEDUCTIONS FOR WAIVER OF CHARGES
FOR STANDARD RATE CLASS
(APPLIES ONLY IF WAIVER OF CHARGES RIDER IS ATTACHED TO THE POLICY.
FOR SUBSTANDARD CLASSES TAKE RATING ON POLICY DATA PAGE TIMES THE PREMIUM
OBTAINED BY USING PERCENTAGES BELOW.)
<TABLE>
<CAPTION>
Male Male Female Female Male Male Female Female
Non- Non- Non- Non-
Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco Tobacco
Age Rate Rate Rate Rate Age Rate Rate Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18 4.6% 6.1% 9.3% 12.6% 42 6.5% 8.9% 11.3% 15.4%
19 4.6 6.1 9.3 12.6 43 6.9 9.3 11.5 15.6
20 4.6 6.1 9.3 12.6 44 7.2 9.7 11.8 16.1
21 4.6 6.1 9.3 12.6 45 7.5 10.1 12.2 16.6
22 4.6 6.1 9.3 12.6 46 7.8 10.5 12.6 17.0
23 4.6 6.1 9.3 12.6 47 8.1 10.9 12.9 17.6
24 4.6 6.1 9.3 12.6 48 8.4 11.3 13.3 18.1
25 4.6 6.1 9.3 12.6 49 8.7 11.8 13.7 18.6
26 4.8 6.5 9.3 12.6 50 9.1 12.2 14.1 19.2
27 4.8 6.5 9.3 12.8 51 9.4 12.7 14.6 19.8
28 4.8 6.5 9.5 13.0 52 9.8 13.2 15.0 20.4
29 4.8 6.5 9.5 13.0 53 10.2 13.8 15.5 21.0
30 4.8 6.5 9.8 13.2 54 10.6 14.3 15.9 21.6
31 5.0 6.7 9.8 13.2 55 11.0 14.9 16.4 22.2
32 5.0 6.7 9.8 13.2 56 11.5 15.5 16.9 22.9
33 5.2 6.9 10.2 13.7 57 11.9 16.1 17.4 23.6
34 5.2 7.2 10.2 13.7 58 12.4 16.7 17.9 24.3
35 5.4 7.4 10.2 13.7 59 12.9 17.4 18.5 25.0
36 5.4 7.4 10.2 13.9 60 13.4 18.1 19.0 25.8
37 5.6 7.6 10.2 13.9 61 14.0 18.8 19.6 26.6
38 5.6 7.6 10.4 14.1 62 14.5 19.6 20.2 27.4
39 6.1 8.0 10.6 14.3 63 15.1 20.4 20.8 28.2
40 6.1 8.0 10.8 14.5 64 15.7 21.2 21.4 29.0
41 6.1 8.5 11.1 14.7
</TABLE>
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
LIVING BENEFIT RIDER
This rider is a part of the policy to which it is attached.
- --------------------------------------------------------------------------------
SECTION 1 - DEFINITIONS
- --------------------------------------------------------------------------------
1.1 YOU OR YOUR
means the person whose life is insured under the policy.
1.2 POLICY BENEFIT
means the amount of death benefits we would pay to your beneficiaries upon your
death if this endorsement were not a part of the policy. It includes:
a) the death benefit of the policy;
b) any insurance provided by paid-up additions;
c) the amount of any one-year term insurance purchased with dividends; and
d) the face amount of any term insurance riders which cover you and are
attached to the policy.
It does not include the amount of any accidental death benefit rider that may be
attached to the policy or any death benefit from any rider that covers another
person or another family member.
1.3 LIVING BENEFIT
means the portion of the policy benefit we will pay the owner under this
endorsement if we receive proof that the insured is eligible for such benefit.
1.4 TERMINALLY ILL
means having a life expectancy of 12 months or less as certified by a physician.
1.5 PHYSICIAN
means a licensed medical practitioner performing within the scope of his/her
license. Such person must be someone other than you, the owner, or a member of
the immediate family of either you or the owner.
- --------------------------------------------------------------------------------
SECTION 2 - GENERAL PROVISIONS
- --------------------------------------------------------------------------------
2.1 LIVING BENEFIT PAYMENT
We will pay a living benefit in a lump sum to the owner if you are terminally
ill. We may make payments other than as a lump sum in any manner requested by
the owner and agreed to by us, except an option involving life contingencies.
2.2 AMOUNT OF LIVING BENEFIT
The maximum amount you may request for a living benefit is the lessor of:
a) the policy benefit; or
b) $250,000.
The $250,000 maximum will be applied in sum to all the policies under which you
are insured with us.
The amount requested for the living benefit will be adjusted as follows:
a) A 12 month discount will be applied which reflects the early payment of
amounts held under your policy. The discount will be based on the policy's
loan interest rate. If a loan interest rate provision is not included in
your policy, the discount will be based on an annual interest rate of 7.40%
in advance. The policy's loan interest rate will be multiplied by the
benefit amount to determine the amount of discount.
b) If there is an existing policy loan on your policy on the date you request
a living benefit, the living benefit payment will be reduced. The purpose
of this reduction is to repay a portion of the policy loan. The deduction
will be computed as follows:
Amount of Reduction = Existing Policy Loan X Requested Portion Of Policy Benefit
----------------------------------------------------------
Policy Benefit
The actual amount of living benefit paid to the owner will be equal to the
requested amount minus the 12 month discount and the reduction for existing
policy loans. This is the living benefit payment.
<PAGE>
If the requested amount of living benefit is less than the policy benefit, the
policy will remain in force. To remain in force, the face amount of the policy
after the living benefit has been paid must be greater than or equal to the
minimum issue limits for the plan of insurance on the date of the living benefit
request. The premiums due under the policy, all remaining values and policy
benefits will be reduced proportionately.
2.3 BENEFIT CONDITIONS
Payment of the living benefit is subject to the following rules:
a) We must receive a written request on our form signed by you and the owner.
b) The policy must be in force other than as extended term insurance.
c) The policy or an eligible term rider must not be within five years of
expiration or endowment at the time a living benefit is requested.
d) The living benefit is not available for any last
survivor life insurance policy.
e) If there is an irrevocable beneficiary or assignee, they must consent in
writing to payment of the benefit.
f) We reserve the right to require you or any beneficiary, a spouse, assignee,
or any other party in interest to consent to the payment of the living
benefit if, in our discretion, such agreement is needed to protect our
interests.
g) Your policy is not eligible for this benefit if:
i) you or the owner are required by law to use this endorsement to meet
the claims of creditors, whether in bankruptcy or otherwise; or
ii) you are required by a government agency to use this endorsement to
apply for, obtain, or keep a government benefit or entitlement.
h) You must provide proof that you meet conditions under the living benefit
provision, including an attending physician's statement and any other proof
we may require. We reserve the right to seek a second medical opinion or
have you examined at our expense by a physician we choose.
2.4 TERMINATION
All rights and benefits under this endorsement will end when any one of the
following events occurs:
a) the owner requests that the policy or this rider be cancelled;
b) the grace period ends without payment of the premium; or
c) conversion, expiry, maturity or termination of the policy.
2.5 POLICY PROVISIONS APPLY
The policy is modified to add the provisions of this rider. All provisions of
the policy not in conflict with this rider will apply to this rider. In the
event of a conflict between the provisions of the policy and this rider, the
provisions of the rider will prevail.
/s/ Edward M. Wiederstein
President
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
LIVING BENEFIT RIDER
DISCLOSURE STATEMENT
1. This Living Benefit Rider is NOT a long term care policy. The amount this
rider pays may not be enough to cover nursing home or other bills. The
owner may use the money received from this rider for any purpose.
2. Benefits payable under this rider MAY be taxable. We make no
representations concerning any potential tax consequences of this
endorsement. You should consult your personal tax adviser.
3. This rider MAY affect Medicaid eligibility. If you use the endorsement
benefit, you MAY be required to spend all of the available funds to become
eligible for Medicaid or other government assistance programs.
4. Payment of the accelerated benefit will be allowed if you are determined to
have a terminal illness. This means you have a life expectancy of 12 months
or less as certified by a physician.
5. The maximum amount you may request for an accelerated benefit is the lesser
of the policy benefit, or $250,000. The $250,000 maximum will be applied in
sum to all the policies under which you are insured with us.
6. The amount requested for the accelerated benefit will be reduced by a 12
month discount which reflects the early payment of amounts held under your
policy. The discount will be based on the policy's loan interest rate, or
7.4% for policies not having a loan provision. There will be no other
administrative charge.
7. The amount requested will also be reduced if there is an existing policy
loan on your policy on the date you request an accelerated benefit. The
purpose of this reduction is to repay a portion of the policy loan.
8. Payment of the accelerated benefit may decrease or eliminate the death
benefit your beneficiary will receive by the amount of the accelerated
benefit requested. If a portion of the policy remains in force following
payment of the accelerated benefit, the premiums due under the policy, all
remaining values and policy benefits, including any policy loans will be
reduced proportionately.
- ---------------------------------- ----------------------------
Policyowner's Signature Agent's Signature
- ---------------------------------- ----------------------------
Date Date
First copy - Home Office Second Copy - Owner/Insured
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
COST OF LIVING INCREASE RIDER
This rider is a part of the policy to which it is attached.
- --------------------------------------------------------------------------------
SECTION 1 -DEFINITIONS
- --------------------------------------------------------------------------------
1.1 YOU OR YOUR
means the person whose life is insured under the policy.
1.2 EFFECTIVE DATE
means the date shown for this rider on policy data page.
1.3 CONSUMER PRICE INDEX
means the Consumer Price Index For All Urban Consumers, U.S. City Average, All
Items (CPI) as published by the U.S. Department of Labor.
1.4 CPI FACTOR
The CPI Factor is calculated as follows:
(a)-(b) where:
-------
(b)
a) is the CPI 6 months prior to the increase date;
and
b) is the CPI 42 months prior to the increase date.
We reserve the right to use some other similar measurement if the U.S.
Department of Labor changes or stops publishing the CPI.
- --------------------------------------------------------------------------------
SECTION 2 - THE CONTRACT
- --------------------------------------------------------------------------------
2.1 INCREASE BENEFIT
The specified amount on your life will increase automatically every third policy
anniversary without proof of insurability. Such increase will be subject to the
following rules:
a) The policy and this rider must be in force with all needed monthly
deductions paid.
b) The increase will take place every third policy anniversary after the
policy date. Such anniversary will be the effective date of the increase.
c) The increase amount will be the lessor of:
i) the initial specified amount plus any prior increases under this rider
multiplied by the CPI Factor;
ii) 20% of the initial specified amount; or
iii) $25,000.
d) The minimum increase amount is $2,000
e) The total amount of all increases under this rider will be the lessor of:
i) four times the initial specified amount on this policy; or
ii) $200,000.
f) The cost of insurance rate for the increase will be based on your sex,
attained age and rate class at the time of increase.
g) We will send the owner a new policy data policy data page showing the new
specified amount following an increase.
h) Any increase will be subject to per $1,000 charges shown in the policy.
i) The increase will not be allowed if your mortality class is other than
standard.
2.2 REJECTION OF INCREASE
We will mail you a new policy data page on the effective date of any increase.
Acceptance is automatic. You may reject the cost of living increase by notice to
us and return of the new policy data page within 30 days of the increase date.
2.3 TERMINATION
All rights and benefits under this rider will terminate when any of the
following occur:
a) any automatic cost of living increase is rejected;
b) the later of:
<PAGE>
i) the policy anniversary on which you are age 65; or
ii) the 10th policy anniversary;
c) the owner requests that the policy or this rider be canceled;
d) the grace period specified in the policy ends without payment of the
monthly deductions; or
e) conversion, expiry, maturity or termination of the policy.
2.4 POLICY PROVISIONS APPLY
All provisions of the policy not in conflict with this rider will apply to this
rider. In the event of a conflict between the provisions of the policy and this
rider, the provisions of this rider will prevail.
- --------------------------------------------------------------------------------
SECTION 3 - MONTHLY DEDUCTIONS AND REINSTATEMENT
- --------------------------------------------------------------------------------
3.1 MONTHLY DEDUCTIONS
The monthly deduction for this rider will be deducted on the same dates, in the
same manner and under the same conditions as the monthly deductions for the
policy to which this rider is attached. Monthly deductions for this rider are
due until the rider terminates. Any monthly deductions deducted after
termination, as provided in this rider, will not continue this rider in force
and will be refunded.
The current monthly deduction rates for this rider will be determined by us. If
we change the rates, we will change them for everyone in your premium class. The
current monthly deduction rates for this rider will never be more than 6% of the
guaranteed maximum monthly insurance rates shown on the policy data page.
3.2 REINSTATEMENT
This rider may be reinstated along with the policy subject to the requirements
of the policy and the following:
a) You must provide proof of your good health and insurability satisfactory to
us.
b) All unpaid monthly deductions must be paid with interest. We will set the
interest rate, but it will not exceed 6% per year.
/s/ Edmund M. Wiederstein
President
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
GUARANTEED INSURABILITY OPTION RIDER
This rider is a part of the policy to which it is attached.
- --------------------------------------------------------------------------------
SECTION 1 - DEFINITIONS
- --------------------------------------------------------------------------------
1.1 YOU OR YOUR
means the person whose life is insured under the policy.
1.2 EFFECTIVE DATE
means the date shown for this rider on page 3 of the policy.
- --------------------------------------------------------------------------------
SECTION 2 - THE CONTRACT
- --------------------------------------------------------------------------------
2.1 OPTION BENEFIT
The owner may increase the specified amount of insurance on your life without
proof of insurability on each of the option dates, if the policy and this rider
are in force with all needed monthly deductions paid.
Such purchase is subject to the following rules:
a) The owner must send us a written request, on our form and pay the monthly
deductions on or before the option date.
b) The policy date of the increase will be the option date.
c) In no event will the increase in specified amount become effective unless
you are living on the option date.
d) The increase in specified amount will not exceed the basic amount of this
rider.
e) Each Option will expire if not used on or before its option date. The
expiration will not affect future options.
f) The monthly deductions for the increased amount will be based on your sex,
attained ago and rate class on the option date.
g) The increased amount will be subject to the same exceptions, exclusions and
restrictions, if any, as this policy.
h) The increased amount will not be effective unless the net cash value on the
option date is sufficient to pay monthly deductions for the policy plus the
increased amount.
i) We will send the owner a new policy data page 3 showing the new specified
amount following exercise of an option.
j) The increased amount will be subject to the first year per $1,000 charges
shown in the policy.
2.2 AMOUNT OF THIS RIDER
The amount of this rider is shown on page 3 of the policy.
2.3 OPTION DATES
Option dates will be the policy anniversaries on which your age is 22, 25, 28,
31, 34, 37 and 40. Use of the advance purchase option will cancel the next
unused option.
2.4 ADVANCE PURCHASE OPTION
If the policy and this rider are in force with all needed deductions paid, the
owner may make immediate use of the next unused option within 60 days of the
following:
a) your marriage;
b) the birth of each living child to you during your lifetime; or
c) upon your legal adoption of a child.
Use of the advance purchase option is subject to the same rules which apply to
any other option benefit plus the following:
a) The next option date will be cancelled.
b) In the event of a multiple birth, the specified amount of the new policy
may be increased to an amount equal to the amount of this rider times the
number of live children born.
c) You must send us proof of such marriage, birth or adoption.
<PAGE>
d) The increased amount under this option will not be effective unless the net
cash value on the effective date of such increase is sufficient to pay
monthly deductions for the policy plus the amount of the increase resulting
from the exercise of this option.
e) The effective date of the increase will be the monthly deduction day
coinciding with or next following the date the signed request was received
in the Home Office.
If you die without using an advance purchase option during the 60 days it is
available, a death benefit will be paid equal to the amount that would have been
paid had the owner exercised such option.
2.5 TERMINATION
All rights and benefits under this rider will terminate on the earliest of:
a) the policy anniversary on which you are age 40;
b) you die;
c) the owner requests that the policy or rider be cancelled;
d) the grace period specified in the policy ends without payment of the
monthly deductions;
e) the continuation of the policy in force under a cash value option; or
f) conversion, expiry, maturity or termination of the policy.
2.6 POLICY PROVISIONS APPLY
All provisions of the policy not in conflict with this rider will apply to this
rider. In the event of a conflict between the provisions of the policy and this
rider, the provisions of this rider will prevail.
- --------------------------------------------------------------------------------
SECTION 3 - MONTHLY DEDUCTIONS AND REINSTATEMENT
- --------------------------------------------------------------------------------
3.1 MONTHLY DEDUCTIONS
The monthly deductions for this rider as shown herein are to be deducted on the
same dates, in the same manner, and under the same conditions as the monthly
deductions for the policy to which this rider is attached. Monthly deductions
for this rider are due until this rider terminates. Any monthly deductions
deducted after termination, as provided in this rider, will not continue this
rider in force and will be refunded.
The monthly deductions for this rider are based on your attained age at the
beginning of each policy year. The table on the following page shows the monthly
deduction per $1,000 of rider amount based on your attained age at the beginning
of each policy year.
3.2 REINSTATEMENT
This rider my be reinstated along with the policy subject to the requirements of
the policy and the following:
a) You must provide proof of your good health and insurability satisfactory to
us.
b) All unpaid monthly deductions must be paid with interest. We will set the
interest rate, but it will not exceed 6% per year.
/s/ Edmund M. Wiederstein
President
<PAGE>
TABLE OF GUARANTEED INSURABILITY OPTION
MONTHLY DEDUCTION RATES PER $1,000
FOR STANDARD CLASS
Attained Male Female Attained Male Female
Age Rate Rate Age Rate Rate
0 .01 .01 20 .06 .04
1 .02 .02 21 .06 .04
2 .02 .02 22 .06 .04
3 .02 .02 23 .07 .05
4 .02 .02 24 .07 .05
5 .02 .02 25 .07 .06
6 .02 .02 26 .08 .06
7 .03 .02 27 .08 .06
8 .03 .02 28 .08 .06
9 .03 .02 29 .08 .07
10 .03 .02 30 .08 .07
11 .03 .02 31 .08 .07
12 .03 .02 32 .09 .07
13 .04 .02 33 .09 .08
14 .04 .03 34 .09 .08
15 .04 .03 35 .09 .08
16 .04 .03 36 .09 .09
17 .04 .03 37 .10 .10
18 .05 .03 38 .12 .12
19 .05 .03 39 .14 .13
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
CHILDREN'S TERM LIFE INSURANCE RIDER
This rider is a part of the policy to which it is attached.
- --------------------------------------------------------------------------------
SECTION 1 - DEFINITIONS
- --------------------------------------------------------------------------------
1.1 YOU OR YOUR
means the person whose life is insured under the policy.
1.2 COVERED CHILD
means your child, your stepchild or your legally adopted child, who:
a) is named in the application for this rider and who is less than age 18 on
the date of such application; or
b) after the date of such application, is born to you or legally adopted by
you before such child is age 18.
1.3 EFFECTIVE DATE
means the date shown for this rider on the policy data page.
- --------------------------------------------------------------------------------
SECTION 2 - THE CONTRACT
- --------------------------------------------------------------------------------
2.1 DEATH BENEFIT
We will pay the amount of this rider to the beneficiary of this rider.
a) within two months after receipt by us of due proof of a covered child's
death;
b) if a covered child dies:
i) after such covered child is 7 days old; and
ii) before such covered child's 23rd birthday;
c) if the policy and this rider are in force on the date of a covered child's
death with all needed monthly deductions paid; and
d) subject to the terms and conditions of the policy and this rider.
2.2 AMOUNT OF THIS RIDER
The amount of term insurance under this rider is shown on the policy data page.
2.3 DEATH BENEFIT CHANGES
The owner may change the amount of this rider at any time after the first policy
year subject to the following rules:
a) The change must be in writing in a form acceptable to us.
b) It must be signed by the owner.
c) The form must be sent to us and, if proof of insurability is required, such
proof must be acceptable to us.
d) We will issue a new policy data page for any change in amount of this
rider.
Any decrease will be effective on the monthly deduction day coinciding with or
next following our receipt of the request. Any reduction will be in the
following order:
a) against the most recent increase in insurance;
b) against the next most recent increases reduced in succession;
c) against the initial amount.
In no event will the current amount of this rider be more than the specified
amount of the policy. Any decrease is also subject to a minimum amount remaining
of $10,000.
Any increase will require proof of insurability. An approved increase will have
an effective date as shown on the new policy data page.
2.4 INCONTESTABLE CLAUSE
We will not contest payment of this rider for any reason other than fraud after
this rider has been in force during such covered child's lifetime for two years
from the effective date.
We will not contest payment of any increases in the amount of this rider for any
reason other than fraud after the increases have been in force during such
covered child's lifetime for two years from the effective date of each increase.
2.5 MISSTATEMENT OF AGE OR SEX
We have the right to correct benefits for misstated age or sex. In such an
event, benefits will be the amount the monthly deduction actually made would
have bought at the correct age or sex.
<PAGE>
2.6 SUICIDE
If, within one year of the effective date, a covered child dies by suicide,
whether sane or insane, our liability is limited to the monthly deductions paid
for this rider.
Any increase in death benefits resulting from an increase in the amount of this
rider will not be paid if a covered child dies from suicide, while sane or
insane, within one year of the date of such increase. Instead, we will return an
amount equal to the cost of insurance for such increase in the amount of this
rider.
2.7 TERMINATION
All rights and benefits under this rider will end when any one of the following
events occurs:
a) the owner requests that the policy or rider be cancelled or fully
converted;
b) the grace period specified in the policy ends without payment of the
monthly deductions; or
c) conversion, expiry, maturity or termination of the policy.
2.8 POLICY PROVISIONS APPLY
The cash value and policy loan provisions of the policy, if any, will not apply
to this rider. All other provisions not in conflict with this rider will apply
to this rider. In the event of a conflict between the provisions of the policy
and this rider, the provisions of this rider will prevail.
- --------------------------------------------------------------------------------
SECTION 3 - OWNERSHIP AND BENEFICIARY
- --------------------------------------------------------------------------------
3.1 OWNERSHIP
The owner of the policy will be the owner of this rider.
3.2 BENEFICIARY
Beneficiaries for this rider are as named in the application, unless changed by
the owner. The rider's beneficiaries may be different from the policy's
beneficiaries.
- --------------------------------------------------------------------------------
SECTION 4 - MONTHLY DEDUCTIONS AND REINSTATEMENT
- --------------------------------------------------------------------------------
4.1 MONTHLY DEDUCTIONS
The monthly deductions for this rider are to be paid on the same dates, in the
same manner, and under the same conditions as the monthly deductions for
the policy to which this rider is attached. Monthly deductions for this rider
are due until this rider terminates. The monthly deduction for this rider will
be $0.25 per $1,000 of coverage under this rider.
4.2 REINSTATEMENT
This rider may be reinstated along with the policy subject to the requirements
of the policy and the following:
a) You must provide proof of good health and insurability satisfactory to us
for each covered child who would be insured under this rider upon such
reinstatement.
b) All unpaid monthly deductions must be paid with interest. We will set the
interest rate, but it will not exceed 6% per year.
- --------------------------------------------------------------------------------
SECTION 5 - CONVERSION
- --------------------------------------------------------------------------------
5.1 CONVERSION PRIVILEGE
The owner may convert coverage under this rider to a new policy on any covered
child without proof of insurability if the policy and this rider are in force
with all needed monthly deductions paid. Application for conversion must be made
during such child's conversion period and before termination of this policy and
rider.
5.2 CONVERSION PERIOD
The conversion period for each covered child expires on the earlier of:
a) such covered child's 23rd birthday; or
b) 60 days after your death.
5.3 CONVERSION REQUIREMENTS
Such conversion is subject to the following rules:
a) The owner must send us a written request, on our form.
b) The owner must pay the first premium on the new policy.
c) The policy date of the new policy will be the date of termination of the
covered child's coverage under this rider.
d) In no event will the new policy become effective, unless such covered child
is living on the policy date of the new policy.
e) The face amount of the new policy may not exceed the face amount of this
rider in effect on the date of the request.
f) The new policy must comply with our published rules in effect on the date
of issue of the new policy.
<PAGE>
g) The premium for the new policy will be our rate for such covered child's
age on the policy date of the new policy for the same premium class as this
rider.
h) The new policy will be subject to the same exceptions, exclusions and
restrictions, if any, as this rider.
i) The new policy may be any form of single-life permanent life insurance
policy then being offered by us.
j) Our consent and proof of such covered child's insurability are required to
add any other benefit riders to the new policy, including the waiver of
charges rider.
/s/ Edward M. Wiederstein
President
<PAGE>
FARM BUREAU LIFE INSURANCE COMPANY
5400 UNIVERSITY AVENUE, WEST DES MOINES, IOWA 50266-5997
OTHER ADULT UNIVERSAL LIFE INSURANCE RIDER
This rider is a part of the policy to which it is attached.
- --------------------------------------------------------------------------------
SECTION 1 - DEFINITIONS
- --------------------------------------------------------------------------------
1.1 YOU OR YOUR
means the person whose life is insured under the policy.
1.2 COVERED ADULT
means the person whose life is insured under this rider and who is age 18 or
older.
1.3 AGE
means age at the last birthday.
1.4 ATTAINED AGE
means the covered adult's age on the effective date plus the number of policy
years since the effective date.
1.5 EFFECTIVE DATE
means the effective date of this rider shown on the policy data page.
- --------------------------------------------------------------------------------
SECTION 2 - THE CONTRACT
- --------------------------------------------------------------------------------
2.1 DEATH BENEFIT
We will pay the amount of this rider to the beneficiary of this rider:
a) within two months after receipt by us of due proof of the covered adult's
death;
b) if the policy and this rider are in force on the date of the covered
adult's death with all needed monthly deductions paid; and
c) subject to the terms and conditions of the policy and this rider.
2.2 AMOUNT OF THIS RIDER
The amount of insurance under this rider is shown on the policy data page.
2.3 DEATH BENEFIT CHANGES
The owner may change the amount of this rider at any time after the first policy
year subject to the following rules:
a) The change must be in writing in a form acceptable to us.
b) It must be signed by the owner.
c) The form must be sent to us and, if proof of insurability is required, such
proof must be acceptable to us.
d) We will issue a new policy data page for any change in the amount of this
rider.
Any decrease will be effective on the monthly deduction day coinciding with or
next following our receipt of the request. Any reduction will be in the
following order:
a) against the most recent increase in insurance;
b) against the next most recent increases reduced in succession;
c) against the initial amount.
In no event will the current amount of this rider be more than the specified
amount of the policy. Any decrease is also subject to a minimum amount remaining
of $50,000.
Any increase will require proof of insurability. An approved increase will have
an effective date as shown on the new policy data page.
2.4 INCONTESTABLE CLAUSE
We will not contest payment of this rider for any reason other than fraud after
this rider has been in force during the covered adult's lifetime for two years
from the effective date of this rider.
We will not contest payment of any increases in the amount of this rider for any
reason other than fraud after the increases have been in force during the
covered adult's lifetime for two years from the effective date of each increase.
2.5 MISSTATEMENT OF AGE OR SEX
We have the right to correct benefits for misstated
<PAGE>
age or sex. In such an event, benefits will be the amount the monthly deductions
actually paid would have bought at the correct age or sex.
2.6 SUICIDE
If, within one year of the effective date, the covered adult dies by suicide,
whether sane or insane, our liability is limited to the monthly deductions paid
for this rider.
Any increase in death benefits resulting from an increase in the amount of this
rider will not be paid if a covered adult dies from suicide, while sane or
insane, within one year of the date of such increase. Instead, we will return an
amount equal to the cost of insurance for such increase in the amount of this
rider.
2.7 TERMINATION
All rights and benefits under this rider will end when any one of the following
events occurs:
a) the earlier of the policy anniversary on which you are age 115 or the
policy anniversary on which the covered adult is age 115;
b) the covered adult dies;
c) the owner requests that the policy or rider be cancelled or fully
converted;
d) the grace period specified in the policy ends without payment of the
monthly deductions; or
e) conversion, expiry, maturity or termination of the policy.
2.8 POLICY PROVISIONS APPLY
The accumulated value benefits and policy loan provisions of the policy, if any,
will not apply to this rider. All other provisions not in conflict with this
rider will apply to this rider. In the event of a conflict between the
provisions of the policy and this rider, the provisions of this rider will
prevail.
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SECTION 3 - OWNERSHIP AND BENEFICIARY
- --------------------------------------------------------------------------------
3.1 OWNERSHIP
The owner of the policy will be the owner of this rider.
3.2 BENEFICIARY
Beneficiaries for this rider are as named in the application, unless changed by
the owner. The rider's beneficiaries may be different from the policy's
beneficiaries.
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SECTION 4 - MONTHLY DEDUCTIONS AND REINSTATEMENT
- --------------------------------------------------------------------------------
4.1 MONTHLY DEDUCTIONS
The monthly deductions for this rider are to be paid on the same dates, in
the same manner, and under the same conditions as the monthly deductions for
the policy to which this rider is attached. Monthly deductions for this rider
are due until the rider terminates. The monthly deduction for this rider is
computed as the sum of a) plus b), where:
a) is the cost of insurance rate (as defined in section 4.2) multiplied by the
amount of the rider; and
b) is the monthly per $1,000 charge from the policy data page, multiplied by
the current amount or the amount of any increase in the amount of this
rider. This charge applies only during the first policy year or during the
12 months following an increase in the amount of this rider.
4.2 COST OF INSURANCE RATE
The cost of insurance rate is subject to the following rules:
a) The rate is based on the covered adult's sex, rate class and attained age.
For any increase in the specified amount, the attained age will be the
covered adult's age on the effective date of the increase.
b) The monthly rates will be determined by us based on our expectation as to
future mortality experience.
c) If we change the rates, we will change them for everyone in a rate class.
d) The monthly guaranteed rates shown in the policy are based on the 1980
Commissioner's Standard Ordinary Mortality Table, Age Last Birthday. The
monthly rate will never be more than these rates.
4.3 REINSTATEMENT
This rider may be reinstated along with the policy subject to the requirements
of the policy and the following:
<PAGE>
a) You must provide proof of good health and insurability satisfactory to us
for the covered adult who would be insured under this rider upon such
reinstatement.
b) All unpaid monthly deductions must be paid with interest. We will set the
interest rate, but it will not exceed 6% per year.
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SECTION 6 - CONVERSION
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6.1 CONVERSION PRIVILEGE
The owner may convert this rider to a new policy on the covered adult without
proof of insurability if the policy and this rider are in force with all needed
monthly deductions paid. Application for conversion must be made before
termination of the policy and rider and before the covered adult's 75th
birthday, or within 60 days after your death.
6.2 CONVERSION REQUIREMENTS
Such conversion is subject to the following rules:
a) The owner must send us a written request, on our form.
b) The owner must pay the first premium on the new policy.
c) The policy date of the new policy will be the date of termination of
this rider.
d) In no event will the new policy become effective, unless the covered
adult is living on the policy date of the new policy.
e) The face amount of the new policy may not exceed the face amount of
this rider in effect on the date of the request.
f) The new policy must comply with our published rules in effect on the
date of issue of the new policy.
g) The premium for the new policy will be our rate for the covered
adult's age on the policy date of the new policy for the same premium
class as this rider.
h) The new policy will be subject to the same exceptions, exclusions and
restrictions, if any, as this rider.
i) The new policy may be any form of single-life permanent life insurance
policy then being offered by us.
j) Our consent and proof of the covered adult's insurability are required
to add any other benefit riders to the new policy, including the
waiver of charges rider.
/s/ Edward M. Wiederstein
President
<PAGE>
Exhibit 1.A. 6(a)
Certificate of Incorporation of the Company
STATE OF IOWA
OFFICE OF SECRETARY OF STATE
This is to Certify that the IOWA LIFE INSURANCE COMPANY of Des Moines, Iowa
has filed in this office Articles of Incorporation, and paid the fees as by law
provided.
Therefore, this Certificate is issued, thereby authorizing it to transact
business as a corporation, under and Subject to the laws of the State of Iowa,
PERPETUALLY from October 30th, 1944.
In testimony whereof, I have hereunto set my hand and caused to be affixed
the seal of the office.
Done at Des Moines, the Capital, this Thirtieth day of October, 1944.
/s/ Wayne M. Ropes
Wayne M. Ropes
Secretary of State
by [left blank] Deputy Secretary of State
Expires PERPETUAL
<PAGE>
ARTICLES OF INCORPORATION
OF
IOWA LIFE INSURANCE COMPANY
We, the undersigned, for the purpose of transacting the business
hereinafter set forth, do hereby associate ourselves together and under the
following Articles of Incorporation unite ourselves into a body corporate under
the provisions of Chapter 384 and Chapter 398 of the Code of Iowa, 1939, and all
acts amendatory thereto, and assume all powers and obligations granted bodies
corporate under said chapters, and do hereby adopt the following Articles of
Incorporation, to-wit:
ARTICLE I.
NAME
The name of this Corporation shall be IOWA LIFE INSURANCE COMPANY.
ARTICLE II.
PRINCIPAL PLACE OF BUSINESS
The principal place of business of this Corporation shall be in the city of
Des Moines, County of Polk, State of Iowa. It may establish and maintain branch
offices, depositories and agencies elsewhere.
ARTICLE III.
POWERS, OBJECTS AND PURPOSES
The purposes and objects for which this Corporation is formed, and the
powers which it shall have and exercise, are:
1. To make insurance on the lives of persons and every insurance
appertaining thereto or connected therewith, and granting, purchasing or
disposing of annuities, and to make insurance against bodily injury, disablement
or death by accident, and against disablement resulting from sickness or old age
and every insurance appertaining thereto, on a level premium plan and as a legal
reserve company with all the rights and privileges granted or permitted by
Chapter 384 and Chapter 398 of the Code of Iowa, 1939, and all acts amendatory
thereto.
2. To assume and exercise all the rights, powers and privileges that are
now or may hereafter be conferred by law upon similar corporations, and to have
the right of perpetual succession, sue and be sued, make contracts, acquire,
own, and transfer property, real and personal, and have a common seal.
<PAGE>
3. To issue all forms of insurance contracts pertaining to or connected
with the business of life insurance as it now or may hereafter be carried on in
this state or elsewhere.
4. To cede to and reinsure its excess risks wherever they may be in other
companies or associations, and to accept and reinsure the excess risks of other
companies or associations ceded to it.
5. To buy, sell, invest and reinvest its funds in any of the securities or
property in which a life insurance company may now or hereafter lawfully invest.
6. To have and exercise all of the rights and powers necessary and
incident to carrying into effect the purposes for which this Corporation is
formed.
7. The objects, powers and purposes specified above shall, except where
otherwise expressed, be in no way limited or restricted by inference to or
inference from the terms of any clause or paragraph of these Articles of
Incorporation, and the foregoing shall be construed both as powers and objects
and the enumeration thereof shall not be held to limit or restrict in any manner
the general powers conferred upon this Corporation by the laws of the State of
Iowa, or any acts amendatory thereto, all of which are hereby expressly claimed.
ARTICLE IV.
CAPITAL STOCK
The authorized capital stock of this Corporation is Five Hundred Thousand
($500,000.00) Dollars, divided into Two Hundred Six Thousand (206,000) shares,
of which amount Two Hundred Thousand (200,000) shares of the par value of One
($1.00) Dollar per share, amounting to Two Hundred Thousand ($200,000.00)
Dollars is "Common Stock," and Six Thousand (6,000) shares of the par value of
Fifty ($50.00) Dollars per share, amounting to Three Hundred Thousand
($300,000.00) Dollars, is 6% cumulative "First Preferred Stock."
The nature and definitive extent and preferences and privileges granted
each class is, as follows:
1. STOCK ISSUE CONDITIONS. No stock of this Corporation shall be issued
until this Corporation has received payment in full therefor the selling price
as fixed by the board of directors, which shall be not less than par, in cash or
property, providing, however, that when it is issued for anything other than
money it must be done in accordance with the statutes in force at the time said
stock shall be issued.
2. COMMON STOCK. The Common Stock shall be issued to and owned only by
the Iowa Farm Bureau Foundation, its assigns, or a member in good standing of
the
<PAGE>
Iowa Farm Bureau Federation as defined in the By-Laws of this Corporation, and
no one else shall be eligible to own the same.
The Common stockholders shall be entitled to receive, when and as
declared by the board of directors, subject to any limitations in these
Articles contained, dividends from the net earnings of this Corporation on
such equitable basis as the board of directors shall determine, and shall be
payable annually when and as determined by the board of directors, provided,
however, that no dividends shall be declared or paid on the Common Stock
issued to and owned by the Iowa Farm Bureau Federation or its assigns in
excess of six (6%) per cent per annum on the par value thereof. No dividends
shall be declared or paid on the Common Stock until the board of directors
has first declared dividends on the First Preferred Stock and paid or set
apart the same to or for the account of said First Preferred stockholders.
Dividends to the Common stockholders shall be non-cumulative. No person
shall be entitled to dividends unless he is a Common stockholder of record at
the time of the declaration of the same.
The holders of Common Stock shall be entitled to one vote for each and
every share of stock issued and owned at all meetings of the stockholders, and
shall not have the privilege of voting by proxy but a corporate stockholder
shall have the privilege of voting by an authorized representative or
representatives, and no one other than the Iowa Farm Bureau Federation shall be
entitled to own more than one share.
The Common Stock of any holder thereof, other than the Iowa Farm Bureau
Federation or its assigns, may be called, redeemed or retired at the election of
the board of directors at such time or times as it shall determine, and shall be
called, redeemed or retired by the board of directors whenever the holder
thereof shall cease to be eligible to own the same by ceasing to be a member in
good standing of a County Farm Bureau and the Iowa Farm Bureau Federation, as
herein provided and as defined in the By-Laws, or any amendment thereto, upon
the payment of the purchase price paid per share with accrued dividends, if any;
provided, however, that not less than thirty (30) days' prior notice of such
intention to retire or redeem such stock shall be given the holder of such stock
called for retirement or redemption by written notice postpaid to the last known
address of each stockholder as shown by the books of this Corporation.
From and after the date fixed for such redemption all dividends on the
Common Stock thereby called for redemption shall, unless the Corporation shall
default in the payment of the redemption price, cease and all rights of the
holders thereof as stockholders of the Corporation, except the right to receive
the redemption price and accrued dividends, if any, shall cease and terminate.
The eligibility of a person, other than the Iowa Farm Bureau Federation or
its assigns, to own and hold Common Stock in this Corporation shall be
determined by the records of the Iowa Farm Bureau Federation of which the owner
thereof or the one under which he is eligible to own the same is or was a member
at the time of issue of said stock, and said books and records shall be
conclusive of his or their said eligibility.
<PAGE>
In the event of the dissolution and winding up of the business of this
Corporation, whether voluntary or involuntary, or in the event of the sale of
all of the assets of the Corporation and the distribution of the proceeds
thereof, the Common stockholder shall receive nothing until the First Preferred
Stock has been paid in full the purchase price paid per share to this
Corporation, together with all unpaid accrued dividends on such shares of stock.
3. FIRST PREFERRED STOCK. The First Preferred Stock shall be issued to
and owned only by members in good standing of a County Farm Bureau of this state
and of the Iowa Farm Bureau Federation and shall have no voting privileges, and
the holder of First Preferred Stock shall be entitled to receive, when and as
declared by the board of directors, dividends from the net earnings of the
Corporation at the rate of six (6%) per cent per annum, payable annually, when
and as determined by the board of directors. Such dividends shall be payable
before any dividends shall be paid on or set apart for the Common stockholders,
and such dividends on the First Preferred Stock shall be cumulative so that if
at any time at the dividend period dividends at the rate of six (6%) per annum
should not have been paid upon or set apart for the First Preferred Stock, the
deficiency shall be fully paid or set apart without interest before any
dividends shall be paid or declared upon the Common Stock.
The First Preferred Stock may be redeemed or retired in whole or in part,
at the election of the board of directors at such time or times as it shall
determine at the purchase price paid per share with accrued dividends, if any,
provided, however, that not less than thirty (30) days' prior notice of such
intention to retire or redeem such stock shall be given the holders of such
stock so called for retirement or redemption by written notice postpaid to the
last known address of such stockholders as shown by the books of the
Corporation.
No First Preferred stockholders shall have any preferential right
respecting the retirement or redemption of the shares of First Preferred Stock
owned by him, but in the event less than all of the outstanding shares of First
Preferred Stock are to be redeemed such redemption may be made by lot or
pro-rata in such manner as may be determined by the board of directors of this
Corporation.
From and after the date fixed for such redemption all dividends on the
First Preferred Stock thereby called for redemption shall, unless the
Corporation shall default in the payment of the redemption price, cease and all
rights of the holders thereof as stockholders of the Corporation, except the
right to receive the redemption price and accrued dividends, if any, shall cease
and terminate.
In the event of the dissolution and winding up of the business of the
Corporation, whether voluntary or involuntary, or in the event of the sale of
all of the assets of the Corporation and the distribution of the proceeds
thereof, the holder of the First Preferred Stock shall be entitled to be paid in
full the purchase price paid per share, together with all unpaid dividends
accrued on such shares, before any sum whatsoever shall be paid
<PAGE>
in liquidation on account of the Common Stock, and thereafter the Common Stock
shall be entitled to the remaining assets.
4. LIMITATION ON STOCKHOLDERS' DIVIDENDS. No cash dividend on the capital
stock of the Corporation in excess of the amount required to pay dividends at
the rate of six (6%) per annum on the par value on the issued and outstanding
First Preferred Stock, shall be paid in any calendar year prior to January 1,
1946, unless the capital of the Corporation, its surplus and contingency
reserves shall aggregate ten (10%) per cent or more of all other liabilities of
the Corporation, and no cash dividend in excess of the amount required to pay
dividends at the rate of six (6%) per cent per annum on the par value of the
issued and outstanding First Preferred Stock shall be paid in any calendar year
between January 1, 1946 and January 1, 1951, unless the capital, surplus and
contingency reserves shall equal or exceed eight and one-half (8 1/2%) per cent
of all other liabilities; nor shall any cash dividends in excess of the amount
required to pay dividends at the rate of six (6%) per cent per annum on the par
value of the issued and outstanding First Preferred Stock be paid on the capital
stock in any calendar year after January 1, 1951, unless the capital, surplus
and contingency reserves shall equal or exceed seven (7%) per cent of all other
liabilities.
No cash dividend in any one calendar year in excess of the amount required
to pay dividends at the rate of six (6%) per cent per annum, on the issued and
outstanding First Preferred Stock, shall be paid on the capital stock unless the
policyholders dividend scale of the Corporation in effect for said calendar year
results in an average net cost equal to or less than the average net cost to the
ten legal reserve companies operating in the United States each having more than
$250,000,000 insurance in force and showing the lowest average net cost.
For the purpose of this comparison the average net cost shall be computed
on the Whole Life Plan for ages at issue 25, 35, and 45, and for a policy issued
in the amount of One Thousand ($1,000) Dollars. Cost for above ages shall be
determined for each year of issue since organization of the Corporation, except
that the cost on policies in force for twenty (20) years or more shall not be
used. The actual dividends payable for the year in question shall be used and
not a net cost based on dividend history. Companies doing primarily a mail
order business or operating through lodges or as fraternal organizations, as
well as United States Government Insurance, shall not be included in the
comparison.
5. REGISTERED OWNER. This Corporation shall be entitled to treat the
person or corporation in whose name any share of stock is registered as the
owner thereof for all purposes, and shall not be bound to recognize any
equitable right or claim to any interest in such share on the part of any other
person or corporation, whether or not the corporation shall have notice thereof,
save as expressly provided by the laws of the State of Iowa or as may hereafter
be provided.
6. TRANSFER OF STOCK. The shares of First Preferred Stock in this
Corporation shall be transferable only to a member in good standing of a County
Farm Bureau of
<PAGE>
this state and of the Iowa Farm Bureau Federation, and the shares of Common
Stock shall not be transferable in any manner except the shares owned by the
Iowa Farm Bureau Federation, and no transfer except as herein provided shall be
of any validity or cognizable by the Corporation, and no transfer of any stock
of this Corporation shall be of any validity until duly entered on the books of
the Corporation.
7. INCREASE OR DECREASE OF STOCK. From time to time any class of stock
may be increased or decreased as may be determined by vote of the stockholders
present at any annual or special meeting possessing voting rights to the extent
and in the manner provided by the statutes of the State of Iowa and these
Articles of Incorporation, and in the event it is determined to increase the
amount of First Preferred Stock it shall not be necessary to secure the consent
of the holders of the First Preferred Stock; provided, however, that no other
class of stock shall be created having preference over the First Preferred Stock
as now authorized or as may hereafter be authorized in respect of payment of
dividends out of the earnings or upon liquidation or dissolution unless the
amendment authorizing such change shall receive the affirmative vote of the
holders of not less than two-thirds of the outstanding First Preferred Stock
voting as a class.
8. All persons and/or corporations or associations who shall acquire stock
in this Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, and shall, by their subscription therefor and
acceptance thereof, be bound by the said Articles of Incorporation, and any
amendments thereto, and the By-Laws duly adopted thereunder.
ARTICLE V.
OFFICERS AND DIRECTORS
1. The business and affairs of this Corporation shall be managed by a
board of twelve (12) directors who shall be members in good standing of the Iowa
Farm Bureau Federation, and shall be elected by the stockholders of this
Corporation as hereinafter provided, and said directors shall hold office until
their successors are elected and qualified.
2. The term of office of the directors of this Corporation shall be two
(2) years and until their successors are elected and qualified.
3. At the first annual meeting of the stockholders of this Corporation to
be held in 1946, as provided in these Articles, seven (7) directors shall be
elected for a term which shall expire at the next annual meeting of the
stockholders and until their successors are elected and qualified; five (5)
directors for a term of two years, and then at each annual meeting thereafter
there shall be elected for a term of two years each as many directors as there
are directors whose terms expire.
4. Until the first annual meeting of the stockholders of this Corporation
to be held in 1946, the following persons shall constitute the directors of this
Corporation.
<PAGE>
Name Address
---- -------
Allan E. Kline Vinton, Iowa
E. Howard Hill Minburn, Iowa
Mrs. Raymond Sayre Ackworth, Iowa
A. Fletcher Aitchison Cascade, Iowa
J. S. Van Wort Hampton, Iowa
H. J. Shoemaker Hawarden, Iowa
J. Otto Gidel Lake City, Iowa
Russell Hayes Prairie City, Iowa
W. C. Molison Grinnell, Iowa
Lee Stephenson Eldon, Iowa
W. G. Lodwick Sedan, Iowa
F. A. Klopping Underwood, Iowa
5. Until the first annual meeting of the stockholders of this Corporation
and until their successors are elected and qualified the officers of this
Corporation shall be:
Office Name Address
------ ---- -------
President: Allan B. Kline Vinton, Iowa
Vice-President: E. Howard Hill Minburn, Iowa
Secretary: Donald B. Groves Des Moines, Iowa
Treasurer: Donald B. Groves Des Moines, Iowa
6. The officers of this Corporation shall be elected by the board of
directors immediately following the first annual meeting of the stockholders,
and thereafter immediately following each annual meeting, and shall hold office
for the term of one year or until their successors are elected and qualified.
7. The officers of this Corporation shall be a president, vice-president,
secretary, treasurer, and such other officers as the board of directors may from
time to time create, and the offices of secretary and treasurer may be held by
the same person.
8. The board of directors may fill all vacancies occurring in its
membership, and a director elected to fill a vacancy shall serve for the
unexpired term of the director whose vacancy he was elected to fill and/ or
until his successor is elected and qualified.
9. A majority of the board of directors shall constitute a quorum for the
transaction of all business of the Corporation.
10. The board of directors shall have full authority to adopt and enact
regulations and rules and by-laws for the proper government of the Corporation,
classify risks, promulgate rates therefor, adopt policy forms and riders,
appoint agents, officers,
<PAGE>
employees or others, require bonds for such officers and employees as they may
determine, issue such information as the welfare of the Corporation may require,
designate depositories, hold meetings at such times and places as the business
may require, and shall make a full and complete report of its doings at each
annual meeting of the Corporation.
11. The board of directors may appoint an executive committee, consisting
of five (5) members, and designate a chairman thereof; the members thereof shall
hold office for the term of one year or until their successors are appointed and
qualified; said term, however, being subject to the will and pleasure of the
board of directors. The executive committee shall have such powers and possess
such authority as the board of directors shall, from time to time, by by-law or
resolution vest in it.
12. The board of directors shall have power to appoint such other
committees as it may deem necessary for the efficient conduct of the business,
and every such committee so created by the board shall report its doings to the
meeting of the board of directors next ensuing.
13. All conveyances of real property, releases of mortgages, liens and
judgments, and all other instruments affecting real property, made by the
Corporation or required by law to be made a matter of record, shall be executed
by the president or vice-president and the secretary or assistant secretary and
attested to by the corporate seal.
ARTICLE VI.
MEETINGS OF STOCKHOLDERS
1. REGULAR ANNUAL MEETING. The first regular annual meeting of the
stockholders of this Corporation shall be held in the year 1946 and all
subsequent annual meetings of the stockholders of this Corporation shall be held
annually, at such time and place and upon such notice as the board of directors
shall, from time to time, fix and determine, provided such notice is not less
than ten days and such meeting shall be held at Des Moines, Iowa.
2. SPECIAL MEETINGS. Special Meetings of the stockholders may be called
at any time by the president upon the giving of five (5) days' notice in writing
by mail to the stockholders as shown by the records of this Corporation, and
such meetings shall be called at any time upon the request of stockholders
representing twenty-five (25%) per cent of the stock issued.
In case the president neglects or refuses to call a meeting at the request
of the stockholders, as herein provided, the stockholders may join in a call of
the stockholders at a special meeting upon giving to each stockholder of record
having voting privileges the same notice and in the same manner as hereinbefore
provided in this section.
<PAGE>
3. VOTING PRIVILEGE. At all meetings of the stockholders each Common
stockholder shall be entitled to one vote for each share of stock owned and held
by him or it.
ARTICLE VII.
CORPORATE PERIOD
This Corporation shall commence business under these Articles of
Incorporation as soon as it secures certificate of incorporation from the
Secretary of State of the State of Iowa, and certificate authorizing it to
transact an insurance business from the Commissioner of Insurance of the State
of Iowa, as by law provided, and shall have perpetual existence unless changed
as by law and these Articles of Incorporation required.
ARTICLE VIII.
PRIVATE PROPERTY EXEMPT
The private property of the stockholders of this Corporation shall be
exempt from the debts of the Corporation and from all liability therefor.
ARTICLE IX.
This Corporation shall have a corporate seal and shall have inscribed
thereon "Iowa Life Insurance Company, Des Moines, Iowa, Corporate Seal, " which
words may be changed at any time by resolution of the board of directors.
ARTICLE X.
BY-LAWS
The Board of Directors may at its pleasure make and adopt By-Laws which do
not conflict with the law or these Articles of Incorporation or By-Laws adopted
or ratified by the stockholders and alter or amend the same.
ARTICLE XI.
AMENDMENTS
These Articles of Incorporation may be amended at any annual meeting of the
stockholders or at any special meeting called for that purpose by a two-thirds
vote of the stockholders having voting privileges present at such meeting,
provided that no amendment shall be made or enacted unless the proposed
amendment or alteration has been filed in writing with the president and with
the secretary of this Corporation not less than sixty (60) days before the
meeting at which the same is offered. Notice of
<PAGE>
special meeting and the proposed amendment or alteration to these Articles of
Incorporation coming before such special meeting shall be given the stockholders
in the same manner and for the same period of time as is required for special
meetings of stockholders.
<PAGE>
STATE OF IOWA
[GRAPHIC]
OFFICE OF
THE SECRETARY OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
I, MELVIN D. LYNHORST, SECRETARY OF STATE OF THE STATE OF IOWA, DO HEREBY
CERTIFY THAT THE FOLLOWING AND HERETO ATTACHED IS A TRUE PHOTOSTATIC COPY OF
Amendment to Articles of Incorporation for IOWA LIFE INSURANCE COMPANY, of
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Des Moines, Iowa, changing the corporate title to FARM BUREAU LIFE INSURANCE
- -------------------------------------------------------------------------------
COMPANY.
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AS THE SAME APPEAR OF RECORD IN THIS OFFICE.
-----------------------------------
IN TESTIMONY WHEREOF, I HAVE HEREUNTO
SET MY HAND AND AFFIXED THE OFFICIAL SEAL
OF THE SECRETARY OF STATE AT THE CAPITOL, IN
DES MOINES, THIS 4th DAY OF August,
A.D. NINETEEN HUNDRED AND FIFTY-EIGHT.
/s/ Melvin D. Lynhorst
--------------------------------------------
SECRETARY OF STATE
--------------------------------------------
DEPUTY
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION,
AS AMENDED, OF
IOWA LIFE INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS:
That at the annual meeting of the stockholders of the Iowa Life Insurance
Company, held at the Fort Des Moines Hotel, Des Moines, Iowa, on the 1st day
of August, 1958, pursuant to notice in writing, stating the time, place and
purpose of said meeting mailed in accordance with the provisions of the Articles
of Incorporation and the laws of the State of Iowa, the following Amendment to
the Articles of Incorporation, a copy of which amendment was duly filed with the
president and secretary of this corporation more than sixty (60) days prior to
August 1, 1958, was adopted by a UNANIMOUS vote of all of the stockholders
present in person or represented by an authorized representative at said
meeting:
Amend Article I, entitled "Name," by striking all of said article, and
substituting in lieu thereof the following:
"The name of this corporation shall be 'FARM BUREAU LIFE INSURANCE
COMPANY'."
Amend Article IV, entitled "Capital Stock," by striking all of said
article, and substituting in lieu thereof the following:
"The authorized capital stock of this corporation is Five Hundred Thousand
($500,000.00) Dollars, divided into ten thousand (10,000) shares, of which
amount four thousand (4,000) shares of the par value of Fifty ($50.00)
Dollars per share, amounting to Two Hundred Thousand ($200,000.00) Dollars,
is Common Stock, and six thousand (6,000) shares of the par value of Fifty
($50.00) Dollars per share, amounting to Three Hundred Thousand
($300,000.00) Dollars, is six (6%) per cent cumulative First Preferred
Stock.
The nature and definite extent and preferences and privileges granted each
class is, as follows:
Section 1. STOCK ISSUE CONDITIONS. No stock of this corporation shall be
issued until this corporation has received payment in full therefor the
selling price as fixed by the board of directors, which shall be not less
than par, in cash or property, providing, however, that when it is issued
for anything other than money it must be done in accordance with the
statutes in force at the time said stock shall be issued.
Sec. 2. COMMON STOCK. The Common Stock shall have a par value of Fifty
($50.00) Dollars per share, and the holders of record thereof shall be
entitled to one vote per share at all
<PAGE>
-2-
meetings of the stockholders. The Common Stock shall be issued to and
owned only by the Iowa Farm Bureau Federation and shall be issued from time
to time upon application by it and upon tender and payment of the purchase
price as fixed by the board of directors, which shall be not less than par.
The holders of record of the Common Stock shall be entitled to vote at all
meetings of the stockholders by a duly authorized representative or
representatives.
If, after providing for the payment of full dividends for any fiscal year
on the First Preferred Stock and for any balance that remains due on the
cumulative dividends of such First Preferred Stock, there shall remain any
surplus net earnings or profits not in the opinion of the board of
directors required for the operation of the business of this corporation or
for the payment of its liabilities, it shall be applicable to dividends
upon the Common Stock for such fiscal year when and as from time to time
the same shall be declared by the board of directors, which dividend shall
not be cumulative but shall only be paid as surplus net earnings or profits
are available and dividends are declared. Such dividends shall be ratable
in proportion to the number of shares of Common Stock issued and
outstanding until dividends have been declared and set apart for the Common
Stock to the extent of, but not in excess of, six (6%) per cent for any one
fiscal year.
No common stockholder shall be entitled to dividends unless it is a
stockholder of record at the time of the declaration of the same.
The Common Stock or any part thereof may be called, redeemed or retired at
the option and election of the board of directors at such time or times and
in such manner as it shall determine upon the payment of the purchase price
paid this corporation for each share, with accrued dividends, if any,
provided, however, that not less than thirty (30) days' prior notice of
such intention to retire or redeem such stock shall be given the holder of
such stock called for retirement or redemption in writing, post-paid, to
the last known address of such stockholder as shown by the books of this
corporation.
From and after the date fixed for such retirement or redemption all
dividends on the Common Stock thereby called for retirement or redemption
shall, unless this corporation shall default in the payment of the
redemption price, cease, and all rights of the holders thereof as Common
stockholders of this corporation, except the right to receive the
redemption price and accrued dividends, if any, shall cease and terminate.
In the event of the dissolution or winding up of the business and affairs
of this corporation, whether voluntary or involuntary, or in the event of
the sale of all of the assets of this corporation and the distribution of
the proceeds thereof, the Common stockholders of record shall, after the
First Preferred stockholders have received distribution and payment of the
full purchase price paid per share to this corporation, together with all
unpaid accrued dividends, for their shares,
<PAGE>
-3-
as provided in Section 4 of this Article, be entitled to receive
distribution of all of the remaining assets of this corporation in
proportion to the purchase price paid per share to this corporation by said
Common stockholder.
Sec. 3. EXCHANGE OF ISSUED AND OUTSTANDING COMMON STOCK. Within a
reasonable time after the adoption of this amended and substituted Article
IV of the Articles of Incorporation of this corporation, the board of
directors shall call the present issued and outstanding Common Stock of
this corporation as permitted in the Articles of Incorporation, as amended,
and give the thirty (30) days' notice to the holders of record of the
Common Stock owned by the Iowa Farm Bureau Federation as provided in
Section 3 of Article IV of this corporation's Articles of Incorporation, as
amended, and all of the shares of the Class A Common Stock issued and of
record in the name of the Iowa Farm Bureau Federation, as of the date of
the adoption of this amendment, shall be surrendered up to this corporation
and exchanged for such number of shares or fractional part thereof of the
Common Stock authorized by this amendment as the total amount paid by the
Iowa Farm Bureau Federation, at the purchase price of One and 50/100
($1.50) Dollars per share will pay for, at the rate of Seventy-five
($75.00) Dollars per share for said Common Stock.
Sec. 4. FIRST PREFERRED STOCK. The First Preferred Stock shall have a par
value of Fifty ($50.00) Dollars per share and shall have no voting
privileges, and the holders of record of the First Preferred Stock shall be
entitled to receive, when and as declared by the board of directors,
dividends from the net earnings of this corporation at the rate of six (6%)
per cent per annum, payable annually, when and as determined by the board
of directors. Such dividends shall be payable before any dividends shall
be paid on or set apart for the Common stockholders, and such dividends on
the First Preferred Stock shall be cumulative so that if at any dividend
period dividends at the rate of six (6%) per cent per annum should not have
been paid upon or set apart for the First Preferred Stock the deficiency
shall be fully paid on or set apart without interest before any dividends
shall be paid or declared upon the Common Stock. No first preferred
stockholder shall be entitled to dividends unless he is a stockholder of
record at the time of the declaration of the same.
The First Preferred Stock may be redeemed or retired in whole or in part,
at the election and option of the board of directors, at such time or times
as it shall determine at the purchase price paid per share with accrued
dividends, if any, provided, however, that not less than thirty (30) days'
prior notice of such intention to retire or redeem such stock shall be
given the holders of such stock so called for retirement or redemption by a
written notice post-paid to the last known address of such stockholders as
shown by the books of the corporation.
Except as provided in the preceding paragraph, no First Preferred
stockholders shall have any preferential right respecting the
<PAGE>
-4-
retirement or redemption of the shares of First Preferred Stock owned by
him, but in the event less than all of the outstanding shares of First
Preferred Stock are to be redeemed, such redemption may be made by lot or
pro rata or by designation of stockholder or holders in such manner and
basis as may be determined by the board of directors of this corporation.
From and after the date fixed for such redemption all dividends on the
First Preferred Stock thereby called for redemption shall, unless the
corporation shall default in the payment of the redemption price, cease,
and all rights of the holders thereof as stockholders of the corporation,
except the right to receive the redemption price and accrued dividends, if
any, shall cease and terminate.
In the event of the dissolution and winding up of the business of the
corporation, whether voluntary or involuntary, or in the event of the sale
of all of the assets of the corporation and the distribution of the
proceeds thereof, the holder of the First Preferred Stock shall be entitled
to be paid in full the purchase price paid per share to this corporation,
together with all unpaid dividends accrued on such shares, before any sum
whatsoever shall be paid in liquidation on account of the Common Stock, and
thereafter the holders of the Common Stock shall be entitled to the entire
remaining assets ratably in proportion to the shares issued and
outstanding.
Sec. 5. LIMITATION ON STOCKHOLDER DIVIDENDS. No cash dividend on the
capital stock of this corporation in excess of the amount required to
pay dividends at the rate of six (6%) per cent per annum on the par
value of the issued and outstanding First Preferred Stock shall be paid
in any calendar year prior to January 1, 1946, unless the capital of the
corporation, its surplus and contingency reserves shall aggregate ten
(10%) per cent or more of all other liabilities of the corporation, and
no cash dividend in excess of the amount required to pay dividends at
the rate of six (6%) per cent per annum on the par value of the issued
and outstanding First Preferred Stock shall be paid in any calendar year
between January 1, 1946 and January 1, 1951, unless the capital, surplus
and contingency reserves shall equal or exceed eight and one-half (8
1/2%) per cent of all other liabilities; nor shall any cash dividends in
excess of the amount required to pay dividends at the rate of six (6%)
per cent per annum on the par value of the issued and outstanding First
Preferred Stock to be paid on the capital stock in any calendar year
after January 1, 1951, unless the capital, surplus and contingency
reserves shall equal or exceed seven (7%) per cent of all other
liabilities.
No cash dividend in any one calendar year in excess of the amount required
to pay dividends at the rate of six (6%) per cent per annum, on the issued
and outstanding First Preferred Stock, shall be paid on the capital stock
unless the policyholders dividend scale of the corporation in effect for
said calendar year results in an average net cost equal to or less than the
average net cost to the ten legal reserve companies, other than
<PAGE>
-5-
the Farm Bureau Life Insurance Company, having the most insurance in force
in the State of Iowa as of the preceding December 31st.
For the purpose of this comparison the average net cost shall be
computed on the Whole Life Plan for ages at issue at 25, 35 and 45, and
for a policy issued in the amount of One Thousand ($1,000.00) Dollars, cost
for above ages shall be determined from the information provided annually
by recognized life insurance publications. Companies doing primarily a
mail order business or operating through lodges or as fraternal
organizations, as well as United States Government insurance, shall not be
included in the comparison.
Sec. 6. REGISTERED OWNER. This corporation shall be entitled to treat the
person or corporation in whose name any share of stock is registered as the
owner thereof for all purposes, and shall not be bound to recognize any
equitable right or claim to any interest in such share on the part of any
other person or corporation, whether or not the corporation shall have
notice thereof, save as expressly provided by the laws of the State of Iowa
or as may hereafter be provided.
Sec. 7. TRANSFER OF STOCK. The shares of First Preferred Stock and Common
Stock shall not be transferable.
Sec. 8. INCREASE OR DECREASE OF STOCK. From time to time any class of
stock may be increased or decreased as may be determined by vote of the
stockholders present at any annual or special meeting possessing voting
rights to the extent and in the manner provided by the statutes of the
State of Iowa and these Articles of Incorporation, and in event it is
determined to increase the amount of First Preferred Stock it shall not be
necessary to secure the consent of the holders of the First Preferred
Stock; provided, however, that no other class of stock shall be created
having preference over the First Preferred Stock as now authorized or as
may hereafter be authorized in respect to payment of dividends out of the
earnings or upon liquidation or dissolution unless the amendment
authorizing such change shall receive the affirmative vote of the holders
of not less than two-thirds (2/3) of the outstanding First Preferred Stock
voting as a class.
Sec. 9. All persons and/or corporations or associations who shall acquire
stock in this corporation shall acquire the same subject to the provisions
of these Articles of Incorporation, and shall, by their subscription
therefor and acceptance thereof, be bound by the said Articles of
Incorporation and any amendments thereto, and the By-Laws duly adopted
thereunder."
Amend Article V, by striking all of Section 1 thereof, and substituting
in lieu thereof the following:
"Section 1. The business and affairs of this corporation shall be managed
by a board of directors of not less than twelve (12)
<PAGE>
-6-
nor more than twenty-one (21), the exact number to be fixed and defined by
a by-law adopted by a two-thirds (2/3) vote of the stockholders entitled to
vote and present in person or represented by an authorized representative
at any regular or special meeting of the stockholders of this corporation,
and said by-law shall only be amended in the same manner as is provided
herein for its adoption."
Amend Article V, by striking all of Section 2 thereof, and substituting in
lieu thereof the following:
"Sec. 2. The board of directors shall be divided into two classes,
district directors and directors at large, and the district directors shall
be elected to serve for terms of three (3) years and until their successors
are elected and have qualified, and the directors at large shall be elected
to serve for terms of two (2) years and until their successors are elected
and have qualified. The terms of the directors shall be on a staggered
basis so that approximately one-half of the directors at large shall be
elected each year and approximately one-third of the district directors
shall be elected each year. The manner, method and procedure for the
nomination and election of directors shall be as defined and provided in a
by-law duly adopted by a two-thirds (2/3) vote of the stockholders entitled
to vote and present in person or represented by an authorized
representative at any regular or special meeting of the stockholders of
this corporation, and said by-law shall only be amended in the same manner
as is provided herein for its adoption."
Amend Article V, by striking all of Section 3 thereof, and substituting in
lieu thereof the following:
"Sec. 3. The following named persons shall, from and after the date of the
adoption of this Amendment to the Articles of Incorporation, as amended,
constitute the board of directors of this corporation, and shall serve for
a term expiring as of the date set opposite their names and until their
successors are elected and qualified, in accordance with the terms and
provisions of the By-Laws. At the annual meeting of the stockholders of
this corporation held in the year of 1959, and at each annual meeting
thereafter, there shall be elected such number of directors as terms expire
as of the date of such annual meeting, and such additional directors, if
any, as provided for in the By-Laws, to serve for the terms fixed in the
By-Laws of this corporation and until their successors are elected and
qualified.
Expiration Date
Name Address of Term
---- ------- ---------------
K. Howard Hill Minburn, Iowa November, 1959
Howard Waters Danville, Iowa November 21, 1958
Mrs. H. L. Witmer Tipton, Iowa November 21, 1958
Clarence Myers Blue Earth, Minn. November, 1959
Charles Marshall Avoca, Nebraska November, 1959
John Ingels Maynard, Iowa November 21, 1958
<PAGE>
-7-
Expiration Date
Name Address of Term
---- ------- ---------------
Wayne Keith Burt, Iowa November, 1960
LeRoy Getting Sanborn, Iowa November 21, 1958
Wesley Seymour Lakeview, Iowa November, 1959
Harvey Moeckly Polk City, Iowa November 21, 1958
Wayne J. Farmer Van Horne, Iowa November, 1959
James B. Helmick Rte. #2, Columbus
Junction, Iowa November, 1960
R. Edwin Allen Lucas, Iowa November, 1959
John Kenagy Rte. #3, Clarinda,
Iowa November, 1960
Amend Article V, by striking all of Section 4 thereof.
Amend Article V, by striking all of Section 5 thereof, and substituting in
lieu thereof as Section 4 the following:
"Sec. 4. Until the first annual meeting of the stockholders of this
corporation held after the adoption of this Amendment, and until their
successors are elected and qualified, the officers of this corporation
shall be:
Office Name Address
------ ---- -------
President: E. Howard Hill Minburn, Iowa
Vice-President: Howard Waters Danville, Iowa
Secretary: Kenneth Thatcher Des Moines, Iowa
Treasurer: D. B. Groves Des Moines, Iowa."
Amend Article V, by striking all of Section 6 thereof, and substituting in
lieu thereof as Section 5 the following:
"Sec. 5. The officers of this corporation shall be elected by the board of
directors immediately following each annual meeting and shall hold office
for such term or until their successors are elected and qualified, as shall
be provided for in the By-Laws."
Amend Article V, by striking the numbers of Sections 7, 8, 9, 10, 11, 12
and 13, and re-numbering as "Sections 6, 7, 8, 9, 10, 11 and 12,"
respectively.
Amend Article V, by striking all of Section 14 thereof, and substituting in
lieu thereof as Section 13 the following:
"Sec. 13. PROPORTIONATE REPRESENTATION. The holder or holders jointly or
severally, of not less than one-fifth (1/5) of the aggregate vote of the
Common Stock, but less than a majority of the vote represented by the
shares of such stock, shall be entitled to nominate to be elected directors
in accordance with these Articles of Incorporation. In the event such
nomination shall be made, there shall be elected, to the extent that the
total number to be elected is divisible, such proportionate
<PAGE>
-8-
number from the persons so nominated as the aggregate vote of the shares of
stock held by persons making such nominations bear to the whole of Common
shares issued; provided the holders of the minority shares of such stock
shall only be entitled to one-fifth (1/5) of the total number of directors
to be elected for each one-fifth of the entire voting capital stock of such
corporation so held by them. This section shall not be construed to
prevent the holders of a majority of the votes represented by said Common
Stock from electing a majority of the directors. Vacancies occurring from
time to time shall be filled so as to preserve and secure to such minority
and majority stockholders proportionate representation as herein provided."
Amend Article VI, by striking all of said Article and substituting in lieu
thereof as Article VI the following:
"Section 1. REGULAR ANNUAL MEETING. The first regular annual meeting of
the stockholders of this corporation shall be held in the year 1946 and all
subsequent annual meetings of the stockholders of this corporation shall be
held annually at such time and place and upon such notice as the board of
directors shall from time to time, fix and determine, provided such notice
is not less than ten days and such meeting shall be held at Des Moines,
Iowa.
Sec. 2. SPECIAL MEETINGS. Special meetings of the stockholders, except for
the election of directors, may be called at any time by the president, and
shall be called by the president or secretary of this corporation upon the
call of the board of directors by a resolution duly adopted so providing
and directing and notice thereof shall be given the stockholders by written
or printed notice stating the object, time and place of such meeting, and
shall be mailed to the last known address of each stockholder as shown by
the books and records of this corporation at least fifteen (15) days prior
to such meeting."
Sec. 3. VOTING PRIVILEGE. At all meetings of the stockholders each Common
stockholder shall be entitled to one vote for each share of stock owned and
held by him or it."
Amend Article IX, by striking all of said Article and substituting in lieu
thereof as Article IX the following:
"This corporation shall have a corporate seal and shall have inscribed
thereon 'Farm Bureau Life Insurance Company, Des Moines, Iowa, Corporate
Seal.'"
Amend Article X, by striking all of said Article and substituting in lieu
thereof as Article X the following:
"The board of directors may, at its pleasure, make and adopt By-Laws and
amend the same which do not conflict with the law of the Articles of
Incorporation, as amended from time to time,
<PAGE>
-9-
or the By-Laws adopted by the stockholders. No amendment shall be made to
any By-Law which has been adopted by the stockholders unless the proposed
amendment or alteration has been filed in writing with the president and
with the secretary of the corporation not less than sixty (60) days prior
to the meeting at which the amendment is to be offered and voted upon."
CERTIFICATE
The President and Secretary of this corporation were duly authorized and
directed to sign, acknowledge, record, and do all things which are by law
required to execute, complete and carry into effect the within and foregoing
amendment to the Articles of Incorporation. We, E. Howard Hill and Kenneth
Thatcher, Chairman and Secretary, respectively, of said meeting, do hereby
certify the above to be a true and correct statement of the proceedings of the
stockholders at the above named meeting.
/s/ E. Howard Hill
---------------------------------
Chairman
/s/ Kenneth Thatcher
---------------------------------
Secretary
In conformity with the above resolution we, the President and Secretary,
respectively, of said corporation, have executed this instrument, and do hereby
sign and acknowledge the same for and on behalf of the said corporation this 1st
day of August, A. D., 1958.
/s/ E. Howard Hill
---------------------------------
President
/s/ Kenneth Thatcher
---------------------------------
Secretary
[STAMP]
[STAMP]
<PAGE>
-10-
STATE OF IOWA
SS.
COUNTY OF POLK
BE IT REMEMBERED, that on this 1st day of August, A. D., 1958, before me, a
Notary Public in and for said county and state, personally appeared E. Howard
Hill and Kenneth Thatcher, each being to me personally known, who being by me
duly sworn did say, that they are the President and Secretary, respectively, of
the Iowa Life Insurance Company, and that the foregoing instrument was signed
and sealed on behalf of said corporation by authority of its stockholders, and
that they acknowledge said instrument to be the voluntary act and deed of said
corporation, by them voluntarily executed.
/s/
---------------------------------
Notary Public in and for
POLK COUNTY, IOWA
[SEAL]
[STAMP]
<PAGE>
Exhibit 1.A. 6 (b)
By-Laws of the Company
Adopted ANNUAL MEETING
May 28, 1969
AMENDED AND SUBSTITUTED BY-LAWS
OF
FARM BUREAU LIFE INSURANCE COMPANY
ARTICLE I
CORPORATE NAME, LOCATION AND PURPOSE
Section 1. NAME. The name of this corporation shall be FARM BUREAU LIFE
INSURANCE COMPANY.
Section 2. LOCATION. The location of its principal or home office shall
be in Des Moines, Iowa.
Section 3. POWERS, OBJECTS AND PURPOSES. The corporate powers, objects
and purposes of this corporation are such as are provided in Article III of the
Articles of Incorporation of this corporation.
ARTICLE II
CORPORATE PERIOD
Section 1. CORPORATE PERIOD. The corporate period of this corporation
commenced on the 30th day of October, 1944, and shall have perpetual existence
thereafter unless changed as by law and the Articles of Incorporation required.
ARTICLE III
STOCK AND STOCKHOLDERS
(Authorized Capital- Eligibility to own stock- Conditions, etc.)
Section 1. AUTHORIZED CAPITAL. The authorized capital stock of this
corporation is Five Hundred Thousand Dollars ($500,000), divided into ten
thousand (10,000) shares, of which amount four thousand (4,000) shares of the
par value of Fifty Dollars ($50) per share, amounting to Two Hundred Thousand
Dollars ($200,000), is Common Stock, and six thousand (6,000) shares of the par
value of Fifty Dollars ($50) per share, amounting
<PAGE>
to Three Hundred Thousand Dollars ($300,000), is seven and one-half per cent (7
1/2%) cumulative First Preferred Stock.
Section 2. COMMON STOCK. The Common Stock shall have a par value of Fifty
Dollars ($50) per share, and the holders of record shall be entitled to one vote
per share at all meetings of the stockholders. The Common Stock shall be issued
to and owned only by the Iowa Farm Bureau Federation and shall be issued from
time to time upon application by it and upon tender of the purchase price as
fixed by the Board of Directors, which shall be not less than par. The holders
of record of the Common Stock shall be entitled to vote at all meetings of the
stockholders by a duly authorized representative or representatives.
If, after providing for the payment of full dividends for any fiscal year
on the First Preferred Stock and for any balance that remains due on the
cumulative dividends of such First Preferred Stock, there shall remain any
surplus net earnings or profits not in the opinion of the Board of Directors
required for the operation of the business of this corporation or for the
payment of its liabilities, it shall be applicable to dividends upon the Common
Stock for such fiscal year when and as from time to time the same shall be
declared by the Board of Directors, which dividends shall not be cumulative but
shall only be paid as surplus net earnings or profits are available and
dividends are declared. Such dividends shall be ratable in proportion to the
number of shares of Common Stock issued and outstanding until dividends have
been declared and set apart for the Common Stock to the extent of, but not in
excess of, seven and one-half (7 1/2 %) for any one fiscal year.
No Common stockholder shall be entitled to dividends unless it is a
stockholder of record at the time of the declaration of the same.
It is callable at the option of the Board of Directors at the selling
price, together with accrued dividends, if any, on thirty (30) days' prior
notice as provided in the Articles of Incorporation.
(b) FIRST PREFERRED STOCK. The holders of the First Preferred Stock shall
be entitled to receive when and as declared by the Board of Directors, dividends
from the net earnings of this corporation at the rate of seven and one-half per
cent (7 1/2 %) per annum on the par value, payable annually when and as
determined by the Board of Directors. Such dividends shall be payable before
any dividends shall be paid on or set apart for the common stockholders, and
shall be fully paid or set apart before any dividends shall be paid or declared
upon the Common Stock. It is to be sold at par and one-half per share,
one-third of which selling price shall be contributed surplus. It is callable
at the option of the Board of Directors at the selling price, together with any
accrued dividends, if any, on a thirty (30) day's prior notice, as provided in
the Articles of Incorporation. No first preferred stockholder shall be entitled
to dividends unless he or it is a stockholder of record at the time of the
declaration of the same.
<PAGE>
Section 3. LIMITATION ON DIVIDENDS. No cash dividends on the capital
stock of the corporation in excess of the amount required to pay dividends at
the rate of six per cent (6%) per annum on the par value of the issued and
outstanding First Preferred Stock shall be paid in any calendar year prior to
January 1, 1946, unless the capital of the corporation, its surplus and
contingency reserves, shall aggregate ten per cent (10%) or more of all other
liabilities of the corporation, and no cash dividend in excess of the amount
required to pay dividends at the rate of six per cent (6%) per annum on the par
value of the issued and outstanding First Preferred Stock, shall be paid in any
calendar year between January 1, 1946 and January 1, 1951, unless the capital
surplus and contingency reserves shall equal or exceed eight and one-half (8
1/2%) of all other liabilities, nor shall any cash dividends in excess of the
amount required to pay dividends at the rate of seven and one-half per cent (7
1/2%) per annum on the par value of the issued and outstanding First Preferred
Stock be paid on the capital stock in any calendar year after January 1, 1951,
unless the capital surplus and contingency reserves shall equal or exceed seven
per cent (7%) of all other liabilities.
No cash dividend in any one calendar year in excess of the amount required
to pay dividends at the rate of seven and one-half per cent ( 7 1/2%) per annum,
on the issued and outstanding First Preferred Stock, shall be paid on the
capital stock unless the policyholders' dividend scale of the corporation in
effect for said calendar year results in an average net cost equal to or less
than the average net cost to the ten legal reserve companies other than the Farm
Bureau Life Insurance Company, having the most insurance in force in the State
of Iowa as of the preceding December 31st.
For the purpose of this comparison the average net cost shall be computed
on the Whole Life Plan for ages at issued 25, 35, and 45, and for a policy
issued in the amount of One Thousand Dollars ($1,000). Cost for the above ages
shall be determined from the information provided annually by recognized life
insurance publications. Companies doing primarily a mail order business or
operating through lodges or as fraternal organizations, as well as United States
Government Insurance, shall not be included in the comparison.
Section 4. REGISTERED OWNER. This corporation shall be entitled to treat
the person or corporation in whose name any share of stock is registered as the
owner thereof for all purposes, and shall not be bound to recognize any
equitable right or claim to any interest in such share on the part of any other
person or corporation, whether or not the corporation shall have notice thereof,
save as expressly provided by the laws of the State of Iowa or as may hereafter
be provided.
Section 5. TRANSFER OF STOCK. The shares of First Preferred Stock and
Common Stock shall be transferable.
Section 6. STOCKHOLDERS' CONTRACTS. All persons who shall acquire stock
in this corporation shall acquire the same subject to the provisions of the
Articles of Incorporation and these By-Laws, and by the acceptance of a
certificate or certificates
<PAGE>
of stock in said corporation, agree to be bound by the Articles of Incorporation
and By-Laws and all amendments thereto.
Section 7. ISSUANCE OF STOCK. So long as Chapter 492, Code of Iowa, 1966,
is the law of the State of Iowa, no stock of this corporation shall be issued
until this corporation has first received payment in full therefor at par, in
cash or property, provided, however, that when stock is issued for anything
other than money, it must be in accordance with the statutes of the State of
Iowa in force at the time said stock is issued.
ARTICLE IV
MEETINGS OF STOCKHOLDERS
Section 1. ANNUAL MEETING. The first regular annual meeting of the
stockholders of this corporation shall be held in the year of 1946 and all
subsequent annual meetings of the stockholders of this corporation shall be held
annually at Des Moines, Iowa, at such time and place as the Board of Directors
shall fix and determine, provided not less than ten (10 ) days' notice in
writing is given each stockholder entitled to vote, by mailing the same to his
last known address.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders, except
for the election of directors, may be called at any time by the president, and
shall be called by the president or secretary of this corporation upon the call
of the Board of Directors by a resolution duly adopted so providing and
directing and notice thereof shall be given the stockholders by written or
printed notice stating the object, time and place of such meeting, and shall be
mailed to the last known address of each stockholder, as shown by the books and
records of this corporation at least fifteen (15) days prior to such meeting.
Section 3. VOTING PRIVILEGE. At all meetings of the stockholders each
Common stockholder shall be entitled to one vote for each share of stock owned
and held by him or it.
Section 4. QUORUM. At annual and special meetings of the stockholders,
the stockholders of this corporation represented in person or by duly authorized
representative shall constitute a quorum at all meetings of the stockholders.
Section 5. ORDER OF BUSINESS. The order of business at all stockholders'
meetings insofar as possible and appropriate shall be as follows:
a. Call of Roll.
b. Reading and disposing of any unapproved minutes.
c. Reports of officers and committees.
d. Unfinished business.
e. New business.
<PAGE>
f. Election of directors.
g. Adjournment.
ARTICLE V
(Stockholders' By-Law)
BOARD OF DIRECTORS
(Classification - Qualification - Nomination - Terms and Election)
Section 1. MANAGEMENT. The business and affairs of this corporation shall
be managed by a Board of Directors of not less than twelve (12) nor more than
twenty-one (21), divided into two classes, district directors and directors at
large, and the district directors shall be elected to serve for terms of three
(3) years and until their successors are elected and qualified, and the
directors at large shall be elected to serve for terms of two (2) years and
until their successors are elected and qualified.
Section 2. NUMBER, QUALIFICATION AND ELECTION OF DIRECTORS. The board of
directors shall be constituted, as follows: There shall be twelve (12)
directors who shall be residents of the State of Iowa and active members of the
board of directors of the Iowa Farm Bureau Federation, nine (9) of whom shall be
district directors, and three (3) of whom shall be directors at large elected to
serve for a term of two (2) years and until their successors are elected and
qualified; plus one (1) director at large elected to serve for a term of two (2)
years and until his successor is elected and qualified from each state, other
than the state of the domicile of the corporation, in which this corporation is
licensed and authorized to transact and conduct its insurance business, other
than for the purpose of investments or reinsurance, who shall be an active
member of the board of directors of the Farm Bureau corporation of each such
state; at such time as the premium volume in any state other than the state of
domicile equals or exceeds one-sixth (1/6) of the premium volume in Iowa, such
other state shall be entitled to one (1) district director and shall be further
entitled to an additional district director each time such state attains an
additional premium volume equal to one-twelfth (1/12) of the premium volume in
Iowa. The number of district directors in each such state, if any, shall be
reduced whenever the premium volume in such state is less than the premium
volume required above to attain such director and the difference is greater than
one twenty-fourth (1/24) of the premium volume in Iowa. Adjustments in the
number of district directors shall be made at the time of the regular annual
meeting of this corporation based upon premium volume defined as the
direct-business premiums and annuity considerations received less dividends
allowed in the preceding fiscal year. In the event there is to be a downward
adjustment in board representation, as provided for above, then and in that
event the board of directors' nominating committee for such state, as
hereinafter provided for, shall determine and designate which district director
or directors are to be continued in office and the board of directors upon
receiving such determination and designation shall forthwith accept the
resignation of the board member who is not continuing, said resignation to be
effective as of the date of the
<PAGE>
board meeting held in connection with the annual meeting of the company, and in
the event said board of directors' nominating committee for said state fails to
act and so designate then and in that event the board of directors shall accept
the resignation of the district director from said state whose term has the
least number of years to run, and if there be more than one such district
director, then said terminating director shall be chosen by lot among them. All
district directors shall be elected to serve for a term of three (3) years and
until their successors are elected and qualified from districts and in the
manner hereinafter in these ByLaws provided, except that a district director
newly qualified from a state, other than the state of domicile of this
corporation, may at the discretion of the nominating committee of his state, be
elected for a term of one (1) or two (2) years in order to provide for staggered
terms of district directors from said state.
Each district director must be an active member of the board of directors
of the Farm Bureau corporation of his state of residence and whenever he ceases
to be a director of the board of directors of such state Farm Bureau
corporation, there shall be a vacancy in the office of director of this
corporation.
Section 3. DISTRICTS DEFINED.
(a) The State of Iowa shall be divided into nine (9) districts numbered
from one (1) to nine (9), which districts shall be defined, as follows:
DISTRICT 1- Alameda, Black Hawk, Bremer, Buchanan, Chickasaw, Clayton,
Delaware, Dubuque, Fayette, Howard, Winneshiek;
DISTRICT 2- Butler, Cerro Gordo, Floyd, Franklin, Hancock, Humboldt,
Kossuth, Mitchell, Winnebago, Worth, Wright;
DISTRICT 3- Cherokee, Clay, Buena Vista, Dickinson, Emmet, Lyon, O'Brien,
Osceola, Palo Alto, Plymouth, Pocahontas, Sioux;
DISTRICT 4- Audubon, Calhoun, Carroll, Crawford, Guthrie, Harrison, Ida,
Monona, Sac, Woodbury, Shelby;
DISTRICT 5- Boone, Dallas, Greene, Grundy, Hamilton, Hardin, Jasper,
Marshall, Polk, Story, Webster;
DISTRICT 6- Benton, Cedar, Clinton, Iowa, Jackson, Johnson, Jones, Linn,
Poweshiek, Scott, Tama;
DISTRICT 7- Davis, Des Moines, Henry, Jefferson, Lee, Louisa, Keokuk,
Muscatine, Van Buren, Wapello, Washington;
DISTRICT 8- Appanoose, Clarke, Decatur, Lucas, Mahaska, Marion, Monroe,
Madison, Warren, Wayne;
<PAGE>
DISTRICT 9- Adams, Adair, Cass, Fremont, Mills, Montgomery, Pottawattamie,
Page, Ringgold, Taylor, Union.
(b) DISTRICTS DEFINED IN STATES OTHER THAN THE STATE OF THE DOMICILE OF
THIS CORPORATION. On and after the date any state, other than the
state of the domicile of this corporation, is entitled to one (1)
district director, said state shall constitute one (1) district, and
when such state is entitled to more than one district director as
herein provided said state may, if its nominating committee so
determines, divide itself into such number of districts as there are
district directors, or, in the alternative, said state may elect its
district directors on a state-wide basis and said directors shall
serve for the same terms as all other district directors. When a
state, other than the state of domicile of this corporation, is
entitled to an additional director, as hereinbefore provided, the
secretary of this corporation shall in writing so advise the
nominating committee of said state (the board of directors of the
state Farm Bureau corporation) and said committee shall then nominate
an eligible person, as defined in this Article, and file in writing
with the secretary of this corporation the name of such nominee
properly certified in the manner and in accordance with the terms of
Section 4 of this Article. The Board of Directors of this corporation
shall at its next meeting elect said nominee as a district director of
this corporation to serve until the next regular annual meeting of
this corporation and until his successor is elected and qualified.
SECTION 4. NOMINATION OF DIRECTORS- NOMINATING COMMITTEES. The Board of
Directors of the state Farm Bureau corporation of the state of the domicile of
this corporation and of any other state in which this corporation is licensed
and is authorized to transact its insurance business shall each, respectively,
constitute and be a stockholders' nominating committee for each state. Each
such state's nominating committee shall nominate the person or persons who are
eligible and qualified to be elected as directors of this corporation from such
state, as hereinbefore provided, and shall submit and file in writing with the
secretary of this corporation the names of such nominees, including the name of
the nominee, if any, who has been nominated and elected by the Board of
Directors as a district director since the date of the last annual meeting of
the stockholders of this corporation, not less than thirty (30) days prior to
the date of the meeting of the stockholders of this corporation at which they
are to be elected, and the secretary of this corporation shall submit the names
of such nominees to a nominating committee appointed by the president of this
corporation which said committee shall report and submit to the stockholders for
election only the names of those so nominated, if eligible, and no one else
shall be eligible for election to the Board of Directors of this corporation.
Section 5. MEMBERS OF BOARD OF DIRECTORS. The following named persons
shall constitute the Board of Directors of this corporation and shall serve for
the terms set opposite their names and until their successors are elected and
qualified. At the annual meeting of the stockholders of this corporation to be
held in the year 1970, and at each annual meeting thereafter, there shall be
elected such number of district directors as
<PAGE>
terms expire as of the date of such annual meeting for a term of three (3) years
and until their successors are elected and qualified, and such number of
directors at large as terms expire as of the date of such annual meeting for a
term of two (2) years and until their successors are elected and qualified.
(Directors at Large)
Name Address Expiration Date of Term
---- ------- -----------------------
J. Merrill Anderson RFD #1, Newton, Iowa 1970
Dean Kleckner Rudd, Iowa 1971
Mrs. Herbert Johnson RFD #1, Charles City, Iowa 1971
P. Dillon Hempstead Houston, Minnesota 1970
Roland G. Nelson Mead, Nebraska 1970
Kenneth McIntyre Harwood, North Dakota 1971
(District Directors)
District Name Address Expiration Date of Term
- -------- ---- ------- -----------------------
1 K. H. Hoppenworth RFD #1, Tripoli, Iowa 1971
2 Edward Engstrom RFD #1, Kanawha, Iowa 1970
3 Lyle R. Stephens LeMars, Iowa 1971
4 T. Selmer Hodne Box 103, Manilla, Iowa 1972
5 R. N. Burt RFD #1, Marshalltown, Iowa 1971
6 Robert Joslin RFD #2, Clarence, Iowa 1972
7 Fred Holsteen RFD #1, West Point, Iowa 1970
8 Lawrence W. Everett RFD, New Sharon, Iowa 1972
9 William E. McGrew Emerson, Iowa 1970
Section 6. ELIGIBILITY OF OFFICERS. No person shall be eligible to be
elected by the Board of Directors of this corporation to the offices of
president and vice-president of this corporation unless he is a resident of the
State of Iowa, an active member of the board of directors of the Iowa Farm
Bureau Federation. No person shall be eligible to be elected by the Board of
Directors of this corporation to the offices of secretary and treasurer of this
corporation unless he is a resident of the State of Iowa and the active
secretary and active treasurer of the Iowa Farm Bureau Federation.
Section 7. MEETINGS. The regular organization meeting of the Board of
Directors shall be held immediately after each annual meeting of the
stockholders, or as soon thereafter as a quorum of the Board of Directors can
be obtained for the election of officers and the transaction of any other
business which may properly be brought before the meeting and no notice of said
organization meeting shall be required.
Regular meetings of the Board of Directors shall be held quarterly at such
time and place and upon such notice as the directors may fix by resolution.
Special
<PAGE>
meetings may be called upon the order of the president. Notice of the time,
place and purpose of special meetings shall be given at least two (2) days
previous thereto by oral or written notice delivered personally or mailed to the
several directors at their last known address. Any director may waive notice of
any meeting of the Board of Directors. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting.
Section 8. QUORUM. A majority of the entire number of the Board of
Directors shall constitute a quorum of the board for the transaction of business
at any meeting of the Board of Directors. A majority vote of the members
present in quorum shall determine any matters not herein or in the Articles and
ByLaws requiring a different vote. If less than a majority of the directors may
be present at any meeting, a majority of the members present may adjourn the
meeting from time to time without further notice.
Section 9. VACANCIES. The Board of Directors shall fill all vacancies
occurring in its membership and that of the officers of this corporation by the
election of a person eligible to serve as such, as in these ByLaws authorized
and provided, and a director or officer so elected to fill a vacancy shall serve
for the unexpired term of the director or officer whose vacancy he was elected
to fill and/ or until his successor is elected and qualified. Whenever a member
of the Board of Directors of this corporation ceases to be eligible by reason of
the termination of his membership as an active member of the Board of Directors
of the Iowa Farm Bureau Federation , or of a state Farm Bureau corporation of a
state in which this corporation is licensed and authorized to transact its
insurance business, there shall be a vacancy in the office of said director as a
member of the Board of Directors of this corporation, and the Board of Directors
of this corporation shall fill such vacancy by electing the person nominated and
eligible to be elected as a director of this corporation, as in these ByLaws
provided, to serve until the next regular annual meeting of the stockholders of
this corporation and until his successor is elected and qualified, and his name
shall be placed in nomination for election as a director of this corporation by
the nominating committee and elected to serve for the remainder of a two-year
term if a director at large, and a three-year term if a district director, and
until his successor is elected and qualified.
Section 10. This Article V of the ByLaws of this corporation is a bylaw
adopted by the stockholders of this corporation in accordance with the laws of
this state and the Articles of Incorporation, as amended, of this corporation,
and may be amended only as authorized and provided in Article XI of these
ByLaws.
ARTICLE V-A
BOARD OF DIRECTORS- GENERAL PROVISIONS
Section 1. RULES AND REGULATIONS. The Board of Directors may from time
to time adopt rules and regulations and such rules and regulations shall
constitute by
<PAGE>
reference a part of these ByLaws, and shall be binding upon the stockholders of
this corporation and upon anyone doing business with this corporation.
Section 2. COMMITTEES.
(a) AUDIT AND BUDGET. The audit and budget committee shall consist of
three (3) members who shall be members of the Board of Directors and shall be
appointed by the president and approved by the Board of Directors. The chairman
thereof shall be designated by the president. This committee shall review at
periodic intervals, all receipts received and all disbursements made from the
funds of the corporation and perform such other duties as may be delegated to it
by the Board of Directors.
(b) INVESTMENT. The investment policy of the corporation shall be
determined by the Board of Directors, which shall have the power to determine
the classes of investments and the percentage of investment to be made within
each of said classifications, subject to and in accordance with the provisions
of Section 515.35, Code of Iowa, 1966. The investment committee shall consist
of the president, secretary, treasurer, general counsel and the general manager
of the corporation, all of whom shall serve by virtue of their office. The
president shall serve as chairman of said committee and in the absence of the
president, those present shall designate an acting chairman. The committee
shall elect its secretary. The secretary of the committee shall keep a complete
record of the proceedings thereof. The investment committee shall make a report
to the Board of Directors each month, which report shall show the investments
purchased, sold or retired during the month immediately preceding, and in
addition, said committee shall, annually, make a full report to the Board of
Directors, covering all investment activities with particular reference to
purchases and sales during the preceding fiscal year. The Board of Directors
may call for special reports on investments at any time they so desire.
The investment committee shall have the duty and the power to authorize and
direct the mode, manner and time of making and calling in investments, and the
sale or transfer of investments and the reinvestment of the proceeds thereof,
and to examine all funds and securities as often as they deem necessary or when
required to do so by the Board of Directors. The investment committee shall
have the duty and authority from time to time and whenever necessary to
authorize the execution of all contracts, deeds, conveyances and any other
instruments of the corporation necessary for the assignment, transfer and sale
of investments of the corporation requiring corporate signature. A majority of
the members of the committee shall constitute a quorum. There shall also be a
purchasing committee, which said committee shall consist of this corporation,
all of whom shall serve by virtue of their office. The treasurer shall serve as
chairman of said committee and in the absence of the treasurer, those present
shall designate an acting chairman. The purchasing committee shall select its
secretary who shall keep a complete record of the proceedings thereof. The
purchasing committee shall have the same power and authority, relative to the
handling, acquisition and disposition of investments of every kind and nature,
coextensive with the investment committee. A majority of the members of the
committee shall constitute a quorum. The
<PAGE>
purchasing committee shall make a detailed report to the investment committee
quarterly, covering the activities of the purchasing committee for the preceding
three months' period.
The investment of the funds of the corporation and the deposit of the
reserve on all policies and contracts issued by the corporation shall comply
with the laws of the State of Iowa.
Section 3. FIDELITY BONDS. The Board of Directors shall require the
officers, agents and employees having custody of any of its funds or property to
give the corporation a bond conditioned for the faithful discharge of the duties
of such person and in such amount and with such company as surety as the Board
of Directors shall require or approve. The cost of such bond shall be borne by
the corporation.
Section 4. AUDITS. The Board of Directors shall have an annual audit made
of the records of the corporation for submission to the members at the annual
meeting. The Board of Directors may have other audits made from time to time
whenever they shall deem such additional audits necessary.
ARTICLE VI
OFFICERS
(Officers - Election - Term - Duties)
Section 1. OFFICERS. The officers of this corporation shall be a
president, vice president, secretary and treasurer, and the office of secretary
and treasurer may be held by the same person. The Board of Directors may also
elect or appoint a general manager, an assistant general manager, assistant
secretaries, an assistant treasurer, a general counsel, an assistant general
counsel, an underwriting secretary, a medical director, an actuary and such
other officers as the interests of the company may require. The Board of
Directors shall have power to prescribe additional powers and duties for the
officers and employees herein provided for, and to change such powers and duties
whenever the board may deem best.
Section 2. ELECTION AND TERM OF OFFICE. The president, vice president,
treasurer, and secretary shall be elected at the organization meeting of the
Board of Directors and all other officers shall be appointed or elected at such
time as the Board of Directors in its discretion shall determine. The term of
office of the president, vice president, treasurer and secretary shall be for
one (1) year, or until their successors are elected and qualified. The term of
office of all other elected or appointed officers shall be at the will and
pleasure of the Board of Directors.
Section 3. DUTIES OF OFFICERS.
<PAGE>
(a) PRESIDENT. The president shall preside over all meetings of the Board
of Directors and meetings of the stockholders; shall execute personally or
through an agent duly authorized by the Board of Directors, in behalf of the
corporation, all contracts, deeds or other instruments which have been approved
by the Board of Directors; shall be a member ex-officio of all committees of the
Board of Directors; and shall have general supervision and administrative
control over all of the affairs of the corporation.
(b) VICE PRESIDENT. In the absence or the inability or disability of the
president, or his refusal to act, his duties shall devolve upon and be
discharged by the vice president.
(c) SECRETARY. The secretary shall be the custodian of all books, papers,
records, documents, official seal and property of the corporation, except as
otherwise authorized by the Board of Directors. He shall conduct by himself or
through such assistant secretaries and other subordinates such business as shall
be authorized by the Board of Directors; he shall serve or cause to be served,
printed and published, such notice as shall be required by law, by these ByLaws
and by resolutions of the Board of Directors; he shall keep the corporate
records, carry on all proper correspondence and shall act as secretary in the
meetings of the stockholders and the Board of Directors, and shall perform such
other administrative duties as shall be assigned to him from time to time by the
Board of Directors.
(d) TREASURER. The treasurer shall have charge of the funds of the
corporation and shall pay them out as ordered by the Board of Directors. He
shall keep an accurate account of receipts and disbursements and submit a
monthly report thereof to the Board of Directors at their regular meeting and
oftener as required; he shall also give a full and complete report at the annual
meeting of the stockholders.
(e) GENERAL MANAGER. Subject to the business and administrative policies
adopted by the Board of Directors from time to time and under the supervision
and direction of the Iowa Farm Administrative Board, the corporate manager, the
general manager shall be responsible for the supervision and direction of the
business and affairs of this corporation and its employees and agents.
(f) ASSISTANT GENERAL MANAGER. The assistant general manager shall, in
the absence of the general manager, perform the duties of the general manager;
he shall at other times have such duties and authority as shall be delegated to
him and shall assist the general manager and be subject to the supervision and
direction of the general manager.
(g) ASSISTANT SECRETARY. The assistant secretary or secretaries shall
perform the duties of the secretary in the absence of the secretary and shall
perform such other duties as may from time to time be required by the Board of
Directors.
(h) ASSISTANT TREASURER. Such of the powers and duties vested in the
treasurer may be delegated by the Board of Directors to an assistant treasurer
or assistant
<PAGE>
treasurers as the Board of Directors in its discretion may deem necessary or
desirable. The assistant treasurer or assistant treasurers shall be vested only
such powers and duties as are so delegated. Assistant treasurers shall, in the
performance of their duties as delegated, be subject to the direction,
supervision and control of the treasurer.
(i) GENERAL COUNSEL. The general counsel, subject to the supervision of
the Board of Directors, shall be responsible for all matters of legal import
concerning the company.
(j) ASSISTANT GENERAL COUNSEL. The assistant general counsel shall, in
the absence of the general counsel, perform the duties of the general counsel;
he shall at other times have such duties and authority as shall be delegated to
him and shall assist the general counsel and be subject to the supervision and
direction of the general counsel.
(k) UNDERWRITING SECRETARY. It shall be the duty of the underwriting
secretary to have general supervision of the underwriting and acceptance of
risks and applications for insurance. No policy shall be issued unless the
application shall have first been approved by either the Underwriting Secretary
or an underwriter designated by him.
(l) MEDICAL DIRECTOR. It shall be the duty of the medical director to
have general supervision of medical underwriting and he shall be under the
general supervision of the underwriting secretary. He shall have supervision
over all medical examiners and cause to be kept such records as may be required
by the business of the company, and perform such other duties relating to the
underwriting of the company as shall from time to time be delegated to him.
(m) ACTUARY. The actuary shall be directly responsible to the general
manager and through him to the Iowa Farm Administrative Board, and through it to
the Board of Directors of this corporation for the performance and carrying out
of his responsibilities. It shall be the duty of the actuary to supervise the
compilation of all statistics and calculation of premium rates and the
allocation and distribution of surplus, and the performance of such other duties
as shall be assigned to him from time to time by the general manager.
ARTICLE VII
Section 1. KINDS OF INSURANCE. The Board of Directors shall determine the
kinds of insurance and the nature of the risks to be covered, subject and
pursuant to the provisions of the Articles of Incorporation, as amended, and the
applicable laws of the State of Iowa.
Section 2. FORM OF POLICIES. The policies of insurance issued by the
company shall be in such form and upon such terms and conditions as may be
determined and authorized by the Board of Directors.
<PAGE>
Section 3. PREMIUM. The Board of Directors shall fix the amount of the
premium and valuations for each policy and contract of insurance, with said
premiums to be paid monthly, quarterly, semi-annually or annually.
Section 4. REINSURANCE. The company may contract for reinsurance on its
own risks and may make and issue reinsurance contracts on the risks of others.
Such contracts may be on a participating or on a non-participating basis and may
be with or without contingent liability.
ARTICLE VIII
FISCAL YEAR
Section 1. FISCAL YEAR. The fiscal year of the company shall commence
with the first day of January of each year and terminate with the 31st day of
December each year.
ARTICLE IX
CORPORATE SEAL
Section 1. CORPORATE SEAL. The corporate seal of the corporation shall be
in the form of a circle and shall have inscribed therein the name of the
corporation and the words "Corporate Seal, Iowa."
ARTICLE X
EMPLOYEES
Section 1. EMPLOYEES. No person who is a member of the Board of
Directors, other than the president, and no person who is a relative of any
member of the Board of Directors or any officer of this corporation shall be
eligible for employment by the corporation.
ARTICLE XI
(Stockholders' By-Law)
AMENDMENTS TO BY-LAWS
Section 1. AMENDMENTS TO BYLAWS. The Board of Directors may, at its
pleasure, make and adopt ByLaws and amend the same which do not conflict with
the law or the Articles of Incorporation, as amended from time to time, or the
ByLaws adopted by the stockholders. No amendment shall be made to any ByLaw
which has been adopted by the stockholders unless the proposed amendment or
alteration has been filed in writing
<PAGE>
with the president and with the secretary of the corporation not less than sixty
(60) days prior to the meeting at which the amendment is to be offered and voted
upon.
<PAGE>
AMENDMENTS TO THE
AMENDED AND SUBSTITUTED BY-LAWS
OF
FARM BUREAU LIFE INSURANCE COMPANY
Adopted August 26, 1975
AMEND ARTICLE I of the By-Laws, entitled CORPORATE NAME, LOCATION AND
PURPOSES, by striking Section 2 thereof in its entirety and by substituting in
lieu thereof the following:
"Section 2. LOCATION. The location of its principal or home office shall
be in West Des Moines, Polk County, Iowa."
AMEND ARTICLE IV, entitled MEETINGS OF STOCKHOLDERS, by striking Section 1
in its entirety and by substituting in lieu thereof the following:
"Section 1. REGULAR ANNUAL MEETING. The regular annual meeting of the
stockholders and of this corporation held in the year 1975, and all subsequent
annual meetings of the stockholders of this corporation shall be held annually
at such time and place and upon such notice as the Board of Directors shall from
time to time fix and determine. Such notice shall be given in writing and
mailed to the stockholders' last known address as shown by the books and records
of the corporation not less than ten (10) days prior to such meeting, informing
the stockholders of the place, date and hour of said stockholders' meeting, and
said meeting shall be held in West Des Moines, Iowa, or at such other place in
Polk County, Iowa, as the Board of Directors may fix and determine, providing
notice of any such meeting at a place other than West Des Moines, Iowa, shall be
given to the stockholders in writing and mailed to the stockholders' last known
address as shown by the books and records of the corporation at least twenty
(20) days prior to such meeting, informing the stockholders of the place, date
and hour of said stockholders' meeting."
AMEND ARTICLE V-A, entitled BOARD OF DIRECTORS - GENERAL PROVISIONS, by
striking Section 2(a) in its entirety and by substituting in lieu thereof the
following:
"(a) BUDGET AND FINANCE. The budget and finance committee shall consist
of three (3) members who shall be members of the Board of Directors and shall be
appointed by the president and approved by the Board of Directors. The chairman
thereof shall be designated by the president. This committee shall review at
periodic intervals, all receipts and all disbursements made from the funds of
the corporation and perform such other duties as may be delegated to it by the
Board of Directors."
FURTHER AMEND ARTICLE V-A, by striking from Section 2(b), entitled
INVESTMENT, the figures and words "515.35, Code of Iowa, 1966" appearing in line
five thereof and by substituting in lieu thereof the figures and words "511.8,
Code of Iowa, 1975."
<PAGE>
AMEND ARTICLE IX, entitled CORPORATE SEAL, by striking said Article in its
entirety and by substituting in lieu thereof the following:
"ARTICLE IX
CORPORATE SEAL
Section 1. CORPORATE SEAL. The corporation shall have a corporate seal
and shall have inscribed thereon, 'Farm Bureau Life Insurance Company, Corporate
Seal, Iowa.'"
<PAGE>
AMENDMENT TO
AMENDED AND SUBSTITUTED BY-LAWS
FARM BUREAU LIFE INSURANCE COMPANY
26 November, 1975
ARTICLE XII
INDEMNIFICATION - OFFICERS, DIRECTORS AND EMPLOYEES
This corporation shall make indemnification to the following extent and
under the following circumstances:
a. To indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right or the corporation) by reason of the fact that
he is or was a director, officer, employee, or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
enterprise, against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
b. To indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue, or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of this duty to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
<PAGE>
c. To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in paragraphs "a" and "b," or in
defense of any claim, issue, or matter herein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred
by him in connection therewith.
d. Any indemnification under paragraphs "a" and "b" (unless ordered by a
court") shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the director, officer,
employee, or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs "a" and "b." Such
determination shall be made (1) by the board of directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit, or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the shareholders.
e. Expenses, including attorney fees, incurred in defending a civil or
criminal action, suit, or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit, or proceeding as authorized in
the manner provided in paragraph "d" upon receipt of an undertaking by or on
behalf of the director, officer, employee, or agent to repay such amount unless
it shall ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this section.
f. The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such person.
g. The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
<PAGE>
Section 9. VACANCIES. The Board of Directors shall fill all vacancies
occurring in its membership and that of the officers of this corporation by the
election of a person eligible to serve as such, as in these ByLaws authorized
and provided, and a director or officer so elected to fill a vacancy shall serve
for the unexpired term of the director or officer whose vacancy he was elected
to fill and/ or until his successor is elected and qualified.
Whenever a member of the Board of Directors of this corporation ceases to
be eligible by reason of the termination of his membership as an active member
of the Board of Directors of the Iowa Farm Bureau Federation, or of a state Farm
Bureau corporation of a state in which this corporation is licensed and
authorized to transact its insurance business, there shall be a vacancy in the
office of said director as a member of the Board of Directors of this
corporation, and the Board of Directors of this corporation shall fill such
vacancy by electing the person nominated and eligible to be elected as a
director of this corporation, as in these ByLaws provided, to serve for the
unexpired term of the director whose vacancy he was elected to fill and/ or
until his successor is elected and qualified.
<PAGE>
Adopted: September 30, 1980
AMENDMENTS TO THE
AMENDED AND SUBSTITUTED BY-LAWS
OF
FARM BUREAU LIFE INSURANCE COMPANY
AMEND ARTICLE V-A, Section 2(b), entitled "Investment," by striking it in
its entirety and substituting in lieu thereof the following:
"(b) INVESTMENT AND PURCHASE COMMITTEE. The investment policy of the
Corporation shall be determined by the Board of Directors, which shall have
the power to determine the classes of investments and the percentage of
investment to be made within each of said classifications, subject to and in
accordance with the provisions of Section 511.8 of the 1979 Code of Iowa.
The Investment and Purchase Committee shall consist of the secretary,
treasurer and general counsel and the general manager of the Corporation and
the head of the Investment Department shall be an ex officio member of this
Committee without portfolio, all of whom shall serve by virtue of their
office. The treasurer shall serve as chairman of said Committee and in his
absence the general counsel shall act as chairman; the Committee shall elect
its secretary. The secretary of the Committee shall keep a complete record
of the proceedings thereof. The Investment and Purchase Committee shall make
a report to the Board of Directors each month, which report shall show the
investments purchased, sold, or retired during the month immediately
preceding, and in addition, said Committee shall, annually, make a full
report to the Board of Directors, covering all investment activities with
particular reference to purchases and sales during the preceding fiscal year.
The Board of Directors may call for special reports on investments at any
time they so desire.
The Investment and Purchase Committee shall have the duty and the power to
authorize and direct the mode, manner and time of making and calling in
investments, and the sale or transfer of investments and the reinvestment of the
proceeds thereof, and to examine all funds and securities as often as they deem
necessary or when required to do so by the Board of Directors. The Investment
and Purchase Committee shall have the duty and authority from time to time and
whenever necessary to authorize the execution of all contracts, deeds,
conveyances and any other instruments of the Corporation necessary for the
assignment, transfer and sale of investments of the Corporation requiring
corporate signature. A majority of the members of the Committee shall
constitute a quorum.
The investment of the funds of the Corporation and the deposit of the
reserve on all policies and contracts issued by the Corporation shall comply
with the laws of the State of Iowa."
<PAGE>
AMENDMENTS
TO THE
AMENDED AND SUBSTITUTED BY-LAWS
OF
FARM BUREAU LIFE INSURANCE COMPANY
West Des Moines, Iowa
AMEND ARTICLE III, Section 1, entitled "AUTHORIZED CAPITAL", by striking
the first paragraph in its entirety and by substituting in lieu thereof the
following:
"Section 1. AUTHORIZED CAPITAL. The authorized capital stock of this
corporation is One Million Five Hundred Fifty Thousand Dollars ($1,550,000.00),
divided into thirty one thousand (31,000) shares, of which amount twenty-five
thousand (25,000) shares of the par value of Fifty Dollars ($50.00) per share,
amounting to One Million Two Hundred Fifty Thousand Dollars ($1,250,000) is
Common Stock, and six thousand (6,000) shares of the par value of Fifty Dollars
($50.00) per share, amounting to Three Hundred Thousand Dollars ($300,000) is
seven and one-half per cent (7 1/2%) cumulative First Preferred Stock."
AMEND ARTICLE III, Section 2 (a)., entitled "COMMON STOCK", by striking the
second paragraph in its entirety and substituting in lieu thereof the following:
"If, after providing for the payment of full dividends for any fiscal year
on the First Preferred Stock and for any balance that remains due on the
cumulative dividends of such First Preferred Stock, there shall remain any
surplus net earnings or profits not in the opinion of the board of directors
required for the operation of the business of this corporation or for the
payment of its liabilities, it shall be applicable to dividends upon the Common
Stock for such fiscal year when and as from time to time the same shall be
declared by the board of directors, which dividend shall not be cumulative but
shall only be paid as surplus net earnings or profits are available and
dividends are declared. Such dividends shall be ratable in proportion to the
number of shares of Common stock issued and outstanding."
AMEND ARTICLE III, Section 3, entitled "LIMITATION ON DIVIDENDS" by
striking the Section in its entirety.
<PAGE>
Adopted March 1, 1984
AMENDMENTS TO THE
AMENDED AND SUBSTITUTED BY-LAWS
OF
FARM BUREAU LIFE INSURANCE COMPANY
AMEND ARTICLE V-A, Section 2(b), entitled "Investment," by striking it in
its entirety and substituting in lieu thereof the following:
(b) INVESTMENT COMMITTEE. The investment policy of the Corporation shall
be determined by the Board of Directors, which shall have the power to determine
the classes of investments and the percentage of investment to be made within
each of said classifications, subject to and in accordance with the provisions
of Section 511.8 of the Code of Iowa, as amended. The Investment Committee
shall consist of the Secretary, Treasurer, General Counsel, General Manager,
Assistant General Manager, Controller and Financial Planning Officer, Vice
President Life and Health Insurance, and Vice President Investments of the
Corporation, all of whom shall serve by virtue of their office. The Treasurer
shall serve as chairman of said Committee and in his absence the General Counsel
shall act as chairman; the Committee shall elect its Secretary. The secretary
of the Committee shall keep a complete record of the proceedings thereof. The
Investment Committee shall make a report to the Board of Directors each month,
which report shall show the investments purchase, sold or retired during the
month immediately preceding, and in addition, said Committee shall, annually,
make a full report to the Board of Directors, covering all investment activities
with particular reference to purchases and sales during the preceding fiscal
year. The Board of Directors may call for special reports on investments at any
time they so desire.
The Investment Committee shall have the duty and the power to authorize
and direct the mode, manner and time of making and calling in investments, and
the sale or transfer of investments and the reinvestment of the proceeds
thereof, and to examine all funds and securities as often as they deem necessary
or when required to do so by the Board of Directors. The Investment Committee
shall have the duty and authority from time to time and whenever necessary to
authorize the execution of all contracts, deeds, conveyances and any other
instruments of the Corporation necessary for the assignment, transfer and sale
of investments of the Corporation requiring corporate signature. A majority of
the members of the Committee shall constitute a quorum.
The investment of the funds of the Corporation and the deposit of the
reserve on all policies and contracts issued by the Corporation shall comply
with the laws of the State of Iowa.
AMEND ARTICLE III, Section 4., entitled "REGISTERED OWNER" by renumbering
as Section 3.
<PAGE>
AMEND ARTICLE III, Section 5., entitled "TRANSFER OF STOCK" by renumbering
as Section 4.
AMEND ARTICLE III, Section 6., entitled "STOCKHOLDERS' CONTRACTS" by
renumbering as Section 5.
AMEND ARTICLE III, Section 7., entitled "ISSUANCE OF STOCK" by renumbering
as Section 6.
<PAGE>
[LETTERHEAD]
January 30, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentleman,
With reference to the Registration Statement on Form S-6 filed by Farm Bureau
Life Insurance Company ("Company") and its Farm Bureau Life Variable Account II
with the Securities and Exchange Commission covering certain variable universal
life insurance policies, I have examined such documents and such law as I
considered necessary and appropriate, and on the basis of such examinations, it
is my opinion that:
(1) Company is duly organized and validly existing under the laws of the State
of Iowa.
(2) The variable universal life policies, when issued as contemplated by the
said Form S-6 Registration Statement will constitute legal, validly issued
and binding obligations of Farm Bureau Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to the said Form
S-6 Registration Statement and to the reference to my name under the caption
"Legal Matters" in the Prospectus contained in the said Registration Statement.
In giving this consent, I am not admitting that I am in the category of persons
whose consent is required under Section 7 if the Securities Act of 1933.
Very truly yours,
/s/ Stephen M. Morain
Stephen M. Morain
Senior Vice President
& General Counsel
<PAGE>
[Letterhead]
January 30, 1998
Farm Bureau Life Insurance Company
5400 University Avenue
West Des Moines, Iowa 50266
Gentlemen:
This opinion is furnished in connection with the registration by Farm Bureau
Life Insurance Company of a flexible premium variable life insurance policy
("Policy") under the Securities Act of 1933, as amended. The prospectus
included in this Initial Filing to the Registration Statement on Form S-6
describes the Policy. I have provided actuarial advice concerning the
preparation of the policy form described in the Registration Statement, and I am
familiar with the Registration Statement and exhibits thereto.
It is my professional opinion that:
(1) The information contained in the examples set forth in Appendix B of the
Prospectus, based on the assumptions stated in the examples, is consistent
with the provisions of the Policy.
(2) The fees and charges deducted under the Policy, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to
be incurred and the risks assumed by the insurance company.
I hereby consent to the use of this opinion as an exhibit to the Initial Filing
to the Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus.
Sincerely,
/s/ Christopher G. Daniels
Christopher G. Daniels, FSA, MAAA
Life Product Development and Pricing
Vice President
Farm Bureau Life Insurance Company
<PAGE>
[Letterhead of Sutherland, Asbill & Brennan, L.L.P.]
January 28, 1998
Farm Bureau Life Insurance Company
5400 University Avenue
West Des Moines, Iowa 50266
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal Matters"
in the prospectus filed as part of the initial registration statement on Form
S-6 for Farm Bureau Life Variable Account II. In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933.
Sincerely,
/s/ Stephen E. Roth
Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan, L.L.P.
<PAGE>
POWER OF ATTORNEY
The undersigned directors of Farm Bureau Life Insurance Company, an Iowa
corporation (the "Company"), hereby constitute and appoint Edward M.
Wiederstein, and Stephen M. Morain, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance policies or annuity
contracts: registration statements on any form or forms under the Securities Act
of 1933 and under the Investment Company Act of 1940, and any and all amendments
and supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and him or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereto set his or her hand on the date
set forth below.
NAME DATE
- ---- ----
- ----------------------------------- ---------------
Kenneth R. Ashby
/s/ Al Christopherson January 6, 1998
- ----------------------------------- ---------------
Al Christopherson
/s/ Ernest A. Glienke January 6, 1998
- ----------------------------------- ---------------
Ernest A. Glienke
/s/ Philip A. Hemesath January 6, 1998
- ----------------------------------- ---------------
Philip A. Hemesath
/s/ Craig D. Hill January 6, 1998
- ----------------------------------- ---------------
Craig D. Hill
/s/ Daniel L. Johnson January 6, 1998
- ----------------------------------- ---------------
Daniel L. Johnson
- ----------------------------------- ---------------
Richard G. Kjerstad
<PAGE>
/s/ Craig A. Lang January 6, 1998
- ----------------------------------- ---------------
Craig A. Lang
/s/ Lindsey D. Larson January 6, 1998
- ----------------------------------- ---------------
Lindsey D. Larson
/s/ David R. Machacek January 6, 1998
- ----------------------------------- ---------------
David R. Machacek
/s/ Donald O. Narigon January 6, 1998
- ----------------------------------- ---------------
Donald O. Narigon
- ----------------------------------- ---------------
Bryce P. Neidig
/s/ Charles E. Norris January 6, 1998
- ----------------------------------- ---------------
Charles E. Norris
- ----------------------------------- ---------------
Keith R. Olsen
- ----------------------------------- ---------------
Bennett M. Osmonson
- ----------------------------------- ---------------
Howard D. Poulson
/s/ Sally A. Puttmann January 6, 1998
- ----------------------------------- ---------------
Sally A. Puttmann
/s/ Beverly L. Schnepel January 6, 1998
- ----------------------------------- ---------------
Beverly L. Schnepel
<PAGE>
- ----------------------------------- ---------------
F. Gary Steiner
/s/ Edward M. Wiederstein January 6, 1998
- ----------------------------------- ---------------
Edward M. Wiederstein
